‘More supply chain collaboration could generate £2.6 billion for grocery sector’

The grocery industry could potentially generate value of £2.6 billion if there was more collaboration in the supply chain.

Standardising pallet sizes and organising deliveries more efficiently could save millions, while improving on-the-shelf availability could generate more than a billion pounds in sales, the IGD Supply Chain Summit was told today.

Declan Hoey, head of customer logistics development at Mondelez International, said collaboration between firms was vital. “The potential value that’s unlockable is reason enough to start engaging with this,” he said.

Delegates were told standardising pallet sizes and maximising fill could save £1.5 billion, while if 10 per cent of deliveries went straight from factories to customer distribution centres it would save £80 million. If product availability increased by 1 per cent, it would generate in excess of £1 billion in additional retail sales.

Hoey said there were practical barriers to firms collaborating on these issues but there was also a human element. “We fear change and it’s easy to fall into the mindset of ‘it’s too difficult, it’s too complex, it will cost us too much’,” he said.

The conference was told it was more important to focus on these issues rather than worry about the impact of technology and “omni-channel retailing” on supply chains.

“For consumers in the future things will be simpler but for us in the supply chain it will definitely be more complex,” said Hoey.

“Rather than focus on actually trying to predict what 2030 will look like, why don’t we look at the issues that frustrate us across the industry today? We are losing value through that inertia by not tackling those issues.”

Delegates heard that Mondelez had global annual revenues of $35 billion (£22.14 billion), with $2.5 billion (£1.6 billion) generated in the UK and Ireland.

(Source:  http://www.supplymanagement.com/news/2014/more-supply-chain-collaboration-could-generate-ps26-billion-for-grocery-sector#sthash.yVGHTcUu.dpuf)