Supply Chain Digital July 2020 by Supply Chain Digital

J ULY 2 0 2 0

www.supplychaindigital.com

Global supply chain transformation Hicham Nehme, Head of Supply Chain at Vodafone Qatar, on the complexities of the supply chain transformation

Digitalising operations to help the vulnerable

Sustainable supply chains

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FOREWORD

elcome to the July edition

Elsewhere in the magazine, we

of Supply Chain Digital!

explore how four different supply

This month’s cover feature sees us speak with Hisham Nehme, Head of Supply Chain at Vodafone Qatar, to discuss the complexities of

chains are opting for responsible sourcing, while in another article we hear from Richard Howells, VP at SAP Digital Supply Chain, who discusses

supply chain transformation and

the importance of SCM software.

overcoming unexpected challenges.

There are in-depth digital reports with

In our second interview with Nehme,

McAlpine Hussman and World Vision.

he stresses the importance of

Be sure to read our feature with Big

establishing a digital transformation

Data and Analytics experts from

strategy, particularly in the wake

Blue Yonder and Epicor to examine

of COVID-19. “Every organisation

how innovative technology can help

must have at least a vision for

navigate the impact of COVID-19.

digital transformation,” he says.

Finally, this month’s Top 10 examines

“For the supply chain in particular, digitising operations can improve speed and reliability, from how fast products can be manufactured to how promptly order fulfilment and delivery to the final destination can be made.”

10 of the most sustainable supply chains 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

Is supply chain the weakest link in your global strategy?

“EY” and “we” refer to all German member ﬁrms of Ernst & Young Global Limited, a UK company limited by guarantee. ED None. MUK 1903-246

Addressing an organization’s overarching end-toend supply chain and operations strategy to grow, optimize and protect their operations – no matter if local or global: EY provides the right answers as your leading integrated transformation partner in the digital age. www.ey.com/en_gl/supply-chain

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PUBLISHED BY

Sophia Forte Sophie-Ann Pinnell PRODUCTION DIRECTORS

EDITOR-IN-CHIEF

Sean Galea–Pace DEPUTY EDITOR

MEDIA SALES DIRECTOR

James White PROJECT DIRECTORS

Georgia Allen Daniela Kianicková

Charlotte Clarke Caroline Whiteley

PRODUCTION MANAGER

DIGITAL MEDIA DIRECTOR

Georgia Wilson

Owen Martin

Jason Westgate

EDITORAL DIRECTOR

DIGITAL VIDEO PRODUCERS

PRESIDENT & CEO

Matt High

Kieran Waite Sam Kemp

Glen White

CREATIVE DIRECTOR

Steve Shipley

DIGITAL MARKETING MANAGER

Shirin Sadr

CREATIVE TEAM

Oscar Hathaway Erin Hancox

DIGITAL MARKETING EXECUTIVE

Jack Grimshaw www.supplychaindigital.com

10 Global supply chain transformation

26 RESPONSIBLY SOURCED SUPPLY CHAINS CAN BENEFIT EVERYONE

Navigating the impact of COVID-19 with Big Data & Analytics

SCM SOFTWARE: ENABLING AGILITY, VISIBILITY AND RESILIENCY

42 How digital automation is shaping modern supply chains

82 Sustainable supply chains

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100 McAlpine Hussmann

118 132 Scandinavian Tobacco Group

World Vision

Global supply chain transformation WRITTEN BY

LEILA HAWKINS PRODUCED BY

GLEN WHITE

J U LY 2 0 2 0

www.supplychaindigital.com

Hicham Nehme, Head of Supply Chain at Vodafone Qatar, on the complexities of the supply chain transformation and overcoming unexpected challenges

ith vast swathes of the population working remotely and living under lockdown

conditions as a result of the global COVID-19 pandemic, the world has never been so dependent on telecommunications. Vodafone is playing a major role in keeping people and organisations connected. To do so, it has relied on a robust strategy that enabled it to overcome significant challenges to its supply chain.

J U LY 2 0 2 0

Hicham Nehme, A. Head of Supply Chain at Vodafone Qatar, on mitigating supply chain risk under COVID-19 CLICK TO WATCH

2:51

Hicham Nehme, A, Head of Supply

This process involved recognising

Chain, explains that the Vodafone sup-

the difficulties that employees may

ply chain has been very much proactive

be experiencing in adapting to work

rather than reactive, beginning a process

from home; ensuring customers are

of stringent crisis planning as early as

getting the best possible service

December. First, the company identified

now that telecommunications are so

four pillars for supply chain management

essential to daily life; understand-

(SCM) resilience: employees, custom-

ing its supplier profiles so that it is

ers, suppliers, and emergency planning.

prepared for potential problems with

“After identifying these,” says Nehme,

sourcing and, finally, building a com-

“we had a much greater understanding

plete end-to-end strategy based on

of how to manage the crisis.”

these points.The latter would enable www.supplychaindigital.com

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V O D A F O N E Q ATA R

Vodafone Qatar to move from crisis

six or more months of supply deliv-

mode to business as usual.

ered by March. It planned ahead in

SCM coordinated with each depart-

case of shortages that would lead to

ment on the local level, and with VPC

price increases, and signed three-year

on the group level, to determine what

contracts with all its suppliers.

the biggest problems would be and

“When the pandemic started, the

what actions should be taken to solve

first question was how can we import

these, both in the short and long term.

from China, and we generated tens of

SCM strategy has revolved around

scenarios looking at how we could do

being prepared – and anticipating

this,” notes Nehme. “Now the whole

scenarios rather than dealing with the

world is locked, and the situation has

fallout. For example, in January it bulk

changed to: ‘how can we import from

ordered stock to ensure it would have

the rest of the world?” It’s important

J U LY 2 0 2 0

Hicham Nehme, A. Head of Supply Chain at Vodafone Qatar, discusses the importance of leadership in supply chain CLICK TO WATCH

2:11

“ Digital tools are not a privilege anymore” — Hicham Nehme A. Head of Supply Chain at Vodafone Qatar

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“ We’re now using data analysis more than ever before to forecast” — Hicham Nehme A. Head of Supply Chain at Vodafone Qatar

to learn from previous crises and manage change using new technology.” As a result the company has started using entirely virtual marketplaces such as Amazon. Another key point is not being heavily reliant on just one territory, such as China. “I believe China will face a lot of problems in the coming years because of what people believe to be the cause of the pandemic. We don’t yet know how big companies that operate in China like Apple will react, but we need to prepare so the

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

Hicham Nehme Title: A. Head of Supply Chain

Company: Vodafone Qatar

Industry: Telecommunications Location: Qatar Hicham Nehme is an experienced procurement professional. Having worked for 18 years in procurement and supply across different industries, Hicham is responsible for oversight of the procurement operations, strategic sourcing and digital transformation in supply chain. Hicham was instrumental in developing procurement policies and procedures and implementing procurement strategies, managing projects in the MENA Region, Europe and US. Hicham is CIPS and CPPM Certified, with a BA in Business Administration Systems. He is a father of three girls. www.supplychaindigital.com

V O D A F O N E Q ATA R

supply chain remains continuous and

Skype and Zoom. We know the whole

sustainable,” Nehme explains. “There

world will change after this, and

are a lot of different opinions out

the most important aspect is digital

there, but I think business needs to

transformation, now a main part

be spread across many countries, not

of any company.

centralised in one area.” The COVID-19 pandemic has high-

“Every organisation must have at least a vision for digital transformation,”

lighted how essential digitalisation

Nehme adds. “For the supply chain

is. “Digital tools are not a privilege

in particular, digitising operations can

anymore,” Nehme explains. “They’re

improve speed and reliability, from

being used all over the world during

how fast products can be manufac-

this crisis. We’ve moved from attend-

tured to how promptly order fulfilment

ing school to e-learning, and doctors

and delivery to the final destination

are giving medical advice through

can be made. But to implement digital

J U LY 2 0 2 0

Hicham Nehme, A. Head of Supply Chain at Vodafone Qatar, on managing the COVID-19 crisis CLICK TO WATCH

1:40

www.supplychaindigital.com

V O D A F O N E Q ATA R

Hicham Nehme, A. Head of Supply Chain at Vodafone Qatar, explains how the company builds and sustains partnerships CLICK TO WATCH

3:01

22 transformation well it’s also crucial

Technology aside, he shares that

to pay attention to the organisation’s

strong partnerships are also essen-

structure and how this will change.

tial to success. “If companies act

That’s why any successful digital

like solo endeavours they will fail.

transformation starts from the top,

Organisations depend on their sur-

from the leaders, and works down to

roundings and their suppliers to build

the employees.”

technology and share knowledge.”

While data analysis is becoming

Considering those suppliers, Nehme

increasingly useful, it will play an even

explains that the crisis has led to a

more important role in the future, along

redefining of what a partnership can

with blockchain and AI. “We’re now using

be. “It’s led us to reevaluate our suppli-

data analysis more than ever before to

ers based on how they react during the

forecast,” Nehme explains. “This is ena-

crisis, and whether they were available

bling organisations to look at potential

when we needed them,” he affirms.

impacts on projects and profitability.”

