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
A fresh approach to customer engagement Delight your customers, every step of the way. You’ll know what we mean when you try our products:
Empower your support team to work together and resolve customer issues faster
Engage with website visitors and product users for sales and customer success
Keep your sales team in the know about prospects and close deals faster
Learn more →
Learn more →
Learn more →
Streamline your IT service and manage internal requests from your employees.]
Reimagine your cloud-based phone system for businesses of all sizes across 90+ countries.
Recruit and onboard top talent. Manage all employee data in one place.
Learn more →
Learn more →
Learn more →
VIEW ALL PRODUCTS →
GET STARTED www.freshworks.com sales@freshworks.com
FOREWORD
W
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
03
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
CLICK THE MENU TO RETURN TO CONTENTS PAGE
Subscribe to receive exclusive weekly news and insights direct to your inbox
CLICK NOW TO SUBSCRIBE FOR FREE
05
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
58
Navigating the impact of COVID-19 with Big Data & Analytics
54
SCM SOFTWARE: ENABLING AGILITY, VISIBILITY AND RESILIENCY
42 How digital automation is shaping modern supply chains
66
82 Sustainable supply chains
When our clients want to move fast and make things, they turn to us! Nagarro drives technology-led business breakthroughs for industry leaders and challengers. Some of our clients include ASSA ABLOY, the City of New York, DHL, GE, Lufthansa, Siemens and T-Systems. Working with these clients, we continually push the boundaries of what is possible to do through technology, and in what time frame. Today, we are more than 5,000 experts across 21 countries. Together we form Nagarro, the global services division of Munich-based Allgeier SE.
“We need partners like Nagarro who help innovatively and technologically to take place in the digital transformation.” Dr. Roland Schütz, CIO of the Lufthansa Group, talks about the secret sauce of this successful and trusted partnership.
LEARN MORE
/company/nagarro
/nagarro
/nagarroinc
/nagarroinc
nagarro.com
100 McAlpine Hussmann
118 132 Scandinavian Tobacco Group
World Vision
Global supply chain transformation WRITTEN BY
LEILA HAWKINS PRODUCED BY
10
GLEN WHITE
J U LY 2 0 2 0
11
www.supplychaindigital.com
12
Hicham Nehme, Head of Supply Chain at Vodafone Qatar, on the complexities of the supply chain transformation and overcoming unexpected challenges
W
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
13
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
A gateway to innovate, a channel to communicate
Hayat Communications Al Owinah Tower, 9th floor Old Salata, Corniche Doha - Qatar P.O. Box: 30219 Tel: +974 4451 4979 Fax: +974 4451 4978 qatar@hayatcomm.net
www.hayatcommunications.com
Hayat Communications Company KSCC (HCC) is a publicly listed company in the Kuwait Stock Exchange focused on the communications industry. HCC is a service provider for the design, supply, build and management of all various types of fixed line and wireless networks. Namely, the mobile industry, fiber roll-out, security and surveillance, Enterprise, IT and low voltage system. HCC is considered a top tier partner in the communications sector across the Arabian Gulf specifically. Our vision to be the partner of choice as a major service provider of networks in communications and technology. Accommodating evolving communications through innovation, user-friendly solutions and our professional management team. Our services lines are catered mainly in: - IT &Telecommunications infrastructures - IOT - ELV/ AV systems - Automation solutions - Smart offices, homes, parking‌etc - Energy solutions
LEARN MORE
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
16
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
17
“ Digital tools are not a privilege anymore” — Hicham Nehme A. Head of Supply Chain at Vodafone Qatar
www.supplychaindigital.com
PREMIERE TELECOM INFRASTRUCTURE BUILDERS IN QATAR Building Tommorow’s Telecom Infrastructure Today HATCOM Trading & Contracting is a Premiere Telecom Infrastructure builder in Qatar. Our Products and Services includes engineering and turnkey construction of traditional GSM Sites, Camouflage Sites, Rapid Deployment Solutions, Site Specific and Customized Solutions, Military Towers and Datacenters.
