Chain reaction

In today’s highly competitive global marketplace, the pressure on firms to create and deliver value to customers grows stronger by the day. In such squeezed times, efficient and effective supply chain management has come to play an increasingly significant role in both cost reduction and service enhancement. Euroasia Industry speaks to Allport Supply Chain Management’s Clyde Buntrock about the latest trends and challenges in the SCM market, and how his company is reacting.

The aim of supply chain management is to link the marketplace, the distribution network, the manufacturing process and the procurement activity in such a way that increases a company’s performance levels and adds efficiency. It is a constant balancing act between keeping costs low, while ensuring proper inventory levels and maximum service. With an international financial downturn and an increasingly globalised supply chain to consider, the daunting challenge presented to SCM executives becomes ever more apparent.

Having been in the business for nearly half a century, and as the UK’s leading independent freight forwarder, not many companies are better placed to speak about the SCM market today than Allport Supply Chain Management, which helps multinationals – mainly retailers – to expedite global freight movement and optimise supply chain processes. Allport’s supply chain systems are developed internally by ediTRACK, the company’s dedicated software house.

With processes and technology that put customers in control of the supply chain, Allport Supply Chain Management provides its clients with a competitive advantage that lets them achieve the best availability and highest quality at the lowest cost. Providing a service that helps customers source from, and enter, new and emerging markets around the world, Allport’s biggest market sector is retail, covering brands from Gucci to FitFlop; it also works with three of the largest supermarkets in the UK, as well as with numerous fashion retailers, including New Look and M&S.

Euroasia Industry catches up with Mr Clyde Buntrock, business solutions director for Allport Supply Chain Management and head of business solutions at its subsidiary, ediTRACK, to find out how Allport is tackling the myriad challenges that today’s retail markets are throwing its way.

Euroasia industry: In the post-financial crisis era, supply chain management issues must abound. What specific impacts have you identified in the various markets in which you operate?

Clyde Buntrock: One massive issue is inventory. Customers want to reduce holding costs, so ask us to give them better visibility of their stock. Once you understand exactly where your goods are – in the warehouse, in transit, in production, etc. – you can start being lean in your inventory holding. You can challenge all elements of cost and eliminate the ‘nice-to-haves’ left over from before the downturn hit. Another issue is new markets. Customers in Western Europe, which were impacted by the downturn, are now exploiting buoyant, emerging markets where consumerism is growing (for example, China and Brazil). They want support in doing that, without increasing their stock holding. For instance we help route products directly into those markets from source rather than via their traditional markets.

What are the latest innovations in SCM that can help to reduce costs for the client, while sustaining or improving added value and margins?

CB: If you source a product from a low-cost labour region and move it to a high-cost labour region, it makes sense to do all of your logistical activity in the lower-cost area. Companies increasingly make products close to source and then ship them directly. But to make this practice viable – to understand where goods are, and which checks have taken place – you need technology. This is vital for brands without their own physical infrastructure. A UK company that designs its own product might not actually see that product when it is with the manufacturer, wholesaler, retailer or consumer, but can still maintain the identity and quality of its product if it integrates its technology with its supply chain processes.

Environmental issues are clearly an increasingly important consideration for companies, across all product sectors. How can clients reduce their carbon footprint through effective supply chain management?

CB: Once you start measuring your carbon footprint, you will know if you’re reducing it and where to be lean within your supply chain. Many companies have already started using supply chain technology for measurement, and a number of them are looking to source more locally. But it tends to be cost pressure or responsiveness to customers primarily, that motivate their lean use of logistics equipment.

What benefits are cloud-based systems bringing to the management of the supply chain?

CB: For many years our subsidiary, ediTRACK, has been operating web-based solutions for supply chain management. Supply chain partners can access information in the cloud as and when they need it. Rather than having numerous applications dealing with isolated areas of supply chain, cloud-based software puts everything seamlessly in one place, so that all parties can communicate with each other and access relevant data, all in real time.

In a culture where people demand that goods be there yesterday, how can companies move to reduce their lead times?

CB: It’s critical that companies scrutinise not just the physical time that the product moves, but everything from its conception to the moment it reaches the consumer: specifying, tendering, quality control, testing, meeting regulations for local markets, production planning... The upstream critical path is less understood and less subject to process control than the physical movement.

What are the main challenges that you see in dealing with SCM issues in the main product sectors that Allport Supply Chain Management serves? What measures can be taken to help eliminate supply chain risks?

CB: Most businesses work in silos that share the overall goals of the business, but not always an understanding of how to achieve them. For example, a buyer might reach his target in achieving a fantastic intake margin by ordering a large quantity of products at low unit cost, but this course of action might force his organisation to pay for excessive stock holding in a high-cost destination market, outweighing the margin that he achieved.

Many supply chain managers are frustrated that important supply chain decisions are already made by the time they part with the product. If you break down the silos and put supply chain thinking and practices into the buying function, buyers would consider things like packaging and order size versus consumer demand, and not just commercial intake margin, before agreeing terms with the suppliers.

Are there any region-specific SCM trends or challenges that you can identify? How has Allport Supply Chain Management moved to overcome these?

CB: There has been a much-publicised cost increase around the Pearl River Delta in Southern China. As a result, we have had to be agile to accommodate sourcing in other regions. Meanwhile, in post-recession UK, virtually all of our customers are either already reaching out to international markets and looking to do it more, or are desperate to start doing it.

Looking ahead, what plans does Allport Supply Chain Management have for the future?

CB: We’re always looking to strengthen our already well-developed global network and our capabilities in the emerging markets where we already operate. In addition, we are always enhancing and continuously developing our technology. The latest upgrade of our logistics module LIMA will give customers more business intelligence capability and enhance process control and workflow management.

Find out more about Allport Supply Chain Management at www.allport.co.uk - and its subsidiary, ediTRACK, at www.editrack.com