Major tensions within the established food retail giants as they face up to discount retailers have created significant stress in the supply chain, Malcolm Johnstone, president of the Food Storage & Distribution Federation, told members at the organisation’s annual lunch.
Johnstone, who was elected to his second term as president of the FSDF in April, is managing director of food logistics specialist ACS&T.
“The UK food industry, led by its retail clients, has some of the most demanding requirements in the world,” he said highlighting the Food Standard Agency’s latest announcement of a further audit and regulatory framework.
“Feeding a population of over 60 million consistently and safely every day is what we do.”
However, the legislative bar is being raised further after food scares and safety concerns.
“We are seeing the withdrawal of F Gases over the next ten years, demands of stronger health and safety practices and speculation that ammonia will not be permitted as a refrigerant.”
“The FSDF has a vital role in safeguarding such activities and managing the legislative expectations to ensure the industry’s voice is heard,” he said.
Johnstone called for all members, especially the larger member companies, to play their part in ensuring that the FSDF’s voice is heard.
“FSDF works in a difficult environment where the real problems that the industry faces cannot be discussed – in the main due to the anti-competitive controls that exist.”
He cited issues such as an over capacity of unsuitable buildings, lack of long term planning, due to market insecurity and short term commercial deals, and price structures that are so biased towards storage that transport is often a loss leader to attract clientele.
“These all drive behaviour which does not foster investment, supply chain efficiency, or partnership with knowledgeable and valued customers,” he said.
“The challenge to us here today is to find new ways to manage facilities that may not be fit for purpose as market conditions change.
“Bulk high bay warehouses, aligned to production, are not the answer when I am seeing market demand moving away from few SKUs (Stock Keeping Units) and therefore pallet movement, to many SKUs and therefore case picking.
“It can be difficult for prospective clients to comprehend when the market has been seduced by over capacity and thereby has price points to reflect that state, for them to recognise that over capacity may be operationally ineffective for their particular market needs.”