Supply Chain Digital – August 2020 by Supply Chain Digital

AUGUST 2020

www.supplychaindigital.com

Global trade management in the age of COVID-19 WITH INSIGHTS FROM:

ALSO INSIDE:

CREATING VALUE WITH PROCUREMENT OUTSOURCING

LEADING P2P PLATFORMS

HOW COVID-19 HAS TRANSFORMED LOGISTICS AND 3PL

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FOREWORD

elcome to the August edition

pandemic. “The e-commerce trend is

of Supply Chain Digital!

driving faster, more efficient shipping,

This month’s cover feature sees us explore global trade management and

high inventory turnover and inventory staged in forward locations near

gather analysis from experts in the

consumers,” says Bruining.

industry to examine the state of today’s

Don’t miss our interview with Omer

supply chain post-COVID-19.

Abdullah, Co-Founder of The Smart

Elsewhere in the magazine, we gather

Cube, to explore how the future

insights from McKinsey, CIPS and The Hackett Group to discuss how

of procurement will be determined by humans and machines working

to create value from procurement

harmoniously.

outsourcing. Malcolm Harrison, CEO

We also have in-depth digital reports

of CIPS Group, comments: “The

with Bayer, McAlpine Hussman,

pandemic may have been the most

Canopy Growth and World Vision that

challenging of all but risk has always

you won’t want to miss.

been with us and trained professionals

Finally, this month’s Top 10 examines

understand resilience is key to keeping organisations afloat.” Further, we speak with Jaap Bruining, Head of Europe at Coyote Logistics, to discuss the business benefits of 3PL services and the industry’s transformation as a result of the

the leading P2P platforms worldwide. Would you like to be featured in the magazine? Get in touch at sean.galea-pace@bizclikmedia.com Enjoy the issue!

Sean Galea-Pace

www.supplychaindigital.com

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EDITOR-IN-CHIEF

Sean Galea–Pace DEPUTY EDITOR

Georgia Wilson EDITORAL DIRECTOR

Matt High CREATIVE TEAM

Oscar Hathaway Erin Hancox Sophie-Ann Pinnell Sophia Forte

PRODUCTION DIRECTORS

MEDIA SALES DIRECTOR

Georgia Allen Daniela Kianicková

James White

PRODUCTION MANAGER

Owen Martin

Justin Brand Caroline Whiteley

DIGITAL VIDEO PRODUCERS

DIGITAL MEDIA DIRECTOR

PROJECT DIRECTORS

Kieran Waite Sam Kemp

Jason Westgate

DIGITAL MARKETING MANAGER

Stacy Norman

Shirin Sadr CHIEF MARKETING OFFICER

Leigh Manning

CHIEF OPERATIONS OFFICER

PRESIDENT & CEO

Glen White

DIGITAL MARKETING EXECUTIVE

Jack Grimshaw www.supplychaindigital.com

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32 HOW TO CREATE VALUE THROUGH PROCUREMENT OUTSOURCING

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Creating the supply chain of tomorrow WRITTEN BY

WILLIAM GIRLING AND GEORGIA WILSON PRODUCED BY

CHARLOTTE CLARKE

AUGUST 2020

w w w. s up p l y c h ain digi t a l . c o m

B AY E R

Bayer’s Head of Supply Chain Management, Michele Palumbo, discusses the transformation of supply chain and how Bayer is driving innovation

ith over 20 years’ experience within the supply chain and logistics industry, Michele Palumbo is currently the Head of Supply

Chain Management at Bayer S.p.A. (Italy). Palumbo has worked at a number of companies during his career. Prior to joining Bayer in 2010, he worked 12

at SDA Bocconi School of Management, Hoechst Italia S.p.A., Gruppo COMIFAR and various pharmaceutical companies as a consultant in operations and supply chain management. Currently, Palumbo is a member of the Scientific Committee of Il Sole 24 ORE Formazione|Eventi and Adjunct Professor at Università Cattolica del Sacro Cuore in Milan. With his broad range of experience within the industry, Palumbo is well placed to discuss the evolution of supply chain and logistics, and the impact that Coronavirus (COVID-19) is having on the industry. He also has an acute understanding of the technologies – such as cloud computing, advanced radio-frequency identification (RFID), and more – that have both contributed to Bayer’s own digital transformation journey, and are driving the supply chain of the future. He joined us to discuss both areas. AUGUST 2020

“ It is possible to streamline processes and to project systems that are able to resist predictable events, not black swans” — Michele Palumbo, Head of Supply Chain Management Italy 13

w w w. s up p l y c h ain digi t a l . c o m

B AY E R

“ In the future, customers and all the actors involved in the supply chain processes will be interested in having full visibility on the distribution processes” — Michele Palumbo, Head of Supply Chain Management Italy

PRE-COVID-19: OLD PERSPECTIVES Palumbo describes the transformation of the industry as a Copernican revolution that we are in the middle of. However, he believes that the onset of the global pandemic is only accelerating the effects of this revolution. He says: “The impact on industries we are seeing today, I believe, were already rooted a long time ago in the first economical crisis back in the 1930s. Many have previously tried to explain and provide solutions for this revolution, from

economists and politicians, through to tycoons, ideologists and more, each one putting profit, capital, the workers or the environment at the centre of this economic universe. However, none had a comprehensive perspective. “Deming and Juran, for example, tried to put the customer at the centre of the system, but found an audience only in the post second world war Japan,” he reflects. “This disruptive culture reached its peak in the 1980s, with the development of new computing power and the emerging internet allowing the world to connect and forever diminishing the boundaries between countries. Companies that AUGUST 2020

E X E C U T I V E P R OF IL E :

Michele Palumbo Title: Head of Supply Chain Management Italy Location: Milano, Lombardy, Italy Palumbo has been Head of Supply Chain Management Italy in Bayer S.p.A. since 2017. He started working for Bayer in 2010 to source logistics and distributive services for the group in Italy, implementing important strategic and more operational projects in the ambit of the life science industry. Palumbo is a Summa graduate from Bocconi with a research empirical thesis on circular economy and majored at Polytechnics of Milan in industrial management. He joined the SDA Bocconi faculty where he designed and coordinated managerial logistics training for the technology and production department. After collaborating with some management consulting companies, he took on the role of innovation and logistics manager in the business services department of the pharma-chemical group, Hoechst, in Italy. Then he was responsible for central logistics services in one of the leading pharma wholesalers in Italy, Comifar-Phoenix Group. Palumbo is an Adjunct Professor in Operations and Supply Chain Management at the Catholic University of Milan and faculty member of Il Sole 24 Ore Business School. A serial innovator, as a manager and academic, he offers a multifaceted perspective and is able to create value in different contexts thanks to technologically advanced, sustainable and efficient solutions. Empathic and altruistic, intellectually curious and a visionary, he has a large family and is involved in caritative initiatives. He is a board member of the Italian Food Aid Foundation and of the Observatory on Transport Compliance Rating.

w w w. s up p l y c h ain digi t a l . c o m

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6:12

started to connect at that point began

reduced to certifications, audits and

to compete to gather the best core

procedures designed to mitigate the

competences.

main risks. The spirit of progressing

Palumbo explains that growing pres-

towards zero defects became the spirit

sure on margins as a result of global

of greater ‘resilience’. However, I believe

competition was problematic for the

it is possible to streamline processes

long-term sustainability of the entire

and to project systems that are able

system. As a result, the perspective

to resist predictable events, not ‘black

became increasingly short term and

swans’. And, we have to admit that the

short sighted, based around a quarterly

more over-structured the systems are,

ROI. “The new rules were fixed to com-

the more fragile they reveal to be.”

pete, survive and prosper,” he states.

Reflecting on this, he muses:

“But, at the end of 1990s, the concept

“Compare this financial short-sighted

of continuous improvement was mainly

perspective with the ones of Cristoforo w w w. s up p l y c h ain digi t a l . c o m

B AY E R

Colombo, Leonardo da Vinci, Galileo

exposed to natural threads struggles

Galilei, and many other visionaries who

to develop antibodies that become part

changed the world with their long-term

of its survival assets. Resilience stands

perspectives. Or, consider those who

to immunity like a snail to a seed â&#x20AC;&#x201C; a

built cathedrals without knowing if

snail relies on his shell to cope with

they could have seen them completed

threads. A seed falls to the ground and

or not. In my experience, we have a

is immediately attacked by microor-

great opportunity today to change our

ganisms that try to eat it. But, in doing

perspective very easily. If we change

that they free the vital energy impris-

it to immunity, we can switch to a more

oned in the rind and life starts rooting

natural and sustainable concept:

and, as a paradox, eating the same

threads, after all, are opportunities.

microorganisms. Life takes advantage

We are meant for that, every organism

of threads.â&#x20AC;?

AUGUST 2020

account the concept of ‘Personal, Automate, Local (PAL)’, as described by transformation expert S.A. Culey. “Personalisation and customer centricity is increasingly important. Amazon calls it ‘customer obsession’, and it’s something that we have all experienced – it’s set the modern benchmark,” he explains. “Working in the pharmaceutical industry, where customers are often patients and drugs are called ethical products, it is not difficult to get the concept.” Automation, he notes, is driving collaboration and visibility. “It is the end of invisible supply chains where no news means good news,” he explains. “In the

PERSONAL, AUTOMATE, LOCAL

future, customers and all the actors

Reflecting on challenges and opportu-

involved in the supply chain processes

nities in more general terms, Palumbo

will be interested in having full visibility

considers the impact of the global

on the distribution processes.” Finally,

COVID-19 pandemic. It is, he says,

Plaumbo notes, the idea of Local is

“only the latest disruptive event that is

driven by the concept of density of

accelerating the evolution of supply

value. In terms of volumes, in the last

chains towards collaborative ecosys-

30 years the miniaturisation of elec-

tems able to cope with big challenges

tronic components has enabled both

and take advantage of them by improv-

a noticeable technological enrichment

ing their response capabilities.”

and a reduction in size or dimensions

Supply chains in the future, says Palumbo, will have to take into

of products. This would immediately drive a higher density of value, if it were w w w. s up p l y c h ain digi t a l . c o m

B AY E R

not for the more than proportional cost decrease of the technological developments. “The final result is counterintuitive, a general decrease of the density of value,” says Palumbo. “In logistics, this is one of the most basic but important elements to consider in the engineering of a distributive network: decreasing density of value allows higher stocks to be distributed and an increase of the service level possible for the customers. This is exactly what 20

we are experiencing with ecommerce during the current lockdown situation.”

THE IMPACT OF COVID-19 ON THE PHARMACEUTICAL SUPPLY CHAIN AND LOGISTICS INDUSTRY Considering the current state of supply chain and logistics amidst the COVID-19 pandemic, Palumbo is impressed by the response of the industry. “COVID19 emerged in late February with the first three cases of coronavirus in Lodi, where our LSP Silvano Chiapparoli Logistica principal warehouse is located. We immediately engaged the second warehouse, located in the center of the country, to switch roles in the AUGUST 2020

distributive network and minimise the impact of quarantined areas, where it was difficult to enter or get out. Special medical assistance was immediately settled, and a specific COVID-19 protocol was implemented to grant safety conditions for the active workers. Redundancy in the distributive network and distributed stock in two warehouses allowed an exceptional result. “It is impressive,” he continues. “I have to say how reactive the supply chain has been in particular to cope with this disease, certainly in relation to transporting the medical supplies that are required worldwide, as well as the level of collaboration between colleagues from all around the world. I would have never imagined having meetings in the middle of the night, 24-hours a day, seven days a week. That’s really impressive and something that we’ll never forget.” Palumbo, who believes that the future for supply chains will change as a result of the virus, explains that “the logistic system will become extremely local and decentralised as a result of COVID-19, which will be a huge challenge for the future for organisations w w w. s up p l y c h ain digi t a l . c o m

B AY E R

“ The logistic system will become extremely local and decentralised as a result of COVID-19, which will be a huge challenge for the future for organisations to compete with a completely different shift in approach” — Michele Palumbo, Head of Supply Chain Management Italy

AUGUST 2020

to compete with a completely different shift in approach. As I mentioned before, COVID-19 is accelerating the trends of the Personalised, Automated and Local approach. From my perspective, it’s very important that in the future there will be local abilities to serve the customers in an extremely agile, reactive and proactive approach. It will be a fundamental change.”

BAYER: DIGITAL TRANSFORMATION AND PREPAREDNESS Bayer has, for the past 156 years, used science and technology to provide a better life for all. Innovation, as a consequence, lies at the heart of the organisation. With that in mind, it should come as little surprise that Palumbo recounts a more than positive response to the COVID-19 crisis. To understand that response, and the wider ambition for technological innovation in the company, he explained in more detail Bayer’s transformation journey. “Today the competitive advantage has changed to competing as ‘systems’ rather than as companies. Technology provides the industry with the ability to escalate, therefore companies need to w w w. s up p l y c h ain digi t a l . c o m

B AY E R

be interconnected with their systems.

