Having just this week written about Dick Russill and his new book on procurement risk, we now have the most unexpected supply chain risk incident probably in my lifetime.  How many supply risk registers list ‘volcano erupts, air transport closes down across Europe” ?  Not very many I suspect. And even fewer of us would have heard of Eyjafjallajokull….

Yet some supply chains, such as fresh fruit and vegetables into supermarkets,  are now getting seriously disrupted; as well as individuals unable to get home, sports people missing competitions, students who can’t get back to university.  (We have friends stuck in a very nice hotel in Mauritius…could be worse I suppose!)

I remember doing my first ever risk assessment as a young manager.  It all seemed very fanciful; planes falling out of the sky onto our national office, wiping out the entire management team, the factory burning to the ground, a lunatic or extortioner poisoning our products.  How fanciful I thought; and how wrong I was.  I was even personally running (a different) factory when it burnt absolutely to the ground one night.

As well as the general disruption, this won’t be doing much to help the weak economic recovery in Western Europe.  But it has at least knocked the election off the front pages, so every cloud (of volcanic ash) has a silver lining!

Surprising and interesting to see that WalMart are expecting to make huge savings through better management of their supply chains, in particular through globalising some sourcing and more direct purchasing of fresh produce rather than via intermediaries.   I believe that UK supermarkets  have been doing this for ages (I did know the head of fresh produce at a major supermarket quite well a few years back and I know he was certainly working in that way).  And when I ran a potato packing business for a very short time (in 1990 to be precise)  we dealt directly with M&S, Tesco etc.  They were lovely people to deal with, warm, caring, sympathetic , always ready to negotiate a fair price that gave us and the farmers a reasonable return….*

Back to WalMart though; just goes to show; however big and successful you are, there is always something you can do better.  Even if you’re the biggest and most successful retailer in the world….

Peter Smith

* sarcasm alert….!!

An interesting bit of information from a good friend.  He was talking to a senior guy at a very large global branded FMCG company.  Apparently one of the biggest UK supermarkets has found a bit of a ‘hole’ in their profits (some £200 million) and is asking major suppliers to cough up to fill it; £6 million contribution or we remove your products off the shelf.

No way, was the response, and we’ll see you in court if you break any of our contractual agreements…..

Now, only the very strongest branded suppliers will be able to take such a strong line I suspect, so it will be interesting to see what happens there.   But isn’t it good to see supply chain partnership working so well as we approach the festive season!