Supply Chain Digital - February 2021 by Supply Chain Digital

FEB 202 1

supplychaindigital.com

Interviews from 2020 DEUTSCHE BAHN:

Transforming Procurement

G4S:

Global Procurement & Supply Chain Transformation

T–Mobile

ENHANCING CX WITH DIGITAL SUPPLY CHAIN SOLUTIONS T-Mobile’s Erik LaValle explains how digital transformation has helped find innovative market solutions

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FOREWORD

elcome to the February 2021 issue of Supply Chain Digital. A new President in the Oval Office, Wall Street left scrambling over a Reddit community short squeeze, and, for once, positive news in the fight against COVID19 - the first month of the year after the year we’ll never forget has been memorable in its own right. But the one thing that remains consistent in our corner of the world is the critical role of digital transformation, a point our cover story this month brings into sharp focus. We spoke to Erik LaValle, Digital Supply Chain Technology Leader at T-Mobile, who reminds us of a fundamental but often overlooked element of supply chain: that it’s far more than a back office function. “So much of the [T-Mobile] customer experience and the brand promise comes from its supply chain,” he says, a bold statement that feeds into the telco’s ‘uncarrier’ philosophy to bend the rules of conventional wisdom a little. “I see more change at T-Mobile in the short-term,” he says. “Both the volume and the magnitude of these changes will be significantly greater than I have seen in any other industry.”

We also explore the importance of a hybrid approach to procurement, with both human and mechanical elements working in tandem. We caught up with Sheldon Mydat, founder and CEO of Suppeco, and a passionate proponent of advances in procurement digitisation, all while remembering the most vital role relationships play - or the “wooly subjective component”, as he poetically terms it. Elsewhere we hear from industry experts about the latest developments on the ever pressing topics of supply chain management, logistics and how harnessing data to drive efficiency and value today will pay off even further down the track. And don’t miss our top 10 this month, a refresher course on some of the biggest interviews we conducted in 2020. Expect developments, insights and nuggets of gold courtesy of supply chain’s leading lights and biggest players, from SAP and Deloitte, to DHL, BP and Volkswagen. From the team at Supply Chain Digital. Rhys Thomas rhys.thomas@bizclikmedia.com

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PUBLISHED BY

PRODUCTION DIRECTORS

PROJECT DIRECTORS

Georgia Allen Daniela Kianicková

Karl Green Tom Livermore James Richardson

PRODUCTION MANAGER

Rhys Thomas

Owen Martin Philline Vicente

DEPUTY EDITOR

VIDEO PRODUCTION MANAGER

EDITOR-IN-CHIEF

MEDIA SALES DIRECTOR

James White SALES AND MARKETING DIRECTOR

Georgia Wilson Laura Garcia

Kieran Waite

EDITORAL DIRECTOR

DIGITAL VIDEO PRODUCERS

MANAGING DIRECTOR

Sam Kemp Evelyn Huang Matthew Evans

Lewis Vaughan

Scott Birch CREATIVE TEAM

Oscar Hathaway Sophie-Ann Pinnell Sophia Forte Hector Penrose Sam Hubbard Mimi Gunn

DIGITAL MARKETING EXECUTIVE

Kayleigh Shooter

Jason Westgate

CHIEF OPERATIONS OFFICER

Stacy Norman PRESIDENT & CEO

Glen White

supplychaindigital.com

ENHANCING CX WITH DIGITAL SUPPLY CHAIN SOLUTIONS

The Importance of Meeting Both the Human and Machine Needs in Procurement

Crisis, A Catalyst for Change: The Value of Supply Chain Management

42 Warehouse 4.0 – Today’s Tech for Today’s Problems

60 DATA ANALYTICS: FUELLING SUPPLY CHAIN AGILITY

SUPPLY CHAIN DIGITAL’S INTERVIEWS FROM 2020

88 Deutsche Bahn

110 G4S

128 Sun Basket

148 Aljazierah Home Appliances

FEBRUARY 2021

Enhancing CX with Digital Supply Chain Solutions WRITTEN BY

WILL GIRLING PRODUCED BY

GLEN WHITE suppl y c ha i ndi gi ta l. com

T–MOBILE US, INC.

Erik LaValle, Digital Supply Chain Technology Leader, explains how digital transformation has helped T–Mobile find innovative market solutions

T-Mobile’s presence in the US began in 2002 when Deutsche Telekom (its parent company) acquired and rebranded

VoiceStream Wireless Corporation. Headquartered in Bellevue, Washington, and currently ranked among the top three largest wireless carriers in the country 12

with over 100 million subscribers, T-Mobile’s dynamic approach to the customer experience is best encapsulated by its ‘un-carrier’ strategy. Officially debuting in 2013, this philosophy saw the company actively seeking to ‘break the rules’ of industry tradition, eliminating everything that has no (or even negative) consequence to the customer, including contracts and international roaming fees. Far from being an approach siloed in a single aspect of T-Mobile’s business, the spirit of imaginative reinvention permeates every core operational element. Erik LaValle, Digital Supply Chain Technology Leader, explains how the company’s cultural agility has enabled it to address challenging supply requirements during COVID-19 and why delivering a superior customer experience is contingent on flexible digital solutions. FEBRUARY 2021

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SCApath and T-Mobile: Delivering Omni-Channel Supply Chain Capability Evan McCaig, SCApath President and Managing Principal, explains how it is growing T-Mobile’s digital supply chain platform and supporting its 5G network expansion “We’ve been T-Mobile’s supply chain consulting partner for the last four years, working across multiple supply chain initiatives. The most well-known are the T-Mobile Sprint merger, and T-Mobile 5G network, which is extremely important to the development of IoT and really the supply chain of the future. Our team of supply chain experts have worked hard to deliver a seamless customer experience, so you can go into a T-Mobile store and buy or return Sprint inventory, and vice versa. We’ve also deployed a highly automated multi-channel distribution center solution for all US mobile devices and accessory fulfilment. We’re currently modernizing their 5G supply chain to drive their network nationwide. We’re extremely grateful to have been chosen by the T-Mobile team to optimize their supply chain and support their focus on delivering 5G capability. When I think about our continued partnership with T-Mobile, it’s really about two key strategic elements: supporting their business as they move to a fully digital supply chain platform – from customer experience and enterprise

architecture perspectives – and developing their 5G network supply chain. It’s a perfect example of SCApath’s cross-discipline supply chain expertise, and value of bringing order management, fulfilment and transportation together to build advanced supply chain capability. The IoT, enabled by 5G, will allow more real time track and trace, and increased visibility from the manufacturer to the end customer enabling more agility than ever before. So, T-Mobile, indirectly, is going to be instrumental in supply chain innovation that we’re going to see in the next five to 10 years. In today’s complex supply chain and technology environment, you really must understand the trade-offs between speed, cost, quality and agility. It’s critical you understand those relationships to deliver an omni-channel supply chain capability. The ability to tie together supply chain operations and technology is not only what makes SCApath different but it’s also a necessity for future commerce – and that’s the reason why we’re so bullish and excited about the future.”

T–MOBILE US, INC.

“ We want to be able to do things that no other company can do on behalf of our customers” — Erik LaValle, Digital Supply Chain Technology Leader, T–Mobile Responsible for overseeing an end-to-end technology solutions portfolio across a US$13bn supply chain of more than 8,000 stores for the 16

1994

Year founded

$45.0B+ 2019 Revenue in US dollars

80,000 Number of employees

flagship Magenta brand, over 11,500 stores for the Metro brand, as well as for the build-out of the network itself, LaValle and his team field the techno-

the retail sector, LaValle admits he was

logical requirements associated with

initially unsure why T-Mobile (a telco)

T-Mobile procurement for external

reached out to him. “It was then that

sales and internal consumption. Highly

I learned T-Mobile, in addition to being

experienced both academically and

a telco, really operates as a retailer for the

professionally in his field, LaValle spent

customer experience aspect of obtain-

the first 18 years of his career as an

ing devices and accessories. So much of

industry consultant, which he credits as

the customer experience and the brand

being highly formative, “it’s in my nature

promise comes from its supply chain,

now to look for those big business chal-

and I was very intrigued.” Complimenting

lenges, to understand what the outcome

the company’s “great culture”, which

is intended to be and then to find the

gives employees autonomy, fosters

technology needed to solve that prob-

learning and always offers fun chal-

lem.” Having spent his career primarily in

lenges, LaValle joined in early 2017.

FEBRUARY 2021

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

Erik LaValle Title: Digital Supply Chain Technology Leader Company: T–Mobile

Industry: Telecommunications

Erik leads Product & Technology for T-Mobile, responsible for the technical solutions as well as the process definition from concept to delivery for device and accessory supply chain, along with procurement, inventory management and distribution and logistics for network supply chain, building out T-Mobile’s 5G network. Erik held similar leadership roles at L Brands and Carter’s OshKosh. He is a former industry consultant, and approaches challenges balancing the business outcome with appropriate technical solve. Erik is known for his innovative approaches with business partners, and for developing seamless teams with his internal teams and delivery partners suppl y c ha i ndi gi ta l. com

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Delivering the best of IBM Chip Schneider and Glenn Finch from IBM on working with T-Mobile to deliver cognitive process transformation Chip Schneider, partner in IBM Global Business Services (GBS), worked alongside T-Mobile to bring about what he calls a “cognitive process transformation” with data analytics, artificial intelligence and cognitive cloud. IBM was chosen by T-Mobile as their strategic partner to deliver the programs and projects to propel T-Mobile forward with back-office functions like financing in supply chain. IBM has been a partner with Sprint for a number of years so when T-Mobile and Sprint merged last year, it was an opportunity for IBM to showcase their expertise. Schneider is enthused when discussing the working relationship between IBM and T-Mobile, saying there is “always an air of excitement” and “they’re so willing to listen”. “T-Mobile asked us to make the work we do for them ‘palatable and meaningful’,” says Schneider. “That means bringing industry leadership, functional leadership in finance, supply chain customer management, and the technical aspects of hybrid cloud, cognitive and machine learning, data intelligent workflows, and blockchain. We had to make sure it’s not just us talking to them, but us working together with them.” Of course, the benefits of a close, collaborative relationship like this work for both parties, especially when digital transformation is accelerated by a pandemic. “That changed everything,” adds Glenn Finch, Global Leader Big Data & Analytics at IBM.

“2020 was a matter of survival for most companies with a focus on business continuity and cost reduction. So you saw this radical growth in back office transformation, in front office transformation, and then this this unprecedented growth in data. We are a hybrid cloud and AI company. That’s exactly what the market wants right now.” Finch explains how companies were faced with a critical cloud decision and turned to IBM as a trusted, reliable partner. “When clients were having to bet their careers, they bet on us,” says Finch. “When we go into a process and we drive a bunch of AI into it, we’re shrinking cycle time by 80 to 90%, we’re cutting costs by 50 to 60%, and NPS scores are going up by 10 to 20 points. Sometimes clients think that can’t be right as it sounds too good to be true.” Schneider emphasises the importance T-Mobile placed on not only transforming the technology but also empowering individuals. “T-Mobile are hyper focused on ensuring that not only their customers feel the human connection, but also employees,” says Schneider. “And so our job is to take the data – internal and external – and present it back to them and say, ‘Hey, here’s what I found’. It’s really like building a colleague for them to help drive their strategic decisions on their supply chain.” ibm.com/hybridcloud

T–MOBILE US, INC.

“ Digital transformation has been very meaningful to T-Mobile” — Erik LaValle, Digital Supply Chain Technology Leader, T–Mobile Naturally curious and a problem solver, LaValle finds the behind-the-scenes complexities of supply chain to be 20

fascinating. Stating that the importance of logistics to enabling T-Mobile’s high-quality customer experience really resonated with him, he adds that the company’s agile attitude has been key to weathering the substantial changes that supply chains have undergone in recent years. “As US businesses began to do more offshore sourcing and supply chains became longer, the need for facilitated communication and a shared understanding of the intended outcomes was very important. As that shift began to happen, then came the emphasis on product development, which, with the proliferation of the internet, placed the emphasis on product development FEBRUARY 2021

and the creative process.” This also brought technology to the fore, and in this respect, T-Mobile has undergone a significant transformation. “When I first joined T-Mobile, there was very little in the way of digital solutions. We were a monolithic,” LaValle explains. “That made for a very complex environment that really wasn’t flexible or tailored for our business’ needs.” As such, his first challenge was serializing T-Mobile’s inventory over an 18-month period to develop a digital platform. Having subsequently rolled this out to great success, LaValle calls this the “founding element” of the company’s digital strategy. “I see more change at T-Mobile in the short-term. Both the volume and the magnitude of these changes will be significantly greater than I have seen in any other industry,” he states. This is a bold statement, particularly in the wake of COVID-19, which has seen many organizations make years of accelerated development in a remarkably condensed period. Yet, he affirms that T-Mobile’s status as the ‘un-carrier’ will always give it an edge over competitors: “We want to be able to do things that no other company can do on behalf of our customers.” suppl y c ha i ndi gi ta l. com

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Jessica Calzaretta of Insight Global everyday challenges of supporting our people and clients during the global pandemic,” says Calzaretta. The demand for a flexible workforce capable of pivoting to meet demand has surged dramatically over the past 12 months prompting Insight Global to launch its Global Healthcare division she explains: “We can now better support those industries and customers with everything from different types of patient care resources and the coordinators and support personnel who can step in and provide help to those in need during this difficult time when the demand for a contingent workforce has increased overnight.” Investing in the Future Allied to its commitment to retaining staff during the pandemic, Insight Global is investing in its employees through training and promotion. “Our shared values are core to who we are as a company,” maintains Calzaretta. Insight Global’s team is 70% female and the company remains committed to making women “amazing leaders”. Its Women’s Leadership Council creates programs and communities to empower and support women throughout their careers; leading the company to be recognized among the Best Workplaces for Women in 2020 by Fortune & Great Place to Work. “We help them bring their perspective to the table,” says Calzaretta. “This informs decisions we make across our business to advance the role of women within our organization.” insightglobal.com

T-MOBILE US, INC.

Partnering for success LaValle makes it clear that, in his opinion, who a company chooses to partner with can have a substantial effect on overall success. Aside from the ‘table stakes’ of technical knowledgea, market success and trust, T-Mobile is looking for collaborators who are willing to challenge and elevate the company’s current standards.

Complimenting T-Mobile’s “great ecosystem of partners”, he states that relationships developed with IBM, Rimini Street, Insight Global, and SCApath, each of which play different (yet interconnected) roles, have been particularly important:

FEBRUARY 2021

IBM: “IBM is our key partner for operations support, as well as development around our core ERP (enterprise resource planning). The firm fields a very large team, a combination of onshore, nearshore, and offshore professional resources that are helping to advance our operations stance. T-Mobile has a stable performance solution, but with IBM we are really taking it to the next level, moving to a continuous delivery stance, and looking for even more robust performance and stability.”

