Delivery van driving through urban area

To prepare is to prevail

Written by Susana da Costa
07/07/2021

Last year's unexpected disruption of the Global Supply Chain came with a high impact and at a fast pace, leaving organisations with an obvious question: How to build a supply chain strategy that allows a streamlined and agile organisation that can cope with ever-changing circumstances?

Business conditions have significantly changed since the pandemic broke out in early 2020. Many companies have made progress in adapting their ways of working to the new situation, however making changes to supply chains has not come so easily nor cheaply. In many cases, companies put their primary focus on temporary solutions. Recent business continuity studies found that only 12% of the organisations were prepared for the COVID-19 impact, showing that there is still a lot to be done across the industries.

Buying where it is cheapest and keeping inventory low has been a common strategy, but this can contradict flexible and reliable deliveries. Today many companies acknowledge that they need to consider long term resilience of the business in the face of various potential disruptions.

Throughout this challenging period, AFRY has been supporting its clients to understand where, when and how supply chain issues start impacting financial performance. Our expertise allows us to build a resilient organisation and solutions that are sustainable e.g. assessing disruption risks, critical components and identification of alternatives, optimising production and capacities given the new reality, identifying and managing the risks and focusing the organisation on managing for cash. 

Recent initiatives supply chain management
Significant savings can be realised through operational improvements, which in average translates to 10% improvement of supply chain costs

We have been advising our customers in vital areas to optimise the efforts and overcome the pandemic impacts:

Building operational excellence within the supply chain

  • Reconsidering the operational model and reshaping the operations to evolve into resilient and agile supply chain operation
  • Redesigning and optimising the internal supply chain processes to minimise waste and unnecessary spending along the chain to preserve cash for future growth initiatives.
  • Supporting the changes required in the supply chain towards a more regional network while global networks are still heavily disrupted.
  • Rationalise product portfolios by defining critical products for stabilisation and grow while optimising working capital needs for operations. Understanding the impact of demand interruptions, optimising the production planning and building competences and tools to manage inventories at a healthy working capital level has proven to be key for our customers to improve supply chain efficiency and create value.

Rethinking the digital strategy

  • The need for remote work and the fast paced unpredictable changes, transformed data availability and advanced analytical competences and capabilities into a competitive differentiator and a critical factor for organisations.
  • Improving the digitalisation level and knowledge within the supply chain has been a powerful enabler to help our customers to think faster, more creatively and with purpose about how to better support customers, suppliers and logistics networks affected by the pandemic

Developing formal risk management strategy and procedures

  • Managing and mitigating supply uncertainty with suppliers of all sizes, providing industry expertise to look for alternative sources when preferential suppliers are in severely affected areas or supporting them in identifying alternative materials
  • Within the risk management development, assessment of the fragilities of the manufacturing eco-systems - the implications of COVID in terms of contract provisions for each critical ecosystem stakeholder, including material suppliers, contractor companies, co-manufacturers and logistics providers has been a powerful tool for our customers.
  • Evaluation of supply chain scenarios - running simulations to predict when and where excesses and shortages are likely to occur as well as running end-to-end scenarios to get actionable insights that will optimise operational metrics.

Together with our customers, our experts have assessed the situation and challenged current ways of working throughout these challenging times. AFRY’s deep industry expertise and strong process insights into supply chain have proven to be key to turn a difficult situation into an opportunity to evolve into a new and more resilient organisation.

Graphical display of facts and statistics
Operational services reference case
The Client is a panel mill producer in Central Europe. Performance of the supply chain management wasn’t clear enough and thus internal & external benchmarking was required. Customer service related costs and how they impact product and customer profitability were not clear. The total savings of 3.5 M€ were identified.

Contact

Susana da Costa

Principal

Pär Ström

Business Unit Manager, Supply Chain Management