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Hospitality supply chain ‘on verge of collapse’

The UK’s hospitality sector supply chain is facing devastation with 324,000 jobs at risk unless businesses receive immediate financial support from the Government, according to new research.

UKHospitality’s Supplier Alliance has released data highlighting the impact of the COVID crisis on the hospitality supply chain and the lack of financial support that has been received by businesses.

Key findings from the report:

  • 1 in 5 jobs in the supplier workforce have already been lost (workforce now just 82% of February 2020 level)
  • 1 in 3 businesses have received no Government grants or loans
  • Without support, 2 in 5 businesses will have to close, with 1 in 5 facing insolvency – 324,000 redundancies likely
  • Hospitality venues will need to return to 59% of normal trading levels to make supplier services viable.

UKHospitality has called on the Government to use the forthcoming Budget to ensure that supplier businesses receive the necessary financial support. This includes:

  • A meaningful, national grant fund for the hospitality supply chain to allow viable businesses to invest in goods/services critical to a successful restart
  • A Government backed invoice factoring scheme to free-up funds for investment and mitigate some of the risk of trading through the restart.

UKHospitality Chief Executive Kate Nicholls said: “It cannot have escaped many people over the past year that hospitality businesses have been completely devastated by the COVID crisis. Much less visible, but by no means less terrible, has been the destruction heaped upon those businesses that supply restaurants, pubs, hotels and the entirety of hospitality.

“The pain of the past year has filtered right down the supply chain and many of those businesses are now staring ruin in the face. One in five jobs have already been lost in the supply chain and another 324,000 are now at risk of being lost unless there is immediate financial support. One-third of businesses have not received any support whatsoever from the Government and the sector is clinging on.

“The totality of hospitality is dependent on its supply chain. If supplier businesses fail, then the entire sector grinds to a halt and we are at risk of the whole thing collapsing. We are hopeful that hospitality businesses can lead the recovery of the UK’s economy this year. That cannot happen if businesses are not supplied to do the job. The supply chain is everything and it must be supported.

“The Government has to understand this and provide the support that these businesses desperately need at the Budget. Otherwise, our sector will rapidly become a house built upon sand and the terrible damage that has been felt over the past twelve months will only be compounded.”

Retailers to on-shore £4bn of products to the UK as COVID-19 ‘resets’ supply chain strategies

More than £4.2 billion of products will be on-shored to the UK by retailers in the next 12 months in a move that would represent a significant fillip to manufacturing, being equivalent to the country’s entire current clothing manufacturing output.

That’s according to a new report by global professional services firm Alvarez & Marsal, in partnership with Retail Economics, that estimates that COVID-19 has created new pressures on retailers, exposing weaknesses in global supply chains and leading many to rethink strategies for the future to remain resilient.

Nearly three quarters (70%) of Europe’s largest 30 retailers say they have conducted a review of their supply chains as a direct result of the pandemic.

Of the same group of retailers, more than half (55%) have already begun to diversify their suppliers, with 29% planning to do so within the next 12 months. 14% are already sourcing more from domestic economies, with almost half (42%) planning to do so in the next 12 months.

Erin Brookes, Managing Director and Head of Retail and Consumer, Europe, A&M said: “COVID-19 has brought about a fresh set of financial and logistical challenges which retailers must overcome while accommodating permanent shifts in consumer behaviour. Our research shows that despite these new pressure points, most retailers are responding at speed, creating new growth opportunities within their domestic economies and protecting against future risk.

“This Christmas will be a major test for this new operating environment. The structural shift towards online will place extraordinary pressure on distribution and in some cases, we are likely to see supply not meeting demand. Meanwhile, new lockdown measures which prevent most physical retail from opening over key sales moments like Black Friday will only exacerbate these challenges. In the next few weeks, retailers will need to deliver a steady flow of online sales to contain the usual last-minute rush.”

The report says retail businesses are being forced to reassess the future of their supply networks and how they can not only meet COVID-19 related challenges, but simultaneously address underlying structural changes to ensure they are future-proofed.

Now the initial shock of the pandemic has resided, businesses and governments are considering how to build back better, with sustainability playing a major role. As European retailers come under increasing pressure to create visible ESG commitments, 70% of the retailers surveyed have already begun changing the way they source products to help meet their goals – with the remaining 30% planning to do so in the future.

Part of these plans also incorporate on-shoring, with 46% stating they already source more from their domestic economies to help meet ESG targets, while 39% suggest they intend to in the future.

Retailers are also increasing their focus on sustainability in response to growing consumer demand for ethically sourced goods. A third (32%)³ of U.K. consumers say they would be prepared to pay more for products sourced from Britain to help meet carbon emissions targets, while a further 35% would if there was no impact on price.

The COVID-19 crisis has put even greater emphasis on using technology to build more resilient supply chains and accelerated trends towards digital trade and e-commerce. Technological innovation and adoption will shape the future of supply chains, helping to streamline operations and drive efficiencies.