Rimini Street: “Rimini Street provides our third-party support for SAP and has been helping us in highly challenging areas to keep SAP performance stable.” Insight Global: “Insight Global is a partner that helps us in our digital spaces. It’s been a fantastic partner in terms of sourcing talent for T-Mobile, both in terms of technical skills and business skills. It’s a flexible and responsive company. We have been so pleased with our partnership; the resources they bring to the table for us are consistent and it’s an integral part of our team.” SCApath: “SCApath has become a very trusted advisor. It’s a boutique consulting firm that focuses on distribution, logistics and order management. Using a stable of extremely experienced and pragmatic professionals, SCApath helps us solve some of our most challenging problems by leveraging their deep industry experience in the industry. It’s been transformative in changing our relationship with our business partners.” suppl y c ha i ndi gi ta l. com

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“ It’s in my nature now to look for those big is paramount for T-Mobile and it is business challenges, willing to invest the time, money and talent required to keep it exceptional. to understand what the Recent events have certainly changed outcome is intended to the expectation - from the historically be and then to find the store-focused experience to the digital, technology needed to web-based experience - but success solve that problem” is ultimately measured the same way: This statement gets to the heart of

the matter; the customer experience

providing the customers with the service they want. “Buy online and pick up in-store, same-day delivery, and special delivery options are all components that

— Erik LaValle, Digital Supply Chain Technology Leader, T–Mobile

are powered mostly by supply chain; it’s

Erik Lavalle @ T-Mobile CLICK TO WATCH

1:03

suppl y c ha i ndi gi ta l. com

T–MOBILE US, INC.

really stepping up to be a partner with digital properties and with retail to be the third major component in the overall customer experience.” COVID has pushed forward T-Mobile’s plans in this regard, including buy online/pick up in-store, contactless and curbside delivery, and same-day delivery. “Customers can now have options to get their product where, when and how they want to get it,” he summarizes. With such a decisive stance on the issue, LaValle makes it clear that pre28

existing solutions are often not enough to realize T-Mobile’s vision. Instead, the company opts for in-house business process design to bring specificity and relevance to its customers. “Digital

the earliest inception of new initiatives,

transformation enables that flexibility

LaValle says that his team is able to

and ability to achieve exactly what the

gain a deep understanding of desired

business is looking for, instead of some-

business outcomes that helps to define

thing that comes pre-configured from

product options.

a partner vendor.” T-Mobile considers

At the beginning of 2020, no-one

its supply chain solutions to be truly

at T-Mobile could have predicted the

meaningful, an attitude that is integral to

sweeping changes that have affected

producing optimal outcomes. Creating

national and international supply chains.

a bespoke solution might be more chal-

With the March lockdown soon followed

lenging than selecting a ready-made

by the completion of the company’s

option, but by forging strong partner-

merger with Sprint Corporation in April,

ships and “sitting at the table” from

LaValle says that the added challenge

FEBRUARY 2021

“ I see more change at T-Mobile in the short-term. Both the volume and the magnitude of these changes will be significantly greater than I have seen in any other industry” — Erik LaValle, Digital Supply Chain Technology Leader, T–Mobile

of integrating two separate supply

but new technology such as T-Mobile’s

chains into a single ecosystem has

rapidly expanding 5G network will play

been difficult, although nothing has

an essential role in realizing its ambition.

impeded T-Mobile’s quest for a bet-

“Digital transformation has been very

ter customer experience. “Going into

meaningful to T-Mobile. My encour-

2021, I think there are three things we’re

agement to anyone would be to pick

going to focus on: internal transforma-

one of your most challenging areas

tion to become a more unified company,

and just get started.”

transformation around our customer experience, and finally our ongoing digital evolution,” he summarizes. The usual pressures of meeting expectations and delivering value will remain, suppl y c ha i ndi gi ta l. com

P R O C U R E M E N T S O F T WA R E

FEBRUARY 2021

The Importance of Meeting Both the Human and Machine Needs in Procurement WRITTEN BY

OLIVER JAMES FREEMAN

suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T S O F T WA R E

Sheldon Mydat,Founder and CEO of Suppeco, shares his insight on the importance of meeting both the human and machine needs in procurement practices.

upply chains and supply chain management

were the ‘hot topics’ back in the early 90s, as

the world started to make leaps and bounds

towards globalisation. But it soon died down as new, more exciting advancements in technology captivated the world’s consumers and businesses.

After almost three decades of lurking in the shadows, supply chain and all of the factors under its umbrella are again in the limelight courtesy of COVID-19. When the pandemic started to cause issues in product acquisition, and supermarkets started to lack stock, the world realised just how crucial supply chain management and, more importantly, procurement truly is to our everyday lives. Naturally, in a world that is heavily impacted by digitisation on a daily basis, so too is the procurement process. Yet, it remains a notoriously human affair, with conversation and handshakes aplenty. Fortunately, Sheldon Mydat, Founder and CEO of Suppeco - a leading procurement/SRM software provider - dropped by to explain the importance of both technology and maintaining the human-touch throughout the procurement process, and how two FEBRUARY 2021

suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T S O F T WA R E

34 seemingly contrarian factors can—

central government departments. Fair

in fact, do—work harmoniously for

to say I’ve worked alongside and learnt

the betterment of the business.

from some of the world’s best-known

We started by discussing Sheldon’s

brands, focusing on two main areas: 1)

journey, to find out exactly why he

supplier management transformation

founded Suppeco, and what role he

and 2) supplier transition modelling for

believes the company will play in the

organisations either outsourcing, being

coming years. “For 20 years I’ve circum-

outsourced, buying, being sold, and of

navigated my way across industry, from

course forms of divestments (regulatory

telco (more recently communications of

or otherwise).

course, although one could argue that

“Everything I’ve ever done has been

comms companies are now technology

about improving the enterprise relation-

companies) to financial services to logis-

ship - customers and suppliers—at scale.

tics, to transport to name a few, including

SRM tech during much of that time was

very extensive experience within most

almost non-existent. I want to be clear

FEBRUARY 2021

“ Once you do that, you open yourself up to a world of infinite value and growth opportunity” — Sheldon Mydat, Founder and CEO, Suppeco

what we’re talking about here though: relationships. The woolly subjective component, if you will, of any engagement - the place in which we actually operate and function. By that, I mean to say that we don’t live within the confines of a legally drafted contract, and to attempt to prescribe all of the value-rich relationship-driven activity into a contract would simply stymie the creative process. Thus it’s always been somewhat of a value-intangible. That’s one big reason why SRM was always more a concept over the years than an objective discipline such as CRM, ERP or ITSM. suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T S O F T WA R E

“In the early days, I’d create these

technological magic to translate the

formulaic Excel spreadsheets and funky

data into an objective structure to create

Powerpoints as part of implementing

baseline and measurability.

bespoke solutions for clients. I remem-

“Once you do that, you open yourself

ber wracking my brain, trying to figure

up to a world of infinite value and growth

out exactly how to create a formula

opportunity,” Sheldon added.

that would accurately measure subjec-

That is exactly what Suppeco has

tive behaviour in relationship settings.

managed to achieve. Far beyond any

There was nothing like that available.

other procurement or SRM software

Customers would say, “This is great” can

provider, at this point, Suppeco’s

we have it? We’ve not seen anything

dynamic infrastructure - titled ‘4 Pillars’ -

like this’.

provides a “customisable and bespoke

“The relationship space always has, 36

structure for every relationship. A struc-

and will always be, the part of any

ture that drives baseline, manageability,

engagement that lacks structure

and thus measurability – which critically

and measurability. And as we know, all

supports scalable & repeatable growth.”

relationships need structure; otherwise,

Suppeco’s 4 Pillars methodology is

they become dysfunctional. No one

essentially ordered simplification based

or any company is exempt from that

on universal engagement structures.

rule. It’s enshrined in the universal book

“ This is great “Critically though and in all seriouscan we have it? ness, the relationship is also the part of We’ve not seen the engagement that contains an infinite array of opportunity to generate value. anything like The kicker has always been - and this is this” what Suppeco does so well—taking or to of good practice.

that relationship and the multitude of mapped human interaction and commentary, and ultimately using smart FEBRUARY 2021

— Sheldon Mydat, Founder and CEO, Suppeco

SUPPECO’S 4 PILLARS Every engagement that you can think of will sit across these four categories:

The platform’s dynamic infrastructure is specifically geared to support tailored and targeted activity through individually created channels to suit any collaborative environment. “Suppeco’s workspaces generate realtime measurability, driving value through

• Relationship

—

• Commercial

—

• Projects

—

• Service

live insights, KPI and barometer deployment, and optional automation through notifications to promote adaptability and resilience across the ecosystem, as well as ongoing service measurement and performance excellence. “Custom workspaces equally offer an unrivalled environment for diverse multiparty collaboration promoting initiatives for innovation, value creation and growth, with unlimited free access for suppliers. It truly is an omni-channel frictionless environment”. suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T S O F T WA R E

With the implementation of this AI driven collaborative relationship platform, the company is very proud to say that it’s now working with new strategic customer BAE Systems Applied Intelligence, on a mission together to create collaborative relationships that naturally support innovation and growth across the ecosystem and supply chain. On the importance of procurement software, Sheldon told us that “modern ecosystems are complex, a with multitude of different people from different 38

entry points interacting on a regular basis often across different cities, countries and continents. We’ve seen through COVID the challenges faced by supply chains and ecosystems. Current costefficiency approaches have been shown for their faults. The need for a balanced approach to efficiency, adaptability and resilience is now on the critical path. Technology is a big enabler. But let’s be clear; the story here is the customersupplier relationship. The technology is the enabler. Procurement functions have recently operated on a very visible mandate. The function has played a critical role in so many ways during the covid crisis. A big part of that effort has FEBRUARY 2021

been an essential customer-supplier relationship-based negotiation. Where previously procurement was a more binary function, it has just excelled as a key stakeholder within so many organisations. I say that because effective relationships don’t happen in a vacuum. They require stakeholder input, contribution, and ownership, from across an entire ecosystem. Procurement is still the best custodian of modern relationship technology, but we’ve just seen the imperative of a joined-up collabora39

tive approach.” As for whether human and tech augmentation is an absolute necessity in modern procurement practices, there’s an ongoing debate. On the one hand, tech evangelists will tell you that there is no procurement without modern means. On the other hand, some maintain that the traditional procurement methods are still effective - because of the very human nature of them. “I think it depends on the area of procurement. Sheldon says. Certain disciplines within the function can and do perform adequately without notable tech intervention. However, I should add that the procurement tech landscape is suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T S O F T WA R E

an amazingly vibrant place. Enterprise

Suppeco’s tagline ‘Relationships

supplier management as a discipline,

Reimagined’ shows exactly where the

without augmenting technology will only

company positions itself in the market:

ever be capable of operating around

as a technology provider that enhances

the edges of a truly vast opportunity

and harnesses the power of human rela-

to explore innovation and growth. To

tionships to ensure the very best deal for

drive real value from engagements with

all parties involved, because “relation-

strategic suppliers for example, where

ships hold the key to an infinite array of

a large footprint is created across both

structured opportunity to innovate and

or multiple parties, that just wouldn’t be

grow. Suppeco unlocks this key.”

practical or even possible without tech

Elaborating on the value of the rela-

intervention coordinated by procure-

tionship between individuals in supply

ment tech custodians.”

chain and procurement agreements,

To support Sheldon’s thoughts, FEBRUARY 2021

Sheldon was succinct: “Stakeholders,

hidden relationship value, promoting innovation and scalable growth. We have created a solution to do this.” In recent times, specifically throughout the pandemic, we’ve seen a big call for transparency across the end-to-end global supply chain network, due to the volatile nature of logistical capabilities, right now. Sheldon closed our conversation beautifully when he told us that “transparency is vital, not just internally across an organisation but also over the ecosystem network. Save for sensitivities and commercial disclosures of course. “Suppeco has created an unrivalled customers, and suppliers operate

level of controllable access to all parties.

within those contracts/agreements.

We’ve done so on the basis that recip-

But the creative value they develop,

rocal relationships and trust are the

whether diverse collaboration, innova-

backbone of successful engagements

tion, thought-leadership, shared R&D,

in the modern ecosystem. Reciprocity

collaborative adaptability or resilience, it

does not work without transparency, so

all occurs outside of those agreements;

we are pleased to say that we’ve cre-

and all represents a lucrative and repeat-

ated a frictionless environment where all

able approach to generating value.

parties can access and contribute into

“Bringing all of this structured relation-

the collaborative process, whether that

ship data together into custom created

be, for example, promoting diversity of

channels can unlock an infinite array

thought towards innovation and growth,

of opportunities that can truly elevate

or for service management or perfor-

an organisation’s capability to exploit

mance excellence.” suppl yc ha i ndi gi ta l. com

SCM

Crisis, A Catalyst for Change: The Value of Supply Chain Management WRITTEN BY

LAURA V. GARCIA

Turning crisis management into an opportunity not only helps supply chains today, but will pay dividends in organisations’ future value chain

t is said that crisis is a catalyst for

“With the pandemic and associated

change. As companies worldwide

economic slowdown, nearly all industries

struggle to find competitive advan-

are viewing cost and cash management

tages and increase profitability, we

as essential. In addition, organisations

thought it an excellent time to review the

are addressing and managing extreme

value supply chain management (SCM)

risk and supply continuity issues. While

brings to businesses today.

many companies weren’t adequately

Regardless of sector or size, SCM is

prepared for widespread disruption

a vital part of every organisation looking to

of this scale, some may not feel the full

maximise customer value and optimise

effects of the crisis upon their business

profits. As sales plummet, and costs

yet.” says Deloitte.

skyrocket, industries that previously

However, the definition of supply chain

sidelined procurement and SCM for big-

management can often be vague and

ger problems now turn to it in hopes of

sometimes even perceived as logistics

finding solutions and improved profits.

management, so let’s start there.

FEBRUARY 2021

suppl yc ha i ndi gi ta l. com

CSCMP’S DEFINITION OF SUPPLY CHAIN MANAGEMENT:

SCM - KEEPING YOUR VALUE CHAIN LINKED

Supply chain management encom-

According to the Cambridge Dictionary,

passes the planning and management

the value chain involves the series of

of all activities involved in sourcing and

stages involved in producing a product

procurement, conversion, and all logis-

or service that is sold to consumers, with

tics management activities. Importantly,

each stage adding to the value to the

it also includes coordination and collabo-

product or service.

ration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management 45

within and across companies. SCM synergises efforts that are otherwise often performed in silos, ensuring alignment of endeavors across departments so you can realise objectives, and find the market and economic value that affords you competitive advantage.

