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Comment: Can we really deliver a frictionless supply chain?

The Perfect Order programme began over a year ago as a collaboration between leading retailers and suppliers, facilitated by GS1 UK, to harmonise inbound delivery requirements for the UK retail grocery sector. It set out with the goal to improve efficiency and remove the significant avoidable costs that exist in the supply chain – in order to deliver real financial and efficiency benefits for suppliers and retailers, and of course, ultimately for the shopper too.

The industry working group was initially driven by poor compliance to inbound receipting requirements, the customisation of individual retailer orders by suppliers, and poor adoption and implementation of the global GS1 supply chain standards. Every retailer had their own way of managing the entire order-to-cash process, much to the frustration – and cost – of their suppliers. As independent advisors, we were asked to visit many retailer and supplier distribution centres and pretty soon we confirmed these findings – and much more besides.

So what has been done in the last year? And what more needs to be done?

Unlocking £100 million of avoidable costs

First of all, the industry needed to understand the scale of the problem. Working with the Perfect Order programme members, we soon estimated that the grocery sector is wasting £100 million of avoidable costs – ever year. This money is wasted in three key areas:

Harmonising processes

Despite the obvious and quantifiable inefficiencies, getting to a stage where the industry agrees a single harmonised process was always going to be a challenge. But the first output, agreed by the group and shared with the wider industry for consultation and approval, was delivered towards the end of 2016. The guideline sets out the minimum requirements for in-bound logistics for retailers and suppliers – in other words, outlining the basic requirements for suppliers and retailers as the first step on the path towards achieving the perfect order.

Importantly, arriving at an industry agreed process didn’t mean developing a whole new set of standards. The foundations to an industry agreed process were already in place, because the majority of companies have already adopted or have committed to using GS1 standards in this area.

This year, it’s expected that the participating companies will work toward these minimum requirements – in line with their own priorities and adoption plans. In some cases, adoption will be easy – it’s largely what they do now – but in other cases it will take more time.

What’s next for the programme?

The next phase of the programme is vital. The efficient delivery of goods from suppliers to retailers depends on the use of ASNs (Advanced Shipping Notices) – sent via EDI. Yet in the UK, only a few retailers have adopted ASNs, and even they have adopted them in different ways, causing more unnecessary costs and complexity for the sector.

But many large retailers are currently either reviewing the need for ASNs, or are planning to implement them within the next year or two. To unlock the £100 million, the industry is currently wasting it’s important that these retailers are all working towards the same harmonised process. Which is why we and the Perfect Order programme members are currently reaching out to them – encouraging industry collaboration on a single harmonised standard and process.

It’s all about collaboration

Collaboration is key. In other countries, where harmonised industry processes exist, there are proven, tangible benefits for retailers and suppliers. And leading international retailers have successfully driven out costs through improved efficiency and better ways of working. Ultimately, they have improved product availability and increased sales. It’s time for the UK grocery sector to catch up – because a common industry approach delivers proven benefits.

Steve Richards is the retail engagement manager for GS1 UK, the not-for-profit supply chain standards organisation. Read more here.