Of the retailers surveyed, the majority recognise the need for continued investment into technology, with 77% who are considering investing in digitalisation, 63% in automation and 23% in artificial intelligence.

Tim Waters, Managing Director and European Supply Chain Practice Lead, A&M said: “The impact of the pandemic has been felt throughout retail supply chains across the world. Despite significant distress and disruption, COVID-19 has also acted as a catalyst for change for retail businesses, with evolving consumer behaviour, ESG commitments and technological potential leading new strategic thinking. 

“Across all sectors, businesses are looking for ways to rebuild for the better, with sustainability swiftly climbing agendas. Our research highlights that on-shoring operations is already underway for many retailers. Not only will this help to create more ethical supply chains, it will help to manage future risk.”

Away from the pandemic, the uncertain outcome of the ongoing Brexit negotiations will have significant repercussions for UK retailers and their supply chains, with no-deal creating costly delays and interruption. According to A&M’s analysis, a no-deal scenario would create new tariffs of £7 billion for UK businesses, with most of the burden placed on food (17.1%) and clothing (10.6%).

As such, A&M’s research suggests that European retailers are reluctant to commit to any permanent changes to their supply chains until a Free Trade Agreement (FTA) is negotiated between the U.K. and the EU.

Navigating Covid-19 through e-commerce: Lessons learnt

By Michiel Schipperus, CEO at Sana Commerce

Covid-19 has had a significant impact on the global retail industry, with sales expected to dip by 5.7% this year. At the same time however, global Amazon sales increased by 26% in Q1 and 40% in Q2, and e-commerce spending in the U.S. grew from 11.8% in Q1 to 16.1% in Q2

In the UK, Covid-19 is expected to add £5.3bn to UK e-commerce sales this year. These figures demonstrate that industries that were already predominantly focused online have been able to weather the storm more easily than those that were focused on traditional, face to face customer relationships. 

McKinsey carried out research looking at the various impacts that Covid-19 has had across the globe and the findings underline the need for businesses to ensure their digitisation strategies are in place for both customer channels and supply chains. In the UK and Europe, 40% of those questioned said that Covid-19 had accelerated the digitisation of their supply chain and 21% said it had significantly accelerated digitisation of customer channels. In North America these stats were 31% and 13% respectively. 

While these figures incorporate both consumer and B2B e-commerce growth, it’s still evident that manufacturers, wholesalers and other B2B organisations can benefit from moving sales online. But B2B sales require a very different approach to the customer journey than B2C, so ensuring that the online solution is fit for purpose is key. What approach should businesses take as they start on their digitalisation journey?

Finding the right solution

During this period of increasing uncertainty businesses need to make quick decisions around digital strategies. It’s all about speed to market – getting a business online can be the difference between the business being open or closed. Customers want to know that they are dealing with a reliable business that puts them first, understands their specific requirements and then delivers a personalised approach. Most businesses are keen to get a solution in place now to help them to capitalise on the accelerated need for online sales through an e-commerce solution that simply works. For those that have never had e-commerce before it needs to be straightforward and easy to maintain through cloud based automated updates, enabling businesses to capitalise on existing markets. For those businesses that have a more mature e-commerce offering, it’s all about refining the customer journey to make purchasing a simple as possible.

Make it personal

Key to success is the organisation’s ability to focus on its relationship with its customers. Covid-19 has taught us that customers are seeking reassurance from the people they do business with. This means that a website that is completely self-service must offer the customer such a strong purchasing experience that they do not feel the need to have the personal contact that would have previously been the norm.  

People want to do business with businesses they can trust. This means having a platform that delivers personalisation for the end user through flexible design that can be implemented quickly and be customised to specific requirements. Personalisation allows a business to target customers more closely, offering discounts to either a specific group of customers, or on products that are in high demand, for example. It means showing personal payment options and delivery possibilities that are specific to a segment or even an individual customer. Or drawing into a customer’s previous buying patterns to make suggestions, recommendations and advice. It is possible to get your web store live quickly to meet these challenges by using a SaaS solution – meaning it can be built and integrated into your ERP in a matter of days. 

Consider your timeframe

Customers expect swift response times, even in the world of B2B. If you are not able to provide them with this, it is likely they will go to a competitor so choose a webstore solution that’s responsive. Consider looking for a site that is built on single-page application (SPA) designed for B2B, creating dynamically loading pages and not rebuilding each time visitors navigate to a new page. This improves the overall customer experience and enables them to get to where they want to go on your site much faster meaning time to basket can be reduced.

Integrate your ERP

Integration with a company’s ERP systems is crucial as this ensures that existing data, such as stock availability, personalised pricing options, and order history, are instantly reflected in the online store, eliminating errors and delays and delivering a reliable online experience. Businesses should seek a solution that provides the maximum amount of flexibility. One that offers headless-ready e-commerce is the best approach here as it means it can be integrated with ERP system(s) in the back end whilst using other platforms for the customer front end. This is important as it opens up opportunities for the additions of applications such as voice or even barcode scanners in the future. This type of solution helps to create a seamless, personalised customer experience – enabling businesses to foster long lasting relationships even once the global pandemic is under control. 

