Global Franchise Supply Chain Management Is Critical for International Success, Part 2
Editor: This is part 2 of an article that appeared the previous issue. In that article you heard from Tom Healey, Vice President of International Supply Chain and Product Development at Dairy Queen on his take on the global supply chain for the second half of 2021. This time, following the introduction from Bill Edwards, we hear from 3 more international supply chain experts.
Effective and efficient global supply chain development and management are critical to a franchisor’s success and to maximizing unit royalties around the world.
The Lexico Oxford Dictionary defines supply chain as "the sequence of processes involved in the production and distribution of a commodity."
As consumers, our usual supply chain concern is whether or not our favorite clothing store has our size in stock in a store or online. For franchisors who do business outside of their home country, supply chain development and management is a major ongoing challenge. In the best of times, franchisors in the food and beverage and retail sectors devote considerable time and money to ensure their products reach their international licensees in a timely and financially efficient manner.
Then, in the early months of 2020, Covid-19 happened. Stores and restaurants shut down worldwide. Orders for new products stopped. Shipping schedules went haywire and containers were left at ports where they were not needed. Air cargo shipments dramatically increased, along with the price of shipping. Local suppliers of food products shut down their production facilities. Consumers shopped online worldwide more than ever before.
In late 2020, when businesses began to start up again, stores and restaurants had to restock. Consumers started spending again at restaurants, creating high demand for food and associated products. But factories and food production facilities had to ramp back up. Shipping had to totally restart. I asked international supply chain experts what this means for franchisors and international franchisees.
Michele Rushing, Vice President of International Supply Chain Management, CKE Restaurants
CKE, the franchisor of Carl’s Jr. and Hardee’s, recently opened its 1,000th international restaurant.
Our experience over the past year with global supply chain and Covid is that initially, with restaurants closed or sales restricted, the supply was in good shape. As we started coming out of Covid lockdowns, things began to change within the U.S. for export. Tight availability of containers, pallet cost skyrocketing, inventory of packaging items, and poultry in particular began to tighten, which required identification of alternate sources. Domestic supply to restaurants was prioritized, and exports took the biggest hit. As of today, this is still the situation, with little notice as to what quantities would be delivered to the exporter with confirmed purchase orders.
Supply chains form a critical component of local and global commerce. Many businesses cannot survive without a constant and reliable flow of goods. Even short delays in product delivery can cripple a company and cause disruptions throughout multiple areas of society. As global commerce continues to expand, supply chains have become more complex. The world’s dependence on viable supply chains was starkly demonstrated by the issues arising from the Covid-19 pandemic.
Joyce Mazero, Chair of the Global Franchise & Supply Network Practice, Polsinelli
Mazero is the go-to supply chain expert for many franchisors. She takes a bit different approach to supply chains. Here are some trends and watchouts she sees for supply chain leaders in 2021.
Weather events and the pandemic have presented overwhelming worldwide challenges for manufacturers, shippers, carriers, and customers. The 2020 hurricane season was a major event, and predictions for 2021 are that it will be another above-normal season.
Visibility continues to be the number-one focus point for supply chains, particularly in the transportation area, which is increasing in demand in North America, Europe, and Asia/Pacific. Partnerships among companies featuring solutions for the visibility problem are in demand, but it is a struggle given the lack of maturity in these services.
Delivery times are getting faster. Stores are becoming fulfillment centers, including handling last-mile delivery and using non-traditional spaces for warehouses and shipping direct to their consumers. As more companies turn to omnichannel, “meet the customer everywhere” strategies layer more stress on supply chains. Pickup at stores based on online orders has increased significantly, and customers are flocking to curbside and fulfillment options to avoid going directly into stores. These occurrences shift the cost of labor to the retailer, increasing costs and affecting already stressed margins.
Going omnichannel, however, requires up-front technological investments to become more efficient. The product can be sold across many channels, but solid order and inventory management are essential. Retailers have implemented multi-basket picking and robotics to address the costs. Covid has also driven retailers to create on-demand warehousing on a temporary basis to backstop traditional third-party logistics (3PL) relationships.
Janet Deverso, Operations Manager, TradeTrans
TradeTrans is a global supply chain management company that oversees the purchasing and U.S. export distribution for thousands of QSR franchise units around the globe.
Accelerating change, fierce competition, and arduous export regulations have taken a serious toll on the international supply chain in general. The biggest of these challenges include longer lead times, shortage of raw materials, limited vessel space, and trucker shortage. Despite technology advancements and massive sophisticated 3PL facilities, the secret sauce to global supply chain growth and efficiency is dedicated and trusted relationships.
With post-pandemic catch-up in full swing, both within franchising and the world as a whole, we’re seeing an increase not only in ordering, but also in the export requirements. From bilingual labeling criteria to lab testing to compliance certifications, there are seismic shifts in what we need to accomplish to get goods to our franchise customers. This is particularly evident in the Middle East, United Kingdom, and new market expansion in North Africa and throughout Europe.
Going beyond the transactions and building a dependable and scalable supply chain strategy with our franchise partners ensures the success of our planning, purchasing, logistics, international shipping – and ultimately, the bottom line.
William Edwards is CEO of Edwards Global Services (EGS) and a global advisor to CEOs. From initial global market research and country prioritization to developing new international markets and providing operational support around the world, EGS offers a complete international operations and development solution for franchisors based on experience, knowledge, a team on the ground in more than 40 countries, and trademarked processes based on decades of problem-solving. Contact him at firstname.lastname@example.org or +1-949-224-3896. Read his latest biweekly global business newsletter at www.geowizard.biz.
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Franchise Update Magazine: Issue 3, 2021