Discussion – Sustainability to Survivability the Supply Chain post COVID-19

Published by Maria Charalambous on

Coliance (in association with IBM) hosted our latest webinar, “Sustainability to Survivability the Supply Chain post COVID-19” on the 29th April 2020.

Supply chain experts joined us for an interactive debate to see how ethical preferences can be improved by good technology choice. It was great to host so many interested attendees and receive so many questions for the Q&A.

Q: Have you got a view on how Tax Compliance will play a role in the future of electronic trade? Particularly in the Corona aftermath, a lot of countries will need to refill the coffers.

A: David A Hogg, Sterling Supply ChainSales Leader, Europe at IBM

Although not my area of expertise it does seem obvious that governments and society at large will be concerned with how the post-recovery period can be managed from a fiscal perspective. Part of that will no doubt be tax collection and compliance. It continues to be a legal requirement in trading that organisations will file their statutory reports, and robust supply chain systems play their part. It is true to say that supply chain platforms subscribing to electronic communication and collaboration standards will enjoy easier compliance processes and should be part of the fundamental set of capabilities of such a platform.

Q: How do you think global standardisation and simplification initiatives like Peppol change the future landscape of B2B and B2G trade?

A: Marcus Langford, Managing Director, Coliance

In this crisis the ability to create new supply routes has been crucial. However, that agility must have a secure, auditable paper (electronic) trail behind it. The ability to set-up new partnerships either between business or with Government agencies overnight has come to the fore. The Pan European Purchasing and Procurement On-line (PEPPOL) is a relatively new standard version of the EDI, which has been around for more than 20 years. What has changed is the onboarding capabilities of partners from an average of 4 weeks down to hours and the visibility and security of transactions across supply Networks. Coliance and IBM have some of the best capabilities and expertise in this space.

Q: If you were an investor, where would you be putting your money right now, in terms of supply chain technologies?

A: Marcus Langford, Managing Director, Coliance

As an investor, I would be looking for technologies that were going to give returns in the medium to long term. There is trade-off between time and cost to implement a solution and the benefits that will accrue in the life of the solution. Given these factors I would boil it down to a single capability, agility – The agility to forecast and react.

Intelligent Inventory insight provides that capability. In any supply chain, your ability to minimise your holdings, reduce wastage and react fastest to shocks in the system has never been more important. Modern inventory systems combine feeds from your key supply systems such as Order, Transport and Warehouse management systems and combine this with Artificial intelligence to provide predictions and analysis in real-time. Organisations that have known not just what is in their distribution centres, but also what is held in their stores and concessions and then combined that information with transportation costs and replenishment information are the ones who have shown an agility in the current climate which will probably be the difference between survival and extinction.

Q: As the shopping landscape changes with a move to more e-com shopping; do you have a perspective on how Supply Chains might adjust to this? One option would be to consider B2C rather than B2B for, this is fairly straightforward if the item value is high enough to still make margin when accounting for the delivery costs. For items with a lower value whereby delivery costs would outweigh margin, do you think there is an opportunity for a collaboration solution in the industry? For example, a B2C fulfilment operation whereby the lead is taken by a Logistics company rather than an e-com retailer?

A: David A Hogg, Sterling Supply ChainSales Leader, Europe at IBM

This is a question we often hear from consumer packaged goods companies and brand owners who are seeking to take advantage of the digital shopping world we all live in. This Direct to Consumer or Direct to Market mission is often a new sales channel for CPG industry and the key question for low margin products is how to meet the customer expectation and deliver product to home profitably. One option to consider is teaming with a 3rd party logistics provider to share resources to lower the order fulfilment costs. The good news is that IBM has already partnered with many 3rd party logistics providers – 4 in Europe up to now –  who provide a combination of physical and digital aspects of buy online deliver to home opening up this new sales channel. This same platform manages other omni-channel use cases such as returns and click & collect etc. An interesting way of achieving a profitable direct to consumer B2C offer.

Q: Given the massive human impact of the pandemic, how should this be factored into future resilience  and sustainability considerations?

A: Roger Needham, Senior Supply Chain Consultant
IBM Sterling Solutions, IBM Europe

A primary consideration for businesses across virtually every sector will be how to organise within-shift processes and across-shift handovers. PPE has always been a key factor over recent years and now the supply chain for this critical product will also be brought into sharp focus. A topic on the news most evenings. For those organisations that rely on contact with the public for their on going trade, these considerations will be brought into an even sharper focus.

