Wet summers and extreme floods, Tesco branded vans darting in and out of suburban streets like minnows in a stream and a Conservative Party stating it will tax companies on the impact they have on the environment. These issues are indicators of the pressures the supply chain of major retailers and manufacturers in the UK is about to endure from customer consumption habits and regulations.
Existing methods of haulage, storage, shop inventory and customer delivery are set to be revolutionised. As a result, the information infrastructure to support the supply chain will also undergo a major reinvention.
Management consultants CapGemini have been studying the future landscape of the supply chain. Its 2016 Future Supply Chain report indicates that the complexities of the challenges facing the supply chain are not the sole responsibility of the supply chain manager. In the report, Roland Dachs, supply chain vice president at packaging manufacturer Crown Europe and Xavier Derycke, director of retail chain Carrefour say, “Until now, the most important parameters for supply chain designs have been related to cost efficiency and on-shelf availability,” the duo warn of the challenges to come, “new factors are becoming increasingly critical, such as traffic congestion in urban areas, energy consumption, CO2 emissions and the permanent rise in transportation costs.”
A raft of legislation has already come into force. In the UK supply chain managers now have to comply with the London Congestion Charge, which has drastically reduced the number of vehicles that come into the centre of the city. Earlier this year the Low Emissions Zone was introduced, which places a £1000 fine on haulage vehicles that do not comply with standards set down by Transport for London. The British Climate Change Bill, which came into force last November, sets a legal a target for Britain to achieve a 60 per cent cut in its carbon dioxide emissions by 2050.
In the near future CapGemini foresees water consumption regulations and increasing security regulations imposed not only information, but also on the warehouses the supply chain uses to store its inventory.
Consumers embrace these regulations as they believe they improve the quality of life, especially for those living in urban environments. Corporations have to convince their consumers that they are behaving responsibly towards the environment. CapGemini believe the 2007 Bali Treaty, as well as other legislative initiatives, are “challenging the industry to come up with breakthrough solutions by 2020. Preserving energy and raw materials and other resources like water will become a crucial aspect in future supply chains.”
Organisations are already seeing some of the challenges coming into view. Jane Scott, CIO at food services and supply chain provider 3663 said, “We can be more efficient. We have to comply with supply chain legislation already that fits in with being more sustainable.” 3663 Food Services supplies the catering and hospitality industry. Its main clients are companies like Compass which runs the Starbucks, Burger King, Upper Crust and Ritazza chains in the UK. Scott has been CIO for the company for five years having joined the company from Coca Cola.
Anthoula Madden, vice president of consumer products and consulting services at CapGemini was involved in the production of the 2016 the report, she describes the current supply chain as, “focussed at the moment on the replenishment of the outlets, but not enough on planning and other processes, such as returns or removal of waste and recycling materials. A lot more integrated planning is required.”
Nigel Bagley, director of customer development at food and household goods manufacturer Unilever agrees and recently told experts, “We can’t continue to operate with a supply chain that was developed decades ago on a historical method of manufacturing and delivery. The world has changed and we have to change our supply chain to adapt to it.”