New competitors, technology, political and environmental events, are among a growing number of threats to supply. Be capable of adapting and responding.

 

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Last week, IGD hosted its first Hackathon event as part of the charitable Reducing Wasted Miles initiative. We brought together 70 attendees from a whole range of organisations involved in the supply chain: retailers, manufacturers, solution providers, academics and third-party logistics firms.

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Head of Supply Chain Insight, Alistair Balderson, takes a look at highlights from IGD’s recent report series, Vulnerabilities in the global supply chain.

All change, please

We are often told that change is always with us. The usual quote is from British Victorian statesman Benjamin Disraeli: “Change is inevitable. Change is constant.” Although I prefer the version my son used as his Thought for the Week at Scouts recently: “Change is inevitable. Except from a vending machine.” (I’m pretty sure he didn’t come up with that himself).

It also seems to be a given that change is coming at us more quickly than ever before. In that circumstance, it can be hard enough to think about the strategy you need to keep up with or lead the change. It’s harder still to look further afield at the wider profile of risks facing the business.

This is the background to a recent series of reports, Vulnerabilities in the global supply chain, published on IGD Supply Chain Analysis. We hope these will help your risk management strategies, looking both inside and outside your supply chain to create action plans which acknowledge, mitigate and avoid potential problems.

Responding to external challenges

In the first two reports, we looked at a range of external vulnerabilities including geopolitics, global transport chokepoints, natural resources and the environment. The increasing volumes of international trade in our industry makes these vital areas for consideration. And as long as businesses maintain a long-term view, there are actions that can be taken, especially with some of the new technology that is becoming available.

Example: water

An example here is the need to secure clean water for a growing global population; it is foreseen that current levels of water use will inevitably lead to shortages. The agricultural sector can play their part in reducing usage by using connected sensors which ensure water is targeted only where it is most needed. This will be essential given that 70% of the world’s fresh water is used for crop irrigation.

The effects of implementing supply chain strategies

The final report looks internally, turning attention to some of the risks that come about as a result of supply chain strategies that we implement. Some of these would be weighed up in the context of a specific project. However, we also need to be aware of the risks that come about or increase through steady incremental changes.

I will focus on two such risks here (specifically digitalisation and people), but of course you can find out much more by reading the report.

Connecting the world

Digitalisation – the increasing use of digital technologies to drive business processes – is creating amazing new opportunities for our supply chains. Connected systems, super-secure databases, rapid transfer of vast amounts of data, and advanced analytical engines to generate predictive insights. But these benefits come with risks, not least of which is cyber-security.

We’ve seen several incidents in the last two or three years of cyber-crime, malware attacks and data breaches. Increasingly these incidents are happening as a result of the Internet of Things, small connected devices that track assets, temperatures, moisture … the list goes on. If these devices are not fully secured, they can be hacked into and an opening is created to your wider network which does not rely on the traditional PCs and servers.

The problem here is that as individual devices (or suites of devices) are added to the network, cybersecurity may well be a key part of the project considerations. But as time goes on, that set of devices are connected to a new set, or the servers are upgraded, and through a series of incremental changes, weaknesses and gaps are introduced.

Your business: empowered by people

People are rightly described as a business’s greatest asset, and this will be the case even as we introduce more automation. But as organisations are streamlined and jobs are merged, changed or removed, we create a risk that many years of experience or capability are lost. Customer and supplier relationships are built fundamentally on trust between people, and the relationship can be put at risk when key people leave. Again, the case for and against each individual change may well be weighed up as it happens, but the incremental effect of several changes may only be seen subtly over time.

I hope this has given you an overview of the third report and enticed you to take a look at the series – take a look at reports one and two. In a fast-changing world, it is easy to put strategic risk management low on the priority list, especially if individual projects are well monitored. But we would urge all businesses and supply chains in particular to regularly review some of the risks we have highlighted, developing possible mitigation plans where you can.

Alistair Balderson

Alistair Balderson

Head of Supply Chain Insight

Vulnerabilities in the global supply chain

This series of reports explores several significant vulnerabilities in the increasingly global food and grocery supply chain, and proposes actions plans that you can take to be prepared and resilient.

  1. Geopolitics
  2. Environment and resources
  3. Setting up for disruption

13 November, London

With the theme of SUPPLY CHAINS FOR GROWTH, the interactive programme will allow you to create a day that will give you everything you need to enhance your food and grocery supply chain.

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Single-use plastics is a growing concern in the grocery retail industry due to its environmental impact. We are seeing increased activity in the retail and FMCG sector to reduce single-use plastics in-stores, and Lidl's sister company, Kaufland, is one of the latest retailers to make such a commitment.

Kaufland announces strategy to reduce plastics by 2025

Kaufland alongside its sister company, Lidl, launched a comprehensive 360-degree strategy to reduce single-use plastics in their stores by 2025. The retailer aims to:

  • reduce consumption of single-use plastics by at least 20% by 2025
  • increase share of recyclable packaging in private label to 100% by 2025
  • delist selected plastic items, such as straws, until the end of 2019 and offer alternatives

Kaufland will apply three core tactics in reducing single-use plastics in-store. Use of alternative packaging, increase share of recyclable products, and make some ranges or categories plastic-free.

How will Kaufland implement its 360-degree strategy?

The 360-degree strategy has a three-prong approach to reducing single-use plastics in-store.

  • Educating shoppers to adopt environmentally responsible consumption behaviour, by informing them about alternatives, causes, and recycling.
  • Set up a recycling infrastructure in and around Kaufland stores such as collection points, self-service recycling machines, and rewarding them with discount coupons.
  • Work with the suppliers to reduce SKUs with single-use plastic packaging and encourage use of sustainable packaging.

Carrefour Italy has announced plans to begin using blockchain technology to improve traceability in the supply chain.

Building on wider success

Following Carrefour France’s launch of blockchain technology in March 2018, Carrefour Italy has said it will begin using similar solutions from September. The retailer said it would enable shoppers to see the entire supply chain of poultry products from 29 farms, two feed factories and one slaughterhouse.

A step towards total transparency

To access the information, shoppers scan a QR code that takes them to an interface created especially by Carrefour Italia that shows them all the information about where the product has come from. The next product that shoppers will be able to find out more about is its private label citrus fruits. Commenting on the initiative, Carrefour Italia’s director of operations, Stéphane Coum, said: “For Carrefour Italia, the traceability of the supply chain represents in this sense a further assumption of responsibility towards our customers and a new step towards total transparency.

Carrefour France expands blockchain use

Meanwhile, as part of a separate announcement, Carrefour France said it was extending the use of blockchain technology to its second product: tomatoes. Shoppers will be able to find out about the whole supply chain of the Carrefour Quality Line cored oblong tomatoes. The retailer said the solution was the result of a three year with the Rougeline cooperative, which has seen nine producers grow tomatoes without herbicide. Carrefour has committed to providing complete transparency of supply chains for eight products by the end of 2018.

Presentations

27/06/2018
In the final report in the vulnerabilities series, we look internally, examining how your supply chain strategies can create new risks to be managed as well as improving your ability to serve the needs of your customers.
06/06/2018
Interested in reducing inventory and improving service? Demand-driven supply chain management challenges traditional thinking. The concept is taking off as an alternative to traditional materials requirements planning (MRP).
16/05/2018
The second Vulnerabilities report explores the impacts that natural disasters and resource shortages have on food and grocery supply chains, and how we can take action to mitigate risk.

Sustainability Manager Alan Hayes looks at IGD and Wrap’s new resources for food companies to improve food waste measurement

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.