Focusing on long, efficient supply chains is no longer worthwhile. It’s time to rethink logistics to make it leaner and more resilient, combining smart inventory management and digitalization.
Giorgia Pacino interviewed Industry Manager Food & Beverage Emanuele Bottaro in issue no 6/2020 of Sistemi&Impresa.
The effort expended over the years to build efficient production networks has left little room for the ability to react to the unexpected. Manufacturers worldwide have concentrated on designing increasingly complex and long networks, which have, however, proved to be more fragile and more vulnerable to external impacts. Even before the covid-19 pandemic, other events were contributing to increasing the uncertainty of global supply chains, and the risk of a supply chain that had a hub with no alternatives in the Far East had long been recognized. Businesses were already struggling with increasing losses due to periodic interruptions of production chains. Costs that today can no longer be called “unpredictable.”
According to research conducted by McKinsey, on average, every 3.7 years, closures occur, for various reasons, that last at least a month or more. Over a decade, in certain sectors, companies can assume to deal with unexpected events that wipe out most of the gains made in at least one year. In certain sectors, such as textiles or information technology, production is three times more concentrated from a geographical point of view than 20 years ago. Eighty percent of global trade flows through nations the World Bank ranks increasingly lower as to political stability. The world and its economy have grown in an interconnected way: an event that disrupts a single region can now alarm the production and logistics chains of half the world.
End-to-end simulations and information sharing
Companies are now called upon to envision models of de-globalization: more than two-thirds of Italian companies have encountered blockages or difficulties in supply and are now aiming to differentiate their supplier base while reducing the managerial risk of these aspects of management. The computerization of processes must also be reviewed. “In terms of digitization, we will no longer talk about linear supply chains, but rather about a Digital Supply Network, a new way to manage collaboration among several players to improve productivity and efficiency,” points out Emanuele Bottaro, Industry Manager Food & Beverage of Atomos Hyla, a company in the sedApta Group, specialized in consulting services and technological solutions for manufacturing companies, focused particularly on the Discrete Manufacturing, Fashion & Luxury, and Food & Beverage sectors.
The latter is one of the sectors that, more than others, has experienced the change. Rationalizing the network, shortening the supply chain, and optimizing distribution performance, also means taking into account new purchasing methods: the preference for weekly rather than daily shopping or the tendency to stockpile in the pantry, that has become more common during the lockdown, are forcing Food companies to rethink their organization, optimizing storage and customer service and reshaping purchases and supplies. “The Food sector remembers well that, already in 2019, the actions taken by the US with the tariff policy had led to fibrillation and uncertainty, shortening the visibility on the traditional market and increasingly prompting companies to acquire tools capable of consolidating short production periods and deciding swiftly.“
Whereas the traditional supply chain has so far relied on individual application modules for these processes, after the advent of the pandemic, it has become even more urgent to have a clear control and output on the entire supply chain. “It is the concept of a simulative control tower, a tool that completely embraces the supply chain not only at the level of indicators, but also allowing to intervene on simulations,” explains Bottaro. By varying, for example, the sales forecast and modifying the stocks in the distribution warehouses or the level of customer service, it is possible to calculate the impact on production and purchasing capacities and assess the availability of suppliers, plants, and people. “This makes it possible to obtain an initial output on the feasibility of the changes and then delegate the implementation to the various department managers.”
Alongside simulation and control, the collaboration between the various process actors is fundamental. Often, in fact, it is not so much the execution of the single task that takes a long time, but the more the gap between the end of one process and the beginning of the next. “It is no longer the function itself that needs to be optimized, but the communication among the functions,” says the Industry Manager. “It is necessary to orchestrate the critical processes, to be able to visualize at all times at what point they are, who is responsible for them and when it will be the next player’s turn. Those who acquire end-to-end simulation tools, from sales forecasts to production, to transform the company into a digital twin to be kept under control will benefit”.
Industry Manager Food & Beverage