Current Issues

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Brexit, the weather & online shopping: How Britain’s favourite conversations are shaping supply chains

05-Jun-2018
Brexit, the weather & online shopping: How Britain’s favourite conversations are shaping supply chains
Volatility has been the enemy of logistics and supply chain professionals in the UK and the current environment doesn’t show any signs of getting any easier. The two favourite topics in British conversation have been dominating issues around the supply chain over the past few months: Brexit and the weather! Both are unpredictable and can have a significant impact on supply chain operations, creating a volatile environment for retailers to operate in.

So what impact does this heightened volatility have on supply chains in the UK? And what can the industry do to make sure they are able to deal with any disruption?

The cause
With Brexit creating waves of uncertainty, including issues such as whether border controls will hold up deliveries, a number of companies have reacted by stockpiling their inventory in anticipation of future supply disruption. Most notably, Airbus recently announced they were going to stockpile goods in response to Brexit. A number of other companies are reducing their dependence on stock from upstream suppliers, by over-ordering up to 15-20%, in order to maintain business continuity ahead of potential Brexit trade-related supply disruptions.

Brexit is completely new ground for both importers and exporters creating a new scale of supply chain uncertainty. So surely UK companies should be well rehearsed in adapting to the great British weather? It seems not. During the recent cold snap in the UK, a number of supermarkets, fast-food retailers and manufacturers experienced severe disruption in their supply chain. Another scenario saw certain fried chicken fans left empty-handed, as poor weather conditions and lack of contingency planning brought their entire supply chain to a standstill.

Another longer-term factor driving supply chain volatility is the sheer pace of technological change in logistics and the boom in ecommerce. Customers want cheap fulfilment, ease of returns and increasingly, same day delivery, which has put completely different demands on the supply chain. With a warehouse model built on long-term leases, retailers have been left with a rigid supply chain which is unable to react to anything from the changing retail environment, to extreme weather, to an uncertain future.

With Brexit, the weather and the boom in e-commerce comes uncertainty, and this calls for contingency planning. As the old adage goes: “hope for the best and plan for the worst”. What can businesses do to better prepare for volatility?

Lessons in fluidity
Retailers need to learn to not rely on a central point of failure. Many of the recent weather-related food shortages were driven by a lack of access to one central depot which effectively neutralised the rest of the supply chain. In order to reduce the cost pressures on their supply chain if things go wrong and to ensure they can deal with unpredictable forecasts, retailers need to decentralise their warehousing network. For example, three central hubs could become a network of 18 on-demand warehouses across the country. This transforms the long-term fixed costs of the central hubs into short-term variable costs, as well as allowing access to stock should extreme weather conditions occur in a central location. The result is cheaper warehousing, lower transport costs and increased flexibility.

Inventory management should already be a key aspect of a supply chain, but flexibility should be built into the systems for times of uncertainty. Traditionally, surplus inventory was considered a symptom of an inefficient and disjointed supply chain where businesses could not accurately predict supply or demand. In the 1980’s, Toyota Production System highlighted the virtues of just-in-time” and “lean production” which focused on eliminating inventory build up throughout the supply chain. But surplus inventory isn’t a necessarily bad thing. Businesses can reduce the costs of holding that inventory by leveraging cheap, high-quality external storage which in turn gives them the ‘insurance policy’ of having stock in place for times of uncertainty. Of course, this doesn’t always work for certain sectors such as businesses in fast fashion or perishable goods, but for critical items with downstream dependency, excess inventory gives businesses security and optionality in times of uncertainty.

Data-driven approaches the supply chain are key and this is particularly evident in the dominance of online retailers vs brick and mortar. Businesses like ASOS and Amazon have huge amounts of data on customer demand which provides more accuracy in forecasting and managing new inventory. The next logical step in creating a more fluid supply chain is using that data to not only optimise how much inventory you need but also proactively position inventory both when and where it’s needed for the right price.