LEARN MORE
E: info@hatcom.com.qa W: hatcom.com.qa
T: +97444445538 Doha - Qatar
“ 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
19
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-
20
“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
21
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.�
Telecommunications is another stra-
Among the company’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:
23
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
25
PROCUREMENT
26
RESPONSIBLY SOURCED SUPPLY CHAINS CAN BENEFIT EVERYONE WRITTEN BY
J U LY 2 0 2 0
WILL GIRLING
27
w w w.suppl yc ha i ndi gi ta l. com
PROCUREMENT
Supply Chain Digital explores how four different supply chains (food, consumer goods, tech and retail) are opting for responsible sourcing
A
s global supply chains become ever more diverse, interconnected and farreaching, business opportunities have
accordingly flourished. However, the rise of the
‘consumer class’ 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 company’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
29
w w w.suppl yc ha i ndi gi ta l. com
Designed for progress. Built for industry
From manufacturing to healthcare, public sector, retail to fashion, we deliver enterprise software solutions that are built for the cloud, brought together by AI technology. 68,000 customers in 170 countries
$2.5B invested in product development
71 million cloud users
Enterprise leader in ERP infor.com
+61 2 9021 7100
Learn More
Get a demo
PROCUREMENT
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
31
PROCUREMENT
(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’.
32
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
33
PROCUREMENT
What is Gartner’s best strategy for responsible sourcing?
34
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
35
PROCUREMENT
• 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
37
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
PROCUREMENT
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.
38
J U LY 2 0 2 0
ŠIntel
39
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 company’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.
Intel’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
PROCUREMENT
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 workers’ rights, health and safety, etc. w w w.suppl yc ha i ndi gi ta l. com
41
S U P P LY C H A I N
42
SCM SOFTWARE: ENABLING AGILITY, VISIBILITY AND RESILIENCY WRITTEN BY
J U LY 2 0 2 0
WILL GIRLING
43
w w w.suppl yc ha i ndi gi ta l. com
S U P P LY C H A I N
44
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
D
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
45
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
The Leading Enterprise Contract Management Platform in the Cloud Icertis, the leading enterprise contract management platform in the cloud, solves the hardest contract management problems on the easiest to use platform. With Icertis, companies accelerate their business by increasing contract velocity, protect against risk by ensuring regulatory and policy compliance, and optimize their commercial relationships by maximizing revenue and reducing costs. The AI-infused Icertis Contract Management (ICM) platform is used by companies like 3M, Airbus, Cognizant, Daimler, Microsoft and Roche to manage 5.7 million contracts in 40+ languages across 90+ countries.
LEARN MORE
www.icertis.com | manisha.khadge@icertis.com
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
w w w.suppl yc ha i ndi gi ta l. com
47
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
48
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
w w w.suppl yc ha i ndi gi ta l. com
49
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
50
©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
51
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
53
LOGISTICS
54
Navigating the impact of COVID-19 with Big Data & Analytics WRITTEN BY
J U LY 2 0 2 0
GEORGIA WIL SON
55
w w w.suppl yc ha i ndi gi ta l. com
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
57
w w w.suppl yc ha i ndi gi ta l. com
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
w w w.suppl yc ha i ndi gi ta l. com
LOGISTICS
60
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
61
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
63
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
65
“ 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
66
How digital automation is shaping modern supply chains WRITTEN BY
WILL GIRLING
J U LY 2 0 2 0
67
w w w.suppl yc ha i ndi gi ta l. com
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?
