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Creating resilient supply chains

Published on June 7, 2024

Creating resilient supply chains: A value-driven blueprint for fortifying futures

Phil Davies, Jörg Junghanns, Richard van Schip, Haresh Panjavani, Pablo Aldonza Rubio, Henrik Bathke, John Hancock
Jun 6, 2024
capgemini-invent

A Joint Point-of-View from Capgemini and Kuehne + Nagel

In the last twenty years, supply chains have experienced tremendous growth and sizable challenges across the globe. Most, if not all organizations have been impacted by disruptions, including pandemics, geopolitical events, natural disasters, human error, and a combination of these causes. Finding levers for resilience has become paramount.

While supply chain disruptions occur in every industry, some are hit harder than others. Since the COVID-19 pandemic hit in 2020, organizations have become cautious and started taking a systematic approach to mitigating supply chain risks.

1 Creating resilient supply chains

Disruptions in key geographies continue to contribute to sourcing and logistical uncertainties, blocking the movement of goods. Kuehne + Nagel (KN) faced one such event when their key client, a global pharmaceutical company, was hit due to Ever Given ship that got stuck in Suez Canal. After working round the clock with mitigation plans and other alternatives the shipments were delivered on time without compromising on quality. However, this experience was eye-opening for one of the leaders.

“It’s important to embrace resilience to maintain higher levels of customer service. The combination of right people with right mindset and up-to- date technology makes the difference. The future is unforeseen, and most we can do is face it better.”

Ms. Himani Rawat, Logistics Process Owner, KN

The fifth dimension

For several years, supply chain leaders have been balancing three dimensions: cost, cash, and service. It has been difficult to manage the trade-offs among these three. Now, however, two additional parameters have gained significant prominence in recent times: resilience and sustainability.

3 Creating resilient supply chains

Many of the decisions across supply chains, including planning, procurement, manufacturing, and distribution require evaluation from all five dimensions. For example, the decision on ‘how much inventory to store across the distribution center’ needs to be evaluated considering ‘how much will it cost,’ whether it will be sufficient to service the demand (including enough resilience to meet unforeseen surges or declines),’ and ‘how much working capital (cash) will get blocked.’ Moreover, there are also sustainability issues, such as ‘how much carbon is emitted during transport.’

Levers of supply chain resilience

Resilience is the capability to anticipate potential threats, resist adverse impacts, adapt to changing circumstances, recover effectively and efficiently from disruptions.

The resilience handbook

The four levers of supply chain resilience (visibility, collaboration, responsiveness, and agility) need to be enabled across the supply chain, from planning and sourcing to manufacturing and delivering. The decisions and actions across the supply chain are distributed among strategic, tactical and operational categories. The resilience can be enabled by augmenting the decision-making process at both a strategic and a tactical level. The following practical handbook can equip organizations with a comprehensive list of tools and methodologies to make their supply chain resilient.

4 Creating resilient supply chains FINAL
5 Creating resilient supply chains
Strategic and tactical actions to ensure resilience

Demand planning is usually a starting point, playing an essential role in establishing a resilient planning process. This tactical step in scenario planning (falling under the responsiveness lever) has been embraced by many organizations looking to improve the resilience of their supply chain initiatives. Inventory control towers are another way to enable real-time insights into inventory stock-outs and shortages, thereby taking care of visibility.

A consumer goods company in Europe wanted to optimize its material management by enhancing visibility and its strategic operating model design. Capgemini implemented a two-pronged solution: we designed a control tower to deliver one unified view and created an operating model with streamlined processes and structure. The benefits for the client were significant. Not only did the supply chain gain more resilience but it also optimized both inventory worth EUR 3 million and Full-Time Equivalent (FTE) upto 25% over the base.

Technology enablers

Technology plays a crucial role in making supply chains resilient. The primary task here is to ensure technology improving visibility, collaboration, responsiveness, and agility in one way or other.

2 Creating resilient supply chains

Advanced analytics can turn vast amounts of supply chain data into actionable insights. By analyzing patterns and trends and creating models, businesses can identify vulnerabilities, anticipate potential disruptions, and take proactive measures. A leading consumer goods company in North America wanted to optimize its supply chain network by consolidating its DC and manufacturing footprint, improving its make versus buy decision-making, and enhancing its service level. Capgemini conducted a network modelling study on the design and planning platform, Supply Chain Guru, and successfully identified the location of several DCs with an optimal network and a service level based on customer segmentation. This gave the company the opportunity to save up to EUR 1 million in DC and contract manufacturing consolidation. The company was also able to improve its service level by 9% within one day for priority customers. Moreover, sustainability gains were achieved, with an 8% reduction in carbon emissions, which thereby makes this a resilient network design.

