In an interview, the supply chain expert Michèle Gschwend explains what changes are taking center stage in everyday business and how companies of all sizes can prepare for the next crisis.
"The perception of what a supply chain entails has changed radically over the past few decades," says Michèle Gschwend (formerly Ruoff), who has managed several large supply chains. In an interview, the managing partner at Boyden global executive search AG explains which developments are in full swing and what they mean for companies.
The supply chain has accompanied me for more than 25 years, more precisely since the beginning of my part-time doctoral thesis in 1996 on the subject of "strategic outsourcing". I was then given the opportunity to manage various large supply chains in the food and beverage sector, for example for Gate Gourmet's global airline catering, for PepsiCo Europe and the supply chain strategy of Kraft Foods International. I was able to switch from consumer goods to the manufacturing industry and also managed the Europe-wide supply chain at Novelis, formerly Alusuisse. Of course, the topic is still with me now that I have switched to Executive Search.
Before the pandemic, the term was mostly not understood at all. Due to the corona pandemic, the invasion of Ukraine and the associated product and energy bottlenecks as well as the highly relevant sustainability issue, the supply chain has suddenly become a major issue for society as a whole. When I first started, I understood the supply chain as an end-to-end value chain and always looked at it holistically at management level. Basically, this is the business model of a company. My definition is not synonymous with logistics or production, but goes beyond it. This view has been gaining ground more and more recently.
If you manage complex supply chains in large companies, it's not just about systems, tools and processes, but ultimately always about the cooperation of people. Transformations or cultural changes cannot be carried out if the focus is not on people and the corporate culture. That's why this career change was such a good fit. Today I fill management and board positions. In the past, CEOs mostly talked about business strategies. The supply chain was divided into logistics and production. Now it's an important thing for them too. The supply chain has arrived at the heart of everyday business.
Absolutely, the perception has changed. The delivery difficulties caused by the crises have meant that almost every child has heard of the supply chain. When companies can no longer produce what we need on a daily basis and the shelves remain empty, it becomes noticeable. This is why I find the analogy with the chain so important: If just one link in the value chain is broken, the product is missing.
Everyone is talking about digitization and Industry 4.0, but it is different for every company. There is no universal definition for it. The meaning is industry specific. In production, digitization may refer to the automation of processes. In a hospital, it is more about having the information available not only on paper, but also electronically. If you break all of this down to the supply chain, digitization has always been part of every activity. Finally, data is needed. For as long as computers have existed, people have tried to capture as much data as possible in a system like SAP. Digitization has not only existed since the term «Industry 4.0», but for 25 years or more. Therefore I am of the opinion that companies do not need a digital strategy but need to learn how to best deal with the digital world.
I speak in terms of the business model and the value chain. Society has changed. For example, the younger generation in particular only orders online using their mobile phone or laptop, no longer directly in the shop, using fax papers or later sitting at the computer, as was the case before the Internet (1969). It's no use if processes are automated, data is collected and stored, but the shop is not easily accessible via smartphone. You have to learn how customers approach you in the digital world.
"The supply chain managers try to get out of process optimization and adapt a risk management approach."
Exactly. It is about recognizing or creating a need and then satisfying it in the best possible way. This implementation requires networked thinking along the entire value chain of a business model. Knowing what raw materials are needed, the timing and needs of the market, and how best to sell those products and services through marketing. Narrowing down the market, who to serve, and the time aspect are becoming increasingly important.
The influence of Industry 4.0 and digitization is that you have to reflect the changing world in the supply chain. You don't just need specialists, but people who understand the overall context of a company. In the past, process optimization was the main focus, but now dealing with the digital world must be taken into account.
We can no longer be certain of what is to come. Supply chain disruptions are just one example and companies need to find ways to deal with them. Those responsible for the supply chain are trying to get away from the approach of increasing efficiency and process optimization and adapting a more holistic risk management approach. One tries to understand which links represent the greatest risk for the chain, which is all the more important in the age of globalization. That's a mindset change. On the one hand, we have come a long way with the frameworks, the process optimization approaches in sub-areas that need to be brought together. On the other hand, the unexpected can happen and getting everything everywhere is not only for economic reasons, but above all no longer justified from a social and environmental point of view. How does the stable environment react to this? For the supply chain in particular, the importance of meaningfulness, sustainability and flexibility has increased and has long been a task for leadership.
You can't achieve everything through the frameworks, it has to be done through people. I have a nice example of a pharmaceutical company during the pandemic: when the system collapsed, they did the planning every day over the phone and Excel sheet because no integrated data was available - and that across the entire supply chain from production to the suppliers to customers. Something like this would not be possible if people did not know each other and had not developed a common culture.
Definitely, the top-down approach, which was only driven by finance and expertise, has had its day. During Corona we saw that those teams are more agile and faster that work well together and understand each other. Management levels must acquire this understanding. The strategic orientation is always based on hypotheses. Today you have to question them regularly. Are the assumptions about the market and customer behavior still correct? Can we continue to act like this or do we have to adjust something? This is the dilemma of leadership: stable systems and processes must be balanced against agility and responsiveness. The entire corporate culture is affected. I also notice this in Executive Search. In the past, the search for executives was very number-driven. They wanted someone who had the understanding of the process, to effectively reduce costs and increase sales. Now, at CEO and board level, as well as in the supply chain, people are in demand who are culturally compatible and who show empathy, agile thinking and self-reflection. Because that way you are faster, more successful and also have more fun at work.
They cannot afford major investments in digitization, but they don't have to either. You even have an advantage. Because deliberate, selective investments in digitalization are often better. And because people in SMEs are often used to covering the last parts themselves, they are more resilient to crises. In the end, it's all about good interaction between man and machine. I think the little ones in particular, mostly family businesses in Switzerland, do it better and faster.
The trends in leadership are towards risk management, holistic thinking, sustainability and dealing with the digital world. The experiences of the last few years act like a catalyst. We have made great leaps. The question is, can we retain and further promote this experience and knowledge and put it into practice together?