Tuesday 22nd Aug 2017 - Logistics & Supply Chain

Tarun Patel

Perhaps the most significant area of activity for IGD, head of supply chain Tarun Patel suggests, is the attempt to improve levels of collaboration among and between retailers and suppliers.

‘As the industry grows ever more complex, as shown for example by the increasing number of products flowing through international supply chains, there is a growing need for collaboration.

‘On the one hand, there is the threat that if the industry doesn’t work together and suppliers and retailers stay in their little silos, it will fail to grow and prosper. On the other hand there is the opportunity forcompanies to go outside their four walls, work with their trading partners and deliver real and increasing value to the customer.’

Patel says there is a fundamental and continuing shift in retail supply chain thinking. Whereas until recently the focus was on transport, warehousing and hard logistics, the terms have changed. The supply chain management remit is much broader and it is more about the relationships between organisations and where the opportunities lie to unleash value.

‘Some 10 years ago the supply chain was all about increased efficiency and lower costs. With factors such as high fuel prices that focus hasn’t gone away but we are seeing companies looking further along the supply chain. The battlefield is moving to the store itself, in particular to on-shelf availability which can vary enormously. Companies are becoming aware that there are a series of issues presenting in the store environment, and that is where the new challenges lie.’

IGD, which is an international research and education body, not a lobby group or trade association, works closely with suppliers and manufacturers as well as with retailers. Patel says there are now some classic examples where manufacturers are helping retailers to apply some manufacturing rigour to their store operations. ‘The sort of approach exemplified by total productive maintenance [crudely, identifying and fixing the problem before it leads to a breakdown] which manufacturers and warehouse operators use as a matter of course, can be and are being adapted and applied to the in-store retail environment.’

In-store efficiency also throws the spotlight on packaging and replenishment systems, says Patel. ‘The wrong type of packaging can significantly increase the difficulties of getting the product onto the shelf. If you have 40,000 product lines in brown cardboard cases it is difficult to see what is what visually, so there is a lot of work to be done with packaging to improve product identification at the back of the store.

‘At the same time there is an evolution in replenishment systems. Merchandising units where products are delivered pre-displayed on, typically, a returnable shelving unit that can be wheeled in and out have speeded replenishment from back of store to front of shelf, and more generally, secondary packaging is changing to create more retail-ready units of merchandising.’

But these trends have wider implications, says Patel. ‘Most supply chains have developed with production and distribution rather than point-of-sale in mind, but the model is now being driven from the retail rather than the production end. So the infrastructure we have created around pallets may not be appropriate for merchandising units. Costs too are changing location, so collaboration is paramount if we are to minimise costs and maximise value across the supply chain.’

This development of retail-ready packaging has, says Patel, become one of the hottest issues over the past couple of years. (IGD is mounting an International Retail-Ready Packaging Conference on November 21 in Prague www.igd.com/rrp).

The principal drivers behind retail-ready packaging are the commercial ones of in-store efficiencies and improved shopping experiences but increasingly environmental rules are a factor.

The result, says Patel, is that for the first time, companies are looking at packaging like engineers. They are asking ‘is this packaging fit for all its purposes?’

  • Tarun Patel graduated in production management from the University of Westminster. He has had over 10 years’ experience in supply chain management and development across retail, wholesale and logistics service companies, most recently at Booker where he was responsible for supply chain development with its top 20 suppliers.
  • At IGD, Patel overseas the international supply chain research programme and is also responsible for the ECR UK programme. He contributes to UK and international work groups and has written numerous business publications.

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