MHD SUPPLY CHAIN
STRATEGY AND VISIBILITY VITAL TO AUSTRALIAN SUPPLY CHAIN
Nate Rosier, SVP Consulting at enVista, is a globe-trotting supply chain strategist with a global vision to match. He talks about global and Australian bottlenecks, and why better strategy and visibility are imperative down under.
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ate Rosier, SVP Consulting at enVista, operates primarily out of the United States while consulting on supply chain strategy projects across the world, including Australia and the APAC region. “I run our consulting practice, which consists of about 100 people,” Nate says. “We do supply chain strategies across the world. Some are in Australia, Singapore, Hong Kong, a few in the UK and India – and the rest in the US. We work projects everywhere.” Nate notes that nowadays most supply chains are global – even those for basic goods like groceries – but that companies across the world are still hamstrung by old modes of thinking. “Supply chains still mostly operate on a basic linear process basis,” he says. “It’s still largely the practice to have just enough trucks, just enough containers, and just enough ships to handle a ‘steady state’. Such processes assume that tomorrow will be the same as today; whether there’s capacity to handle disruption is not built into supply chain thinking.” The exceptions to this rule, Nate says, are the big-name companies – Walmart, Amazon, Nike, Apple – who truly do consider supply chain strategy as integral to their overall business strategy. Most companies, though, are stuck in the past, Nate says. “And one of the worst things that companies do is to operate a just-in-time global inventory model,” he says. “It’s a horrible mistake.” Why is the just-in-time 28 | MHD DECEMBER 2021
model ineffective? “Before COVID, those of my clients who were operating on a just-in-time basis – I pulled them out of it because it costs more money to operate that model globally than it does to just preposition inventory strategically,” Nate says. “The reason for this is the length of planning cycles. To get components from Asia to a factory to assemble things in the United States – the stretch of time involved is so long that forecast accuracy of actual future needs and demand is very low. With such low predictive ability, whatever you order in this manner is going to be wrong for the situation you actually find yourself in.” Inevitably, he says, this means that airfreight shipments will be used at the last minute to compensate for inaccurate earlier predictions. “The companies that effectively manage global supply chains strategically position what I call ‘shock absorbers’,” he says. “When you’re importing product, you have long lead times and therefore a lot of risk associated with it. What many companies will do is simply flow their product into distribution centres across different countries. What they should be doing instead is holding inventory closer to ports as a hedge, so that it can then be deployed flexibly and within a shorter timeframe to accommodate changing demand patterns in different locations. Unfortunately, everybody usually just wants to buy a bunch at once, do a big load, and sell it through. Well – the reality is – you don’t always know where it’s going to sell.”
Nate Rosier, SVP Consulting at enVista. The short shrift afforded to import supply chain strategy is compounded, in the Australian context, by two major limitations, Nate says. “Firstly, Australia has a far higher percentage of imports compared to other countries. Secondly, there isn’t much in the way of port development.” He says that the US has excellent port operations and a variety of competing options to get goods to the same place via different routes. “We have a lot of inland ports in the US – where there’s a drop off at the coast and it goes straight from ship to rail and is received at a port that’s inland,” Nate says. “So, if I’m trying to get something to Chicago, I can access via LA, or Oakland, or Prince Rupert up in Canada – and it’ll get there in about the same amount of time.” The variety of backup options in the US provides a safeguard against specific port disruptions. Indeed Nate adds that the variety of port development
