Supply chain faces major challenges to respond to retailer pressures, says ACS&T's Malcolm Johnstone

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Major tensions within the established food retail giants as they face up to discount retailers have created significant stress in the supply chain, ACS&T's managing director Malcolm Johnstone and president of the Food Storage & Distribution Federation (FSDF) told members at the organisation's annual lunch. This was just one of the challenges faced by FSDF members, he said, in a year where many members had good reason to appreciate the services offered by the Federation. Johnstone added:

"Being over a hundred years old, the Federation has to maintain its reason for existence by ensuring that it continually offers value to its members. In my view, this is amply illustrated by the Climate Change Agreement (CCA), now in its second term, and the value of the technical and business advice to so many of our members. The value of a large CCA agreement can be measured in six figures. For major retailers, it can be measured in seven figures. The technical advice on ATEX and DSEAR saved my own company a further six figures."

Johnstone was speaking to the annual lunch which was held at Anfield, home of Liverpool FC. He said that these were the tangible benefits, but that much more was achieved behind the scenes when the FSDF is working with the bureaucrats in Westminster and Brussels. He continued: "A major task of the CEO, Chris Sturman, is to lobby, represent and promote the views of the membership to the necessary bodies. And this is made even more difficult when it is attuned to controlling differing legislative agendas. Take, for example, the Food Standard Agency's latest announcement of a further audit and regulatory framework – without any consultation with the industry," he pointed out. The UK food industry, led by its retail clients, has some of the most demanding requirements in the world.

"Feeding a population of over 60 million consistently and safely every day is what we do. However, the legislative bar is being raised further after food scares and safety concerns. This Federation is in the forefront of managing those challenges to ensure a responsible and reasonable approach. We are seeing the withdrawal of F Gases over the next ten years, demands of stronger health and safety practices and speculation that ammonia will not be permitted as a refrigerant. The FSDF has a vital role in safeguarding such activities and managing the legislative expectations to ensure the industry's voice is heard," he said.

Johnstone - who was elected to his second term as president of the FSDF in April this year, is managing director of food logistics specialist ACS&T - has worked in the logistics sector for 40 years and as MD of ACS&T for the past eight years. He is also a Fellow of the Chartered Institute of Logistics & Transport. He concluded with a rallying call for all members, especially the larger member companies, to play their part in ensuring that the FSDF's voice is heard.

"For a trade body like FSDF, its strength is within its membership," said Johnstone. "FSDF works in a difficult environment where the real problems that the industry faces cannot be discussed – in the main due to the anti-competitive controls that exist."

He cited issues such as an over capacity of unsuitable buildings, lack of long term planning, due to market insecurity and short term commercial deals, and price structures that are so biased towards storage that transportation is often a loss leader to attract clientele. "These all drive behaviour which does not foster investment, supply chain efficiency, or partnership with knowledgeable and valued customers," he said. "The challenge to us here today is to find new ways to manage facilities that may not be fit for purpose as market conditions change. Bulk high bay warehouses, aligned to production, are not the answer when I am seeing market demand moving away from few SKUs (Stock Keeping Units) and therefore pallet movement, to many SKUs and therefore case picking. It can be difficult for prospective clients to comprehend when the market has been seduced by over capacity and thereby has price points to reflect that state, for them to recognise that over capacity may be operationally ineffective for their particular market needs."

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