A recent survey of FMCG suppliers conducted by the Customer Supply Group showed that service levels have dropped by >5% in recent weeks, with failed deliveries rising from 30-100 loads per weeks for some suppliers.
Survey Insights
Smaller retail customers, Cash & Carry and wholesalers are suffering as multi-drop deliveries are more vulnerable to short-term driver shortages and delays at any DC en-route is having a knock-on effect to subsequent delivery points.
Costs are rising by up to 14% for Primary deliveries, whereas many larger 3PLs are seeking more modest increases of between 5-10%, with the average settling circa 6%. Family owned providers appear to have been less affected, but for suppliers relying on network providers where >40% of
deliveries are made on subcontracted transport, the service challenge is severe. Pallet Networks are notably struggling to maintain service, with network volumes rising by up to 50% over ‘normal’ and throughput being constrained by caps or lead-time extensions to protect service to some degree.
Two further insights were reinforced – there is no short-term solution to the crisis, although suppliers are seeking to extend lead-times and reduce delivery frequency to improve vehicle fill and reduce complexity in the short-term. Supplier and retailer collaboration is also back on the agenda as a means of reducing empty running, although in the shortest term even this is beyond most teams’ capacity as they seek to minimise the impact on service day by day.
The Government reaction to extend driver hours demonstrates how little they understand of the problem that their own policies of the last 12 months, have exacerbated to crisis point. Rising driver wages are overdue, along with an increase in respect they deserve for the role they perform to support our lives and livelihoods – but it’s not the answer to the problem and Government need to take responsibility for a recovery plan to address the dearth of drivers.
I also fear, that this is the tip of the looming iceberg, as skilled labour is short across the farming, manufacturing and distribution sectors, as well as hospitality and the NHS to name but a few…so where is this skilled labour pool going to come from? We can’t grow it overnight.
As a result of the feedback from our supplier network group we have set up a Driver Crisis and Transport Load Matching Subgroup for FMCG suppliers interested in reducing empty running across their inbound, factory clearance and customer delivery operations.
If you are an FMCG supplier who would be interested in joining the meeting on 20th July, please email us at hello@simply-sc.com for further information and to receive an invitation.
