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Supply Chain Focus: Future Strategies - Thinking ahead

What key factors will shape the supply chain model of the future? We posed questions to two retailers and two logistics providers

1. Will the need for speed to market increase even more in future?

2. Will sourcing and supply chains be focused on countries nearer to home to cut lead times?

3. Could retailers reduce delivery times by asking suppliers to deliver direct to stores rather than through a distribution centre?

4. Does greater speed necessarily add cost into the supply chain?

NEIL BURNS, GROUP OPERATIONS DIRECTOR, PEACOCKS

1. Speed to market will definitely increase - you can never get to market fast enough. The fashion window is getting shorter and the quicker you can get from the design stage to the customer the better. We are changing to become more fashionable so speed is vital.

2. The dynamics of profitability mean that you have to weigh the advantages of sourcing closer to home against the costs. We have been buying more from countries in Europe, as well as Turkey.

3. I don't think it's realistic for suppliers to deliver to stores and wouldn't want them to take control of that part of the operation. When our products hit the warehouse they can be in a store 48 hours later, so there is not a significant delay.

4. I can't see why speeding up would add cost. Hopefully, it should reduce it, because dwell time is itself a cost. You can't view costs in isolation - if you did something that significantly improved sales but incurred a cost, the business would be better off.

JASON KEEGAN, LOGISTICS DIRECTOR, NEW LOOK

1. The need for speed will increase. New Look is known for bringing products in quickly and we are always looking at how to cut another few days out of the process. It is all about continuous improvement and building good relationships with suppliers.

2. You have to balance better lead times against increased costs. We have a joint venture in Turkey with a supplier, which helps keep costs down and gives us a profit-share which we can use to keep prices low.

3. It is possible to have some suppliers make direct deliveries and it is something we have looked at. The problem would be that stores would have to deal with a courier drop from the supplier plus their normal delivery, which would increase costs.

4. Increasing speed is partly about doing things slicker. We share data about shipments via an IT system, which means people don't have to wait for faxes or phone calls. You can also work with suppliers to make sure you meet customs cut-off times.

BRIAN GAUNT, MANAGING DIRECTOR, UK FOOD AND CONSUMER DIVISION, CHRISTIAN SALVESEN

1. There will undoubtedly be an increasing need for products to be manufactured as close to the season as possible to maximise the relevance of a particular look. This will place more pressure on the supply chain.

2. The differential in labour costs between western Europe and the Far East and India means it is almost certain that imports from these locations will increase. There will be an increase in product sourcing from eastern Europe, Turkey and north Africa, but this will be relatively small by comparison.

3. It would not be cost-effective for suppliers to deliver direct. Retailers have made big investments in distribution infrastructure and to move away from this would leave them with stranded distribution assets.

4. Speed to market is driven by more than the physical means of moving product, with the key being accurate data provision between retailers and suppliers. Expensive and quicker routes to market like air freight are often driven by poor communication.

PAUL RICHARDSON, DIVISIONAL MANAGING DIRECTOR FOR EUROPE, DHL

1. We see speed as a critical differentiator for both brands and retailers alike. We expect fashion consumers to drive this trend, resulting from their continuous demand for newness.

2. We would expect to see the same product being sourced from different geographic areas, based on need, demand and any economies that can be achieved.

3. Suppliers delivering direct to stores will have a part to play within the changing landscape of supply chains. The supply chain focus is likely to move more towards less complex operations, with a greater emphasis on what can add value in terms of cost, speed and quality.

4. Costs can be measured in different ways. The speed of the supply chain and the impact it has on business can justify the need for an increase in investment. However, we do not expect that greater costs will be incurred from having a supply chain that is faster overall.

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