Increased momentum around sustainability is shunting the physical supply chain into uncharted terrain. The Future Supply Chain 2016 report ascertains that the supply chain will have to alter course and plots the direction it needs to go.
ECR Europe Marketplace Guide Berlin, May 2008
Len Lewis

Roland Dachs, vice president planning and logistics, European division Crown, and Xavier Derycke, supply chain director of Carrefour, co-chairs of the Global Commerce Initiative’s working group on the future supply chain, believe the group’s newly published report will supply the framework for other long-term success stories. “Progress has been made since ‘2016-The Future Value Chain’ report was published in 2006,” said Dachs. “But it is important that the entire food community shares a vision that will create momentum and build on things that have been done to create a responsible supply chain.”
The new report, titled Future Supply Chain 2016 and published by GCI and Capgemini, emphasises the growing importance of new parameters such as CO₂ emissions reduction, reduced energy consumption, better traceability and reduced traffic congestion. “Supply chain strategy needs to look ahead and give priority to these parameters,” said Derycke.
 “Our report is looking ahead ten years because we are tackling things that have a long-term reach in terms of moving structures,” said Dachs. “But we are also offering practical collaborative ideas in such areas as transport which can be started up quickly. Now that the latest report is published we intend to start encouraging companies to enter into significant pilots.”
Already the changes that are taking place in European supply chains and around the world are a combination of long-term initiatives combined with those that will provide immediate results. 
The report presents a new supply chain model that integrates innovative solutions such as collaborative physical logistics, demand fluctuation management and efficient assets with collaborative concepts like information sharing. It also highlights examples of existing leading practices, applications to example supply chains and new ways to calculate the impact on the supply chain.
According to the report, the total impact of this supply chain redesign could potentially reduce transport costs per pallet to the order of more than 30 per cent, cut handling costs per pallet to the order of 20 per cent, reduce lead time by 40 per cent and lower CO₂ emissions per pallet to the order of 25 per cent, while also improving shelf availability.
Derycke concedes that while some supply chain issues are global in nature, there can be significant differences between those in the US and Europe that must be taken into account. “For example, we have a lot to improve when it comes to rotation of products and the level of stock in the supply chain between suppliers and stores,” he said, emphasising the importance of cross-docking and direct contact between suppliers and stores. “But to succeed in cross-docking and make changes that could result in a ten to 15-day reduction of inventory, you have to prepare the stores, information systems, your logistics partner and suppliers for fine tuning of the system,” Dachs noted.
Asked whether the global nature of the supply chain changes the rules, he replied: “There are different conditions in the US, Europe and emerging countries. What we’ve tried to do is show that the supply chain architecture of the future needs to take challenges like scarcity of resources and additional transportation costs into consideration,” Dachs said. “All these things are going to accelerate and it will require changes in the way we set up supply chains. Regulations about protecting the environment and required CO₂ reductions were not considered in previous supply chain designs and must now be integrated into new models.”

Increased collaboration
Dachs and Derycke also emphasise that while individual examples of these concepts already exist, the key to their broader implementation across the industry will be improved collaboration. They noted, however, that progress is being made and collaborative efforts in sustainability have increased. “In France, for example there has been a five or six year partnership managed by Carrefour in pooling of transportation between suppliers to improve order frequency and ensure that fresh deliveries meet demand,” said Derycke. This kind of pooling may be even more important in emerging markets where it is an absolute necessity to reduce logistics in the face of tremendous increases in fuel and other transport costs.
While the report will provide examples of ‘villages of warehousing’ for suppliers, it is not necessarily recommending use of third-party logistics companies. “We encourage what is professional. Sometimes that could be best expressed by a third party,” said Derycke.
Technology is another aspect of sustainability, Dachs said, noting that innovations in physical assets such as bigger trucks, high-speed vessels, double deck barges and anything that can take trucks off the road must be implemented. “Intrinsically, most of this innovation already exists. The question is how to deploy it in a strong collaborative way on a global scale. That’s where momentum must be gained,” he said, specifically citing the issue of city logistics. “The model we established in the last 40 years based on full availability of resources is going to be threatened – not only in Europe and the US, but in emerging countries where the population is centred in the cities. Some (delivery) models need to be redesigned.”
One of the key elements also in the report is the issue of on-shelf availability, Derycke added. “We must readdress what is available for the consumer on the shelf. As such, it is more important to manage store and distribution centre orders by collaborating with suppliers. In the end, the problem is the total stockout. Suppliers have to reinvest time and energy to reduce out of stocks.”