“It spends more than €5bn on R&D every

At Bayer we have implemented multiple

year, meaning that we can experiment

technologies to escalate our operations

freely and treat any failures as simply

over the years, including RFID trackers

the necessary steps towards success.”

across the supply chain to monitor the

This creatively fertile atmosphere has

flow of goods and Blockchain in the

allowed Palumbo to develop a range

near future to increase accessibility,

of different ideas and projects over

traceability and reliability.” he concludes.

the past 10 years. Serving over 17,000

Bayer is no stranger to frontier-

customers across Italy, Bayer S.p.A.

pushing innovation; its research team

maintains a complex flow of supply

discovered and later distributed

channels, yet the company is able to bal-

Prontosil, the world’s first prominent

ance the myriad elements within it with

antibiotic, which won the 1939 Nobel

transparency, traceability, efficiency and

Prize in Medicine and went on to save

flexibility. The origins of the system that

countless lives. The company’s pres-

make this possible, Palumbo says, can

ence in Italy consists of three divisions:

be traced back to 2010.

Bayer S.p.A. (human and animal), Bayer CropScience (botanical) and Bayer Healthcare Manufacturing (production, packaging and distribution). With a regional revenue of €1.02bn, three state-of-the-art production sites and approximately 2,000 local collaborators, the company is representative of the professionalism, dedication and transformational creativity that has defined Bayer for over a century. Palumbo tells us that it is this spirit that first drew him to the company. “Bayer is really pursuing research and development,” he explains. AUGUST 2020

BUILDING A COLLABORATIVE ECOSYSTEM

Palumbo. Doing so was no easy task,

At that time, Bayer had the vision for

as marrying old systems with new

a digital transformation that would

software proved to be highly challeng-

see the inception of a ‘collaborative

ing. However, he continues, pursuing

ecosystem’, combining TMS (transpor-

100% automation in these aspects

tation management systems), cloud

was a practical necessity, not just

and advanced analytics capabilities.

because it increased the efficiency

This was to be a ‘from the ground up’

of transport costs but also to ensure

journey, starting with system automa-

business continuity in an increasingly

tion via the integration of software

complex environment. “Bayer moved

with legacy technical structures and

to a cloud platform, a pilot project for

then progressing onto more qualita-

the company worldwide. We were the

tive developments. “Phase one was

first to move outside the boundaries

to move from the focus on processes,

of Bayer’s IT system and use a new,

such as pre invoicing, contract man-

unique platform in order to monitor and

agement and so on,” elaborates

track deliveries.”

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“ We were the first to move outside the boundaries of Bayer’s IT system and use a new, unique platform in order to monitor and track deliveries” — Michele Palumbo, Head of Supply Chain Management Italy

company also required a way to leverage this new resource in a method that would allow the supply chain to continually adapt and stay ahead of trends. This is where data analytics and simulation software come in: “They are very important when re-engineering the distributive network in a country,” says Palumbo. “With this software, I have the ability to redesign it and find out the exact consequences of doing so. I can project; I can have a clear understanding of the effects on cost and service level of the new distributive asset.” Added to this is the usage of RFID (radio-frequency identification) in a way which Palumbo calls “unique within the pharmaceuticals industry”. RFID is a

TECHNOLOGY TRANSFORMATION

form of identification technology that can

A shift towards cloud computing edged

enable the unique identification of large

Bayer towards the overall goal for its

volumes of products, assets, people,

transformation: increased collabora-

animals and much more. For a relatively

tive capability. Now with a centralised

low cost, special RFID labels can be

platform from which to share and

added to items or logistics supports

store information, various elements

(e.g. cartons, pallets, etc,) which give

of the supply chain (warehouses, car-

off a readable signal. Each tag has an

riers, agents and customer service

extensive operational lifetime and emits

representatives) could pool strands of

a unique identifier that can be transmit-

information in a flexible manner. Even so,

ted over a long distance at a very fast

with new data streams now open, the

rate, enabling massive and simultaneous w w w. s up p l y c h ain digi t a l . c o m

B AY E R

readings that provide a huge increase

its diverse applicability, from Brand

in accuracy, speed and productivity

Protection to production control

compared to barcode readings.

and Industry 4.0 applications, asset

Using this relatively cheap method,

management, hospital processes

billions of items can be accurately

optimisation and many others. However,

tracked during all parts of the logistics

despite the fantastic opportunities that

process, thus granting customers

RFID technology presents to supply

peace of mind through enhanced trans-

chains, very few industries have been

parency which illustrates every step

proactive in integrating it; Palumbo

of their distributive journey throughout

notes that retail, airlines and conveni-

LSP warehouses, carriersâ&#x20AC;&#x2122; hubs and

ence stores could all benefit from the

subsidiaries, up to destination.

cost-saving and enhanced stock

Moreover, RFID technology can provide value to companies thanks to AUGUST 2020

control implications, yet single-digit percentages of companies opt to do so.

“ We’ve collectively realised how fragile our supply chains are; as a result of coronavirus, it’s become clear how important it is to have reliable digital systems that show us the reality of the whole supply chain” — Michele Palumbo, Head of Supply Chain Management Italy

handling unit arrangement, shipping, receiving and inventory, with an average of 10 to 15 readings per box. All this data generates added value through real-time information and a dedicated BI web dashboard that provides full supply chain visibility, detailed and accurate traceability, perfect recall capability and operational KPI monitoring. “Increasing the level of service means a general improvement not only in operational efficiency,” Palumbo clarifies, “but also an improvement in turnover. The benefit that we expect from this project is an increase in our ability to review errors, customer complaints

In Bayer Italy’s deployment, every

and returns. Bayer will be able to have a

single box of product and every

real-time visibility throughout the entire

GreenPallet is uniquely identified by

supply chain.” This will go hand-in-hand

an RFID label and tracked individually

with a significantly increased rate of

throughout the whole supply chain,

productivity and logistical accuracy

starting from LSP facilities up to final

from a relatively small investment in

delivery to customers. More than 30

RFID technology. “In the future, all of

facilities of Bayer’s LSP and transporta-

this shipping information could be certi-

tion partners are equipped with RFID

fied by each and every single actor on a

readers and stations, managed by

shared blockchain,” he continues. “We

middleware that collects and sends all

will also be able to trace information like

data to a remote server. Products and

ambient temperature with embedded

GreenPallets are read during relevant

temperature sensors in order to get

processes such as picking, palletised

data from a cold-chain perspective.” w w w. s up p l y c h ain digi t a l . c o m

B AY E R

THE SUPPLY CHAIN OF THE FUTURE Bayer’s developments and vision for the supply chain’s future are truly futuristic and the company’s focus on solutions for contemporary problems doesn’t stop at RFID. Increasing the level of sustainability in the company’s operations has been over 20 years

1863

Year founded

$43mn+ Revenue in US dollars

in the making, starting with the 1997 ‘Ronchi Decree’, which redefined corporate waste as anything a company discards, intends or is required to throw away, and is consequently taxed 30

for. This has given way to ‘circular eco-

107,824 Number of employees

nomic’ thinking, wherein a company seeks to reduce production ‘inputs’ and reuse materials in a cost-effective

the waste. As a result we have saved,

and environmentally friendly manner.

more or less, €1mn per year.”

It was this restructuring of priorities

The effective evolution of Bayer’s

that resulted in Bayer’s ‘GreenPallet’.

supply chain is a model example

Realising that 75,000 new wooden pal-

of why innovative and bold thinking

lets were being produced every year,

aren’t just ornaments for successful

the company realised that it could save

companies, they are the reasons for

large amounts of money by manufac-

that success.

turing reusable pallets from (recycled)

Referring back to those challenges

plastic. “Instead of being wasted, the

outlined previously, Palumbo claims

pallets return to the warehouse,” says

that the company’s attitude towards

Palumbo. “This has allowed us to avoid

investment in R&D could be more

a huge amount of wasted wooden

valuable now than ever before.

packaging, as well as tax payments for

“We’ve collectively realised how fragile

AUGUST 2020

our supply chains are; as a result of

“As I have previously stated, threats

coronavirus, it’s become clear how

like coronavirus will make us stronger,

important it is to have reliable digital

because our supply chain will be able

systems that show us the reality of the

to meet the challenge,” Palumbo con-

whole supply chain. Imagine a world

cludes. “This is the story of the supply

where you can really trust in your

chain of tomorrow, where everything is

partners because of the tools that

interconnected, everything is feasible

you have enabled, which provide

and a digital ecosystem is able to cope

information in real time via different

with threats that we can’t predict today.”

platforms.” It is through these systems that a new standard of best-practice for customer service in the industry can be reached, and it is this that Bayer is working towards. w w w. s up p l y c h ain digi t a l . c o m

PROCUREMENT

HOW TO CREATE VALUE THROUGH PROCUREMENT OUTSOURCING WRITTEN BY

SEAN GALEA-PACE

AUGUST 2020

w w w.suppl yc ha i ndi gi ta l. com

PROCUREMENT

Outsourcing is an increasingly popular trend in procurement. But do the benefits outweigh the risks?

ith keeping up with the latest trends of a fast-paced and constantly evolving market both difficult and expensive, many

organisations are beginning to turn to outsourcing as a solution. This allows a company to spend more 34

time adapting their operations for long-term change, while the outsourcing partner handles the non-core activities.

THERE ARE CONSIDERABLE BENEFITS TO OUTSOURCING NON-CORE ACTIVITIES, INCLUDING: • Making more time for internal staff to focus on the business’s core activities. • Providing the ability to access expert, high quality services without the need for staff training and operating costs, investment in new technologies etc. • Allowing increased productivity and efficiency in outsourced activities. • Streamlining of operations. • Faster adaptation to change. • Decreased issues with team management. • Reduced overall operational costs. AUGUST 2020

“ Outsourcing of transactional procurement has become quite common and can render higher process efficiency and compliance through standardisation of processes, automation, and the availability of skilled workers” — Iliana Filyanova, Partner, McKinsey’s Manufacturing & Supply Chain practice

w w w.suppl yc ha i ndi gi ta l. com

PROCUREMENT

In McKinsey’s article ‘Creating value through procurement outsourcing’, the evolution of outsourcing strategic procurement activities, such as supplier selection, contract negotiation or specification management, is shown to have become more widespread. To make strategic procurement outsourcing a success, McKinsey has highlighted three basic steps:

“ Outsourcing often involves a contract for provision of a complex service and to manage this effectively a resource should be retained which understands the complexities of this service” — Malcolm Harrison, CEO, CIPS Group

1. Outsource strategic buying only in

3. Choose outsourcing partners that

categories where doing so offers

have the capabilities to address those

clear value.

sources of value, then define and imple-

2. Have an exact understanding of the

ment agreements that maximise the

sources of that value and how to

chance of capturing potential savings.

unlock them. W H AT I S O U T SO U RCI N G?

Outsourcing is the process of finding an external third-party supplier to take on the management and provision of a service. It is generally used for non-core activities and used when a business may not have the skills or the expertise in-house for a product or service, which is often linked with a lack of critical scale, or an in-house investment is needed which can’t be prioritised or may need to get something to market quickly. Outsourcing allows for scaling up or scaling down according to need. Indirect outsourcing is goods and services a business needs to maintain and support its own operations. Direct outsourcing is for goods and services relating to the business product or service.

w w w.suppl yc ha i ndi gi ta l. com

PROCUREMENT

Source: McKinsey 38

clients, outsourcing providers can often negotiate better prices, particu-

WHAT IS THE VALUE?

larly in areas where the company’s own

After an organisation has created a

spend is too small or infrequent to give

shortlist of potential categories for out-

it a strong position in the market. To

sourcing, it should decide whether it is

capture the benefits of volume aggre-

neccessary. In order to decide, organi-

gation, however, companies must

sations must know exactly how

ensure their own specifications and

outsourcing can deliver value in a cer-

delivery requirements are sufficiently

tain category and pick the right

similar to those of the outsourcing pro-

provider and deal to harness that value.

vider’s other clients and that they are

According to McKinsey, the value

willing to accept the provider’s sourc-

levers available to strategic buyers -

ing decisions, such as transitioning to

whether in-house or outsourced - fall

lower cost suppliers.

into four core categories:

• EXPERTISE • VOLUME AGGREGATION

Their scale allows outsourcing provid-

By bundling demands from multiple

ers to offer deep expertise and

AUGUST 2020

How B2B online marketplaces could transform indirect procurement CLICK TO WATCH

0:44

39 real-time market insights across a

often delivering significant benefits in

broad range of categories. Access to

transactional sourcing activities, how-

leading expertise doesn’t only provide

ever, the nature of strategic buying can

direct benefits in categories where

limit the savings achieved.

organisations don’t have their own from the best and improve their own

• D EMAND AND SPECIFICATION MANAGEMENT

capabilities in other areas.

