How to protect your logistics network against volatility

Sami Naf­fakh, Chief sup­ply offi­cer, Reckitt Benckiser

Har­ald Emberg­er, Chief sup­ply chain offi­cer, Beiers­dorf

Todd DeLaugh­ter,
Chief exec­u­tive offi­cer, Alpe­ga Group

Gus­ta­vo Burg­er, Chief sup­ply offi­cer inter­na­tion­al, Kraft Heinz

Sophie Öhrström, Exec­u­tive vice pres­i­dent, glob­al logis­tics, GANT

How have you man­aged the dis­rup­tion of the past months – coro­n­avirus, the con­tain­er cri­sis and Suez Canal block­age – and what tools have helped you nav­i­gate?

SO: The whole of 2020 was a sup­ply chain roller­coast­er, start­ing with lim­i­ta­tions in sup­ply from Asia and Europe. Then once the sup­ply start­ed to increase again, sales in Europe were impact­ed by lock­downs and ware­hous­es were over­filled with prod­ucts. It’s been a mat­ter of con­trol­ling the infor­ma­tion and build real­ly close co-oper­a­tion and trust with inter­nal as well as exter­nal stake­hold­ers.

GB: At the very ear­ly stages of the pan­dem­ic, we had dai­ly calls with all plant man­agers to empow­er them to make deci­sions at local lev­el. They would have to ask two ques­tions. Is this deci­sion help­ing pro­tect the health and safe­ty of our peo­ple? If yes, go ahead. Is this deci­sion help­ing pro­duce more food? If yes, go ahead.

TD: Alpe­ga is involved in trans­porta­tion man­age­ment soft­ware and freight exchanges with cus­tomers who are pro­duc­ing and ship­ping goods all over the world. We saw ear­ly on, some indus­tries declin­ing in terms of vol­ume and oth­ers spik­ing. So the abil­i­ty to han­dle these swings in demand was key for our cus­tomers with tools like spot bid­ding and at the same time pro­vid­ing access to our Tele­route freight exchange plat­form to car­ri­ers for free dur­ing the pandemic’s ini­tial months.

HE: In 2017, we were hit by a cyber-attack. This made us revis­it our busi­ness mod­els, our capa­bil­i­ties. [So all of that] helped us with [the Covid-19] cri­sis.

SN: On the hygiene, dis­in­fec­tion side, we saw huge spikes, up to 25 times pre-Covid vol­umes. So, there’s been huge respon­sive­ness to put in place addi­tion­al capac­i­ties, most of which are onshore. That helped with the trans­porta­tion dis­rup­tion lat­er.

For us to nav­i­gate the future, it’s crit­i­cal to under­stand not where the demand is, but where the demand will be

What process­es can you put in place to help mit­i­gate against future dis­rup­tions?

SN: This whole sit­u­a­tion of super high volatil­i­ty and unpre­dictabil­i­ty has changed the dynam­ic of the rela­tion­ship with key cus­tomers. And there’s been much more appetite for close col­lab­o­ra­tion, shar­ing of data and build­ing joint fore­casts.

SO: When some­thing like the Suez Canal ship block­age hap­pens, the first ques­tion you get is what is the impact on our goods? Arrival of the goods is essen­tial when plan­ning our sea­sons and all relat­ed activ­i­ties. Being able to have full vis­i­bil­i­ty is key.

How have you worked with inter­nal stake­hold­ers to ensure suc­cess?

GB: We became very agile because we had cross-func­tion­al col­lab­o­ra­tion, not only with­in the com­pa­ny, but out­side it. Very quick­ly, the dif­fer­ent stake­hold­ers under­stood we need­ed to remove com­plex­i­ty from the sys­tem. The pan­dem­ic became a cat­a­lyst of trans­for­ma­tion and agili­ty.

What have the events of the past year taught you about the need for real-time vis­i­bil­i­ty in your net­work?

SO: Order vis­i­bil­i­ty is the foun­da­tion for con­trol­ling your sup­ply chain. The next step is to flex­i­bly re-route and opti­mise from where your orders are ful­filled. But you can­not start with­out hav­ing vis­i­bil­i­ty and data.