“How you react towards a crisis and

J U LY 2 0 2 0

how you support your organisation

Nehme has counted for many pro-

when it needs you, is the most impor-

jects. In the same industry, HATCOM

tant part of the supply chain.â&#x20AC;?

Telecommunications is another stra-

Among the companyâ&#x20AC;&#x2122;s suppliers and partners are those in the telecommunications industry such as Hayat Communications, on which

tegic partner with which Nehme has worked across many projects. Looking ahead, Nehme envisages the independence of supply chains:

www.supplychaindigital.com

“For countries like the US or Europe, the first thing that they face is a lack of supply chain planning. They have

“ How you react towards a crisis and how you support your organisation when it needs you, is the most important part of the supply chain”

the capability but they don’t have the tools or the materials, so they’ll have to find new ways to bring in new materials and new products”, he says. “We’re going to see supply chain organisations working separately and becoming businesses. The most important thing for any country right

— Hicham Nehme A. Head of Supply Chain at Vodafone Qatar

now is securing food, medication and medical equipment for its people. They don’t need someone sitting behind a desk telling them their balance sheet has dropped. The most important thing now is how to survive, and to survive you need a supply chain.”

www.supplychaindigital.com

PROCUREMENT

RESPONSIBLY SOURCED SUPPLY CHAINS CAN BENEFIT EVERYONE WRITTEN BY

J U LY 2 0 2 0

WILL GIRLING

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

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Supply Chain Digital explores how four different supply chains (food, consumer goods, tech and retail) are opting for responsible sourcing

s global supply chains become ever more diverse, interconnected and farreaching, business opportunities have

accordingly flourished. However, the rise of the

â&#x20AC;&#x2DC;consumer classâ&#x20AC;&#x2122; has both driven and presented 28

a challenge to procurement: how can sourcing meet demand but remain as sustainable and ethical as possible? A profound CSR (corporate social responsibility) issue with the capacity to address several fundamental issues, from the living conditions of workers in primary industries to the environmental sustainability of operations, responsible sourcing offers a chance to make a substantial, positive impact in a companyâ&#x20AC;&#x2122;s sphere of influence.

ASSESSING THE SITUATION Before exploring individual efforts to implement responsible sourcing, it is worth assessing contemporary supply chains, understanding why a focus on CSR initiatives is so important and how they can be achieved. J U LY 2 0 2 0

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

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However, at the same time, the enterprise value for the top 50 global In its article ‘Starting at the source:

consumer goods companies is com-

Sustainability in supply chains’, con-

promised by a range of issues which

sultancy organisation McKinsey

threaten to erode it, including labour

states that population growth and

violations, carbon emissions, pollu-

increased wealth distribution over the

tion and worker conditions.

next 5 years could have a significant

Reconciling these operational

effect on consumer patterns globally.

issues whilst still meeting consumer

Estimating that an additional 1.8 billion

demand forms the crux of a well-

people will have living circumstances

implemented, ethical and responsible

enabling them to be active consumers

supply chain. According to

by 2025 (a 75% rise from 2010), the

McKinsey’s insight, the supply chain

company is optimistic about the mar-

of a consumer goods company is apt

ket’s potential for growth.

to account for 80% more GHG

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

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(greenhouse gas) emissions than

primary barrier to building more

other industries, as well as over 90%

responsible supply chains).

more environmental damage. A lack

• Advanced technology (tools) such

of transparency in the supply chain is

as data analytics software can

often linked to this decrease in stand-

provide the means of increasing

ards, as primary suppliers may

end-to-end transparency.

subcontract portions of work to sec-

• The market for socially responsi

ondary entities, making it difficult or

ble supply chain tools is poten

even impossible for companies to

tially a highly profitable one, with a

address the problem.

plausible $2.7bn market valuation in the next five years. • No single approach will yield a complete solution or ‘silver bullet’.

Deloitte cogently addresses the

Rather, a combination of technol

challenges of responsible sourcing

ogy alongside dedicated change

in ‘Responsible supply chain tools:

management will produce

Understanding the market

optimal results.

opportunity’ when it says “effectively addressing labour risks in supply chains will require both bold action from individual companies and

Supply Chain Digital spoke with Miguel

collective action across companies,

Cossio, Research Director at Gartner

suppliers, policymakers and

on the importance of responsible

providers of new tools and solutions.”

sourcing: “It has quickly shifted from

Following on from this, Deloitte

being ‘nice to have’ to something that

makes several key observations,

plays an integral role in how compa-

including:

nies protect their brand’s reputation,

• Global supply chains are complex

ensure business continuity, and create

and not easily understood (49% of

a competitive advantage,” says Cossio.

executives identify this as the

In a market where consumers,

J U LY 2 0 2 0

How can blockchain and IoT create a more responsible supply chain? In its article ‘Continuous interconnected supply chain: Using Blockchain and Internet of Things in supply chain traceability’, Deloitte explores how large volumes of data collected via IoT devices and recorded through blockchain can lead to a revolutionary new approach to supply chain. As an open-source technology, blockchain enables transactions to be recorded in a secure, auditable and transparent

“ Effectively addressing labour risks in supply chains will require both bold action from individual companies and collective action across companies, suppliers, policymakers and providers of new tools and solutions” — Deloitte

way, whilst IoT allows no ‘blank spaces on the map’ by meticulously registering each step of a commodity’s journey. Deloitte summarises this tech combination’s key merits as: • Fast – transactions can be carried out directly and with fewer intermediaries on automatically updated ledgers. • Low cost – a computer automated process reduces labour costs and mitigates incidences of ‘reconciliation work’. • Increased transparency – open- source technology means that all authorised personnel can conduct audits on the data, with all accounts rendered visible (albeit semi-anonymously). • Reliable – transactions carried out in the blockchain cannot be retrieved or amended, enhancing data fidelity.

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

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What is Gartner’s best strategy for responsible sourcing?

Cossio: “A 2019 Gartner survey of 260 supply chain professionals found that 75% of companies have a responsible sourcing program in place. Unfortunately, many of these organizations take a passive approach and limit their efforts to deploying a supplier code of conduct and hoping suppliers take action. Companies looking to adopt this key initiative should work on the following: • Define the focus of the

program. Based on a materiality assessment, will you focus on multiple issues or specific ones (such as palm oil)? • Determine governance. Do

you have the resources to run this in-house or will you outsource to a third party? • S et an objective. What are

your goals? Ensure compliance to minimum regulatory requirements or aim to meet/ exceed industry standards?

J U LY 2 0 2 0

• Identify supplier risk

exposure. Avoid focusing on spend. Instead, focus on risk exposure based on materials/ services sourced and geographies where your suppliers are located. • Establish a remediation

process. Define an escalation path and actions that the organisation will take whenever findings in the supply base occur. Ensure sourcing decisions incorporate sustainability factors defined in your program. Rather than starting from scratch, supply chain leaders should leverage information provided by industry associations such as the Responsible Business Foundation to determine focus areas relevant to their industry and pre-defined supplier audits to simplify the process.”

shareholders and governments

INDUSTRY-LEADING APPROACHES

demand the integrity of a company’s

With the importance of a carefully-

(and its suppliers’), the onus on enter-

developed CSR strategy, the

prises to make a positive impact on

utilisation of technology assets and

society has never been greater.

listening to consumer demands

Indeed, it may be that conscien-

demonstrably the crucial themes of

tious consumer-demand, ultimately,

responsible sourcing, we shall now

has made responsible sourcing less

explore how leaders in the food, retail,

an option and more a necessity.

consumer goods and tech industries

“While adoption in consumer-facing

are meeting expectations.

industries has evolved more rapidly, companies across all industries will feel the pressure sooner or later. In the near future, the inclusion of sus-

Swiss multinational food manufacturer

tainability criteria in sourcing

Nestlé is a champion of responsible

decisions will be akin to supplier qual-

sourcing, placing a protective empha-

ity: expected and non-negotiable.”

sis on individuals, communities and the planet. Acknowledging that business

“ In the near future, the inclusion of sustainability criteria in sourcing decisions will be akin to supplier quality: expected and non-negotiable” — Miguel Cossio, Research Director, Gartner

continuity and the welfare of these constituent parts are profoundly interconnected, the company has revised its operating models, implemented sustainable sourcing practices and engaged in enrichment initiatives within its supplier ecosystem. According to its website, some of the companies activities have included: • Compiling a transparency report on its 15 priority raw materials (the latest edition available here). w w w.suppl yc ha i ndi gi ta l. com

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• Setting goals of achieving 80%

to trace food back to its farm origins.

audited and compliant Tier 1 sup

Currently still in development, its trial

pliers, as well as 80% traceability

run last year traced milk from produc-

on spend and volume by the end

ers in New Zealand to the company’s

of 2020.

factories and warehouses in the

• Engaging suppliers to adhere to

Middle East. The company will also

the strict guidelines of the compa

open-source data on its supply chain

ny’s Responsible Sourcing

and disclose suppliers to demon-

Standard (RSS).

strate its commitment to progress.