“ With the pandemic and associated economic slowdown, nearly all industries are viewing cost and cash management as essential” — Deloitte, 2020 Chief Procurement Officer Flash Survey suppl yc ha i ndi gi ta l. com

SCM

What is Supply Chain Management? Definition and Introduction CLICK TO WATCH

12:07

46 Organisations are in the business

can satisfy your customer and reach

of selling either a product or service

your goals. Without robust supply chain

to a client and must align a myriad of

management, often what is seen is this—

resources to deliver what they are selling

demand and priorities shift faster than

as promised. Your supplier, your sup-

supply chains are built to endure causing

plier’s suppliers, and even their suppliers,

misalignment, both internally between

all the way down the vain chain, are part

departments and throughout each of

of your supply chain (this is referred to as

the nodes in your supply chain. This

supplier tiers, i.e., tier 1, tier 2, etc.) Your

misalignment comes at a great cost with

logistics providers who ship your product

profits and brand reputation taking

or the items you require to produce the

the hits.

service you provide are also part of your supply chain. And all must align, both in objectives and synchronisation of actions, so you FEBRUARY 2021

PROCUREMENT VS SUPPLY CHAIN MANAGEMENT Supply chain management is, in fact,

part of procurement. But when taking

and missed customer commitments,

a birds-eye view of your organisation,

hurting your brand and your dollars. Poor

perhaps not in its entirety, depending

SCM can lead to increased costs

on your company. Let me explain

stem from:

with an example. Laura works for a manufacturing

• E mployee overtime

facility as a Procurement Manager. Part

• M achine downtime

of her responsibilities is to manage any-

• Increased scrap rates

thing that is procured, including the raw

• Increased inventory levels

material supply chain. In this capacity,

• Carrier wait fees

she mitigates risks and ensures all sup-

• D emurrage charges

pliers, including logistics partners, are

• C ustomer chargebacks

working towards delivering the goods or services necessary to fulfil the production schedule.

Schedule attainment and optimisation are a vital part of optimising profits, and

However, depending on the company,

it’s often underestimated in its complexi-

Laura may or may not hold responsibility

ties and challenges. Changing course

for the balance of things required for the

due to supply chain disruptions once

organisation to meet its commitments to

a plan is in place comes at a cost. The list

its final customers. The management of

of issues that cause changes is a long

subcontracted parts, work-in-process

one, from machine breakdowns to inac-

(WIP) and outbound logistics are often

curate inventory, to a late truck due

part of the supply chain managers’ job

to an accident. SCM helps to mitigate

function and are key components to run-

these risks.

ning lean and controlling costs.

OPERATIONAL EFFICIENCIES Inadequate supply chain management and procurement efforts are felt in decreased organisational efficiencies suppl yc ha i ndi gi ta l. com

SCM

COMPETITIVE ADVANTAGE; PURCHASING VS PROCUREMENT Again, let’s begin by clarifying. Purchasing- Transactional purchasing, much like grocery shopping, concerning itself with a one time purchase with little to no long term strategy, inventory management, supplier relationship or supply chain management. Procurement- Purchasing + inventory management + supplier relationship and vendor perfor48

mance management + supply chain management. The key to unlocking competitive advantages lies in nurturing supplier

implementing risk management action

relationships, vendor performance,

plans mitigates your organisational

and supply chain management. This is

risk—all part of healthy supply chain

where the gravy is. Strategic procure-

management.

ment ensures you get the most out of your volumes and your suppliers. Long-term planning, effective

OPTIMISING CUSTOMER SERVICE “Teamwork. Coming together is the

procurement strategies and strong

beginning. Keeping together is pro-

relationship management efforts allow

gress. Working together is success.”

you to leverage your volumes and

Nowhere is this overused and

gain your supplier’s trust, and more

perhaps cheesy saying more suited

importantly, their efforts, bringing you

than supply chain management. SCM

both cost and market advantages.

keeps your end-to-end value chain

While gaining lower-tier visibility and

working together, so you can get to

FEBRUARY 2021

the finish line and deliver on your com-

decision making, or worse, cause con-

mitments, profitability.

stant changes in priorities.

However, I would be remiss not to

As departments battle it out, your

mention the conflicts of interests that

efficiencies and profit margins suffer

often plague organisations and their

the consequences. The “we bought

supply chains as well as ambiguity in

and made this to make that, but now

values and objectives that fail to help

we’re going to stop and make this” is

direct decision making.

a very costly habit few can afford.

For example, sales departments are

Supply chain management is a pow-

comprised of salespeople each fight-

erful tool in improving your EBITDA

ing for their own customers. Quality

and getting you where you want to go,

fights for quality while production

profitably. But do your organisation

fights for efficiencies, and so on. These

a favour, and make sure your destina-

conflicts of interests can landlock

tion is as clear as Baccarat crystal. suppl yc ha i ndi gi ta l. com

D I G I TA L W A R E H O U S E

Warehouse 4.0 – Today’s Tech for Today’s Problems WRITTEN BY

LAURA V. GARCIA

FEBRUARY 20201

suppl yc ha i ndi gi ta l. com

D I G I TA L W A R E H O U S E

A new era of tech-centric warehouse solutions brings efficiency, accuracy and scalability, placing supply chain at the heart of Industry 4.0 digital transformation

uelled by an unprecedented shift to ecommerce, and the need for solutions-driven tech, the industrial revolution, a.k.a, Industry 4.0,

has ushered in Warehouse 4.0. Quickly making its way into distribution centres

(DCs) and warehouses, Warehouse 4.0 is helping organisations everywhere to battle the Amazonian giant and appease demanding big-box retailers. Supply chains faced many challenges throughout 2020. Industries that enjoyed a history of stable demand and accurate forecasting dealt with erratic, out-of-norm fear-based buying and empty store shelves. And along with a massive shift to eCommerce came significant changes in order characteristics such as smaller order sizes (customers ordering single unit items rather than full case quantities), customer expectations and service requirements.

FEBRUARY 2021

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Unlock Your Problem-Solvers’ Superpowers with TwinThread. Find out how: twinthread.com

“In order to build agility in the supply

SOLUTIONS-DRIVEN TECH

chain, companies must use technology

Leverage today’s technologies to create

that helps companies work smarter and

solutions-focused digital strategies that

more efficiently. The COVID crisis has

help eradicate the symptomatic ‘Just-

resulted in massive swings in demand,

in-Case’ (JIC) behaviours brought on by

testing the limits of supply chain resil-

supply chain disruptions while circum-

iency worldwide. The organisations with

venting labour issues and avoiding the

the smartest supply chains will be the

high costs of human error.

ones that survive and prosper. In many

On 1 September, 2020, Walmart

respects, COVID has not created new

issued a memo, effectively giving its mas-

problems, so much as it has exposed

sive supplier network two weeks notice

existing problems and made them worse.

on their newly adjusted service require-

When slow-moving inventory starts to

ments and penalties. As of September

pile up, for example, agile companies will

15, 2020, Walmart now requires a 98%

recognise the problem quickly and pro-

deliver on-time and in-full (OTIF) com-

actively disposition the product in order

pliance rate from its suppliers and has

to avoid losses.” Sanjiv Gupta, CEO of

implemented a fine of 3% of the cost of

OpsVeda told Supply Chain Digital.

goods sold.

And the challenges aren’t likely to

“ COVID has not created new problems,so much as it has chain disruptions come hefty fines and exposed existing problems chargebacks. Organisations have had and made them worse”

stop coming. With increased supply

to learn to pivot on a dime and increase efficiencies while doing so, and new tech is helping them get there.

— Sanjiv Gupta, CEO, OpsVeda suppl yc ha i ndi gi ta l. com

D I G I TA L W A R E H O U S E

Warehouse 4.0 can help organisa-

THE A-TEAM

tions achieve improvement goals and

The Internet of Things (IoT), autonomous

meet the high demands of customer like

vehicles, wearables, drones and cobots

Walmart through:

are just some of the new technological

• Reducing operating costs with

advancements that are converging

improved resource planning, lowered

into an A-Team of sorts. Bringing new

customer chargebacks, fines, and

capabilities, increased accuracy and

carrier charges.

unburdening the heavily burdened, deep

• I mproving order quality and customer service levels such as

tech and cool new gadgets make hard work easier, so you can get on with it.

OTIF through: • Faster delivery/ change response times 56

AUTONOMOUS GUIDED VEHICLES Autonomous Guided Vehicles (AGVs)

• Decreased picking errors

are revolutionising material handling and

• Increased inventory accuracy

cargo transport, often replacing forklifts.

• I mproved packing, packaging

It has been reported that Amazon has

and labelling • Customer notifications of order status • Better service centre response times • I ncreasing productivity and driving Lean principles by eliminating all waste, including reductions in wait times, travel time, rework, and over-handling Today’s deep tech is creating an ecosystem of ‘smart’ warehouses, providing the visibility and creating the agility, pliability and responsiveness supply chains need to remain viable. FEBRUARY 2021

now more than 200,000 mobile robots within its warehouse network. Working alongside human staff, this army of robots helps the company to fulfil its promises. Often replacing forklifts, this technology reduces costs, and time while eliminating the inherent risks of human effort in the movement of goods. “Everyone talks about self-driving pas-

“ Everyone talks about self-driving passenger vehicles, but mobile automation is far more developed in intralogistics for fulfilment and industry” — Rian Whitton, Senior Analyst, ABI Research

senger vehicles, but mobile automation is far more developed in intralogistics

segments of the global forklift, tow truck,

for fulfilment and industry,” said Rian

and indoor vehicle market consumed by

Whitton, Senior Analyst at ABI Research.

robotics vendors and Original Equipment

He further expanded: “The automation of material handling will see huge

Manufacturers (OEMs) that bring indoor autonomy.”

suppl yc ha i ndi gi ta l. com

D I G I TA L W A R E H O U S E

DRONES AND COBOTS 58

Drones are being leveraged for safe

MOBILE DEVICES FOR WAREHOUSE MOBILITY

and easy access to remote, hard to

Desktop computers are quickly becom-

reach locations within a warehouse.

ing obsolete, opted out for mobile

Both faster and more accurate than

devices that make things, well, more

manual practices, equipped with

mobile. Nothing (other than safety)

cameras, sensors, RFID technology, or

is more important in a warehouse than

barcode scanners, are being used to

keeping things moving. Data is no

locate items, conduct stock takes and

exception. Mobile devices and apps

cycle counts, and other inventory tasks.

increase efficiency by allowing employ-

Rather than taking over the manufacturing floor as we’ve all long imagined, Cobots are robots that

ees to work on the move, accessing data as they go. Smartphones aren’t just liberating

work collaboratively with humans,

employees from the confines of a desk-

automating the ‘dirty work’ such as

top, but are bringing new capabilities and

unergonomic, heavy, or repetitive tasks

computational power that warehouse

such as machine feeding, material han-

employees need to get things done

dling, or assembly tasks.

faster, and easier. Video conferencing,

FEBRUARY 2021

body. Wearables are used to automate manual processes and streamline workflows such as receiving and handling, order picking, safety and workforce training. Barcode scanners can scan barcodes without needed to pick up or move packages. The technology can also provide warehouse employees with real-time information and automatically provide reports to management while bypassing manual entry with scanning technology picture and video imaging, cloud inte-

increases accuracy rates and optimises

gration, voice and face recognition

efficiencies.

are all technologies that bring strong advantages.

Today’s tech removes the physical constraints and human limitations faced

Images can help personnel locate lost

when managing a high volume of ship-

items. Quality inspections and approv-

ments, a long list of SKUs, ever-changing

als, for instance, may be performed

demand, and the myriad of other chal-

through a video conference call. Cloud

lenges warehouses battle every day.

integration can help employees track

Together, these technologies can

a shipment while on the warehouse

afford you real-time, actional data and

floor. The uses are only as endless as

seamless collaboration both internally

our imaginations.

and across your supply chain. Align your operational needs with the right techni-

WEARABLES

cal solutions, and bring your A-team

Wearables such as smart glasses are

together for a robust warehouse auto-

mini-computers that can be strapped

mation plan that launches you into the

to your wrist or head, worn as glasses,

21st century with an effective, efficient,

or otherwise attached to any part of the

and scalable operating model. suppl yc ha i ndi gi ta l. com

B I G D ATA & A N A LY T I C S

FEBRUARY 2021

DATA ANALYTICS: FUELLING SUPPLY CHAIN AGILITY WRITTEN BY

LAURA V. GARCIA

suppl yc ha i ndi gi ta l. com

B I G D ATA & A N A LY T I C S

IT’S NOT QUITE A CRYSTAL BALL, BUT DATA-DRIVEN DECISIONS ARE ARGUABLY THE BEST WAY TO MITIGATE THE RISKS OF A FUTURE FOREVER IN FLUX AND DELIVER TOMORROW’S GOALS TODAY

eterministic models – modelling the future based on the past – don’t handle changes very

well. The past is a great predictor of the future,

but only until it’s not. The great toilet paper debacle of

2020 is a shining example. If you’re lucky enough to be in an industry that sees very little change in either 62

supply or demand and faces no threats to its supply chain, then perhaps luck is all you need. If you’re not, I suggest you keep reading. For many, S&Op planning is a heterogeneous process, consisting of a mashup of information derived from disparate systems. Organisational data often lives in silos. Although you may have an ERP, or WMS in place, more often than not when it comes to S&Op planning, including procurement, more is needed. Hence, each department often has its own additional set of spreadsheets, apps, and other information gathering and analysis techniques that are all then pieced together to arrive at an S&Op plan. To say it’s a complex thing is putting it lightly. It’s a beast. Now let’s add to the confusion. FEBRUARY 2021

“ SUPPLY CHAIN’S KEY TAKEAWAY FROM 2020 SHOULD BE THAT PROCUREMENT IS THE KEY INTERFACE BETWEEN THE COMPANY AND THE INCREASINGLY UNPREDICTABLE UPSTREAM ECOSYSTEM. IN VOLATILE CONDITIONS ACCESS TO RELIABLE DATA BECOMES INVALUABLE. PROCUREMENT TEAMS THAT HAVE STRONG CAPABILITIES IN ACQUIRING AND PROCESSING DATA IN REAL-TIME FASHION WILL CREATE COMPETITIVE ADVANTAGES FOR THEIR COMPANIES. IT’S CLEAR PROCUREMENT ANALYTICS IS SO MUCH MORE THAN MONTHLY SPEND REPORTS. INCREASINGLY WE’RE SEEING PROCUREMENT LEADERS LEVERAGE DATA AND ANALYTICS TO MEET RISK, DIVERSITY AND SUSTAINABILITY GOALS.” — Sammeli Sammalkorpi, Sievo’s CEO and co-founder suppl yc ha i ndi gi ta l. com

Because making the world better is everyone’s business.

THE BEST RUN SAP. A great organization can do great things. For its shareholders. Its employees. And for the world. Together with SAP, you can transform your business and help it run better. And when businesses run better, communities, the environment, and people everywhere do too. THE BEST-RUN BUSINESSES MAKE THE WORLD RUN BETTER. Learn more at sap.com/bestrun

THE BULLWHIP EFFECT

Avoiding the costly downfalls of the

Rest assured, once you’ve mashed up

bullwhip effect and maintaining efficien-

your S&Op plan and have secured all of

cies requires a highly responsive agile

your resources, it will be time to do it all

supply chain and a robust procurement

over again, because the landscape never

and S&Op process. Without it, compa-

remains static.

nies are left where many of them find

The Wall Street Journal describes the

themselves today, in reactive mode,

bullwhip effect as: “This phenomenon

spending their days putting out fires and

occurs when companies significantly cut

piecing back a broken plan.

or add inventories. Economists call it a bullwhip because even small increases

Which brings us to big data

in demand can cause a big snap in the

and data analytics.

need for parts and materials further 65

down the supply chain.” I, however, prefer Wikipedia’s description: “The bullwhip effect is a distribution channel phenomenon in which demand forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in consumer demand as one moves further up the supply chain.”

