Scott Sutcliffe, Group Purchasing Director at McBride, discusses supply chain resiliency and the implementation of robust sourcing strategies.
As has been well publicised, the last 18-24 months have seen some seismic challenges to global supply chains. From a scarcity of ocean freight, a proliferation of ‘force majeures’ and a blocked Suez Canal – we have often seen the’ unprecedented’ in recent times.
As a result, procurement strategies have become a growing area of focus for many businesses, and it is vital that robust, effective, and efficient supply chains can be relied upon.
As a manufacturer of cleaning products, McBride’s supply chain is influenced significantly by European chemical production volumes. It would be a logical to assume that as demand decreases or fluctuates in certain sectors, for example the recent downturn we have witnessed in the automotive and construction industry, that this would lead to surplus capacities of materials and feedstocks.
In fact, the opposite is true, and we saw how a finely balanced supply and demand trend emerged during the end of 2022 and through 2023. A recent industry report, for example, stated that European chemical capacity utilisation is down around 25 per cent versus the average rates of the last 25 years.
Chemical suppliers are therefore working hard to actively manage capacities and provide a stable and predictable price level for customers, that remains economic for the producer.
In this changing supply and demand landscape how should manufacturers implement reliable strategies to ensure supply chain resilience?
Sourcing strategies
We are seeing volumes currently grow more than 10 per cent year-on-year, as consumers seek more cost-effective alternatives to expensive branded products.
This increase in demand presents several challenges. Naturally there is the continuous optimisation of our production processes to meet consumer demand and maintaining inventory at the correct level, but this always must be balanced against the challenges of material sourcing.
To mitigate for these risks, our Purchasing team has focused significantly on building supply chain resilience, developing methodologies to help anticipate, prepare for, respond to, and recover from disruptions and market uncertainties.
The team has worked closely with the R&D and Operations departments to reduce reliance on single-sourced materials. It has also implemented effective sourcing strategies that consider the strength of supplier relationships, geographic diversification, environmental credentials and risk management across our entire portfolio.
Risk, quite rightly, is becoming a critical factor in buyers’ decision making. The team works closely with our Legal department to ensure that we have an appropriate level of contract cover in place, that allows us to hold our suppliers to account. Moreover, identification tools are used to identify aspects of the supply chain where there is an increased likelihood of disruption – and to develop strategies for risk mitigation.
Supply and demand
Keeping production lines running is one thing, but ensuring timely distribution of products to our customers’ shelves is another. We have worked closely with the Group Logistics team to ensure that the right agreements are in place with the right hauliers, with the right performance measures, to service our customers’ growing needs.
This focus has seen a real step-change in reliability in the last 18 months and has delivered a more solid logistics platform to be able to handle the increased volumes we have witnessed.
As we head into 2024 the job is far from done, however I am confident that we have the correct level of continued focus across inbound and outbound supply chains in place to consolidate our future success.
