Supply Chain Innovation - Q1 2021 by Mediaplanet UK&IE

Q1 / 2021

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Supply Chain Innovation

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Reshaping supply chains with a sustainable thread

IN THIS ISSUE

If the UK manufacturing sector is to recover quickly from the disruptive impact of the COVID-19 pandemic, much will depend on the durability of its complex supply chains.

Using digital tech to unlock supply chain carbon strategies

06 More help needed for suppliers impacted by the pandemic

06 The resilient net zero supply chain Project Manager: Alex Murphy Business Development Manager: Josie Mason josie.mason@mediaplanet. com Managing Director: Alex Williams Head of Business Development: Ellie McGregor Head of Production: Kirsty Elliott Designer: Thomas Kent Freelance Designer: Lottie Fox-Jones Digital Manager: Harvey O’Donnell Paid Media Strategist: Jonni Asfaha Production Assistant: Henry Phillips Mediaplanet contact information: P:+44 (0) 203 642 0737 E: uk.info@mediaplanet.com All images supplied by Gettyimages, unless otherwise specified

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WRITTEN BY

James Selka DL CEO Manufacturing Technologies Association

he complex nature of manufacturing supply chains makes them more vulnerable than most to the effects of a global shutdown, such as that experienced during the pandemic. Reshaping supply chain models with a more sustainable thread is therefore highly desirable, while the ability to manufacture our own critical goods such as vaccines, medical equipment and defence products will be of vital importance to the nation’s ability to bounce back. Several industries, especially automotive and aerospace, have been significantly affected by the pandemic and will continue to rely on innovation and agility to secure their long-term future. Planning for recovery, manufacturers have had to ask some tough questions about how robust their supply chains are. Even before the pandemic and with Brexit looming, many had looked to regain greater control over their operations by reshoring increasing parts of their supply. This continues to be enabled by sophisticated and powerful manufacturing technologies that drive us towards greater viability of producing to demand. Lower miles and less waste all adds up to a welcome and important step towards net zero. Supply surety Having surety over supply will be a key factor in how quickly the industry is able to recover. The successful vaccine programme and the gradual easing of lockdown restrictions mean the UK is in a better position than most to resume full production. Allied to its reputation for producing quality goods, the picture is more optimistic than it was looking in the final quarter of 2020.

Several industries, especially automotive and aerospace, have been significantly affected by the pandemic and will continue to rely on innovation and agility to secure their long-term future. A further determining factor in the speed of recovery will be the ability of manufacturers to enhance their production efficiency to make step changes in their competitiveness. Automated processes are becoming more widespread and advances in machine tool design, metrology and allied software mean production gains can be more readily attained. Investment confidence With Brexit and the pandemic understandably affecting investment confidence, delayed decisions about upgrading production capabilities were inevitable. But the Super-Deduction stimulus announced by the Chancellor in his spring Budget could incentivise many firms to bring forward their investment decisions. The Manufacturing Technologies Association, which organises the MACH exhibition, is already seeing considerable interest from suppliers for its 2022 event, many keen to exploit the benefits offered by the new scheme. Let us encourage UK manufacturers to seize this arguably once-in-ageneration opportunity, to invest in new technologies and develop their workforces to leapfrog our international competitors, thereby accelerating our economic recovery for everyone’s benefit.

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Reviewing the scalability, flexibility and agility of retailers Record numbers of people turned to online shopping in 2020, driven by lockdown restrictions alongside the ongoing growth in the sector, and 2021 shows no signs of this changing.

A WRITTEN BY

Carl Lyon COO, Hermes UK

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s home delivery was deemed essential right from the start of the pandemic, the industry had to quickly put in strong processes to ensure the safety of their staff and customers. The challenge was that this inevitably impacted on productivity, just as volumes went sky high when shops shut. On a positive note, the increased volumes have also enabled some organisations to invest more heavily in their supply chains. For example, at Hermes we had to implement our five year growth plan in just five months to meet demand. Accelerating long term plans The pandemic has also forced retailers and their delivery providers to review their processes and become more flexible and agile. Both sides have had to focus on good communication as this has been key to ensuring that capacity can meet demand. Looking ahead, the challenge for

the industry continues to be the uncertainty which makes planning and volume predictions a challenge. The key is scalability, with the ability to ramp operations both up and down in response to customer demands and government restrictions. Some companies have turned to technology and automation as a way of building capacity, as it is often more cost effective to invest in automation rather than in new buildings. Challenging traditional approaches Some retailers have been slow to grasp the need to change, with many continuing to maintain the traditional method of using different supply chains for home delivery via a carrier, delivery to their stores and to their own warehouse. This pandemic has proved that this is not always the best approach and, in fact, having a single supply chain that can be easily diverted to ease the strain should be considered. This should