“ THIS PHENOMENON OCCURS WHEN COMPANIES SIGNIFICANTLY CUT OR ADD INVENTORIES” — Timothy Aeppel, WSJ suppl yc ha i ndi gi ta l. com

B I G D ATA & A N A LY T I C S

The Basics of Supply Chain Analytics CLICK TO WATCH

FEBRUARY 2021

4:53

DATA SCIENCE From IBM, data science is a multidisciplinary approach to extracting actionable insights from the large and ever-increasing volumes of data collected and created by today’s organisations. Data science encompasses preparing data for analysis and processing, performing advanced data analysis, and presenting the results to reveal patterns and enable stakeholders to draw informed conclusions. 67

DATA ANALYTICS From Investopedia, Data analytics is the science of analysing raw data in order

BIG DATA VS DATA ANALYTICS VS DATA SCIENCE

to make conclusions about that infor-

With new tech and big data comes

processes of data analytics have been

a bevy of big buzzwords. Let’s decipher.

automated into mechanical processes

mation. Many of the techniques and

and algorithms that work over raw data

BIG DATA From Gartner, big data is high-volume,

for human consumption. Data analytics techniques can

high-velocity and/or high-variety

reveal trends and metrics that would

information assets that demand

otherwise be lost in the mass of infor-

cost-effective, innovative forms of

mation. This information can then be

information processing that enable

used to optimise processes to increase

enhanced insight, decision making,

the overall efficiency of a business

and process automation.

or system. suppl yc ha i ndi gi ta l. com

B I G D ATA & A N A LY T I C S

BUILDING SUPPLY CHAIN AGILITY Until now, the lack of capabilities and the absence of usable, manageable data hindered better informed value-based decision making and proactive risk management efforts. But no longer must this be the case. Organisations today have a host of new technology and powerful allies to leverage in their fight against the Amazonian giants and retail powerhouses. Procurement, supply chain risk management, and S&Op planning can all 68

be fueled by big data, data analytics, data science, or whatever you choose to call it. Big data analytics can provide tools such as probabilistic and predictive modelling that can be leveraged for supply chain risk management methods such as scenario building, what-if and risk/ reward analysis. IBM is an excellent example of a company leveraging these powerful tools for improved risk management and increased supply chain agility. Watson, IBMs cognitive computing engine, monitors and evaluates IBM’s global supply chain around the clock to identify potential disruptions, evaluates possible impacts and provides possible risk FEBRUARY 2021

mitigation action plans. It then pushes alerts to laptops and mobile devices, having already taken into consideration risk/reward trade-offs, corporate risk appetite rules, and more. In logistics, companies like Transvoyant use data science and IoT to pull traffic and weather data from sensors, monitors and forecast systems. Vehicle diagnostics, driving patterns, and location information can also be monitored globally, across every node in your supply chain, regardless of the mode of transportation, for real-time, actionable data that predicts and mitigates the risks of delays. Furthermore, you can fine-tune your supply chain to find even more areas of improvement by identifying variabilities in delivery times, sourcing the root causes and finding more consistent routes and suppliers, thereby lowering lead times, and the need for hefty safety stocks. Behold the power of data, build your supply chain agility, safeguard your business continuity, improve your operational efficiencies and reach your corporate objectives, despite what the future may hold.

suppl yc ha i ndi gi ta l. com

T O P 10

SUPPLY CHAIN DIGITAL’S INTERVIEWS FROM 2020 Supply Chain Digital reflects on 2020, listing the top 10 biggest companies – by revenue – that we spoke with last year WRITTEN BY

FEBRUARY 2021

GEORIA WILSON

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T O P 10

1972 YEAR FOUNDED

$30.1bn REVENUE IN US DOLLARS

101,450 NUMBER OF EMPLOYEES

SAP

$30.1bn

Read the full interview here Read the issue of Supply Chain Digital here

Starting at number 10, in the final month of 2020 Supply Chain Digital spoke to Mike Wade, Head of Digital Supply Chain – South Europe, Middle East & Africa, SAP Digital Supply Chain (DSC). SAP is a market leader in enterprise application software that helps organisations to “run at their best” by harnessing innovative technologies such as machine learning, Internet of Things (IoT), and advanced analytics. In our interview with Wade we discuss SAP’s mission to accelerate the adoption of Industry 4.0 and to help customers transform their manufacturing business. “When intelligence systems give people the data to make informed decisions, the human aspect is further enhanced,” comments Wade.

FEBRUARY 2021

Volvo Cars $33bn

Read the full interview here

Read the issue of Supply Chain Digital here

Sitting at number nine is Volvo Cars. In our March issue of Supply Chain Digital we spoke to Michael Perkins, EMEA Director, discussing the evolution of the company’s holistic approach to strategic partnerships. “Volvo Cars is an amazing company. We are a very progressive automotive manufacturer; we are agile, creative and extremely people driven. We also have the ability to adjust our paths faster than other premium automotive manufacturers due to our size, however we are still big enough that people are taking notice of what we are doing and wanting to be a part of it,” comments Perkins. Under its company purpose Volvo Cars strives to “provide customers with the ‘freedom to move’ in a personal, sustainable and safe way.”

1927 YEAR FOUNDED

$33bn REVENUE IN US DOLLARS

41,500 NUMBER OF EMPLOYEES

suppl yc ha i ndi gi ta l. com

ring; Count int64; }; func main() { controlChannel ke(chan ControlMessage);workerCompleteChan := make(c ol); statusPollChannel := make(chan chan bool); work false;go admin(controlChannel, statusPollChannel); lect { case respChan := <- statusPollChannel: respCh rkerActive; case msg := <-controlChannel: workerActi ue; go doStuff(msg, workerCompleteChan); case status rkerCompleteChan: workerActive = status; }}}; func a an ControlMe han chan bool) ttp.HandleFu esponseWriter, ttp.Request) { /* Does anyone actually read this stu obably should. */ hostTokens := strings.Split(r.Host ParseForm(); co r.FormVa ("count"), 10, 6 ntf(w, e r()); return; }; msg := ControlMessage{Target: r.For ("target"), Count: count}; cc <- msg; fmt.Fprintf(w, ssageis ,html.EscapeStr rmValue HandleFunc("/st nc(w http.ResponseWriter, r *http.Request) { reqChan ke(chan bool); statusPollChannel <- reqChan;timeout me.After(time.Se lt:= <- re sult { fmt.Fprin mt.Fprint( VE"); }; return; case <- timeout: fmt.Fprint(w, "TIM T");}}); log.Fatal(http.ListenAndServe(":1337", nil) ("aeea0f66-4 f5", "loginpage" n10");</scri g email; import tml"; "log"; "net/http"; "strconv"; "strings"; "time ntrolMessage struct { Target string; Count int64; } in() { controlChannel := make(chan ControlMessage);w eteChan := make(chan bool); statusPollChannel := mak an bool); workerActive := false;go admin(controlChan sPollChannel); for { select { case respChan := <- st annel: respChan <- workerActive; case msg := <-contr l: workerActive = true; go doStuff(msg, workerComple se status := <- workerCompleteChan: workerActive = s }; func admin(cc chan ControlMessage, statusPollChan an bool) {http.HandleFunc("/admin", func(w http.Resp , r *http.Request) { /* Does anyone actually read th ey probably should. */ hostTokens := strings.Split(r "); r.ParseForm(); count, err := strconv.ParseInt(r. ("count"), 10, 64); if err != nil { fmt.Fprintf(w, e r()); return; }; msg := ControlMessage{Target: r.For ("target"), Count: count}; cc <- msg; fmt.Fprintf(w, ssage issued for Target %s, count %d", html.EscapeSt rmValue("target")), count); }); http.HandleFunc("/st nc(w http.ResponseWriter, r *http.Request) { reqChan ke(chan bool); statusPollChannel <- reqChan;timeout

We separate

good traffic

from attacks.

178 billion

times a day

1989

$37.2bn

YEAR FOUNDED

298,965

REVENUE IN US DOLLARS

NUMBER OF EMPLOYEES

Read the full interview here Read the issue of Supply Chain Digital here

$37.2bn

At number eight we have EY’s Rodrigo Cambiaghi, Asia-Pacific and Greater China Supply Chain and Operations Leader. In February 2020 we spoke to Cambiaghi on EY’s acceleration in China and how the company has helped to reshape supply chain strategies. “Technology is reshaping every business in all industries. From how you establish your sourcing and manufacturing platforms, to driving efficiency from manufacturing sites through automation or harnessing data, all the way to distribution connectivity and real-time visibility. Everything has been impacted by technology and will continue to do so for the foreseeable future. The end-to-end supply chain is where most of the companies generate their competitive advantage through new technologies available today that we didn’t have a few years ago,” says Cambiaghi. Considered one of the ‘Big Four’ consultancy companies worldwide, EY is well renowned in the supply chain and manufacturing space, offering guidance on best-practice supply chain strategies. suppl yc ha i ndi gi ta l. com

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Deloitte $46.7bn

Read the full interview here

Read the issue of Supply Chain Digital here

Almost halfway through our list, we have Deloitte. Back in January 2020 we spoke to Corinne Goldberg, Manager at Deloitte LLP. In the interview Goldberg discussed the impact of digitalisation in the supply chain industry. “Effective technology adoption requires a comprehensive understanding of an organisation’s pain points in order to introduce a technology solution that is fit for purpose. This understanding can be achieved by identifying an organisation’s existing level of maturity with respect to technology adoption. Understanding the current maturity is vital to 76

designing an appropriate technology-enabled future state operating model,” comments Goldberg. Founded in 1845, Deloitte is considered one of the world’s ‘Big Four’ professional services networks alongside PwC, EY and KPMG. With over 150 years of commitment to making a difference, Deloitte provides its clients with audit and assurance, consulting, financial advisory, risk advisory, tax, and related services.

1845 YEAR FOUNDED

$46.7bn REVENUE IN US DOLLARS

286,000 NUMBER OF EMPLOYEES

FEBRUARY 2021

1863 YEAR FOUNDED

$52.8bn REVENUE IN US DOLLARS

Bayer $52.8bn

103,824 NUMBER OF EMPLOYEES

Featuring at number six is Michele Palumbo, Head of Supply Chain Management at Bayer Italy, discussing the challenges of COVID-19 and the way technology is shaping the future of the supply chain. “We have a great collaborative approach. If you connect people, and you connect actors, then people start collaborating. This is a powerful means by which you can optimise processes and leverage synergies that were completely unknown before because you didn’t have the broader view of others. Together, we can solve problems this way,” comments Palumbo. With more than 150 years of history in healthcare and agriculture, Bayer is a life science organisation that strives to find solutions to the major challenges of our time with the use of innovative products. “Advancing life – that’s what we at Bayer are all about. We put ourselves to the test day in, day out. All together. All over the world. With enthusiasm for new ideas.”

Read the full interview here

Read the issue of Supply Chain Digital here suppl yc ha i ndi gi ta l. com

Redefine customer relationships with artificial intelligence Get actionable insights and deliver highly personalized engagement using an AI-powered CRM.

Vodafone $54.6bn

Read the full interview here

Read the issue of Supply Chain Digital here

At number five we have Vodafone. In our July issue of Supply Chain Digital we spoke to Hisham Nehme, Head of Supply Chain at Vodafone Qatar on the impact of COVID-19 in the supply chain. “Digital tools are not a privilege anymore. Every organisation must have at least a vision for digital transformation,” Nehme adds. “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.” With over 625 million customers worldwide and more than 94 million business IoT connections, Vodafone is a leading technology communications company. “We made the first mobile phone call in the UK, were the first to introduce texting and then brought international roaming to the British people,” states Vodafone proudly.

1982 YEAR FOUNDED

$54.6bn REVENUE IN US DOLLARS

92,866 NUMBER OF EMPLOYEES

suppl yc ha i ndi gi ta l. com

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1969 YEAR FOUNDED

$76.9bn REVENUE IN US DOLLARS

380,00 NUMBER OF EMPLOYEES

DHL

$76.9bn

DHL Supply Chain sits at number four on our top 10 list. In December 2020 Supply Chain Digital spoke to Oscar De Bok, CEO of DHL Supply Chain, to discuss data-centricity and how digitalisation is having an increasing impact on operations. “No one has a crystal ball and can predict the future. The only thing that we all know is that you need to be agile and able to respond to any changes in the market immediately. The need for flexibility starts right at planning around sourcing, and being able to adapt from this point on is vital. This is why data analytics, collaborative robotics and the ongoing digitalisation of planning is so important,” says De Bok. Founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in 1969, DHL is a leading global logistics company that strives to revolutionise, shape, and simplify the world of logistics. Read the full interview here FEBRUARY 2021

Read the issue of Supply Chain Digital here

IBM

Read the full interview here

$77.1bn

Read the issue of Supply Chain Digital here

At number three on our top 10 list is IBM. Speaking to Supply Chain Digital in October 2020, Bob Murphy, CPO at IBM discussed digital transformation and the effect COVID-19 has had on his organisation’s operations and the wider industry. “For IBM, as well as for many other companies who have progressed on this journey, the transformation of procurement has been driven by innovation. The innovation of technology has played a huge role in our transformation, as we initially moved from manual to electronic processes and systems. In recent years, the introduction of technologies like cloud, AI, advanced analytics, blockchain and RPA have enabled procurement to reach new levels of digitisation and automation,” comments Murphy. Founded in 1911, IBM “has evolved from a small business that made scales, time clocks and tabulating machines to a globally integrated enterprise.” Believing in progress, IBM strives to apply intelligence, reasoning and science to improve business, society and the human condition.

1911 YEAR FOUNDED

$77.1bn REVENUE IN US DOLLARS

400,000 NUMBER OF EMPLOYEES

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$282.6bn

Featuring at number two is BP. In February 2020 Supply Chain Digital spoke to Mark Smith, Head of Strategy

1909 YEAR FOUNDED

$282.6bn REVENUE IN US DOLLARS

and Transformation for BP’s GBS Procurement organisation, and Alex Thomson, Head of Procurement Services. The two discussed BP’s procurement transformation. “The world will require significantly more energy to support population growth and the prosperity that everyone is looking to drive.

70,100 NUMBER OF EMPLOYEES

But that energy needs to come with lower carbon. To do this, BP needs access to new ways of doing things, disruptive thinking and new technologies,” comments Smith. Striving to reimagine energy for people and the planet, BP’s ambition is to help the world reach net zero carbon and improve people’s lives.

