Keys to SCM success
strategy session

Keys to SCM success

Managing your supply chain may never have been more challenging than it is in today's global trade environment. Our experts give you their best advice on how to succeed in 2019.

In today’s global trade environment, building and maintaining a supply chain that meets the goals of your business and helps it grow can be both critical and challenging. From trade tariffs to trade wars to economic uncertainty to political unrest, there are a multitude of factors that can impact the businesses you do business with.

In a report this month, Gartner, the global research company, said there are eight trends it says are pervasive in global supply chains. They include artificial intelligence, advanced analytics, the Internet of things, robotic process automation, and blockchain.

“These technologies are those that supply chain leaders simply cannot ignore,” said Christian Titze, research vice president at Gartner. “Within the next five years, if half of large global companies are using some of these technologies in their supply chain operations, it’s safe to say that the technologies will disrupt people, business objectives and IT systems.”

But what can you do now in real-time to improve your own supply chain operations? Below is some advice and tips from our experts here at AEB on what you can do to ensure your supply chain serves your company in a way that enhances your products and processes while ensuring your customers get expectations met.

Markus Meissner
Markus Meissner

Markus Meissner, Managing Director at AEB

Keys to success in supply chains

When it comes to dealing with the unforeseen or volatile and dynamic supply chains, it’s very much about changing formalities, having flexibility in customer service, and securing multi-channel distribution and local/direct sourcing. Keys to success are end-to-end transparency, real time availability of data, predictive analytics and high flexibility in the underlying IT systems. But there can also be difficulties in the hiring of skilled people and dealing with a growing demand for highly educated talents (in particular with IT know-how). Also, important to success in supply chains are a higher level of automation, SC planning and execution systems, talent management and strong partnerships for dedicated areas like transportation, customs, stock management/warehousing and other value-added services.

Dealing with the biggest test

The biggest test will come in applying technology with the potential to disrupt the entire supply chain. Prominent examples are the platform economy, additive manufacturing (3D printing) or machine learning technologies. These are examples which will cause existing and stable supply chains to become noncompetitive almost overnight. Keys to success: Development and continuous review of your production, sourcing and distribution strategy under the guise of applying the latest technologies.  Companies have to prepare themselves to seek local production, multiple channel sales to end customers and sourcing from various suppliers and distributed inventory. As a matter of course, companies have to undergo continuous change and adoption programs that must be much more stringent and professional than in the past.

Claire Umney, former strategic initiatives director at AEB

The customer needs to be at the core

Your supply chain is integral to delivering your promise to the customer and that promise must be in line with the customer’s requirements - whether that is cost and/or service oriented – know your customer. Ability to deliver depends on resilience along the whole supply chain through diverse, trusted and integrated partners whether that is suppliers, integrating partners, or service providers. A flexible supply chain also ensure continuity.  

Technology and people as key success factors

Underpinning everything, of course, is technology which is critical for you to drive the automation of transactions, to integrate partners, to achieve visibility, and to model and improve processes and efficiency. Finally, but most importantly, are your people. Your people are the key success factor and having a skilled, motivated workforce with the company ethos driving their actions will continually move you toward success.

Dr. Ulrich Lison
Dr. Ulrich Lison

Dr. Ulrich Lison, a member of the Executive Board of AEB and a global trade expert

Importance of blockchain technology

Blockchain is going to be exceedingly important. Smart contracts via Blockchain help to optimize SCM processes and create new services that are what I call inter-cross-acting. Blockchain technology makes these ideas realistic because of its inherent characteristics. By that I mean secure and unchangeable data and its ability to avoid the abuse of data. 

Own resilience and B2B Platforms as further key factors

Key also will be your own resilience. We are seeing a longer phase of protectionism and trade barriers. SCM has to ensure that a company’s goods flow in a way that is flexible and adaptable. And finally, B2B Platforms will be huge. These platforms will change the vertical and horizontal value creation stages with an impact on SCM.

Carsten Bente
Carsten Bente

Carsten Bente, Senior Consultant, Global Trade and Risk Management at AEB

Supply chain on the basis of market requirements and goals

The supply chain should be implemented on the basis of market requirements and the goals derived from them for the company itself. When organizing the supply chain, think primarily in necessary processes and not in established functions and divisions.

Also purchasing department, sales department, shipping department and customs department must be sensitized for this purpose. And processes supported by IT solutions and intelligently networked form the basis of a smooth supply chain. (platform, cloud).

Geoff Taylor
Geoff Taylor

Geoff Taylor, AEB's general manager in the UK

Embrace multi-channel

Whatever sales channels exist, providing a common stock pool is the key way of managing stock effectively rather than having separated stock per channel which always leads to over or under stocked positions.

Importance of supply chain analytics

Another strong aspect is supply chain analytics. That means data, data, and data and then being able to manage that data in order to identify and act upon the trends. Implement short and med term KPIs: metrics around service, capital expense, and cost as well as understanding how these KPIs need to adjust in line with the wider company strategy.

Ingo Strasser
Ingo Strasser

Ingo Strasser, General Manager for Switzerland at AEB

More transparency as key success factor

To me it’s not that complicated. Businesses need more transparency, to increase their responsiveness, to work toward greater automation, to put in place a stronger customer focus, to remember that individualized solutions matter to the customer, to work toward intensified cooperation and to create closer integration of value creation. Bring all of that to the table and you’ll succeed.

Frans Kok
Frans Kok

Frans Kok, General Manager of AEB Asia Pacific

Focus on consumer needs, flexibility and digitalization

A successful supply chain should be focused on customer needs and add value to the customer’s business. It should be adaptable and able to change as the customer’s business model changes. Where possible data should be digital and use as little paper as possible.

Dr. Torsten Mallée
Dr. Torsten Mallée

Dr. Torsten Mallée, Director International Business Development at AEB

Supply chain should serve your business priorities

Ensure your supply chain serves your business priorities – whether is it speed, costs, customer service levels or anything else. Besides day-to-day operations and trouble-shooting, it is mandatory to reserve time for aligning all stakeholders on the priorities to fulfill your top-level strategy.

Unified, flexible and best-in-class SCM IT solution

Set up your IT in a way that it helps you deliver best results – the effort for this will vary a lot depending on the level of diversity and legacy in your IT landscape. However, without a unified, flexible and best-in-class SCM IT solution supply chains cannot compete in today’s fast changing business environments.

Invest in transparency

And do not hesitate to invest in transparency in your supply chain – only those that are able to identify root causes for challenges in the performance can determine ways to improve it.