Chaos in the supply chains: Here are the areas you should focus on to strengthen the company
Published: June 12, 2022, 7:04 p.m.When we thought that the logistical chaos after the pandemic could not get worse, Russia invaded Ukraine. The resulting perfect storm in the supply chains could mean an accumulated loss for European companies of 920 billion euros by 2023, according to a report from Accenture. But through three focus areas, companies have the opportunity to emerge stronger from the chaos.Read more about the future of the supply chain – First and foremost, both the pandemic and the war in Ukraine are human tragedies. But they have also created a ketchup effect of problems and revealed shortcomings in the global supply chains that many have not wanted to see in recent decades. This is stated by Fredrik Malmfors, Nordic responsible for the business area supply chain and operations at Accenture. The company’s report “From disruption to reinvention – the future of supply chains in Europe” published at the World Economic Forum’s annual meeting in Davos in May charts how previously reliable supply chains have been completely turned upside down. And it is mainly in four areas that the problems have arisen: logistics, energy, lack of materials and lack of qualified labor. – Which of these areas creates the worst problems depends on which industry the company operates in. In an energy-intensive industry, it obviously becomes a very emergency situation when there is a total imbalance throughout the European energy model.Fredrik Malmfors, Nordic responsible for the supply chain and operations business area at Accenture. For companies that depend on inputs or production in low-cost countries on the other side of the globe, the major problems in the transport sector are a major threat. Fredrik Malmfors, Nordic responsible for the supply chain and operations business area at Accenture. – We have gone from “Just In Time” to “Just In Case”. If you are dependent on global supply chains, you face enormous challenges. In addition, if you need to get hold of semiconductors, it is even more complex. previously predicted would come in the second half of 2022 is now not expected to happen before 2023, perhaps not even until 2024.However, the report is not only a gloomy read, but also highlights that companies, despite the chaos in the supply chains, have great opportunities to change and improve their situation. Instead of optimizing the flow of goods based on how it can generate cost savings and reduce tied-up capital, the authors of the report believe that there are three completely different areas that companies must focus on to get back on track: resilience, relevance and sustainability. – I will not say that it is over on consumption as we know it, but that we are moving towards a different future in certain industries, we already see that, and companies must adapt to it.
Resilience, relevance and sustainability
The first area, resilience, is about understanding one’s risk. To map its supply chains and suppliers on several levels, to work scenario-based and try to predict where problems may arise, in order to realize the company’s ability to be flexible and deliver even if there are disruptions along the way. – It is about new factors suddenly have a value. You need to ask yourself if it is really right to put all the eggs in the same basket, especially if that basket is very far away. Although production closer to consumers is more expensive, perhaps it can pay off by creating more flexibility?These questions are related to the second area: relevance. – If companies are to know what customers value most, they must understand them and their expectations. Today, companies meet customers in several different channels and this has created a need to be much more customer-centric in the supply chains. If the focus has historically been on cost control, it will in future need to be more focused on how to set up its product flow to meet the expectations of different customer segments as efficiently as possible. Companies that change and become more customer-centric will have a competitive advantage. And this in turn leads to the third area: sustainability. – Customers and decision-makers take the issue seriously in completely new ways, and when we build new supply chains, it will be critical to take into account. It also includes how you think circularly from the beginning when developing your products, ie how the product is handled and recycled when it is no longer used. Those who manage it definitely get a comparative advantage.How this journey of change should go is an open question, and very industry dependent, but there is one factor that Fredrik Malmfors believes is common to all companies: the importance of working data-driven and analytically. – If you take the help of the tools and the computing power that available in cloud solutions today, there is an enormous amount of new technology that allows you to very quickly get a picture of the resilience of your own supply chains. There are also digital tools today that can connect the different parts of the chain so that the company gets a complete picture in real time. – This is something many have wanted for many years, and it is a fantastic opportunity to optimize their situation. We see more and more companies implementing so-called “control towers” that help to visualize what is happening but also over time can provide suggestions on how to handle the problems more efficiently. The ability to understand in real time what is happening and effectively handle deviations is significantly better today than it has been historically, and in the end it leads to increased profitability with a lower climate impact.Read more about the future of the supply chain
30 percent – so much of the value added of the eurozone depends on cross-border logistics chains90 percent – so much of all traded goods are transported by sea across the sea10 times – it is so much more expensive to send goods by sea today compared to June 2020425 000 – so many extra truck drivers for heavy transport would be needed in Europe The article is produced by Brand Studio in collaboration with Accenture and not an article by Dagens industri