Leadership 19
differentiating the physical characteristics terms of cycle times, timeliness, quality
of the freight and the duty and customs and accuracy is central to time DIY Global Sourcing
regimes that are applicable. It is more compression and risk reduction. Based
important to analyse and build into the on historical performance of the end-to- Kingfisher and B&Q, the large Do-it-Your-
costing the resulting markdown and end chain it is possible to identify self multiple, has revealed in annual reports
lost sales risk of the product by improvements programmes to develop and recent corporate presentations the
developing and applying a market-risk supplier reliability. The ultimate goal is benefits of their global sourcing strategy.
and cost risk profile. The inventory to issue orders and schedules on shorter Their advertising campaigns promote the
holding cost through the chain must also lead times, reflecting real demand or concept of “every day low prices” … which
be factored in. Experience has shown more accurate forecasts. Understand- can only be enabled by implementing
that this analysis identifies products that ing the underlying performance of the global sourcing. From an analyst briefing
should never be traded on a long vendor, and his category of products in pack, the impact of transacting business on
lead-time, or that should be the subject the marketplace is the starting point for a global scale using Far East sources can
of a postponement strategy. It is also this; it is dependent on information be seen from the examples quoted:
likely to show that there are some across the chain.
products where actions to reduce lead- 6. Information platform to provide B&Q Knife
time and increase flexibility will justify a consistent and timely information: WAS sourced for 88p
higher initial purchasing cost. the capability to put in place, operate NOW sourced for 40p
2. One touch information flow: to avoid and maintain a full supply chain
double entry, duplication, mistakes and visibility solution. All of the above B&Q Real Wood Flooring
inconsistency as the same transaction capabilities are anchored by the 2004 sold for £19.98/m
2

moves through the many points of operational skill to secure and maintain 2005 sold for £14.07/m
2
contact in the chain. Accuracy of the information backbone with the
information is a precondition of proactive diverse data structures that are needed Castorama Wrench
management and the ability to exercise by each supply chain function. WAS sourced for €8.50
risk mitigation measures. This capability NOW sourced €2.00
is systems enabled; it is critical to All of these capabilities relate to
have the widest view of the total chain on management information and the skills Castorama Swimming Pool
one information platform with the ability to apply that information with greater 2004 sold for €305.00
to recognize inconsistencies. precision; information on the extended 2005 sold for €129.00
3. Total product identification and chain in terms of accuracy and speed of
compliance: to ensure fast accurate availability is central to these capabilities. The customer has benefited from these
product and handling unit identification Our research suggests that companies lower prices and it has driven sales
that feeds the “one touch information” are moving from the first stages of quick growth, margin and market share to some
requirement without delay. The use wins into a more mature phase of global extent. However, these numbers do not
of barcodes and RFID (Radio Frequency sourcing. Those that have learnt the new tell the whole story in terms of cost and
Identification) to the correct standards game will be more able to sustain the risk. The authors’ research shows that the
is the enabling technology; this needs advantage they have won so far. capital tied up in the extended chain can
to be quality assured and enforced on the extend from 30 days for domestic supply
ground across many sites with failures to as much as 150 days. The risk in the
being fixed where they occur. About the Authors extended chain is then whether the sales
4. Real-time routing through dynamic will meet the forecast on which the order
visibility: the capability to see through Professor Richard Wilding is Chair in has been based. Of course, when supply
the chain, know what is coming and test Supply Chain Risk Management at exceeds the predicted demand, the chain
for events that have not happened as Cranfield School of Management and is too long for it to be able to adapt to the
planned; to interpret the implications of hosts the Cranfield Supply Chain Risk actual demand. The consumer is often
failures in a proactive way and make Forum www.supplychainriskmanagement. delighted by the even lower prices that
decisions to minimize their impact. This co.uk. He can be contacted through result as stock is cleared. However, it is
is the ‘traffic control’ of global supply www.richardwilding.info. not a sustainable model if the levels of
chain management; it must be managed obsolescence climb too high. Leading
transparently and with the proactive Professor Alan Braithwaite is visiting companies are now putting in place
co-operation of all the parties in the chain. Professor in Supply Chain Management advanced supply chain control mecha-
5. Vendor development — cycle time at Cranfield School of Management and nisms to govern their global sourcing
compression linked to real demand: Chairman of LCP Consulting Ltd. Contact transactions.
the capability to understand and improve him through www.lcpconsulting.com.
the long-term performance of vendors in
Launch 2007 Supply Chain Digital
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