Understanding the global supply chain revolution

Frank Baur
Vice pres­i­dent, sup­ply chain, Europe, Mid­dle East and Africa, Park­er Han­nifin

Ivan­ka Janssen
Chief sup­ply chain offi­cer, Philips

Mar­tin Fij­man
Glob­al chief pro­cure­ment offi­cer, Bright­star

Josue Munoz
Vice pres­i­dent glob­al sup­ply chain, Col­gate-Pal­mo­live

Dirk Hol­bach
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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