Improve your supply chains and logistics.

In June 2011, the CEO of a multi-national food company described the Australian food market as the ‘worst in the world’. The main reason, he said, was the dominant position of the two major grocery retailers.

He noted that the two companies were in strong price competition and replacing some branded products with their own-brand products. Additional factors in the Australian economy were also identified to justify closing some factories and importing products. His comments received wide publicity, but what of the outcome?

This past week, a senior executive of the company said that through 2012 there had been a positive change. There are three reasons. Relationships with the retailers has improved; customer service is now strong because the planning process had been overhauled and to date, this year is a record in respect of supply chain productivity. Note the lack of comment about changes at the customer end. Have there been any?

Over twenty years ago I had a consulting assignment to help this company improve their planning systems. But as we know, priorities change as management changes; what is important this year is not favoured the following year. The sad situation is that over the years, management did not realise that supply chains and logistics do not go away; they remain front and centre of the business, whether management takes notice or not.

When things go wrong it is natural to blame something or someone else, as it takes the ‘monkey off your back’. If you have customer service problems with customers, the first step is not to blame them. Instead, review and analyse your supply chains and how logistics is managed – and remember that logistics is far more than trucks and warehouses!