Month: August 2020

Do manufacturers need a new model of inventory management? Neil Ballinger, head of EMEA at automation parts supplier EU Automation, offers a view:

During the economic boom in the 1980s, just-in-case was the standard approach to inventory management — piling safety stock was the norm and was done in the certainty that, sooner or later, extra supplies would come in handy. Nowadays manufacturing follows a lean production model, which in turn relies on a just-in-time inventory strategy. This business model can reduce costs, but is it really the most efficient in the long run? Here Neil Ballinger, head of EMEA at automation parts supplier EU Automation, discusses the pros and cons of this approach.

Empowered with social networks and digital devices, consumers are increasingly dictating the market — they expect more customised items to be available, and they want to get them quickly and for the best price. To keep up with demand while maximising profits, manufacturing plants have quickly moved to a lean production model. First popularised by automotive giant Toyota, lean manufacturing is all about eliminating waste and maximising profitability per line.

Following this shift in production, inventories have become lean too. Since production is aligned to demand, the standard approach has moved from just-in-case to just-in-time, with suppliers delivering smaller amounts of raw materials more often. Any excess inventory is seen as an enemy of profit, firstly because there is no guarantee that it will be sold, secondly because it increases storage costs. The just-in-time approach requires a fine-tuned mechanism of demand prediction, as well as global supply chains that are synchronised to respond to changes in local demand. However, very few companies can reliably trace their supply chain beyond tier one suppliers. This means that the majority cannot fully understand the risks associated with their extended supply chains.

What if your tier two supplier is over-reliant on a certain geographical area or on a single supplier for raw goods? A disruption of business in one plant could quickly generate a domino effect with costly repercussions across the entire chain. Overzealous inventory management could put companies in a difficult position. Plants might not be able to cope with disruptions along the supply chain or might not manage to produce and deliver an unexpected order.

Adding safety stock can help, but there are further steps that supply chain managers can take. Lean production should be accompanied by a diversification of suppliers and tools to enhance the visibility of your extended supply chain. Manufacturers should not over-rely on one geographical area and might want to add local businesses to their list of approved suppliers. This applies to suppliers of raw materials, but also to companies that provide automation equipment that is essential to production. If a component in a critical application suddenly breaks, do you know who to call?

When demand increases, machines run at full capacity and the risk of breakage increases. Having a well-stocked spare parts inventory, sourced through a trustworthy supplier, can make the difference between fulfilling your orders or disappointing your clients. Manufacturers might also want to put systems in place to guarantee visibility across their extended supply chain network. There are many digital tools on the market that allow companies to trace their supply chain beyond tier one, allowing them to react quickly in a case of disruptions.

Lean manufacturing doesn’t necessarily mean that, in case of sudden demand, inventories will struggle to cope. With the right digital tools in place, businesses can find a healthy balance between minimising waste and keeping customers happy.

Wincanton, which describes itself as the largest British third-party logistics (3PL) company, has won a three-year contract to provide home delivery services for Dwell, the furniture retailer. The agreement will see Wincanton manage a range of customer eFulfilment solutions for Dwell across the UK and Northern Ireland, including click and collect deliveries to stores and store replenishment from the Dwell Distribution Centre in Milton Keynes.

Dwell customers will also benefit from Wincanton’s bespoke ‘white glove’ home delivery service, where orders are delivered by two-person teams of highly skilled technicians. This service includes an enhanced delivery booking system, which offers delivery date selection, regular order updates and a confirmed two-hour delivery slot. In addition to this, Wincanton’s Home Delivery Network fleet is equipped with 360-degree cameras and telematics technology, as part of the Group’s commitment to placing safety and efficiency at the heart of its operations.

Dwell and its customers will benefit from the innovation and expertise Wincanton brings with its W2 digital innovation programme which includes further investment in cloud-fulfilment systems and robotics to drive online growth in the home, and health and beauty sectors.

Paul Durkin, Managing Director of Digital and eFulfilment at Wincanton, said: “We are excited to be partnering with Dwell and to take on the responsibility of delivering the great customer experience that will contribute to their continued growth. As a market-leader in eFulfilment services, our home delivery solution will enhance Dwell’s customer proposition whilst reducing their cost to serve.”

Emma Long, Chief Operating Officer at Dwell, said: “Making sure our customers receive the best experience when they shop with Dwell is a big part of why we’ve chosen to partner with Wincanton. Their ability to deliver great customer service and help us to better manage our costs will support our exciting ambitions for growth.”

James Appleby (pictured), managing director at DG International, offers a personal view on the importance of digital transformation in logistics.

Keeping the economy moving – of which the retail industry plays a big part – has been of the upmost importance since the COVID-19 pandemic hit, not just for the country’s recovery, but also to save thousands of jobs across the country.

COVID-19 shone a spotlight on every issue in the retail supply chain. All non-essential sales had to be moved online and there were unprecedented demands for products not considered essential only a few weeks before. Stock levels and locations had to be amended and as a result, there was and still is huge pressure on logistics suppliers to move shipments promptly and efficiently.