The current climate is impacting every business, no matter what industry they are in. The days of face to face buying and selling may become a thing of the past and the need to be able to deliver that personal service through e-commerce is increasingly important. While it may be tempting to rush to find a solution, particularly when faced with the threat of losing customers, it is vital to carefully consider the best possible solutions available at this time. This considered approach will allow businesses to secure their current customer base whilst setting themselves up for a successful online future.

Smart warehousing: A reality check for the big vision of the Internet of Things

By Jamies Watts, Head of Sales, Mysoft

Following last week’s Total Supply Chain Summit, I have reflected on some of the conversations I had with people and a key topic that came up was Smart Warehousing and where SME’s are on their journey to optimizing towards this. I have done some further  reading and wanted to share my thoughts with you…

At the turn of a new decade, we are on the brink of exceptional growth in the Internet of Things (IoT). The number of IoT devices is forecast to grow to almost 31 billion worldwide in 2020 , and onwards to 75 billion by 2025, making IoT truly one of the trends of the decade. 

As 5G also becomes the norm, those devices will be connected across continents rather than just warehouses, and the logistics business is therefore ideally placed to benefit.

The need to refactor logistics for social distancing in the post-coronavirus (COVID-19) world makes the business case for smart warehousing more compelling. 

The RFID Journal reports: “At a time when social distancing is sweeping the world and changing the face of retail, the companies that survive will be those that take the leap into digitising their supply chain processes with IoT and RFID.”

But those headline statistics are only meaningful if we put the datapoints created by IoT devices to work. Enterprise resource planning (ERP) is certainly part of the solution – it  connects disparate systems to allow management to identify trends and patterns and so make better commercial decisions. 

This is already going to be challenging. Analyst IDC estimates that IoT devices will create a whopping 40,000 exabytes of data by 2020 (that’s 40,000 billion gigabytes) and sifting value from the chaff of this data pool demands rigour and data visualisation skills which are currently both cutting edge and expensive to recruit.

Real world processes are resistant to automation

However, that’s still only the start. IoT is a rapidly expanding set of tools and standards to create information flows; it’s not a business solution in its own right. 

The smart warehouse, in which human effort is slowly transplanted by automations, requires a blend of hardware and software. Yes, that will be underpinned by IoT, but a range of systems must work in harmony.

Take, for example, one of the most basic functions that is naggingly resistant to automation: picking. The value of automation is clear. In the words of consultant Digiteum: “Tasks like picking and packing are monotonous and tiresome — thus, the odds of human error are higher than in more demanding tasks. IoT and smart warehouse technologies help automate repetitive assignments and allocate the workforce more efficiently. By introducing IoT to the warehouse, store managers will be able to reduce order inaccuracies and inventory damage.” 

But automated picking requires:

  • Standards for packaging – which generally has an associated size/handling cost
  • In-house and external coding/asset-tagging and code display (barcodes, etc) requirements
  • Best-in-class robotics, either capable of identifying and gently lifting a product, or at the least capable of picking units from a pre-defined pallet location
  • Management software to run the show and exception handling for when things go wrong

And picking is only one component of the workflow in which digital is expected to interface with the human world in the logistics environment. An end-to-end system will include guided vehicles and/or transit sorting, inventory control, and the ubiquitous Warehouse Management System.

Reviewing the business case

The smart warehouse business case therefore needs a two-pronged approach:

  • holistic view to appreciate all the possible benefits of a data-empowered warehouse:
    • Customer service with better communication and transparency, leading to loyalty
    • More efficient logistics from real-time understanding
    • Problem-solving, whether order-based (mistakes with individual items) or line-based (predictive maintenance and hot-swapping of facilities)
    • Productivity, whereby employees can be focused on higher-value activities
  • But a tactical, stepped approach so the pain of overhaul can be softened by quick wins and low-hanging opportunities.

Warehousing is going digital. That’s non-negotiable. 

In the smart warehouse, accelerated by the need for social distancing, there will also be fewer people on the shop floor. That’s also a business necessity. 

But what the shape of digital enablement will look like in each instance will never be set in stone. 

Further emerging trends (such as drones and autonomous vehicles) have yet to make their mark. Today’s state of flux is the new normal, and perhaps the most open-minded approach is to realise that data is an asset in its own right. 

It’s up to us to put it to relevant and meaningful use, knowing the solution will likely be different for each business.

If this is something that you would like to discuss is more detail and how Sage and Mysoft can help your business, specifically around smart warehousing and ERP. Contact me on 07826 527 821

OPINION: UK Business ill-prepared for post-Brexit Customs Complexity

2020 was meant to be the year of ‘Brexit Preparation’. When the UK left the EU on January 1st2020, firms involved in trade with the EU were set to spend 12 months on robust planning, maximising the 12 month Brexit transition period to understand the new trade and customs requirements. The transition period provided time to put in place the systems and expertise required to manage trade and the customs declarations that will be required with the EU. 

