Chain Reaction

An Expert's View about Sourcing in Australia

Posted on: 16 Apr 2010

In my book, efficiency in managing logistics or the supply chain is a critical issue in determining export competitiveness, and I’m not just talking about perishables. It can well be argued that logistics is in fact a marketing strategy and can be used to deliver a competitive advantage, and not as some people will describe it: ‘another bloody cost’.

 

Those people who understand the importance of effective supply chains, use them intelligently to not only deliver a better bottom line, but to out-do the competition by building continuity of supply into the brand dynamics. And in the case of agribusiness products, delivering quality more often than not at a higher price. I was talking to a supplier of asparagus to Japan. He was from south west New South Wales, in an area that presented some challenges from a rapid transportation viewpoint. When I asked him what his competitive advantage was he said, “first the product which meets all the specifications demanded by the Japanese consumer and second we deliver top quality”. And the quality, he said, is governed by the fact that “I can cut it on Tuesday and have it freshly on the plate in Tokyo on Friday night”. In other words, he focused on the two fundamentals: meeting product specification and managing the land and air freight task to build quality into the brand, resulting in satisfied customers and better margins.

 

Even further, a well managed supply chain can become a key driver for a whole industry. South Africa’s Capespan, for example, prides itself in being a specialised, world class leader in the marketing of fresh fruit internationally. What makes them really successful is their participation in managing the logistics task from farm gate to end user, in South Africa and between and within the arkets they supply. Importantly their brands are critically linked to quality, and quality is driven by the supply chain. As a result they are also able to demand premium pricing and through strong branding get repeat  purchase. Capespan is without doubt an excellent example of turning the freight task into an effective marketing strategy.

 

 

During the 70s and 80s, many major large international companies had production facilities in every far flung corner of the globe. They were without doubt inefficient, especially considering the capital cost of equipment required to undertake what was only moderate levels of production. Through effective management of the supply chain, these companies can now meet consumer demand worldwide, reduce costs and free up capital. They can do this because the freight component is seen as in integral part of the business, not just another cost.

 

Thanks to geography, it’s safe to say Australian exporters have more reason than most to focus on how effectively we move product from here to overseas markets. The way I see it, the first step is to start thinking about the freight task differently; more on the basis of how can to use it as an business advantage rather than simply giving into it as just another bloody cost. Moreover, overseas customers expect efficient continuous supply and the highest quality, so there really isn’t a choice.

 

 

Australian Institute of Export

 

 

 


Posted: 16 April 2010

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