From 16th– 18th July, I had the privilege of taking part in the virtual Supply Chain Summit 2020 from the comfort of my own home. Industry professionals from all over the world participated in the three-day event, including speakers and panellists from DHL consulting, Stanley Black and Decker, Mars, Nestlé and so many more.
The focus of the event was preparing for recovery after Covid-19 and I gained several key insights from a variety of key notes and panel discussions. I would like to break the event down for you by discussing some of my key take-aways from the event.
Supply Chain Resilience
Resilience has become a bit of the buzzword since the pandemic started, after supply chains were shook by the countermeasures. It showed that the majority of supply chains needed to become more resilient and that is why the panel discussion on supply chain resilience provided some great takeaways.
One of these is how Pascal Bouye, VP Supply for Global emerging markets at Mars, defined resilience. He suggested resilience can be looked at in two dimensions. The first is operational resilience and this is the ability of a company to: resist an unexpected event, recover from these events, and potentially learn and/or reinvent themselves as a result. This is usually a short-term dimension. The second dimension is strategic resilience. Strategic resilience is the ability to ensure that the road to market, for example sourcing or a company’s distributor model, remain relevant as well. By breaking resilience down in this way, it will make it easier to focus on how to make your supply chains more robust and resilient.
What also was really interesting, which came up in the discussion, was the role of software in resilience. Frederic Laluyaux, President and CEO of Aera Technology proposed that we should move toward adopting more technology. He suggested that the challenge for supply chains and supply chain professionals is that we are moving away from an era where people are doing work supported by data and software and we need to move to a situation where software is doing the work guided by people. By adopting these types of technologies, supply chains can switch from the (sole) reliance on people, who can often be slow and inaccurate, to reliance on software, such as Artificial Intelligence, which can make much faster and accurate decisions. He indicated that by ensuring this transition is smooth, it will predominantly help improve resilience, especially for those industries severely affected by the pandemic.
Supply Chain Visibility
Alongside resilience, visibility in the supply chain has been a key talking point especially during the summit. Supply chain visibility seems like it’s something that needs to happen rather than just continuing to be just a discussion point. For me, that is why the panel discussion on supply chain visibility provided some great takeaways.
In order to achieve supply chain visibility, you have to understand why supply chains want visibility and Janet Godsell, Professor of Operations and Supply Chain Strategy at the University of Warwick, explained this quite clearly. She suggested that the reason supply chains want visibility is to achieve back integration so that supply chains can reduce inefficiencies and minimize buffers that are associated with silo and functional thinking alongside maximizing flow. If this can be achieved end-to-end this can benefits all partners in the supply chain benefit by delivering customer value at lowest possible supply chain cost.
Another key takeaway from the discussion was understanding some of the challenges preventing businesses from achieving supply chain visibility. The availability and quality of data and the adoption of technology make up a small percentage of the challenge of trying to achieve full visibility according to Luca Fichera, Vice President Supply Chain and Business Services – Asia, Oceania, Africa at Nestle. However, he believes that people, culture, and willingness to make this transformation is the bulk of the challenge in trying to achieve full visibility. This is because achieving full visibility requires a significant change to what people are expected to do.
For example, in demand-supply planning without end-to-end visibility, planners mainly work on planning. However, in a scenario where a firm achieves end-to-end visibility, planners will not need to carry out planning but instead will need to manage exceptions and understand which areas require optimization. As a result, the c-set of skills are different from what is expected of a planner and the planners need to be willing to undergo new training and firms need to be willing to provide this training. Where there is no willingness from either side to achieve this, companies will not be able to maintain their visibility.
Ecommerce is here to stay
While the pandemic has caused problems for many businesses, firms can be split into winners and losers. The winners are those who had ecommerce already set up and the losers were those who have remained offline. This is why the keynote speech on “Mastering the Ecommerce game in the new normal” from Sabine Mueller, Chief Executive Officer at DHL Consulting, really stood out for me.
It has come as no surprise that over the last few months, there has been a significant change in consumer behaviour across all continents due to the pandemic. Not only are people ordering and spending more online, there was also a significant increase in the amount of older people (60+) shopping online and a higher availability of a broader range of products online such as sporting goods and home office items. This change in the demand for ecommerce has also seen a change in the behaviour of suppliers: for example Amazon has increased its capacity by hiring more workers and a other firms, which already had strong online operations set up such as Walmart and Adidas have started improving their online sales.
However, while some may have believed that these rates would drop back down, the rates are here to stay. When looking at different patterns of recovery from Covid-19, in each scenario, there is an expected year on year increase in e-commerce. If we have passed the “storm” of virus, there is a first estimate of a 25% year on year increase in average ecommerce sales, with this being higher in some countries. Then in every other recovery scenario, there is an expected increase of at least 32% in ecommerce.
The key take-away from this session is: One of the winners from the pandemic certainly has been ecommerce and these levels will not go back to pre-crisis levels. In essence if you do not offer your product online you may miss out. As Mueller said, “Now, we have the chance to fundamentally rethink our supply chains in order to capture the true value ecommerce has to offer”.
I hope this has given you an oversight into some of the topics discussed at this year’s summit. The recovery from the coronavirus pandemic is probably going to be difficult in the short term but will lead to long term improvements.
I would like to say a special thank you to Alcott Global for organizing the event and to all of the speakers and panellists. I left the summit feeling very positive and inspired.