In most successful purchasing organi-

expertise, it can also help them learn

sations, 40-50% of the total savings

• LABOUR ARBITRAGE

achieved come from changes in inter-

Outsourcing providers offer a combi-

nal factors, such as optimising

nation of scale, standardised

specifications to minimise total cost of

processes and low-cost locations

ownership or controlling demand.

designed to decrease the labor cost of

Such savings also tend to be the most

sourcing activities. With labor arbitrage

sustainable over the long-term. w w w.suppl yc ha i ndi gi ta l. com

PROCUREMENT

Capturing the benefits requires close

capabilities, and scale they may not

and ongoing collaboration between

have in-house. Transactional procure-

the purchasing function and other

ment includes routine

parts of the business, which could be

requisition-to-pay activities (R2P), such

harder for an outsourced provider.

as purchase order creation and man-

Iliana Filyanova, Partner for

agement, invoice payment, and vendor

McKinsey’s Manufacturing & Supply

management. Outsourcing of transac-

Chain practice believes procurement

tional procurement has become quite

outsourcing spans a range of activities,

common and can render higher pro-

from strategic to transactional.

cess efficiency and compliance

“Strategic procurement includes

through standardisation of processes,

Source-to-contract (S2C) activities

automation, and the availability of

from market analysis and category

skilled workers.” However, despite pro-

strategy development to strategic

curement outsourcing being seen as

sourcing and contracting,” explains

an appealing option to many organisa-

Filyanova. “Outsourcing of S2C can

tions, Filyanova is also mindful of the

give companies access to expertise,

risks involved. “If companies do not

“ T he pandemic may have been the most challenging of all but risk has always been with us and trained professionals understand resilience is key to keeping organisations afloat” — Malcolm Harrison, CEO, CIPS Group

appropriately define the scope and incentives of an outsourcing agreement, they risk losing value over the mid- and long term,” says Filyanova. “For example, if the provider focuses mainly on optimising commercial levers - from whom to source, at what prices - and does not address demand and specification levers, 40-50% of the value may be lost. To effectively influence demand management levers - what and how much to buy - a provider will need to be able to manage change

AUGUST 2020

within an organisation and have effec-

“It’s important to question whether

tive client relationships to influence

there is sufficient expertise in-house,

specifications and consumption deci-

or additional budget available to bring

sions. This often appears to be

in additional support or innovative

challenging for an outsider, resulting in

thinking in a new project. Another

quickly plateauing savings.”

challenge is ensuring that senior

Malcolm Harrison, CEO of CIPS

teams and the CEO are on board to

Group, understands some of the chal-

ensure the project team can work

lenges that come with procurement

cross-functionally with the out-

outsourcing. “Understanding the

sourced resource efficiently and

rationale behind what you’re trying to

effectively, including strong communi-

do is probably the most challenging

cation links.

part, but there’s plenty of other obsta-

“Once a contract for an outsourced

cles along the way,” explains Harrison.

supply has been established then this w w w.suppl yc ha i ndi gi ta l. com

PROCUREMENT

contract has to be managed.

With the worldwide disruption of

Outsourcing often involves a contract

COVID-19 impacting businesses across

for provision of a complex service and

the world, Nic Walden, Senior Director,

to manage this effectively a resource

Procurement Executive Advisory

should be retained which understands

Membership Programmes and Melani

the complexities of this service. Poor

Flores, Associate Principal at The

contract management as well as insuf-

Hackett Group reflects on the impact to

ficient resources and poor data are

procurement in the immediate aftermath

frequently cited as reasons for out-

of the pandemic. “It’s clear that across

sourcing contracts not delivering the

different industries the impact is differ-

anticipated value.”

ent, but the initial impact has been primarily operational,” explains Flores. “It’s been important to source new

goods, such as PPE, to ensure that factories can continue to operate in safe conditions. This is in addition to responding to changes in demand and working with suppliers to look for substitutes for products or services that have been affected by the pandemic.” Walden believes that the COVID-19 pandemic is very different to the financial crisis of 2008. “Although it’s been a terrible crisis for everyone involved, procurement has actually benefited from COVID-19 and has been elevated to a more strategic role,” explains Walden. “However, it’s too early to say how much of an effect the

Malcolm Harrison, CEO, CIPS Group AUGUST 2020

pandemic will have on procurement outsourcing in the near future.”

C I P S - H OW T O B U ILD SU P PLY CHAI N RESI LI EN CE

• P rioritise high risk sources and do a deep dive into the implications for your business. • A ny businesses single-sourcing from one country need to investigate whether this is the safest strategy. • I nterrogate your supply chains beyond the first few tiers with a particular focus on identifying critical suppliers who may no longer be financially viable.

•E valuate the benefits of investing in systems which provide better data not just to improve efficiency and take faster decisions but also to give greater transparency. •U se a mix of forecasting tools and develop relationships with suppliers ‘on the ground’. •L ook to form alliances even with competitors to reach a win-win situation for all.

• E nsure you have real transparency of what is going on in your supply chains.

•E nsure you have the necessary capabilities and train / develop your function to meet the increased business requirements.

With the future of the industry in

all, but risk has always been with us

mind, Harrison believes the supply

and trained professionals understand

chain must remain vigilant and build

resilience is key to keeping organisa-

resilience to guard against a potential

tions afloat,” affirms Harrison. “Any

second wave of the coronavirus or any

businesses single-sourcing from one

other pandemics over the coming

country should be one of the first steps

years. “Shocks to supply chains do

as so many were caught out when the

happen such as volcanoes and tsuna-

virus first hit China.”

mis, and skilled, up-to-date professionals know this. The pandemic may have been the most challenging of w w w.suppl yc ha i ndi gi ta l. com

GLOBAL TRADE MANAGEMENT

AUGUST 2020

Global trade management in the modern supply chain WRITTEN BY

SEAN GALEA-PACE

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GLOBAL TRADE MANAGEMENT

Experts from The Hackett Group, Gartner and McKinsey discuss global trade management in today’s supply chain post-COVID-19 46

hese days, having real-time visibility in the supply chain is essential. Due to the speed in which

Josh Nelson, Associate Principal, Strategy & Transformation at The Hackett Group, believes that any

technology is being adopted in the

organisation with a global supply base

industry, organisations without global

can benefit from global trade man-

trade management systems are few and

agement systems due to the number

far between. A company that utilises a

of permutations between the global

global trade management system can

supply chain and tariff laws. “Global

expect to cut costs, risks and delays

trade management provides an

associated with manual compliance and

organisation with consistency and is

tracking efforts. This includes the efforts

incredibly valuable,” explains Nelson.

that are generated by such a system

“For example, in the produce industry,

that can easily pass the audit of a gov-

produce is grown in one area and

ernment or external agency.

then shipped worldwide based on the

AUGUST 2020

What is global trade management? Global trade management is the practice of streamlining the entire lifecycle of global trade. This is across order, logistics, and settlement activities to significantly improve operating efficiencies and cash flow. This makes it easier to facilitate the flow of information, money and goods in global trade supply chains that include buyers, sellers and intermediaries, including customs agencies, banks and freight forwarders. Compared with domestic distribution management, global

seasonality. If mistakes in documenta-

trade management introduces the

tion begin to be made, the regulators

complexities of multiple languages,

start to slow down shipments and it

time zones, currencies and models

takes longer to get things through the

of transport.

border to the point where a company

Despite it now being a vital require-

that is successful at a cross border

ment, some companies still operate

and global trade management system

legacy systems which see employees

can fly through. If you want a fast supply chain that is efficient and consistent, having an error free process is vital. This is where a global trade management system really excels.â&#x20AC;? Due to the global disruption caused

manually analyse spreadsheets packed full of data. Due to the complex nature of the modern day supply chain, a lack of automation leaves room for human error and interpretation that could potentially mean severe consequences.

by COVID-19, speed is an increasingly w w w.suppl yc ha i ndi gi ta l. com

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S U P P LY C H A I N

“ Global trade management technology provides shippers with greater agility and reaction speed to find new suppliers” — Oscar Sanchez Duran, Senior Principal Research Analyst, Gartner Supply Chain Practice

key component in the supply chain.

have two or three supply points that

Nelson adds that the ability to trans-

creates more complexity in the supply

port goods across borders quickly and

chain and enables you to do business

efficiently and provide an edge over

with more than one country at a time

competition is vital. “Getting goods

to mitigate against unprecedented

from one place to another quickly and

situations occurring.” Oscar Sanchez

efficiently is a huge advantage, particu-

Duran, Senior Principal Research

larly in the current times,” he explains.

Analyst, Gartner Supply Chain Practice,

“In the new environment, with disrup-

believes that global trade management

tions across the entire supply chain,

is essential to help navigate the cur-

you end up having a lot of variations

rent ‘new normal’ climate. “We’ve seen

in sourcing. 10 years ago, you could

how countries in different regions

have had one point of supply in China

have closed their borders at different

that was consistent, however, now,

times, and now while some parts have

you can hedge against that disruption

relatively come back to normal oth-

from pandemics and other disasters

ers are still on that journey, affecting

that could be out there. It’s wise to

how shippers source products and w w w.suppl yc ha i ndi gi ta l. com

GLOBAL TRADE MANAGEMENT

raw materials from their suppliers or

check if it is compliant to trade with

how businesses transform their prod-

them, classify the products and doc-

ucts to supply increasing demand for

ument to meet all legal requirements

products like PPE, hand sanitisers,

for customs regulations or calculate

etc., or to simply capitalise on market

the landed costs of their products.”

instability,” he explains. “Global trade

Despite the clear benefits, Ashu-

management technology provides

tosh Dekhne, Partner in McKinsey’s

shippers with greater agility and

Operations Practice, highlights that

reaction speed to find new suppliers,

there are still challenges due to the

AUGUST 2020

Five key advantages of global trade management 1. Streamlined screening of export orders Firms without a global trade management software system must manually screen every sales order from an international customer to ensure that the customer and associated parties aren’t on the sanctioned party list published by various government agencies. Delays such as this can add days to an organisation’s order-to-cash cycle time, affect cash flow and impact revenue. Through a global trade management system, as soon as a sales order comes through, it instantly clears the sales order for shipment or flags it for export compliance issues. 2. Elimination of order processing delays Once the export order is ready to be shipped, the organisation must ensure that all export documentation is completed and that any filing, like Shipper’s Export Declaration, is done correctly. A global trade management system allows all activities to be done correctly, so all shipments can be delivered on time. 3. Visibility into landed costs Without a global trade management system, landed costs must be inputted manually. This means that actual costs, such as product pricing, rebates and discounts don’t always get factored into decision-making. Without that visibility, companies could be losing money on a product they think is profitable. 4. Reduction of inbound delays An import shipment that lacks accurate paperwork can be significantly delayed at customs. If a company experiences such delays frequently, it is forced to either carry excess inventory or incur more stock-outs. Delays in inbound shipments are particularly expensive for companies in industries where product life cycles are short. 5. Streamlining financial trade Letters of credit are vital to conducting business with an international customer. Delays from collecting cash from international shipments due to incorrect documentation can be expensive. Through a global trade management system, this streamlines the process for collecting and filing the documentation and ensuring the paperwork is correct.

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GLOBAL TRADE MANAGEMENT

“ Managing this complexity requires detailed knowledge of international trade policies, agreements, and tariffs” — Ashutosh Dekhne, Partner, McKinsey Operations Practice AUGUST 2020

quantity of steps required to create products and move them from their origin to their end consumer. “Managing this complexity requires detailed knowledge of international trade policies, agreements, and tariffs, along with the ability to effectively coordinate the physical distribution of products and the flow of information needed to track the delivery,” says Dekhne. “Most companies have fragmented systems and limited visibility into end-to-end flows, which can create challenges

Global Trade & Logistics What is Global Trade? CLICK TO WATCH

3:37

for managing supply chains effec-

trade management capabilities. It’s

tively and efficiently.” Nelson adds

becoming more core and integrated

there has been significant evolu-

with business planning processes

tion about the definition of global

and that ultimately improves visibility

trade management over the last

into the supply chain.”

few years. “It was traditionally a standalone capability. Companies would have an ERP system, a planning system and one of those full time capabilities was global trade management,” he explains. “However, now, we’re seeing integrated supply chain software companies harness more supply chain visibility and global w w w.suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T/ T E C H N O L O G Y

Combining human and artificial intelligence in procurement WRITTEN BY

AUGUST 2020

WILL GIRLING

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P R O C U R E M E N T/ T E C H N O L O G Y

Omer Abdullah, Co-Founder of The Smart Cube, discusses how the future of procurement will be determined by humans and machines working harmoniously

s supply chains begin to adjust to the requirements of the post-lock-

down world, many companies will be exploring the best ways to streamline their procurement models. Those who had previously hesitated in developing a digital

transformation strategy will probably find themselves compelled to explore the technological advantages of blockchain, internet of things (IoT) assets, artificial intelligence (AI) software, cloud computing and more. However, whilst adopting these new technologies is the foundation for change, it is not the end of the road. Transforming procurement is an interconnected process involving both tech and the innovative utilisation of human talent. It is only by properly synthesising these two aspects that supply chains can be adequately reimagined. AUGUST 2020

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â&#x20AC;&#x153;It is only by properly synthesising technology and human talent that supply chains can be adequately reimaginedâ&#x20AC;?

The Smart Cube is a research and

industry-leading expertise to deliver

analytics organisation dedicated to

tailored solutions for clients across

helping companies navigate the com-

specific sectors. Currently working

plex world of modern business.

closely with almost one-third of the

Founded in 2003, the company com-

Fortune 100, The Smart Cube excels

bines cutting-edge tools, research

at helping others add value and gain a

methods and analysis with

competitive edge in the market 59

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P R O C U R E M E N T/ T E C H N O L O G Y

decision-making. When Omer

the supply chain broadly,” recalls

Abdullah, Managing Director, co-

Abdullah. “We realised that we could

founded the company in 2003 with

provide ongoing intelligence and ana-

Gautam Singh, CEO, and Sameer

lytics to organisations, but also pull

Walia, it was based on the joint-realisa-

everything together with high value

tion that leading companies still

thought leadership and insight devel-

required fundamental insights, advice

opment work.” Reflecting on the

and guidance when navigating the

journey The Smart Cube has under-

modern market. “What we saw was this

taken over 17 years, he states that he is

need for ongoing research and analyti-

proud of growing the company to over

cal support that organisations clearly

500 people and opening offices in

needed, especially in procurement and

India, Romania, the UK and the US.