HE: We looked into how much a buffer costs. With­in our resilience pro­gramme, we showed esti­mates to the organ­i­sa­tion. This is a real­ly good point, to make it vis­i­ble and say look, how much are we pre­pared to pay for insur­ance? You can­not run hand to mouth every day and in every part of the sup­ply chain.

TD: This dis­cus­sion is about vis­i­bil­i­ty in real time, but it’s only to the extent you can take the ana­lyt­ics of that infor­ma­tion and affect your advanced plan­ning, because the idea is not to have to be in a reac­tionary mode but, as oth­ers have stat­ed, to build in buffers and do that through your plan­ning process. We offer an advanced plan­ning solu­tion with grow­ing num­bers of users, but still maybe 5 per cent of com­pa­nies do advanced plan­ning. Lots of room to improve.

How will real-time vis­i­bil­i­ty set your busi­ness up to bet­ter man­age dis­rup­tion and win com­pet­i­tive advan­tage?

GB: In the food indus­try, there is an inter­est­ing dynam­ic that brands trav­el and prod­ucts don’t, because taste is very local. For us to nav­i­gate the future, it’s crit­i­cal to under­stand not where the demand is, but where the demand will be. That’s where ana­lyt­ics can help us a lot.

SO: In the fash­ion indus­try, many prod­ucts are intend­ed for one spe­cif­ic sea­son, which means it’s cru­cial goods arrive in time. For us, hav­ing the vis­i­bil­i­ty and abil­i­ty to pre­dict when the goods are expect­ed will help us plan and steer our resources more effi­cient­ly.

What have you learnt over the past 12 months that will help future-proof your busi­ness when pre­dict­ing trans­port costs is more chal­leng­ing than ever?

SN: We’re doing a lot of work on hav­ing the right bal­ance between off­shoring and onshoring, which would reduce the depen­den­cy on ocean and air freight. We’re also look­ing at rail to go from Asia into Europe.

HE: Our focus is not only costs, but also the impact on car­bon foot­print. How do I take trucks off the road and get fuller loads and few­er move­ments, prefer­ably by rail? The sec­ond thing is we need to reduce the com­plex­i­ty in our assort­ment to get a more effi­cient sup­ply chain.

TD: Advanced plan­ning, as we dis­cussed. Six­ty per cent of the goods in Europe move by road. But at any giv­en point, 40 per cent of the trucks on the road are emp­ty. I think that’s where we as soft­ware ven­dors have a huge oppor­tu­ni­ty to fill those trucks up on the back­haul [return jour­ney]. We save cost for ship­pers and car­ri­ers, and reduce the car­bon foot­print in the process.

Will you be more will­ing to make upfront invest­ments in your sup­ply chains for the sake of long-term resilience?

SN: The short answer is yes. We’re invest­ing in buffers, in work­ing cap­i­tal. We’re invest­ing in addi­tion­al capac­i­ties, in capa­bil­i­ties.

GB: Invest­ing ahead of the curve in things that real­ly mat­ter is actu­al­ly a top-line vis­i­bil­i­ty, not a bot­tom-line con­straint.

HE: It’s the same on our side. I’m per­suad­ed that we need to invest in tar­get­ed mea­sures, for exam­ple even in raw mate­r­i­al prices, to become more resilient.

TD: The pan­dem­ic has stressed sup­ply chains every­where this past year. But it is reward­ing to see sup­ply chain organ­i­sa­tions mov­ing into a more strate­gic role with vis­i­bil­i­ty at the high­est lev­els in all com­pa­nies and this has been a con­sis­tent theme from all the pan­el­lists. Trans­porta­tion man­age­ment is one of the areas where we can help sup­ply chains dig­i­tal­ly trans­form com­pa­nies, adding flex­i­bil­i­ty, sav­ing time and mon­ey, and reduc­ing the car­bon foot­print.

For more infor­ma­tion please vis­it alpegagroup.com/en/tms

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