Since March, however, Covid-19 has wrought unprecedented change throughout every supplychain – and many firms felt they had no option but to shelve Brexit planning, and in many cases also use cash and stock initially reserved for Brexit-related disruption, simply to survive. With the deadline fast approaching, however, and the option of a ‘no-deal’ Brexit on the table, the lack of preparedness is beginning to raise concerns. 

As Andrew Tavener, Head of Marketing at  Descartes, argues, UK businesses are largely ill-prepared for the customs complexity post-Brexit. Companies need to take action now, or potentially risk supply chain disruption at a level far greater than that experienced during the onset of Covid-19.

Brexit readiness assessed

During July 2020, Descartes commissioned independent research to ascertain supply chainmanagers’ general expectations around the impact of Brexit. The findings were stark:

  • Two thirds of businesses have had their Brexit preparations disrupted by COVID-19.
  • Less than a quarter (23%) have high confidence in their ability to cope with the extra administrative burden of Brexit.
  • Two thirds (67%) of large firms are very or extremely concerned about longer delays in their supply chain impacting the business post-Brexit.
  • Fewer than one in five (18%) of UK businesses are prepared for a ‘no deal’ Brexit.
  • Almost three quarters (72%) are concerned about the customs brokerage market’s capacity post-Brexit.
  • Two fifths (40%) are concerned about customs declarations impacting their business post-Brexit.

With just a few months until the the end of the Brexit transition period, the lack of certainty surrounding the deal still under discussion between the EU and UK is undermining business certainty. Just over half (52%) think a UK-EU trade deal is unlikely to be achieved in 2020 and only one in ten (10%) supply chain managers claim to have total certainty regarding the impact of Brexit on their business. Furthermore, despite the consensus regarding the likelihood of a ‘no deal’ Brexit, fewer than one in five (18%) are prepared for a ‘no deal’ exit from the EU.

Delays to the supply chain (45%) are the biggest concern regarding the impact of Brexit on cross border trade. However, the larger the organisation, the greater the concern regarding supplychain delays: 56% of supply chain managers in firms with over 1,000 employees are worried about delays to the supply chain. The impact of such delays also raises serious concerns: two thirds (67%) of larger firms are very or extremely concerned about longer delays in their supplychain. Over two thirds (68%) of supply chain managers within healthcare are also concerned about supply chain delays. Tariff payments (40%) and customs declarations (40%) are the next highest concerns. 

These findings underline a key fact: those organisations and supply chain managers with existing experience of customs declarations are far more worried about the implications of Brexit on the business than those who have yet to discover the complexity of customs processes. Significantly, with consumer behaviour having fundamentally changed during COVID-19, this inexperience is likely to catch out many smaller sole traders who have moved to an ecommerce model and rely on trade with the EU during the pandemic.

Understanding Customs Complexity

For any organisation hoping for a last-minute reprieve, customs declarations will be required regardless of whether the UK strikes a free trade deal with the EU. Even companies that opt – and are allowed – to defer import customs declarations for six months must still maintain detailed records of goods brought in. Furthermore, many smaller organisations appear unaware that Brexit affects every import or export with the EU: it will no longer be possible to simply load up and drive to another country to deliver and sell goods without paperwork, or for e-commerce traders to simply post goods to a consumer in Paris or Cologne as if it were Birmingham or Manchester. Customs declarations will be mandatory.

There are essentially two approaches that companies can consider: complete declarations in-house or use an intermediary – a customs broker or freight forwarder – to handle the process.  Relying on the latter option, however, could be difficult given the expected huge increase in demand due to Brexit. Government figures suggest that British companies trading with Europe will have to fill in an extra 215 million customs declarations a year post Brexit – with a potential cost to businesses of around £7bn a year. There are simply not enough third-party providers to support this huge increase in demand – a fact clearly recognised, with our research confirming almost three quarters (72%) are concerned about the customs brokerage market capacity after Brexit.

Yet when less than a quarter (23%) of companies have confidence in their ability to cope with the extra administration associated with Brexit, and 40% are concerned about customs declarations impacting their business post-Brexit, the options if customs brokers are not available are limited.

It is possible to file directly with HMRC – but how confident is the business in its ability to check the classification and valuation of goods to ensure the right commodity codes are used? Determine the need for licences for restricted or hazardous goods? Prepare and submit the correct documents to ensure there are no delays at the border? And what about taking advantage of customs authorisations, including Inward Processing, Customs Warehousing, Transit and Customs Freight Special Procedures that could simplify the paperwork requirements for importers trading heavily with the EU or moving goods through multiple territories? Any firm wanting to use these procedures will need to be authorised by HMRC. What about the option of a six-month deferment for import declarations, which will require the business to open a deferment account with UK customs?

