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Leveraging Centers of Excellence for Continued Grocery Supply Chain Success

By Will Lovatt  May 11, 2016

The grocery sector is facing rapid changes. While the idea of omni-channel shopping is commonly aligned with the retail industry, more grocers are offering alternate means for customers to engage, which is changing distribution models. This is requiring grocers to continuously rethink and improve their approach to supply chains. The modern supply chain is exhibiting greater complexity and volatility than ever, and often stretching across continents, however measuring the impact of changes has become more complex as well, and more susceptible to poor management.

Endless changes, whether they be shifts in supply-and-demand, rising prices, the introduction of omni-channel retail touchpoints, disruptions in transportation due to shortages or strikes, changes in regulation, natural disasters or political unrest, can all have a major implications for supply chain operation.

Complex picking

Consider for example, how the supply chain must cope with omni-channel retail. Where once there was a simplicity of picking whole packages of items in a warehouse and dispatching them to retailers, now it is a question of picking individual items to make up baskets, potentially from locations that were never designed to perform that role.

Supermarkets also now engage in ‘streaming’ where they periodically look at specific categories of products, such as we all observe with retailers managing Christmas season chocolates, and deciding how they are going to be stocked, flowed or bulk-moved through the supply chain to support seasonal promotions and demand.

The difficulty for those managing this ever more complex supply chain is coping with an increasingly dynamic change across all the various internal and external factors.

Pooling talents and technology

One of the best ways for a grocer to keep pace with this incessant fluidity and build-up of pressure at different points, is to create a supply chain design center of excellence that pools its talents and technology, using multiple sources of data to continually remodel and redesign the supply chain for maximum efficiency.

Meeting diverse and immediate challenges head-on requires a working model at which a business can throw every conceivable change, using a powerful platform to create what-if scenarios giving a more real-time, live view of supply chain design.

It is no longer enough to see design as a series of one-off models or forecasts from which a couple of changes may result before the change project is put to one side until next year. Sustaining competitive advantage is a matter of continually reviewing design to reduce costs and risks to ensure the highest levels of service are always facilitated as efficiently as possible.

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Constant data monitoring

A center of excellence will constantly monitor all the factors and data affecting the supply chain from one end to the other. This requires smart use of data from various different sources, all of which are pulled together and used to create a set of different scenarios.

This could, for example, focus on what to do if the business acquires a new customer and grows by X percent, meaning a regional distribution center can no longer cope with the volumes being generated, requiring some new investment.

Data is the real-time driver, but for a center of excellence to function it is vital to have the right set of people conducting the redesign work and providing their results as a service to the rest of the business. It at starts with having the right talent and it’s also important to have first-rate leadership.

Importance of experienced staff

A diverse team is a key piece so that the center is not driven by supply chain staff alone, but also by finance and sales or promotions personnel. Studies show that on average, centers of excellence with staff that have experience across the business were 25 percent more efficient with time and cost-saving measures.

Aside from optimizing the quality of design and the various scenarios produced, this broad base of participation avoids the major pitfalls of local or departmental bias. It also makes it more likely that the work produced feeds into sales and operations planning, which is about ensuring coherent plans across multiple silos of operations.

Although many businesses pay lip service to continuous improvement through supply chain design, the reality is often that it remains a tactical tool. But businesses stuck with this approach will see their costs rise and efficiency decline while competitors edge ahead.

If grocers are not to go backwards, each must create its own center of excellence for continuous supply chain improvement.