Much like Day 1, Days 2 and 3 of the European Supply Chain and Logistics Summit 2014 were filled with thought-provoking keynotes, workshops and case studies.
Day 2 Highlights
Innovation and team work drive successful supply chains
The first two keynotes on Day 2 were very exciting to say the least. First up, Nick Fry, Commercial Advisor and former CEO of Mercedes AMG Petronas F1 team, drew parallels from the highly competitive F1 world to supply chain management. Fry provided the audience with information regarding the production process of an F1 car. The team produces a new car every year, starting in July.
Approximately 4,000 parts need to be designed, and the car needs to be ready for its first test-run in February. The first race is in March and the last race is in November, at which point the team is well into planning and producing the following year’s car. This is quite a rigorous pace. With the goal of improving on the car by 10% each year, the F1 team needs lots of ideas, which is why an open and honest culture is encouraged. He warned the room full of supply chain and logistics managers to avoid the “blame culture” and encouraged them to cultivate strong supply chain teams.
Stephen Attenborough, Commercial Director from Virgin Galactic, really grabbed the audience’s attention during the second keynote of the day as he spoke on “Overcoming Challenges of Galactic Proportions.” I don’t know about everyone else in the room, but I was taken aback by how close Virgin Galactic really is to offering commercial flights to space (for those that can afford the 250,000 € price tag):
The main takeaway addressed the topic of risk. 542 people have been to space, 18 of which did not return alive. There is clear risk in offering commercial flights to space. Attenborough noted that risk is everywhere; knowing how to manage it satisfactorily is the key to success. I will touch more on the topic of risk under the Day 3 summary.
Supply Chain Strategy
Miguel Suarez, Supply Chain Manager for Lafarge, Europe, delivered an excellent presentation on managing supply chain strategy in rapidly changing markets. Suarez identified three drivers of supply chain strategy: consumer requirements, demand uncertainty and supply uncertainty. A significant change in any one of these drivers within a market requires an adjustment in supply chain strategy. Suarez identified four basic types of supply chain strategy: efficient, responsive, risk-hedging and agile. He noted the importance of aligning the right supply chain strategy with the varying customer groups and market conditions. Drawing on his experience within the spice, jewelry and cement industries, he encouraged supply chain and logistics managers to start the alignment process now as building up a new supply chain strategy can be quite time intensive.
Supply Chain Trends
The final presentation on the Day 2 agenda was a panel discussion which addressed “Supply Chain Trends: A Five Year Perspective.”
The recurring trends mentioned and discussed by the panel of four supply chain and logistics experts included (in no particular order):
- Vertical and horizontal supply chain collaboration
- Risk Management
- Shift from “cost management” to “value creation”
- Coopertition – cooperation with competitors
As mentioned in part one of my review, the day closed with a networking BBQ. Attendees did not allow the bad weather stand in the way of a nice evening of networking:
— Clare Dewhirst (@DewhirstC) June 17, 2014
Day 3 Highlights
Perfectly in line with the panel’s prediction of risk management as a top supply chain trend, John Manners-Bell, Chairman of the Supply Chain Council of the World Economic Forum, delivered an insightful presentation on the topic. Manners-Bell identified nine main forms of supply chain risk: economic risk, natural disasters, geopolitical/security, terrorism, corruption, business process risk, cargo crime, piracy and societal risks. When asked if risk has increased, his answer is “yes and no.” He believes external risks from disruptions are on the rise, while internal risks have fallen as supply chain strategies have developed (JIT, Lean Inventory, Quick Response etc.).
However, as good as lean inventory, JIT, and remote production (and other similar strategies) have been for the supply chain, they have led to a systemic vulnerability to “high impact – low probability” events, such as natural disasters. Complacency can lead to a lack of preparedness for such events. Today’s supply chain networks are complexly intertwined, and consequences from one network can have unforeseen and critical consequences in a different network. Manners-Bell provides four techniques for mitigating risks and stresses that deciding on which strategy to adopt relies heavily on understanding the cost implications of each approach:
- Inventory Management – Build a buffer
- Sourcing – develop contingency strategies for specific Supply Chain links
- Adopt sense and respond technology to make dynamic routing decisions
- Acceptance – do nothing as costs of mitigation outweigh benefits of lean supply chain strategy
Manners-Bell also talked about the increasing reputational risks companies are facing with their supply chains in terms of environmental practices and worker conditions.
Key Performance Indicators
Christian von der Schulenberg from Siemans delivered an informative presentation on using non-financial KPI’s to drive supply chain success. He emphasized the importance of an effective target setting approach which includes measurability and reachability. Setting targets too high could lead to demoralization. The most important supply chain KPI is the “Net Promoter Score” which indicates the level of customer satisfaction. When choosing what KPI to measure, supply chain and logistics managers should identify the bottlenecks they are experiencing and set a target for improvement. By choosing the right KPIs to measure, supply chain sustainability can be reached.
Quotes to note and Conclusion
There was simply just too much to cover at this event with an agenda full of exciting and informative supply chain and logistics topics. I would like to end my review the top quotes from various keynote, case study and workshop speakers:
“Supply Chains are not a cost to be managed. Supply Chains are an asset to be leveraged and should be an engine that drives value creation.” – Jeanne Reisinger: Global Supply Chain Improvement Strategist
“If you stop getting better, you stop being good” – Christian von der Schulenburg: Siemans Head of Power Division, Supply Chain Management
“Nothing is risk free… understanding it and managing it satisfactorily is key.” – Stephen Attenborough: Commercial Director at Virgin Galactic
“Future supply chains will be about resilience” – John Manners-Bell: Chairman of the Supply Chain Council of the World Economic Forum
With that, I conclude my review of the European Supply Chain & Logistics Summit 2014. Feel free to comment on your main takeaways from the event in the section below. I am very much looking forward to 2015!