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De­si­gning the future re­s­pon­si­ble supply chain

Interview with Andy Lahy, Director of Solutions Design, Logistics and Manufacturing at DSV, Basel on designing the future responsible supply chains.


What challenges are current supply chain configurations facing, and how do they need to be adjusted to meet future needs?

So, I think there are some major challenges going on today for global supply chains and some of the challenges were already beginning even before coronavirus and if anything, coronavirus is just shedding more light on some of the challenges that are already happening. Probably two or three big warnings around the technological changes that are happening around us. So, 3D printing, robotics and the implications that has for supply chains, automation, autonomous vehicles, all these big technologies that are clearly having an impact on how we live and work. Even interviews like this that we can do now obviously changes the way that we work and interact with each other. So, there are big technological changes. Second, I think are the big political, macroeconomic changes that are going on there. Maybe not as visible and as fast, but you know, thinking about even some of the big changes that we've seen in the last few years: Brexit, Trump suggesting to build a wall, and China and the Belt and Road initiative, some really big government driven policies that are changing the way that companies design their supply chains. Then the third one which is a another big one I think. Me and you as consumers, what we are demanding now from businesses that is forcing companies to change to win the business. And one - is our demand for speed especially when we buy products online we expect every product to be available all the time. We expect to be able to click a little button and have products delivered in 24 hours or 40 hours. So what we have: our expectations of customers have changed very radically over the last 5-10 years, which is putting enormous pressure on supply chains if you're making products on the other side of the world. You can just click a button and deliver it to a customer based in Brazil, Sao Paulo, London or Zurich and you've got to configure and position your invention in places where you can meet that demand for speed. But the other very interesting side of that is a paradox at the moment. There on one side, we demand speed and availability and instant products, but equally consumers demand that supply chains of businesses are sustainable. And those two things don't often come together. There's a contradiction there somewhere. So, companies on one side, they've got to be fast, they've got to be responsive, they've got to have products available everywhere. But on the other side, we've got to find a way to do that in a sustainable way, not just about carbon, but also thinking about the materials that we use. How can we minimise not just plastic but every type of material at the moment. So yeah, all of these pressures when you combine them together is putting huge pressure and challenges for business to reconfigure their supply chains.

How can internationally active companies integrate responsibility when redesigning their supply chains?

I think in many cases there are win-win opportunities. So by doing the right thing you can make the supply chain more sustainable, you can make it ethical, you can make it transparent. So, a lot of the time it's not a contradiction just by doing the right thing from the business perspective, you do the right thing from a people on the planet perspective. I think where it gets difficult and some of the challenges come from that contradiction, when you do need to invest more money to do the right thing from a sustainability or a people perspective. So I think that that's the big challenge. When there's that contradiction, you've got to make some tough decisions. But I think what we see now and in terms of best practises is that when companies are evaluating their big strategic decisions, it's not just an ROI profit decision. They’re increasingly thinking about that triple bottom line - what's the impact on the planet? What’s the impact on the people? And they make the decision considering all three of the lines – people, planet, and profit.

What needs to be changed to encourage companies to consider responsibility?

I think it really requires companies to be a bit bolder and be a bit braver in some of their decisions. I think what we've seen over the last thirty years is that a lot of supply chains decisions have been driven purely by cost. You know, let’s think as consumers – we’re sitting here in Europe and Switzerland, the logical place and the sustainable place to build products that we need and it’s not on the other side of the world in Asia. The decisions are being made on a cost basis. But I think now as companies are starting to think of these other elements as well, environment and sustainability in particular. What about that high one on the agenda at the moment? Increasingly, companies are thinking about their supply chains and not just where can I make this product in the cheapest possible way, but where can I make it as best for the consumers that I'm trying to serve? When can I make it best for the environment in the wider society, but increasingly I think that's the next big one as well. How can I make this product that supports the consumers that are building the product form. So as an example, building the product in the market where the consumers create jobs that create economy. So, if you start thinking of those wider aspects that that's the big challenge and the big thinking that companies need to do.

How is DSV preparing for the future state of supply chains?

So, I think there are two or three angles to it from our perspective. Traditionally, I think it's fair to say that the logistics industry that the DSP works in Huz almost responded just to the market demand, so customers have said towards you need to do this, execute that, and we've done it. You know, that's been what logistics companies have done very, very well. There are execution organisations, operational execution, but now what we see is that logistics companies want to make these big transitions in these big moves. Our customers need us to also do some thinking with them, not just responding to what they need, but also to big global organisations. Now we also have a lot of information, a lot of knowledge about supply chains, we touch and move products all around the world. So, we've got to warn, tap into that knowledge that we've got to challenge our customers as well and the way that they work. So that's one side. The second thing I think is we also see that as a big organisation we've got to look at these new startups and new companies that are bringing new ideas to shake up the industry. So that's one. Element and Stream that we've got of working with style companies to bring some new ideas and some different perspectives. The third side, that's a bit that interests me. I think working with the universities and tapping into that research and that different way of thinking that universities are used to. How can we tap into knowledge that's moving up in our organisation or even in our team? That's happening to the noise that universities have got to try and bring some completely different ways of thinking about supply chains.