Furthermore, the company is focusing on four key areas: natural capital, human rights, animal welfare and transparency. Regarding the lat36

ter, Nestlé has partnered with

Viewing responsible sourcing as a

WWF-Australia and BCG Digital

great opportunity to strengthen its

Ventures on ‘OpenSC’, a blockchain

supply chain, mitigate risk and

platform which will allow customers

develop trust with customers and stakeholders, Unilever’s policy emphasises 10 fundamental princi-

“ Sustainability is evolving and there is increased interest and scrutiny from consumers about the origin of ingredients” — Unilever J U LY 2 0 2 0

ples, including corporate integrity, supporting workers’ rights and engaging with sustainability initiatives. Estimating that its products are used by 2.5 billion people daily, the company believes that its far-reaching significance only heightens the importance of its responsible sourcing. However, this is by no means a recent development: in 2010, Unilever set an ambitious target of achieving 100%

Unilever: Sustainable Sourcing CLICK TO WATCH

2:42

sustainably-sourced raw materials by

from consumers about the origin of

2020. By the end of 2019, it had man-

ingredients, the environmental pro-

aged to achieve 62% overall - an

tection of our planet, and the fair and

increase of 48% from the 2010 start-

ethical treatment of people within our

ing point. Even so, for maximum

extended supply chain,” says Unilever

impact, the company has prioritised

on its website. “We recognise that

the sourcing of palm oil, soy, sugar, tea,

we’re facing many challenges, includ-

vanilla, cocoa and other common raw

ing increasing the number of

materials which make up the bulk

materials we are working on and the

(66%) of its volume. Across these

difficulty of creating and sustaining

important items, it was able to achieve

positive impacts. The road ahead will

a responsibly sourced rate of 88%.

not be easy − but our resolve to cre-

“Sustainability is evolving and there is increased interest and scrutiny

ate a sustainable supply chain remains strong and unwavering.” w w w.suppl yc ha i ndi gi ta l. com

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free’ zones. Starting its work over a decade ago in 2009, the company has gone to great lengths to ensure “Our choices can impact the lives of

that its supplies of tantalum, tin, tung-

millions,” says Intel on its website.

sten and gold (known as 3TG) from

Demonstrating that the scope of

the Democratic Republic of Congo -

responsible sourcing extends beyond

and neighbouring countries - do not

the borders of the food or consumer

originate at mines funding criminal or

goods industries, Intel has made a

anti-humanitarian groups. From this,

dedicated effort to ensure the miner-

Intel has proceeded to expand the

als used in the manufacturing of its

parameters of its responsible sourc-

electronics are supplied from ‘conflict

ing to all materials and all countries.

J U LY 2 0 2 0

ÂŠIntel

Thus far, Intel has proven to be

1. Fostering accountability in the

highly efficient and successful at

supply chain - this extends not

consolidating its supply chain to

just to Intel and its primary suppli

include only those companies which

ers, but also to any secondary or

adhere to its ethical guidelines. As

tertiary entities which contribute.

detailed in a white paper on the sub-

2. Encouraging more action in the

ject, based on a survey of smelters

industry - Intel has co-chaired

and refineries running from 2012 to

the RBA (formerly EICC) and

2018, the companyâ&#x20AC;&#x2122;s efforts have

GeSI Extractives Working Group

afforded an 80% increase in compli-

to educate others on conflict

ance, yielding a 100% compliant

minerals and how to exclude

supply chain.

them from the market.

Intelâ&#x20AC;&#x2122;s approach hinges on three key areas:

3. Creating traceability by working closely with suppliers. w w w.suppl yc ha i ndi gi ta l. com

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M&S highlights that, in the world of retail, establishing trust and meeting customer expectations is an imperative criteria in today’s market. Aside from the ethical responsibilities of maintaining an accountable supply chain, the company also emphasises that doing so simply makes good business sense: “Growing pressure on natural resources and poor global stewardship may increase our costs, 40

restrict our access to key raw materials and make our global supply chains more volatile,” says its website. Selling 3 billion items a year from over 2,000 suppliers, sourced from 20,000 farms 100,000 smallholders, M&S estimates that its supply chain features around 2 million people, therefore demonstrating an awareness both of its own ecosystem but also the scale of any practicable solution. An innovative step towards greater transparency was achieved in 2016, when it made an interactive map available which allows the public to locate its clothing and food manufacturers worldwide. M&S’ overall J U LY 2 0 2 0

approach can be broken down into four sections with two component aspects: 1. Understanding the M&S supply chain and establishing a consistent, minimum standard across it. a. Incorporating defined global sourcing principles. b. Maintaining supply chain transparency. 2. Continuous and rigorous monitoring and assessment of suppliers to ensure standards are met. a. Monitoring and assurance. b. Handling grievances and complaints. 3. Working with suppliers to increase capacity and therefore capability. a. Worker training programmes. b. Global community outreach programme. 4. Close collaboration on difficult issues which cannot be resolved by M&S alone. a. Encouraging a convergence on ethical sourcing practices. b. Advocating for public policy in local areas of operation to maintain workersâ&#x20AC;&#x2122; rights, health and safety, etc. w w w.suppl yc ha i ndi gi ta l. com

S U P P LY C H A I N

SCM SOFTWARE: ENABLING AGILITY, VISIBILITY AND RESILIENCY WRITTEN BY

J U LY 2 0 2 0

WILL GIRLING

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

S U P P LY C H A I N

In this report, Richard Howells, VP at SAP Digital Supply Chain, along with other top commentators, explains the importance of SCM software J U LY 2 0 2 0

efining the importance of SCM software

As supply chains adjust to the

uncertain new conditions imposed on

them by the COVID-19 pandemic, supply chain management (SCM) software is starting to take on greater importance than ever before. A group of interconnected activities integrating suppliers, transporters, warehouses, customers and many more aspects of the process, SCM software has the

capacity to reduce costs and improve

available, is dedicated to placing supply

visibility whilst sacrificing none of the

chains firmly in the realms of industry

service quality which companies’ repu-

4.0, fostering resilience despite volatile

tations depend on.

demand and supporting businesses as

Supply Chain Digital spoke with

they adjust to the economic disruption.

Richard Howells, VP of Solution

“Although supply chain management

Management at SAP Digital Supply

software can differ slightly in its precise

Chain, in order to gain insight into

offerings,” explains Howells, “there are

what SCM software comprises, which

generally six basic principles that all

technologies enable it and why it is

programs include: design, planning,

beneficial. SAP, whose digital solutions

sourcing, manufacturing, delivery

are listed as some of the best currently

and service of a product.” 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

• Design: Encompassing R&D and engineering, software can accelerate the development process and allow for continuous, yet sustainable, innovation. • Planning: This creates an encompass ing viewpoint on demand, balances inventory and optimises forecasting. • Sourcing: Identifies appropriate sup pliers and devises strong vendor relationships. • Manufacturing: Increases enterprise agility and works closely with part ners, thus minimising waste. • Delivery: Optimises warehouse space, increases consistency of delivery quality and improves speed, efficiency and sustainability. • Service: Oversees customer require ments from start to finish, from raw material to final product and eventual delivery. Thus, a complete product journey

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

Richard Howells Richard Howells has been a part of SAP since 2004, although his experience in SCM and manufacturing stretch back over 25 years. Holding a BSc in computer science from the University of South Wales, Howells’ interest in tech permeates his current role, which requires him to be knowledgeable about the internet of things (IoT), artificial intelligence (AI), machine learning (ML) and blockchain. Describing himself as “a problem

driven values such as transparency and

solver at heart”, Howells derives great satisfaction from working with customers and teams to identify and fix business issues and enjoys working with customers and teams to identify and fix business issues. His areas of expertise are marketing, product design, public speaking and

continuous innovation. “SCM software

social media.

is formed. If these six aspects can be balanced from start to finish, SCM software will have attained its optimum goals: increasing growth and market share. Additionally, underpinning these software functions should be culturally-

©McKinsey

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S U P P LY C H A I N

should constantly be reinventing current methods based on real-time results to create more efficient solutions overall,” adds Howells.