Taking Control

Any company deciding to self-file should consider a software system that can streamline the process, from data consistency to the use of templates to speed up the creation of documents for routine product import. The Government’s Custom Grant Scheme provides support for businesses needing to invest in both technology and training. Combining a Software as a Service (SaaS) customs solution that ensures all regulatory changes are automatically updated and available, with staff training to achieve in-house expertise, provides a strong foundation not only for handling the complexities of post business activity but also future business development.

One of the key aspects of self-filing is the ability to immediately understand and manage landed costs. Import and export duties and tariffs create a new cost model that businesses need to understand rapidly. With different tariffs applied based on a range of factors, from place of origin to method to transport, the ability to monitor landed costs will provide companies with the chance both to manage the new cost models and take strategic sourcing decisions. With over a third of firms confirming they have or will by the end of 2020 looked for new sources of goods (35%) and imported goods early to protect supply chains (34%), factoring in the landed costs will be key to creating the correct customer pricing model and retaining margin where possible.

For ecommerce businesses, immediate insight into landed costs will be essential to provide customers with accurate pricing. No business wants to risk shipping individual items cross border, all the way to the customer’s door, only for the item to be refused when the courier demands the additional £20 customs duty payment, for example. Being able to integrate customs solutions into the ecommerce platform will support accurate real time pricing information.

Software can also support firms that decide to use customs authorisations, including Inward Processing, Customs Warehousing, Transit and Customs Freight Special Procedures; as well as providing the detailed record keeping required for companies that have deferred import customs declarations for up to six months. Essentially, the software will create the declarations without submitting them, providing a detailed declaration report to the business to deliver essential insight and take control over the new import/export cost model post the Brexit transition period.

Conclusion – Preparing for Change

Growing numbers of organisations are beginning to recognise the implications of the Covid-19 pandemic extend far beyond the extraordinary supply chain challenges faced over the past few months: consumer behaviour has changed fundamentally. Retailers estimate the shift from bricks & mortar to ecommerce has massively accelerated, achieving a change within three months that was previously expected to take at least three years. While companies may have recognised the increase in customs declarations that will be required as a result of Brexit, the shift towards ecommerce and direct to consumer delivery will not only increase those numbers, it is also likely to catch a number of the smaller sole traders by surprise.

With 30% of organisations experiencing major uncertainty with regards to the impact of Brexit on the business and its supply chain, and the end of the Brexit transition period fast approaching, the onus is on business to take action today, and make the changes that can enable firms to become 100% confident with regards to customs declarations from January 1st 2021.

5 Minutes With… Matthew Hopkins, BoxLogic

In the latest instalment of our supply chain industry executive interview series we spoke to Matthew Hopkins, Director at BoxLogic, about his company, industry opportunities, the challenges posed by COVID-19 and Brexit, plus some Netflix favourites…

Tell us about your company, products and services.

BoxLogic is a consultancy that supports our clients transform their supply chain operations, usually when there is a change in volumes, sales mix or cost base; or if additional capacity is required in the network. The key areas that we add value to our clients are by designing efficient distribution networks, designing or redesigning new warehouse facilities, evaluating the feasibility of warehouse automation and WMS selection.

We are a team of four and setup our own business in late 2018 after working together for several years at a previous specialist logistics consultancy. Now we set our own direction for working with clients. It has been very exciting so far and I’m looking forward to it continuing.

What have been the biggest challenges the Supply Chain industry has faced over the past 12 months?

It has been fascinating time for supply chain with some very important issues in the news agenda. It shows how important the function is and it’s hopefully going to attract many young people to the industry who are excited about answering these questions.

You cannot look past Covid-19 as the biggest challenge, managing the supply issues, starting and stopping the supply chain has shown incredible adaptability. There has been plenty of other challenges though including the need for better visibility of how goods are sourced and the ethical integrity of those products. That applies as much for paying workers in garment factories fairly, as it does for the sustainability of soy production on deforested land.

The small matters of Brexit, the demise of the high-street and the increasing adoption of automation on top of that!

And what have been the biggest opportunities?

Ecommerce. To have an effective, efficient online fulfilment platform has been integral over the last six months for many businesses to keep trading. Town centres are quieter than ever and the ONS data shows that the lockdown and social distancing is encouraging an even greater proportion of spend to shift online. Operations that have invested in warehouse technology to reduce the reliance on labour have been well placed to benefit from the pandemic and I think a lot of companies are playing catch up.

What is the biggest priority for the Supply Chain industry over the next twelve months?

I think there are going to be two priorities. Firstly, keeping the operation going through the pandemic and maintaining social distancing in the workplace to prevent outbreaks in the operation. The financial and even reputational impacts of an operation going down because of an outbreak could be significant.

Secondly, the supply chain industry still doesn’t know what terms the UK will be trading on after we exit the Brexit transition period and there isn’t a lot of time for the industry to prepare for whatever the future looks like. 

What technology is going to have the biggest impact on the market this year?

