Sir; The retailer backhaul supply chain optimisation initiative, however good it is on paper, is likely to be still-born if the quote from your article - "We'll worry how to carve it up later" - is a representative attitude of the retail multiples (The Grocer, November 10, p32). Full optimisation requires true partnership.
The primary challenges of the increased logistics complexity introduced through the initiative include:
- Synchronisation of pick-up, delivery slots and production schedules alongside the inevitable added congestion
- Quantifying and equitably distributing the costs and benefits between suppliers and retailers.
Resolving these challenges requires close collaboration, and trust, between the retailers and the suppliers, with the prospect of win-win benefits for both. Declarations over carving it up later do not make this task any easier. Suppliers still feel they were on the losing side of the stalled ECR initiative.
So, if the supply chain optimisation theory is sound, what is the approach that should be adopted to realise the potential benefits?
Experience of major change initiatives shows it is imperative that they are driven by a compelling business case and that all relevant parties are involved from the outset to ensure there is full commitment to see through the change on a permanent basis.
We make no apologies for making this 'motherhood' observation, as it seems that these basics are being ignored.
Following these steps to gain win-win commitment by all parties to deliver the opportunity paves the way to tackling the considerable logistic challenges. In addressing these, the complexity is such that agreed dynamic costing models will be required to ensure that suppliers do not lose out.
Ultimately, the whole initiative needs to demonstrate that the increased complexity delivers an overwhelming and equitable improvement in margins for the whole supply chain on an ongoing basis. And let us hope for all those in the food industry that those wielding the power do not repeat the mistakes made during the introduction of ECR.