I see resilience being a major influence on supply chains across all sectors – not at the expense of sustainability in the longer term, but there could indeed be a risk that sustainability in the shorter term takes a back seat as businesses adapt to the ‘new normal’.

Q: in the aftermath of the crisis, if businesses are willing to pay a premium to future-proof their supply chains – how much of this resilience is also likely to be sustainable – can companies leverage technology to find a balance?

A: Roger Needham, Senior Supply Chain Consultant
IBM Sterling Solutions, IBM Europe

Technology can certainly help organisations to find a new balance of resilience and sustainability. Thankfully recent years have seen the wider spread application of Artificial / Augmented Intelligence which has increased the speed by which companies can strategize key supply chain trade-offs. Clearly the meaning of resilience will need detailed definition by supply chain type, but in the longer term such multi-faceted and at times conflicting business requirements will be incorporated in to supply chain planning offerings.

Q: As the organisations are bracing for a long recession, do you think sustainability focus will take a back seat or they will be front and centre of organisation strategy?

A: David A Hogg, Sterling Supply ChainSales Leader, Europe at IBM

I believe sustainability will come back into focus as we move through the recovery period to the next normal. As we all know ethical trading, sustainability and reusability were hot topics as we entered 2020 and do remain in the consciousness of the consumer. We can see a two-step journey. Step 1) Recovery mode, bringing business back to life and taking tactical manoeuvres to unlock inventory and get revenue flowing. This could also include marketing and promotion activity to push product that is time sensitive such as in season fashion items. This will require strong inventory visibility and enabling contactless commerce and flexible fulfilment options such as kerbside pick up and deliver to home. Step 2) As the various industry segments settle into their new normal, we see the formulation of supply chain strategies that will in turn drive investment in resilient and agile supply chains. A couple of clear examples of this are a) Full omni channel platforms to best manage flow of outbound goods and b) End to end multi-tier supply chain control towers designed to give unprecedented visibility and insights to mitigate supply chain interruptions or delays for whatever reason.

Q: What do you see as the biggest risk to organisations? The time to re-establish those second and third tier links or the reduction in global shipping/airline and logistics capacity?

A: Roger Needham, Senior Supply Chain Consultant
IBM Sterling Solutions, IBM Europe

Much will depend on the nature of the organisation operational model. For manufacturers their ability to even begin a restart of production operations, will depend on the extent to which critical components originating in Tier 2/3 suppliers are ‘at risk’, due to the ongoing viability of these often smaller but vital suppliers. Will the supplier have survived the lockdown? If so, will national government policies allow them to reopen at the same time as the OEM? If the supplier has struggled financially, what options exist to help their cashflow position in the short-medium term.

The reduction in logistics capacity generally and/or the extent to which transport assets are ‘out of rotation’, and/or inadequately staffed, will be the focus of logistics teams. Larger organisations will no doubt have multiple teams focusing simultaneously on supplier risk and logistics / transport challenges. The two are more likely to go hand in hand, as the end to end supply chain will struggle to function adequately by diverting attention to one challenge versus the other.

Q: As industry restarts, do you think there will be a drive towards moving more tier 2 and tier 3 supplier relationships closer to home, if so how do you see this impacting profitability and sustainability?

A: Roger Needham, Senior Supply Chain Consultant
IBM Sterling Solutions, IBM Europe

Yes I do – But I would suggest this should only happen after full business impact considerations which may vary across business sectors. Many recent supply chain challenges have thrown the subject into focus in light of the notable move to offshore some 15-20 years ago. Whilst this move was initially prompted by unit cost of purchasing products, recent trends have become ever more focused on ‘total landed cost’ providing a more realistic insight to the true business cost of a global supply chain.

Recent events will undoubtedly prompt more organisations globally to better evaluate not only the direct monetary cost on the P&L, but also to understand the longer term service implications which if not fully understood, could lead to customer confidence ebbing away, if accurate ‘available to promise’ and ‘on time in full’ commitments cannot be met.

As with most issues across complex supply chains, there is no one silver bullet, but I am certain that technological, AI and IoT solutions will enable organisations to assess these complex trade offs more quickly and accurately.

Missed the livestream?

If you missed out, don’t worry! You can now access the full webinar recording and the presentation slides online by clicking HERE.

Coliance solutions…

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