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

Nick Ford

WHY IS SCM SOFTWARE ESSENTIAL TO A WELL-FUNCTIONING SUPPLY CHAIN? With the COVID-19 pandemic disrupting old supply chain paradigms and

Nick Ford has worked at Mendix since 2011 in a variety of roles, including Senior Director of Solutions Architecture (EMEA), Chief Technology Evangelist and as interim Country Manager for the UK branch.

forcing companies to reassess their

Founded in 2005, Mendix is a world-leading tech disruptor in the low-code software development platform sphere. With a firm belief that everyone should have the ability to build best-in-class software, Mendix’s platform uses visual models and collaboration tools, facilitating people of different skill levels to work closely together. Currently used by over 4,000 companies and 150 universities worldwide, the company has

ples builds an uninterrupted supply

received praise from Gartner and Forrester. In 2018, Mendix officially joined the Siemens©McKinsey family. J U LY 2 0 2 0

logistics networks, SCM software can be introduced to redress the balance, provide solutions during supply shortages and capacity constraints. Effective support of the six core princichain and promotes a customer-centric model of operation. However, if even one of these principles is out of balance, the result could ultimately end in dissatisfaction. “End-to-end business processes across all supply chain functions are especially crucial now, during a time where supply chains around the world are being disrupted due to spiked demand and factory shutdowns,” says Howells. “While unprecedented events such as COVID19 will almost always catch us off guard, it’s important to ensure good visibility,

agility and resilience across the supply

can help businesses streamline pro-

chain in order to react in real-time to

cesses using intuitive algorithms and

shifts in supply and demand.”

analytics to future-proof the major ele-

Regarding this latter point, Nick Ford,

ments of supply chain management

VP of Product & Solution Marketing at

including integration, operations, pur-

software company Mendix, agrees and

chasing and distribution.” Mendix’s

adds that SCM software brings an all-

low-code platform provides a develop-

important ‘modernising’ effect to some

ment arena to democratise the

supply chains. “COVID-19 has made

creation of these digital solutions,

it clear that outdated systems which

getting new ideas into production

can’t communicate with each other

quickly for fast impact. It also enables

lead to difficulties in quickly pivoting to

cost-effective collaborations between

altered endpoints, ultimately leading

sourcing managers, procurement

to untimely deliveries and dissatisfied

specialists, logistics operators and

customers,” he says. “SCM software

IT professionals.

SAP: Innovate for Success with Product Lifecycle Management CLICK TO WATCH

1:33

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S U P P LY C H A I N

WHAT TECHNOLOGY ENABLES SCM?

effective, efficient and transparent

According to Howells, SAP’s software

manner. “Key features of SAP’s SCM

for SCM has been designed to help

software are centred around ensuring

suppliers, manufacturers, business

businesses can survive and thrive

partners and retailers connect and

in any environment,” he explains.

manage supply chain processes in an

“We achieve this by anticipating and

©SAP

J U LY 2 0 2 0

preparing for changes in demand,

such as IoT, AI, ML and blockchain

material availability, manufacturing

which has initiated supply chains pro-

capacity and human resources to

gression to industry 4.0. Envisioned as

continue fulfilling and exceeding

a revolutionary combination of auto-

customer needs and expectations.”

mated processes and self-improving

It is the introduction of smart tech,

computer algorithms, industry 4.0 has the potential to fundamentally alter the ways in which we work and live. By carefully embedding these values, such as SAP Digital Supply Chain’s solutions, that SCM can reach nextgen effectiveness. “We are able to capture a digital thread throughout the product and asset life cycle, from design to decommission,” continues Howells. “In fact, a recent SAP and Oxford Economics study of 1,000 supply chain executives revealed that many organisations are focused on applying intelligent technologies like automation, ML and AI to streamline processes, automate routine tasks and assist in the effectiveness of other technologies, such as augmented and virtual reality and drones.” Ford adds: “Operational efficiency begins with digitising analogue processes, unifying incongruent legacy systems, and aggregating data - all of which can be done with low-code applications.” w w w.suppl yc ha i ndi gi ta l. com

S U P P LY C H A I N

CONSULTANCY INSIGHT: MCKINSEY & CO In its article ‘Digital transformation: Raising supply-chain performance to new levels’, McKinsey identifies SCM software and associated digital technologies as the driving forces which will lead to improved supply chains. “A supply-chain digital transformation, then, is about establishing a vision for how digital applications can improve service, cost, agility, and inventory levels and consistently implementing process and organisational changes that use these 52

technologies to drive operational excellence,” says the article. Importantly, however, McKinsey notes that whether a supply chain is augmented by installing new software and system isn’t wholly dependent on the tech itself, but rather how it is used cooperatively. Calling SCM a collaborative endeavour, the company further notes that “efforts to improve supplychain performance should, therefore, involve changes to the ways that employees and teams share information, consider problems and opportunities, reach decisions, and carry out actions they agree on.” Therefore, a company’s vision should include: J U LY 2 0 2 0

The SAP-Oxford Economics study referenced by Howells provides several enlightening statistics on the development of SCM: • 47% of supply chain leader regard ‘automation for routine tasks’ as their prime strategic goal. • 76% are deploying IoT across several areas. • 64% are leveraging Big Data and predictive analytics software. • 48% are utilising robotic process automation (RPA).

• Improved decision making • Focus on automation • End-to-end customer engagement • Continuous innovation • Finding talent which will drive the change

CONCLUSION: HOW WILL SCM SOFTWARE BENEFIT GLOBAL SUPPLY CHAINS? “The pandemic has taught businesses that in order to quickly pivot and adapt, they require tooling that enables them to rapidly respond to unforeseen emergencies, or indeed opportunities, that arise within the supply chain,” states Ford. Indeed, with a complex, interconnected network of suppliers, manufacturers, logistics providers and partners, coupled with the added complexities of COVID-19, the urgency of a reimagined supply chain has never been greater. SCM software can be the enabler for that transformation. “In a multi-tiered global supply chain, end-to-end visibility and collaboration are essential,” concludes Howells. “Supply chain solutions that span company boundaries and enable collaboration both across departments and across companies are critical.” w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

Navigating the impact of COVID-19 with Big Data & Analytics WRITTEN BY

J U LY 2 0 2 0

GEORGIA WIL SON

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LOGISTICS

Supply Chain Digital speaks with Big Data and Analytics experts to discuss how the innovative technology can help navigate the impact of COVID-19 THE BLACK SWAN OF 2020 In just a few short months, the impact of COVID-19 has transformed the ways in which not only supply chains but all organisations 56

around the world operate. While “the full impact of COVID-19 on supply chains is still unknown, one thing is for certain—it will have global economic and financial ramifications that will be felt through global supply chains, from raw materials to finished products,” says Deloitte. While supply chains have become highly sophisticated and vital to the competitiveness of many companies. Deloitte further explains that “their interlinked, global nature also makes them increasingly vulnerable to a range of risks, with more potential points of failure and less margin of error for absorbing delays and disruptions. A decades-long focus on supply chain optimisation to minimise costs, reduce inventories, and drive up asset J U LY 2 0 2 0

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ruptions.” As a result, “COVID-19

BIG DATA AND ANALYTICS IN THE SUPPLY CHAIN TO MANAGE THE IMPACT OF COVID-19

illustrates how many companies may

It is clear that in the coming months,

not fully appreciate their vulnerability

technology is going to be a core

to global shocks through their supply

component when it comes to getting

chain relationships.” However, as new

operations up and running as lock-

supply chain technologies emerge,

down restrictions ease.

utilisation has removed buffers and flexibility to absorb delays and dis-

the industry can improve its visibility

McKinsey highlights that there

across the end-to-end, driving supply

are six key issue that need to be

chain agility and resilience.

addressed within the supply chain industry, in the short term: 59

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LOGISTICS

When it comes to managing these

holds the key to identifying issues

key issues outlined by McKinsey, data

across the entire supply chain, helping

will be vital. “Amid the current climate,

to plan for -and instantly adapt to -

where the COVID-19 pandemic has

changing circumstances. Accessing

caused so much uncertainty within

data by using artificial intelligence (AI)

global supply chains, you could argue

and machine learning (ML), companies

there has never been a greater need for

can better model and predict demand,

visibility and synchronisation,” com-

match supply to demand and automate

ments Fred Baumann, GVP for Industry

ordering, allocate inventory with the

Strategy at Blue Yonder. “Big Data

right margin-optimisation cost function

J U LY 2 0 2 0

and fine tune their inventory in almost real-time to mitigate the impact of shortages.” As a result Big Data and analytics within the supply chain ”can help drive businesses to the next level, providing the fuel for analytics tools to forecast, predict and plan for issues before they actually occur. This gives the ability to navigate disruptions months in advance, rather than responding once they have happened. By identifying patterns in what can initially seem unrelated factors, businesses are in a better position to make immediate and effective decisions than ever before,” adds Baumann. Agreeing with Baumann, Andy Coussins, Senior Vice President and Head of Sales, International, Epicor

“ COVID-19 illustrates how many companies may not fully appreciate their vulnerability to global shocks through their supply chain relationships” — Deloitte

Software stress that “cutting through the everyday influx of data is an ongoing business need—and systems that can help make decision-makers choose quickly, and wisely, are more crucial than ever before. When it comes to the successful adoption of such technologies, Jolyon Austin, EY Partner, Supply Chain Transformation highlights that, “businesses should start small, with agile w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

10 S H O RT T E R M ACT I ON S T O TAK E I N RESP O N SE T O T HE OUT BR E A K F O R C O M PA N I ES T HAT P RO DU CE, DI ST RI BU T E O R S O U R CE FRO M SU PP LI ERS

• Enhance the focus on workforce and labor planning • Focus on Tier 1 supplier risk by identifying the company’s key direct suppliers and understand their ability to meet supply requirements and potential risks • Gain as much visibility across the extended supply network • Understand and activate alternate sources of supply • Update inventory policy and planning parameters • Enhance inbound materials visibilit • Prepare for plant closures 62

