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Supply Chain at Executive Committee level is crucial
Why companies are putting supply chain at the Executive Committee level? In our series of interviews with key Supply Chain and Logistics experts, we recently spoke to Mohamed Lasgaa of Dutch consulting house Groenewout. We talked about key trends and opportunities in logistics, the growing importance of the role of logistics and supply chain in companies, how the labour market should adopt new approaches, why supply chain approaches need to become extremely flexible and how several key retail players have been addressing this. This interview has been published on Tractonomy’s Robotics website.
Hi Mohamed, many thanks for doing this interview with us. Can I ask you to introduce yourself and your company?
“Hi, my name is Mohamed Lasgaa, but people call me just “Mo”. I can look back at a career of almost 20 years in logistics and supply chain management consulting. After my graduation as an Industrial Engineer I joined Groenewout, and today I am responsible for the Belgian sales and project delivery. Groenewout has built out an expertise on four main focus areas:
- Supply chain network design
- Warehouse engineering and automation
- Supply chain planning
- Construction and facility management related to logistics assets
We do both the full feasibility or master planning studies as well as full-blown end-2-end implementation support. It also could be just a part of a realization roadmap such as tender management for automation solutions where we inject our automation concepting and engineering expertise.
Can you tell a bit more about Groenewout Consulting?
Mo: “Groenewout is a boutique consulting company focused on logistics and supply chain management. We are not generalists, but we have a solid expertise in logistics and supply chain and we act independently which is quite rare in the Benelux market. Since short we are part of the German based EPG Group, Groenewout is with 25 people in the Benelux and the EPG Group counts about 900 people worldwide.
What do you see as the big challenges in our industry?
Mo: “Every manufacturing industry is strongly impacted by supply chain and logistics. I see a large number of challenges which impact us especially on a European and US level:
- Labour Market. The workforce is getting older and this process is now having a much bigger impact. On every level we see a shortage of people as the instream is lower than the outstream. We see this especially during peak times, which really leads to issues in finding the right number of people as well as the right qualifications. Here the solution can be selective immigration, people that have been short-schooled can be attracted to our industry to keep our welfare at a decent level as we no longer have the necessary people. This is not only a challenge for our industry but for all industries in Europe and the US.
- Decarbonization. Neutralizing emissions such as CO2. If we cannot reduce these emissions then economic growth will no longer be possible. There are solutions to the problem and new technologies will be critical to create these. Nevertheless, they will not solve all our problems, the majority of the solutions must come from a massive behavioural change of the human being which is hard nut to crack.
- Cybersecurity. This topic remains very underestimated, data protection is key and it’s clear that not everyone should have free access to any data, this is a big challenge for logistics and transportation companies that use the data from their customers.
- Global Supply Chain Dependency. For decades we outsource a lot of manufacturing to low cost countries in Asia, but less to Eastern Europe and North Africa. This has of course contributed to our welfare by producing cheaper products but it has also led to a larger dependency. I.e. digitization solutions and other new technologies require a multiplier of chipsets in order to build mobile phones, PCs, servers, cars, etc… One little problem, these chips are mainly produced in Taiwan which created enormous supply shortages around the globe and prices went up like a rocket… Actions are now being undertaken by political leaders in the EU and the US to address this “little” issue and to bring back strategic materials and goods locally, but question is whether consumers will be ready to pay more for goods that are produced locally as the location of production will play a key role. It will be interesting to see how this evolves.
- Geopolitics. Our overall dependency on supply chains as a whole has been very clear since COVID. We have seen the weaknesses of the supply chain and at the same time also the rigidity of the supply chain. The trend will be that companies that have the capabilities to be more agile will be the survivors in this industry in the long run (survival of the agilest). Climate change will lead to harder to predict harvests (sometimes good, sometimes insufficient), lack of container capacity more frequent, pandemic, supply chain disruptions etc… The supply chain needs to become extremely flexible which is quite a new trend and a lot of companies didn’t focus on that previously. We are living in a permanent change and our ability to manage this, will be a critical challenge and as we know – the majority of companies are not adapted to that agility unlike the Inditex-es and Apple’s of this world – examples of brands that have embraced such adaptability early on.”
