All eyes on the inbound
“The question is: how do you find the right business rhythm when the ground is trembling? If you only had the right visibility, could you make more agile decisions? The answer is yes.” So says Björn Redig, the newly appointed head of manufacturing at Sonat. With quick feet and a wide network, Redig and his team are designing better logistics, for manufacturers in need, resulting in substantial growth margins.
Redig is flipping through the sharp analysis of a recent inbound report for a global material handling company; it’s obvious that the logistic team is in distress and it’s beginning to affect their competitive advantage. This report looks at how the manufacturers demand went up during the pandemic, only to identify inbound deliveries to have fallen behind. The bottom line: costly production stops on several occasions. “The most urgent threats are increased cost, lower margins and sharp drop in sales,” he says.
As well as designing overarching supply chains, Sonat aims to challenge the visibility of inbound logistics specifically. “Due to a turbulent market, many manufacturers today are facing the prominent problem of not receiving components in time, this often means a costly hard stop,” Redig explains. “We have, therefore, developed a specific inbound management service which – not only solves the delays in deliveries short term but – looks at how inbound can be re-designed to be better scaled, even when the market fluctuates.”
Inbound services at Sonat incorporate getting operational visibility, but it also means tactically applying data to underpin and formulate new inbound strategies together with the client. “We take full responsibility, even in the most chaotic of situations. Firstly, we use our global network to identify all orders that might cause delays and then we act on them, this is typically where we get on the phone, redesign routs and complete missing documentation. Secondly, we create transparency across all inbound traffic and connect that with the production schedule, making sure that there is absolute symmetry, lastly, we work proactively to plan to avoid having to put out fires, it’s all about being one step ahead,” Redig describes.
Sonat has for the last twenty years been an independent catalyst for better, more transparent, inbound logistics. “In the past, large volumes were perhaps able to push down prices from a single supply source, but manufacturers today need to carefully evaluate their single source strategy and begin to balance their risk. Together, we can design a resilient and sound rhythm for inbound, bespoke to each manufacturer. The complexity of these networks often requires a knowledgeable partner, making logistics clear when things start getting muddled,” Says Redig.
And as the market has seen several hits to components manufacturing (including a pandemic, geopolitical risk, increased transport and production costs, and closed borders) the importance of inbound logistics has steadily grown. In 2020, Sonat partnered with a medical manufacturer to ensure that all components required to produce respiratory machines for Covid-19 patients were shipped and delivered to the factory in time. “30% of the inbound logistics were identified as critical, and through proactively securing production, the manufacturer was able to sustain a 600% growth rate, despite the turbulent global market. Bottom line, lives were saved, and the manufacturer reported an EBITA margin increase from 12.5 to 19.2%,” Redig sits back and eyes the final figures for the year: “the impact visibility had on this aggressive ramp-up was astonishing.”
Visibility at Sonat is the key to sustained growth. And even though many of the clients have critical problems that need solving, the task at hand is about designing for the future. “Despite the extreme climate, we plan for long-term shifts in the market, influenced by circularity and the need to buy and source components with a new mindset. The traditional single source strategy, purchasing based on price, is forever challenged. And that is a good thing,” Redig explains, “I had a strategy meeting last week with a European client who is now producing locally, we were just plotting their inbound logistics to arrive at many small warehouses instead of a large central one, this to anticipate risk, balance cost, and adapt to new customer behaviours.”
Logistics debates all over the world pore over the topic of local inbound strategies, and rightly so. “The need to build supply chain resilience is prompting organizations to reduce their reliance on just-in-time manufacturing processes,” Writes Capgemini in their Fast Forward report, from November 2020. And global logistic talents are all saying the same thing: responsiveness today is reliant on how fast inbound can be shifted towards a smaller, local, inventory.
“At Sonat, we work with better visibility and more control, but in smaller batches, which gives our clients a more sustainable just-in-time capability. This means less energy, lower costs, and more profit. That’s where I see most of our partners heading,” Redig explains.
Having taken over the position as a business developer at Sonat, Redig is eager to invent new sustainable inbound chains. This means the adoption of emerging technology, but it also involves keeping an ear on the ground and being wise enough to know when to act fast. Real-time visibility, transparency and risk monitoring are part of any organisation but it’s in the combination of technology and human experience the best rhythms can be found.
“I speak to many business leaders who are stressed today,” Redig says, generally looking concerned, “They approach me and describe the horror of not knowing their inbound deliveries, in many cases they are unpacking goods in the morning only to find out that vital parts have been left out of the batch, factory workers are out of production, and customers are turning to the competition. When we partner up with our clients, we make sure to eliminate these situations, checking, re-checking, and checking again to carefully monitor every part of the chain, until we know where everything is. Our best-kept secret: never second-guess.
Current events have made inbound logistics more public, which is on one hand putting pressure on deliveries, and on another hand, making delays part of our everyday. Why are my outdoor furniture not coming? Someone might have asked this spring. Only to have been answered: Well because they are stuck in the Suez Canal. But with these setbacks, it was also clear how the world is ready to champion these difficulties. “The attention that this has brought to our role as supply chain designers, says Redig, has led to a flurry of requests to secure a resilient inbound from all over the globe. Meanwhile, my experience at Sonat is getting greater, building a larger network than ever. We are developing fast, making sure to serve local and global manufacturers with the most intricate solutions, Redig concludes “With steady inbound control, we make sure that our clients are the most resilient players in the market.”