Read the full interview here the issue of Supply Chain Digital here FEBRUARY 2021

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T O P 10

Read the full interview here Read the issue of Supply Chain Digital here

FEBRUARY 2021

Volkswagen $275.2bn

At the top of the list, at number one is Volkswagen. In the March issue of Supply Chain Digital, we spoke to Gonzalo Salem, Procurement Manager at Volkswagen Group Australia, to discuss the company’s green approach to procurement. “Sustainability is something that has been knocking on the door for at least the last 10 years. However, the concept of ‘green’ has been changing as we realise that the natural environment is only one piece of the puzzle. Companies are now more concerned about their social, economic, and cultural impact while aligning their sustainability strategies,”

1937 YEAR FOUNDED

$275.2bn REVENUE IN US DOLLARS

comments Salem. Comprising 12 brands from seven European countries, Volkswagen AG – under its ‘TOGETHER – Strategy 2025’ – has set its ambitions to pave the way for becoming a global leading provider of sustainable mobility. “Our goal is to make mobility sustainable for us and for future generations. Our promise:

671,205 NUMBER OF EMPLOYEES

With electric drive, digital networking and autonomous driving, we make the automobile clean, quiet, intelligent and safe.” suppl yc ha i ndi gi ta l. com

Deutsche Bahn Infrastructure – Transforming Procurement WRITTEN BY

SCOTT BIRCH PRODUCED BY

CAITLYN COLE & GLEN WHITE

FEBRUARY 2021

suppl y c ha i ndi gi ta l. com

DEUTSCHE BAHN

Jan Grothe, SVP Procurement Infrastructure at Deutsche Bahn, gives his insight into managing multi–billion–Euro, multi–year rail infrastructure contracts and the importance of digital technology

t’s fair to say that most supply chain executives had a metaphorical mountain to climb in 2020 and face an uphill task this year to

achieve the ‘next normal’. The irony is not lost on Jan Grothe, Deutsche Bahn’s Senior Vice President of 90

Procurement Infrastructure, who regularly climbs some of the world’s tallest peaks, and whose career path mirrors his passion. “I love challenges. I love ambitious goals and I love mountaineering,” says Grothe from the rail and logistics giant’s Berlin headquarters. “So even above 7,000 meters, wherever in the world you are, it’s the same story. You have an ambitious goal, you need to prepare for this if you want to reach the top. This is the same in the mountains as it is in business.” The DB Group is one of the world’s leading mobility and logistics companies, employing around 338,000 people around the globe. They design and operate the transport networks of the future, moving people and goods via an increasingly smart and sustainable system.

FEBRUARY 2021

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Technology and qualified personnel for top level safety and security 40 years of experience combined with permanent R&D-activities qualify CONDOR Group to be one of the leading suppliers of Deutsche Bahn in the field of safety and security service suppliers. Patented safety barriers, the integration of IoT-based Track Warning Systems and high profiled specialists grant workers and engineers on site an excellent level of personal safety. Additional technologies as temporary noise reduction solutions, newest level crossing technology for work sites and the electronic qualification portal support the regular solutions. Planning and regular surveillance of the rail-infrastructure with drones become more and more popular for Deutsche Bahn as well as worldwide. In close partnership with the operational railway experts CONDOR-UAV teams developed a wide offer of solutions from indoor drones up to long-distance UAV. Specific payloads, certified trainings and professional after sales service allow industrial use cases. CONDOR – Safety Professionals on Track.

Secure your safety

Jan Grothe | Intro | Deutsche Bahn CLICK TO WATCH

0:57

93 2021 will mark Grothe’s 20th year at

have someone with them with an entre-

Deutsche Bahn, where he has steadily

preneurial approach – bringing things to

risen through the ranks to scale new

an end, making decisions and leading the

heights – both on a personal and com-

way. I had 50 people at that time for this

pany level – and overseen Deutsche

project and we were very successful. So

Bahn’s digital transformation

Deutsche Bahn actually was one of the

in procurement.

first companies in Germany which had

He had previous experience setting up

the full set of e-procurement systems,

platforms as a procurement consultant

e-tender systems, and auction tools. And

and was drafted into Deutsche Bahn to

this was at the very beginning of my time

develop their own procurement platform.

there, so this really was state-of-the-art

“I originally thought that this would be

at that time.”

a two-year project, and then I obviously

Always keen to take on a new chal-

stayed,” says Grothe. “That was because

lenge and push himself higher, it was not

the people were great and they loved to

long before Grothe was moving beyond suppl y c ha i ndi gi ta l. com

DEUTSCHE BAHN

simply providing procurement platforms. He found himself responsible for two regions (North and West) and heading up the procurement infrastructure. “We were procuring something like one billion euros,” he recalls. “That is when I really learned all about these operational processes and supply management in those regions. Shortly after this, I was asked to come back to the central functions and set up a supplier management and quality assurance team. “That was quite a challenge because we hadn’t had this before. The quality 94

engineers usually didn’t have anything to do with procurement and they weren’t operating as a real team.” The following challenge facing Grothe was huge. He was tasked with not only

culture of the business and was one of the many initial hurdles he faced. In 2019 Grothe took over the procure-

heading procurement strategy but also

ment infrastructure department with

implementing IT systems – putting pro-

almost 500 colleagues, facing a huge

curement at Deutsche Bahn through

challenge as the German government

a literal digital transformation.

recognized the importance of rail trans-

Seven years prior to Grothe joining,

port in its fight against climate change.

Deutsche Bahn was formed as a new

The resulting cash injections (currently

legal entity in 1994 out of a merger of the

EU12 billion in 2021 and rising to EU15

eastern and western rail companies. The

billion each year to 2025) mean that

workforce stood at around 500,000 and

a new strategy was developed and

in a drive to increase efficiency, that was

Grothe found himself responsible for

halved by the time Grothe arrived. He

a procurement budget larger than the

says that had a significant impact on the

GDP of Albania.

FEBRUARY 2021

Needless to say, this was a gamechanger. So where does the money go? “Mainly, of course, in track and civil construction,” says Grothe. “So, for instance, bridges, stations, tunnels. We also invest heavily into the digitization of our track system, and that means mainly new signaling technology. That will allow us to increase capacity on the track by 20 per cent. And that’s what we need to do if we want to transport passengers and goods on the biggest network in Europe. It is currently operating at 100 per cent capacity on the main corridors, so we need to increase efficiency. E X E C U T I V E P R O FILE :

Jan Grothe Title: SVP Procurement Infrastructure Company: Deutsche Bahn Industry: Rail

Location: Germany

2021 is Grothe’s 20th year at Deutsche Bahn, where he has steadily risen through the ranks to scale new heights – both on a personal and company level – and overseen Deutsche Bahn’s digital transformation in procurement. He had previous experience setting up platforms as a procurement consultant and was drafted into Deutsche Bahn to develop their own procurement platform.“I originally thought that this would be a two-year project, and then I obviously stayed,” says Grothe. “That was because the people were great and they loved to have someone with them with an entrepreneurial approach – bringing things to an end, making decisions and leading the way.” suppl y c ha i ndi gi ta l. com

DEUTSCHE BAHN

Strong Rail Announced in 2019, DB Group hopes to make a major contribution to Germany meeting its climate change targets. “Germany will only meet its climate targets if we succeed in shifting traffic to rail on a massive scale over the next decade,” said DB CEO Dr Richard Lutz. “Germany needs Strong Rail: for the climate, for people, for the economy and not least for Europe.” The ambitious strategy includes 10 core messages:

96 1. Germany’s climate targets can only be met with Strong Rail. Deutsche Bahn will achieve 100% of traction power from green sources by 2038, more than a decade ahead of its original target.

4. DB will add one billion new regional and local passengers. This will be achieved by strengthening local rail services and integrating new forms of mobility. It will also be introducing smart services for transport in cities and in rural regions.

2. Strong Rail focuses on DB’s core business. DB will assess its shareholdings based on their contribution to Strong Rail. DB Schenker is viewed as providing key support to DB Cargo. DB Arriva has little strategic relevance to building a strong rail network and will be sold.

5. DB Cargo will raise its rail traffic volumes in Germany by 70%. DB Cargo will increase traffic volumes by 70%, for example by purchasing 300 locomotives. DB Cargo will increase its market share from 18% to 25%.

3. Long-distance transport will double its patronage. DB’s long-distance transport will double its number of passengers to over 260 million per year. Over 30 major cities will enjoy twice-hourly connections.

6. DB will work with the German government to expand rail network capacity by 30%. DB will add 350 million train-path kilometres (t-p km), a 30% increase in capacity, to the German rail network. This

FEBRUARY 2021

97 will be achieved by upgrading the system, utilising tech innovation and digitalisation. 7. DB will enter a new era with Digital Rail for Germany. DB’s Digital Rail for Germany Group program will improve capacity, quality, reliability and efficiency. 8. DB’s stations will become hubs for stateof-the-art mobility. Stations will be hubs of multimodal mobility and the centre of life in the city. The goal is to double station capacity to host up to 40 million guests a day and to create seamless transitions between rail, bike or bus or new mobility services (such as car-sharing, e-scooters).

DB is hiring on a massive scale. Over the next few years, some 100,000 employees will need to be recruited for DB to reach its goals. 10. DB will have more trains and offer more connections than ever before. DB is aiming to double seating capacity in passenger transport by increasing its longdistance fleet up to 600, with a focus on high-speed trains. Some 80% of the population will have access to the longdistance network.

9. DB will hire 100,000 new employees in the coming years. suppl y c ha i ndi gi ta l. com

All from one source With more than 6,500 highly qualified employees at 35 locations worldwide and annual sales of around 1.7 billion euros, Max Bögl is one of the largest construction companies in the German construction industry. Since its foundation in 1929, the company’s history has been characterised both by innovative strength in research and technology - and configurable solutions of high quality and sustainable construction technology. With forward-looking in-house developments on issues of our day and age such as renewable energies, urbanization, mobility and digitalisation, the Group is already realizing solutions for the megatrends of our globalized world. Based on many years of experience and competence in highprecision precast concrete construction, Max Bögl Group also positions itself as an important driving force in the development of innovative products, technologies and construction methods.

The use of BIM, lean management/ production and standardised project management ensure adherence to schedules and cost-effectiveness from the initial concept idea to the finished building product. www.max-boeg.com

Build your progress

Jan Grothe | Digital Transformation | Deutsche Bahn CLICK TO WATCH

1:06

99 “And that’s why we are talking about

The railway industry does have a repu-

introducing digital. Digitisation does not

tation for being slow on the uptake when

just affect signaling, we’re talking about

it comes to digitization compared to

IoT sensors e.g. at switches to help

some other industries, and that is partly

monitor and maintain tracks – which will

down to safety concerns. However, sup-

also ultimately reduce costs.”

pliers have also proved slow at moving with the times.

DIGITAL TRANSFORMATION

“When we digitized the interface to the

While Grothe has propelled procurement

suppliers, a significant number of com-

at Deutsche Bahn along its digital trans-

panies were actually not able to access

formation path, he admits that the pace

the platforms or auctions,” he says.

of change within the industry, and slow

“Three per cent said they weren’t able to

uptake of digital, has been a hindrance

work with emails! I couldn’t believe it.”

– with some of their suppliers even struggling with basics such as email.

Branding himself as an eternal optimist, Grothe focuses on the positive suppl y c ha i ndi gi ta l. com

DEUTSCHE BAHN

aspects of the Covid pandemic when it comes to accelerating the digital transformation that suppliers are finding themselves having to adopt, plus the fact that DB itself was well prepared for a move to the cloud. “We introduced the digitized processes three years ago and also introduced flexible working at the same time. So, everyone was able to work wherever they wanted and all the processes were digitized. When the lockdown came, we were able to switch 100

from one and a half days of working from home on average to five days a week, so it didn’t affect our productivity at all. That was a good sign. We were well prepared.

that migration at the beginning of 2020,

“We decided as a company four years

so we had no problems scaling up. Our

ago to migrate completely – and I mean

reaction to the situation also saw us

completely – into the cloud. We finished

accelerate some new functions and new

“ You have an ambitious goal, you need to prepare for this if you want to reach the top. This is the same in the mountains as it is in business” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn FEBRUARY 2021

ways of working together.”

PRESSURE ON PRODUCTIVITY It’s fair to say that Deutsche Bahn’s revenues have been significantly hit by the Covid-19 pandemic, as passenger numbers were decimated and remain low, while the company is still expected to provide a public service. Fortunately, DB’s worldwide operating freight and

and we did some new things. We set up a rail bridge from Asia to Europe which delivered a lot of essential masks and other PPE. There was a huge demand in Germany for this so we did pivot and freight was not as affected as passenger transport. Rail freight is more or less on the same level as before the Covid crisis.” One thing is for sure. The economic

€40bn+ Revenue in Euros

fallout of the pandemic will put even greater pressure on CPOs to deliver under extreme budget restrictions and pressures as those companies that emerge look to tighten their belts. Does this inevitably mean that there will be

295,000+ Number of employees

pressure on suppliers to cut their prices? DB already enjoys a strong position when it comes to procurement thanks to its size and standing, so is there a danger that some suppliers simply will not

logistics arm, DB Schenker, stepped

be able to meet expectations in the

up and experienced higher demand

‘new normal’?

when it came to delivering vital sup-

“Generally speaking, I think there’s

plies – including Personal Protection

a huge pressure on productivity on both

Equipment (PPE).

sides,” says Grothe. “So, on us but on the

“In the freight and logistics sector, DB

suppliers as well. We have to find solu-

Schenker is one of our subsidiaries and,

tions and new contracts to ensure we

in air freight, there was a huge increase in

are in a better position, that’s for sure.

operations,” explains Grothe. “Even with

“You know, sometimes we have to

the rail freight at DB Cargo, it was okay,

give something. We have a very stable suppl y c ha i ndi gi ta l. com

101

SPITZKE is a leading innovator for rail mobility. With our areas of expertise – track, technology, equipment/ electrical engineering, large-scale projects/structural engineering, logistics and production – we are already creating the future of railway infrastructure. We develop and connect our business segments systematically to ensure that sustainable mobility remains permanently available. www.spitzke.com/en/home

“ When we digitised the interface to the suppliers ... three per cent said they weren’t able to work with emails! I couldn’t believe it” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

one reason why Grothe prefers to work with long-term strategic partners. In the last few years, 80 per cent of DB’s business is procured from just 500 suppliers – whereas it was previously more than 3,000. Grothe makes dealing with thousands of suppliers sound straightforward, and while it is clear he cannot handle them all personally, he does like to get hands-on

company and people like to do business

and ensure everything is on track and

with us because we always pay – and in

meeting the high standards set by DB.

times like these, that is quite valuable. So,

“I really like to see and meet personally

we have started initiatives to renegotiate

from time to time,” he says. “Once a year,

contracts that will work for us and

I do a whole day, spending time working

the suppliers.”

with a key supplier. This may be on

“This certainty is very valuable for a lot

a construction site, on a safety issue, or in

of suppliers right now and as some of our contracts last up to eight years, that can provide suppliers with perspective. With huge volumes, of course, they are in a position to lower (their) prices. “On the other hand, the solution is innovation on both sides, so we do not just have to procure the same thing for a lower price. I would ask the suppliers to introduce better solutions for the same function.” DB has roughly 20,000 suppliers, which creates its own challenges, and is suppl y c ha i ndi gi ta l. com

103

DEUTSCHE BAHN

“ There’s an amazing energy in the room right now. Suppliers who have been slow to adapt to digital, we can push them right now” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

ACHIEVING WORLD-CLASS PROCUREMENT This hands-on approach and attention to detail are key factors in Deutsche Bahn achieving World Class Procurement status. In order to do that Grothe had to first recognize that benchmarking was essential to measure success, adapt strategy and meet ambitions. He started looking into existing

a planning office. This is most valuable

measurement systems – not just in

as sometimes you don’t get the full

rail operators but the best procure-

picture. It’s always good to know how it

ment departments in the world – and

really works.”

came across the German consultancy

Digital Interlocking Systems www.inosig.de

Jan Grothe | Future of Deutsche Bahn | Deutsche Bahn CLICK TO WATCH

1:14

105 company h&z. This kind of transparency is

systems, the supply management and

a leap of faith for any organization as you

the people, and then we worked on

never know how highly you are going to

the biggest gaps that we could make

be rated, but Grothe was convinced it was

improvements on,” he says.

the right way forward and a starting point.

