Wednesday 25th Nov 2020 - Logistics & Supply Chain

Recession brings increased focus on collaboration

Two out of three companies are starting to collaborate with their key suppliers as they are being forced to make significant changes to their supply chains as the economic downturn has worsened, according to research by LCP consulting.

Not surprisingly,  two thirds of the companies surveyed said the economic downturn significantly affected their business in a negative way. The survey also found that 45 per cent are focusing on the risks in their supply chain.

The research was conducted across senior decision makers with a responsibility for supply chain management. Just over a third of companies (36 per cent) felt that the complex nature of their supply chains had increased supply chain risks.

Those surveyed also identified reduced consumer spending, the falling strength of the pound and their board’s decision to drive changes to conserve cash as contributing factors to increasing pressure on their supply chains.

LCP chairman Alan Braithwaite (pictured) said: “Our research demonstrates that companies are starting to move towards collaborating with their key suppliers to find common solutions. If carried out effectively, building and nurturing these key relationships along the supply chain will help them get more for less; whereas if companies just negotiated on price they will miss out on the benefits, and their suppliers will leave them high and dry when times get tough.

LCP points to examples of collaboration among established brands. “For instance, when Edscha, a German manufacturer and supplier to BMW filed for insolvency it presented BMW with a huge problem. The luxury car maker was about to introduce its new Z4 convertible and Edscha supplied its roof. It was impossible for BMW to find an alternative supplier in less than six months, so it collaborated with the company to help it become more financially stable.”

The study also found that the same number are still looking at ways to reduce their carbon footprint. However, over half felt that a strict regulatory environment (with penalties) is still the only way that organisations will start taking its carbon footprint seriously.

Braithwaite said:  “While companies are citing a strict regulatory environment as the only way organisations will start addressing their carbon footprint seriously, there are changes to the rules which are becoming established in the form of public accountability through CSR standards and government initiatives. These new rules are being set, but it is now time that companies learn how to respond to them.

“Supply chain management has a major role to play in both corporate and government adjustments to deliver a sustainable future. Our experience shows that 20-30 per cent gains in efficiency (costs and emissions) can be achieved through the applications of end-to-end supply chain thinking.”

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