17 July 2020
Topics in this article
  • Cost Optimization
  • Sustainability

Building a modern playbook for supply chain strategy and logistics stardom

At our recent webinar, held with Supply Chain Strategy and Logistics consultancy Hatmill, Proxima’s Simon Geale welcomed Joe Metcalf, Johnathan Foster, Neil Jordan, and Simon Dixon to discuss their advice on the tools needed now to achieve supply chain and logistics success across: warehousing, automation, freight, and reverse logistics. Here are some key takeaways from the session about the state of the market:

Growth of automation

We have seen a notable increase in the implementation of automation since the last recession. This has been driven predominantly by retailers looking to adopt automated supply chains and manufacturing processes. This trend has further evolved due to labor shortages since Brexit, which has been coupled with the rise of the returns market and increased online shopping, requiring flexible supply chains and increased accuracy. Businesses considering automation should first involve the ‘experts’ to truly understand its functions and benefits, before integrating automation systems fully into their business operation. Whilst many organisations cite a desire to become digital businesses, automation should be considered as in the key tool in achieving this.

International and domestic challenges of freight amidst COVID-19

One cannot ignore the fracture of supply chains across businesses, as they look to cope with challenging demands during the pandemic. Many international in-bound imports were able to maintain successful operation through the height of lockdowns, using larger ships, with increased capacity. Meanwhile, in Europe, the landscape has been stable, but newly implemented border checks have impacted the movement of goods, something to consider as we approach Brexit.

The growing returns market

During lockdown, returns have become an enormous market, costing businesses $550bn in the US, and $60bn in the UK. Moreover, figures taken two years ago suggested that even then 90% of us had returned a product, 40% of us had bought variations (sizes, colors, etc.) of the same product, and 80% of us are looking at returns policies before making a purchase.

How do businesses leverage returns?

Controlling returns is becoming a big problem for many retailers, and many businesses simply “aren’t getting it right”. The next 12 months provide an opportunity for businesses to develop products and a commercial strategy that takes returns into account – acknowledging that 20%-30% of products will be returned. Data remains the key to this – what can you forecast? Supply Chain and Logistics stars should be asking themselves: What is the best route? What is the right strategy? How do I integrate the strategy across all parts of the business?

Warehousing pressures

Warehousing has remained solid throughout COVID-19, with the stockpiling of resources in the UK beginning as early as October 2019, due to Brexit. A recent McKinsey report suggested a ‘15% enduring switch’ to eCommerce, from bricks and mortar retailers. While the pressure for warehousing expanse increases, the death of some bricks and mortar businesses, although morbid, has helped to counterbalance this fight for space.

Coping with capacity

Businesses should look to automation to solve capacity issues, respond to the influx of returns and inconsistent consumer demand. While automation programs can be achieved in 9 months, businesses should allow 18 months to truly implement a cohesive automation system, being sure to utilize modelling to forecast demand, and stock efficiently.

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