The past few months have shown the significance of digitalisation within retail and how it can enable a more seamless experience for both those working within the industry and the customer. Behind the scenes, the supply chain infrastructure had to move quickly to support the retail industry. On the front line, delivery drivers learnt how to make contactless deliveries, and in the early stages of the supply chain, buyers worked out how to source products they would have normally acquired from areas affected early on by COVID-19, such as China. Logistics companies also had to navigate the challenges of closed borders and restrictions on importing and exporting goods from certain countries.

The demand for personal protective equipment (PPE) and essential retail goods meant that stock needed to be sourced, transported and delivered quickly and from verified suppliers. Digitising this process within a dedicated platform resulted in available stock being located instantly, aircraft with room for the cargo found and deliveries tracked straight to the door of their recipient. Going digital also helped companies to operate efficiently when they were dealing with a reduced workforce.

In an industry where deals can still be done over fax, digital solutions could not have come quick enough. Companies with the technology infrastructure in place could work remotely and continue operations with the same level of efficiency, if not more so, the day lockdowns were announced. Freight forwarders such as DG International – which uniquely already had a digital platform – formed new alliances with international suppliers, technology providers and cargo operators to meet this growing need.

The processes learnt in 2020 will no doubt continue post-COVID. DG International is now part of a Critical Supply Chain Network, which we set up during the pandemic alongside our partners to quickly deliver PPE to those who need it most. The connections that we – and many others in the industry – have formed will mean that the logistics industry will remain more agile and able to adapt to changing circumstances, should a global event on the same scale as COVID-19 happen again.

As we look ahead to the future of the logistics sector in relation to retail, the changes made will be positive for the industry. Retailers are better prepared for managing fluctuations in online sales and freight companies have the infrastructure in place to transport goods across the world at short notice. DG International was lucky to have already transformed its operations and had brought everything online, and look forward to supporting our customers as they recover from the pandemic and beyond.

Rather than the last mile, Craig Summers, UK Managing Director of Manhattan Associates discovers it’s actually the first mile of the process that ensures supply chain success and aids customer satisfaction.

On your marks, get set, go
From click-to-dispatch, the first mile represents the journey from the point at which a consumer places an order, to the time that it is picked, packed and dispatched, including every aspect of the supply-chain process that makes this possible.

It is here in the first mile, not the last mile, where brands evolve to meet the shifting behaviours of their customers, can maximise inventory to increase the bottom line and (crucially) ensure the wellbeing of many of their employees during the pandemic.

Practice makes perfect
These things do not simply happen overnight and adapting and evolving has historically often taken retailers months and even years to effect change – not a luxury that has been afforded to anyone this year.

The old adage that ‘crisis drives innovation’ has certainly played out over the course of the pandemic, with many established names adopting a start-up mentality and becoming much more agile in the decisions taken and the practical rollouts deployed.

The past six months has seen a number of challenges for retailers, not least for many managing the rapid transition from omnichannel retail to a pure play model, two fundamental areas stand out, both of which are rooted in the first mile of the supply-chain journey.

1. Warehouses
Understanding people and product movement have traditionally been the key indicator of warehouse performance and employee efficiency, but in the socially distanced world of warehousing, you need to rely more on technology to help maintain the efficiency of the click-to-dispatch process.

Whether it’s limiting numbers of workers in specific zones; using swipe keys rather than touchscreen keypads or increasing shift rotations to maintain picking efficiency and productivity, the technology that operates a warehouse during the first mile of a product’s journey is key.

2. Inventory
If you have got it, you should be able to sell it, no matter where in your supply chain an item is. However, in practical terms, this simple concept is complicated to achieve.

Open-architecture IT, including cloud and microservices, as well as developments in AI and machine learning mean retailers can ingest more data to predict demands on retail supply chains.

In turn, firms can be more effective in allocating inventory and rolling out new delivery models (like click-and-collect or curbside pick-up), essentially rendering the need to invest further in complicated ERP deployments (that are often expensive, time-consuming and inflexible) redundant.

Consumer conditioning towards ecommerce and the ongoing demand for delivery services has led to a growth in micro-fulfilment centres, an increased reliance on accurate inventory and an appetite for faster change at the board level.

The road to recovery
While with any luck coronavirus will not be with us forever, its impact will certainly have a significant and lasting effect on consumer behaviour and the first mile of the supply chain.

With consumers more inclined to be forgiving of businesses during this period, now is the time to be bold and pilot new innovative approaches and agile processes.

In the future retail landscape, it will be brands that are nimble and embrace the flexibility afforded to them by advances in cloud and AI solutions that will thrive in a post-pandemic retail landscape.

However, it is worth remembering that ‘innovative’ delivery methods and en vogue technology are no substitute for getting the basics right. It is after all, still the first mile that will make or break the success of a brand promise to its customers, not the last.