DHL, Etsy, Alibaba and Tradeshift on supply chain resilience
Communication, visibility and data are critical to supply chain survival say the experts
In this era when your whole supply chain can be flipped on its head in an instant, communication flexibility, planning, visibility and data gathering are going to be critical weapons to fight back said experts from DHL, Etsy, Alibaba and Tradeshift as part of an eyefortransport by Reuters Events webinar.
Companies who are able to look at their supply chains holistically, build in redundancies and understand what the customer needs most are going to be best placed to come out of this crisis in a position to thrive.
All participants were quick to emphasise that communication is a vital lifeline for customers in these time and that they were crying out for information and reassurance on the state of their supply chains and deliveries.
We quickly realised how crucial communication is to our customers at the moment
DHL’s German arm have been engaging in large scale outreach says Markus Reckling, Managing Director for Germany. Initially they were nervous about taking this measure, as they wondered “Don’t they have other problems? Do they really want to talk to us?” saidReckling “But I think the supply chain and transportation and its resilience is on the top of everyone’s minds.
“We quickly realised how crucial communication is to our customers at the moment. What we started out doing is we very quickly created training sessions for what you need to do differently on the phone. We created conversation cards and topics of the week that we were talking to customers about, be it about e-commerce, be it about the COVID crisis itself or a ton of other topics. Two weeks ago we did what we call a ‘sales blitz’. So, the entire sales force was on the phone the whole day. We did a total of, I think, close to 6,000 calls in one day and for us that was a great temperature check for how much the customers appreciate us talking to them.”
Another company finding value from large-scale outreach at this time is Alibaba. “We require all of our employees to talk to customers for several hours per month and bring back what they are learning from them,” said Jamin Dick, Head of North America Supply Chain, Alibaba.
These kind of efforts are driving real value for these businesses in understanding first-hand where the biggest issues lie but also in how customers see them in this crisis and beyond. Reckling noted how engagement had gone sky high, with better open rates and an increase in their customer experience scores.
For Roy Anderson, Chief Procurement and Digital Transformation Officer for Tradeshift the “Kind of transparency" being built through this crisis "is going to radically change the way communication is done up and down the supply chain and I think will allow us to create something that is now being called an ‘anti-fragile supply chain’: A supply chain that has real time data that can manipulate the flows, find new pathways, be able to find more opportunity.”
Flexibility in planning and approach
Becoming anti-fragile and finding those new pathways is about creativity, flexibility and forward planning.
This kind of approach is based on transparency across the entire supply chain, stretching out not just to the end-customer but upstream to “Feedback chains that allow suppliers to be able to make real-time decisions on how they want to produce product, the types of suppliers that are available [to make] product and therefore making those supply chains dynamic and flexible,” says Anderson.
The examples of those that fail to introduce flexibility of approach and into their upstream are myriad currently. Anderson gives the example of farm production, where “These farmers that produced for a supply chain to go to restaurants, that supply chain was so rigid that they had no ability to move it. They had to dump the product – the milk, the vegetables – rather than try to change their supply chain to be able to sell directly to homes.
“I think the idea of trying to drive to that last penny, to get every possible squeeze out of the process, has held us open to such a rigid supply chain that we cause these huge delays,” believes Anderson.
Reducing rigidity is about having a degree of decentralisation and redundancy through forward planning.
Do you really want to be negotiating a bunch of new contracts in the middle of a crisis? Probably not
“There are two things people need to take away from this,” points out Dick. “One is monitoring the market. It’s been a learning experience for many people to understand how important it is to see ahead in the freight markets and there’s more opportunity to do that now than ever.”
“Secondly, is having a plan B. A pretty big takeaway from this what happens when your existing supply chain doesn’t work the way it is supposed to and do you really want to be negotiating a bunch of new contracts in the middle of a crisis? Probably not. Knowing what is out there and learning how to shift your business into something new is a very, very important lesson.”
Indeed, concentrated supply chains are a major vulnerability that have been exposed in the crisis. For Etsy, “We are a highly dispersed marketplace and that has actually served us extremely well during this situation because most of our sellers are working from home, so we don’t have concentrated vocations, where people have to go into a place of business,” noted the company’s Global Head of Shipping, Roman Sobieri. “That gives us a great ability to continue offering the products.”
