Suppliers to convenience stores will be the focus of the next revolution in supply chain management, a logistics guru has predicted.
Speaking at Food Manu- facture's recent conference on collaboration between manufacturers and retailers, Professor Daniel Jones, chairman and founder of the Lean Enterprise Academy, said changes in the way convenience stores were supplied would result in more food being sourced closer to the point of sale. This would require changes in the way it is collected and delivered and lead to a wider range of products being sold. "We are only just beginning to take stock of the convenience store revolution."
Major multiples, such as Tesco and Sainsbury, are growing their share of the convenience market. Sainsbury's acquisition of East Midlands convenience chain JB Beaumont followed its purchase of Bells Stores last February and Jacksons in August. Sainsbury now has 260 convenience stores, which accounts for just over 2% of the sector, and projects that it will grow convenience sales by £400m by the end of 2007/08.
Jones, who has worked with Tesco and is highly critical of Sainsbury's troubled venture into large, centralised and automated 'fulfilment warehouses', promotes the theory of "making to replenish, not to order". He predicted that local stores could become the focus for home deliveries and pick-ups.
"That changes the interaction and dialogue with the customer," he said. "There you will need to put your most knowledgeable people. This will be an opportunity for people to be innovative."
But it would also put pressure on the availability of products, he warned: "Replenishment would be little and often." This would open up new opportunities for local manufacturers and the same would be true for ingredients and packaging suppliers.
"There are great opportunities for good food manufacturers to win in this convenience age," he said. "There is a need for a group of food manufacturing companies in non-competing products to share the journey together."