Understanding the global supply chain revolution
The primary challenge of ensuring the right product reaches the right person at the right time hasn’t changed, but tech advancements accelerated by events of 2020 mean the time and distance between customer and supplier will be further reduced in the coming years
Vice president, supply chain, Europe, Middle East and Africa, Parker Hannifin
Chief supply chain officer, Philips
Global chief procurement officer, Brightstar
Vice president global supply chain, Colgate-Palmolive
Chief supply chain officer, laundry and home care, Henkel
Patrick Van Hull
Industry thought leader, Kinaxis
How has the coronavirus pandemic accelerated a global supply chain revolution?
MF: I had to make immediate and important decisions impacting supply chain, even before I had an opportunity to grasp every aspect of our business. We had to stabilise our customers’ operations and had to adapt in weeks to a dramatic shift towards digital channels. At the same time, we had to balance the near-term internal supply chain in terms of managing the spending. The crisis provided an opportunity for transformation acceleration, which eventually made us stronger.
JM: The pandemic changed shopper behaviour across the world and the growth of digital commerce that we expected to happen in five years took just twelve months. As ecommerce is becoming more important, the supply chain is critical; if you’re not available on the digital shelf, the impact is significantly higher than if you’re not available on a bricks-and-mortar shelf. So we need to transform, look at how we do things, gain a better understanding of the key players in the digital commerce world and make sure that as a supply chain we structure ourselves to win in this environment, which is expected to continue growing. With the level of volatility that we saw, we found gaps and now we have to make sure we close those gaps and accelerate the process and the transformation to ensure we are better prepared in the future.
DH: I believe we are still in the middle of the “whip effect” triggered by coronavirus. We had set up a structure to cope well when the pandemic hit: a relatively low-value density of products and near sourcing, plus local markets. The crisis came with challenges, but because we had already started our digital transformation journey, we could evolve at speed. Structural parameters, like footprint sourcing and inventory holding strategy, are important components for resilience, which is linked with visibility across the supply chain and leveraging technology. But ultimately supply chain is all about having the right people in the right place. Technology and people have to sync together, otherwise you will not be successful in the mid to long term.
IJ: Because of COVID-19, we had to ramp up the supply chain to shift eight times the pre-pandemic amount of ventilators and fivefold for monitor production; it was a massive undertaking. As we were focusing on ramping up, it became apparent that having data and being able to be agile and manage your supply chain very deep, into the different tiers, is crucial. Establishing an overarching and end-to-end view is, for us, the most important learning from the last year.
FB: More than ever, for many companies, the supply chain has become a boardroom topic. Cash is king, but it is even more important not to impact the customer experience. I don’t think the pandemic has triggered a revolution, per se. However, it has accelerated digital deployment; it has caused supply chain leaders to refocus and rethink strategies to drive greater decentralisation, agility and visibility.
Information and insights management are essential for efficient supply chains, so how can technology empower businesses?
PVH: To increase agility and break down silos, it’s about arming yourself with data insights to understand how each individual action has a broader impact across the organisation’s entirety. When we collaborate with our suppliers and customers, we must understand how it will play out if something were to arrive late. We need context – whether it’s a ship blocking the Suez Canal or something else – because it’s not enough to rely on the old mathematics.
FB: Software alone never solves a problem, but technology deployment accelerated in the last 18 months across all functional areas of the supply chain. In sourcing and procurement, we use digital tools like “should-cost” modelling, for example. And greater shop-floor automatisation ensures a safer and more ergonomic work environment. Handling big data smarter will remain key.
DH: Technology is democratising access to data insights across the whole supply chain. It brings the relevant data to the level where a decision has to be taken and in a crisis a lot of things are happening on a local level, with markets behaving differently, so this visibility is vital. You have to make sure the colleagues in charge at the front end have the maximum amount and quality of data available to make the best decisions. A few years ago, we set up a global analytics platform accessible to most of the organisation and we leveraged this in 2020; it was accessed 70 per cent more in Q2 than Q1. We have enriched these control towers and added more functionality.
IJ: Technology can empower supply chain professionals in other ways, for example virtual working has its pros and cons. You can connect with many more people faster than before, for example we started to use HoloLens for site visits and it is very liberating. I hope we don’t go back to spending our lives in airport lounges. A balance must be struck. Additionally, cloud computing helps our digital transformation, allowing us to pull all the data from legacy systems, gain an overview and spot potential bottlenecks quicker. To drive artificial intelligence baseline forecasting, we have entered a partnership with a small company. We chose this partner because they have a deep focus on what we are looking for and, therefore, were able to work quickly. Agility in partners is going to be very important from now on.
JM: That agility and being bolder, and investing in research and development, are essential as we try to evolve our processes. There’s so many aspects in the supply chain you have to be good at, and that’s where cloud technology and data analytics, as Dirk described, becomes important. You’re going to have to find very specialised partners to provide you with the best value in a niche area. If it doesn’t work, fine; you move on. That way, you can evolve your supply chain much faster than before.
What will the global supply chains of the future look like?
JM: I believe the technology is at a level that we can drive semi-autonomy. The amount of visibility tools that everybody’s trying to sell is enormous, but how do you take action and link it to the decisions made daily by the teams on the ground? Semi-autonomy will augment human decision-making by leveraging technology, which will allow us to be more responsive and resilient.
MF: The future of supply chain configurations will evolve to the point where it is fully dictated by customer behaviour. Consumers have never had more power and this has been one of the most significant trends accelerated in the last year. To keep pace with consumer demand, supply chain innovation is required. We’ve invested and introduced plenty of innovations in our operations and there is a big opportunity when it comes to delivering value-added supply chain services to the last mile. It is such an exciting time to be involved in the supply chain and I would encourage any youngsters to embrace this career and try to change the world.
FB: People will remain key, highlighting the importance of empowerment and engagement, and decision-making at the lowest level. In addition to functional qualification and education, we have embedded technology training across the entire career progression for our staff, from graduates to senior supply chain professionals. We all need to be open to managing change.
IJ: Robotics is one technology in which we are investing. Some people are getting their head around what this means for them. There needs to be a mindset change from the leaders concerning technology and the future of work. It’s not good enough to talk about it; we also need to understand what it means for us as leaders and how we need to start incorporating this in our day-to-day work. As a supply chain leader, you can make people more comfortable with the future of work and enable them to develop themselves, so they are ready for what’s next. The supply chain is the place to be; it’s the breeding ground for future chief executives.
DH: It’s true, a career as a supply chain professional is very interesting and I would suggest young people come in and find out for themselves. The supply chain is such a complex, end-to-end process and the backbone of a business. Experience is an important factor, though, and I think you have to learn about supply chains from the bottom up. It’s a career that is never boring, that’s for sure, and will only become more interesting in the coming years because of technology and the ability to add value.
PVH: When I speak with students, and anyone else who will listen, I tell them, “Everything is a supply chain.” In the supply chain we get to connect the dots. The supply chain opportunity is so vast because we have so many outlets and elements to connect. Good supply chain management comes down to making a good decision in a specific moment and then doing it again, again and again. If you want somebody to decide and take some action, the supply chain is the place to be.
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