David Hesketh explains how UK businesses can benefit from better supply chain management and visibility.
It’s a simple analogy and one that many of us can relate to. Check in at the airport, and one of the many questions you are likely to be asked is, ‘did you pack this bag yourself?’ There are strong similarities between this and how we manage information about cargo being moved in the international supply chain.
I have spent 40 years working in all areas of international supply chains and despite major advances in technology and communications, a UK buyer does not know what their order contains until the container arrives and it is unloaded. And, all of that is down to the lack of good quality data.
In the past, the international trade process was relatively simple. The buyer would travel to another country, identify the goods they wanted, pay for them, load them onto a ship, return to their own country, unload them, pay the customs duty and sell them.
When the buyer stopped travelling to buy the goods and there was no face-to-face transaction, international commerce became more complicated. Coupled with the fact that globalisation during the last 30 years has seen many companies put productivity into developing economies and supply chains have increasingly lacked certainty and clarity from a security, legal and commercial point of view.
With a lack of accurate data, the regulatory authorities do not get the information they need to carry out the risk assessments and create efficiencies. This lack of visibility makes supply chain costs unclear, profit margins unpredictable and the price to the end consumer ambiguous. Research has shown that data inaccuracy among the UK’s top five retailers and their suppliers is costing as much as £1.4billion a year.
For major multi-national brands that can afford to implement their own in-house quality control procedures, these risks can be mitigated but for other national UK retailers and SMEs without those levels of resource, the losses can be significant.
So how can we make things better? The most important part of the supply chain is the understanding between the ‘buyer’ and the ‘seller’ and to keep the items safe in the supply chain.
Going back to my airport analogy at the beginning of the blog, we need to start by asking the people who packed the container to input accurate information and make them accountable.
So, how can we make this happen?
As part of my work, we are piloting a project to capture consignment data from UK trade through the Port of Felixstowe. Working alongside three, end-to-end UK supply chain management companies, Warrant Group, Uniserve and Metro Shipping, we are working on developing a 'single window' seamless electronic data pipeline to conform to standards set by the United Nations, the World Customs Organisation and the European Commission.
My work with Warrant Group in particular, has shown how I am not alone in my quest for reducing risk in the supply chain and delivering a pro-active approach to planning and data management. The company is already demonstrating to its clients how supply chain certainty and exact data can deliver accurate forecasting to create a whole range of benefits from improving warehouse operations to avoiding unnecessary costs such as wasted labour, detention and demurrage fees.
Thanks to this commercial expertise, I am pleased to report that we are now successfully supplying live data into the pipeline and shining a light on the huge benefits companies of all shapes and sizes could enjoy.
Growing the UK economy through international trade is essential and this new approach could make a real difference.
David Hesketh leads the UK Demonstrator Work Package 10 for CORE which seeks to demonstrate international supply chain visibility and security centred, initially on UK trade through the Port of Felixstowe. The project is funded under the European Commission Framework Programme 7.