T
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 companies’ 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
69
AI – 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
71
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
HR
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
3
w w w.suppl yc ha i ndi gi ta l. com
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-
74
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
w w w.suppl yc ha i ndi gi ta l. com
75
TECHNOLOGY
76
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,
w w w.suppl yc ha i ndi gi ta l. com
77
TECHNOLOGY
78
“ 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
79
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
81
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
82
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
J U LY 2 0 2 0
83
w w w.suppl yc ha i ndi gi ta l. com
T O P 10
HQ
NEW BRUNSWICK, USA
132,000 NUMBER OF EMPLOYEES
$82.06bn REVENUE IN US DOLLARS (2019)
84
10
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
HQ
ATLANTA, USA
481,000 NUMBER OF EMPLOYEES
$71.86bn REVENUE IN US DOLLARS (2018)
85
09
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
A fresh approach to customer engagement Delight your customers, every step of the way. You’ll know what we mean when you try our products:
Empower your support team to work together and resolve customer issues faster
Engage with website visitors and product users for sales and customer success
Keep your sales team in the know about prospects and close deals faster
Learn more →
Learn more →
Learn more →
Streamline your IT service and manage internal requests from your employees.]
Reimagine your cloud-based phone system for businesses of all sizes across 90+ countries.
Recruit and onboard top talent. Manage all employee data in one place.
Learn more →
Learn more →
Learn more →
VIEW ALL PRODUCTS →
GET STARTED www.freshworks.com sales@freshworks.com
T O P 10
HQ
MEMPHIS, USA
425,000 NUMBER OF EMPLOYEES
$65.45bn REVENUE IN US DOLLARS (2018)
87
08
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
HQ
BONN, GERMANY
550,000 NUMBER OF EMPLOYEES
â&#x201A;Ź61.55bn REVENUE IN EURO
88
07
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
HQ
AISHI, JAPAN
370,870 NUMBER OF EMPLOYEES (2019)
$272bn REVENUE IN US DOLLARS
89
06
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
HQ
DETROIT, USA
164,000 NUMBER OF EMPLOYEES
$137.2bn REVENUE IN US DOLLARS (2019)
91
05
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
HQ
CUPERTINO, USA
137,000 NUMBER OF EMPLOYEES
$260.2bn REVENUE IN US DOLLARS (2019)
92
04
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
HQ
ATLANTA, USA
62,600
NUMBER OF EMPLOYEES (2018)
$31.85bn REVENUE IN US DOLLARS (2018)
93
03
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
E M E A | A P A C | | APAC N O R T H | A EMEA MERICA AMERICAS FIND OUT MORE
FIND OUT MORE
T O P 10
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
HQ
WOLFSBURG, GERMANY
304,174 NUMBER OF EMPLOYEES
$282.9bn REVENUE IN US DOLLARS
97
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
98
Accenture: Supplier Awareness Animation CLICK TO WATCH
J U LY 2 0 2 0
|
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
HQ
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
99
100
Inside McAlpine Hussmannâ&#x20AC;&#x2122;s supply chain transformation
J U LY 2 0 2 0
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
T
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.
J U LY 2 0 2 0
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
J U LY 2 0 2 0
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
H
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
121
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
J U LY 2 0 2 0
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
J U LY 2 0 2 0
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
J U LY 2 0 2 0
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
J U LY 2 0 2 0
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
W
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
J U LY 2 0 2 0
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
J U LY 2 0 2 0
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
SERVING THOSE W H O S E RV E H IM
Over 60 years as the leading freight forwarder of Humanitarian Aid cargo. Expertise and solutions for non-routine and non-repetitive routes. EDI capabilities, annual Logistics Forum.
WATCH OUR VIDEO
VISIT OUR WEBSITE
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
J U LY 2 0 1 9
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
J U LY 2 0 2 0
143
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
Designed for progress. Built for industry
From manufacturing to healthcare, public sector, retail to fashion, we deliver enterprise software solutions that are built for the cloud, brought together by AI technology. 68,000 customers in 170 countries
$2.5B invested in product development
71 million cloud users
Enterprise leader in ERP infor.com
+61 2 9021 7100
Learn More
Get a demo