Uncategorised

Australian Food & Grocery Council Supply Chain Report released

The Australian Food & Grocery Council (AFGC) and GRA Supply Chain Consultants have released an abridged version of the 2016 Supply Chain Survey Report, a biennial review of the key issues, opportunities, challenges, and emerging trends for supply chain executives across the Australian Food & Grocery sectors.

Key findings of the report include:

Key Financial Metrics a mixed bag

Finished goods inventory levels and write-off costs have improved and logistics costs have stabilized but cash conversion rates continue to worsen, despite the positive direction of inventory levels.

  • Finished goods inventory levels have declined
  • Logistics costs have stabilised
  • Write-off costs as a percentage of COGS are reducing
  • Cash conversion cycles are continuing to worsen

KPIs trending well

Service levels and forecast accuracy have improved, reflecting the priority on increased customer satisfaction for 84% of respondents.

  • Delivered In-Full, On-Time (DIFOD) improved across the board for all retailers
  • Forecast accuracy reportedly increased versus prior years
  • 25% of companies with over $500m in revenue do not formally measure their performance with the major trading partners

Collaboration works—when it’s done right

Whilst collaboration isn’t consistently performed across the industry, respondents indicated that it has benefits service levels to a great or moderate extent over 60% of the time.

  • 46% of respondent said improved collaboration offers the greatest opportunity for supply chain improvement
  • 88% of organisations have a S&OP process that informs planning decisions
  • On shelf availability, given its rated importance, stood out as a large concern

Supply chain war for talent

Recruitment is becoming more difficult, and filling roles typically takes between 3-5 months. As well as sourcing externally, organisations are planning to grow capability internally by investing in supply chain training or education in the next year but a lack of formally training programs continues to be a problem.

  • 73% of organisations having a dedicated supply chain representative on the executive team
  • Specialist and boutique recruitment firms reported as the most successful recruiting method
  • 49% of respondents say it’s getting increasingly more difficult to recruit

“Rapidly expanding customer expectations and narrowing retailer margins are placing pressure on FMCG suppliers both within Australia, and across the globe. This squeeze is not new – for some time FMCG businesses in Australia have faced a market where the requirements and expectations of its customers have risen,” said GRA Partner, Luke Tomkin.

“The AFGC Supply Chain Survey is so timely and important. It provides us with an insight into industry trends and customer expectations, it provides a safe harbour to collaborate with sometimes competing businesses, and it provides a platform to work together for the mutual benefit of all players; the consumer, the retailer and the supplier.”

Send this to a friend