Although lawmakers have taken up the thorny issue of logistics penalties in the large retail sector, notably with the Act of 30 March 2023, commonly known as the "Descrozaille Act", it has to be said that the subject is still a source of serious disputes between manufacturers and retailers.
Discussions crystallise around the justification of the penalties required by the Act, which often lacks substance or is sometimes missing altogether. The question of evidence, in order to establish responsibility precisely, is therefore central.
In these circumstances, an audit of how your supply chain and your contracts work, led in particular by a logistics expert and a contract manager, appears to be a crucial step in getting a clearer picture and supporting an effort to stem the penalties.
An obvious combination of expertise
As we explained in an earlier article, challenging the way you operate and the tools you use, optimising your contracts along the whole supply chain and taking advantage of changes in the applicable regulations clarifies the allocation of roles and responsibilities and improves logistics performance.
The first step towards this process, which ultimately helps reduce conflict between suppliers and customers, is an audit of how the supply chain works and of the related contracts.
Because the subject of logistics penalties cannot be handled on logistics or contractual ground alone, the aim of the exercise is to bring to light, by combining these two areas of expertise, the gaps and the failings against your own standards, as well as to identify areas for improvement and make the order management process as secure as possible.
By putting a collaborative approach in place, companies get the full benefit of the synergies between these two fields of expertise. The logistics expert brings a deep understanding of operations and the flow of goods, while contract managers ensure rigorous management of contractual commitments and supplier relationships.
The logistics audit
By carefully assessing your logistics processes, your information systems and your operating practices, the logistics audit will bring inefficiencies to light, identify the issues specific to the business, and put forward tailored recommendations to improve the overall performance of its supply chain.
Measuring the performance of the logistics function makes it possible to check that the means deployed to ensure service quality and order traceability meet customers' requirements and the promise made on that front.
It is also an opportunity to review the way you operate and to work on building trust between the various partners involved along the supply chain.
For the supply chain to work as well as possible, the various parties need to adopt a collaborative attitude, with clear, compatible processes and traceability of flows that gives greater end-to-end visibility of orders.
This assessment, led by a logistics expert, gives a clear view of strengths and weaknesses and helps the organisation take the decisions required to put proactive measures in place to optimise operations, such as a goods flow tracking solution.
The contract audit
Knowing your contracts thoroughly and monitoring them is often pushed into the background in favour of the operational process.
Yet mastering your contracts and the obligations flowing from them is more than essential in order to grasp the risks companies face, to know their weaknesses and to turn them into opportunities to improve the performance of their supply chain. All the more so at a time when the legislative context is, in a sense, reshuffling the pack.
In these circumstances, and with a view to keeping the commitments they have made under control, manufacturers should seize this opportunity to analyse their contracts and their logistics specifications.
The contractual audit, led in particular by a contract manager and carried out together with the internal teams, results in a stocktake of each party's obligations and of how well they are met. It also identifies the deviations between the contract and the operating model in place, the regulations in force, and also the promise made or the requirement expressed, together with the related risks.
Once these findings have been shared and discussed, various responses are then framed with a view to containing and reducing the risk of dispute and easing the difficulties encountered. By way of example, these may cover:
- revising the mechanism for applying and capping penalties;
- revising and adapting the specifications and/or the contracts to build in stricter timing constraints;
- defining a mechanism for monitoring, alerting and evidencing failures between the stakeholders;
- defining KPIs more closely focused on the areas that generate the most penalties;
a claim management strategy; - introducing summaries and/or registers to help teams identify contractual obligations more easily, and so on.
Conclusion
There is no denying that carrying out a logistics and contractual audit is a fundamental step in the quest to optimise operations and reduce logistics penalties.
However, the value of the exercise goes well beyond simply fixing the problems identified. By working together, logistics experts and contract managers can build integrated strategies aimed at maximising the overall performance of the supply chain while minimising risk, in a spirit of continuous improvement.
Ultimately, then, a logistics and contractual audit is far more than a mere review of existing practice. It is a strategic tool that allows companies to take informed decisions, optimise their operational performance and strengthen their competitiveness in the market. By adopting a collaborative approach between logistics experts and contract managers, companies can genuinely turn their logistics challenges into opportunities for growth and lasting success, and so considerably reduce the risk of penalties.