• Focus on making the production schedule agile • Evaluate alternative outbound logistics options and secure capacity • Conduct global scenario planning

S E V E N S TA N DA R D B U S I NESS ACT I O N S T O TAK E I N RESP O N SE T O T HE O U T BRE AK

• Educate employees on COVID-19 symptoms and prevention • Reinforce screening protocols • Prepare for increased absenteeism • Restrict non-essential travel and promote f lexible working arrangements • Align IT systems and support to evolving work requirements • Prepare succession plans for key executive positions • Focus on cash f low

J U LY 2 0 2 0

“ Amid the current climate, where the COVID-19 pandemic has caused so much uncertainty within global supply chains, you could argue there has never been a greater need for visibility and synchronisation” — Fred Baumann, GVP for Industry Strategy, Blue Yonder

technology that seeks out data in multiple places (internal and external) and then presents it for structured use through data layers. Applying machine learning techniques can suggest new associations of disparate sets of data to find even more value.” “Thoughtful application of Big Data and analytics will support the increasing focus on supply chain health,” further explains Austin. “The technology will equip and empower supply chain professionals (whether in plan-

approaches and be open to learn from

ning, manufacturing or logistics) to

mistakes, building on each success.

understand and manage the health of

Supply chains that derive the best busi-

the data that powers the supply chain

ness value ensure that projects are

shifting the focus to more value-added

commissioned with clear goals and the

work, as well as increasing capabilities

associated business questions and

in best-of-breed supply chain systems,

challenges they seek to address. Too

supported by self-healing supply

often such initiatives are based on ‘look-

chains (auto data cleansing) and com-

ing for opportunity in data’ when the

bined with robotic process automation,

more value-driven approach is to invert

and machine learning to make the cog-

that thinking to ‘what insight do I need to

nitive supply chain a reality.”

address my opportunity – with data’.” Austin further highlights that while

However, “the primary challenge of Big Data and analytics is that data

“much has been made of creating ‘data

across the end-to-end supply chain is

lakes’ from which to draw data to run

not owned by any single entity, and

analytics, organisations should con-

data definitions (the language or format

sider the application of data crawler

of data) vary between industries and w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS

to build and maintain a functioning cognitive supply chain.” However, “recent research indicates that the data deluge workers experience on a daily basis is becoming overwhelming. Nearly threequarters of employees claim they’re dealing with more and more data, while almost two-thirds said they are often overwhelmed by the sheer volume of emails they receive. Over a third went on to confess they feel stressed every day, due to information overload. Information overload not only puts 64

different stages in the supply chain.

workers under pressure, it can also

With all these variables, businesses can

have a damaging impact on their ability

take time to get their house in order

to make accurate business deci-

when it comes to data standards. The

sions—60% claim that the amount of

best approach for nailing this down is to

data and information they receive daily

use a platform with open APIs, which is

can sometimes make it hard to make

able to take inputs from any source in

the right choices,” adds Coussins.

real-time,” continues Baumann. “It’s

Therefore, “while no one person can

also worth keeping in mind the different

have direct visibility of everything that is

types of real-time data that are required

going on in a company, business intel-

to make a cognitive supply chain work

ligence technologies and analytic

in practice – reliable signals are

software—including enterprise

required from areas across the busi-

resource planning (ERP) systems and

ness including transportation, weather,

manufacturing execution software

performance, and IoT sensors, in areas

(MES)—should be used to provide

like distribution centres and factories.

these insights. These technologies

Without these, you simply won’t be able

work by collecting, distilling,

J U LY 2 0 2 0

“ Supply chains that derive the best business value ensure that projects are commissioned with clear goals and the associated business questions and challenges they seek to address” — Jolyon Austin, Partner, EY

interpreting, editing, and presenting meaningful data in a timely manner, and highlighting issues and areas of concern in a way that is clear and actionable. By applying analytics to data, decision-makers can swiftly access insights that will enable them to make the right choices to improve operations across an entire business— including customer service and demand planning—and, ultimately, profits,” concludes Coussins. w w w.suppl yc ha i ndi gi ta l. com

TECHNOLOGY

How digital automation is shaping modern supply chains WRITTEN BY

WILL GIRLING

J U LY 2 0 2 0

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TECHNOLOGY

Since the COVID-19 pandemic has illustrated the need for further automation of supply chains, what role will AI and ML play in the transformation?

he effect of the COVID-19 pandemic in relation to supply chains can be measured by an accelerated interest in

automation, particularly with regard to AI (artificial intelligence) and ML (machine learning). The cur68

rent fragility of global supply chains, the necessity for end-to-end transparency and the availability of digital technology to rectify the situation has created an exciting surge of companies exploring new applications and possibilities. With chatbots for customer enquiries, ML-powered analytic for planning and forecasting, self-driving vehicles and software to target and streamline chain inefficiencies prevailing as trending utilisations of automation technology, the logistics sector of tomorrow may hinge on companiesâ&#x20AC;&#x2122; ability to strike a fluid human-robot balance.

DEFINING AI AND ML Despite operating along similar principles, both AI and ML have distinct functions which differentiate and are specialised for certain tasks: J U LY 2 0 2 0

AI â&#x20AC;&#x201C; Implemented within an existing system, AI is computer science aimed at training machines to carry out tasks normally performed by humans. The ultimate goal, therefore, is to enable machines to match or even outperform humans on a given task. w w w.suppl yc ha i ndi gi ta l. com

TECHNOLOGY

“ The logistics sector of tomorrow may hinge on companies’ ability to strike a fluid humanrobot balance” — Alec McPherson, Director at Manhattan Associates.

large pools of data which would be unmanageable if analysed manually.

ML DIFFERENTIATORS: 1. Its aim is to streamline the accuracy of a process pathway through a self-improving algorithm. 2. ML conducts prescriptive tasks and will not deviate. 3. ML unlocks the value of ‘dark data’.

AI DIFFERENTIATORS: 1. It is programmed to enhance 70

4. The ML process will determine what the patterns in data indicate,

successful outcomes, although

although this will not necessarily

this does not necessarily mean

be inherently useful or valuable.

a focus on accuracy. and can carry out more complex

TRENDING APPLICATIONS WITHIN SUPPLY CHAINS

or ‘smart’ tasks.

Some of the popular uses for automa-

2. The software is sophisticated

3. AI is capable of actively making decisions. 4. AI will search for the best solution possible.

tion and unlocking value via analytics in supply chains include: Planning and forecasting – With supply chains incorporating more endto-end digital technology, companies

ML – By comparison, ML’s func-

are now able to take a holistic view

tions are relatively simpler and less

of processes via collected data. ML

proactive than AI. Programmed with

algorithms can be programmed

an algorithm designed to optimise

to analyse statistics, factor in historical

an input-output pathway through

and environmental information and

experiential trial and error, ML is

then produce insights into patterns

useful for drawing inferences from

or trends.

J U LY 2 0 2 0

Exhibit

Artificial intelligence’s impact is likely to be most substantial in marketing and sales as well as supply-chain management and manufacturing, based on our use cases. By advanced analytics

9.5–15.4

By artificial intelligence

3.3–6.0

3.5–5.8

3.6–5.6

1.4–2.6 1.2–2.0

Marketing and sales

Supply-chain management and manufacturing 0.9–1.3

0.5–0.9

0.6 0.2

Risk

0.2 Service operations

0.3 0.1

0.3

0.2

<0.1

Product Strategy and development corporate finance

0.2–0.4

0.2 0.1

0.1

Finance and IT

Other operations

Note: Figures may not sum to 100%, because of rounding. Source: McKinsey Global Institute analysis

Warehouse and stock manage-

calculating daily stock movements

ment – The possibilities of AI-based

and even automated cleaning robots

automation within warehouses

programmed to work in dynamic

are extensive. From mechanical

environments, AI facilitates the

arms that can sort, select and han-

fast-paced changes required by

dle cargo to software capable of

supply chains.

Most of AI’s business uses will be in two areas

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TECHNOLOGY

Chatbots – Able to mitigate large

self-driving vehicles have the potential

volumes of customer enquiries in

to dramatically transform modern sup-

a qualitative manner, AI chatbots can

ply chains. AI systems fed a constant

be an invaluable resource for liberating

stream of data in real-time using cut-

employees from routine or repetitive

ting-edge network technology, such

duties and refocusing them on more

as 5G, will give vehicles the autonomy

client-centric tasks. Furthermore,

to make road-based decisions that

chatbot automation in operational

factor in traffic, weather conditions

procurement can be highly effective

and terrain challenges.

for streamlining invoice generation and helping buyers secure fast

MCKINSEY

approval and easy payment.