AUGUST 2020

T H E SMART CU BE

Omer Abdullah is the MD of The Smart Cube, which was co-founded with Gautam Singh, CEO, and Sameer Walia in 2003. Earning a BBA degree in Business Administration from the University of Macau and an MBA in Corporate Strategy and International Business from the University of Michigan (1993-1995), Abdullah began his career as a Principal at A.T. Kearney management consultancy (now called ‘Kearney’). Having gained almost a decade of experience, he decided to take a chance on a career change with The Smart Cube and hasn’t looked back since. Responsible for the deployment of the company’s supply chain and procurement solutions to companies in the CPG (consumer packaged goods), retail, industrial and life sciences sectors, Abdullah is an expert at unlocking value within supply chains.

“ Our most successful engagements are those relationships where we operate as a true extension of their team” — Omer Abdullah, Co-Founder/MD, The Smart Cube

Recognising that collaboration is vital when seeking new advantages in the market, Abdullah states that The Smart Cube operates in a way which facilitates a truly symbiotic relationship. “Our most successful engagements are those relationships where we operate as a true extension of their team,” he says. “We’re doing work that supports them from a strategy, category management and procurement perspective whilst simultaneously building understanding w w w.suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T/ T E C H N O L O G Y

“ The idea behind Amplifi was to codify information and support clients to do higherorder, more intelligent work” — Omer Abdullah, Co-Founder/MD, The Smart Cube

in a way which positively benefits

credibility with internal stakeholders via

aspects such as sourcing execution.” In

a fact-based, database approach.”

practice, this helps The Smart Cube to

This highly informed method of oper-

elucidate the value of specific KPIs and

ating is likely to become ever-more

vendors; the burning question the com-

invaluable as supply chains continue to

pany wishes to ask its clients is not just

adjust to the new post-COVID-19 world.

‘what do you want to do?’ but rather

As market volatility makes formulating

‘why do you want to do it?’. It is only

a commodity forecast strategy difficult,

through truly understanding a client’s

The Smart Cube’s ability to provide

motives, Abdullah claims, that you can

insights into fixed and variable costs

deliver the added value they are looking

will be essential. “I think what’s been

for. “There’s a level of trust which makes

interesting over the course of the

our way of operating a true partnership.

COVID-19 crisis is how well we’ve been

Through that, we’ve delivered tens of

able to help customers respond to

millions of dollars in savings over the

these very immediate and pressing

years and that’s the quantitative benefit.

challenges,” says Abdullah. A natural

However, our qualitative impact derives

consequence of close collaboration

from deeper understanding and

and far-reaching industry expertise,

AUGUST 2020

knowledge with state-of-the-art tools and advanced analytical capabilities, Amplifi can be utilised proactively by staff to deliver value to clients or responsively to generate data and context. Remarking on the decades of industry know-how which drive Amplifi, Abdullah adds that one of the main benefits of The Smart Cube’s OIE is that it circumvents the need to ‘reinvent the wheel’ with every enquiry. Able to access a wealth of procurement intellithe company demonstrates that

gence and resources, companies can

greater levels of efficiency are a benefit

forecast the best route for weathering

to this way of working. Consequently,

supply chain disruption or fluctuation.

the pandemic has enabled a busy work

Originally only available to the compa-

period for the company and allowed its

ny’s clients but now, in the wake of

service level to shine. “Some of the

COVID-19-related disruptions, is now

best pieces of feedback I’ve received

available to the global procurement

were in recognition of our fast

community on a freemium basis with

response. When a client has a problem,

three levels (Essential, Professional and

they call The Smart Cube and a day or

Unlimited). “The idea behind Amplifi was

two later we’ll deliver a solution,

to codify information and support cli-

whether that’s cost-saving, moving a

ents to do higher-order, more intelligent

supplier base or even finding alterna-

work,” Abdullah states. “It’s fundamental

tive suppliers,” explains Abdullah.

information that gives you the lay of the

Sitting at the technological heart of

land: market size structure, growth

The Smart Cube is Amplifi PRO, the

rates, etc. We’re giving companies the

company’s organisation intelligence

opportunity to sign up and find this

engine (OIE). Combining deep

information themselves.” w w w.suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T/ T E C H N O L O G Y

T HE SM ART CU BE

According to The Smart Cube’s website, Amplifi PRO “supports practitioners across the procurement function, including sourcing managers, category managers, category buyers, supplier risk managers, and Centre of Excellence teams.” Designed to provide a rich, fulfilling and enhanced user experience, the platform’s features include: • A resource centre specifically for COVID-19-related information. • Regularly added topical content on important issues. • Over 75 reports on sustainability and innovation. • Price and market data on more than 1,200 commodities. 64

• A selection of documents by membership events specialist CASME, including insights from other procurement companies. • Customisation features for individual users. In a press release, Gautam Singh said, “Amplifi PRO was designed to accelerate decision-making for our procurement clients. Now, we are offering this fantastic resource to the global procurement community, with enhanced category intelligence, practical tools and an intuitive user experience. In this time of major supply chain disruptions, more buyers and suppliers having access to essential procurement intelligence and being better-informed benefits everyone.”

AUGUST 2020

Amplifi PRO: On-demand digital procurement intelligence platform CLICK TO WATCH

3:20

“ The Smart Cube’s enhanced analysis will allow us to access deeper insights and do things that other people cannot do” — Omer Abdullah, Co-Founder/MD, The Smart Cube

The data-rich advantage of a solution like Amplifi is that it brings procurement firmly into the digital era, whereas before, Abdullah posits, it has often lagged behind because of more traditional operating methods. “What’s interesting on the digital side is that we see a huge spectrum in terms of progress. Even though you might think that Fortune 100 companies would be quite advanced in their digital transformation, for procurement this is often not the case.” Nevertheless, with companies able to generate large quantities of data across their supply chain via w w w.suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T/ T E C H N O L O G Y

AUGUST 2020

However, this is only half the story and The Smart Cube’s success has and will continue to depend on the synergistic relationship between its technology and aforementioned work ethic. With primary and secondary research capabilities in multiple languages, financial research, quantum modelling, data analytics, predictive and prescriptive modelling work and even a patent research team, it is the integration of human and artificial intelligence (HI and AI) that Abdullah considers ‘the key’ to a transformative supply chain. “From a procurement executives’ perspective success is driven by being smart combinations of cloud, IoT and AI,

about which decisions are tackled

organisations like The Smart Cube will

and the reasoning behind decision-

be vital for classifying the value of data

making,” he concludes. “Ultimately, all

and how to use it. “Research and analyt-

of it comes down to being able to

ics have to go together,” he says. “We’re

make better decisions and not look-

no longer in an environment where you

ing for panaceas; to be successful,

can separate qualitative data from

you have to have the mindset that

quantitative data. The Smart Cube’s

says, ’look, I’m going to take the best

enhanced analysis will drive greater vol-

technology, but I also know that I

umes and allow us to work with data in

need the best human talent too’.”

much more productive ways. It’ll allow us to access deeper insights and do things that other people cannot do.” w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

How COVID-19 has transformed the logistics and 3PL industry 68

WRITTEN BY

AUGUST 2020

GEORGIA WIL SON

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LOGISTICS

Jaap Bruining, Head of Europe at Coyote Logistics, discusses the business benefits of 3PL services and the industry’s transformation due to COVID-19 “In Europe — and many places around the world — the term “3PL” (third-party logistics) can encompass a wide range of services and 70

shipping solutions,” says Jaap Bruining, Head of Europe at Coyote Logistics. These solutions include the likes of Less than truckload (LTL) and truckload brokerage, intermodal, transportation management, freight forwarding, value-added logistics, warehousing, reverse logistics and final-mile. “3PLs also service a wide range of businesses, both large and small. But, the main takeaways are that not all 3PLs provide all services, and for every facet of the supply chain, there are 3PLs that offer shipper and carrier solutions.” With this in mind, Bruining explains that the global freight market is large, complex, and fragmented. “The higher the complexity, the more attractive it is to outsource to a 3PL provider. Taking Coyote as an example: we ship AUGUST 2020

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10,000 loads per day and have a global

explain when 3PL services are beneficial

team of 200 IT staff to continuously

for both carriers and shippers:

improve processes and with that our

“For carriers, keeping their trucks

customer and carrier experience. It’s dif-

loaded and moving profitable freight

ficult to replicate that in-house. Another

is the number one priority. While many

example: if you’re a relatively small com-

work directly with shippers to source

pany with thousands of different

freight, it is extremely difficult to have

customer addresses across Europe, it

every driver loaded in every direction

will be labour intensive to cost effectively

all the time. This is especially true for

outsource this to dozens of different car-

smaller carriers, who do not have the

riers who will each have their own

sales resources or fleet size to build

geographical strengths. That is where

relationships with a huge network of

3PLs come in.” Bruining goes on to

shippers. By working with a 3PL 73

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LOGISTICS

provider, carriers gain access to thou-

direct relationships with carriers, they

sands of shippers (and their loads)

do not have the internal resources or

whenever and wherever they need

shipment density to procure 100% of

them. They also get a representative

the capacity they need. 3PLs help to

that manages the entire quoting,

fill in the gaps, as well as provide flex-

booking and tracking process. For

ibility. No matter where they need

shippers, working with a 3PL provider

their goods picked up and where they

gives them access to the carrier

need them delivered, a scaled 3PL

capacity they need. Similar to carriers,

can help quickly connect their ship-

while most shippers will develop

ment to a carrier looking to move a

AUGUST 2020

load in that lane. By handling this entire booking and shipping process, and offering support throughout, 3PL providers give shippers time back to focus on other parts of their business. Additionally, many 3PL providers offer multimodal solutions, which means they can connect shippers to several types of trucks, such as flatbed, lorry, refrigerated van and many others. This dramatically streamlines the procurement process, which lends to cost efficiencies.” When it comes to emerging trends within the industry Bruining contemplates that “it is difficult to separate “current trends” and “technological trends” within the standard and thirdparty logistics space. Even trends

“ While we are in the depths of one of the worst economic environments in modern history, we will recover, and we don’t believe it will be in the distant future” — Jaap Bruining, Head of Europe, Coyote Logistics

that are not centred on a tech product are often made possible through technological advances.” For example Bruining details the rise of ecommerce which has been a pervasive force throughout the global supply chain, but the level of service is only possible with the use of sophisticated operating , planning and inventory systems. “The e-commerce trend is driving faster, more w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

Coyote Logistics: Helping You Deliver on Your Promises CLICK TO WATCH

1:03

76 efficient shipping, high inventory turnover and inventory staged in forward locations near consumers. There has been a huge influx of 3PL providers to help support this incredibly complex supply chain, providing a wide range of service.” As a result, “ecommerce has amplified the importance of the supply chain function in almost every business that ships physical goods. Some companies are choosing to make tremendous investments to build out the function internally, while many others are looking to 3PLs to outsource the function.” AUGUST 2020

“As the world becomes increasingly

THE IMPACT OF COVID-19 AND HOW IT IS TRANSFORMING THE LOGISTICS AND 3PL INDUSTRY

globalised, and consumer demand for

With the effects of COVID-19, signifi-

fast and free shipping keeps climbing,

cantly impacting supply chains around

so does the demand for 3PL services.

the world, Bruining explains that “the

Not only does the industry continue

shock to international supply chains

to grow, but 3PLs share of shippers’

since the pandemic broke out has

routing guides continues to grow.

been unparalleled. In April, global air

3PLs are also expanding their scope

freight capacity was down 38.7% year-

of services, giving shippers access to

on-year as passenger flights were

more solutions without managing

taken out of commission, causing air

more relationships.”

freight rates to surge. ‘Almost all trade

Another trend that Bruining has seen emerge is the demand for flexibility.