Final thoughts: Trust alliances make stronger chains

Since the coronavirus pandemic hit every business across the globe, supply chain digitalization has become critically important for all companies. Many companies are investing in digital business systems that can cater to the transportation and warehousing sector as well. Visibility to shipments in transit and their accompanying data is among the most essential elements of supply chain resilience. For shippers, there is a variety of mature, real-time transportation visibility platforms available. Kuehne + Nagel provides one such platform: ControLOG. With this platform, shippers can identify relevant supply chain risks at a shipment level.

Today, resilient supply chains are making significant changes to their businesses, which are becoming more agile and responsive. Business leaders are adopting and investing in technology and proactively protecting themselves against any future disruptions. Strategic alliances have also become an important part of global strategies. Entering into an alliance and collaborating with supply chain partners can lead to newfound resilience. Capgemini is a global leader in digital transformation. Kuehne + Nagel is a global leader in logistics operations. Our strategic partnership brings unparalleled End-to-End (E2E) supply chain capability to the market, coupled with rapid reaction to disruptions.

With ever-changing market dynamics, supply chain disruptions, persistent challenges, and advanced technologies still prevalent, it is imperative to take a comprehensive, end-to-end view of resilience with the preferred sequence of initiatives that will improve visibility, collaboration, responsiveness, and agility.

References 

  1. Capgemini Research Institute (2023) Illuminating the path: Building resilient and efficient supply chains in the consumer products and retail industry 
  2. Capgemini Research Institute (2023) The resurgence of manufacturing – Reindustrialization strategies in Europe and the US 
  3. AWS Supply Chain (2024) Mitigate risks and lower costs with an ML-powered supply chain application 
  4. Información Logística (2017) ‘Technology that supports Zara’s Supply Chain’ 
  5. Inditex (2023) ‘Supply Chain – Management to transform the sector’ 
  6. DFreight (2023) ‘Unlocking success: Exploring Walmart supply chain strategies and impact on the retail industry’ 
  7. AWS (2024) ‘Leverage new tools like machine learning (ML) and artificial intelligence (AI) to reduce supply chain risks’ 
  8. Kuene + nagal (2024) ‘Step inside our world: Discover what motivates us’  
  9. Johnson & Johnson (2021) ‘How Johnson & Johnson’s innovative supply chain technology is helping transform how we work—and live’ 

Authors

Phil Davies

Head of Intelligent Industry, Capgemini Invent UK
The digital revolution is creating unprecedented challenges and opportunities for companies and they are having to invent new business models and ways of working in order to survive and prosper. Phil works with senior executives to leverage the digital opportunities and transform – customer experiences, operations or business models.

Jörg Junghanns

K+N Partnership Lead, Intelligent Supply Chain Operations, Capgemini’s Business Services
Jörg is Capgemini’s VP Europe for Intelligent Supply Chain Operations, driving transformative solutions across industries. He employs innovation and strategic thinking to empower supply chain growth, utilizing Capgemini’s Digital Services for planning, order management, procurement, and automation. With a global background, he excels in digital strategy, shared services, process design, and project management.

Richard van Schip

Head of Intelligent Industry & Sustainable Operations, Capgemini Invent
Seasoned Program, Project, Change and People Manager, combining strong project management and change management skills with a profound knowledge of supply chain management processes and information technology to improve the effectiveness and efficiency of business processes and organizations. 25 years’ work experience

Haresh Panjavani

Sr. Director and Head of Supply Chain Consulting, Capgemini Invent
Haresh Panjavani practices business consulting with experience in adding value to his clients’ businesses. He has worked across a range of industries, gaining the know-how of cross-industry functioning. His focus areas are supply chain, intelligent industry, sustainability, digital transformation, customer experience, operating model design, program management, and enterprise performance management. He has experience in account management, practice growth, offer development, and multi-country project roll-outs.

Pablo Aldonza Rubio

Head of Smart Plant & Supply Chain, Capgemini Invent
Msc Civil engineer with a postgraduate in BiM Project Management and currently coursing an Executive MBA. Efficient Global Management as a goal and challenges as motivation. In continuos study of new technologies and methodologies to improve processes and project management. Experience in the industrial and construction sectors, open to challenges that involve working in complex enviroment and to allow me to continue building a solid career in the field of management, process improvement and consultancy.

Henrik Bathke

Senior Consultant for Supply Chain Resilience, Capgemini Invent

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