In McKinsey’s insight ‘Supply Chain

Self-driving vehicles – Although still 72

in the nascent stages of development,

4.0: Opportunities to use your supply chain for differentiation’, the

Andrew Ng: How can AI create value for businesses right now? CLICK TO WATCH

J U LY 2 0 2 0

2:04

73 consultancy lists ML-powered fore-

McKinsey notes that a European non-

casting through advanced analytics

food retailer was able to achieve a 15%

among its choice methods for unlock-

saving on operational costs by auto-

ing value in a modern supply chain.

mating its warehouses, yet without

Its research postulates that a 12%

incurring a reduction in service levels.

overall increase in forecasting accu-

In a further examination – ‘Most of

racy is possible when ML algorithms

AI’s business uses will be in two areas’

are used in conjunction with enterprise

Michael Chui, et al, estimated that AI

data, with brand and pack errors

could yield between US$3.5trn and

reduced by 66%. This improvement

$5.8trn in additional value across mul-

can be attributed to the high volumes

tiple sectors. Amongst those expected

of historical, situational and environ-

to gain the most are supply chain

mental data factored together to

management and marketing and sales,

produce a coherent report, thus allow-

which cover 66% of the opportunity

ing supply chain managers to make

collectively ($1.2trn to $2trn potential

more informed decisions. Additionally,

value for supply chain). w w w.suppl yc ha i ndi gi ta l. com

TECHNOLOGY

OR AC LE

Dominic Regan is a Senior Director

as AI. These can, for example, moni-

for Oracle’s logistics applications

tor demand at a very granular level

across EMEA. Working closely

across multiple tiers of the supply

with its product development and

chain, enabling operational planning

strategy teams in his current role,

both within the company itself as well

he’s been involved with supply chain

as with trading partners. Leveraging

since the mid 1980s:

this intelligence enables the neces-

sary operational agility to quickly “A lot of the technological solu-

re-prioritise inventory in order to

tions for supply chains were built

meet shifting customer demand or

for traditional operations, not the

adjust to external impacts.

global, flexible supply we need today. Despite AI adoption increasing,

“Moving forward, we can expect

many companies still lack an end-

the expansion of both AI as well as

to-end view and will often view the

machine learning in the supply chain.

supply chain in silos, causing them

This can enable manufacturing and

to be slow to discover and react

supply chain managers to track and

to issues and adapt to change.

manage day-to-day production, while leading to data-driven opera-

“To overcome this, businesses must

tions that will significantly improve

introduce greater transparency from

production yield, product quality,

end to end. Doing so requires the

lead times, equipment, and labour

implementation of technologies such

efficiencies.”

J U LY 2 0 2 0

B LU E YOND ER

Wayne Snyder is VP of Industry

automatically by learning the true

Retail Strategy EMEA at world

drivers of demand.

leading supply chain platform Blue Yonder:

â&#x20AC;&#x153;The warehouse of the future must be continual and dynamic,

â&#x20AC;&#x153;AI makes automation a much more

and understand real-time issues

realistic prospect within warehouse

to respond accordingly. What

management. Warehouse mate-

happens if deliveries are late?

rial handling processes tend to be

What happens if the yard is full

focused on flexibility, scalability and

of deliveries waiting for unloading?

process adaptability; AI can drive

AI allows you to use real-time

these to the next level, increasing

analytics to understand priorities

productivity with improving the level

and schedule activities accordingly

of user adoption. AI is also pushing

in the most effective manner to

warehouse inventory management

meet business objectives. This

to the next level, with AI tools mak-

can make warehouses more effi-

ing it possible to understand the

cient than ever before, enabling

relationships between internal data

businesses to make decisions

sets to enable businesses to fore-

based on item, location and day.â&#x20AC;?

cast dynamically, continually and

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TECHNOLOGY

MANHATTAN ASSOCIATES An article from Manhattan Associates (MA) titled ‘Building a smarter supply chain for eCommerce’ explores the exciting possibilities that come from digital innovations. In particular, MA examines how same-day delivery capabilities have made flexibility,

“ AI could unlock $1.2trn to $2trn of potential value for supply chain management” — Alec MacPherson, Director at Manhattan Associates.

speed and breadth of reach the new metrics for success. Global eCommerce sales are pro-

part of that; AI and ML are the keys to unlocking large streams of value

jected to grow 265% to $4.9trn by

from vast amounts of collected data

2021. Better planning, smarter analysis

(estimated to be 2.5 quintillion bytes

and more accurate forecasting are all

per day by MA).

J U LY 2 0 2 0

M A NHATTAN ASSOC IATES

Alex MacPherson is a Director at

rather than relying purely on manual

Manhattan Associates. Not only

pickers. By strategically implement-

does the company offer a range

ing automation and robotics, supply

of supply chain solutions, but

chains can work around the clock

MacPherson is also an expert in

without having to delay deliveries,

warehouse management systems:

while still staying true to customer expectations.”

“Today’s warehouses and DCs (distribution centres) need to ensure

“Within a warehouse, however,

flexibility, scalability and reduced

it is still necessary to complement

reliance on temporary or unreliable

automation with human employees

labour pools to meet their opera-

to perform certain tasks that robots

tional requirements.”

are simply not yet able to do. Move further along the supply chain

“With the use of robotics and

to the delivery end and it’s a differ-

automated processes within

ent picture, with last-mile delivery

warehouses and DCs, retailers

having been transformed in the

can process eCommerce orders

last five years.”

far more quickly and safely,

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TECHNOLOGY

“ Same-day delivery capabilities have made flexibility, speed and breadth of reach the new metrics for success” — Alec McPherson, Director at Manhattan Associates. J U LY 2 0 2 0

DELOITTE

The third aspect, however, manifests

Deloitte points out that, while 76%

a more ‘cerebral’ or ‘smart’ form. AI

of respondents to its Deloitte 2019

robots programmed to recognise and

Supply Chain and Digital Analytics

emulate human interaction with logic

Survey agreed that AI and ML invest-

and nuance (chatbots) can be invalu-

ment was crucial to their overall

able for operational procurement by

strategy, only 44% invest at least

giving customers fast, intelligent solu-

$5mn into developing it.

tions to common enquiries (invoicing,

This disparity is only emphasised

payment, approval, etc).

by the organisation’s ‘Building a cognitive digital supply network’ article,

THE HACKETT GROUP

which extolls the virtues of a balanced

We spoke with Nicolas Walden, Senior

human-robot workforce by breaking

Director at management consultancy

down the augmentations of automa-

The Hackett Group, on the topic of

tion into three categories:

automated vehicles and their contemporary deployment in supply chains:

● Cognitive assistance

“Mining companies, such as Rio Tinto

● Cognitive insights

and BHP Billington, have really been

● Cognitive engagement

investing in this area by automating the trucks and heavy equipment they use,”

The first two focus on the more

he says. “It can drive a lot of value – not

‘mechanical’ aspects of automation

just in terms of saving costs, but also

(process assistance and data analyt-

by reducing the necessary frequency

ics). RPA (robotic process automation)

of vehicle maintenance and increasing

– described here by Deloitte – is an

the standards of health and safety.”

example of this: software observes

However, Walden clarifies, it isn’t

and ‘learns’ repeatable patterns of

just this aspect of logistics or type

behaviour by observing a comput-

of vehicles that could be enhanced

erised task performed by a person,

by AI: cars, vans and even trains

which the software can then replicate.

can be included. As 5G becomes w w w.suppl yc ha i ndi gi ta l. com

TECHNOLOGY

“ With the use of robotics and automated processes within warehouses and DCs, retailers can process eCommerce orders far more quickly and safely” 80

— Alec McPherson, Director at Manhattan Associates.

THE HAC KETT G ROU P

Nicholas Walden is Senior Director

Possessing decades of cumu-

of Procurement Executive Advisory

lative experience gained at

Membership Programmes at The

prestigious companies in the tech

Hackett Group.

and consultancy spheres, Walden helps clients – all global industry

Having gained two degrees from

leaders – to reach their potential

Victoria University of Wellington (in

through world-class performance

Accounting & Economics and Law),

insights, metrics, research and

he began a career in commercial

networking.

finance and business consultation. J U LY 2 0 2 0

commonplace and network connec-

‘comfort zones’, there’s so much

tion speeds accelerate rapidly, the

complexity that manufacturers often

mapping accuracies of autonomous

struggle to keep up technologically.

vehicles and AI software’s ability to

However, that’s the level supply

make real-time decisions will make

chain solutions will need to eventu-

a significant difference to delivery

ally be operating at.” Concluding,

consistency.

Walden states that, although R&D

“At the moment, autonomous

of AI-driven vehicles appears to

vehicles have been successful when

have been slowed down by COVID-19,

they stay within strict operating

the potential for innovation is still

parameters,” Walden continues.

present in the market and should

“When they’re taken outside of those

be monitored carefully. w w w.suppl yc ha i ndi gi ta l. com

T O P 10

Sustainable supply chains

Supply Chain Digital examines 10 of the worldâ&#x20AC;&#x2122;s leading supply chains and the innovations that make each organisation a leader in sustainability WRITTEN BY

MARCUS LAWRENCE

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

T O P 10

NEW BRUNSWICK, USA

132,000 NUMBER OF EMPLOYEES

$82.06bn REVENUE IN US DOLLARS (2019)

Johnson & Johnson PHILIP DAHLIN, DIRECTOR OF SUSTAINABILITY

Johnson & Johnson’s ethos is centralised on one purpose: to improve the health of humanity. This grand aim comprises its customers, staff, communities, and the environment, and its annual Health for Humanity reports sheds fascinating light on the ways in which its operations are geared to the core towards CSR and sustainability. In 2017, J&J and its employees donated over US$2mn dollars to relief efforts for the victims of Hurricane Maria across the Caribbean. Its manufacturing facilities in Puerto Rico were the subject of a focused emergency strategy that ensured the wellbeing of J&J’s employees and their families; this human-level protection of the supply chain during a crisis is emblematic of J&J’s credo and people-centric mode of business.