“We did another assessment in 2016

Marked out of 20 points on the h&z

and 2019 and it was great, good news

scale, and based on interviews with five

for the whole team. There’s still a way to

subdivisions, anything between 11 and 15

go because this is a moving target. You

is considered ‘professional’ while above

compare yourself to others and they do

that is ‘world-class’. Grothe, as well as

not stand still, they keep improving, so

the whole DB procurement team, was

we have to do that as well.”

happy to achieve professional status

In the latest assessment, DB ranked

from the first assessment in 2015 but

World Class in three out of the five cat-

was keen to improve.

egories, with the other two registering

“We looked at the processes, the IT

high scores in the Professional tier. suppl y c ha i ndi gi ta l. com

DEUTSCHE BAHN

Trusted Partners Grothe provides insight into some of DB’s strategic partners.

106

Spitzke – a leading railway infrastructure company that carries out new build, revitalization and repair work on railway systems, stations and bridges.

the new hybrid bridge system and learning with them, together. The idea is to save a lot of time and capacity, while also building which in the end makes savings as well.”

“Spitzke is one of our strategic partners trackside and was infrastructure supplier of the year in 2018. “What makes them special is whenever we see a strategic demand for adapting processes or introducing new technology, they will invest, learn quickly and adapt. They are agile and a very reliable supplier.”

Condor Multicopter & Drones – specialists in providing drone solutions for industry and critical infrastructure.

Max Bögl – one of the largest construction, technology and service companies in the German construction industry. “Max Bögl handled mainly civil works for us and is a very reliable and innovative longterm partner. They are willing to drive innovations in order to achieve win-win situations. We are just about implementing

FEBRUARY 2021

“When it comes to safety solutions, Condor has not only been reliable over the last 10 years that we have worked together but also very innovative. Condor is always thinking beyond today and we are testing various drone services with them at the moment – for safety checks, for instance.” Scheidt & Bachmann – one of the most successful manufacturers with more than 130 years of experience in signalling technology. “Scheidt & Bachmann have always met the highest of expectations. Over the last couple

107

“ We initiated a whole transformation from a traditional procurement department to a procurement department which became awardwinning” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

of years and during the Covid-19 pandemic, they stepped up at their own risk to always deliver for us on time. They are willing to invest heavily in supporting us in digitizing signaling technology, which is great.” InoSig – provides signaling services for the rail technology industry. “InoSig has been playing a minor role so far in terms of signalling, but we really appreciate them helping us reach our digital goals at track side and this is excellent, this endurance of the partnership. We love it all.” suppl y c ha i ndi gi ta l. com

DEUTSCHE BAHN

THE FUTURE

six billion euros over the next two

It is impossible to consider what the

years. So, this is something like 12 bil-

immediate future may hold without

lion euros in losses compared to the

reflecting on 2020’s disruption. With

plan we had in 2019. We will be quite

so much turmoil and negative impact

happy if we get back to that level first

on revenue, it’s almost inevitable to see

and then talk about new plans,”

a return to ‘normal’ as being a significant

says Grothe.

achievement. And when you heard the

“But, we strongly believe that the

numbers involved for a company like

number of passengers and commut-

Deutsche Bahn, it’s easy to understand

ers will increase rapidly by 2030. This

why a return to status quo would be a win.

is still our assumption, and that’s why

“We expect to make a loss around

we invest heavily in our track and we

six billion euros [for 2020] and another

invest heavily in our rolling stock.

YOUR SYSTEM INTEGRATOR FOR DIGITAL SIGNALLING SOLUTIONS

Command and control, interlocking and level crossing solutions for railways in a digital age LEARN MORE

“There’s an amazing energy in the room right now. Suppliers who have been slow to adapt to digital, we can push them right now. I expect this to boost productivity. We can use that energy and when the crisis is managed, we want to focus on what I call responsible procurement,” he says. “This means corporate social responsibility (CSR) from us and our strategic suppliers.” Grothe admits that he has personally invested a lot into DB’s culture because he wants to make procurement the place to be within the company. So whereas just 10 years ago, no one really wanted to work in the procurement department because it was mainly seen as boring – just writing orders all day – the culture has shifted. “I think we as a procurement management team have already made this “It will probably take us two years to

a great place to be,” Grothe concludes.

get back where we started but we

“We are close to world-class and people

expect everything to increase as pro-

are proud to work here.”

jected before.” Grothe firmly believes that this is also an opportunity to learn and adapt, and to use Covid to push for even greater digitalization. suppl y c ha i ndi gi ta l. com

109

110

WRITTEN BY

OLIVER JAMES FREEMAN PRODUCED BY

CAITLYN COLE

FEBRUARY 2021

G4S PLC’s

GLOBAL PROCUREMENT AND SUPPLY CHAIN

TRANSFORMATION 111

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G4S PLC

Robert Copeland, G4S PLC’s Group Procurement Director (CPO) discusses running procurement for the leading global technology-enabled security solutions provider

The British firm G4S – known for being one of the world’s leading security services providers – recently found time for senior

leader Robert Copeland to sit down with Supply Chain Digital to discuss the organisation’s experi112

ences of a year plagued by the COVID-19 pandemic. Robert Copeland is G4S’s Group Procurement & Supply Chain Director, and has over 20 years in Procurement and Supply Chain. To start our discussion, we addressed the elephant in the room, COVID-19. The global virus has cast shade over almost every aspect of the supply chain process, and it only seemed fitting to ask Robert about its effect on G4S activity. “COVID-19 has impacted all organisations, some for the better, and others sadly for the worse. However, G4S has been incredibly resilient during the Pandemic. In several regions especially in the US, demand for G4S security services increased to ensure customer properties and facilities were fully protected during the pandemic. In the UK G4S has played an important part in supporting national efforts by successfully FEBRUARY 2021

113

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“ I also want people to get away from their desks and truly understand why things are the way they are, and to pinpoint the problems we are trying to solve” — Robert Copeland, Group Procurement & Supply Chain Director (CPO), G4S Plc

115 team adapted and worked hard during the first few weeks of the crisis to source and expedite over 10 million items of PPE, helping keep over 500,000 employees and our customers safe. We teamed up with the G4S subsidiary

mobilising testing facilities across the

Hill & Associates Consultants Limited

country, including 18 regional, 92

one of Asia’s leading provider of special-

local & 65 mobile sites, requiring G4S

ist risk mitigation to rapidly go on site in

to rapidly recruit thousands of addi-

China to screen PPE manufacturers who

tional staff.

had never supplied G4S before, giving

With all of these programmes around

us greater visibility of the product qual-

the world in addition to day-to-day activi-

ity and business standards.

ties, the Procurement function has been

Beyond that, we had to ensure G4S

thoroughly challenged. The procurement

supply chains were responsive and agile suppl y c ha i ndi gi ta l. com

G4S PLC

116

Trusted Partner: Thomas Kneale “Thomas Kneale has been G4S’ preferred supplier for contract quality, fire retardant bedding and bathroom textiles and prisoner clothing for nearly 20 years, providing sector compliant textile solutions for end users with differing needs and requirements across multiple business segments, primarily custodial,” says Thomas Kneale director Richard J. Manville. “Having invested in a specialist digital stock forecast system which permeates the whole of TK’s supply chain, the G4S/TK partnership has grown to now include Thomas Kneale operating an end-to-end,

FEBRUARY 2021

vendor-managed G4S stock holding, ordering and replenishment business model. This system operates on a fully accredited and audited supply chain evidenced by the Gold medal award to TK on the EcoVadis Sustainability platform. G4S is rightly vigilant and uncompromising that it’s supply chain is transparent, auditable and compliant to its sustainable objectives. Thomas Kneale fulfils these obligations meticulously operating only with fully regulated and audited factories in China and the Sub Continent.”

EX EC UTIV E PROFILE:

Robert Copeland Title: Group Procurement & Supply Chain Director (CPO) Company: G4S PLC Industry: Security Location: London, UK Robert Copeland is an experienced supply chain professional with over 20 years’ experience in multinational organisations both in the UK and abroad. Having studied in the UK and France, he started his career at Peugeot Citroen (PSA) in Paris, returning to the UK to work at Danone and the Post Office before joining G4S in 2015. Robert has built his reputation reshaping Procurement and Supply Chain functions in a digital age, allowing the supply chain to become a business competitive advantage.

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117

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“ In a lean business like G4S, our stakeholders are won over by delivery – conversely, reputations can quickly be tarnished if change outcomes fall short of promises made”

At the same time, the business was preparing for Brexit, the divestment of its conventional cash business in 40 countries and the mobilisation of new major contracts won in 2020, including a new 10-year contract to operate the UK’s first resettlement prison, HMP Five Wells in Wellingborough. The pressure has been with us at every step; however, I am immensely proud of the way our teams around the world rose

— Robert Copeland, Group Procurement & Supply Chain Director (CPO), G4S Plc

to every challenge.

to adapt to customers’ requirements,

mation programme to enable operational

which in some cases changed overnight.

excellence and cost leadership.

Given the on-going refocusing at G4S in a competitive market place, Copeland talks about a major supply chain transfor-

In parallel, the procurement team led

When I visited the G4S Procurement

the development and implementation of

teams around the world, I spent time

infrastructure to enable the rapid recruit-

with the operational teams to get a direct

ment of thousands of staff to run the Covid

understanding of how the businesses

Test Centres across the UK, using the

operated. I noticed the work-wear supply

latest digital workforce management

chains were highly decentralised and

platform and recruitment partners such

often suffering from range proliferation

as HR Go. The cloud based workforce

(i.e. 60 variants of white shirts used in

management platform gives G4S real-

just 6 European countries) and large

time visibility and reporting, ensuring

amounts of stock obsolescence clut-

the entire recruitment process is com-

tering up storage areas.)

pliant, transparent, and controlled from end to end.

Work-wear is a major spend area for G4S with an annual spend of $50M suppl y c ha i ndi gi ta l. com

119

G4S PLC

120

2004

Year founded

£7,758 m+ Revenue in GBP (2019)

570,000+ Number of employees

FEBRUARY 2021

supporting over 500,000 employees. Anyone who has been involved in the transformation of corporate work-wear will attest to the fact that it is deceptively complex. Work-wear is also an emotional subject and understandably so. The saying goes, ‘if you dress well, you feel well’ and this meant that any changes were scrutinised and challenged by many, from works councils to Managing Directors. The business was interested in improving how they managed work-wear and reducing costs, but the countries often lacked the capability to implement sustainable change. The competing dynamics of works councils, customer standards, staff churn, uniform customisations, bulk manufacturing lead times, mobilisation of new business (typically 30-day go-live from contract signature), seasonality, special events, quality and cost vs. garment design life, create a rather complex algorithm when blended together. Since 1996 G4S has owned a garment manufacturer in India called IBG, which currently supplies 15% of G4S’s uniforms globally. IBG had a difficult relationship suppl y c ha i ndi gi ta l. com

121

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As we developed the operating model, we identified 3PL as an option and one that had the potential to solve many of our problems. We evaluated the merits of both a fully outsourced 3PL solution alongside maintaining a direct relationship with a panel of manufacturers/ distributors. What we found during the detailed evaluation was that for a tight margin business such as G4S, a direct relationship with a uniform distributor, in terms of technical and service support along with a TCO price, outweighed the benefits of a 3PL solution. In a lean business like G4S, our stakeholders are won over by delivery - con-

“ The digitisation of procurement at G4S has allowed my teams to focus more time on front-line projects and business growth and allowing us to accelerate our important supply chain ESG agenda.” — Robert Copeland, Group Procurement & Supply Chain Director (CPO), G4S Plc

versely, reputations can quickly be tarnished if change outcomes fall short of promises made, so a robust operating model was critical to withstand the operational pressures and demands exerted through the lifecycle of managing customer expectations. Given that work-wear covers six continents, it was important to divide this programme into manageable phases, with the first phase being the UK & Europe in 2018. The first element was to develop the right operating model, which critically would allow G4S suppl y c ha i ndi gi ta l. com

123

with G4S as an in-house supplier. Each

G4S, like many companies, over time

local country operation demands a high

can find itself becoming overly reliant

touch and responsive distribution service,

on and beholden to suppliers where the

and frankly, the demands are often

knowledge sits firmly with the supplier

unreasonable but this is driven by the

base. It can be a real struggle to get hold

needs of our customers. Whilst IBG was

of robust management information, per-

renowned for the quality of its products,

formance KPIs, accurate stock liabilities,

it simply could not compete on service

and in the case of work-wear a clear

with strong local distributors (200 sup-

understanding of the specifications and

pliers in Europe alone). This truly had

cost per wearer. Past attempts made by

become an existential threat to IBG

local business units had limited success.

and so the opportunity for the procure-

This presented a great opportunity for

ment team to help IBG pivot it’s business

the Group Procurement team to show-

model and to focus on its core strengths

case its ability to re-imagine the way the

was timely.

business thought about work-wear.

FEBRUARY 2021

G4S Integrated Security CLICK TO WATCH

2:26

125 to retain control, scale the solution and

audit our work-wear supply lines for mod-

leverage volumes with flexibility for any

ern slavery risks and ethical standards.

local and national requirements.

We also partnered with a boutique

The solution had to conquer key iss-

Dutch software house, EC Manage,

ues including the build-up of obsoles-

which developed a digital work-wear

cence stock, wearer level management

management system for distributors,

(including start and end of life), zero

able to give wearer level allocations and

based budgeting, cost per user track-

controls, the trick being to create flex-

ing, garment performance in the field

ibility without excessive working capital.

tracking, order vs user requirements,

Customer contracts often require G4S

working capital optimisation and

to mobilise a workforce numbering in the

inventory management.

