£1.5bn wasted annually through supply chain inefficiencies

A new study by digital freight forwarder and logistics provider Zencargo has found that British…...

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A new study by digital freight forwarder and logistics provider Zencargo has found that British businesses trading overseas waste approximately 3 hours on every shipment. Requests and transfers of data via email and phone are the biggest time sinks, even though most of the information needed already exists online.

Procurement professionals working assiduously to achieve company cost reduction and sourcing savings may be dismayed to find that their efforts are undermined by this redundant activity. Wasting around 100 million hours every year, it is effectively little more than “Chinese Whispers.” The lost time in supply relationship management, procurement and freight-administration functions translates into an eyewatering annual cost of £1.5bn.

The problem of wasted time is aggravated when trading with partners outside the EU customs union, according to a report published in Air Cargo News. In most cases, this results in an additional 17% of wasted hours.

Supply chain managers conventionally rely on freight forwarding partners to grapple with the logistical intricacies of international trade. This relieves the complex administrative burdens of sending and modifying bills, of lading and managing tariff compliance obligations. Shippers must otherwise select the best ports, the best global carriers and inland logistics suppliers, frequently in unknown countries, unassisted.

Despite the intricacies, Zencargo’s analysis (which analysed 100 shipments), clearly shows that relying on emails, phone calls and human individuals to manage these processes is immensely wasteful.

In a statement, the company’s CEO and co-founder, Alex Hersham, said: “The study demonstrates the urgent need for supply chain innovation as a route to solving the productivity puzzle. The adoption of simple technology that helps automate communication can deliver productivity gains now to the tune of £1.5bn per annum.”

Digital freight forwarding platforms like that provided by Zencargo (and, in the last year, new rivals from DHL and AP Moller-Maersk) can’t abolish all delays and all contingencies in the supply chain. The unexpected will continue to happen. But they can provide full supply chain digital visibility and help to achieve cost reduction by significantly limiting inefficiencies.

Nick Ford

Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.

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