J U LY 2 0 2 0

ATLANTA, USA

481,000 NUMBER OF EMPLOYEES

$71.86bn REVENUE IN US DOLLARS (2018)

UPS SUZANNE LINDSAY-WALKER, CSO

Global logistics giant UPS’s extensive sustainability initiatives are predicated on the ability to enact meaningful change during this period of technological advancement in business, heightened awareness of the climate crisis, and the international focus on social and environmental betterment led by the United Nations’ 2030 Sustainable Development Goals (SDGs). “Through continuous transformation, we are capitalising on disruption to shape a future in which more people prosper, enterprises run more efficiently, and resources are conserved for future generations,” UPS said in its 2018 Corporate Sustainability Progress Report, and this focus extends to a broad CSR project focused on disaster relief. w w w.suppl yc ha i ndi gi ta l. com

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T O P 10

MEMPHIS, USA

425,000 NUMBER OF EMPLOYEES

$65.45bn REVENUE IN US DOLLARS (2018)

FedEx MITCH JACKSON, CSO

As one of the worldâ&#x20AC;&#x2122;s pre-eminent logistics providers, FedEx takes its environmental responsibilities as a key component of global supply chains deeply seriously. Responsible environmental practices have been ingrained across its operations to boost efficiency whilst cutting waste and emissions, and it is working towards a series of ambitious targets. Having recently worked to cut its aircraft emissions by 30% and make a 30% jump in its Express fleetâ&#x20AC;&#x2122;s efficiency by 2020, its sights are now set on 2030 goals. By then, 30% of its jet fuel will consist of alternative fuel sources, as well as expanding upon its on-site renewable energy generation initiatives at sites around the world. w w w.suppl yc ha i ndi gi ta l. com

T O P 10

BONN, GERMANY

550,000 NUMBER OF EMPLOYEES

â&#x201A;Ź61.55bn REVENUE IN EURO

Deutsche Post DHL Group MONIKA SCHALLER, EVP

Deutsche Post DHL Group takes the concept of stewardship to its role in business partnersâ&#x20AC;&#x2122; supply chains, as well as undertaking considerable work to optimise its own supply chain to the highest ethical and environmental standards. Its 2019 Sustainability Report makes plain that DPDHL has centralised sustainability and CSR within its wider business strategy, with a 35% efficiency gain across operations since 2007 and 13,500 vehicles in its fleet with alternative drive mechanisms being examples of its progress. Across its sites and suppliers, DPDHL provides assistance with socioeconomic development initiatives, direct community action, and delivering training to individuals along its supply chain to drive employability and fill skills gaps.

J U LY 2 0 2 0

AISHI, JAPAN

370,870 NUMBER OF EMPLOYEES (2019)

$272bn REVENUE IN US DOLLARS

Toyota SHIGERU HAYAKAWA, CSO

Toyota has been publicly integrating environmental and ethical standards to its business practices since 1992, with particular focus on driving sustainable development across the world through CSR. This is reflected in its current commitments to the UNâ&#x20AC;&#x2122;s SDGs, namely the following subcategories: reduction of environmental pollution, improvement of water quality, reduction of environmental impact of cities, management of waste, adoption of sustainable practices and integration of sustainability information, and promotion of sustainable lifestyles. Across legal compliance activities, an increase in environmental management projects worldwide, and education initiatives, Toyotaâ&#x20AC;&#x2122;s supply chain adheres to strict environmental social standards. w w w.suppl yc ha i ndi gi ta l. com

DETROIT, USA

164,000 NUMBER OF EMPLOYEES

$137.2bn REVENUE IN US DOLLARS (2019)

General Motors DANE PARKER, CSO

Sustainability is an all-encompassing element of General Motors’ culture and supply chain. Through in-depth transparency, focused initiatives on workplace safety, environmentally-friendly innovation, and its company-wide vision of zero crashes, zero emissions, and zero congestion, GM is a leader in automotive sustainability. The firm’s Board of Directors’ Governance and Corporate Responsibility Committee members take regular reviews of its progress towards the zero-zero-zero vision, ensuring it remains a central focus for its operations around the world. In 2018, GM highlighted a series of impressive steps forward both environmentally and socially, with milestones including: becoming the first automaker to be led by a female CEO, Mary Barra. w w w.suppl yc ha i ndi gi ta l. com

T O P 10

CUPERTINO, USA

137,000 NUMBER OF EMPLOYEES

$260.2bn REVENUE IN US DOLLARS (2019)

Apple LISA JACKSON, VP ENVIRONMENT

The transition to sustainable manufacturing materials has become a key feature of Apple’s recent Macbook and iPhone models, representing the reflection of evolving consumer interests and desires that has driven its iterative approach to design and its position as one of the world’s dominant tech innovators. Apple’s move to renewably-sourced energy at its sites around the world is now bleeding into its relationships with its partners across the supply chain as it assists them with their own shift to sustainable electricity. The firm has also been investing heavily in sustainable interests across its global network, with its 2019 Progress Report highlighting its financial support for 485MW’s worth of wind projects across China, slashing emissions for its suppliers in the market.

J U LY 2 0 2 0

ATLANTA, USA

62,600

NUMBER OF EMPLOYEES (2018)

$31.85bn REVENUE IN US DOLLARS (2018)

Coca Cola BEA PEREZ, SENIOR VP & CSO

Coca-Cola is the world’s largest beverage producer and has one of its most robust supply chains, leveraging a network of subsidiaries and partners around the world with a decentralised system that encourages flexibility, agility and, crucially, innovation. Coca-Coca Hellenic Bottling Company (CCHBC), the firm’s primary European bottler, for example, is both the keystone to the European supply chain and a respected leader in innovation. Leveraging IoT-enabled technology such as intelligent coolers that track and moderate temperature whilst measuring vending statistics, CCHBC has maximised efficiencies across its value chain whilst minimising waste and energy usage. In 2017, Bea Perez became the company’s first Chief Sustainability Officer. w w w.suppl yc ha i ndi gi ta l. com

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T O P 10

Volkswagen RALF PFITZNER, HEAD OF SUSTAINABILITY Volkswagen (VW), a much-respected leader in automotive engineering and technology innovation, is similarly progressive in its approach to sustainability 96

in its supplier relationships. With a mantra thatâ&#x20AC;&#x2122;s best distilled as the desire to go above and beyond, VWâ&#x20AC;&#x2122;s three-fold approach (Prevent, Detect, React) works to establish and develop its supply chains. Sustainability requirements are written into its contracts with suppliers, sustainability metrics are monitored constantly to identify areas of concern or slips in performance using a self assessment and reporting tool, and finally robust measures can be taken to mitigate and close opportunity gaps for greater sustainability performance. Decarbonisation, human rights, responsible procurement of raw materials, and combating corruption are the key areas of focus for these review metrics, with safeguarding against human rights abuses being of primary interest to ongoing relationships. J U LY 2 0 2 0

WOLFSBURG, GERMANY

304,174 NUMBER OF EMPLOYEES

$282.9bn REVENUE IN US DOLLARS

Drive Sustainability: Insights from Volkswagen CLICK TO WATCH

4:24

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

T O P 10

Accenture: Supplier Awareness Animation CLICK TO WATCH

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2:36

Accenture JESSICA LONG, MD STRATEGY AND SUSTAINABILITY Accenture makes quite the statement of intent with the introduction to its responsible supply chain ambitions: “We have the purchasing power and multi-billion-dollar supply chain to cultivate a culture of responsible buying on a global scale.” Across five pillars (corporate

DUBLIN, IRELAND

505,00

NUMBER OF EMPLOYEES (2018)

$43.2bn REVENUE IN US DOLLARS

citizenship, social impact, environment, inclusive workplace, and core values), Accenture tackles the breadth of the world’s most pressing CSR drivers. Its environmental policy is to play a key role in the shift to a low-carbon economy, with clear focus on decarbonisation, emissions reduction, cultures of responsibility, adherence to and surpassing of compliance standards, and fostering sustainable supplier relationships that capitalise on opportunities to excel. w w w.suppl yc ha i ndi gi ta l. com

100

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

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101

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 102

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. J U LY 2 0 2 0

103

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, 104

McAlpine: Digital Transformation CLICK TO WATCH

J U LY 2 0 2 0

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

105

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

106

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.

