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Oil Prices & Credit Crunch Dominate Forum 29 October 2008

The escalating price of oil and the ferocity of the credit crunch dominated the 6th annual Supply Chain Planning Forum sponsored by software developers and consultants Barloworld Optimus this month.

Elevated into one of the most important regular platforms for key players in supply chain development and operation to probe the chief issues facing the industry, this year’s Forum witnessed even the ‘green’ offensive – originally pegged as the major feature of the must-see event – forced into a back seat as the impact of the credit crunch and other related topics accounted for the major thrust of the day’s presentations.

“We’ve all been overtaken by the world-shaking events of the past few weeks – not only the impact, but also the speed” commented Barloworld Optimus’ recently-appointed Head of Marketing and Sales John van Wyk.

“The result is that the role of planning in the supply chain has emerged as the key to who’ll still be standing when the dust settles and those who won’t” he said.

He added that a changing world has forcibly spelled-out the need for new tools and strategies to cope, and that one of the major conclusions emerging from the Forum is that close behind revenue and demand, the role now being played by supply chains ranks as the third most critical driving force behind companies’ ultimate success or failure.

“It all comes down to putting a finger on the pulse and understanding how modelling impacts on the ability to cope with whatever comes along” he told delegates.

But, he added, despite the unforeseen severity of the credit crunch and its devastating effect, lessons learned from the unfolding events of the past few weeks suggest that behind the bleak situation presently dogging global markets, clear signs of opportunity are also emerging ...

Dubbing the current global situation ‘a massive wake-up call’, he said that the key to survival is the ability to understand supply chain performance and that the answer lies in responding to the fact that world events have thrown open ‘a whole new set of challenges’ for supply chain professionals to start tackling ‘as of now... ‘

“Out of the sickening thud of a compelling event, what we’re now waking up to is the huge amount of opportunity to be found in the current situation.  Flexibility, agility, adaptability...   get those right and the others fall into place” he said.

He also added that the next few years are likely to see a growth in the number of Lead Solution Providers but that volatility in the price of oil – currently at around $70 a barrel – make any moves uneconomic under the present climate.

Earlier, the 100-plus delegates from some of the world’s foremost companies including  ThyssenKrupp Aerospace, KPMG, DHL Exel Supply Chain, BELRON and Continental Tyre Group were shown a compelling vision of a future with oil as high as $200 a barrel – as some international observers are claiming could be the situation by 2012 or possibly earlier.

Other highlights included:

• the challenges presented by Kwik Fit’s recent decision to switch to daily deliveries to its 700 retail outlets and the key role played by Barloworld Optimus’ Optimiza as the inventory optimisation powerhouse behind the move
• how aviation metals supplier ThyssenKrupp Aerospace reaped the rewards of forward-planning through effective incorporation of the right tools
• the role of strategic design in operational delivery, given by Babcock Networks’ Director of Supply Chain Gillian Holmes
• the impact of integrated business planning at Sasol Nitro
• the ‘new dimensions’ opened up by GIS in supply chain planning from ESRI (UK)’s Graham Wallace
• Autoglass’ parent group BELRON’s Director of Supply Chain Development Markus Schmidt and Supply Chain Manager Melanie Salter underlining the case for the right tools in achieving supply chain ‘super-accuracy’
• the importance and practicalities of designing tax efficiencies into supply chains – an element all too often overlooked, according to guest speaker KPMG’s Paul Meredith

Though overshadowed by recent world events and the fall-out from the collapse of financial institutions, green issues and their importance – now viewed as the third most critical factor in influencing companies’ direction – also featured in the Forum with an in-depth examination of carbon calculation and how to deal with it by Unipart’s Erik Pearson, and a practical approach to evaluating carbon footprint delivered by Professor Alan Braithwaite and David Knivett of LCP Consulting.

More than 100 supply chain directors, managers and analysts, representatives of 3PLs, consultancies, and companies from both manufacturing and retail sectors attended the day-long event in early October at Ardencote Manor Hotel near Warwick.

According to The Forum’s host, Barloworld Optimus’ MD Kevin Boake, choice of location was no accident:  the venue was recently selected as the first winner of Warwickshire County Council’s Environmental Certificate after a series of moves to reduce its own environmental impact including waste minimisation, recycling, steps to reduce energy, water conservation and tree planting.

He added that despite some hard lessons stemming from the day’s presentations, the post-Forum survey indicated that everybody gained from the day-long event – presented under the banner ‘Planning today for success tomorrow’...

“Already complex, the seismic events of the past few weeks have propelled supply chain planning and particularly inventory optimisation into the spotlight as never before.

“Their position as critical ‘make-or-break’ factors have never been illustrated quite so forcefully, and delegates were left with the option of either rising to the new and exciting challenges now being presented, or of facing the consequences” he said this week.