David Hickey, Senior Director, EMEA, was featured in a recent article in The Procurement magazine, a global publication serving executives within the dynamic industry of procurement, particularly focusing on challenges facing today’s corporate world. Titled, “Supply Chain and Logistics”, the article takes an in-depth look at what procurement executives face when establishing and managing a logistics network in Europe.
The full article is below.
Supply Chain and Logistics in Europe
By: David Hickey
Supply Chain and Logistics are becoming one of the top elements of managing business operations at the corporate level. Executives are seeking new ways and innovative processes to enable their companies to run effectively and efficiently in a global market. Over the last decade, supply chain solutions have been quickly becoming outdated, and new tools and methodologies are emerging in the digital age. These trends are empowering global leaders to discover and develop new ways to manage the movements of their products and services around the globe. Supply chain and logistics are increasingly becoming an art and a science that is continuously evolving and expanding.
Global businesses make location decisions on a daily basis, whether it be expansion, consolidation, retention, or even all of the above.
When determining where the best location will be for their operations, logistics and supply chain strategy become a very critical factor in the decision-making process. Companies want to make certain that the site is effective in meeting the demands of their customers and to efficiently source goods from suppliers, all while ensuring transportation costs are kept at a minimum. In addition, companies takes
into account the future by forecasting customer demand, supply routes and trends, energy costs, and other shipping, commodity and transportation – related expenditures.
Why are Supply Chain and Logistics so Important?
Technological and communication advancements have created the need for goods and services to be transferred and moved across continents, which have made effective Supply Chain and Logistics strategies a global necessity. Supply chain and logistics are affected by many factors in the business world today, including the rapid growth of multinational corporations and strategic partnerships, global expansion and sourcing, and the swift development of technology. Each of these trends has dramatically effected corporate strategy and the bottom line of most multinational corporations. Due to these emerging trends, supply chain and logistics have become the most critical business area to many companies around the world today.
To any global corporation, the impact that supply chain has is significant and exponential. Strong supply chain teams could help organizations streamline everything from day-to-day product flows to unexpected natural disasters.
Moreover, effective operations impact customer service by making sure the right product assortment and quantity are delivered in a timely fashion. Additionally, those products must be available in the location that customers expect. Supply chain managers also help firms decrease the use of large fixed assets such as plants, warehouses and transportation vehicles in the supply chain.
Governments around the world are also focusing their efforts on establishing strong Supply Chain and Logistics networks in which attracts many global investors.
Governments are establishing ports and airports, and ensuring the existence of strong infrastructure that enables companies to transport goods across different continents. Furthermore, governments are establishing strategic partnerships and alliances to ease the tariffs and fee charges at the borders between countries. They continue to invest in roads, bridges, railway systems, harbors & ports, and airports to expand their value-add and ensure their countries are ready to receive multinational corporations into its soil.
Supply Chain and Logistics in Europe
Supply Chain and Logistics have global processes and procedures that apply in every part of the world. However, there are differences between regions and certain challenges and unique risks.
In a recent Gartner study, several of the top European supply chain organizations shared similar traits and features. Some of the traits are operating on a global scale, while still being able to respond to local markets, multiple models through segmentation, collaboration, digital experimentation, boast a culture of excellence and change, sustainability and invest in talent and technology. These organizations have created and identified common practice from their operations in Europe and discovered how to mitigate risk in their supply chain management.
Supply Chain Challenges Facing European Companies
Today, European companies are faced with several challenges in their Supply Chain and Logistics operations.
One of the on-going challenges that face European companies is the lack of information and the data that enables them to improve their processes and procedures.
As a result, many companies are resorting to creating their own analyses and studies to come up with the best structure for their organization. Many European companies have to deal with thousands of suppliers and products on a regular basis. The lack of data makes it extremely challenging for companies to maintain a strong network of suppliers. Moreover, it makes the procurement of products, many of which have hundreds of components, very challenging.
A second challenge that European companies face in their supply chain operations is finding the best ways to mitigate risks in their supply chain network.
As companies increase their network of suppliers, they might find one or two firms down the chain that may present substantial reputational risk. Certain companies have identified alternative strategies, while many companies are left unsure of the correct action to mitigate such risks. Therefore, firms that can develop clear and consistent policies for applying these various approaches are likely to reap substantial rewards. When a problem arises, firms that have taken coherent action will have the best ability to react and rebound.
Lastly, another challenge that European countries are facing in their Supply Chain and Logistics network is infrastructure. A recent research by the European Commission (EC) has indicated that 30% of road freight transport over 300 km should shift to another mode of transportation such as rail or water by 2030. The EC recommended an additional 20% change by 2050. The recommendation is coming as a result of infrastructural changes across many European countries.
Moreover, many European countries are also moving toward more fuel efficient ways of transportation, and they continue to experiment with green and renewable energy.
In conclusion, Supply Chain and Logistics managers should keep close attention to changes in the procurement world. New trends are coming to surface on a daily basis and significantly changing the rules of the game for multinational corporations. As processes and methodologies evolve, procurement executives must adjust their strategies and operations, accordingly. Particularly, European companies should be at the forefront of innovation and development in order to compete on the global market. Discovering solutions and strategies to face existing challenges will greatly benefit the companies in the near term, as well as, to pave a path for future growth.