temperature. Novo Nordisk uses sensors to monitor whether the temperature of certain products stays within the range of e.g. two to eight degrees. “That generates a wealth of data which we can use to pre- dict for which routes and at which times of year there is a risk of the temperature becoming too high. We can analyse the possible measures and the associated costs. Would it be enough to wrap the pro- ducts in insulation material, or is active cooling necessary?”
Novo Nordisk can now answer tactical questions itself too. Hundsbæk-Pedersen: “What if we were to manufacture every product at every production site, for exam- ple? We can now calculate the impact on working capital and cost-to-serve in advance, whereas we used to make such decisions based on gut instinct.” So far, Novo Nordisk’s supply chain has felt little impact from geopolitics, not least because every country benefits from high availability of drugs for endemic disea- ses such as diabetes. With more than 50% market share, Novo Nordisk is a key player in that field. “Brexit will have an impact on our supply chain, of course. We expect a hard Brexit to increase lead times by six weeks, which means we will have to hold six weeks’ worth of extra stock. But
that’s a relatively simple calculation which doesn’t require complex models.”
Local for local
International brewing company Heine- ken started developing its own expertise in supply chain network design five years ago. The world around it was changing
E-COMMERCE ALTERS THE ADIDAS NETWORK
E-commerce has had a major and lasting impact on the supply chain network for Adidas. “We now have extensive consumer contact on a large scale through the Runtastic app,” said Thomas Eichhorn, Senior Vice President Logis- tics & Distribution at Adidas, during the annual Gartner conference in London. “It caused us to digitalize, and that resulted in the personal realization that you don’t want to fail in the consumer’s eyes so you have to perform.”
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E-fulfilment per country Service level agreements for next-day deliv- ery are standard practice in the UK. “But the omnichannel is very country-specific. In
Russia, for example, credit cards are much less common, whereas collection points are very popular,” stated Eichhorn. “The fulfilment of e-commerce orders from a single central distribution centre somewhere in Europe isn’t scalable. We now have a distribution centre in the UK providing same-day delivery in Lon- don.”
Adidas is not exclusively reliant on its own distribution centres for the fulfilment of e-commerce orders. “We sell our products based on a partnership model,” explained Eichhorn. “Adidas does the fulfilment for cer- tain products, and e-commerce-partners such as Zalando do it for others. Orders through
our own web store coming in from Paris, for instance, are fulfilled from Zalando’s local distribution centre. We don’t need to create an extra inventory point of our own for that.” A ship-from-store model is not scalable in Europe. Eichhorn: “Which inventory should be used to fulfil a customer order? To answer that question, you need a distributed order management system with a virtual overview of all stock. We’ve already implemented that in Europe and China, and we have plans to do the same in the USA. We’ve still got some work to do in terms of the inbound goods flow: where are we actually going to hold stock?”
increasingly rapidly and the company concluded that the old approach, based on traditional network studies, was no longer sufficient. “In those studies, it was common to spend 80% of the time on gathering, analysing and validating the data, leaving just 20% for finding answers to our questions. We wanted to turn that on its head and have more time to spend on risk analysis and scenario analysis,” says Benno Waterman. In conjunction with consultancy firm Argusi, Water- man has set up network models for both Europe and Asia, and is now responsible for the operational planning for the bre- wery in Zoeterwoude. Those network models – including sup- pliers and customers – are ready for use. If one of the operating companies from Europe or Asia have an issue, Heineken simply has to update the data and perhaps integrate the latest changes in production lines or transport prices. “Take the exam- ple of Heineken 0.0, which we launched very successfully 18 months ago. We can use the model to explore the best way to expand our production network in order to meet the growing demand. Because the model covers the whole of Europe, we can generate European solutions and achieve economies of scale,” explains Michiel
SUPPLY CHAIN MOVEMENT, No.31, Q4 2018
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