The post-Coronavirus normal · Impact on logistics in China from coronavirus and related lockdown...
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The post-Coronavirus normal Resilient supply chains with China Virtual guest lecture – BVL Regional Group Rhein
Transcript of The post-Coronavirus normal · Impact on logistics in China from coronavirus and related lockdown...
The post-Coronavirus normal
Resilient supply chains with China
Virtual guest lecture – BVL Regional Group Rhein
Slide 2© 4flow
29.07.2020Public
4flow – More than 20 years of supply chain design and optimization
Business model
Facts and figures
Supply chain expertise
4flow around the world
Offices Team
Founded
650+16
2000Projects/year
200+
Transport
network
design
Cost
optimization
SCM
processes
4flow offices
4flow on-site
Site
engineering
DigitalizationSupply chain
consulting
4flow consulting.
Supply chain
software
4flow software.
Supply chain
services
4flow management.
Slide 3© 4flow
29.07.2020Public
A robust and working supply chain is essential as China is one of the most important trade partners for Germany
119
107
9692
79
68 66 66
56
46 45 44
27 27 25
FR
US IT
RU
CN
PL
NL
UK
AT
HU
CH
BE
CK
ES
SE
77 80 7975
80
92 94
102106
110
54
65 67 67
7471
76
8693
96
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Import from China Export to China
[in billions of EUR]
Data source: Statistisches Bundesamt
Important trade partners for German exports German foreign trade with China[in billions of EUR in 2019]
Slide 4© 4flow
29.07.2020Public
With the spread of the coronavirus multiple challenges occurred for global supply chains
Global
supply chains with
all end-to-end functions
Network
Transport
Intralogistics
Inventory
Organization
✓ Inbound
✓ Outbound
✓ Overseas
✓ …
✓ Raw materials
✓ Work in progress
✓ Finished goods
✓ …
✓ Plants
✓ Warehouses
✓ Cross-Docks
✓ …
✓ Productivity
✓ Organization structure
✓ Span of control
✓ …
✓ Putaway
✓ Picking
✓ Empties
✓ …
Shutdowns &
closings
Limited
capacities & delays
Reduced
workforce
Supply
shortages
Working
models
Slide 5© 4flow
29.07.2020Public
Impact on logistics in China from coronavirus and related lockdown after Chinese New Year festival
Impact from corona virus
Road freight
Sea freight
Air freight
Workforce
▪ Lack of drivers after Chinese New Year
▪ Strict driving bans and blocked regions
▪ Increased transport times
▪ Temporary disruption in port operations
▪ Blank sailings and unreliable schedules
▪ Lack of container yard capacities
▪ Up to 95% of all flights cancelled
▪ Significant drop in passenger belly
▪ High demand while reduced capacities
▪ Workforce could not return after holidays
▪ Regional quarantine regulations
▪ Production stops partly until mid-March
*
* Chart quoted from Seabury
Consulting Air Cargo Capacity
impact from corona virus
40%
60%
80%
100%
2/24 3/2 3/9 3/16 3/23 3/30 4/6 4/13 4/20 4/27
Workforce resumption
Slide 6© 4flow
29.07.2020Public
While sea freight recovered quite fast, air freight capacities are still significantly reduced due to ongoing international travel restrictions
0
100
200
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400
0
1.000
2.000
3.000
4.000
5.000
Jan Feb Mar Apr May Jun
Cargo throughput 2019 Cargo throughput 2020
Container volume 2019 Container volume 2020
[10k TEU][10k ton]
0
20
40
60
80
0
20
40
60
80
100
120
Jan Feb Mar Apr May
2019 Total trans. turnover 2020 Total trans. turnover
2019 Cargo volume 2020 Cargo volume
[10k ton][100m ton.km]
* Data source:
http://www.portshanghai.com.cn/jtwbs/webpages/server_teu.html
** Data source: http://www.caac.gov.cn/en/HYYJ/SJ/
Air freight – China**Sea freight – Shanghai port example*
Slide 7© 4flow
29.07.2020Public
Global supply chains need to be transparent and designed robustly to cope with unexpected impacts like from coronavirus
Phase 1
Sudden ramp-down
due to lockdowns
Phase 2
Ramp-up based on
synchronized information
Phase 3
Supply chain
reconfiguration
Slide 8© 4flow
29.07.2020Public
In the ramp-down phase it is important to consolidate all available information and create an individual risk profile for your supply chain
Phase 1:
Ramp-down
Social
commitment
▪ Consolidation and evaluation of all available information
▪ Generation of transparency on raw material and finished goods status
- e.g. demand, inventories in the supply chain, production capacities, etc.
