Kathy Gibson reports – During the Covid-19 crisis, people who don’t normally think too deeply about supply chains quickly learned how important they are.
“We all became supply chain experts,” says Richard Wilding, professor at Cranfield School of Management, chairing a Digital Differnence discussion with Microsoft.
He describes the supply chain as a network of people and organisations that deliver products or services that is valued by the end customers. The chain is made up multiple stakeholders – scientists, farmers, chemist, engineers and more – all involved in creating value for society.
Increasingly, competition is no longer between companies, but between the supply chains they are part of, he adds. “The supply chain is becoming the business. Value is time-sensitive, so supply chains are supporting faster time to market.”
With the Covid-19 pandemic, global supply chains were interrupted, and businesses had to scramble to find new sources or goods, and ways to get them to the customer.
Hendrik Venter, CEO: mainland Europe, Middle East and Africa at DHL, comments: “A lot of people didn’t even know what logistics and supply chain management was until faced with empty supermarket shelves. They quickly realised how important they are.”
DHL had to adapt quickly to make sure its employees were connected and able to do their jobs at home, and were continually well informed. “We had to make sure that IT could cope with high volumes of data and traffic; and not neglect data protection and privacy.
“And we had to immediately help our customers build new supply chains.”
Among the solutions that DHL put together were pop-up warehouses for customers and governments.
The company also helped many customers quickly move from a business-to-business (B2B) model to being able to address a business-to-consumer (B2C) stance.
“A lot of customers had contemplated a move to e-commerce; and this accelerated it,” Venter says.
Ralph Haupter, president of Microsoft, Europe, Middle East and Africa, says Microsoft was in a good position when Covid-19 hit, since it deployed remote working technology some time ago.
“But many customers weren’t prepared. Some companies shifted tens of thousands of employees to a secure work-from-home environment in weeks.”
Microsoft experienced increased demand on its data centre capacity, which was a challenge; and it also had to address some supply chain issues.
“What was impressive is that, even in places you might not think possible to work in a different way, it came to light it is possible,” Haupter says. “For example, a company working on shop floor and maintaining machines is now doing it remotely using Hololens.
“Some consultants working at customer premises have gone remote and it’s working very well, sometimes more efficiently.
“There is a new mindset on how we help customers to get supply solutions built. A client in France needed to distributed 1-billion items of PPE to more than 40 000 healthcare institution. They had no infrastructure, but we built it in four weeks.”
The next challenge will be the smart supply chain, Haupter adds, with data visibility vital.
“If your supply chain is the same as it was 12 months ago, it probably out of date,” says Wilding.
Venter agrees: “We will never go back to the way we were before.”
He points out that DHL’s global footprint gave it early warning about the impact in Europe. “We realised supply would be severely disrupted, and were able to start preparing for it long before customers were actually confronted with empty shelves.
“But it demonstrated the need for greater end-to-end visibility across the whole supply chain, which allows us to be more responsive.”
Venter believes customers will require more flexible and agile supply chains in the future.
“In Europe we are seeing customers rethinking the way they source materials, looking to near-sourcing and multi-sourcing; relooking where they manufacture and source goods. In case of lockdown, they need to ensure that their supplies are not locked down.”
The crisis also accelerated the momentum to e-commerce, Venter adds. “This drives change going forward, with companies realising the importance of multi-channel and omni-channel supply.
“And they won’t go back.”
E-commerce will drive a need for more stock locations, Venter explains. “Stock will need to be closer to where the goods are consumed so it can be delivered on time, and the companies can be competitive.
“And this is a very competitive environment; customers have high demands.”
He says companies will look at utilising a large menu of warehouses across Europe, giving them the ability to scale up and down quickly.
“There is a need to roll out technology and innovation at a record pace,” Venter says. “There will be more robotics and technology in the warehouses.”
Data analytics are going to be paramount, he adds. “We need to move away from throwing technology into the warehouse; rather making it smart, intelligent and operating on facts for better planning and forecasting.”
Haupter explains that a lot of companies are still trying to connect the dots and understand where everything fits in the supply chain. “Data understanding and insight is key,” he says. “The new norm is where data is the currency for success.
“In a lot of boardrooms it’s sinking in that this is no longer a task just for the CIO. How data is managed is becoming a core asset in the boardroom discussion.”
Companies are quickly learning from experiences in other industries and countries, Venter adds. “To be successful, all industries must learn from each other so they don’t make the same mistakes.”
Having the right culture and leadership in an organisation is vital, Venter adds. “Companies need to be agile and able to react fast. We have seen this everywhere; the faster you react the more responsive you are in managing the situation. This means you can do the right thing and do it right the first time.”
To drive this, employees need to be engaged and informed, with the right tools to do their jobs properly.
“We need to know our customers, but also the weak points and risks in our own businesses. This means we have to make sure we have a resilient infrastructure so we are able to process huge amounts of data in realtime to make fact-based decisions.
“We need to have a structured approach to all of this, with agility and innovation. It is important that you focus and are structured, and know what you want to accomplish.”
To do this, Venter believes companies should take the best technology available and ensure they quickly implement and apply it.
“You can then scale at a record pace in standardised fashion across the business,” he adds. “Those that do well will have a competitive advantage.”
He advises CIOs to avoid focusing on everything. “Focus on the things that will make the biggest impact, and roll out in a standardised and strategic way. If you standardise what can be standardised, that lets you replicate, and focus on things make a difference.”
The next big challenge for the supply chain industry will be the distribution of Covid-19 vaccines. “This will be the logistics challenge of the century,” says Venter. “I believe it will be a mammoth task to get it right.
“Vaccines are high value, highly sensitive and temperature controlled. There is a lot at stake and any misstep could result in lost lives,” he adds. “Equally, millions of dollars could be destroyed if the integrity of products is not protected.”
DHL expects there will be stringent temperature requirements imposed on the transportation and storage of any new vaccines, with some predictions for a minus 80-degrees requirement across the entire supply chain.
“This is a fantastic challenge for distribution companies,” Venter says. “Logistics providers are challenged to distribute billions of vaccines globally, many of them to areas with less developed infrastructures.
“We are currently working with a lot of companies in the race to develop and trial vaccines; with a number of discussions underway to understand exactly what will be needed and what vaccine distribution centres will look like.”