In the wake of the Corona crisis, global networks have had to make adjustments to increase their flexibility and respond to short-term fluctuations. But what challenges do innovative supply chains bring with them? With Thomas Spiess, member of the management board of Staufen.Inova AG, we discuss where companies have opportunities to connect and what proven solution strategies already exist.
Mr. Spiess, we learned in the first part what the most important elements in supply chain network management are, and also where the greatest challenges lie. What practical experience have you had in this regard during your long consulting career?
We talked about the four elements in supply chain network management.
1. Network. How is the network structured?
2. Management system. How is the network operated?
3. Planning. How does planning take place in the network?
4. Information management. How is information prepared and exchanged?
With regards to point 1, I can say the following based on my practical experience: Very few companies are still in a position to outline their network and associated relationships as a whole. If we sketch this network on the wall using a visualized footprint, we regularly observe customers’ aha! moments.
Displaying a footprint in this manner also enables supply chain segmentation, showing which product types can be routed through which networks. As a result, you can perfectly match different supply chains, such as one with efficient but long lead times for predictable products together with another that is short, close to the sales market and allows you to react with agility to seasonal fluctuations.
If you implement comprehensive planning systems that transcend divisional boundaries and enable the organization to respond even to short cycles, then nothing can really surprise you during a crisis.
Has the pandemic caused major changes in supply chain network management?
Yes. The awareness of having to maintain closer ties with one’s network in order to know early on when things are going to get rough and where has increased significantly. Open and honest communication between network partners has also increased significantly. One client told me about his networking experience when they used to meet twice a month. He said it was “The Chamber of Lies” but has now become “The Chamber of Truth” during the crisis. Many companies have also become more flexible during the crisis. In some areas, adaptability has even led to new opportunities.
As a supply chain network expert, what is your opinion on the subject of sustainability?
That is a very important issue. In some industries, such as textiles, supply chains are still lacking transparency. There are still many production facilities that do not produce according to European standards, both socially and ecologically. But for some time now, there has been a noticeable positive tendency in production capacities. Romania, Bulgaria or Hungary offer shorter transport routes and thus also a more stable as well as more sustainable value chain. A great deal of technology also went missing by moving everything to the Far East. But a change in thinking has taken place, further confirmed by the Corona pandemic. Producing on your own doorstep and having everything under control is en vogue.
One term that comes up again and again in connection with the supply chain is resilience. What exactly do you mean by that?
In general, this refers to the stability to cope with unexpected disruptions in order to ensure that the normal state is restored quickly and without major failures. In supply chain networks in particular, the ripple effect occurs time and again, namely that a disruption causes a ripple that then ripples from procurement to production to the customer. Because what ultimately counts is the ability to deliver to the customer. If the product is not delivered on time, you may lose your customer to your competitor. Brands like Audi and Toyota will then no longer fight each other for customers, but rather the focus will be on value networks and their resilience. The world has become more vulnerable and this must be specifically addressed through supply chain network management today.
Dr. Thilo Greshake, Partner Automotive, STAUFEN.AG
With a doctorate in mechanical engineering and more than 15 years of international consulting experience in lean development, engineering excellence and quality management, Dr. Thilo Greshake has been responsible for the Automotive division at Staufen AG since 2017.
Thomas Spiess, Member of the Executive Board, STAUFEN.INOVA AG, Switzerland
He studied mechanical engineering at ETH Zurich and has been an expert for supply chain management for almost 30 years.