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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

107

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

www.refspecs.co.nz

SPECIALIST REFRIGERATION WHOLESALERS Refspecs is a specialist refrigeration and air conditioning wholesaler, selling spare parts and capital equipment to the trade both locally in New Zealand and exporting throughout the Pacific

LEARN MORE

REFSPECS ARE PROUD TO BE A KEY SUPPLIER TO MCALPINE HUSSMANN SINCE 2010

McAlpine: Smart Storage Use CLICK TO WATCH

1:44

109

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 110

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 J U LY 2 0 2 0

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

111

MCALPINE HUSSMANN

VI SI O N

112

“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.

J U LY 2 0 2 0

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

113

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

114

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.

J U LY 2 0 2 0

McAlpine: Supply Train Transformation CLICK TO WATCH

1:44

115

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, 116

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 J U LY 2 0 2 0

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

117

118

THE SCIENCE OF PROCUREMENT AT SCANDINAVIAN TOBACCO GROUP WRITTEN BY

SEAN GALEA-PACE

PRODUCED BY

CHARLOTTE CLARKE

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119

www.supplychaindigital.com

S C A N D I N AV I A N T O B A C C O G R O U P

HOW SCANDINAVIAN TOBACCO GROUPâ&#x20AC;&#x2122;S CULTURAL TRANSFORMATION HAS REIMAGINED AND OPTIMISED THE PROCUREMENT PROCESS

120

eadquartered in Copenhagen, Denmark, Scandinavian Tobacco Group (STG) has enjoyed a smooth and consistent level of

success over the years. Originally founded in 1961 as Skandinavisk Tobakskompagni A/S, the company initially housed a full-spectrum of tobacco products, but eventually settled on retaining its cigar, pipe and rolling tobacco businesses after restructuring itself in 2008. Now an internationally recognised company with 6,900 employees and known for producing high-quality, world-renowned products popular in both the US and Europe, STG has pursued a course aimed at maintaining shareholder value by becoming an indisputable leader in the tobacco industry. J U LY 2 0 2 0

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www.supplychaindigital.com

OUR BUSINESS IS HOW WE DO BUSINESS Quality Importers Trading Co., Inc. is a B2B product innovator and distributor for some of the industryâ&#x20AC;&#x2122;s most iconic international brands. QI also represents a global network of manufacturers specializing in the areas of wooden-ware, plastic injection molding, metal stamping and product packaging. .

OUR MISSION IS TO UNLOCK OUR CUSTOMER’S BUSINESS POTENTIAL BUILD ON A SOLID FOUNDATION During its twenty-plus years of business, while enjoying continuous annual growth, Quality Importers Trading Co., has developed an internal infrastructure and network of global partnerships that has ensured that its customers succeed in calm waters, and prosper even more in times of international economic and political storms, when most cannot. Keeping production and deliveries on schedule helps companies maintain healthy inventory levels that are positioned for growth. External threats to the supply chain caused by economic uncertainty, tariffs and other influences can only be mitigated with sound organization, time-proven processes and experience. Keeping product flowing from the supply chain onto the distribution channels has proven to be the difference between success and failure, often with no third option. KEYS TO WEATHERING THE STORM THROUGH STRATEGIC NETWORKS • Closely monitor product production and deliveries to ensure adhesion to schedules • Tight control and visibility on costs • Minimize external threats by managing economic uncertainty and tariffs • Build inventory levels that are positioned for growth while preserving cash flow • Execute with a strong sense of urgency and accuracy.

design distribution

sourcing

PRODUCT LAUNCH

sampling

packaging branding

QI’s balanced and symbiotic integration: from concept to creation.

INVEST IN TIMES OF UNCERTAINTY Making sound business decisions a habit and part of the culture place the company in a position to invest when and where many others may steer away. This strategy has paid off and Quality Importers has taken the initiative to further improve its products and services with a large investment in cloudbased systems with ERP and other resource management tools that will help the company unleash even more of its customers’ potential. Let’s get started on your future. Contact us now at sales@qualityimporters.com.

1 (954) 602-5637 // www.qualityimporters.com // Instragram: @QualityImporters // Facebook: www.facebook/QITradingCo Twitter: @QITradingCo

S C A N D I N AV I A N T O B A C C O G R O U P

STG has an innovative and consumer-

“ IN ORDER FOR STG TO ACHIEVE ITS GOALS, A STRONG COLLABORATION WITH STAKEHOLDERS AND VENDORS TO ENSURE THAT THEY SHARED A COMMON VISION, GOAL AND STRATEGY IS VITAL”

focused approach to its brand portfolio management that relies on a robust understanding of its consumers across markets and categories, as well as being committed to developing its brands, concepts and products for markets globally. The organisation’s strategy is focused on four main business priorities. Across categories and markets, these priorities help us create value from our recognised brands, extensive tobacco expertise, global scale, market footprint

124

and supply chain. When rethinking

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Scandinavian Tobacco Group: My Ignition: Iris CLICK TO WATCH

2:31

125 procurement, the company defined six

STG shares a particularly strong rela-

main principles to ensure its ongoing

tionship with is Quality Importers (QI).

competitiveness: securing supply, main-

A Florida-based company specialising

taining business continuity, simplicity,

in cigar storage and packaging, QI pro-

improving margins, improving networks

vides first-class service to STG and is

and realising targets. By standardis-

considered one of STGâ&#x20AC;&#x2122;s most reliable

ing its processes in this way, STG was

and trusted partners.

able to increase the transparency of its

During the first quarter of 2020, STG

operations and better measure if it was

delivered net sales of DKK 1,791 mil-

adhering to its own goals.

lion, organic net sales growth of 5%.

In order for STG to achieve its goals,

The first quarter 2020 includes Agio

a strong collaboration with stakehold-

Cigars, which was acquired on January

ers and vendors to ensure that they

2, 2020. The quarter showcased posi-

share a common vision, goal and

tive organic growth in net sales across

strategy is vital. One such vendor that

all four commercial divisions with www.supplychaindigital.com

S C A N D I N AV I A N T O B A C C O G R O U P

126

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127

“ SCANDINAVIAN TOBACCO GROUP ENTERED THE COVID-19 CRISIS FROM A POSITION OF STRENGTH, AND WE WILL REMAIN IN GOOD FINANCIAL HEALTH EVEN THOUGH WE EXPECT A NEGATIVE IMPACT FROM THE COVID-19 CRISIS ON OUR BUSINESS IN 2020”

www.supplychaindigital.com

S C A N D I N AV I A N T O B A C C O G R O U P

Scandinavian Tobacco Group: From Seed to Handmade Cigar: Harvesting CLICK TO WATCH

0:52

128

high growth in Region Machine-Made

“ DURING THE FIRST QUARTER OF 2020, STG DELIVERED NET SALES OF DKK 1,791 MILLION, ORGANIC NET SALES GROWTH OF 5%”

Cigars of 5.2% and in Region Smoking Tobacco & Accessories of 11.6%. In a press release on the company’s website, Niels Frederiksen, CEO of Scandinavian Tobacco Group, commented: “In the middle of a unprecedented global pandemic with a high degree of volatility and uncertainty in most markets, we are able to present a solid result for the first three months of 2020 with net sales growth and a strong cash flow as well as we

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129

have revealed the plans for creating

a negative impact from the COVID-19

significant value with the integration

crisis on our business in 2020. To ensure

of Agio Cigars. During these uniquely

the continued strength of our underlying

challenging times, I have been encour-

business we have reinforced our empha-

aged by the resilience of our business

sis on costs and strengthened our focus

and by the dedication of our employ-

on cash and liquidity.”

ees in keeping our business running

With the goal of being the undisputed

and delivering on our promise to our

leader in a declining market, STG has

consumers and customers.

put itself in a position to remain a major

“Scandinavian Tobacco Group entered

force in cigars and tobacco and grow

the COVID-19 crisis from a position of

organically or through mergers and

strength, and we will remain in good

acquisitions. Through its “Fueling the

financial health even though we expect

Growth” campaign, an emphasis was www.supplychaindigital.com

S C A N D I N AV I A N T O B A C C O G R O U P

130

J U LY 2 0 2 0

put on gathering quality data from which decisions could be made. Fueling the Growth makes STG more agile by removing layers of management and there is now a maximum of seven between CEO and shop floor, when previously there could be up to 12. This will allow for messages across the organisation to be sped up and experts in the sector now take decisions and bring them to market much more efficiently. With over 200 brands in the companyâ&#x20AC;&#x2122;s portfolio, most recently Royal Agio Cigars, a leading European cigar manufacturer, STG is in the enviable position of being able to retain its valued customers whilst also attracting new ones with its superior products. Of paramount importance to this vision is a rock-solid procurement process which seeks to engage stakeholders and partners and utilise the latest technology.

www.supplychaindigital.com

131

132

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World Vision: digitalising operations to help the vulnerable WRITTEN BY

GEORGIA WILSON PRODUCED BY

CAITLYN COLE 133

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 134

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

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135

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

136

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

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

2:17

137 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 J U LY 2 0 2 0

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.” 139

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

140

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

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141

“ 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

142

“ 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

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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 144

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 J U LY 2 0 2 0

145

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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