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LOGISTICS

ACTIO N S F O R S H I P P E R S T O TAK E I N P REPAR AT I O N FO R T HE B O U N C E BACK PO ST COVI D-19 • Develop a thorough return-to-work strategy - whether you are totally dormant right now, or just have some portion of your workforce operating remotely, you need to document your process and communicate it with your employees • Contact your strategic providers - whether it’s a supplier or a carrier, you need to know what will be available to you in the coming months, both in terms of inventory and how you’re going to move it • Add f lexibility - find out ways to simplify production. Pare back product lines and minimize SKU counts. Make the shift with a mind towards in-home consumption. Work with providers that are going to be able to help you pivot quickly 78

– Jaap Bruining, Head of Europe, Coyote Logistics

lanes across the world are seeing dou-

Bruining, who describes the phases

ble-digit air cargo capacity declines

Europe has experienced so far. “In

compared to last year,” says Philippe

Europe, we have seen two phases, the

Gilbert, President of Supply Chain

first phase was in March where not

Solutions at UPS (Coyote Logistics’s

only facilities closed but also borders

parent company).

got difficult to cross for trucks. During

“With transatlantic air cargo capacity

this phase there was a lot of confusion

down 44% from the United States into

and uncertainty and conditions from

Europe, and 58% in the reverse direc-

the people driving the trucks were very

tion. Charter rates are running four to

tough. We are now in the second

six times higher than normal, though

phase, most unclarities around border

we expect rates to come down as pas-

crossings have been resolved. That

senger air capacity recovers some

said, a lot of facilities are still closed,

ground in the coming months,” adds

with some industries hit significantly

AUGUST 2020

“ The higher the complexity, the more attractive it is to outsource to a 3PL provider” — Jaap Bruining, Head of Europe, Coyote Logistics

chances of emerging from the pandemic in good shape.” As a result of the pandemic, Bruining has seen the deployment of robotic process automation (RPA) and autonomous vehicles for moving and storing products accelerate further. “Although the trend lines were

harder than others, resulting in a sharp

already in place, the reality of managing

drop in demand, estimated to be

supply chains in the era of COVID-19 has

around 30% across Europe. Carriers

dramatically upended old ways of doing

have been struggling during this phase

things. Take physical distancing and

but as we see a gradual opening up of

stay-at-home orders, which are already

facilities, demand is slowly recovering.

having a deep impact on distribution and

As a result of all of this, there has been

logistics. Warehouses that use robots

a need for the industry to handle the

may not only be more efficient but might

situation dynamically.”

be less likely to shut down if workers get

Since the outbreak of COVID-19, Bruining states that the pandemic has certainly been testing the global supply chain, highlighting the importance of innovation. “From a desire for greater resilience to the accelerated adoption of warehouse automation and alternative transportation modes, the crisis is throwing open a new world of challenges and possibilities. But it’s not only about improving supply chain resilience, it’s also about driving innovation at the same time. Companies that double down on innovation now will maximise their w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

“ This has been the most difficult shipping environment for supply chain and logistics professionals in our observed history” — Jaap Bruining, Head of Europe, Coyote Logistics

online chatting, video conferencing and EDI/API integration. We have also seen customers finally accepting to move from paper to digital invoicing and PODs. As a company with a heavy foundation in technology is a big advantage to us.”

THE FUTURE OF 3PL LOGISTICS IN A POST COVID-19 WORLD

sick.” With supply chains being reconfig-

Without a doubt Bruining states that

ured in response to the pandemic,

“this has been the most difficult ship-

Bruining predicts many organisations will

ping environment for supply chain and

relocate their operations to regions

logistics professionals in our observed

where free trade agreements are in

history, but as an industry, we’re con-

place, particularly for companies now

tinuing to produce and deliver the

reviewing the finer detail of their supply

essential goods that we all need to sur-

chains. For similar reasons, an increased

vive. As tough as the previous quarter

appetite for shorter supply chains is

has been, and though we are far from a

expected to drive a rise in nearshoring.”

full recovery, we believe that we have

Undoubtedly, like many others Bruining has witnessed an acceleration

passed through the trough and have begun the climb upwards.”

in the digitalisation of processes, not just

With COVID-19 revealing for many

in terms of consumer behaviour but also

organisations that they have a lack of

within companies. “What we have been

visibility in the further reaches of their

seeing is that on the carrier side, carriers

supply chain, Bruining expects to see a

have become much more interested in

move toward improved visibility as the

engaging digital freight brokers like

pandemic unfolds. “Technology has a

Coyote Logistics. On the customer side,

key role to play here. Advanced data

we see people moving from telephone

analytics will prove pivotal in helping

communication and meeting in person to

firms gain more visibility into their

AUGUST 2020

supply chains and better mitigate

with alternative manufacturers, allow-

anticipated disruption. Strengthening

ing you to shift operations more quickly

communications with Tier 1 suppliers is

in response to disruption.â&#x20AC;?

another vital element of improved vis-

Other expectations that Bruining

ibility. When dealing with primary

sees for the future of supply chains

suppliers, itâ&#x20AC;&#x2122;s important to properly

and logistics is â&#x20AC;&#x153;a greater focus on

understand where they source from

inventory management, with lights-out

and any supply chain risks associated.

warehousing and redundant inventory

Being able to act on this information

becoming commonplace. The adop-

will ultimately increase the resilience of

tion of lights-out warehousing, where

your extended supply chain. This may

facilities depend increasingly on auto-

mean diversifying your supply chain by

mation and require few staff, alongside

proactively developing relationships

an emerging appetite for redundant w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

AUGUST 2020

ACTIO N S F O R S H I P P E R S T O TAK E I N PREPAR AT I O N FO R T HE B O U N C E B ACK PO ST COVI D-19 • Have a solid understanding of what money is owed to you - now more than ever, every pound counts, make sure the well-deserved revenue you earned is getting into your account • Re-examine your network needs - things have changed dramatically over the past few months, and the usual lanes you used to run may no longer be valid, make sure you have a clear understanding of what your network looks like today • Have a strategic call with your shippers - if you work with shippers, especially those that are not currently shipping, reach out to see what their forecasted needs are, go beyond a ‘what-can-I-get-this-week’ and try to get a realistic look into their supply chain needs for the remainder of the year – Jaap Bruining, Head of Europe, Coyote Logistics

“ From a desire for greater resilience to the accelerated adoption of warehouse automation and alternative transportation modes, the crisis is throwing open a new world of challenges and possibilities” — Jaap Bruining, Head of Europe, Coyote Logistics

inventory—or excess stock—mark what some suggest will be a swing away from an outright emphasis on efficiency to a more nuanced approach to supply chain health.” Bruining concludes that “while we are in the depths of one of the worst economic environments in modern history, we will recover, and we don’t believe it will be in the distant future.”

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T O P 10

P2P Platforms 84

Supply Chain Digital looks at 10 of the leading P2P platforms globally, in no particular order WRITTEN BY

SEAN GALEA-PACE

AUGUST 2020

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T O P 10

SWEDEN

350

NUMBER OF EMPLOYEES

Wax Digital PAUL ELLIS, MANAGING DIRECTOR

Wax Digital is a leading global provider of cloud-based spend management solutions. Wax Digital web3 Purchase to Pay brings automation to the entire procurement process, rapidly delivering cost and resource savings, while eliminating maverick spend, increasing spend visibility and decreasing manual process. The web-based purchase order system provides an intuitive consumer shopping experience to ensure that employees can quickly and easily meet their needs for products and services from the right suppliers at the right prices.

AUGUST 2020

FINLAND

1,349 NUMBER OF EMPLOYEES

Basware KLAUS ANDERSEN (CEO)

Basware delivers world-class financial supply chain solutions and its platform provides 100% spend visibility. Basware collects financial data across the entire operation in one single platform. The organisation helps companies save money, make growth a reality and propel business to the next level through its market-leading P2P solutions. Basware’s solution also featured as a ‘Leader’ in Gartner’s Procure to Pay Magic Quadrant 2019.

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T O P 10

CALIFORNIA, USA

1,300 NUMBER OF EMPLOYEES

Coupa ROB BERNSHTEYN (CEO)

Coupa’s cloud-based unified suite provides a Procure to Pay solution that connects an entire organisation’s spend - from sourcing and requisitions to invoicing and payments. Coupa’s process flow integrates with multiple ERPs, which allows for a single Procure to Pay across all suppliers, for every employee and business need. Through Coupa’s P2P system, it offers a range of benefits, including better spend optimisation, more savings and a higher ROI.

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T O P 10

NORTH CAROLINA, USA

1,100 NUMBER OF EMPLOYEES

JAGGAER JIM BUREAU (CEO)

JAGGAER provides a world-class P2P solution that allows companies to simplify processes, gain organisational efficiency and drive cost savings. Jaggaer’s JAGGAER ONE solution offers procurement leaders and suppliers full digital transformation across the entire procurement spectrum. Its modular solutions and unified digital platform integrates easily with ERP and accounting systems to help organisations build a fluid supply chain. The solution is focused around key procurement activities, such as the buying experience, superior workflow capabilities and other eprocurement features that harnesses innovation and forward-thinking. Having been named a ‘Leader’ in Gartner’s Procure to Pay Magic Quadrant 2019, JAGGAER delivers four primary capabilities: epurchasing functionality, access to catalog content, electronic invoicing and accounts payable invoice automation.

AUGUST 2020

CALIFORNIA, USA

2,500 NUMBER OF EMPLOYEES

Ivalua DAVID KHUAT-DUY (CEO)

Through Ivalua’s Procure to Pay solution, it empowers users, suppliers and procurement to achieve an efficient and effective process through a complete platform. Recognised as a ‘Leader’ in Gartner’s Procure to Pay Magic Quadrant 2019, Ivalua’s P2P solution is key to enabling and sustaining broader procurement value. Ivalua empowers its users through a digital buying experience and streamlining the full account’s payable process, while integrating seamlessly within an organisation’s ERP system.

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CALIFORNIA, USA

242,371 NUMBER OF EMPLOYEES

Infosys SALIL PAREKH (CEO)

Infosys is a global leader in next-generation digital services and consulting. The organisation helps clients in 46 countries navigate their digital transformation journeys. Its Procure to Pay outsourcing service spans the entire spectrum of accounts payable processes - from scanning to processing invoices, vendor queries, master data management and claims management, while ensuring on-time payment, minimising value leakages and enhancing vendor and employee satisfaction. Its Procure to Pay services deliver business value by reducing the cost of operations, helping attain world-class cost structures and introduce effective controls.

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T O P 10

CALIFORNIA, USA

136,000 NUMBER OF EMPLOYEES

Oracle LARRY ELLISON (CEO)

Oracle is a leading IT company that strives to deliver tomorrow’s emerging technologies today. Since 1977, Oracle has helped people to see data in new ways, discover insights and unlock endless possibilities. Oracle’s Procure to Pay is an integrated solution that links purchasing and payables to maximise return on invested capital. Through Oracle’s Procure to Pay platform, organisations can reduce cost to improve margin, streamline Procure to Pay processes to enhance working capital and drive compliance to optimise asset usage.

AUGUST 2020

NEW YORK

352,600 NUMBER OF EMPLOYEES (2018)

IBM

ARVIND KRISHNA (CEO)

IBM Procurement Services can help transform companies into a cognitive enterprise. Through accessing refined, real-time data, IBM can deliver a highly personalised user experience that can learn over time. IBMâ&#x20AC;&#x2122;s global spend category expertise can optimise spend savings for businesses through intelligent workflows. IBM can reduce business costs and meet the challenges of global enterprises through effective, data-driven Procure to Pay operations. This helps improve the user experience, increase compliance and gain insights through cognitive solutions. IBM strives to develop innovations that matter not only for its own growth, but for its clients and for the world. IBMâ&#x20AC;&#x2122;s procurement and strategic sourcing services, provide end-to-end solutions that have been digitally reinvented with technology, analytics, cognitive insights and IBM Design Thinking.

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E M E A | A P A C | | APAC N O R T H | A EMEA MERICA AMERICAS FIND OUT MORE

FIND OUT MORE

T O P 10

GEP SUBHASH MAKHIJA (CEO) GEP is the leader in unified procurement and supply chain solutions for direct and indirect spend. GEPâ&#x20AC;&#x2122;s unified approach to procurement and supply chain 98

solutions delivery - integrating strategy, software and managed services - helps clients achieve their strategic, operational and financial objectives. GEPâ&#x20AC;&#x2122;s Procure to Pay outsourcing services help drive greater efficiency across all P2P processes, from the point of order to the point of fulfillment and payment. GEP SMART unifies the order-to-invoice process with the source-to-contract process, effectively connecting every order to a contract, to a plan and to a target. It provides full procure-to-pay functionality - from item search to invoice matching and payment authorisation - with best-in-class user experience.

AUGUST 2020

NEW JERSEY, USA

2,000 NUMBER OF EMPLOYEES

We are GEP | Are you one of us? CLICK TO WATCH

3:04

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T O P 10

100

SAP Ariba Live at SAPPHIRE NOW Converge â&#x20AC;&#x201C; The Procurement Channel CLICK TO WATCH

AUGUST 2020

0:16

SAP Ariba CHRIS HAYDON (PRESIDENT OF SAP PROCUREMENT SOLUTIONS) 101 SAP Ariba allows its customers to connect to the largest B2B network, creating dynamic, digital collaboration with millions of suppliers and trading partners worldwide. SAP Ariba Buying and Invoicing is an easy-to-use software solution that sets the standard for all other procurement software offerings. It is user

CALIFORNIA, USA

5,000 NUMBER OF EMPLOYEES

friendly, with streamlined catalog maintenance and a configurable interface. SAP Aribaâ&#x20AC;&#x2122;s P2P solution can allow organisations to become more agile by providing better control over global spend through flexible management and visibility tools. SAP Ariba Buying and Invoicing also helps to simplify commerce by consolidating and managing each phase of a companyâ&#x20AC;&#x2122;s Procure to Pay process.

