Customer is king – key element of a successful supply chain
Currently CEO of the company Mareterram, David was previously with Craig Mostyn Group and Chair of the Western Australian Meat Industry Authority. He is extremely well respected in the meat industry being a strategic thinker with proven success in optimising supply chain efficiency.
David describes a supply chain as being more than logistics, ‘it is a network of functions and relationships that takes product from producers to consumers’.
David provided some key insights into successful chains as well as broken supply chains. Dairy was cited as an example of the latter.
It is essential that a supply chain is sustainable. If a supply chain is not working, it is because not every link is getting a fair return.
The supply chain will not be sustainable and parties will exit. Thus the supply chain requires long term commitment achieved through contracts, relationships, ownership and manages risk.
Putting the C (i.e. Chain) into Agriculture was how he put the transformation from a production ‘push’ to a market ‘pull’ business approach. This involves having a view of the entire supply chain to drive maximum value and assure consistent supply to the customer.
A supply chain is a system of organisations, people, activities, information and resources moving a product from supplier to customer. 5 key attributes for a successful supply chain are:
- Cultural Shift. Here the need is to look across the entire supply chain rather than to simply optimise the profitability of your own individual component. (See diagram of what might be included in a meat supply chain). Each link in the chain needs to get a fair share of the return. Otherwise in time there will be elements that consolidate, close down and exit thereby disrupting the remaining elements of the chain.
- Consistent Supply. Supply must be consistent to enable suppliers to build up markets (i.e. customers and their customers want to build up markets). So there is a need to plan ways to maintain supply at a consistent level all year.
- Customer is king. The focus must always be on the customer, to respond to the price signals based on the value that a customer puts on the product, whilst maintaining consistent supply at reasonable price.
- Linking the Chain. Linking the chain ensures security of supply and is influenced by the level of risk and level of return that are prepared to be shared. This is achieved through relationships, contracts, partnerships and levels of ownership between elements.
- Competitive Advantage. This takes various forms such as a low cost, a brand that people are loyal to, a product whose attributes the customer wants (such as specific quality), or an asset specific to the supply chain.
David’s presentation was a highlight of the program and fitted in well with the theme of “Sharpening the sheep business”. The question is how much of the sheep meat industry works this way now and where do we start to make our supply chains work better in the future. Food for thought!
For more information contact Justin Hardy, Development Officer, DAFWA, Albany on +61 (0)8 9892 4808.