Supply Circles: Changing the way we think about supply ‘chains’ could really change the industry

Most of a manufacturer’s supply chain takes place outside of their facilities. Raw materials, crafting, supply chain and logisticsforming, even assembly is increasingly being done more remotely. Using their power as a customer in these relationships, manufacturers can exert a great deal of influence on their suppliers, which can make many of the separate supply chains each uses become closed loops. This can result in closer, more reliable partnerships and lower costs.

What Is Supply Chain?

The term ‘supply chain’ gives rise to an image of goods starting in one place and eventually ‘ending up’ somewhere else. The image of a circle allows for the possibility of materials being looped back into the production cycles of a partner industry, or a partner of a partner, improving the situation of all those affected.

Just as an example, let’s take an over-simplified relationship between a tomato sauce manufacturer, a glass packaging producer, and a third party fulfillment house, handling warehousing and shipping.

As it stands, the glass bottle manufacturer ships his product to the sauce maker, and those trucks go back empty. The sauce factory ships the finished product to the supermarket’s warehouse, and the trucks return empty. The supermarket’s warehouse hauls off hundreds of tonnes of packing materials for recycling every year, at their expense. Again, the trucks return empty.

Now, we make circles. The trucks offload pallets of sauce at the supermarket’s facility, and load the used cardboard, worn pallets, and similar materials from all of the store’s suppliers, and bring them to the glass factory. Many facilities have already been modified to burn post-consumer waste for energy, and glass manufacture is a particularly energy intensive process. The waste is burned, closing one loop, and the trucks load up with bottles to go to the sauce factory. Another loop closed, and hundreds of empty, profitless truckloads saved each year.

The potential for these circular business relationships exist everywhere, and can be a substantial advantage in these times of shrinking profit margins.

 


Comments Closed

Comments are closed.

Copyright © Which Warehouse Blog