The increased volumes have also enabled some organisations to invest more heavily in their supply chains. also include the ability to fulfil from store – something that is becoming increasingly common as a result of regional and national lockdowns closing shops that contain valuable and possibly time sensitive products. It is crucial that supply chains constantly assess the scenarios of demand and how they are setting up their supply chain to have certain levers that, if required, can be used to deal with the peaks and troughs of the uncertainty. They should not forget the three most important words – scalability, flexibility and agility. Read more at myhermes.co.uk

An intelligent look at procurement A platform with embedded intelligence is the way ahead. Taking the first steps towards autonomous procurement is easier than it looks.

A INTERVIEW WITH

Pete Hodgkinson Sales Director UK, JAGGAER

WRITTEN BY

Virginia Blackburn

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rtificial intelligence and further smart technologies are changing our lives and the way in which we do business, especially in relation to the way human beings and technology collaborate. But there are still companies that have yet to begin their digital transformation, especially when it comes to autonomous procurement. Failing to take action, however, could expose them to greater risk, losing their competitive edge and increases the costs of doing business. While previously procurement’s mission was seen to be driving down costs, now it is seen as driving up value. It is estimated that by 2024, 69% of what a manager does will be automated. It is a platform with embedded intelligence. How to get started It is essential that procurement officers and directors learn how and when to get started; that it is easy to achieve particular milestones and that AI and robotic process automation are not just buzzwords, but essential tools for business today.

Increasingly complex supply networks mean that autonomous procurement helps minimise supply risk and ensure security of supply through enhanced collaboration between humans and technology. To implement it, the company needs to ensure that data is accurate, clean and integrated and then to move forward incrementally by implementing pilot schemes. Do not try too much at once. Here are the four stages and building blocks to achieve autonomous procurement: 1. Automated procurement 2. Augmented procurement 3. Intelligent procurement 4. Autonomous procurement. Soon, procurement professionals will see that manual tasks fall by the wayside and everything is done by machine. In essence, this can be boiled down into four stages: building a strong digital base, establishing the basics, optimise by leveraging

It is no longer a case of whether you can afford to implement autonomous procurement – but whether you can afford not to. emerging technologies and working towards the day of digitalisation. Efficient data monitoring You should develop new cognitive analyses to enable efficient data monitoring. In turn, this will enable better management of suppliers and gain new and better insights by using smart technology, including machine learning and AI. The data will enrich your knowledge of suppliers. You should also begin to implement predictive analytics. These new technologies are having a transformative effect on the way we live and work: they are here to stay. As the field develops, they will attract top minds into procurement. It is no longer a case of whether you can afford to implement autonomous procurement – but whether you can afford not to.

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Using digital tech to unlock supply chain carbon strategies More companies are now working to improve the sustainability of their supply chains through decarbonisation and using emerging digital technologies to tackle the oncoming challenges.

A WRITTEN BY

Julian David CEO techUK

fifth of global carbon dioxide emissions come from multinational companies’ global supply chains, according to a study last year by British and Chinese researchers. Companies can make a huge impact in the fight against climate change by decarbonising their supply chains. In January, the World Economic Forum said it could be a “game changer” for the impact of corporate climate action. Its research found that net-zero supply chains would hardly increase endconsumer costs. Making a commitment to change More and more companies are committing to action in their supply chain. But supply chain emission management is not easy: a fundamental challenge is the limited transparency and there is a lack of accurate, objective, and accessible data. Emerging digital technologies - such

as data analytics, smart sensors, and blockchain – are starting to be used by companies to help them get a handle on their supply chain emissions data. In turn, this data, and the insights that can be gleaned from it using advanced data analytics, can inform strategies to support and incentivise suppliers. Blockchain, enabled by sensors or smart contracts, can help to plug data gaps, delivering trusted, accountable, and timely data. Porsche-backed project CarbonBlock is using smart contracts and blockchain to track emissions in the car company’s supply chain. Using data to drive sustainability Some companies are also using this data to drive demand for more sustainable products. Covalent is using IBM’s blockchain technology for its AirCarbon products to, not only track carbon in the supply chain, but then share that information with their customers.

Others are using it to drive out unsustainable supply chain practices. JBS, the world’s largest meatpacker, will use blockchain to monitor its beef supply chain to drive out deforestation in the Amazon rainforest. Machine learning is being used with other technologies to optimise freight – responsible for 3% of global carbon emissions - by finding optimal routes, minimise shipments and preventing waste through better forecasting demand. We are only at the beginning of seeing these technologies being applied to drive climate action and new digital technologies, such as edge, will no doubt play an important role by supporting local data analytics. But already these examples hint at the potential of these emerging technologies in helping to unlock supply chain emission strategies.