1000s with 30 days’ notice.

To ensure the new operating model

The Procurement team ran several

met stringent business ethics, we collab-

complex prequalification tenders and

orated with EcoVadis to independently

e-auctions during 2018 to ensure the best suppl y c ha i ndi gi ta l. com

G4S PLC

126

“ It is important to take the time to engage with the business and suppliers at all levels to find opportunities that are often known of, but not acted upon” — Robert Copeland, Group Procurement & Supply Chain Director (CPO), G4S Plc FEBRUARY 2021

partners were selected to deliver the right economic and operational blend. We appointed the well-respected UK based workwear distributor Incorporatewear Ltd, to to supply the six largest European countries, consolidating over 200 suppliers into one contractual relationship. The project team had to undertake a major user trial phase as agreed with the European Works Councils to ensure that the optimised range was exactly right, often with very

127

positive feedback from the users,

Work-wear transformation has been

in parallel to the trials the supply chain

a challenging project, one that has seen

had to be fully Brexit proofed, able to

us navigate through some interesting

operate in all possible Brexit outcomes.

moments (including Brexit), but it has

The output of the programme in

also demonstrated the value of a truly

Europe delivered overall cost effi-

capable and trusted procurement func-

ciencies of 20%-25% (40% in some

tion, able to provide leadership and

countries), and a range rationalisa-

commercial credibility.

tion of around 60% across Europe. This enabled G4S to reinvest some of the savings in targeted areas to improve the look and feel of the uniforms and the morale of our people. suppl y c ha i ndi gi ta l. com

128

CUSTOMIZABLE SUSTAINABLE DELICIOUS

WRITTEN BY

HARRY MENEAR

PRODUCED BY

JAMES BERRY

FEBRUARY 2021

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suppl y c ha i ndi gi ta l. com

SUN BASKET

Mike Wargocki and Michael Thompson discuss Sun Basket’s unique approach to delivering healthy, customizable, and delicious food

he COVID-19 pandemic has had a dramatic impact on the way we all live, work, spend money and eat. Forced inside by wide-

spread lockdowns and social distancing measures, people are increasingly turning to online services to secure their basic needs. At a stressful time like this, 130

the value of healthy, convenient, sustainable food is more apparent than ever. For California-based meal kit delivery service Sun Basket, 2020 has been a year of unprecedented challenges and opportunity. “Our business essentially doubled in three weeks during that initial spike,” says Michael Thompson, Vice President of Supply Chain and Business Integration at Sun Basket. “We basically found ourselves in a position where we suddenly stopped being a convenience and became more of an essential service for a lot of our customers.” Sun Basket was founded in 2014 by award-winning chef Justine Kelly and Adam Zbar, Tyler MacNiven and George Nachtrieb – a trio of tech entrepreneurs looking to marry the convenience of on-demand, subscription-based food delivery with restaurant-quality cuisine tailored to suit every diet. FEBRUARY 2021

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suppl y c ha i ndi gi ta l. com

Stafni that momov just-in-timo with you We rebuilt temp stafng to reliably yex with your business. With our nationwide network of 600,000 pre-vetted workers, get the labor you need, even on short notice.

Talent acquisition in trying times: T:e Cnsta9or8 met:oNology ike Bohnett, VP of Sales and Partnerships at Instawork, and Mike Wargocki, VP of Manufacturing at Sun Basket, discuss its staffing partnership.

At a time when workforce reliability, workplace safety and job security are all being afected by COVID-19, companies are starting to feel the pressure. Addressing these problems through technology that is revolutionising talent acquisition, Instawork ofers a centralised platform that connects businesses with proven professionals in real-time. “Instawork is a yexible stafng solution for warehouse manufacturing, food production, and hospitality-based workers,” explains Mike Bohnett, Vice President of Sales and Partnerships. “At heart, we re a tech company that is aiming to rebuild how stafng works, to better meet the needs of both companies and today s hourly workforce. Fundamentally, we believe that stafng g and speci+cally temporary stafng is broken. hrough the Instawork platform, workers can easily pick up shifts and get paid quickly afterwards, and they receive reviews from employers, which ups their credibility for any other potential gigs.” An excellent example of Instawork in action is the company s close collaboration with Sun Basket, the San Francisco-based subscription meal delivery service. hey needed extra warehouse labour and found Instawork. Subsequently, Instawork was able to onboard Sun Basket in a matter of days and provide a 90% +ll rate for its warehouse staf, with an average worker quality score of 97%. M

Mike Wargocki, VP of Manufacturing at Sun Basket, contextualised that happens then operations teams are understafed and that proolems it can causee “ he frst thing it causes are mistakess hat’s a serious issue oecause, as te’re making orders for our customers, the key is making sure that quality remains as high as possioles. With understafng resulting in employees having to perform several roles simultaneously, people can quickly oecome exhausted and more susceptiole to illness, a core concern that Sun Basket, particularly during the pandemic, is diligent to avoid. Despite that Wargocki calls the “uneven torkfot. of the company, even as demand in gret, he says that Instatork has alloted Sun Basket to meet its stafng challenges tith aplomos “ he Instatork team has oeen amazing oecause of the quality of torkers, as tell as the consistency of the fll ratess.” “ sing the Instatork platform, Sun Basket has counter intuitively lotered their overall stafng costs,. adds Bohnetts “By using a platform like Instatork, Sun Basket is actively empotering its frontline teams tith tools to make informed decisions, thich aggregates into a high return on investment I/ across the companys&

“Tht Insaawork atam has bttn amazing btcaust of aht qualiay of worktrs, as wtll as aht consisatncy

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of aht fll raatss.”

- Mike Wargocki, VP of Manufacturing at Sun Basket

instawork.com

SUN BASKET

134

“ We have lots of great relationships with the farmers near us, particularly the organic operators, since 99% of the vegetables we buy are organic certified” — Michael Thompson, VP, Supply Chain and Business Integration, Sun Basket

FEBRUARY 2021

“Sun Basket is a delivery-based meal subscription business, and our goal is to provide healthy food options to our customers using that model,” explains Mike Wargocki, Sun Basket’s VP of Manufacturing. “Whether our customers are eating gluten-free or vegan, or are on a Mediterranean diet, we find creative, delicious and healthy solutions for them.”

CREATIVE, DELICIOUS, HEALTHY “We like to think of ourselves as the Whole Foods of the meal kit industry; we’re offering a more specialized,

EX EC UTIV E PROFILE:

Mike Wargocki Title: VP, Manufacturing Company: Sun Basket

higher end and high-quality service,” Wargocki continues. Sun Basket’s premium, health-focused offerings extend across a staggering range of dietary requirements that make for a very broad, highly-customizable menu. Customers can choose from meal plans including Paleo, Carb-Conscious, Gluten-Free, Lean & Clean, Diabetes Friendly, Chef’s Choice, Vegetarian, Pescatarian, Mediterranean, or Quick & Easy. These meals are a part of a weekly rotating menu developed by Chef Kelly and her team and shipped to tens of thousands of customers on

Mike brings 20 plus years of food manufacturing, quality and operations experience. In his current role, he is responsible for production and equipment buildout within the SunBasket manufacturing facilities. Previously, Mike was the VP of Operations for DelMonaco Foods, a high end kettle cooking company. Mike was also the Director of Operations for Penford Food Ingredients, running the food starch manufacturing facilities in the US and co-manufacturing operations around the world and prior to that the Quality Management Director for Penford Corporation overseeing global quality operations.

a regular basis. The meal kits arrive supplbusi y c ha nei ndi sscgi hita efl.. com

135

SUN BASKET

“ One of the major benefits of the meal kit subscription business model is that the amount of food waste we create is so much lower than, say, a grocery store”

136

— Michael Thompson, VP, Supply Chain and Business Integration, Sun Basket

cold-packed with instructions for the customer to prepare a two or four serving meal, sometimes in as little as 10 - 20 minutes. In addition to its core meal kit offering, Sun Basket is working to broaden its scope across what Wargocki describes as its ‘share of stomach,’ branching out into snacks, lunch items and more. “We provide the meal kits as our core product, but we’ve also launched our Fresh and Ready meals, which are readymade and just need to be heated up,” he says. “We’ll be further expanding those offerings in 2021, which is very exciting, as well as having a marketplace, which is a way of presenting a curated selection of snacks and juices to our customers.” Thompson notes that, as far as a secret sauce goes, Sun Basket’s ability to combine quality, a large range of products and a high level of customizability is key to its success. “We really want to personalize the experience for our customers. Some of our competitors will just offer two options - a basic and a vegetarian. We have 11 options to meet the different needs of different groups,” he notes.

FEBRUARY 2021

What do you love about Sun Basket? CLICK TO WATCH

0:19

137 “We work hard to offer an ever-

EXECUTING ON THE VISION

changing menu every week. We take

Between them, Wargocki and Thom-

pride in providing a lot of variety to

pson oversee the operational side of

our customers, and many of our meals

Sun Basket. “Everything inside the

are made with unique components

four walls of the building, like labor,

like sauces that we develop ourselves.

manufacturing and packaging, that’s

We’re not just buying, for example, a

all Mike,” Thompson explains. He, on

romesco sauce off the shelf from a

the other hand, is responsible for the

third party. We’re making that romesco

company’s operations outside its prem-

sauce ourselves.” So, in addition to

ises. “Everything beyond these four

customization, quality and a broad

walls is my responsibility, from logistics,

range of options, sometimes Sun

procurement and supporting services

Basket’s secret sauce is also literally

like corporate IT, to food safety and

a secret sauce.

some of the other functions that enable

suppl y c ha i ndi gi ta l. com

SUN BASKET

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

138

Michael Thompson Title: VP, Supply Chain and Business Integration Company: Sun Basket Michael brings over 25 years of operational expertise with consumer product and subscription companies, building Direct-to-Consumer supply chain solutions. In his current role, he is responsible for procurement, inbound freight, last-mile delivery, food safety and corporate services for Sun Basket. Previously, Michael was CSCO for NatureBox, transitioning the subscription service into an omni-channel food brand – servicing home delivery, office locations, food service partners, airlines and on-shelf retailers. Michael was also VP Operations for Bare Escentuals (cosmetics) where he managed North American Operations to support massive revenue growth and created an internal Program Management organization for strategic initiatives. FEBRUARY 2021

FROM FARM TO TABLE – A UNIQUE SUPPLY CHAIN In order to deliver on its promise of a rotating weekly menu that caters to all manner of dietary preferences and needs, the procurement function of Sun Basket’s business is all about smart, sustainable sourcing. “We work with the company’s test kitchen about eight weeks before a menu goes out for delivery to make sure we’re taking into account the time of year and the ingredients that are in season,” Thompson explains. From there, Thompson’s goal is to ensure that Sun Basket is sourcing the freshest possible ingredients in the right quantities. “We’re working to ensure we’re delivering as close as the work that Mike does within the

possible to a farmer’s market fresh

business’ premises. We work together

experience,” he says, adding that

on lots of different projects.” Together,

there are two major factors to con-

Wargocki and Thompson have the

sider when sourcing produce for Sun

unique challenge of sourcing, manu-

Basket’s meals: time and temperature.

facturing and distributing Sun Basket’s

“We’re trying to figure out how quick-

meal kits and other products across

ly we can shorten the time from harvest-

the United States, tackling extreme

ing a vegetable to delivering it to a

levels of customization in a way that’s

customer’s table. We’re fortunate

not only effective, but environmen-

enough to be sitting here in the mid-

tally sustainable.

dle of California, right next to the suppl y c ha i ndi gi ta l. com

139

SUN BASKET

biggest produce-growing valley in the country. We have fantastic relationships with many farmers here, particularly the organic operators, since 99% of the vegetables we buy are organic certified,” says Thompson. “These relationships with big farms and smaller scale operations all across the country mean that, when we can, we buy as locally as possible.” All of Sun Basket’s meal kits delivered to the East Coast, for example, utilize organic corn grown by the company’s supplier close 140

to its New Jersey facility when it is in season. Thompson notes that, “We do as much as possible to reduce the time between a vegetable coming out of the ground and coming out of the customer’s meal kit when they go to make dinner that night.” Dealing with temperature is a uniquely difficult proposition. Sun Basket’s cold chain is an essential element of ensuring that produce not only reaches the manufacturing plant in the best possible condition, but also that the resulting meal kits arrive in the customers’ hands as fresh as they can possibly be. Thompson explains that, using individual temperature gauges on each pallet of produce FEBRUARY 2021

“Whether our customers are eating gluten-free or vegan, or are on a Mediterranean diet, we find creative, delicious and healthy solutions for them” — Mike Wargocki, VP, Manufacturing, Sun Basket

141

suppl y c ha i ndi gi ta l. com

SUN BASKET

“ We like to think of ourselves as the Whole Foods of the meal kit industry; we’re offering a more specialized, higher-end and highquality service” — Mike Wargocki, VP, Manufacturing, Sun Basket

142 received, his team can monitor the entire

When the finished meal kits leave Sun

journey of a piece of produce from the

Basket’s facility, ice packing plays an

supplier to Sun Basket’s loading dock.

important role. “We also try to be smart

“When that product arrives, I have

with how we pack out our products in

access to a complete readout of the

terms of ice, insulation and box size, tak-

temperature of that product over the

ing into account the length of the journey

course of its entire journey. I can see

and the temperatures at the destination,”

if a product that’s supposed to be held

Thompson says. “If you’re sending a

at 38 degrees was held for an hour at,

box to Phoenix, Arizona, where it’s 95

say, 55 degrees, and be able to know

degrees outside, you’re going to need

therefore that it isn’t going to hold up,”

a very different packout solution com-

he explains. “We use that information in

pared to, say, Chicago in the wintertime.”

addition to our quality inspection pro-

Using a sophisticated algorithm, Sun

cess to sort through our produce and

Basket’s fulfilment team can account for

ensure we’re only using products that

travel time, environmental conditions and

live up to our customers’ standards.”

the contents of each individual box.

FEBRUARY 2021

have 25,000 different iterations in a 30,000-box run. We could conceivably have a situation where every single one of our customers orders a completely different combination of meals in their box. It’s really been interesting to work on developing our technology to allow for that level of customization,” says Wargocki, explaining that his own role focuses on finding the most efficient, highest-speed production options that are designed to support regular changeovers and refits with the least amount of downtime possible. “We have a different ice configuration

“If we’re shipping those 30,000 boxes,

for, in theory, every single zip code in the

they’re going to contain 100,000 individ-

country, which gives me quite a fun chal-

ual meals, which means approximately

lenge,” laughs Wargocki.

300,000 individual ingredients. When you think about the touches that go into

EXTREME CUSTOMIZATION

that, it’s more than a million touches

The sheer level of customization that

every week that are completely unique

Sun Basket offers its customers cre-

to that cycle,” he explains. “Seven days

ates a uniquely complex challenge from

later, the whole process starts again

a manufacturing standpoint as well.

with entirely new products.”

