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2014/06/12

Supply in a Devolved UK…

Supply In a devolved UK

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

 

In my last article, ‘Demand in a Devolved UK….’, I discussed some of the potential impacts of Scotland’s devolution on UK demand.  As we all know, any changes to demand will have an impact on supply.

Firstly we need to consider a potential doubling of SKUs as Scottish products get their own sets of codes and bar codes.  Even if the products essentially remain the same, we will have an increase in production complexity way beyond two times.  Whenever we schedule a production run we will have to ensure that we use the correct packaging.  In many cases we can just print a different bar code at the end of the packaging line, but in others we will have to source and store double the number of unique outer packaging items.  Either way, we will have to plan these SKUs separately.  We may have additional setup times to change packaging or adjust printers.  At the end of the production line we may end up with two part-pallets instead of one and where we have date coded stock and batch sizes, the risk of waste is likely to increase.

Regulations are likely to change between countries over time, especially where food is involved.  For instance a move to “traffic light” health information in one territory may lead to two completely different sets of packaging. Further regulation changes may lead to differences in the actual contents of certain products, leading to more complex production paths and new base products – changes that bite earlier in the production process than packaging changes.

As well as production, distribution may need to be considered.  A single pallet of product sent to Newcastle for further breakdown may become two – one for the Scottish market.  In this case we may decide to send one pallet directly to Scotland instead and because of the relative low level of demand compared with the rest of the UK, the distributor may become the customer.  There will be opportunities for consolidated distributors north of the border, for sure.

This creates a challenge for demand as the distributor supplies its customers, all of whom have their own promotional calendars, from which the producer becomes one step removed.  Tighter integration with this new level of distributor becomes imperative.  If you don’t believe this can happen, look at Ireland where this type of arrangement is normal.

Finally, spare a thought for packaging manufacturers with their tens of thousands of SKUs already.  I’ll leave you to dwell on that one yourselves.

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