Making your supply chain more efficient
February 1st 2006

While most businesses recognise the value of building a close relationship with their suppliers, many are still failing to put into place the sort of supply chain processes that can underpin competitiveness and businesses agility, says Dr Martin Gibson, Envirowise Programme Director

In a recent survey of retail and wholesale companies in the UK, most of those that took part pointed to a cost cutting response to economic pressure, with 56% shopping around for cheaper suppliers and 53% pushing to cut prices.

However, businesses that take this short sighted approach may actually be damaging long-term relationships and competitiveness.

Instead of pressurising suppliers to reduce costs, companies that take a more creative approach to supply chain management will often experience efficiencies that create better, leaner and more competitive supply chains - results that can improve bottom-line profits.

Envirowise is currently working with a number of major companies to facilitate supply chain collaboration and improve environmental performance throughout the supply chain.

For example, the Retail Therapy initiative, which includes free on-site resource efficiency reviews and targeted training workshops, can help retailers find efficiencies and better ways of working together, which should help businesses save money.

In fact, retailers and suppliers involved in the initiative have identified cost savings worth as much as £5.5 million since the project began in 2002.

When the Co-operative Group decided to team up with its suppliers to boost business efficiency, it was quickly impressed by the cost saving potential.

Working with suppliers including Princes Soft Drinks, Rose Country Foods and Kays, costs were reduced in the key areas of raw material use, water consumption, solid waste reduction and energy use. In total suppliers saved more than £420 000.

And the Co-operative Group is just one of a number of companies that have opened their eyes to the potential benefits.

In the food & drink sector, Somerset-based cheesemaker the Lubborn Creamery has recently teamed up with Waitrose to reduce waste and save money within the supply chain - by using water, energy and raw materials more efficiently.

The company is now working with Envirowise to identify costsaving actions and further strengthen their relationship with the supermarket group - which stocks 18 000 product lines and relies on long-term relationships with suppliers to ensure food quality and availability.

And it's not just retailers or food and drink companies that can benefit from these cost savings.

Envirowise recently launched a partnership programme to help electronics producers work in collaboration with their suppliers to help meet the deadline for compliance with the Reduction of Use of Certain Hazardous Substances (RoHS) Directive.

The Directive, due to become effective in June 2006, poses significant challenges for producers to ensure that components being sourced from suppliers are compliant.

As such, Envirowise is working with host companies and their suppliers towards legislative compliance, while also achieving commercial benefits throughout the supply chain.

We are also developing a supply chain partnership in the construction sector. This will include training workshops - highlighting best practice in areas such as waste minimisation, legislation, materials ordering and recycling - and on-site resource efficiency reviews from an expert advisor. In particular, businesses are encouraged to engage with one another and learn about key issues facing the sector.

It is important to remember that any business and their suppliers, whatever their size, can learn from these good practice principles and begin to look at ways of making their own supplier relationships stronger and more competitive during 2006.

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