The dual strategy supply chain managers use to counter disruption

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Supply chain managers are using automation and increased coordination to overcome disruption.

The strategies emerged during a United Nations Economic Commission for Europe roundtable to address the supply chain crisis, which included executives from DHL Freight, Henkel and Hewlett & Packard.

Tom Bartman, associate partner at management consultant McKinsey, who moderated the discussion, listed three challenges that companies face:

1. Labor Shortages

The main cause of the shortage is limited youth engagement, with employees retiring at a higher rate than younger employees entering the transport and logistics sector. “People just don’t see it as an interesting place to work and as a place where people feel like they can build a career,” Bartman said.

He said regulations restricted young people’s access to the profession, while women’s participation was limited. Bartman advised companies to create more attractive career propositions for women in order to achieve full participation of both genders.

2. Availability of equipment

Manufacturing and material shortages mean businesses can’t access the equipment they need.

Meanwhile, pressure to decarbonize fleets is forcing the adoption of new technologies and environmentally friendly operating processes. “It requires the adoption of new equipment at the same time that we have heard of shortages in manufacturing,” explained Bartman.

3. Critical Bottlenecks

Volume spikes at critical points ripple through the supply chain, exacerbating equipment shortages.

Bartman said, “What ends up happening is that equipment that’s already in short supply is being held up at these bottleneck points because it can’t flow through as efficiently as it should.”

In a video summarizing the discussion, Bartman explained that leaders are using a two-pronged strategy to address these challenges:

a) Automation

“What’s really interesting about this is that before the Covid-19 pandemic, the logic and rationale for automation was very financial, it was a business case with payback periods and returns on investment,” he said.

“Today, the case for automation is as much, if not more, about risk mitigation as it is about financial performance.”

b) Better coordination

Better coordination up and down the chain is made possible by more transparent data transmission.

“The objective here is really to provide more transparency to act before a challenge and to see further upstream and downstream of the supply chain allows each actor to make decisions in better coordination with the other actors of the chain. supply,” Bartman said.

The potential for governments to help mitigate disruption, boosting jobs by tackling perceptions and reducing regulations, was also discussed.

The leaders also discussed the importance of investing in roads, railways and ports. “They saw an opportunity to drive standardization, especially between countries and geographies in physical infrastructure,” Bartman said.

“So ensuring that there are established standards for equipment types and activities that enable greater interoperability across the global supply chain.”

Roundtable participants were: Uwe Brinks, CEO of DHL Freight; Dirk Holbach, Henkel’s supply chain director for laundry and homecare; Felix Klinkner, HP Supply Chain Operations Director for EMEA; Matthias Maedge, advocacy director for the International Road Transport Union; and Steven A. Altman, adjunct assistant professor at New York University (NYU) and director of the DHL Globalization Initiative for the Center for Future of Management at NYU Stern School of Business.

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