Tale of three sectors

Many of the issues fac­ing today’s sup­ply chain pro­fes­sion­als are com­mon across indus­tries and sec­tors. Every organ­i­sa­tion has to cope with var­i­ous degrees of sup­ply chain-relat­ed risk and ensure they are sourc­ing respon­si­bly. Buy­ing and deliv­er­ing prod­ucts at the right price is essen­tial across all sec­tors, while clos­er sup­pli­er rela­tions make sense in most indus­tries. Yet there are dif­fer­ences. The impact of online shop­ping and the deliv­ery of these goods have chal­lenged the retail sec­tor, while oth­ers expe­ri­ence pres­sures around cost, risk or lead times. The impact of new tech­nol­o­gy, big data and the inter­net of things will also vary.

RETAIL

The bat­tle to cope with mul­ti­chan­nel shop­ping con­tin­ues to dom­i­nate the agen­da in the retail sup­ply chain. “It’s essen­tial for retail­ers to have inven­to­ry vis­i­ble and acces­si­ble via all chan­nels, and that their sup­ply chain capa­bil­i­ty is aligned to the front-end online expe­ri­ence,” says Jonathan Var­don, glob­al head of retail at UST Glob­al. Click-and-col­lect is anoth­er poten­tial prob­lem, he adds, with almost a third of peo­ple expe­ri­enc­ing issues locat­ing prod­ucts ordered online when they arrive in-store.

But online shop­ping may have reached a peak in gro­cery retail­ing, says Pro­fes­sor David Grant, of Hull Uni­ver­si­ty Busi­ness School’s Logis­tics Insti­tute. “This has always been a com­ple­men­tary chan­nel for super­mar­kets,” he says. “They aren’t recov­er­ing their deliv­ery costs, and new and more forms of unat­tend­ed deliv­ery will be required to meet con­sumers’ needs to obtain the goods if they are not at home to receive them.”

The retail sec­tor, though, is one that can ben­e­fit the most from the trend towards the inter­net of things (IoT), says Sarah Eccle­stone, direc­tor, enter­prise net­works and IoT, at Cis­co UK and Ire­land. This could include pro­vid­ing cus­tomers with infor­ma­tion about a par­tic­u­lar item’s prove­nance to allay con­cerns around where it has come from, as well as help­ing retail­ers to analyse shop­pers’ habits and plan their sup­ply chains more effec­tive­ly.

CONSTRUCTION

A lack of vis­i­bil­i­ty in the pipeline of work is a par­tic­u­lar chal­lenge in the con­struc­tion sec­tor, says Richard Sel­by, direc­tor at Pro Steel Engi­neer­ing. “With more notice, sub-con­trac­tors can work more effec­tive­ly by arrang­ing train­ing for spe­cif­ic jobs and increas­ing or decreas­ing the work­force as need­ed,” he says. “This pre­vents wast­ed time and mon­ey, and would enable the whole process to run more smooth­ly.”

Cash flow is also a peren­ni­al prob­lem and is often caused by lack of plan­ning, says Gavin Swindell, man­ag­ing direc­tor of REL, a divi­sion of the Hack­ett Group. “It’s the clas­sic sce­nario of let­ting the water run out of the tank to reveal rocks that were always there,” he says. “World-class con­struc­tion com­pa­nies are pri­ori­tis­ing cash cre­ation through their own inter­nal oper­a­tions by opti­mis­ing the cash con­ver­sion cycle or the length of time it takes to con­vert resource inputs into cash flows.”

In some parts of the sec­tor, such as ener­gy, oil and gas devel­op­ment, greater use of automa­tion and soft­ware is hav­ing an impact, in the wake of dis­as­ters such as the BP oil spill in the Gulf of Mex­i­co. “Smart sys­tems are grad­u­al­ly infil­trat­ing the sup­ply chain and per­form­ing tasks pre­vi­ous­ly car­ried out by humans,” says Chris Mills, chief tech­nol­o­gy offi­cer, Europe, Mid­dle East and Africa, at cloud busi­ness Piv­otal.

PHARMACEUTICAL

The pre­cise require­ments of mak­ing and trans­port­ing drugs cre­ate a num­ber of chal­lenges in the phar­ma­ceu­ti­cal sec­tor. “Inves­ti­ga­tion­al med­i­c­i­nal prod­ucts and the entire sup­ply chain are cost inten­sive,” says Jens Mat­tusch­ka, vice pres­i­dent, world­wide oper­a­tions, clin­i­cal tri­al sup­plies and logis­tics, at PAREXEL Inter­na­tion­al. “Sup­ply chain man­agers need to imple­ment con­trol mea­sures, such as intel­li­gent stock man­age­ment and just-in-time labelling, to reduce over­sup­ply and keep costs in check.”

The sec­tor has not helped itself, though, with adver­sar­i­al rela­tion­ships between phar­ma­ceu­ti­cals and their sup­pli­ers, says Hugh Williams, man­ag­ing direc­tor at Hugh­en­den Con­sult­ing. “Phar­ma­ceu­ti­cal com­pa­nies are renowned for being tough, unrea­son­able nego­tia­tors,” he says. “Many logis­tics providers com­plain about not being able to rec­on­cile demands for low-cost ser­vice and high cre­ativ­i­ty and inno­va­tion.”

Also, the sec­tor has proved itself reluc­tant to embrace new man­u­fac­tur­ing tech­niques which could make it more effi­cient, says Robert Har­ri­son, phar­ma­ceu­ti­cal indus­try man­ag­er at COPA-DATA. “If you take a look at oth­er indus­tries, in com­par­i­son the phar­ma­ceu­ti­cal indus­try is lag­ging behind,” he says. “How­ev­er, the phar­ma­ceu­ti­cal indus­try is quite dif­fer­ent; they man­u­fac­ture very tox­ic sub­stances which go inside the body. High qual­i­ty and con­sis­ten­cy have always been the focus, with strict con­trols and val­i­da­tion in place. This makes change hard and cost­ly.”

RETAIL

CONSTRUCTION