Managing the supply chain in the face of the energy crisis

You've probably heard of the energy crisis hitting the European continent. If you work in the supply chain or are a company director, you may even have experienced it at first hand.

According to a report published in 2022, 75% of companies have reported disruptions to their supply chain as a result.. The repercussions, however, extend far beyond our continent's borders, impacting the global economy.

So how do you maintain the performance of your value chain in such a tense climate? ? Procemo lists the best practices to adopt to maintain the efficiency of your supply chain.

Tips for optimizing your value chain

Rethinking energy consumption

There are a number of ways in which you can optimize your consumption of energy and raw materials. By limiting your energy dependence, you can limit the impact of the crisis on your value chain.

Here are some practical tips:

• Rethink your warehouse lighting by choosing low-energy bulbs. Install a motion detection system to limit energy loss.
• Think about insulating your buildings. You can opt for solar panels or automatic doors to save energy and optimize insulation.
• Adopt a rational strategy for transporting goods : limit empty runs, give priority to overland transport, and work with responsible service providers.

Rely on technological tools throughout your value chain. WMS allow you to manage your warehousing in real time and optimize your employees' time. The TMS are particularly useful for identifying the shortest and most profitable routes. 

Control costs throughout the value chain

In recent months, Europe's already deep-rooted energy crisis has been exacerbated by the war in Ukraine. The result: slowed raw material flows, material shortages, a drastic rise in energy prices.

It's hard for companies to maintain reasonable prices and meet consumer demand. They are therefore adopting new reflexes to control production costs and maintain a competitive edge.

From purchasing to transport, every link in the chain needs to rethink its strategy to protect the company.

The digital supply chain is your ally

In the face of the energy crisis, new technologies are your allies. They help you optimize your value chain flows by centralizing data in real time. 

ERP (Enterprise Resource Planning) software is essential for managing your company's resources and automating as many processes as possible.

Digitizing your value chain enables you to :

• compare the prices of different service providers;
• benefit from operational tour monitoring;
• anticipate the various disruptions that may occur;
• eliminate unnecessary expenses. 

Digitizing your supply chain is one of tomorrow's major challenges, and will enable you to make considerable savings over the long term.

Focus on transport

To rethink the energy consumption of its value chain, it's impossible to ignore transport. Carriers are bearing the full brunt of the crisis. The aim is to propose alternative solutions to reduce the logistics budget.

Logistics dispersal optimizes each trip by multiplying the number of deliveries between two distribution points.

The massification of flows involves setting up a regional platform to deliver finished products to consumers.

You can also reduce last-mile costs. Suggest that your service provider make the final delivery by bicycle, or set up a click & collect system. As well as keeping costs down, you'll be moving towards a more sustainable supply chain. 

Optimizing transport for a sustainable supply chain 

Anticipating the consequences of the energy crisis 

The energy crisis is still in full swing, and will continue to impact your value chain. To guard against future repercussions, anticipation is key.

Towards a resilient supply chain

Supply Chain 4.0 is not just connected, it's also resilient. It adapts to the economic and political imbalances that impact its performance.

Companies are well aware of this: resilience and flexibility are major criteria for differentiation and success. The energy crisis has played a central role in the emergence of new logistics professions. The visibility manager and the value chain resilience manager are now key profiles in the current context. If you haven't already done so, consider surrounding yourself with these talents.

The new Supply Chain professions 

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Adopt a planning strategy

Planning is essential to improve the visibility of your value chain. We recommend that you opt for a sales and operations planning or S&OP strategy. The aim is to bring together all the company's production stages (marketing, manufacturing, development...) to assess the company's ability to meet customer demand.  

This strategy only works if the different links in the chain work together. Organize monthly meetings and implement collaborative tools to support your talents. This method gives you greater visibility and enables you to anticipate various risks, such as a shortage of raw materials, for example.

How dependent are you on suppliers?

The energy crisis has highlighted companies' heavy dependence on their raw materials suppliers. What can you do about it? By diversifying your sources of supply, for example. This helps to secure your supply chain and reduce the risk of shortages.

Note that this strategy is not always easy to implement, and may involve additional costs:

• by multiplying suppliers, you multiply contracts and management costs;
• it is necessary to train employees who are not used to working with different suppliers;
• you track the various sources of supply using information systems that need to be financed.

You'll find the right balance according to your budget and objectives. Bear in mind that dependence on suppliers can be extremely costly in times of energy tension. So compare the various options and take the time to negotiate contractual clauses with your suppliers. 

Is the green supply chain the solution to the energy crisis?

The current geopolitical context reveals our dependence on finite and fragile resources. Now, more than ever, is the time to focus on renewable energies and opt for a Green Supply Chain.

Sustainable logistics not only protects you in the event of a political or climatic crisis, but also optimizes flows. Use tools such as GreenScore to assess your supply chain's level of responsibility.

You can now adopt simple reflexes to improve this score and gradually transform your channel:

• prefer biofuel to petroleum;
• Favour river and land transport, which consume less energy than air transport;
• implement selective sorting in your warehouses.

Conclusion 

The energy crisis has had a lasting impact on companies and the global economy. Supply chain players must rethink their strategy to emancipate themselves from raw materials suppliers and anticipate future disruptions.

A final tip to protect your Supply Chain in a tense environment: surround yourself with experts. Procemo consultants put their know-how to work for you. Our solutions are designed to meet your strategic or operational Purchasing, Logistics or Supply Chain objectives. Don't hesitate to contact us.