It seems that the UK is facing into a few different economic headwinds at the moment, so I think any technology that takes cost out of an operation quickly is going to do well. That could be good for anyone offering Robots-as-a-Service (RaaS), which will probably suit Autonomous Mobile Robots (AMRs).

In 2022 we’ll all be talking about…?

How good or bad drone deliveries work, I imagine. It’s one of those supply chain developments that will really make an impression on the general consumer and probably create a bit of a buzz. It will be interesting to see who is driving the technology; the traditional parcel carriers, who have been growing rapidly over the last decade and developing their infrastructure or the tech companies. Will it be a VHS vs Betamax moment or not?

Which person in, or associated with, the Supply Chain industry would you most like to meet?

I’m always interested in meeting anyone with an interesting perspective or challenge that needs to be solved. As I’ll be attending the Total Supply Chain Summit in October, I’m hoping to achieve just that.

What’s the most surprising thing you’ve learnt about the Supply Chain sector?

Last year I attended a conference and the audience were asked to raise their hand if they deliberately set out on a career in supply chain. Only 10% of the room had!! It’s such a fast-paced and exciting area to work, I am always surprised by the lack of pathways from education into our industry, when compared with finance or marketing.

You go to the bar at the Total Supply Chain Summit – what’s your tipple of choice?

I’m a tee-total so it’s usually a Coke!

What’s the most exciting thing about your job?

Working in projects always brings great variety but as a consultant, you tend to see even more as you get to work across different businesses and sectors.

And what’s the most challenging?

Starting new projects are always exciting but it’s also very hard to absorb so much information so quickly. It’s like continually starting a new job! But I wouldn’t swap it for anything else.

Peaky Blinders or Stranger Things?

Neither, my favourite Netflix show is Bojack Horseman or Better Call Saul.

How COVID-19 has impacted global supply chains

By Nick Pike, Chief Revenue Officer, Vizibl

The impact of COVID-19 has been swift and devastating to those directly affected. Not just from a health perspective, but also for businesses who had to promptly close their doors as the country went into lockdown, particularly those in hospitality and retail. And as we now slowly emerge from these more stringent controls, the indirect consequences of the pandemic on global systems and networks, specifically global supply chains are also being felt.  

The spread of COVID-19 has affected operations globally in ways that are difficult to model and assess. Many of the affected countries are at the heart of global supply chains and as a result have witnessed depleting (or idling) stock; the net result is that many organisations have simply not been able to meet their contractual obligations on time. 

This is because multiple areas have been disrupted.  For example, suppliers have been unable to fulfil orders due to labour shortages, including shortages of drivers.  There have been transportation restrictions, and restrictions moving from one country to another.  This has resulted in stalled production, unfulfilled orders, slower shipments, stock shortages, incomplete deliveries, inflated costs, and less products on the shelf at the retailer. 

Manufacturing issues in China 

Additionally, it would be remiss to talk about issues affecting global supply chains, without talking about China. Earlier in the year, analysts warned that manufacturing activity in China would face significant disruption due to COVID-19.   For example, Apple has 10,000 direct employees in China with almost all the company’s flagship iPhone products being made in the country. Likewise, US car manufacturer, Ford relies on nine auto manufacturer facilities in China. Indeed, auto manufacturers are one of the industries that have been hard hit, due to parts shortages. 

Over the years, China’s share of global exports has more than doubled from just under 6% in 2003 to nearly 13% in 2018 according to OECD and World Bank data.  However, in the past where China has been viewed as only producing low-end, low-value products, but today China is in the supply chains of many of the high-end products  meaning the impact on the supply chains has been and will continue to be significant. 

Similarly, a slowdown in China affects the global economy. The country accounted for just over 4% of global GDP in 2003. By 2018, it accounted for nearly 16%. The global supply chain is not just vulnerable to China’s position as the world’s largest producer of goods and parts, but also as the world’s second largest consumer. Weaker demand from China further complicates the impact on global supply chains. 

Diversification and resilience will be the watchword going forward 

Containment of the virus is important for disrupted supply chains as they can only return to normal once it stops spreading. This will only really happen once a vaccine has been developed.  While COVID-19 is not the first public health emergency to impact global networks, its severity highlights a need for greater supply chain diversification and resilience. Natural disasters similarly prove this point: the 2011 Tōhoku earthquake in Japan exposed the dependence of global motor vehicle companies on auto parts manufacturing in the country.  

The need to diversify supply chains and build in greater resilience will be critical for long-term survival. Greater visibility into complex supply chain activity will equip organisations with the knowledge to reduce supplier exposure and risk, which will help them vary their supply chains.  New technologies are emerging that allow conglomerates to manage partnerships with a wider range of suppliers, from global corporations to smaller start-ups. Data shows that supplier diversity not only helps to reduce costs but also enables organisations to innovate and deliver more value to end users. 

