When Professor Martin Christopher began his teaching career, nobody knew what a supply chain was, still less studied it. Indeed, the whole idea of studying anything to do with logistics or even distribution was regarded as mildly eccentric, at least in the UK. Slowly, distribution and, later, logistics studies emerged from the shadows.
It wasn’t always realised then – and is not necessarily even today – that ‘making product available is critical to the way you compete. You may prefer Coke to Pepsi but if there is no Coke available, you’ll take Pepsi.’
Obvious, maybe, but how many companies actually build it into their business strategy? Firms often spend a fortune on advertising but little, comparatively, on supply chains. There are some honourable exceptions. ‘How did Dell get to be number one? Sure, they make good computers, but so do other companies. It’s all down to the supply chain.
‘In fashion, Spanish-owned retailer Zara is another of the good guys. In their game, market responsiveness is all, and it changes its merchandise 20 times a year. You couldn’t do that without having supply chain in mind. Wal-Mart got to be the number one US retailer, while K-Mart is in serious financial straits. Both sell much the same kind of goods, but with Wal-Mart, from day one, they aimed to have the lowest cost of getting goods onto the shelves of anyone.’
Supply chain vulnerability
So, for those that grasp the opportunities, modern supply chains can do some remarkable things. But there are also pitfalls. One area Professor Christopher has become increasingly involved in is the issue of supply chain vulnerability, an area of increasing interest to the UK government which had suffered, in rapid succession, the UK fuel strikes in 2000, foot and mouth disease and then 9/11. ‘It all heightened the importance of supply chains, and also brought home that they are very fragile.’ The Department for Transport commissioned the Supply Chain Resilience Report, the second phase of which is expected to be published this spring.
So should we unlearn all the lessons of the past 30 years? ‘There’s nothing wrong with ‘lean’ per se, but you need to know what you’re doing. Over the last decade, we’ve moved manufacturing offshore, so pipelines have stretched. Lean manufacturing is not a bad idea – unless it puts a business at risk. Supply chains need to be agile.
‘However, many strategic decisions are made without any regard for the consequences. Costs, naturally, are the main driver, but the definition of costs has been too narrow. Producing shirts in Indonesia might reduce production costs, but those are only one element. With long pipelines, there is the risk of inventory markdowns. Now maybe it doesn’t particularly matter in this specific area, but in others, like high tech, it might well do.’
A question Professor Christopher likes to ask classes is: ‘What is your longest lead-time?’ (His ‘students’ tend to be senior managers in the industry). ‘Almost everybody has at least one product for which it is three months or more – which significantly limits agility. Moreover, many firms have concentrated on one or two factories or distribution centres in Europe.’
Another interesting statistic comes out: ‘We did a survey some time ago, and found that a tonne of freight moves twice the distance that it did ten years previously. It doesn’t take much for everything to grind to a halt. It could be something relatively mundane, like the recent US ports strikes, let alone an unexpected event like terrorism.’
But would he really want to reverse globalisation? ‘It doesn’t take much to change the equation. Just to take one example, if airlines had to pay duty on aviation spirit, the economics of importing beans wouldn’t look so good.’
Only rarely, if ever, are these issues discussed at board level, yet they are absolutely vital to many firms’ future. ‘It’s not just transport costs – it’s also inventory-carrying costs – we’re perhaps complacent because interest rates are low.’
But long supply pipelines can aggravate inventory problems enormously. ‘If a firm realises it has made a bad buying decision, there may already be three months’ worth of stock in the pipeline. Zara can make a bad decision as well, but their pipeline is only three weeks long.’
Professor of marketing and logistics at Cranfield School of Management
- Started studying what we now know as supply chain management when it was an obscure branch of operational research, initially at Bradford, before moving to Cranfield. The then Martin Christopher teamed up with a visiting academic from the US to write one of the first books on the subject, Customer Service and Distribution Strategy. More recent publications include Logistics and Supply Management and Marketing Logistics.
- Chairs the Centre for Logistics and Transportation at Cranfield, the largest facility of its type in Europe. In addition, he sits on the council of the Institute of Logistics & Transport where he is an emeritus fellow.
- Awards include the Sir Robert Lawrence Gold Medal for his contribution to logistics education and, in the US, the Council of Logistics Management’s Foundation Award.