Retailers must do their bit to help control supply costs

G ood availability of stock and a low-cost source of supply are fundamental to successful retailing, so the efficiency of the supply remains an ongoing issue for the independent trade.
Without a cost-effective supply chain behind them, retailers' opportunities to invest in their offer or to grow their margin will always be restricted. But with increasing shopper demand for fresh, chilled and locally sourced products, the distribution equations are getting more complex. And with fuel prices on the increase, the answers are not necessarily cheap.
That's why finding the most effective solution is key, and much hard work is going on to maximise efficiency. Musgrave Retail Partners is trialling evening deliveries, AF Blakemore last year offered improved terms on key lines as long as retailers agreed to a review of their delivery schedule, while delivery services from traditional cash and carries are commonplace.
Nisa dedicated an entire discussion group session at its 2007 conference to the subject and tasked executives and members to look into possible improvements that could be gained from changing the frequency and time of deliveries, increasing the number of regional warehouses, and collaborating with suppliers on mutually rewarding synergies such as backhauling.
Last autumn the group introduced a controversial low-order/no-order levy system which demanded a payment from retailers who ordered in low quantities, or failed to place an order at all.
Many smaller retailers cried foul, but Nisa management pointed out that thousands of deliveries every week were being missed and that these resources could be better invested in lower case prices.
Local sourcing provides another challenge for distributors, but many wholesalers and symbol groups are finding a solution through regional networks and local hubs, central billing solutions, or joint venture activity such as the new distribution operation set up last year by AF Blakemore and Heart of England Fine Foods.

Scott Wharton, Supply Chain Director, Musgrave Retail Partners

"A number of options exist for retailers to improve supply chain efficiency. Frequency and time of delivery can reduce costs across all elements of the chain. As much as 50% of the total cost of moving a product from supplier to shelf can be in-store, so optimising the delivery pattern to coincide with quieter times of day is a simple example of how we can reduce overall costs.
"Within Musgrave GB, we are currently trialling evening deliveries. Historically, stores wanted deliveries only in the morning, but now an increasing number of retailers are seeing the benefit of receiving goods the evening before their usual delivery time - meaning reduced lead times, improved availability, reduced backroom stock and waste, and greater staff utilisation across the day. Initial results have been very positive.
"We are also implementing new supply and distribution management systems across the business this year, and a real focus for us is to simplify placing of orders and to provide real-time availability information for our retailers."

Richard Inglis Runs three Spar stores in Southampton

"We get three dry deliveries a week and three chilled, so we get one every morning except Sunday. Spar is usually very accurate with its delivery times so we can staff accordingly. We used to get the dry and chilled deliveries on the same day and it was awkward, but as we've grown Spar has adjusted with us. Morning deliveries work best for us because we're in the city, but I know some Spar retailers who prefer evening drops.
"We've invested more than £20,000 in technology in the past year and run the full version of SparPos.
"The technology creates a suggested order which is good for about 90-95% of stock, but you always need to apply a bit of common sense."