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2014/06/05

Demand in a Devolved UK…

Demand in a DEvolved UK 1

By Howard Roddie, Senior Supply Chain Consultant (@HowardRoddie)

I don’t suppose any of us have started to plan for a devolved UK just yet.  It’s too far away and it might never happen.  But it’s a challenge we should think about as it may give us a new perspective on how we organise our current supply chains, regardless of the results of any referendum.

When we look at the current UK as a whole, it is probably fair to assume that overall demand will not change in any earth shattering way. The problem with demand though, as always, is in the detail.  In this respect, the reaction of the retailers to a change in the landscape will be crucial.  One only needs to look back to the introduction of Sunday trading.  A devolved Scotland will lead retailers to rethink their financial structures.  The newly independent Scotland is bound to have different tax and regulatory systems.  Of this, we can be sure, otherwise there is no reason for a split.  A different currency is less certain, but whatever the changes, it is guaranteed that this will have an impact on how we gather and calculate demand data.

The most obvious manifestation of this change is likely to be felt in the proliferation of a whole set of new Scottish SKUs.  To start with, these will be identical in every way to the UK codes except for the bar codes.  Each retailer will move at its own pace on this, but we should not underestimate the effort requires to make this change.  For many of us, this may mean an eventual doubling of our range of SKUs as we change our own branded ranges to our own timetable and the private label ranges to a set of imposed timetables.

The second factor we will have to consider is UK geography.  If we don’t currently consider Scotland at a regional level in our demand territory networks, we may soon have to.  This could lead to reorganisation of our sales structures.  A little bit of thinking ahead at our next sales structure reorganisation may save later pain here.

Whatever the changes we make, we may have twice the number of SKUs and/or increase in regions to forecast.  We will have to rethink our structures and processes.  Do we group the two new products as a generic, or treat them as unique generics, with all their promotional variants?

Did I mention promotions?  Yes, these are less likely to be synchronised between the two countries, so the number of promotions will increase, with the same level of effort required for each promotion: potentially in different currencies.

I’ll stop there.  As you can see devolution could lead to a whole set of challenges for supply chain professionals in the UK.  There is, however, a part of the British Isles where these challenges are already part of daily life: Ireland has been managing this situation for many years.  It would be wise to make use of this expertise.

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