In conclusion
The date by which the UK must leave the EU, March 29th 2019, is set to be the epicentre of volatility for a whole host of UK companies who have complex trade relationships with Europe and have to make last-minute arrangements to ensure business continuity. In the UK, we’ve almost certainly not seen the last of adverse weather conditions. However, businesses that are proactive about managing those supply chain risks are more likely to sail through the other side unscathed.

64 per cent of manufacturers rate their shop-floor IT capabilities as just average, weak or non-existent
5 days ago
The supply chain lessons of the modern grocer
5 days ago
Time to mitigate the risk of a ‘no-deal’ Brexit?
1 week ago
App Insights: How can artificial intelligence innovate supply chain management?
2 weeks ago
Managing Technological Change Without any Supply Chain Disruption
2 weeks ago
Moody’s Blues for House of Fraser; but Website Failings are Just as Damaging
2 weeks ago
Artificial Intelligence: What’s Now And Next In IoT-driven Supply Chain Innovation
2 weeks ago
Indiana Jones and the supply chain bullwhip effect
2 weeks ago
How Enterprise Labeling Helps You Conquer Regulatory Challenges
2 weeks ago
3 Tips for Empowering Millennial Warehouse Workers
3 weeks ago
More robots means easier delivery - but what about the infrastructure?
3 weeks ago
Safety in the warehouse: Five key risk areas for 360-degree protection
3 weeks ago
Automotive resilience, not just airbags and crash tests, but IT too
3 weeks ago
New High Street panel is facing a race against a terminal diagnosis
3 weeks ago
Delivering the supply chain revolution
1 month ago
A market of one: the potential of the personalized supply chain
1 month ago
5 EIS rules you are probably not aware of
1 month ago
TMS: an enterprise priority
1 month ago
Labeling Solutions for Global Expansion
1 month ago
Prime Day will be a $1.6bn loss-leader creating millions more Prime members, says e-commerce expert
1 month ago
Say what? The new possibilities of voice and machine driven retail
1 month ago
‘Peak faith’ in the cloud only 12-18 months away with slump to follow, warns 6point6 Cloud Gateway
1 month ago
As you were for UK manufacturing sector, but new business growth at three month high
1 month ago
Back to IoT basics: Automating outcomes to improve customer experience
1 month ago
Investigation of the "Fast Fashion" impact
1 month ago
Redefining Rental for Materials Handling Equipment
1 month ago
With the Intelligent Enterprise, SAP Creates “A Completely Different Kind of Flexibility”
1 month ago
The supply chain is only as strong as its weakest link
1 month ago
How to Streamline Labeling in the Pharma Space
1 month ago
‘A revolution happened in the way we buy services last week – and no one has noticed!’
2 months ago
Hot Topics at GS1 Connect? Labeling, Blockchain and More
2 months ago
Retailers must Embrace Change
2 months ago
Labeling Solutions That Bridge Islands of Data
2 months ago
My Journey to the World’s Most Important Gathering of Supply Chain Leaders
2 months ago
Workforce of the Future
2 months ago
Securing your supply chain against political uncertainty
2 months ago
On-demand warehousing could help retailers score big this summer
2 months ago
Half of organisations set for major procurement and supply chain AI investment within two years
2 months ago
The Road to Regulatory Compliance for Your Supply Chain Labeling
2 months ago
The War on Packaging
2 months ago
Five data dramas that keep your CIO awake at night
2 months ago
As sales fall new report finds many department stores’ websites suffer from clunky integration and poor delive
2 months ago
Got Your Surfboards Ready to Master the Wave of Digitalization?
2 months ago
TrustArc to Offer IAPP Privacy Core® GDPR Training to Address Compliance Requirements
2 months ago
The Market has never been Stronger for Horizontal and Vertical API Platforms
2 months ago
Selecting the best Transport Management System - One of the most important logistics decisions you’ll make
3 months ago
“Digital Transformation” and Supply Chain Planning
3 months ago
Coolest Advice for Making Blockbuster IoT Devices?
3 months ago
The Fall of ‘Made in China’
3 months ago