How do these challenges translate into key trends/opportunities in logistics?
Mo: “Technology can and will help us partially … electrification, hydrogen, decarbonization, AI, smart farming (higher yields with less energy and water consumption) etc… will no doubt support us and so will the change in behaviour. I also believe that AI thanks to the latest generation in chipsets has made big strides forward. A few suppliers of AMRs use AI to detect the profile of the flooring and can better understand where they are in the warehouse and where they need to go to in conjunction with people and this is just an example. AI is also for logistics and supply chain an important game changer i.e. demand planning and forecasting where AI could improve the forecast accuracy by introducing external leading indicators such as inflation, weather forecast, employment index, currency which could correlate positively with the demand without understanding the underlying logic. It is a black box, and you have to trust it.
Quantum computing will also find its way into our supply chain world where super computers will handle big data and analyse it very fast to enable supply chain professionals to make faster and better decisions.
The role of the Supply Chain
If I look back to ten years ago, then logistics and the supply chain were enablers. They were not as important as sales and marketing and this has changed substantially. We also see it in the education where many more studies on the topic have become available and many more people interested in these studies. Well performing supply chain organizations f. ex. in the FMCG world think of Heineken and P&G have put supply chain on ExCo-level like the Chief Supply Chain Officer which shows the importance of the topic. Supply chain is not only a cost element but it adds value in terms of efficiency (bottom-line benefits) and service to customers (top-line benefits), in other words putting supply chain on the priority list is crucial and therefore you need representation at ExCo-level.
Automation (by robotisation) is part of the solution to react on the labour market challenges where leading robot players can play a key role in automating (repetitive) tasks and in reducing the dependency upon people.
Automation has known big waves, it started early with shuttle systems then we saw the introduction of AMRs (including self-learning AMRs) of many suppliers on the market and in some cases using the older AGV technology. Most of the AMR solutions are still separated from human beings, that is for me old school, the new generation of AMRs work together with people without being separated from them just like we have with the cobots. The new AMR-cobots move between people and join them to jointly undertake things. I expect that in the AMR world more consolidation will happen and companies will join forces to go one step further in what can be done with their robots.
Repetitiveness will be automated, we still see quite some constraints related to weights, the way by which products can be fetched, etc… the maturity in several AMRs is not yet there and this is where I see quite some potential. Same with picking robots and all that is related to packaging where I also see quite some consolidation to come. Thanks to e-commerce but especially with the arrival of a new EU directive (PPWR) stipulating that max 40% of air can be transported, this again will create opportunities for automated packaging solutions/robots.
eCommerce: we see a normalization after COVID, it will never replace the off line world, it focuses on functional shopping while off line shopping leaves room for much more including experiences, emotions, part of a family of friends activity just like an event and in some occasions you want to see, try and feel before you shop. This will remain key, eCommerce will never replace off line but will become rather complementary with the handling of return streams an important challenge that needs to be further looked into. “
Do we now see a bigger focus on logistics, has attention of the industry changed with the many challenges the logistics industry has been faced with?
Mo: “Yes “thanks” to Covid and other key events (Suez disruption, energy crisis, Ukraine war, geopolitics,…) the supply chain and its role has become very clear, just think of the high prices for shipping containers (today back at normal level), the limited availability of goods, people scarcity in EU ….several key players have been revisiting their supply chain quite radically, an example of this was the German retailer LIDL that started its own shipping company “Tailwind Shipping Lines” in 2022 to get their containers with goods on time and keep prices under control. The coupling between workforce scarcity (and with it the need for selective immigration) and the need for technology and automation are key to guarantee utmost flexibility and avoid future shocks. Safeguarding our welfare will be the main driver for both the workforce rethink and the adaptation of new technologies.” Find out more about Mo here.
Many thanks Mo!
Mo Lasgaa has been interviewed by Jean-Luc Devisscher of Tractonomy Robotics.