A growing number of organisations are now incorporating diversity and visibility into their wider supplier collaboration and innovation programmes.  There is a greater focus on regional suppliers to mitigate risk. COVID has exposed the fragility of long distance, international supply chains. In addition, governments are starting to demand local sourcing, for example drugs and PPE. 

So, what tips would we give to organisations both now and in the future. In the short-term as we start to emerge from COVID-19 organisations should look to: 

1.     Create cross-functional and/or cross border SWAT teams to deal with supply chain shortages 

2.     Build additional buffers of inventory and raw materials 

3.     Develop expected-case and worst-case scenarios 

4.     Explore additional delivery routes and how they can source locally 

5.   Explore technologies and partners who can help them to diversify and innovate throughout their supply chain.  

Digitally transforming your supply chain 

Understandably, most companies are currently focused on the near-term, with their strategies addressing the COVID-19 situation as a temporary problem. But, if businesses look at the current situation strategically and align smartly, it will certainly help to propel future growth and competitive advantage for many years to come. For example, this could help organisations to digitise and enhance faster decision making and execution.  

As a result, organisations will gain better end-to-end supply chain visibility.  By collaborating more with their suppliers, they could build new products, services and innovations to deliver more value to their customers. Companies can develop better digital capabilities that enable better sourcing, collaboration, and supplier management.  Finally, this could enable more eCommerce and a better balance with more traditional operations combined with online channels to deliver an omni-channel approach. 

The value of global trade insights in navigating COVID-19 supply chain disruptions

By Mark Segner, VP Global Sales, Descartes

The Coronavirus pandemic has exposed the fragility of the modern supply chain, as companies struggle to acquire the products and raw materials needed to keep revenue flowing. With many businesses relying heavily on a limited number of trading partners, many located in hard-hit areas like China, the scale of the supply chain disruption has been a wake-up call. 

Pummeling the Bottom Line

COVID-19 shockwaves are being felt around the globe, with one in six companies adjusting revenue targets downward. Figures from the Office of National Statistics revealed that 72% of businesses in the UK reported that they are exporting less than normal, and 59% of reported that they are importing less than normal due to the impact of Coronavirus. 

According to a survey by the Institute for Supply Management (ISM), nearly 75% of companies reported supply chain disruptions due to the COVID-19 outbreak, with lead times doubling and delays compounded by a shortage of air and ocean freight options. A recent survey of Descartes customers also found that 31% are looking for alternative suppliers, and their usage of tools to find alternative supply sources has increased by 21%. Given the sheer scale of the disruption, many different types of businesses are unlikely to have a plan in place to address supply disruption from China and other countries.

Re-thinking Sourcing

With the global supply chain often more complex than many comprehend, very few organisations can trace their supply chain beyond their Tier 1 suppliers, and many are uncertain of the location of their second and third-tier suppliers. To fully understand supply-side risk, Deloitte notes that advanced digital solutions are “generally required to trace supply networks reliably across the multiple tiers of suppliers.” Indeed, manufacturers, retailers, and distributors are in uncharted waters as they race to identify new supply sources.

Global Trade Insights Guide the Way

With the daunting task of navigating the rapidly changing global trade landscape, where should your organisation begin? Actionable global trade data is your lifeline for supply chain resilience. In the face of COVID-19 disruptions, global trade intelligence solutions can help businesses swiftly find alternative suppliers in a concise three-step process:

  1. Identify potential sources; Know the market to make better sourcing decisions

A sophisticated global trade intelligence solution can assess market dynamics, revealing the impact of both the Coronavirus and recent tariff changes on specific commodity imports and exports by mapping the global flow of shipments and identifying recent volume shifts. Previous shipment volumes reveal which suppliers have capacity for your sourcing demands, while bill of lading (BOL) data helps you easily identify names, addresses, and contact details for each supplier.

2. Analyse costs; How much will it cost to do business?

Given the slowdown many companies are facing during the pandemic, curtailing costs is top of mind. Global trade data technology can analyse potential suppliers to calculate the total landed cost of doing business with them, including duty spend, variable and fixed taxes, shipping costs, and insurance costs. With international trade insight, businesses can also identify favourable Free Trade Agreements (FTA) or other preferential mechanisms to help maximise margins.

3. Vet potential trading partners; Limit liability and brand damage

The vetting process is vital for avoiding exposure to sanctioned parties but, given the fluidity and sheer size of restricted party lists and the rabbit hole of shell companies, obtaining an accurate view can be extremely challenging.

With a global trade intelligence solution, businesses can quickly screen potential suppliers to determine if the country or vendor are subject to any restrictions or sanctions from the government. Compliance vetting is crucial for avoiding fines and penalties but also ensures your company brand remains untarnished. 

Beyond COVID-19

Access to actionable trade insight is critical to developing a proactive supply chain response to the coronavirus and emerging from this pandemic as intact and profitable as possible. Sophisticated global trade intelligence solutions use shipment data from across the world to model trade flows globally, helping companies rapidly identify, analyse, and vet new sourcing locations. With the right approach, businesses can mitigate the impact of COVID-19 on supply chains and also strengthen and add resiliency to their logistics operations going forward.