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102

MOLSON COORS: CREATING COMPETITIVE ADVANTAGES WRITTEN BY

WILL GIRLING PRODUCED BY

STUART IRVING

AUGUST 2020

103

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MOLSON COORS

WE SPEAK TOJEANNE CATE, HEAD OF US SUPPLY CHAIN STRATEGIC PARTNERSHIPS AT MOLSON COORS

urrently the fifth-largest brewing company in the world by volume, the history of the Molson Coors Beverage Company

reaches back to 1774 and brings together the pioneering stories of English Immigrant, John Molson, and German immigrants Adolph Coors 104

and Frederick J Miller. In 2005, Molson merged with Coors, followed by the integration of 100% ownership of MillerCoors in 2016 to create the multinational company as it exists today. Selling 92.1mn hectolitres of product in 2018 and providing employment to more than 18,000 people across regional offices in North America and Europe, Molson Coors is a success story of collaborative business based on a shared passion for making superior-quality beer. Joining the company in 2011, Jeanne Cate has been involved in the brewing industry for most of her career. Graduating from the University of Cape Town with a Bachelor of Science degree in chemical engineering, she secured a position with South African Breweries shortly after and was instantly won over by the genuine craft that making beer AUGUST 2020

105

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MOLSON COORS

“ IT’S TRULY A PRIVILEGE TO LOOK AFTER OUR ICONIC BEERS AS WE EXPAND INTO NEW MARKETS” 106

— Jeanne Cate, Head of US Supply Chain Strategic Partnerships, Molson Coors

requires, and the passion and energy of people in the business. “It was just so incredible to work in the brewery in my first position as a brewing engineer,” she says. “I instantly found an appreciation for the science of the brewing process and beer production.” Gaining experience in the industry and going on to become a master brewer, Cate eventually found herself drawn to the research and development (R&D) and innovation aspect of the business, leading this programme on behalf of Molson Coors International. She became a Senior Director of Supply Chain for the Asia Pacific and Africa region in 2018 (based in Australia). “It’s truly a privilege to look after our iconic beers as we expand across international markets.” Cate most recently stepped into a role leading US Supply Chain Strategic Partnerships: “As Molson Coors implements its revitalisation strategy, the US business is looking to achieve consistent top

AUGUST 2020

One Great Family CLICK TO WATCH

1:58

107 line growth that enables us to invest in

focused on the longer term objective,”

new opportunities.”

she explains. “Our environment is

Asked how her approach to the role

evolving too fast to be paralysed with

is described, Cate claims that her inno-

short-term incremental thinking or

vation background has been invaluable

be derailed by small upsets. We can’t

in shaping her vision of and approach

be resistant to change if we want to

to supply chain management. Indeed,

become and remain competitive. We

it has proved to be invaluable as

need to thrive in uncertainty and be

Molson Coors embarks on a rigorous

content to stay focused on executing

campaign of new market and category

against a clear strategy while flexing

expansion, as well as operational

around the setbacks.”

innovation. “My R&D experience really

Committed to redefining the art

taught me about taking smart risks and

of brewing as a truly 21st century

developing ideas and approaches in

process, the company is investing in

an agile, flexible way while remaining

new technology and always looking www.suppl yc ha i ndi gi ta l. com

MOLSON COORS

108

for ways to increase the efficiency and

special relationship is software solu-

sustainability of its operations. Molson

tions and consulting company enVista.

Coors’ pledges include making its

A leader in enabling manufacturing

packaging 100% recyclable, reusable

and distribution across supply chains,

or compostable by 2025, mitigating

enVista specialises in optimising

20% of CO2 emissions from its value

efficiencies, saving costs and driving

chain and collaborating as closely as

customer engagement. When the

possible with its partners and distribu-

company needed a collaborator to

tors to create innovative new solutions.

assist with its expansion journey in

“Building relationships and encourag-

the APAC region, it was certain that

ing strong teamwork with our partners

enVista could accelerate the transfor-

has helped to underpin our success,

mation. “We needed a company that is

I think,” Cate says. One such partner

straightforward to work with and has a

with whom the company enjoys a

flexible, customisable approach as our

AUGUST 2020

business grows. They’re truly a partner we can call on at any time.” The COVID-19 pandemic has made many companies reassess what an optimised supply chain looks like and how it operates. Cate says that Molson Coors is building the agile corporate culture necessary to tackle this challenge head-on. “Consumer buying patterns are changing at a very rapid pace and our whole supply chain management has needed to adapt. I think this whole experience will allow Molson Coors to develop

“ OUR ENVIRONMENT IS EVOLVING TOO FAST TO BE PARALYSED WITH SHORT TERM INCREMENTAL THINKING OR BE DERAILED BY SMALL UPSETS AND RESISTANCE TO CHANGE” — Jeanne Cate, Head of US Supply Chain Strategic Partnerships, Molson Coors

E X E C U T I V E P R O FILE :

Jeanne Cate Title: Head of US Supply Chain Strategic Partnerships Company: Molson Coors Industry: Beverages Location: Melbourne Jeanne is a commercially-minded food and beverage supply chain and R&D executive with over 20 years’ experience in international supply chain, endto-end innovation and R&D in product and packaging. She has a proven track record of leading a supply chain across developed and emerging markets through large, regional and diverse teams and multiple operating business models. Jeanne is a pioneering and innovation leader, accomplished in step-changing product, package and process development and the in commercialisation of innovations. www.suppl yc ha i ndi gi ta l. com

109

111 capacity in a volatile marketplace.”

from transactional activities, as well as

Cate explains that Molson Coors

empowering employees to leverage

Beverage Company is executing

data and insights to make decisions,

against a broad revitalisation plan to

evaluate outcomes and quickly adjust

streamline Molson Coors’ operations.

course to achieve continual improve-

“The company revitalisation plan is

ment against key performance

also going to involve improving digital

measures. “Data with the right insights

capabilities, expanding data resources,

help us reduce costs, make faster,

growing our innovation systems and

better decisions and create new prod-

increasing our capabilities in precision

ucts or services to meet customers’

marketing and ecommerce execu-

changing needs.” However, as with

tion.” Augmenting the company’s

all new ideas, approaches will also be

supply chain will include the increased

thoroughly researched, piloted and

utilisation of digital solutions that

tweaked before being fully integrated.

leverage new data and technology capabilities to repurpose effort away

Another core challenge being faced by larger brewing companies www.suppl yc ha i ndi gi ta l. com

MOLSON COORS

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113

“ CONSUMER BUYING PATTERNS ARE CHANGING AT A VERY RAPID PACE AT THE MOMENT AND OUR WHOLE SUPPLY CHAIN MANAGEMENT HAS NEEDED TO ADAPT” — Jeanne Cate, Head of US Supply Chain Strategic Partnerships, Molson Coors

is competition driven by consumer demand for craft beers which often have fuller flavour, greater variety and more of a local presence. Molson Coors has participated in the craft beer movement and has already achieved great success with its Blue Moon Belgian White brand. Using its superior industry breadth, Cate explains that “the company maintains its edge by really tapping into this opportunity for new growth.” It’s an approach that has paid off impressively in the US market, where Blue Moon is the best selling craft beer www.suppl yc ha i ndi gi ta l. com

MOLSON COORS

“ SUPPLY CHAINS ARE GOING TO BECOME MORE INTEGRATED, WHICH CREATES EXCITING OPPORTUNITIES AND SYNERGIES ACROSS LOGISTICS AND SOURCING” — Jeanne Cate, Head of US Supply Chain Strategic Partnerships, Molson Coors 114

AUGUST 2020

brand and one of the country’s top 10 favourites overall. Demonstrating that the craft market is a profitable investment, Molson Coors is continuing to expand its portfolio of products and has begun introducing them to international markets, having started with Blue Moon in Australia in 2013. Beyond this, committed to maintaining an interesting and diverse portfolio of products, the company has also announced new lines of canned spritzer wines and

is exploring the possibilities of CBD

opportunity will come from the differ-

beverages in the US.

ent mindset and approach that needs

Despite the company’s success

to be implemented: optimising costs,

and popularity, Cate emphasises that

increasing our market share, meeting

there is still a lot of work to be done

customer expectations and creating

and that the evolution of its supply

potential competitive advantages.”

chain will be critical as it continues to

Cate is convinced that, by clearly

adjust to rapidly changing consumer

defining the company’s vision for the

buying patterns. “Supply chains are

future and realising what capabilities a

going to become more integrated,

modern supply chain will necessitate,

which creates exciting opportunities

Molson Coors will be adopting a mind-

and synergies across logistics and

set rooted in growth and flexibility,

sourcing,” she states. “Our biggest

with an accommodating attitude that will allow it to stay relentlessly focused on its long-term goals. “Innovation isn’t just a single process applied to a specific area of the business,” Cate concludes. “It’s the result of capabilities existing within the company, which then enable ideas to be successfully developed and operationalised. Supply chain transformation is no different.”

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115

116

Inside McAlpine Hussmannâ&#x20AC;&#x2122;s supply chain transformation

AUGUST 2020

117

WRITTEN BY

HARRY MENEAR PRODUCED BY

STUART IRVING

www.supplychaindigital.com

MCALPINE HUSSMANN

Supply Chain Digital talks to Calum Laird, Supply Chain Transition Manager at McAlpine Hussmann, about the companyâ&#x20AC;&#x2122;s bold supply chain evolution

he modern company is only as good as its supply chain. Once the province of a monthly meeting by the accounting

department - and otherwise left to the attention 118

of a warehouse manager or individual department heads â&#x20AC;&#x201C; supply chain management has undergone a radical transformation over the past decade. Driven by a global rise in ecommerce demand, a heightened need for efficiency and the increased potential for technology like AI and cloud computing, the supply chain space has rapidly become a key differentiator between successful companies and those destined for obsolescence. Founded in the mid 1930s, New Zealand-based commercial refrigeration solutions provider McAlpine has been providing industry-leading services to the region for more than 85 years. Now a part of Hussmann Inc and owned by Panasonic, McAlpine Hussmann is undertaking a series of bold initiatives to digitally transform and radically modernise its supply chain. AUGUST 2020

119

1932

Year founded

$95mn Revenue in NZL dollars

300

Number of employees www.supplychaindigital.com

MCALPINE HUSSMANN

“Up until now, the company hasn’t had a dedicated supply chain focus,” says Calum Laird, who has been serving as the Supply Chain Transition Manager at McAlpine Hussmann since February of this year. A supply chain, logistics and warehousing veteran, Laird has been brought on board by McAlpine Hussmann to orchestrate a multi-faceted transformation of the company’s supply chain that involves tackling warehouse management, a significant software implementation, 120

McAlpine: Digital Transformation CLICK TO WATCH

AUGUST 2020

2:32

redesigning procurement process and driving a cultural shift in a company with a long-serving employee base. “There’s a lot of history here, and a lot of people in the business have been here for 20 to 30 years,” he explains. “From a supply chain specific perspective, I’m involving and engaging with everybody that I can, because I know that there’s nothing worse than having some random newbie come in and say ‘this is how we’re doing things now.’” We spoke with Laird to discuss the transition, and the ways in which

“ We want to make sure that every part of our business is connected, interlinked and using every part of the technology that’s available” — Calum Laird, Supply Chain Transition Manager, McAlpine Hussmann

harnessing the power of technology, procurement transformation and change management are poised to radically empower the McAlpine Hussmann supply chain to embrace the ideology of continuous improvement to further create value for its customers and clients. “There’s a four pillar workstream that I’m running with as part of this project,” Laird explains. “There’s procurement, warehousing, SAP and technology, and then people and culture.”

www.supplychaindigital.com

121

MCALPINE HUSSMANN

E X E C U T I V E P R OF IL E :

Calum Laird Title: Supply Chain Transition Manager Location: Auckland, New Zealand

122

My background is varied across a range of supply chain areas from backend retail procurement, inventory management through FMCG, construction sectors and service provider in specialized third party logistics. Over the past 20 years the desire for continuous improvement, business growth and development has built my foundations to ensure that where my career bases me sees the supply chain as an efficient enabler of sales. Right now that base is McAlpine Hussmann. Outside of the office I am a keen BMX rider that despite the occasional visit to hospital services, has been a lifelong passion. I speak some almost tolerable Portuguese at a basic conversation level, Portuglish to my wife and in-laws. I’m always keen to learn from and about people, over coffee or drinks in all sorts of environments, our stories and histories are all as interesting and unique as those they belong to. A spirit of supporting others features heavily in my life having consulted to non-profit organisations and getting involved in community based projects locally. Equally as comfortable in boots and oilskin fixing fences as I am in a boardroom there is a diverse range to the way I live. Chances are if we’ve worked hard together, I’ll offer you a cold beer and a laugh.

AUGUST 2020

WAREHOUSING AND PROCUREMENT

function. As companies scale, decen-

So far, McAlpine Hussmann’s procure-

tralised procurement strategies have

ment function has largely operated with

a tendency to create silos which can

a pre-Industry 4.0 methodology. “For

create major logistical pain points.

a long time, because they know their

“Right now one of our major pain points

product better than anybody, individual

concerns space constraints at our main

departments have been handling

warehouse in Auckland. Part of that

their own procurement,” says Laird. “It

stems from that decentralised procure-

makes sense to some degree, but it

ment function where we’ve got different

also means that the synergies aren’t

things happening in different divisions

really there to streamline that activity

at the same time, but without everybody

and make it the most efficient operation

knowing about it at the same time,” says

that it can be.” One of Laird’s main goals

Laird. “We’ve got things that have been

revolves around the process of cen-

scheduled arriving at the same times as

tralising the company’s procurement

things that are a surprise to us.”

