Ad van Oers, Supply Chain Lead for Africa and Europe for Castrol’s lubricants business, knows what it takes to build and run successful supply chains. Currently overseeing more than 1,000 employees spread across 40 sites, he has also held senior positions at Estee Lauder and Unilever. We caught up with him to get his thoughts on how supply chains have coped with COVID-19 and what the future might look like.
There’s been enormous pressure on supply chains. We’re in unknown territory – companies have always spent time on their resilience, on their business continuity plans, but no one has ever had to deal with so much disruption right across the length and breadth of their network.
It’s meant that supply chains were tested more than anyone ever expected, and now they’re looking at how resilient their networks were, how agile they were, and how their processes stood up. For some, things may have gone ok all things considered; for others, it won’t have been a comfortable experience.
What we saw a lot of was businesses really focusing on what was key to their organisation, and only that. It’s a push for simplification, to deliver excellence on core activities. This was across the entire operation, not just supply chain, but what that means is that supply chains I think will become simplified – if you’ve got an organisation that is only focusing on what really matters, then the supply chain is only going to support that focus. I saw businesses making focused decisions on their portfolios, sharper trade offs between service and Inventory, and clear choices on how to support their people in these uncertain times.
I also see much more focus on cash, and how, in an economic downturn, a lot of companies will be very protective of cash flow and keeping themselves running. This comes back to the whole focus on core objectives – that’s where businesses are going to keep their cash.
In the past we’ve had a huge amount of focus on efficiency and cost management, balancing it with service. Now, I think we’ll see companies start to make different trade-offs with agility and resilience. They’ll be looking at the learnings from COVID-19 and adapting, but it won’t just be about dealing with the impact of the pandemic, but how they handle what comes next – another pandemic, greater political instability, whatever it is. Do they need to be more agile, more risk adverse? This is where simplification will come in.
I do believe COVID has accelerated a lot of trends: we’ve been talking for a while about artificial intelligence, automation, being more data driven and how that all helps the supply chain, and I’m seeing these trends speed up in the last few months. Recently I’ve observed businesses automating manual transactions in order management, implementing artificial intelligence in demand planning and predicting service and inventory through simulation capabilities.
In addition, if the success of your supply chain depends on workers not falling sick, it’s a pretty strong case for automating what you can, taking out that risk and re-deploying those workers elsewhere in the organisation. In this example, to get the benefits of these advancements, embracing digital tools is key.
We saw a lot of collaboration – everyone was in the same situation, so could see the challenges others were facing, and all parties pulled together. A lot of companies adapt how they operated to accommodate the changes in others.
Castrol was no different. There’s a tendency in crisis, I think, to try and control everything, to centralise everything. We realised early on that wouldn’t work. We’ve got a distributed network across different countries, and each government was acting in a different way with lockdowns and restrictions. So, we went the other way, and delegated as much responsibility as we could to the shop floor, so that our factories could adapt to local changes and respond accordingly.
This meant we could continue to operate and support our customers at a time when many businesses were hugely disrupted. The factory managers implemented proposals on how we could operate while respecting social distancing, new shift patterns which allowed us to effectively quarantine, if necessary and resume operations. They represented supply chain at the country support and crisis teams. Not only that, but it helped our partners – they could adjust their own business, knowing that whatever they did, they would get a quick response.
My strong belief is that the future of the supply chain is to be a triple A network – agile, adaptable and aligned. I’ve already talked about simplification – one of the ways you get that is by being able to integrate the supply chain with the business as smoothly as possible.
To enable that, supply chains need to increase digitisation, achieve a better balance and have a greater focus on improving resilience. A good example is how people are viewing global sourcing– for many years it made sense. Now, with the pandemic, and the disruption of global supply chains, are there better and more local options?
If supply chains are seen as a cost centre, you will always struggle to invest effectively. So, you need to change mindsets to viewing supply chains as a value creator, and in turn an opportunity to achieve your business goals.
It’s important to remember that supply chains as value creators mean that you need to have end-to-end visibility and understanding. That way you’ll be able to see how a higher cost in supply chain could take out cost elsewhere.
How do you get that visibility and understanding? Digitalisation. AI, automation, and being more data driven. I think people have been more exposed to innovation in the last few months than they perhaps were before – for instance, managers who were reticent about remote working have needed to embrace it, and maybe their minds have changed. It’s the same in the implementation of technology in the supply chain. Businesses have been forced to focus, get it right for a core part of their operations, and now want to roll their approaches out more broadly, and will be able to do that by digitising.