The South African solution to supply chain - Supermarket.co.za

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Strikes are a prime example that illustrates the need for contingency planning, with the need to get orders to customers but not put any vehicles or staff at risk to do so With last year’s truck strike, contingency planning had to be done daily. “No-one knew how long it would last so everyday we had to look at which areas were affected and establish whether it affected the outbound delivery from the carrier DC or inbound to the store,” he says. 14 09886-CGSR010MOVINGGOODSEFFICIENTLY19.11 05December201210:09:57AM SUPERMARKET & RETAILER, APRIL 2013 SUPPLY CHAIN ▲ incurring the least possible costs. Reacting to disasters can get very expensive very quickly,” says Aling. Another very real example is when a public holiday falls on a nominated delivery day (NDD). It is easy enough to shift the delivery day to the next day (say to the Tuesday when a public holiday falls on the Monday) but the retailer needs to be prepared and able to receive additional stock on the previous NDD (say, the Friday before) to cover the stock required for the extra day after the weekend. With stores now reducing their backroom space, it is easy to see why a retailer might become unstuck, as he literally does not have the additional capacity to hold an extra day’s stock. This will also affect the turnaround time of carriers as the receiving bay may now be handling Monday’s deliveries 100 on top of the regular Tuesday’s trucks. Logtrix’s Jason Kelly suggests that 95 retailers order up on KVI lines the week before to limit the extra deliveries to just 75 the perishable items. Supply chains need to be quite adaptable so they can accommodate these changes. 25 “Carriers and retailers need to be quite creative 5 in their planning to ensure supply in these periods. It’s a trade-off between stock 0 holding (how long will it last?) and the next delivery (when can I realistically receive more?),” notes Kelly. Contingency plans need to be put in place so planned or unplanned events don’t ultimately affect the stock on shelf. Aling also mentions strikes as a prime example that illustrates the need for contingency planning. “Our transporter’s rule during the strike was that they would do whatever they could to get orders to customers but would not put any vehicles or staff at risk to do so.” Last year’s snow that closed the N3 for two days is another unexpected event that had to be worked around. “We run a crossdock facility in Durban because we have a good highway linking Johannesburg and Durban but, all of a sudden, we didn’t have that anymore and it meant that we had problems supplying customers in Durban. We had to get our vehicles going round the N3 to reach Durban, which adds to lead times etc.,” says Aling. At store level There’s an easy way to see if retailers are getting supply chain right … ”have they got stock on shelf?” asks Kelly. That being said, out-of-stocks (OOS) aren’t necessarily just the retailer’s responsibility. Supply chain management is about the retailer, their suppliers and the person who carries all the goods. “It needs to be all three getting it right,” he says.
Because retailers know that suppliers want to ship to DCs, they can charge DC allowances. A recent study with a soft drinks supplier showed that moving a 2-litre soft drink from the supplier’s truck at the back of the store to the shelf was costing around 40-50 cents per bottle. Another growing element of the supply chain conversation is the role of in-store merchandisers. “Merchandising is a very costly function in retail, especially if you consider the human capital element of merchandisers,” he says. And then there’s the blame game when OOS occurs: Retailers blame the suppliers and their merchandisers, and the suppliers blame the retailers. There’s no hard and fast rule when it comes to merchandisers as different suppliers have different contracts and operational requirements with retailers. “Supplier merchandisers are definitely required at stores where there is insufficient turnover to justify a visit by a multitude of merchandisers. However, in the larger retailers, the expertise to manage the merchandisers is not always available,” comments Fore Good’s Leron Varsha. Dale Good of GLS Solutions believes there are a lot of things that have to happen before retailers in South Africa can take back responsibility for merchandising their shelves and saving cash. “The major ones are getting suppliers to let go control of the retailers’ shelf which they have through supplying merchandisers to stores. From a cost point of view, retailers will have to get suppliers to remove the cost of merchandising from their pricing and give what they are paying merchandising companies to do the job to the retailers,” he says. This cost is pegged at around 4% of sales. There’s clearly still an opportunity to reduce costs in the last 100m. A recent study with a soft drinks supplier showed that moving a 2-litre soft drink from the supplier’s truck at the back of the store to the shelf was costing around 40-50 cents per bottle. Retailers need to be asking, “how do we get stock off the truck and onto the shelf without wasting too much time, space or money?” Communication and collaboration In every supply chain feature, we heed calls for better communication and collaboration between all parties. This year is no different, as clearly, it’s not happening yet – despite the obvious mutual benefits that would result! “A lot of people still think their information is a strategic advantage and are therefore not willing to share,” comments Logtrix’s Jason Kelly. ▲ 15 SUPERMARKET & RETAILER, APRIL 2013
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The South African solution to supply chain - Supermarket.co.za

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