Stressed firms look for better ways to source products
Maxime Firth’s business is complicated to manage, even in favorable times.
His company, Onduline, transforms recycled fibers into roofing materials, after having sprinkled them with bitumen to make them waterproof and sells products in 100 countries.
Its eight production plants extend from Nizhny Novgorod in Russia and Penang in Malaysia to Juiz de Fora in Brazil.
To further complicate its supply chain, Firth’s business is highly seasonal. People install roofs in the summer, so the products are made from January to March, to be sold from April to September.
The big question for him is how much demand there will be from major markets like China and the United States.
“Instead of producing something you’re forced to sell, it’s better to know what the market wants to buy,” he says.
The impact of the coronavirus makes it difficult for business people like him to make the right decisions.
To manage demand, Firth’s company worked with “home-made” IT tools primarily based on Excel spreadsheets.
But he is now using Internet-accessible software (also known as cloud-based) that can shape his situation every week.
It allows the company to use the latest data to explore how demand could start returning to different markets.
“In terms of profitability, and also of production, it changes every week,” he says.
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Coronavirus “puts the spotlight on supply chain planning,” says Frank Calderoni, chief executive officer of Anaplan, whose software Onduline has used.
Some companies have seen sales dry up: such as Mr. Firth, which he says are down 70%.
But the demand for some goods has skyrocketed, including groceries, books, coffee and children’s toys.
The chaos in the supply chain could last at least another 18 months, and probably longer, says Len Pannett, president of the British round table of the Council of Supply Chain Management Professionals.
Companies looking to get back to work may find that their overseas suppliers are still in the block.
The more information available on each company in the chain, the better.
“By being in touch with a client’s customer, you can see what’s coming upfront” and start finding alternative suppliers if necessary, says Pannett.
Most companies monitored supply chains, finance and sales with different tools.
Combining these silos into a single cloud platform allows financial teams to peek into supply chains and sales and be more efficient with money, he says.
And with more margins than ever, companies will have to make better decisions.
More precise information in real time will help them do this and keep track of the effects of their decisions, according to Calderoni.
Supply chains were already dripping on the cloud and claims that coronavirus will accelerate this movement, with technologies such as blockchain and artificial intelligence (AI) becoming common.
For the Gulf state of Bahrain – an island – all of its fans, masks, medicines and 99.5% of the goods on its market arrive through its one port.
The outbreak forced the port to change its procedures, says Susan Hunter, who as head of APM terminals Bahrain is responsible for day-to-day management of the port of Khalifa Bin Salman.
The port had to quickly ensure that truck drivers applied for gate gates, performed security checks, and made online payments.
It also established a critical loading program to identify containers that carry medical supplies, to allow them to quickly go through customs and quickly put them to them.
Hunter would like to move all administration into a blockchain system. “There is no resistance, just ‘How do we make it happen?'” He says.
“We are only a couple of steps away from being able to put many of our documents on a blockchain platform, we are seeing the industry change that way,” he says.
Blockchain tracks transactions in a ledger, stored on a number of computers connected in a peer-to-peer network.
This allows companies to share information on a container only once, but all users up and down the chain can see that information.
It allows “the right person to have the right information at the right time, in an authorized way,” says Richard Europe, blockchain executive of IBM Europe.
Blockchain has made progress in areas such as tracking food through a supply chain.
Walmart asked IBM to create a food tracking system based on blockchain technology.
As an experiment, Walmart’s CEO pulled out a package of mangoes, figured they were toxic, and asked how long it would take to find out where the other mangoes came from and where the other mangoes were on that expedition.
Manually, it took six and a half days to find the answer. But using the blockchain “we reduced it to about two seconds,” says Stockley.
The biggest challenge in introducing blockchain into supply chains is getting multiple organizations to collaborate.
“Blockchain is a team sport,” he jokes.
But Stockley says blockchain can make supply chains “much more resistant, more transparent and proactive” and will get much more attention as we emerge from the coronavirus.
Amazon has forever changed the speed with which we anticipate the arrival of products and the visibility of their movements on the road, says Adam Compain, CEO of ClearMetal, based in San Francisco, an AI supply chain startup.
But outside of Jeff Bezos’ company, the big corporate supply chains are still quite static.
Typically, every six months, a company will examine how long it takes products to move from China to a warehouse and on a store shelf, he says.
Getting the most up-to-date information means making sense of thousands of information every day about where the products are.
Much of this information can be poor or conflicting. For example, a delivery company might tell you twice that the same shipment has been delivered or is out of delivery.
But machine learning algorithms can detect patterns in this messy data. Maybe the same delivery company always sends two messages, but the first one is generally more accurate.
Artificial intelligence is now far better than humans to spot an ongoing storm that will delay your shipping container next week, says Pannett.
For thousands of companies like Firth’s in France, next year will be difficult.
“We now know until May that we are fine,” he says. After that, “we don’t know if customers will pay us.”
So every week his company, like many others, will make high-level decisions using a combination of luck and the best tools that technology can offer.