Anderson agreed that “If we can produce a better product by design, so that the material and/or end product is close to the consumer – localisation of manufacture – we could significantly reduce” the vulnerability as well as “the amount of carbon that is being produced along the way.”
Visibility, tracking and cross-border complexity
However, reaching out to suppliers across geographies creates its own issues that need to be managed, principally through creating better visibility.
On the cross-border side, knowing your customer becomes a real challenge
“On the cross-border side, knowing your customer becomes a real challenge,” emphasised Jamin. “It is very important that you understand identity, that you’re able to trust the payments, that shipment visibility is happening, that clearance is happening well, that damaged goods become a bigger issue.” Furthermore, “The trade war that we are in is creating complexity at the border.”
This means businesses need to be prepared and understand “Who owns the goods at each stage of the process? When do the risks transfer to me? What regulations do I need to face?” warns Dick. “I would be loathe to say ‘get into e-commerce and digitise everything and everything will go well’. You do have to be smart and you do have to be educated to how this business will operate differently to what you have been running.”
Indeed, the “biggest mistake that I see is businesses investing into supply chain visibility but only going to the 10-yard line," warns Dick. "The problem there is that you are chasing all the benefits of supply chain visibility without getting the benefits from it and paying the price of doing that through integration and technology. It’s a half measure if you haven’t got partners that are also digital and able to transfer the information that you want. With customers expecting full visibility, reliable transportation, I think it is important to understand what it takes to provide an end-to-end visible solution for your end customers.”
Anderson also sounded a warning for those working in complex e-commerce operations: “They [businesses] think that this is a front-end, consumer e-commerce scenario and that is of course incredibly important to make it as easy as possible for the end customer to be able to find, order and process that activity. However, what I’ve seen in the past is that behind that e-commerce scene is if they are building up a manual, paper-based process to try to make their supply chain work, they are heading into a world of hurt as things try to scale.
Data is probably the new gold
“I think the failing is that it is a front-end issue or a last mile issue, when in actuality it is important that we understand from the very beginning of this process, come in with a sustainability point of view, have data-driven decisions and then create that digital footprint so that we can track and scale more effectively.”
Data is the lynchpin of the resilient supply chain
All of the participants were keen to emphasise that data is the lynchpin of all of the above. “Data is probably the new gold,” said Reckling.
This value has risen over recent years, as other operators have shown what the possibilities are. “They [the consumers] aren’t going to compare your parcel delivery to how difficult it is to get something over,” said Sobieri. “They’re going to compare it to Uber and say ‘Hey, if I can watch the Uber driver coming down the street to pick me up, why can’t I see my parcel moving down the street so I know exactly where it is.’
The loss of data or the lack of data is actually forcing people to make wrong decisions on wrong data points. We’ve got to improve that along the entire structure
“Those are the kind of data problems we have to get better at and simplify for the consumer. They don’t care how you do it. They just care that they’ve seen it happen in another industry, so why can’t we do it here?”
“We need better understanding of the data from the beginning to the end,” said Anderson “and then to be able to connect those data points and then look at it more holistically.”
Anderson thinks that “the loss of data or the lack of data is actually forcing people to make wrong decisions on wrong data points. We’ve got to improve that along the entire structure.”
The advance of technology is now meeting a wave of demand, which “Is going to accelerate the rate of change for people to adopt digital technologies and be more data-driven and less face-to-face,” forecasts Dick.
For him, “What I’m excited about right now is the proliferation of so many new options. There are some great companies out there who are digitising freight. They are making booking freight as easy as booking an airline ticket.
“I’m convinced that changes to digitisation of how we do business, digitising the supply chain, finding tools for trade finance that you didn’t know about, finding trade partners who can do business end-to-end electronically, I think those are the types of things that will stick from this and will help people, especially the most resilient businesses, to prosper.
In the end “I think creating a dynamic, living supply chain will be our legacy of this process,” says Anderson.
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