Supply chain trends result in diverse plans: ‘Just do it!’

From GenAI to digital twins and from cost control to sustainability: a variety of trends and developments were reviewed during Supply Chain Media’s Trend Dinner. However, those who blindly pursue all trends risk getting bogged down in divergent projects with a limited success rate. Therefore, the pitches by the eight supply chain experts revealed two important pieces of advice: first, investigate which trend has priority. And then, actually set to work with it.

By Marcel te Lindert

Rather than a trend, Argon & Co’s pitch is related to a theme that has always been and always will be important: managing costs and productivity. ‘In the current market, this is extra important because the picture is not so rosy,’ stresses Sven van der Putte of the consultancy firm. He points to the Purchasing Managers Index (PMI), which is relatively low at both Dutch and European level. As a cause, he cites the shortage of new orders, especially from abroad. ‘In addition, we see the purchasing inflation increasing due to the rising cost of materials, wages and transport, while inflation on the sales side is falling. As a result, margins are under pressure.’

At the same time, companies face trends that call for investment, such as artificial intelligence (AI) and sustainability. ‘Companies have to keep working on cost control and productivity improvements, to keep margins intact on the one hand and free up money for all these new investments on the other,’ Van der Putte states. ‘So there is a lot on companies’ plates at once. With the risk that they want to tackle everything simultaneously and start big transformation projects, which often turn out not to be so successful in practice. Therefore, analyse your data first to be able to set the right priorities afterwards.’

Focus on end-to-end planning and automation

One sector that seems to be struggling is consumer products. Cazijn Langeler of consultancy IG&H (pictured) likewise refers to inflation, but also mentions disruptions in supply chains and geopolitical instability. ‘Despite this, the largest European companies in this sector all score a profit margin of around 15%. But if you dive deeper into the figures, you see that their stock turnover ratios are down. In other words, they have to hold larger inventories than before. In doing so, they create extra resilience,’ says Langeler, indicating that the future agenda is also determined by the intention to increase resilience. Alongside sustainability and AI, this includes a trend such as end-to-end planning, which enables companies to react quickly to disruptions. Another trend is automation to cut costs. ‘Not only automation of processes in the factories, but also outside them.’

Remira’s pitch is focused mainly on the problems in the food sector. On average, companies in this sector face one new law or rule every day, which Juul Aben of the German software vendor says is indicative of excessive legislation. ‘Take a poultry company that processes 40 million birds a year, mostly from its own farms. How is that company supposed to meet demand if the government suddenly sets another cap on the number of chickens that can be kept? The question these kinds of companies need to ask themselves is whether they will still be a production company in 10 years’ time, or will they have become a trading company. This requires them to define different scenarios and coordinate with suppliers and other partners early on. And that calls for smarter IT systems, a different approach to business-critical data and new ways of collaborating in the supply chain.’

Anti-fragility and sustainability

Uber Freight zooms in on the concept of anti-fragility, which means that companies actually emerge stronger when they brace themselves against inflation, geopolitical conflicts and supply chain disruptions. One of the solutions that contribute to this is engaging a 4PL like Uber Freight itself: a logistics partner that oversees and manages the entire chain. ‘We see a broad rise in fully-fledged 4PL services in the market. The concept of 4PL may not be new, but what is new is its wide use by companies to bring together all the trends of our time,’ says Guy Roijen of Uber Freight.

As mentioned, sustainability is one such trend, although Jan Pronk of BigMile wonders whether it can still be called a trend. ‘We will have to address sustainability one way or another, because of all the laws and regulations. Eventually, CO₂ will become a currency, and therefore part of the business case. Set to work on it and map your CO₂ footprint. And do so according to current standards and norms so that your CO₂ reporting can easily be audited by an accountant,’ Pronk advises the supply chain professionals who are present. ‘You are all steering this. Set it in motion and include all your stakeholders and suppliers.’

Digital twins and GenAI

Technology is a tool for adequately responding to all developments in the supply chain. In that context, NTT Data makes a case for digital twins. ‘A supply chain digital twin is a virtual representation of your entire supply chain, based on real-time data. It is nothing but a digital copy of your supply chain. With it, you can analyse scenarios and resolve issues at the strategic, tactical and operational level. And because a digital twin is fed with a single dataset, there are no more discussions about the accuracy and reliability of that data,’ states NTT Data’s Menno Rustenburg. ‘It’s true that setting up a digital twin is quite a lot of work, but don’t let that put you off. The possibilities are endless.’

Another promising technology is AI, especially generative AI (GenAI). Bas Groothedde of Involvation is convinced that we are on the eve of the biggest technological breakthrough we are ever going to see. ‘Soon we’ll all have someone on our shoulder with an IQ of 170 or 180 who has read every book in the world and has their content instantly available to you,’ Groothedde says, indicating that his team will be monitoring all technologies including GenAI and digital twins. Involvation is gathering them together in a Technology Monitor that will become freely available to everyone later this year. ‘Think of it as a kind of Wikipedia for everyone in the supply chain.’

‘Just do it’

The only thing companies have to do is to choose which trends and technologies are relevant to them and actually start using them. For those companies, Jan Kraaijeveld of Slimstock has some good advice: ‘I have contact with many companies that talk about all kinds of plans. They want to implement Sales & Operations Planning or improve their forecast. They are all good plans, but in practice they often don’t get off the ground, for whatever reason. So my advice is: just do it. Just make a start.’