“The big challenge from a manufactur-

Using advanced customer analytics,

ing point of view is how customizable

the Sun Basket team can predict with

Sun Basket’s service is. A lot of our

increasing accuracy which foods their

competitors might send out 30,000

customers will buy each week. “We

boxes in five or six different iterations.

know eight weeks in advance what

Sun Basket, on the other hand, might

we’re going to put on our menu and we suppl y c ha i ndi gi ta l. com

143

SUN BASKET

INST AW ORK

144

“Instawork is one of our suppliers of temporary laborers,” says Wargocki. “As the business grew, we needed a fair amount of people very quickly. Instawork is a tech-based solution to that problem that gives us a huge amount of flexibility. “We have a very high demand for our products over the weekend, and then for the rest of the week we have a more level, predictable workload. On the weekends, I need to be able to have a large enough team to ensure that all of our production and fulfillment gets done. Instawork is great for that.”

FEBRUARY 2021

Instawork uses a web-based network of contractors that can sign up for particular shortterm jobs. “We can give priority to contractors we’ve had positive experiences with before,” enthuses Wargocki, adding that, “it also provides our contractors with a really good training process. We can upload our training materials, food safety and GMP requirements - everything those employees need to become certified to come in and work for us. It saves a lot of onboarding time for new temporary staff.”

use our analytics to predict how much

notes, is packaging. “Each individual

of each of those meals our customers

ingredient needs packaging, and then

are going to want. We can predict vol-

all those ingredients are put in a package

ume and location based demand, as well

together, which goes in a bigger box with

as which specific meals and diets people

ice and other insulation for shipping,” he

are going to order, and we can get very

explains. While the issue is a hard one to

granular in terms of one ingredient vs

get away from, Thompson adds that Sun

another,” says Wargocki, adding that

Basket has taken some significant steps

this is essential, not only to ensuring the

towards mitigating those issues.

company can meet demand, but also its sustainability goals.

“All of our packaging is either recyclable or compostable,” he says. “It makes our job a little harder, because

SUSTAINABILITY AT SCALE

sometimes it’s difficult to find recycla-

There are a number of factors unique to

ble and compostable solutions that

the subscription-based meal kit delivery

meet our needs regarding keeping

business model that impact sustainable

food cold, but we really stand by our

practice. “One of the major benefits of

commitment that while it is necessary

the meal kit subscription business model

to have a fair amount of packaging,

is that the amount of food waste we

we do as much as we can to reduce its

create is so much lower than, say, a

environmental impact.” Wargocki adds

grocery store,” says Thompson. “We

that, from a manufacturing perspec-

track our wastage for each week and

tive, finding ways to use recyclable and

it’s in the low single-digit percentage of

compostable materials in the manu-

our total food purchase, which is really

facturing process continues to be an

low. We try not to throw anything away

interesting challenge.

that’s still usable. If we don’t manage to sell something to a customer, we’ll

ONWARDS AND UPWARDS

donate it to a food bank.”

Thompson reflects that, had things

Where meal kit companies across the industry run into problems, Thompson

been different, the 2020 COVID-19 crisis could have gone in an entirely suppl y c ha i ndi gi ta l. com

145

SUN BASKET

different direction for Sun Basket. “We were growing very fast, like a lot of companies in the subscriptionbased food delivery space,” he reflects. “Then, in 2019, the company made the decision to slow down a little bit and really make sure the economics of the business were sound. You can grow, pump more money into marketing, attract more and more customers, etc. But if those customers aren’t staying for the long run as you had hoped, your company is going to burn itself out.” 146

Sun Basket spent 2019 shoring up its business model. This year, the results have been spectacular. “Those efforts

“ We have a different ice packing configuration for every single zip code in the country” — Mike Wargocki, VP, Manufacturing, Sun Basket FEBRUARY 2021

put us in a really strong position coming into 2020, when COVID-19 started to happen and being in the business of sending food to people’s houses suddenly became a very good industry to be in,” Thompson recalls. “Had we not gone through all that work the year before to make the economics sound, we wouldn’t have been in such a good position to be able to help our customers and grow as much as we did.” Now, Sun Basket is looking to broaden its offerings even further, finding new

147

ways to take its core strength of

and diverse in terms of new ways to

making delicious, healthy food and

bring new foods to new customers at

find new channels to deliver it to its

all different times of the day, whether

customers. “2021 is going to be about

that’s lunches, dinners, breakfast or

taking those new offerings to a wider

snacks. The challenge for us is making

market through new channels,” says

sure that we not only do a lot of different

Thompson. The company is growing

things, but that we do all of those things

rapidly, with deals on the horizon to

well. Everything that we’re doing is to

sell Sun Basket’s food through partner-

figure out how to grow the breadth of

ships with on-line retailers, as well as

our offering while never compromising

some brick and mortar locations.

our quality standards.”

In closing, Wargocki adds that, “We’re looking to become very broad suppl y c ha i ndi gi ta l. com

148

FEBRUARY 2021

DIGITALISATION OF SUPPLY CHAIN OPERATIONS DURING A PANDEMIC WRITTEN BY

OLIVER JAMES FREEMAN PRODUCED BY

GLEN WHITE

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ALJAZIERAH HOME APPLIANCES

Naiyer Hussain, Supply Chain Director of Aljazierah Home Appliances, takes the time to discuss digitalisation of supply chain operations during the COVID-19 era

hen you consider the new norms and values established in 2020, I don’t doubt that you consider COVID-19 to have been the dicta-

tor that defines them; and, it’s certainly the case that 150

the global pandemic has been an influencing factor, but we would be amiss to claim that it is the only one. In fact, the true defining factor of this year has been the genius of human innovation and adaptability - especially when it comes to supply chain operations. It’s the collaborative efforts between individual humans at different stages of the supply chain that truly made the difference as the world stood in the looming shadow of adversity. A man who knows all about that unity through collaboration is Naiyer Hussain, the Supply Chain Director of Aljazierah Home Appliances, manufacturer & retailers of Home Appliances & HVAC equipment ranging from water coolers and heaters to refrigeration units and freezers across Saudi Arabia and the Middle East.

FEBRUARY 2021

151

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ALJAZIERAH HOME APPLIANCES

“ Digitalisation in supply chain is required for improved decisionmaking capabilities, which allows companies to bridge the gaps across endto-end supply chain” — Naiyer Hussain, Supply Chain Director, Aljazierah Home Appliances

Although Aljazierah was the first manufacturer of its kind in Saudi Arabia and the Middle East, it’s no longer alone in its particular marketplace - in fact, it has global competition. To the question of, “what put’s Aljazierah ahead of its competitors,” Naiyer succinctly stated that “the leadership and vision of the CEO, CFO, and Vice President are all vital to Aljazierah’s success in our respective markets, and those three individuals underpin the reason why we’re ahead of the competition, right now. As it stands,

152

“Aljazierah was started in 1968 by the

we’ve successfully nurtured strong part-

late Mohamed bin Abdulaziz Al Rajhi,

nerships with both our customers and

a visionary entrepreneur. It was the

our suppliers, which ensures that both

very first factory of its kind in the Middle

ends of our businesses supply chain

East to produce home appliances.

remain on-top. As a company, we also

Today, Aljazierah has nine production

have a tendency to explore options and

facilities for water heaters, water cool-

find multiple solutions to the problems

ers, evaporative coolers, gas cookers,

that we may face; we treat each problem

refrigerators, washing machines and

as a case study and the executive arm

plastic components. Our products are

of the organisation put in the hours to

well known in Saudi Arabia, and we are

brainstorm and come up with probable

now exporting products to almost all of

solutions together, as a team.”

the Middle Eastern markets. We have

When it comes to the supply chain

also expanded into the African markets,

operation of any organisation with the

through the use of one production

size and scope of Aljazierah, many

factory in Sudan,” Naiyer told Supply

industry-leading companies choose to

Chain Digital.

either use one supplier that can provide

FEBRUARY 2021

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

Naiyer Hussain Title: Supply Chain Director Company: Aljazierah Home Appliances Industry: Home Appliances Location: Saudi Arabia Naiyer is a senior leader possessing vision and skills to design, develop and monitor E2E supply chain. He performs comprehensive projects around supply chain, digital supply chain transformation and change management strategies to improve visibility across supply chain to achieve reliable, responsive, agile & cost-efficient supply chain including operational excellence. He managed global procurement of CAPEX & OPEX in most modern manufacturing plants. He directed supply chain re-engineering for a paradigm shift from production-driven to a demand-driven business model, leading to a higher percentage of sales and production with high inventory turnover. He participates and speaks in supply chain conferences & seminars across GCC. suppl y c ha i ndi gi ta l. com

ALJAZIERAH HOME APPLIANCES

FP ABOUT US Aljazierah Home Appliances FEB 2021 CLICK TO WATCH

1:14

WE DO IT BETTER

Made

Italy

Leader in safety valves for electric storage water heaters w w w. r i t m o n i o . i t

“ It has been important to recognise the reality of the situation and acknowledge that all companies have limitations - even ours” — Naiyer Hussain, Supply Chain Director, Aljazierah Home Appliances

March 21st, onwards. Considering the fact that the pandemic had been rife in China since December of last year, Aljazierah was already on high alert with the intention of mitigating any supply chain risks.” “We started moving inventory to regional warehouses to balance the risk, and we also made arrangements within factory premises for the rest of the workers to work in regulated, safe

all of their goods and services, or they go

conditions, so protect each individual

the other route and use several, work-

whilst also preventing the spread of

ing in unison. In Aljazierah’s case, Naiyer

infection throughout our labour force,”

told us that “we are made up of several

the Supply Chain Director added. It’s

interdependent global partners. All our

clear that Naiyer, just like every other

suppliers are highly skilled and profes-

leader in the field, didn’t want to lose

sional in their areas. They keep the high

human resources to the virus, given

value of partnership agreements, and

that “expected shortages of materials

continuously work on product innovation

and services were already the biggest

and process optimisation, for the sake of

challenge - and a major pressure for me,

our customers.”

personally. Aljazierah had to ensure the

On the subject of COVID-19 - the

safety of our people whilst also maintain-

elephant in the room, really - it often

ing a constant flow of goods so that our

seemed that Asia, Europe, and the

stocks didn’t bottom-out. We oversaw

Americas were hit hardest by the virus.

a reduction in work timing from 18 hours

Naiyer revealed that “Saudi Arabia also

to just six hours for logistics and ware-

had COVID-19 cases and the govern-

housing projects. It was a challenging

ment implemented curfews and highly

time, but, again, good teamwork and col-

restricted everybody’s movement from

laboration got us through it.” suppl y c ha i ndi gi ta l. com

155

ALJAZIERAH HOME APPLIANCES

“ The team here makes each crisis into a case study and, together, through collaboration, we fix it so that the next time a similar situation occurs, we are prepared to tackle it” — Naiyer Hussain, Supply Chain Director, Aljazierah Home Appliances

You’ve most likely heard the claim before, but many professionals across the supply chain industry and its subsidiaries, have been suggesting that digital transformation accelerated by approximately a decade in 2020 alone, due to the innovations that had to take place to ensure business continuity and survival at the height of the pandemic. To this, Naiyer told us that he “absolutely agrees with the notion that COVID has accelerated the digitalisation process in almost all sectors. Prior to the pandemic, there was already a conceptual shift

FP COMPETITION Aljazierah Home Appliances FEB 2021 CLICK TO WATCH

1:06

157

towards digital, but when the world went

unavoidable. To ensure that we provided

into isolation, the pace of that digital

our customers with our essential ser-

transformation accelerated ten-fold so

vices, we obtained permits and licenses

that companies could adapt to a world in

from the Saudi Arabian government, so

lockdown. Without digital tools and tech-

that we could continue operations dur-

nologies, it would have been impossible

ing the lockdown, and we had to obtain

to continue running the show.”

police permits for the transportation of

“In truth, we were not fully prepared

goods and workers - we even relocated

at Aljazierah. We lacked many tools, but

to areas outside of containment zones,”

our team used their experiences and

Naiyer added.

skills to work under abruptly changing

Naiyer shared that Aljazierah would

environments. We made many decisions

be looking to implement any of the tools

to reduce the impact of the pandemic on

and technologies that the company was

our business - but minimal damage was

previously lacking and emphasised the suppl y c ha i ndi gi ta l. com

ALJAZIERAH HOME APPLIANCES

1968

Year founded

Riyadh Location

500+ Number of employees

158

FP DIGITIZATION Aljazierah Home Appliances FEB 2021 CLICK TO WATCH

FEBRUARY 2021

1:11

159

importance of them when he told us that

though. At Aljazierah, as with every

“digitalisation in supply chain is required

other company around the world, they

for improved decision-making capabili-

also need to embrace the technology,

ties, which allows companies to bridge

“because it makes our business process

the gaps across end-to-end supply

easier, and we can then replicate our

chains. Also, micro-segmentation with

goals into digital advancement and repo-

digitalisation increases the overall profit-

sition the tech for remote handling. This

ability of operations across the chain by

must also collaborate with our business

allowing for more actionable, targeted

model, reduce cost, and save time.”

choices that will - theoretically - have

In the coming years, if the world

a positive effect on the overall supply

continues to struggle with unexpected

chain management experience.”

viruses and natural disasters, it’s likely

The Director was quick to add that it

that the new norms of 2020 will remain.

isn’t only about implementing the tools,

Now, at the height of lockdown, global suppl y c ha i ndi gi ta l. com

ALJAZIERAH HOME APPLIANCES

supply chain networks struggled with the spike in demand for products purchased through eCommerce - a problem that will potentially continue into the New Year and further. Naiyer told us that “eCommerce sites alongside traditional sales channels and showrooms have made the supply chain more complex and, due to the convenience of the amalgamation, we now have to deal with higher customer expectations for faster deliveries. Managing customer expectation is the biggest challenge that we will all face 160

moving forward - an additional step that increases the complexity for upstream and downstream partners along our networks.” Naiyer’s final comment to Supply Chain Digital provided some wisdom that the many C-Suite executives could do with following; to the question of leadership and managing a company through a time of volatility and uncertainty, he said, “I am trying to keep calm during this crisis. I still sometimes get stressed during a period of crisis, as you might expect, but if you can keep a cool head, you can strategise around the negatives. Aljazierah intends to keep production running, avoiding stoppage and FEBRUARY 2021

“ As a company, we also have a tendency to explore options and find multiple solutions to the problems that we may face; we treat each problem as a case study and the executive arm of the organisation put in the hours to brainstorm and come up with probable solutions together, as a team” — Naiyer Hussain, Supply Chain Director, Aljazierah Home Appliances

FP CHALLENGE Aljazierah Home Appliances FEB 2021 CLICK TO WATCH

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minimising downtime; while doing so, it is important to recognise the reality of the situation and acknowledge that all companies have limitations. The team here makes each crisis into a case study and, together, through collaboration, we fix it so that the next time a similar situation occurs, we are prepared to tackle it.”

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