Transforming supply chain resilience with nearshoring strategies

When the doors of Marylebone’s Crazy Piz­za restau­rant reopened in July, the aro­ma of warm piz­za dough greet­ed cus­tomers upon arrival as they pre­pared to enjoy a slice of Italy in Lon­don at the end of England’s sev­en-month lock­down. 

But while the sights and smells were the same, the accents were very dif­fer­ent. The restaurant’s staff, from senior man­age­ment to chefs and wait­ers, had pre­vi­ous­ly con­sist­ed of Ital­ian, French and Greek nation­als, who had moved to Lon­don long before the pan­dem­ic.

But a com­bi­na­tion of Covid-19 and post-Brex­it immi­gra­tion reg­u­la­tions saw thou­sands of EU work­ers return home, leav­ing Crazy Piz­za oper­at­ing with just 20% of its usu­al work­force. UK agency employ­ees have since plugged some of the gaps, while thou­sands of oth­er restau­rants across the coun­try have also been starved of labor. 

Three months on, restau­rants, retail­ers, meat pro­cess­ing plants, haulage com­pa­nies and many oth­er sec­tors are all com­pet­ing for the same pool of so-called ‘low skilled’ work­ers on entry-lev­el wages. This has result­ed in staff short­ages at every step in the sup­ply chain, emp­ty shelves at super­mar­kets and revised menus for restau­rants fac­ing impor­ta­tion delays.

In the short term, com­pa­nies must con­vince a dwin­dling labor pool of UK-based work­ers to take what have tra­di­tion­al­ly been seen as unde­sir­able jobs. “In the UK, the per­cep­tion is that a restau­rant job isn’t a job for life, where­as in Europe it’s real­ly respect­ed,” says Lara Har­ris, cor­po­rate sales direc­tor of Crazy Pizza’s par­ent com­pa­ny, Bil­lion­aire Life.

The haulage sec­tor is fac­ing the same chal­lenge. “In the first quar­ter of this year, 55,000 dri­vers aged 45 and over left the indus­try,” says Kier­an Smith, CEO of HGV and LGV recruit­ment agency Dri­ver Require. “They left because of appalling con­di­tions, anti-social hours and low pay. In the UK, we have third world wash­ing and park­ing facil­i­ties for dri­vers.”

Cash could pro­vide a short-term solu­tion. Wait­rose has increased deliv­ery dri­ver salaries up to £53,780 per year – a rise of 7% – while a sur­vey by recruiter Indeed showed that wages in the hos­pi­tal­i­ty sec­tor rose by 2.7% in July alone, up to £9.75 per hour. In the first three months of 2021, that rate stood at £9.25 per hour and just £9 at the start of 2020.

The haulage sec­tor is hope­ful that attrac­tive salaries will tempt some of the UK’s 330,000 HGV license hold­ers to return to the indus­try or encour­age unem­ployed bus and coach dri­vers to obtain HGV licens­es. It’s also con­sid­er­ing an adver­tis­ing cam­paign, sim­i­lar to that employed by the army, to con­vince young peo­ple and women to pur­sue a career in logis­tics. 

But retain­ing work­ers long term and avoid­ing los­ing staff to the high­est bid­der will require more than just cash. “Improv­ing road­side facil­i­ties won’t hap­pen overnight, but you need to give peo­ple hope,” says Smith. “The gov­ern­ment can do this by com­mit­ting to a plan of action and ded­i­cat­ing a bud­get to improv­ing work­ing con­di­tions for dri­vers.”

At Crazy Piz­za, the focus is on opti­mis­ing work­place cul­ture. “Those com­pa­nies that are pro­vid­ing the desir­able envi­ron­ment and con­di­tions for staff are win­ning the best staff right now,” says Har­ris. “That’s made us raise our game and make sure that we’re pro­vid­ing the best pos­si­ble con­di­tions and pay. You have to look after your staff to retain them.”

Com­pa­nies are also pur­su­ing inno­v­a­tive solu­tions to make their sup­ply chains more resilient. In August, Co-op chief exec­u­tive, Steve Mur­rells, revealed the com­pa­ny is retrain­ing super­mar­ket staff as lor­ry dri­vers. Trans­port col­lab­o­ra­tion with com­peti­tors is anoth­er poten­tial avenue. “Your best part­ner could well be your com­peti­tor, because you’re deliv­er­ing to the same cus­tomer,” says Rob Wright, a logis­tics and sup­ply chain con­sul­tant at Scala Con­sult­ing. 

Nearshoring is also help­ing to short­en sup­ply chains, reduce deliv­ery times and min­imise stock short­ages. “We source ingre­di­ents from all over Europe but we’ve realised we can get a lot of our fruit, veg­eta­bles, meat and even wine from the UK,” says Har­ris. Retail­ers are also mov­ing away from sole sup­pli­er agree­ments. “Dual-sourc­ing reduces risk and gives your sup­ply chain more resilience,” adds Wright.

Hav­ing learned the harsh lessons of the last 18 months and with Christ­mas on the hori­zon, retail­ers and restau­rants are now hold­ing more stock and increas­ing lead times, with the days of just-in-time inven­to­ry strate­gies a thing of the past. “We used to order ingre­di­ents and they’d arrive in two days and alco­hol would take just 24 hours,” says Har­ris. “Now we have to order two weeks in advance and ensure we order a lot more stock.”

But not all goods can be sourced from the UK. Com­pa­nies still need to min­imise delays fur­ther down the sup­ply chain. Tech­nol­o­gy firm Red­Cloud uses AI soft­ware to help farm­ers, small dis­trib­u­tors and mer­chants use data to pre­dict sell­ing pat­terns and spot con­sumer trends so that they can ful­fill their orders. “We want farm­ers to become more prof­itable,” says Red­Cloud CEO Justin Floyd. “If they can improve their mar­gins, they can grow more prod­ucts and meet fluc­tu­at­ing demand, which keeps goods mov­ing through sup­ply chains.”

In response to Brex­it and the pan­dem­ic, a host of UK retail­ers have also opt­ed to digi­tise their sup­ply chains to max­imise vis­i­bil­i­ty across their entire net­work of sup­pli­ers. This has enabled them to view data in real time and make swift deci­sions to dri­ve sus­tain­able improve­ments in lead times, deliv­ery reli­a­bil­i­ty, and inven­to­ry reduc­tions. 

Dig­i­tal sup­ply chain com­pa­ny Core works with Asda, Pri­mark, M&S and a host of oth­er high pro­file UK retail­ers. The company’s CEO, Ben Punch­er, has wit­nessed the dig­i­tal rev­o­lu­tion first hand: “Those brands have been able to keep their sup­ply chains mov­ing effi­cient­ly because they decid­ed very ear­ly on to digi­tise their sup­ply chains and do away with man­u­al, old-fash­ioned spread­sheets that slow down deci­sion mak­ing.”

But sce­nario mod­el­ling soft­ware could be the secret to plan­ning for crises long before they arise and make sup­ply chain issues a thing of the past. Soft­ware can help com­pa­nies pre­dict the poten­tial finan­cial impact of future dis­as­ters, for exam­ple cli­mate change, or the envi­ron­men­tal con­se­quences of changes to their sup­ply chains.

As the uncer­tain­ty of win­ter approach­es and com­pa­nies con­tin­ue to opti­mise their sup­ply chains in response to the chal­lenges of the pan­dem­ic and Brex­it, it seems that cash, digi­ti­sa­tion and pre­dic­tive tech­nol­o­gy will be the defin­ing fac­tors that dic­tate who sur­vives.