▪ Identification and classification of structural risks in the areas of:
- Supply base
- Production base
- Distribution and transportation
▪ Determination of bottlenecks impacting security of supply (e.g. critical parts
and transportation routes)
Slide 9© 4flow
29.07.2020Public
Based on identified risks, active task force management is established to mitigate the impact on your supply chain during the ramp-up
Phase 2:
Ramp-up
Social
commitment
Task force
management
Critical parts mgmt.
Securing supply of critical
parts until bottleneck is
solved
Information transparency
Securing up-to-date information
flow between all involved parties
Transportation
capacity
Securing sufficient
transportation capacity on
critical lanes
Decision support
Provide decision support to
senior management team
Slide 10© 4flow
29.07.2020Public
Based on the gained experience a more resilient supply chain can be configured to mitigate the structural risks
Phase 3:
Supply chain
reconfiguration
Social
commitment
Supply chain
reconfiguration
Structural
risks
▪ Costs
▪ Performance
▪ Resilience
▪ Critical suppliers and parts
▪ Material shortages and
production bottlenecks
▪ Unreliable transport routes
▪ Low transparency and
unreliable information
▪ Optimized supplier footprint and
sourcing strategy
▪ Efficient global capacity
management
▪ Enhanced supply chain
performance and maturity
▪ Improved supply chain network
Slide 11© 4flow
29.07.2020Public
Collaboration with
involved partners
(e.g. strategic partnerships)
Act
cross-functional
(e.g. take all affected
organizational parts on
board)
Flexible supply
modes
(e.g. ad-hoc change of
transport mode)
Best practices for a more resilient supply chain with China in uncertain times
Transport &
Network
Operations
Organization
Real-time
end-to-end
visibility (e.g. on SKU level)
New
technologies (e.g. robotics,
automation, etc.)
Pro-active event
management (e.g. automatic alert
function and exception
prediction)
Optimized network
structure
(e.g. dual instead of
single sourcing)
Strategic capacity
management(e.g. blocked space for
air freight)
Ensure right talent
and capabilities in
place(only the right people lead
to the right solutions)
Best practices
@
Slide 12© 4flow
29.07.2020Public
Current crisis shows critical disruptions but also offers significant potential to improve towards more resilient supply chains in future
Challenges
& risks
Chances
Network performance
▪ Supply shortages of critical
parts
▪ Insufficient inventories
▪ Unilateral network setup
Limited capacities
▪ Transport disruptions and
delays
▪ Production stoppages
▪ Increased logistics and
production costs
Operations
▪ Lack of transparency
▪ Unreliable information
▪ Unclear demand situation
▪ Wrong forecasting
Organization
▪ Lack of flexibility
▪ Functional focus
▪ Unclear responsibilities
Supply chain
reconfiguration
▪ Optimized supply chain
setup
▪ Increased network maturity
▪ Improved flexibility
Capacity
management
▪ Strategic security of
required capacities
▪ Flexible capacities
New
technologies
▪ Gain speed in digitization
▪ Enhance IT infrastructure
▪ Integration of supply chain
partners
Collaboration
▪ Internal and external
collaboration
▪ Strategic partnerships
Slide 13© 4flow
29.07.2020Public
Your contact at 4flow
Headquarters
4flow
Hallerstrasse 1
10587 Berlin, Germany
T +49 30 39740-0
Shanghai office
4flow
304-305 T1 Building
SCG Parkside
868 Ying Hua Road
Pudong New District
Shanghai, P.R. China 201204
T +86 21 802156-00
Rainer SchmitzVice PresidentM +86 136 8172 4557
www.4flow.com
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