Production & Logistics
Designing and operating the supply chain of the future
To celebrate 25 years of Production & Logistics (P&L), a seminar was organised on Monday 30 January 2023 in Leuven by one of the Ekonomika Alumni Chapters, which supports the permanent education of alumni who are interested in this field. The topic was: ‘Designing and operating the supply chain of the future’. Professor Robert Boute gave a short introduction. “The supply chain of the future is not only about efficiency, however important this is, but it is increasingly about resilience, sustainability and data. It is data driven.”
The first speaker Lóri Tavasszy, professor at Delft University of Technology, focused specifically on the use of real-time data to improve the sustainability of transport and logistics. He expects a great deal of data driven optimisation in smart transport networks and sees different degrees in the use and implementation of data. He also set out his ‘Freight Traffic Management as a Service’, which is a data-to-value framework in living labs and explained how we are shifting from multi-modality, through co-modality and intermodality, to syncromodality, which makes use of real-time data to optimize the mode choice and offers maximum flexibility. He has identified 5 further levels, progressing from ad hoc intermodality to an extended model of syncromodality. He believes that full implementation could yield a massive gain of 50% in efficiency.
Behzad Samii, professor at Vlerick Business School, offered us insights into Supply Chain Sustainability (SCS). The objective of SCS is to create, protect and grow long-term environmental, social and economic value for all the stakeholders involved in bringing products and services to the market. At every stage in the life cycle of specific products, there are social and environmental impacts or externalities. So, what is supply chain sustainability more precisely? It is the management of environmental, social and economic impacts, and the encouragement of good governance practices throughout the lifecycles of goods and services.
There are many reasons why sustainability has become so important.
Newly adopted laws require strict behaviour, there are further societal expectations and, last but not least, sustainability is also in the interest of the companies themselves because it can create business value. Companies are now ranked according to their efforts in sustainability, so it has become an important element in the business strategy of each company. But for very complex supply chains, it is not easy. It is difficult to find a sustainable model for multi-tier supply chains, such as OEM, Tier 1, Tier 2 and Tier 3.
Sometimes, life cycle analyses can offer useful insights. Professor Samii used the example of the average footprint of Unilever products. The figures show that less than one third (29%) comes from the raw material, only 2% from the manufacturing process, 2% from logistics, 5% from retail, and, astonishingly, 62% from consumer use.
Ingrid De Ryck, Vice President Procurement & Sustainability Europe at AB InBev, explained how she and her company AB InBev tackle this issue of sustainability. But let’s never forget the essentials: customers expect on-time delivery and product availability. “If you fail in doing this, customer satisfaction declines immediately.” She sees 3 pillars, which must be combined in order to deliver the supply chain of the future: customer centricity, efficiency and sustainability. They must be at the core of each business today. The transformation towards future-proof logistics is based on four areas: 1. Supply chain segmentation 2. Synchronised planning 3. Cognitive automation 4. Supply chain collaboration
When it comes to cognitive automation and smart tendering, Ingrid De Ryck stressed the necessity of leveraging AI to solve 3 key constraints in logistics:
1. Price: capturing market prices during low season and optimising prices during high season 2. Capacity: maximising capacity by simultaneously offering loads to all suppliers 3. Automation: automating the spot/buy process and freeing up the capacity of transport planning “Sustainability is the main driver at AB InBev,” she said. This means being local, inclusive and natural. AB InBev involves all their suppliers in the value chain in their sustainability project and follows four guidelines. First, smart agriculture; this means that 100% of the direct farmers will be skilled, connected and financially empowered. Second, Water Stewardship, which means that 100% of the communities in high stress areas will have measurably improved water availability and quality. Third, circular packaging; 100% of AB InBev products will be in packaging that is returnable or made from majority recycled content. Fourth, climate action; 100% of the electricity will come from renewable sources and there will be a 25% reduction in carbon emissions across the entire value chain. AB InBev expects to be net zero in CO2 emissions in 2028 in 5 major breweries in Europe and fully net zero in 2040 throughout the whole value chain.
Finally, Dominiek Callewier, one of the pioneers of the P&L Chapter, paid tribute to the first academics who founded P&L: Professor Willy Herroelen and Professor Marc Lambrecht. He showcased their book ‘Innovation in Production’, published almost 40 years ago. It is great to see that P&L is still ‘alive and kicking’ after all these years!
Fa Quix
