Logistics challenges in 2023
Xavier Vázquez, Customer Logistics Manager at Nestlé Spain gave from the perspective of a leading company in the beverage and food sector, a masterclass in Supply Chain Management on November 21.
In this lesson, which is part of the content of the Master's Degree in Logistics Management at La Salle-URL, Xavier V. reflected on the paradigm shift in the logistics sector, brought about by the Covid health crisis in 2020 and the current war between Russia and Ukraine.
The (changing) environment, is constantly looking for new ways to ensure efficiency and profitability in the logistics landscape." Xavier Vázquez - Customer Logistics Manager at Nestlé
Journey - how has the logistics sector evolved?
In 2019, the strategic sector's main actions were based on cost savings, sustainability and digital transformation. In the wake of the COVID-19 pandemic, and with consumption falling in the face of an uncertain future, consumption habits became unpredictable.
In 2021, despite the reactivation of demand, the closure of many companies and the shortage of products could not ensure the supply of goods for many players.
And in 2022, when it seemed that we were beginning to recover, albeit timidly, we suffered another setback in the form of the current Russian-Ukrainian conflict. This generated inflation of more than 10%, with the consequent rise in the price of raw materials. Above all, a new logistical scenario is emerging.
Getting ahead of the strategy
During the masterclass, Vázquez, as an expert on the subject, stressed the importance and need to anticipate and establish a strategy that includes the following parameters:
Empowerment of local commerce
Focus on eCommerce
Resilience = Having a good team of people to withstand the crisis.
Inventory model. Just-in-Time and cross docking models have failed during the crisis.
To ground the concepts, Xavier V. delved into the strategy that Nestlé Spain followed in trying to cope with the crisis and uncertainty during the pandemic years. According to the Customer Logistics manager of the leading FMCG company, the key to its success was to combine two methods: Just-In-Time (JIT) for raw material and packaging suppliers; and the central inventory model for all end customers.
How? The team decided to dramatically increase inventories, regardless of cost, thus avoiding breakage on customer shelves. Even so, because suppliers had no safety stock because they worked in JIT, Nestlé decided, as an extraordinary measure, to create its own network of overflow warehouses to help its suppliers store raw materials and packaging.
Expert Xavier V. stated that the real challenge is to strike an efficient balance between the cost of stock vs. the risk of losing a sale. In other words, it would be just as harmful to have a warehouse with an overstock of product that could expire and destroy working capital, as it would be to have no stock at all and lose a sale. The best ally to achieve this is technology.
The Master's Degree in Logistics Management of La Salle-URL offers the necessary knowledge to be able to face the logistics of the future. Through a curriculum focused on technology applied to the supply chain, the student learns key management skills with a pioneering and innovative Master.