On-Shelf Availability Optimization VUSION - SES-imagotag CLICK TO WATCH

1:20

www.supplychaindigital.com

123

MCALPINE HUSSMANN

“ One of the things that’s highly important within our partner ecosystem is valuing quality relationships” — Calum Laird, Supply Chain Transition Manager, McAlpine Hussmann

In a business like McAlpine Hussmann, this can be a particularly bitter pill, as the company operates by necessity on a project basis. “We obviously don’t just sit around with thousands of freezers waiting for someone to build a supermarket,” explains Laird. McAlpine Hussmann’s warehousing and procurement strategy relies on the company’s ability to receive product and then ship it out to be used in projects with a quick turnaround. “The actual stock we hold long

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McAlpine: Smart Storage Use CLICK TO WATCH

1:44

125

term is predominantly spare parts.

The nature of this cargo can also

We’re talking about very small bits and

prove challenging, Laird notes. Earlier

pieces in storage and everything else

in his career, he was part of the pro-

is quite transitory,” he clarifies. “We

curement function of one of New

might have 20 refrigerated display

Zealand’s major beverage distributors.

cases today and those might be gone

“Slinging beer and wine, for example,

tomorrow. Then, the day after that

is easy because there’s standardised

we’ll have a bunch of trough freezers

sizing pretty much across the whole

on their way to a different supermar-

world. It’s usually 672 750ml bottles of

ket. The transformation I’m overseeing

wine to a palette, or twice as many if

right now is based around ensuring

you’re dealing with 375ml cans or bot-

that this facility is able to manage a

tles and if you buy and sell X-amount of

transient and ever-changing size and

wine, you know within a few millimeters

volume of cargo.”

how much space that’s going to take www.supplychaindigital.com

MCALPINE HUSSMANN

up,” he recalls. This contrasts massively to the variation across refrigeration or HVAC unit ranges, where the length, depth and height all vary more or less from unit to unit. “You’ve got everything from ice machines to serve-over cases and freezer troughs. The product range is monstrous,” he laughs. This diversity is further compounded by the fact that most of McAlpine Hussmann’s customers require customised products. “A particular supermarket might want to have a particular coloured bumper they 126

want to use on the front of a unit for trolley protection. All these things are handled on a case by case basis,” Laird explains. “It wouldn’t be feasible for a company like McAlpine Hussmann to be sitting around with a hundred thousand square metre warehouse stacked full of all these ludicrously expensive and specialised units. It just wouldn’t work.” Redistributing stock in a way that enables this fast turnover, highly transient style of warehouse operation is a key factor in successfully solving the company’s supply chain pain points. Laird notes that communication between business units and an amalgamation of procurement functions will go a long AUGUST 2020

way towards ameliorating this situation. However, in order to create the visibility and cross-company data integration to support positive change, McAlpine Hussmann’s technological capabilities will also need to be overhauled.

TECHNOLOGY TRANSFORMATION “While the space constraints and procurement transformation are very physical things we’re dealing with, we’re also rolling out a massive software and digital communications implementation as well,” says Laird. “We want to make sure that every part of our business is connected, interlinked and using every part of the technology that’s available.” At the heart of this implementation is McAlpine Hussmann’s adoption of SAP’s ERP, MRP, inventory management and warehouse management solutions. In turn these will be integrated with Salesforce’s CRM suite. “The transition to SAP is going to put us light years ahead of where we have been. It allows for real time transfer of all information,” comments Laird. “Our technicians who are out on the road - if they need a particular part to fix a breakdown that they’ve been called www.supplychaindigital.com

127

MCALPINE HUSSMANN

VI SI O N

128

“There’s amazing technology that’s getting invented every single day,” says Laird. As a digital transformation manager, Laird says that he sometimes encounters problems around the subject of artificial intelligence (AI). “People hear AI and immediately picture Jarvis from Iron Man: a heads-up display crossed with a robot butler that can literally do anything and has a mind of its own,” he says. “That’s obviously not how AI operates.” The power of AI to automate elements of jobs to assist human workers and drive efficiency is something McAlpine Hussmann is dedicated to bringing to its customers. VUSION is a large part of this initiative. “It’s part of this big push to help upskill our customers because, at the end of the day, the supermarket is the final mile of the supply chain for us,” says Laird.

AUGUST 2020

VUSION uses AI, along with magnetic and digital shelf labels that can be picked up and moved around. When combined with geolocating smart security cameras, the solution can automate processes “to the point that it can send a replenishment order to one of the store staff’s scanners in that department to let them know that a product needs restocking, and then take them along the most optimised route to carry out that task.”

“ At the end of my tenure, I want to be able to say that this business truly understands and embraces continuous improvement, the digital space and the potential of cloud software, AI and technology” — Calum Laird, Supply Chain Transition Manager, McAlpine Hussmann

a 24/7 repair and service model, which is a huge part of our business,” he explains. “We have technicians come into our warehouse at three in the morning who need a part. At the moment, they have to write down what they’ve taken on paper, and then someone comes in the next day and has to go enter that information into the system to make sure the stock is accurate. The flexibility and agility this gives our entire service team, as well as our back end supply chain and warehouse operators, is fantastic. We have all this added transparency in real time.” It’s an ambitious project. The full SAP

to deal with - can look up the part and

and Salesforce implementation has a

place an order directly from their phone,

go-live date in the first week of October

tablet or other device. They can then

this year. The integration means that

collect that from a local wholesaler, or

there’s still a great deal of data to be

our central warehouse in Auckland.”

cleansed, gathered, entered into the

The SAP integration means that

new system and double checked for

information about part availability,

accuracy. However, Laird is confident

stock levels and location can be

that the transformation will pay big

updated across the entire system

dividends for McAlpine Hussmann,

remotely. Laird expects this to be

and can’t wait to prove it to the team.

particularly useful in alleviating some

“We’re headed for a future where

of the pen and paper data entry that’s

there’s direct interfacing between our

currently generating inefficiencies in

customers, our suppliers and us, and

the Auckland warehouse. “We operate

working to make sure that the days of www.supplychaindigital.com

129

MCALPINE HUSSMANN

writing things down on bits of paper

partners, Laird firmly insists that

are a thing of the past,” he enthuses.

strong relationships are an essential

“All these integrations mean that we’re

part of doing business. “One of the

building a culture where we not only

things that’s highly important within

rely on, but fully utilise the technology

our partner ecosystem is valuing qual-

at our disposal to make sure we’re

ity relationships. That’s a value that

connected to our suppliers as well

McAlpine Hussmann was founded on

as our customers.”

and it continues to be vital today,” he says. Not only does the company work

130

PEOPLE, PARTNERS AND CULTURE

extensively with large-scale, global

Whether it’s within McAlpine

partners from within the Hussmann

Hussmann, across Panasonic’s global

and Panasonic umbrella, but it places

network, or throughout the company’s

equal importance on its relationships

network of trusted suppliers and

with small, local businesses.

AUGUST 2020

McAlpine: Supply Train Transformation CLICK TO WATCH

1:44

131

For over 10 years, McAlpine Hussmann has been working alongside RefSpecs, which supplies them with refrigeration units for the company’s projects. “Companies like RefSpecs really are a huge asset to our business in terms of enabling us to do what we do for our customers. They’re not a huge global corporate; they’re a wonderful, home grown, locally owned and operated New Zealand business. They’re nearby, agile and have a quick response time,” says Laird. “They’re very supportive of our business, and www.supplychaindigital.com

MCALPINE HUSSMANN

we like to make sure we’re supportive of theirs – as we are for all our suppliers and vendors.” Looking inwards, Laird – like every digital transformation evangelist the world over – acknowledges that managing the cultural shift within the company is every bit as important to a successful transformation as software integrations, AI and cloud computing. To do this, he’s working to leverage the extensive industry knowledge of McAlpine Hussmann’s veteran team, 132

hoping to empower them to not only solve existing problems, but to develop a passion for tech-driven transformation. “If there’s anyone I need to learn from and leverage knowledge from, it’s these highly experienced and knowledgeable people. They know our products, customers and processes inside and out. By engaging their support, as well as highlighting the benefits of things like our move to SAP, we can benefit one another,” he explains. “Any level of automation and increased visibility throughout a business by way of software is a great thing for efficiency. I think that some of the people that we’re working with haven’t been exposed to AUGUST 2020

that kind of thing before, and that’s ok – it’s just a matter of making sure that they understand that no one’s trying to replace anyone with robots.”

GOING FORWARD Looking to the future, Laird is optimistic about the cultural changes that he hopes to effect at McAlpine Hussmann. “I would like to be able to instill a culture by way of proof. I need to show the business just how many benefits they’re going to start seeing to their supply chain when these implementations start coming to fruition,” he says. “It won’t all happen at once. I think that ERP, MRP, inventory management and WMS, plus CRM is probably enough implementation for one year. At the end of my tenure, I want to be able to say that this business truly understands and embraces continuous improvement, the digital space and the potential of cloud software, AI and technology.”

www.supplychaindigital.com

133

CANOPY GROWTH: WORLD’S LARGEST CANNABIS DISTRIBUTION NETWORK

134

WRITTEN BY

JOHN O’HANLON PRODUCED BY

ARRON RAMPLING

AUGUST 2020

135

w w w. s up p l y c h ain digi t a l . c o m

C A N O P Y G R O W T H C O R P O R AT I O N

CANOPY GROWTH CORPORATION’S LOGISTICS DIRECTOR MATTHEW SLY TALKS ABOUT THE POST-LEGALISATION CHALLENGE OF DISTRIBUTION IN A REGULATED ENVIRONMENT

anopy Growth Corporation (Canopy) was established in 2013 at Smiths Falls, Ontario as a grower, processor and

producer of medical cannabis. Cannabis originates from India and Asia, where it’s been used for many thousands of years and is so widely 136

used today that a history review is unnecessary. It’s only recently though that western medical science has started to accept the efficacy of cannabis in alleviating illnesses such as epilepsy, multiple sclerosis (MS) and muscular spasms as well as a host of other conditions, both physical and mental. Research and trialling will doubtless isolate and validate many new cannabinoidbased remedies. The debate about legalising cannabis has rumbled on for decades, those in favour pointing out that it is less addictive or physically harmful than either tobacco or alcohol, those against arguing that it is a gateway to hard drugs. However that argument is pretty much lost: legalisation in many countries has generally been welcomed

AUGUST 2020

“ THERE WAS NOBODY TO FOLLOW, NO REARVIEW MIRROR: WE WERE THE LEADERS!” — Matthew Sly, Logistics Director, Canopy Growth

137

w w w. s up p l y c h ain digi t a l . c o m

C A N O P Y G R O W T H C O R P O R AT I O N

“ THE RECREATIONAL MARKET IS WHERE THE MAJOR PART OF OUR BUSINESS NOW COMES FROM” — Matthew Sly, Logistics Director, Canopy Growth

by enforcement agencies because it decoupled pot from the illegal drug trade controlled by criminals. Cannabis for recreational use was legalised by the Canadian government in October 2018, opening a completely new market opportunity to the already well-established industry leader Canopy Growth and its subsidiaries, Tweed Inc (which grows the plants) and Spectrum Therapeutics (which supplies medical formulations). Today, Canopy is the world’s biggest

138

producer and distributor of cannabis and employs some 3,500 people. From growing sites all around Canada, some under glass producing up to five harvests a year, some in open fields yielding a single harvest, the bulk product is brought in armoured trailers to the processing and packing plant at Smiths Falls. It was in the run-up to legalisation that Matthew Sly was appointed Logistics Director of the company. At that point the company employed just 150 people, he recalls, and had no formal logistics department. Until then it had been comparatively simple as all operations were out of a single site at AUGUST 2020

Canopy Growth: Regional Distribution Center CLICK TO WATCH

2:19

139 Smiths Falls. But as acquisitions were

concentrates, had yet to be formulated

made in other provinces, licensing and

for a completely new market. One

moving the cannabis became more

big unknown was how large this new

complex and a supply chain profes-

retail market might become: Canopy

sional was needed.

increased production and growing

For him, the challenge facing Canopy

capacity at this time to meet expected

called to mind how the first settlers

demand but has since modified its

moving westward across Canada must

approach. It aims to maintain its posi-

have felt over a century ago. “There

tion as the world’s leading cannabis

was nobody to follow, no rear-view mir-

company but growth is being carefully

ror: we were the leaders!” Legalisation

matched to market demand as that

presented so many unknowns, and

becomes clearer.

though the core product was now

Recreational shipments outstrip

legal, today’s product portfolio, includ-

medical by a factor of around 10:1

ing edibles, vapes, beverages and

in units, says Sly. “That is where the w w w. s up p l y c h ain digi t a l . c o m

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4:51

142

major part of our business now comes

they provide, has made for a very

from.” And remember that this is a

successful partnership. We can have

high value, rigidly regulated product

goods to the value of anything from

requiring specialised handling. Brinks

CAD$5mn to CAD$20mn on a trailer,

is the global leader in security bulk

and this needs very specialised treat-

transfer of cash and securities for

ment because it not only has to be

banks. Within a month of legalisation,

secure but also in temperature con-

Canopy signed an ongoing agree-

trolled and pharma-grade transports.”

