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Hilary Devey: New Year brings new challenges for retail supply chain

In Hilary Devey’s latest column for the Retail Bulletin, the TV business guru and founder of European palletised freight network Pall-Ex, examines some of the challenges facing the retail supply chain in 2014.

GENERAL MERCHANDISE

Hilary Devey: New Year brings new challenges for retail supply chain

The retail market in 2013 was been turbulent to say the least. Some months saw unexpected sales rises, whilst others saw figures plummet. The past twelve months have also sadly seen some well-known names exit the high street.

Whilst I believe this year will have a more positive note, I do not think we have seen the end of the high profile retail casualties. There will be an even stronger focus on the overall supply chain, increasing efficiencies and driving down costs wherever possible.

To get a comprehensive understanding of the market, it is important to understand the issues that will be facing both retailers and logistics providers over the next 12 months.

The challenges for retailers
The high street is perhaps more competitive than ever before. This creates an ever-increasing need for retailers to drive costs down and the supply chain becomes an obvious area for them to focus their attention.

Having a reliable logistics partner really is crucial. When retailers contact us, the most common request is certainly ‘a robust, just in time service’.

There is mounting pressure on retailers to hold less stock, which obviously makes financial sense. However, this means there is more pressure to source a fast and cost effective delivery service to replenish shelves without downtime.

Retailers continue to compete with each other when it comes to customer deliveries. Short lead times from order to delivery are becoming much more common, again increasing pressure to ensure that that the right logistics partner is in place. In a competitive market place, brand reputation is key, so they literally need to be seen to deliver on time.

The need for supply chain transparency is more important than ever and retailers need a logistics provider that is able to offer online proof of delivery. This is important for all parties involved, including the end customer. People expect immediate updates, a degree of accountability and the option to track and trace orders. To remain ahead, retailers need to be seen to offer this.

The challenges for logistics providers
Like all sectors, rising running costs remain an issue for hauliers. This makes it difficult to reduce rates for retailers. It is certainly not impossible, but it can be tricky.

There is certainly a lot more pressure on the retail supply chain than there was a decade ago. This is mainly down to much shorter lead times, as most retailers are holding less stock and the need for ‘just in time’ deliveries is increasing.

Restricted access to many retailers remains a problem, particularly in town and city centres where timed pedestrian zones are in operation. Many stores are also not open around the clock, resulting in a small delivery window when staff are present and shoppers are not restricted. Space can also be an issue and often pallets need to be split on location. We launched our own Retail Plus+ service to counteract this and I fully expect to see others following our lead in 2014.

London remains one of the biggest challenges for hauliers, particularly with the introduction of red routes, which make up about 5% of the road network in the capital. They are basically zones where you cannot stop, but deliveries are still required, so you are pretty much guaranteed a ticket. I do think there needs to be more cooperation between local authorities and logistics companies to avoid unfortunate situations like this, which are actually quite stifling for hauliers.

For the retail supply chain to work to its full potential in 2014, it is important that both parties understand the situation that they each face.

There is no doubt that it will be a challenging 12 months, but if both the logistics sector and retailers continue to work together and counteract some of the issues that I have outlined above, there is no reason why we should not be seeing a much greater degree of stability on the high street over the coming months.

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