SUPPLY CHAIN STANDARD DECEMBER 2008
www.supplychainstandard.com
clearly labelled in every parameter, and there are
no last minute changes”. In practice, she
conceded, life is rarely like that, but the governing
principles must be to keep things simple, don’t
change things, have everything clearly labelled,
and get the data as accurate as possible as early
as possible. Then, you only need to know about
the exceptions.
Unfortunately “every customer, every store,
every order management system is different, so
you have to build up knowledge of the customer.”
This prompted Hough to ask “if the 3PLs need to
understand their customers so well, why do
customers insist on changing their 3PLs every
three years?” Possibly an unanswerable question.
David Gratton from Ligentia traced many of the
barriers to achieving the perfect order to the
sourcing process. “Buyers are driven by gross
profit. They place an order and expect us to
manage it through, but in reality the factory may
never have had any chance of manufacturing the
order acceptably in the first place. The buyer
books a cracking gross profit, and doesn’t notice
the airfreight charges. Getting the right source
involves looking at the whole supply chain, but
CHARLES TOYE
DIRECTOR,
TOYE & CO
“We had an order for
750,000 military jackets:
and at the last minute
they wanted to change
the size of the epaulettes.
That’s stressful.”
buyers and merchandisers are still typically sitting
in the commercial silo, with no idea about supply
chain. And even if we give our customers a list of
their ten worst vendors, they’ll still be placing
orders next year.”
So it’s about visibility, said Hayden Organ of
Kuehne + Nagel. “It’s still the case that the buyer is
king, and things haven’t changed: although in
many ways supply chain has advanced hugely, in
other ways we have gone nowhere. There is an
insanity where we are required to do the same old
things, and our customers expect us to come up
with a different and better result”.
Pessimistically, Organ said “I don’t think we will
ever achieve the perfect order, unless it’s more by
accident than by plan. Businesses need to focus
on the discipline of who takes control of how the
supply chain is going to perform, and what sort of
supply chain you want for different products, even
in the same business. One size doesn’t fit all.
“I’m sorry to sound defeatist but how can
we shift the paradigm to reach that Utopia?
Who is the real customer? Who makes the
decisions about what that customer gets?
Only then can we start to build
the infrastructure around what
that customer’s experience
has to be.”
Expectations
But that also involves
customer education.
“We as consumers are
hard to understand. We
are disappointed in our
expectations – but often
we have no right to be.
Why would we expect the
same level of customer
expectation when we are buying a
key-ring as when we are buying a plasma
TV from the same store?”
Malory Davies, chairperson, noted that
customer expectations are changing all the time:
“Nobody realised they wanted 24-hour delivery
until TNT started offering it.” Erleen Anderson
pointed to the many ways customer expectations,
and thus fulfilment modes, have diversified from
lifestyle couriers tracking their customers by text,
to being keyholders for unmanned drop points, to
DAVID GRATTON
SALES DIRECTOR,
LIGENTIA
“Getting the right source
involves looking at the
whole supply chain, but
buyers and
merchandisers are still
typically sitting in the
commercial silo”
HAYDEN ORGAN
HEAD OF 4PL
SERVICES,
KUEHNE + NAGEL
“It’s still the case that the
buyer is king, and things
haven’t changed: although
in many ways supply
chain has advanced
hugely, in other ways we
have gone nowhere.”
SCS:ROUND TABLE DEBATE 11
If we are short of microchips for
a product that is slated for a
promotion, we’ll pay for the
personal courier. Other products
don’t need this. We need to
understand why this order is so
significant, and that means we
need information coming back
from the customer.
(in Japan) delivering to a customer’s local Seven-
Eleven (it preserves privacy, apparently).
Charles Toye was just back from visiting
suppliers in Slovakia. He said the infrastructure
problems that make it difficult to get product out
and thus create the perfect order were almost
dwarfed by the difficulties of finding the perfect
customer. “We had an order for 750,000 military
jackets: and at the last minute they wanted to
change the size of the epaulettes. That’s
stressful. A lot of big customers have
no idea of realistic lead times.”
But he also noted that
many of his military
customers, for example,
“no longer want to
deal through
government supplyside
bodies. They want
us to put things
together and deliver
direct to the soldier.”
Cost is of course an
issue, and one that clearly
isn’t well understood by buyers
and customers. Toye claimed it can
sometimes by cheaper to deliver from
Slovakia to the UK than from a UK warehouse.
Anderson agreed: “The UK is very expensive. We
need to do everything we possibly can in the
country of origin, to use the cheaper labour.”
Again, said Hough, it’s about managing
expectations. “People have no idea how stuff gets
onto our aircraft. We work through our cabin
crews to educate them, one at a time.”“Customers
don’t understand the value of things,” agreed Toye.
IN ASSOCIATION WITH ORACLE
MARTIN DIXON
CONSULTANT,
MARTIN DIXON
ASSOCIATES
“If processes are being
driven by the norm, you
have to treat promotions
as exceptions, and you
need a process for
exceptions.”
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