Survival, resilience and growth: A report on the UK’s economic recovery

As lockdown restrictions around the UK are easing, businesses are taking steps on the road to recovery. The coronavirus (COVID-19) pandemic has impacted companies of all sectors and sizes, so the chance to revive operations and look to the future is a welcome shift for millions of small and medium-sized enterprises (SMEs).

While many businesses haven’t been able to function as normal due to the pandemic, and tough decisions have been made, that hasn’t stopped them from adapting.

From finding new markets to pivoting and offering new products and services, businesses have sought to find fresh opportunities to reach customers and keep moving.

But what does the future look like for SMEs in the UK? What challenges will they face and what steps will they take to overcome them?

These questions and more are answered in a new research report by Sage – Survival, resilience and growth: Placing small businesses at the heart of the UK’s economic recovery.

Key take always include-

  • Resilience is going to be as important as growth to the recovery. Not all SMEs, only 54%, are prepared for further potential shocks or challenges, including cash flow/liquidity problems, disruptions in the supply chain, and legal and regulatory changes.
  • 80% of businesses think that technology will be very or somewhat important in restarting their business.
  • 33% of businesses are actively planning investment in technology.

Click here to download the full report.

Making tomorrow a better world in logistics

By Michel Waterschoot, Sales Manager – Southern Europe, Northern Africa, Middle East, Descartes

The health crisis that we are currently experiencing, as well as its financial and economic consequences, should not mean we lose sight of the opportunities that can be leveraged today to help businesses continue growing and developing. This situation should be used as an opportunity to identify weaknesses and design innovative solutions, sharing feedback that is relevant for everyone involved so we can better prepare for the future. 

Maintaining levels of satisfaction

In food distribution, volumes have exploded. With people confined to their homes, consumers have used ecommerce for their daily shopping more than ever before. For some players in the sector it was suddenly necessary to absorb exceptional levels of increased demand. However, it comes at a cost, as businesses must continue to satisfy long-standing customers – in terms of delivery times, slots, product availability – while meeting the demand of new and existing customers.  With this increased and unprecedented influx of orders, demand simply cannot be met under the same conditions as before. The customer relationship is therefore called into question. The retailers’ objective is, if this type of critical situation was to reoccur, they need to be able to control the level of service delivered, in a way that reduces the risk of losing historical customers while attracting new ones. 

The health crisis can lead to accelerated digitalisation

Another shift that we have been able to observe in connection with the COVID-19 crisis is that some companies who were until now very reserved about the use of new technologies, are now reconsidering their options. To limit the contagion of the disease, governments around the world have encouraged the rollout of health measures that reduce contact between people, but also the exchange of physical documents, such as proof of delivery, CMR, invoices and more. Companies therefore had to put in place alternatives to paper regardless of their concerns, for instance with delivery drivers. Their route planning was turned upside down and many were no longer in their usual geographic area as drivers had to stretch capacity to meet the consumer demand. Without their usual paper routing processes they had to use the GPS of their mobile phone to find their way in some cases. In the future, they will undoubtedly be less reluctant to use dedicated technological tools adapted for this, such as smart route planning software. This health crisis may therefore have helped to move along the digitalisation of processes that are still too often paper-based.

Combining deliveries offers benefits for all

In transport, there were around 40% fewer heavy goods vehicles (HGVs) on the roads in April and May. Logistics managers must respond to delivery requests even if the volumes are insufficient and the trucks have to run with a light load or empty on certain routes. This can increase the average cost of delivery for the transporter, by up to + 73% per tonne / km in long distance transport. These figures clearly argue the case for combining delivery efforts and collaboration between couriers, transporters and shippers alike to pool personnel, stock, storage facilities and more. These initiatives have so far been limited across the UK and France for example, no doubt because of the problems around co-responsibility but also for cultural reasons. However, the current situation will help to change mentalities on this, and the promise of the potential benefits that can be leveraged will override these initial concerns. This would be good news in terms of global optimisation for companies, but also in terms of ecological impact.

The importance of good transportation management

Many European shippers subcontract their transport of goods but given the current climate, one could wonder if the companies which control their transport of goods do better than those which entrust it entirely to service providers. With a fleet of its own, shippers who keep control of their flow of goods, through specific contracts with their carriers, get more responsiveness and flexibility, precious in difficult times such as these, especially with regard to the last mile. Shippers can therefore now question their fleet management and find the right balance with their service providers and internal teams in order to get a balance and a transport management system that provides them with the visibility and capabilities they need.

Faced with this critical situation, many companies will encounter or are already experiencing difficulties, potentially jeopardising their activity. However, it’s clear this crisis can also generate positive results by rethinking processes that were undermined during this period. The impacts on the sector are, and will be, numerous, putting even more tension on each of the logistics links. We must observe and analyse the present to make tomorrow a better world.

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