Going The Extra Mile for a Successful Supply Chain Strategy

Just look at how Ryanair and Easyjet caught the traditional airlines off-guard – that’s just what could happen to your business if you fail to spot an opportunity before one of your competitors does.

Of course, in my line of business, I’m interested in how companies can create opportunities for themselves through their logistics management. It’s easy to look at how supermarkets control their supply chain right back to the farmer in the field, and assume that the same will happen in the automotive sector as well. Certainly, the dominant trend in logistics has been the transfer of control from manufacturer to customer.

However, manufacturers and retailers haven’t managed to squeeze out wholesalers everywhere. For example, there are still thriving wholesale businesses in sectors as diverse as newspapers, pharmaceuticals, building materials, and books. What is it that all these sectors have got in common?

Let me tell you what I think the two key factors are:

First, you need to have a customer base that has a lot of small independent businesses. That means that there’s no customer with enough power to dictate to their suppliers. In addition, small businesses don’t have big purchasing functions so they prefer to deal with one company who can supply everything they need.

Second, you need to have a business that operates on very short lead times between order and delivery. This makes it impractical for manufacturers to try to deliver direct.

Both these conditions apply to the automotive sector, and although there’s consolidation in the dealer network there will always be a large number of small independents carrying out servicing, body repair and so on. These businesses want a one-stop shop for all their parts and supplies – and one that can deliver more quickly than a manufacturer can realistically achieve.

So there’s certainly an opportunity for two or three wholesalers to set themselves up to serve this sector. And I mean true wholesalers, who supply just about everything these businesses want to buy; everything from parts from all the franchises to paper for the photocopier. And as always, there’s a big advantage in being one of the first into the market.

It doesn’t have to be a traditional automotive business that exploits this opportunity. But obviously, a company already in the sector would have a head start, but that company will need first-class logistics. That’s because there are two things that make a wholesaler successful: inventory management and operating efficiency – and both of them are core elements of logistics management.

Someone is going to have the chance to set up the leading automotive wholesaler. Could it be you?