Kathleen McLoughlin, Senior Analyst, IGD, examines ways in which retailers and consumer goods firms can optimise their supply chains this year. This article first appeared in ESM March/April 2023.
Food and consumer goods supply chains have faced extensive challenges over the past year. These have included unpredictable consumer behaviour, the continuing impact of COVID-19, new government policies, a difficult economic climate, and supply chain resource insecurity.
In the year to come, supply chains will continue to underpin food and consumer goods businesses. Here are the five trends that we expect to shape global industry supply chains over the next year or so, with supporting examples that we spotted in the first few weeks of the year.
1. Supporting On Sustainability
As Scope 3 accounts for the majority of grocers’ total emissions, businesses will need to make these a focus area if they’re to make significant progress on sustainability. We expect to see businesses look to establish greater transparency throughout their supply chains and take more collaborative approaches with upstream and downstream partners, to enable improvement.
There will also be a continued focus on Scope 1 and 2 emissions, which will include net-zero stores, warehouses and fleets.
We will also continue to see businesses test and learn new approaches on a small scale, with larger-scale roll-outs introduced where suitable.
What We’ve Seen So Far
- CCEP Ventures invests in partnerships to upcycle CO2. The innovation arm of Coca-Cola Europacific Partners announced partnerships with Universitat Rovira i Virgili (URV), in Spain, and the University of Twente (UT), in the Netherlands, to accelerate research into carbon capture technology.
- BerryWorld partners with SMARTKAS on vertical farming. Premium-quality BerryWorld strawberries will be grown at the SMARTKAS vertical farm, providing 27,000 square metres of growing space.
2. Focus On Fundamentals
Businesses will go back to basics on supply chain management and business principles. This will include establishing efficient processes through a continuous improvement culture, ensuring good communication, and maintaining focus on the customer. Key outcomes will be cost reduction and maximising profitability.
Some will look to simplify their operations, where possible, to get on top of availability for their most important customers and products. This will include rationalising the product/customer portfolio.
Communication between different parties in the supply chain is more important than ever, as demand and supply challenges persist. Failure to communicate can put availability at risk. It is also essential for achieving sustainability targets, wherein greater levels of collaboration are needed.
What We’ve Seen So Far
- Warburtons seeks manufacturing profitability boost. The company is using leading analytics technology developed by Schneider Electric and information technology company AVEVA to improve the visibility of data across its operations.
- Woolworths develops supplier onboarding programme. Woolworths Australia, alongside GS1 Australia, MessageXchange and Colladium, has created a new onboarding scheme for its suppliers.
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3. Reinforcing Resources
Businesses will take steps to strengthen and improve access to essential supply chain resources. This covers a multitude of areas, including people resources, raw-material access, and transport infrastructure.
Businesses will look for new ways to improve staff retention and development, and to attract new employees. Particular attention will be given to the capabilities needed to win in the future, as well as right now.
Forward-thinking businesses will identify and assess opportunities for existing and emerging technologies to support in ensuring that supply chain resource is available in future years. An example is exploring the use of automation. The best will establish ongoing practices to ensure that this remains on the agenda.
What We’ve Seen So Far
- Asda takes part in an autonomous HGV trial (pictured). The hub-to-hub consortium, led by UK-based hydrogen-powered commercial innovator Hydrogen Vehicle Systems (HVS), has been awarded £6.6 million (€7.04 million) to create an autonomous zero-emission HGV for the UK market.
- Walmart expands its Associate-to-Driver programme. Last year, the company launched its Fleet Development programme, to give supply chain associates a path to earn their commercial driver’s licence (CDL), to become Private Fleet Walmart drivers.
4. Revisiting Resilience
IGD’s recent survey of supply chain leaders suggested that resilience is their top strategic priority. We therefore expect a renewed/continued focus on building resilience in the coming year. We predict that businesses will look to gain transparency of their end-to-end supply chains as a key starting point.
We will see some businesses explore what tools and technologies are out there to support. These include those that support in gaining real-time visibility and technologies, such as digital twins, which will help businesses simulate potential scenarios.
We also expect more businesses to create and test ‘what if’ scenarios, to build a more resilient culture within teams. Businesses will seek to achieve agility through a range of actions, including increased frequency of planning cycles and changes to physical network design, including locating production sites closer to customers.
What We’ve Seen So Far
- Asda partners with Lloyds Bank on the Supplier Finance programme, in a move that will build resilience in its supply chain. The programme gives Asda suppliers early access to funding on invoices, helping them to improve cash flow.
- Canada develops its first-ever Grocery Code of Conduct. ‘By enhancing transparency, predictability, and fair dealing, the code will help make Canada’s food supply chain more resilient,’ a joint statement read.
5. Time For Transparency
Retailers and manufacturers will take steps towards achieving greater levels of transparency across their end-to-end supply chains. This will be key in supporting other priorities, such as resilience, sustainability, and cost reduction.
Both upstream and downstream activities will be within scope, as well as multiple supplier tiers. We expect to see a real focus on improving data quality, which is a foundation to transparency and essential for well-informed decision-making.
Supply chain leaders will likely look into adopting systems and tools that will help them gain visibility along the chain and within their own organisations. Those that are set up best will be able to access real-time and notification-based data. Businesses will need to be open to sharing information with their partners in order to facilitate this process. This could be through systems, regular communication, or on an ad-hoc basis.
What We’ve Seen So Far
- Maersk and Cozero partner to enhance emission visibility. A.P. Møller – Maersk and Berlin-based start-up Cozero have partnered to develop analytics tools to improve greenhouse gas emissions visibility for international parcel deliveries in Europe.
- Global companies promote data-sharing on GHG emissions. The Smart Freight Centre and the World Business Council for Sustainable Development (WBCSD) have set out guidance on how to advance the quantification and sharing of emissions data.
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Download a free version of IGD’s latest ‘Sustainability Trends for 2023’ report here.
© 2023 European Supermarket Magazine – your source for the latest supply chain news. Article by Kathleen McLoughlin, Senior Analyst, IGD. Click subscribe to sign up to ESM: European Supermarket Magazine.
