Integrated Logistics

Introduction

The pandemic brought to light the critical supply chains of many companies, highlighting the fundamental and strategic value of logistics for the procurement of goods and the role of supplier relationships based on trust and cooperation. Strong crisis situations had already occurred, some contained within a more restricted geographical scope, such as the fall of the Twin Towers (2001), the earthquake in Japan (2011), others on a more extensive level, such as the crisis of 2008-09. Once again, this unpredictable situation highlighted the fragility of the industrial production and distribution system.

Having initially blocked the Chinese economy, on which the industrial sectors of a large part of Europe and the United States depend, European countries and Italy in particular were subsequently affected. As a result, many companies found themselves either working with high production rates, many orders to be set up in a short time and a small number of operators, or with production unable to be started due to a lack of materials or components. This situation highlighted the inability to manage unforeseeable events in the immediate future.

With increasingly complex, globally interconnected and technologically advanced supply chains, it is therefore of paramount importance to reorganise business operations to seize the opportunities that more modern and efficient supply chain models can provide. 
In 2011, some European automotive companies had problems delivering cars because some critical suppliers of electronic components were concentrated in Fukushima. In the same year, other companies in the same sector found themselves without certain pigments used for colouring car bodies. On 28 March 2011, Repubblica reported, 'Factories at risk in the automotive world: the metallic paint, which alone now makes up 90 per cent of the colours used, is missing. This factory is located 45 kilometres from the Fukushima nuclear power plant'.

Crisis Management

A first approach to crises is certainly to learn or evaluate what has been done in the past. Always on the Triple disaster of 2011 (Earthquake, tsunami and nuclear accident) the literature highlights the approach taken by Dell in those years. The company, with most of its strategic suppliers in Japan, faced the crisis with three main actions: 

• Dynamic offer management and shift demand to feasible product configurations based on available components. The approach was to work with the sales force so as to "condition" customer choices to order feasible products.
• Searching for new suppliers able to replace the blocked ones. The company found new sources of supply in Korea and Thailand and sent technicians and buyers there. 
• Technical and operational support to suppliersthus ensuring maximum visibility and coordination across all levels of the supply chain. The company has undertaken support activities to facilitate suppliers in the organisational change required of them. 

Solutions

Among the solutions adopted in the previous case, overstocking does not appear as it is considered to be more of a risk than an opportunity. Probably when faced with a shortage of some component, the general reaction is to think about stocking up or at least think about how production could have been maintained with a larger stock. According to Takahiro Fujimotodirector and professor at Tokyo University Manufacturing Management Research Center, 'holding more inventory as a business emergency measure may improve a company's robustness in the face of disaster in the short term, but it will not necessarily improve its global competitiveness'.

What many companies did instead was a complete overhaul of the supply chain. In some cases they have actually opted for the replacement of the componentas in the case of Hyundai and Honda, which replaced the Xirallic pigment (responsible for the metallic bodywork effect) with other chemical components with similar effects.

New scenarios

The operational solution is an analysis that prepares for new scenarios by providing the basis for new forms of collaboration between suppliers and customers. The steps envisaged to structure new supply chain relationships based on collaboration and cooperation are:

• Survey. Analysing your suppliers to define any critical issues. The supplier must be able to sustain restarts or a possible increase in productivity, so it is necessary to understand whether it has sufficient stock for the near future or sufficient production capacity to maintain the business. At this stage, it must also be identified whether a direct connection via information systems is possible. It answers the question "who".
• Network. Working to create a new network that is first based on clear communication and information sharing. All network actors must bring their information, their knowledge to the table in order to review system strategies. Not extending one's knowledge to the conditions of other actors in the chain may entail risks for the future. The output in this case is a shared relationship in which the shared knowledge lays the foundations for the creation of future scenarios. It answers the question "what".
• Support and Security. Where suppliers show critical operational issues and the supplier is also strategic to their business, it becomes necessary to provide support to evaluate exit routes. It may be necessary to look for new second-tier suppliers in new areas with different production capacities. The buyers of customer companies must provide support to possibly expand the network of second-tier suppliers, while suppliers can become active in suggesting possible operational solutions for component replacement to their customers. Also within its own reality, support for activities is provided by the safety provided to operators, creating the right working conditions through the adoption and use of the correct PPE and the enforcement of rules. The output of the phase is a set of activities to be implemented to facilitate suppliers and/or customers to overcome critical phases, as well as to ensure a safe environment for all employees. It answers the question "where" to act.

• Innovation. If certain components are difficult to find, it is necessary to think about their replacement, which is why it is a question of change and/or innovation. Reviewing certain components can also lead to defining new solutions that in turn can increase or improve the performance of the product sold. It is time to think differently. The output of the phase is both the creation of future scenarios, i.e. the projection of the business 6-12 months ahead, which must be clearly distinguished from each other, so as to be able to structure a series of activities to be carried out for each scenario. It answers the "how" question.
• Elimination. Eliminate the superfluous, cut down on waste, aim for linear flows and simple processes. The output is a reorganisation with a view to lean, questioning the way things have been done up to now and consolidated over time. It answers the question 'why' keep (materials, stocks, processes, etc.).
• Measurement. Creation of a dashboard with a small number of parameters, but which must be extremely meaningful. For each scenario identified in the previous step, it is now necessary to define the appropriate set of parameters and target values. This data will be used to measure the progress the business system is making as the future becomes clearer and the correct scenario is more precisely delineated. The output is a dashboard. It answers the question "which" value for each parameter.