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We are only at the beginning of seeing these technologies being applied to drive climate action.

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Let us encourage UK manufacturers to seize this arguably once-in-a-generation opportunity, to invest in new technologies and develop their workforces to leapfrog our international competitors, thereby accelerating our economic recovery for everyone’s benefit ~ James Selka DL, CEO, Manufacturing Technologies Association

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More help needed for suppliers impacted by the pandemic Supply chains are the beating heart of the economy. They are critical for boosting the resilience and financial strength of smaller and larger businesses, bringing a genuine competitive advantage and make business sense.

upply chains have buckled under the weight of lockdowns. A huge amount of the support has been targeted to the retail, leisure and hospitality sectors, even though many suppliers have lost a significant part of their revenue as a result of restrictions. Suppliers that sell to businesses are not eligible for business rates relief and grant support. This affects a range of industries, from coach firms who would usually be running tours or driving supporters to football matches, to baggage handlers for cruise ships, laundry services for hotels and steak suppliers to restaurants. Their customers are closed, but they are not eligible for support. The Budget on 3rd March saw the Chancellor announce new waves of support for small businesses and the self-employed alike. But the challenge now is ensuring those in the supply chain benefit from these measures, not just those on the frontline. Scale of the problem In total, 56% of those on furlough are in sectors outside of retail, hospitality and leisure and will mainly work for business-to-business suppliers. But only around 10% of grant support is available to those who fall out of these sectors. FSB research shows that 1,000,000 small firms have been left out of support measures. Firms which have suffered massive drops in revenue are still being charged tens of thousands in tax each year, even though their customers are banned from trading. Finding new solutions Our next step is to ask the Chancellor of the Exchequer what measures he can take to ensure that suppliers whose revenue has been impacted by COVID-19 restrictions do not pay tens of thousands in business rates. Also what plans he has to increase the level of discretionary grant support for those who fall outside of the retail, leisure and hospitality industries. As we build our economy back to its former glory, we need The Chancellor to protect our supply chains at all costs.

WRITTEN BY

Mike Cherry National Chair, Federation of Small Businesses

The resilient net zero supply chain In 2019, the UK committed itself to a legally binding target of net zero emissions by 2050. In 2020, came the Prime Minister’s ten-point plan for a green industrial revolution.

WRITTEN BY

Steve Foxley CEO, University of Sheffield Advanced Manufacturing Research Centre (AMRC)

arlier this month, the Government published its £1 billion Net Zero Innovation Portfolio. There can be no doubt that in the corridors of Westminster, and as a consequence on manufacturing top floors and shop floors across the country, sustainability has become as vital a performance indicator as productivity and profitability. Road to decarbonisation The UK is still producing 454.8 million tonnes of carbon dioxide each year – a 44% reduction in the last 30 years, but still 454.8 million tonnes that we need to collectively address in the next 30 years. To reach net zero in 2050, manufacturers will need to decarbonise not just their own factory operations, but also those of their supply chain. It is clear that suppliers need to address their factory emissions, not only because of government legislation, they also need to demonstrate sustainable manufacturing credentials to their customers. As a country, we are increasingly directing our spending away from companies with poor sustainability credentials. Therefore, it is instinctive that those businesses, manufacturers included, will ask their own supply chains for the answers. This is not a threat, however. In fact, this is a distinct opportunity to build resilience. To grasp it, there needs to be appropriate and targeted investment in sustainable manufacturing processes, ones that embrace digital technologies such as 5G connectivity, digital carbon passports, data analytics and artificial intelligence. Onshoring production

As a country, we are increasingly directing our spending away from companies with poor sustainability credentials. Therefore, it is instinctive that those businesses, manufacturers included, will ask their own supply chains for the answers. to stop importing carbon emissions is not enough for manufacturers; that production also needs to embrace more sustainable manufacturing processes than their previous overseas suppliers. Improving productivity of manufacturers Translational research centres, such as the University of Sheffield AMRC, have a critical part to play here. We have built 20 years of success on improving the productivity of UK manufacturers – large and small – and that core activity is no different now, the only new dimension is they need to be net zero as well. The COVID-19 pandemic exposed the fragilities of complex, global supply chains and the need for a resilient, sovereign capability. It also revealed how the most digitally astute manufacturers could pivot their operations to changing market demands. Those same technologies that make processes agile and robust also make them sustainable. They produce manufacturers that are both resilient and green - the exact type of companies that large OEMs need in their supply chain for the next 30 years.