Unlocking supply chain management

There have been some rapid shifts in the supply chain. From the comparative reliability of pre-2020, distribution and logistics has been marred by service bottlenecks, cancellations and skyrocketing freight costs, to name but a few issues. Despite the volatility, though, it’s not all doom and gloom. Rather, mastering the contemporary supply chain requires businesses to adapt and rethink their strategies. Much as we all work towards a ‘new normal’ in society, so too must we change how we approach doing business in the new supply chain.

Harnessing digital technology

There is not an element of business which hasn’t been touched by the trend of digitisation. Logistics and distribution company Neolink uses data sharing and its own digital platform, giving it a distinct edge when faced with a volatile supply chain. Neolink collates information such as AIS data — maritime vessel tracking — and collaborates with clients on real-time data sharing for factors like production and inventory. While the average transit time for a product moving from a factory to the Australian east coast is 24 and a half days, Neolink’s platform significantly improves on that. “The companies that work with us using our platform, providing the early data, get it here in 18 and a half days,” says Neolink co-founder Sean Crook. “That doesn’t sound like a massive difference but five to seven days in the supply chain world now is massively significant.”

Similarly, Officeworks has been employing digital systems to assist in smoothing the creases of the supply chain and to respond to increased consumer demand. Partnering with Körber Supply Chain, Officeworks is utilising an advanced warehouse management system (WMS), as well as automated picking and packing. According to a recent MHD Supply Chain article, the system “provides Officeworks with greater inventory control and has allowed the retailer to increase its delivery window for its next day and express delivery options.”

Supply chain diversification

When the pandemic first disrupted supply chains in 2020, it posed serious problems for plant-based food company Deliciou. “We used to ship our customer orders directly from Australia, worldwide,” says founder and CEO Kjetil Hansen. “At the end of March 2020 when covid hit and the planes stopped flying, we couldn’t ship to our customers around the world.” Combine that with disruptions to wheat production due to the war in Ukraine and droughts in the US, and Deliciou was experiencing real pain in the supply chain.

To combat the roadblocks, Deliciou opted to pivot, diversifying its supply chain. Hansen has set up warehouses in the US and Europe to service local markets, rather than relying on shipping everything from Australia. To insure against a shortage of raw materials, Deliciou has expanded its network of suppliers. “It’s really good to be able to say ‘Made in Australia from 100% Australian ingredients’, but it’s better not to go bankrupt,” says Hansen. “Just be careful not to put all your eggs in one basket – there are a lot of businesses that have gone under because they’ve had suppliers that just couldn’t supply. It’s really important to have diversity.”

Changing models: ‘Just in time’ versus ‘just in case’ 

At a high level, there’s a supply chain model that Crook now recommends to many of Neolink’s clients. It’s called ‘just in case’, and suggests that planning well in advance — holding more stock on hand than otherwise, for example —- can help when the supply chain knots up. The idea is a response to a previously-favoured philosophy, which is called ‘just in time’, in which stock is produced and shipped on a short turnaround. To do the former creates a larger cost upfront — and it’s not applicable for made-to-order supply chains — but the results are clear. 

“I’ve sat down with MDs asking questions like ‘Sean, are you saying we need to invest an additional 15 million dollars into stock?’ and I’m like, ‘Yes, if that means you don’t go out of stock, absolutely,’ Crook says. “We’ve had customers say ‘all of a sudden our orders have gone through the roof, we’re going to get as much as we can into inventory to ensure that Woolworths, Coles, Priceline, and other retailers don’t go out of stock’. And that has had a very positive impact.”

What do the experts imagine our next normal will look like? Watch our recent SmartCompany webinar in partnership with Officeworks, available on-demand now.

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