3PL/Logistics

Both! say supply chain experts While cost cutting is a necessary evil, failure to invest in supply chains will lead to future problems

According to five leading supply chain experts speaking at the sixth annual SCALA Logistics Debate, companies should not be focusing purely on cost cutting within the supply chain

A recent survey conducted by SCALA showed that 62% of the companies surveyed indicated that their trading volumes were up Only 18% said they had fallen Despite this there was a massive reduction in capital investment, with 54% of companies reducing capital expenditure "This reflects lack of confidence and caution by both the consumer and business," said John Perry, managing director of SCALA

Beth Cauldwell, director of supply chain recruitment company Snowden Tate, pointed out if the industry fails to invest in people, there is a danger that it will revert to cost cutting supply chains "The effectiveness of supply chains depends on the effectiveness of its people"

Steve Eastham, operations director at Tetley Tea, said that, in order to determine what to do in current conditions, it was essential to link the objectives of people in the supply chain to the business strategy "We should also look at tying in cost reduction to environmental improvement - we are increasing to a real 95% vehicle cube utilisation That means fewer miles and fewer vehicles - and that is good for our costs and good for the environment Make the environment part of your strategy - and then make it part of our team's objectives"

DHL Supply Chain managing director John Boulter said that investment is one extreme and cost cutting is another, and they are not mutually exclusive "Customers expect us to invest in technology which is smart and efficient; allows customers to share assets; show visibility of waste in order to eliminate it We should invest to achieve these goals - and look for a reasonable payback" He added that environmental issues are also an area for investment

Peter Surtees, Kimberly Clark's director of European Supply Chain consumer products, said that the reality in today's trading environment is that more than two thirds of consumers are looking for deals and promotions "Take out as much excess costs as you can, but only with an eye to the future Invest wisely and make your cash work harder There are currently excellent investment opportunities - for instance in warehousing facilities where there are deals with up to three years rent free Now is the time to train your people Many of them do not understand what a recession is"

He also pointed out that investment in Software as a Service (SaaS) solutions can reduce IT spending by eliminating a certain amount of capital investment

Senior partner at SCALA Consulting, John Potter, believes that consumer behaviour has changed significantly "There is a lot of room for improvement in our supply chains I doubt if many are fully optimised, whether we look at internal or extended supply chains There is much room for improvement in S&OP and supply chain systems and processes There are huge opportunities to improve - but do it very intelligently and invest intelligently to improve margins"

John Boulter agreed that there was a lot more scope for shared user operations and a lot more to be done "The main activity at the moment is in shared transport Suppliers find it acceptable to share deliveries in white vehicle fleets We also have several consolidations centres around the country - the model works but we must attract more customers"

However, Potter believes that for collaboration and shared operations to truly work and maximise benefits, customer orders needed to be consolidated at the point of demand