ment with Brinks Canada to provide

Brinks continues to be a key partner,

logistics for its domestic recreational

and it’s not hard to understand why.

distribution network. “We have a fleet

Its CEO Douglas Pertz was excited by

of armoured tractor trailers that we

the tie-in with Canopy, he estimates

use for all our deliveries. The value

the global cannabis industry to be

Brinks brings to us, and the network

worth around US$160bn. As finance

AUGUST 2020

is increasingly traded electronically, it’s not just producers like Canopy who will be the winners. The recreational product is confined to Canada, the medical distribution

E X E C U T I V E P R OF IL E :

Matthew Sly Title: Director of Logistics Location: Ottawa, Canada

is destined for Europe, Australia, and South America. Starting to export cannabis was quite challenging, Sly admits. “One of my first challenges was figuring out how to move cloned plants and cultures to other continents. Navigating the regulations around the movement of agricultural products is one thing, doing that with a controlled substance is another!” His first international shipment was to Germany to open up the Europe market. His second international shipment was to Australia, which required special temperature and humidity-controlled shippers that were custom designed to make sure the cloned seedlings and cultures would not flower or come to harm in up to 36 hours of transit. Part of Sly’s original brief was to set up a Canada-wide warehousing operation and he continues to help design all Canadian and global storage loca-

After a decade in the pharmaceutical and high-tech industries, Matthew turned his attention to logistics. During his 20 years in the field, he has managed one of the largest auto parts fulfillment centers in North America and has also managed Walmart’s Eastern Canada Distribution Center. Now as the Director of Logistics at Canopy Growth Corporation, Matthew oversees all logistics and worldwide distribution of medical and recreational cannabis out of the world’s largest cannabis distribution center in Smiths Falls, ON. In 2018, Matthew piloted the design of Canopy’s Regional Distribution Center and continues to improve efficiencies with state-of-the-art technologies and innovative solutions.

tions. Here the experience he’d had of running Walmart’s massive Canadian w w w. s up p l y c h ain digi t a l . c o m

143

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145 distribution facility equipped him for the daunting challenge. At the beginning of 2018 he was asked to plan and implement a recreational distribution network ready to capture a new and quite unknown demand. He had five months to buy a distribution center, set it up, work out the excise stamp requirements, and put contracts in place with carriers. This called for him to be very creative to cater for as yet unknown quantities, products and even destinations. Back at the Smiths Falls distribution center, Canadaâ&#x20AC;&#x2122;s rigorous excise

2013

Year founded

$226mn Revenue in US dollars

3,500 Number of employees

stamp requirements were a further w w w. s up p l y c h ain digi t a l . c o m

C A N O P Y G R O W T H C O R P O R AT I O N

146

Canopy Growth: Corporation Culture CLICK TO WATCH

AUGUST 2020

5:33

challenge – and in this case an opportunity to implement the reliability, flexibility, speed and data capture that only automated packing can really ensure. As with tobacco, cannabis producers have to obtain a licence from the Canada Revenue Agency (CRA) permitting them to buy excise stamps – and each province and territory’s stamp is differently coloured “Every unit we ship out has to carry an excise stamp; and they come without adhesive. So I worked with a partner called Plan Automation LP to develop custom excise stamping equipment and high speed packaging lines that allow us to

“ THE VALUE BRINKS BRINGS TO US, AND THE NETWORK THEY PROVIDE, HAS MADE FOR A VERY SUCCESSFUL PARTNERSHIP” — Matthew Sly, Logistics Director, Canopy Growth

pick and place these stamps, at rates from 100-300 units per minute, with the flexibility to accommodate all our different product types.” There’s been a big automation programme at Canopy, he says, placing it ahead of its competitors in being able to respond to customer orders flexibly and fast. An order can be received, packaged, stamped with an excise stamp and dispatched within four hours for delivery anywhere in Canada by 8am the following morning. Digital transformation is not achieved in w w w. s up p l y c h ain digi t a l . c o m

147

C A N O P Y G R O W T H C O R P O R AT I O N

148

isolation of course. Brinks for example

to eliminate paperwork and transac-

has custom-designed its own systems

tional errors. We simply can’t have

so that Canopy can track exactly

errors because we are required by

where its trucks are, what orders are

Health Canada to account for every

on them and when they are delivered,

single gram. And we are introduc-

with proof of delivery (POD) instantly

ing more production automation, for

relayed to Canopy and triggering

example robotic picking and packing

an automated bill. “Because of the

of orders. The digital transformation

complicated regulatory environment

of our industry is the one key thing that

we work in we’ve had to automate a

will enable us to grow and be more

lot of our internal processes including

cost efficient.”

documentation controls and transfer processes, AUGUST 2020

Flexibility and agility are qualities Sly has learned from experience, he says.

149

He could have added a great deal of

reach their potential to deliver value

confidence, since many would have

for themselves and the organisation

fled from some of the challenges he

– it is, he says, a fun environment for

describes. With a CV verging on the

someone who thrives on change.

picaresque, he has worked with con-

“Logistics is the heart of the company;

struction equipment, high-tech PCB

if the heart is not pumping properly

manufacture, pharmaceutical products,

everything will shut down.”

English teaching, auto parts fulfillment (at a rate of 20,000 products a day) and large retail distribution. Now, he is truly working in a culture that suits his personality. Canopy, he notes, gives its people the autonomy they need to w w w. s up p l y c h ain digi t a l . c o m

150

AUGUST 2020

World Vision: digitalising operations to help the vulnerable WRITTEN BY

GEORGIA WILSON PRODUCED BY

CAITLYN COLE 151

www.supplychaindigital.com

WORLD VISION

Tim Covell, Supply Chain Director, World Vision on the organisation’s digital transformation, COVID-19 and its efforts to help the vulnerable

hen it comes to digital innovation at World Vision, Tim Covell, Supply Chain Director at the organisation explains that its strat-

egy is not necessarily ‘cutting edge’. “We’re probably more on the other end of the 152

spectrum where we are intentionally not cutting edge. Instead, we’re looking to be frugal, using technology that has the highest return on investment (ROI), as well as applications that provide the most effective impact,” so when it comes to digital transformation, World Vision is focusing its efforts on its demand planning, fulfilment and distribution. “In terms of demand planning, our stakeholders and program leaders from around the world are serving in various communities and they need to have a simple and common tool that we can pull from. Over time, we have developed a tool with a fairly simple input process, and then we aggregate all those answers into a global demand each year, and this process has continued to be refined year on year. When it comes to fulfilment and global

AUGUST 2020

153

www.supplychaindigital.com

WORLD VISION

“ We are probably more on the other end of the spectrum where we are intentionally not cutting edge. Instead we are looking to be frugal, using technology that has the highest return on investment (ROI), as well as applications that provide the most effective impact” — Tim Covell, Supply Chain Director, World Vision

He adds that, “Envista has been our partner for a little over four years and they have played an important role in allowing us to utilise our ERP

154

distribution, I would say that we are still

for nonprofit application. A lot of what

on a journey about how we can build

we do is non-standard, we are using

global solutions. Here in the US, we

an ERP built for profit in a nonprofit

had a big win several years ago when

organisation, so being able to manage

we introduced a common ERP system

that efficiently and effectively we are

for both managing donations as well

really thankful for Envista for provid-

as ministry executions for serving

ing the expertise.” Other technology

our communities. Now that we’re on

World Vision has adopted to digitally

a common platform, the ability to move

transform its operations include the

products around to maintain control

adoption of a new TMS system about

has really been bolstered,” adds Covell.

a year ago, “and so we are still going through the learning curves of the system and looking to be as effective as

AUGUST 2020

World Vision; supporting communities to fight COVID-19 around the world CLICK TO WATCH

2:17

155 we can with that tool which has a huge

make to our operations when it comes

opportunity to be much more impact-

to technology to enable this in the future.”

ful than the homegrown system that

When it comes to the importance

we were using prior to that.” Reflecting on the future of technol-

of technology, Covell believes that “having connectivity to all of our

ogy at World Vision, Covell notes that

stakeholders, donors, carriers and

one area his team has been looking

customers is critical. As a team – aside

into in the last year and will continue to

from the ones who are continuing to

do so in the future is having an impact

work in warehouses and distribution

assessment of donated Gifts in Kind

– we are able to work from home.

(GIK) to understand how to maximise

The team that’s interacting with our

the freight dollar spend and where

various stakeholders are able to work

the company can use it for the most

from home and not miss a beat and

significant impact. “As a result we are

that has been excellent. However,

looking into improvements that we can

in my personal opinion, this is not www.supplychaindigital.com

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going to be the new normal. I personally believe that being together as a team provides great value due to the connectedness of the team. Working from home creates challenges that you need to overcome on a day to day basis. So I don’t see this as the new normal, I think the days of the office aren’t numbered.” Since the outbreak of COVID-19, Covell explains that while its office based teams have faced minimal disruption, the operations of organisation have not been without challenges. “It’s interesting times for sure,” notes AUGUST 2020

GET A QUOTE

1950

Year founded

$2.75bn Revenue in US dollars

10,000+

Number of employees (Linkedin)

Covell, “here in the United States we

response as well as a local emer-

have had to deal with not being able

gency response, which putting all

to bring in our volunteers for our seven

these elements together makes a

sites in the US which we rely heavily

very challenging environment,” com-

on to make our operations work. So

ments Covell. He believes that “the

not having the volunteers has been

US team has done an excellent job

a significant disruption. In terms of

setting up distribution hubs at 12 dif-

distribution, we are still getting dona-

ferent sites around the country and

tions in from corporations which is

have been ramping up efforts to get

awesome, but the team has pivoted

food and essential supplies to each

to emergency response instead of

of those hubs on top of serving 17 of

normal distributions, so we are cur-

the most fragile countries impacted

rently serving a global emergency

by COVID-19.” 157

E X E C U T I V E P R OF IL E :

Tim Covell Title: Supply Chain Director Company: World Vision Industry: Non-profit Organization Management Tim has a BS in Operations Research/Systems Analysis from West Point Military Academy, and a MS in Engineering Management from Milwaukee School of Engineering. After some time serving in the Army and then leading operations in transportation services, he spent over 21 years at GE Healthcare in Milwaukee, WI. During that time, he had experience in a variety of roles from Mfg and Materials leadership to New Product Development and Advanced Manufacturing Engineering. He recently joined World Vision in Seattle, WA to lead the GIK Supply Chain operation and has been serving there for 3 ½ years. www.supplychaindigital.com

WORLD VISION

158

When it comes to the future of the

of poverty. So for me, COVID-19

industry, Covell details that “one of the

reinforces the criticality of our min-

dynamics of poverty is the inability to

istry and services for the future.”

deal with emergencies or crises as

Reflecting on the organisation,

they emerge and you’re living paycheck

Covell explains that “World Vision

to paycheck, day to day just to get

intends to provide a total business

by. Therefore, having an emergency

solution for corporations, offering a

like COVID-19 reinforces the need for

holistic approach with team activities,

organisations like World Vision and

kit builds, cash donations, and GIK.

many others to be engaged in caring

We have an excellent team that works

for and uplifting communities that

with these corporations in terms of

are struggling to break that cycle

developing relationships and working

AUGUST 2020

159

“ Now that we’re on a common platform, the ability to move products around to maintain control has really been bolstered” — Tim Covell, Supply Chain Director, World Vision

with them. Then, once a donation is made, my team then is the execution arm, so our focus is on providing a high level of service to the donor. In particular, we focus on having a short response time to get the product off of their dock – which is typically a priority for corporations – providing a reverse logistics solution, integrating with the donor’s operations. Finally, maintaining that ministry focus and making sure that we are a pull operation is key. www.supplychaindigital.com

WORLD VISION

160

“ Having an emergency like COVID-19 reinforces the need for organisations like World Vision and many others to be engaged in caring for and uplifting communities that are struggling to break that cycle of poverty” — Tim Covell, Supply Chain Director, World Vision

AUGUST 2020

161

www.supplychaindigital.com

WORLD VISION

It’s important that we’re never taking a product from a corporation and then pushing it to a ministry site, instead we make sure at every turn that we’re responsive and sensitive to what is needed at the ministry site to care for people, making sure that the product we’re sending is providing value.” However, this mission isn’t done alone. Covell explains that World Vision is a small team which relies on its logistics partners significantly 162

internationally and domestically. “In terms of international logistics MX Shipping has been a core partner specialising in access to really challenging countries and last mile scenarios. On the domestic side, we have several core partners that we work with including C.H. Robinson

“ We make sure at every turn that we’re responsive and sensitive to what is needed at the ministry site to care for people, making sure that the product we’re sending is providing value” — Tim Covell, Supply Chain Director, World Vision AUGUST 2020

163

and Radiant two key partners that

each category allows checks and bal-

we lean heavily on. My philosophy is

ances ensuring that we’re being cost

to have a few core relationships and

effective as we go forward.”

not to jump around every year to build strong relationships and grow together. However, on the flip side, I’m not a fan of being single sourced and not having options, so having a few partners in www.supplychaindigital.com

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