Bad Language Costs Billions
Professor Richard Wilding
Steve Macaulay
In the UK, insufficient supplies of salt have highlighted how
important the supply chain is. Now, I am joined by supply
chain expert, Professor Richard Wilding.
Now Richard, let us just clear up first, what is the supply chain
and why is it so important?
Richard Wilding
Supply chain is really a network of companies; it is all the
companies that come together to deliver a particular product
or service. For example, if it is a food product, it could
involve the farmers, the people who actually move the grain
to a particular location where it is then processed and then
right through to the supermarket, and even to some extent
back into your home as well.
Steve Macaulay
A key question: why is it so important?
Richard Wilding
Well why it is so important is because at the end of the day,
for our economy to function, relationships between
companies are absolutely critical. Nobody now does
everything – or very few companies do absolutely everything.
We are dependent on other organisations to ensure that our
organisation, as it were, can make some money.
Steve Macaulay
And I guess supermarkets are a classic case of that?
Richard Wilding
Yes, very much so. Without if you like the various supply
chains and companies supplying into them, the whole
supermarket value proposition, the value that they deliver,
would be undermined because they wouldn’t be able to have
this incredible amount of variety on the shelves which
actually attracts their customer base into a location like that.
Steve Macaulay
So links in the chain are very important; it can cost you a lot of
money if it goes wrong?
Richard Wilding
Very much so. In fact, it costs so much money that now even
the stock exchange is looking at supply chain problems.
Research has actually shown that you can get a twenty
percent fall in shareholder value, or fall in your share price, if
you have issues within your supply chain. So this is very
important to address this and make sure that you actually
manage this in an appropriate way.
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January 2010
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Professor Richard Wilding
Steve Macaulay
You have done quite a bit of research in this area; what are
the main causes that these links don’t hold together very
well?
Richard Wilding
Well one of the things that we often find – and there are a
number of particular issues – but one big issue is the whole
issue of speaking a common language within the supply
chain. It might sound absurd, but even if we are actually
managing supply chains globally and using the English
language for example, in the English language yes means yes;
however, in other cultures and in other languages using the
word yes can have multiple levels of interpretation.
Now that is talking about just our vocal language, but within
the supply chains we are using a language as data as well.
And it is very important that we have a standard data
language which is used throughout the supply chain. If, for
example, electronic data is not being transmitted or shared in
the correct way, it can create confusion and errors and
actually undermine the performance of the supply chain.
Steve Macaulay
And as you said, that is important because errors lead to cost,
lead to insufficient supply of goods, leads to unhappiness on
the consumers’ part and lack of profit?
Richard Wilding
Very much so. And some recent research which we actually
did on something called Data Crunch and this was with GS1
UK. Now GS1 UK, they focus on the application of standards
within supply chain environments and other environments.
What we actually found out was that inconsistencies of up to
eighty percent – so eighty percent of the data was
inconsistent between various supply chain partners. We
were then able to take a very conservative guess at how
much this was costing the industry, and it worked out that
this was going to cost the retail industry around about a
billion pounds over the next five years.
So by actually just getting a common language in place and
ensuring everybody has the right data in the right place at the
right time and they are using consistent data we can improve,
for example, the whole competitive position of that particular
environment.
Steve Macaulay
So in these straitened times, that is very important.
Richard Wilding
Very much so, and I think it is one of those things that from a
supply chain perspective every company can actually do.
Every company can start to look at, if you like, the language
of their business. Is their language compatible with other
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Professor Richard Wilding
businesses’ languages? Because if we can get consistency in
the use of data that is going to actually really improve things
for everybody.
Cranfield is working with GS1 on a number of awards. There
are going to be some annual awards on really the use of
standards within an industry, and we are very happy to
support that because we are very much into trying to
encourage the use of, if you like, this common language
across different sectors and across different business
environments. And of course, ultimately, what would be
nice is that we can also apply this globally and GS1 is a global
organisation, so that is an excellent way of embedding these
things.
Steve Macaulay
So what would the first step be then in getting this common
language?
Richard Wilding
I think the first step is understand what standards and
common languages already exist. Go to organisations like
GS1, you can find them on the web, you will probably already
be using some of their standards. For example, if you have a
bar code they administer a lot of the bar code numbers which
are actually used; so everybody knows that that bar code
relates to a specific product.
So understand the language of business and then just make
sure that you talk and discuss with your supply partners – and
your customers – what language they are actually using.
There is no point in me communicating information in English
if somebody else is actually speaking in Italian or something
like that, because we have got to make sure that we get a
common understanding of how we are going to manage that
supply chain.
Steve Macaulay
You make it sound easy; I suspect it isn’t as easy as that?
Richard Wilding
There are a lot of cultural issues that we need to overcome.
At the end of the day it’s change management; there are
cultural issues, there are change management issues which
come into play, there are information systems issues that
come into play. But generally what we find, the biggest issue
which needs to be overcome, is really building that
relationship and creating trust within the supply chain.
If we are looking at this, get consumer focus, make sure that
you share data, make sure that you have common processes,
common key performance indicators, make sure you are also
able to integrate your systems and processes with your
supply chain partners. And also make sure that you have got
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Professor Richard Wilding
some flexibility in there as well because things don’t always
go as planned. But the key thing is build trust; and the only
way you are going build trust is by working with those other
parties.
Steve Macaulay
Richard, thank you.
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