SUPPLY CHAIN MANAGEMENT
Supply chain
Supply chain actions planned v . implemented , 2020-1
did not – but it will happen at a much slower pace than most anticipate . China and India at minimum will remain important raw material sources ; they are too entrenched in our supply chains to be eliminated . Moreover , we also expect an evolution of supply chain design over time . For this reason , to be successful , our design must be flexible .
Forecasting ahead
The one thing guaranteed about forecasts is that some of them will be wrong . That said , there are some things that we definitely see evolving and they have been a big part of how we have evolved our strategy as an organisation :
• There will be more local supply .
• ‘ Friendshoring ’ and supply diversity will accelerate – with a focus on mitigating geopolitical and long supply line risks .
• World-scale manufacturing will find it difficult to compete
• Agility and flexibility in manufacturing and distribution will grow in importance
• Sustainability will consume increased mindshare
• Supply chains will assign risk and strategic ‘ characteristics ’ to starter materials and suppliers .
• There will be a reduction of focus on lean models – replaced by smarter inventory planning approaches , and supplier diversity We have built our strategy heavily around agility and flexibility . Companies must be able to move quickly to adjust to demand cycles and supply disruptions or they will struggle . This is where we see our choice model really working and adding value . For example , a large pharmaceutical company came to us saying that they needed an advanced intermediate and their only current option was to make this in-house . This company wanted faster and more local options , and they asked us what we could do . This is the epitome of the model we are trying to build . We went back to the customer to say that we had found two suppliers - one in China that we had worked with many times and one in India with a little less experience – or we could make the product in our newly acquired facility . We gave them prices and timelines for each option . Producing it ourselves was substantially more expensive but the customer went with this , saying they now understood the options and was willing to pay for manufacture being close by . ‘ Lean ’ has been a key word over the past 20 to 25 years but one could say we collectively leaned ourselves to the point of failure . ‘ Lean ’ is great until hit
with a disruption or a demand surge or both . We are tending to see more and more disruption that throws a wrench into lean strategies , which tend to be about quick money grabs such as low inventory and the lowest cost supplier . Finally , we do not believe that supply chain disruptions are going to end . COVID-19 was not the first pandemic in the last dozen years or so lest we forget swine flu , SARS and Ebola . In September alone , we saw a typhoon come dangerously close to Shanghai and another hurricane hit Florida . This is why a highly flexible supply chain design is so important . It is why , frankly , supply chain choice matters .
Outlook
No doubt some of these forecasts will prove wrong . Right now , though , Actylis is building its organisation to offer as much choice , flexibility and agility as it can , despite the big monster out there . We think this model is broken but we also think we can take some steps towards resolving it . •
Patrick Bower
SENIOR DIRECTOR OF SUPPLY CHAIN
ACTYLIS k + 1 203 733 3195 J pbower @ actylis . com j www . actylis . com
56 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981