Stress test for supply chains
With transport chains so long today (for example from China), flexible back-up systems are needed in the background, to deal with unforeseen interruptions. Josef Müller spoke to three Austrian logistics managers to find out how they manage their chains.
Meticulous planning; seamless communication between the modes of transport; flexible back-up solutions in the background for emergencies; a return to the good old buffer store – these are amongst the key elements that will help firms get through these times of Covid-19, when logistics activities are so much more difficult.
Resilience is the watchword in these pandemic times. The ITJ conducted some research on the subject of stable supply chains, talking to three shippers; well-known Austrian industrial companies.
“Up until now we haven’t really encountered any specific obstacles in our supply chains arising from Covid-19 restrictions,” Michael Kiel, a group division manager with Austria’s Evva Group. (Evva stands for ‘Erfindungs-Versuchs-Auswertungs-Anstalt’, or invention-trial-evaluation institute).
The 750 employees at its headquarters in Vienna and in ten branches located throughout Europe produce intelligent locking systems. Production requires components from China as well as from many other countries. Evva’s supply chains to Vienna have proved rather resilient so far.
Kiel explained how they do it. “We operate a sophisticated risk-management system. So after Covid-19 broke out, we defined those materials that were particularly critical for production and increased our inventories thereof at three of our production sites – one each in Vienna, Germany and Czechia.” In the case of its imports from China, for example, this may have seen the firm switching over from sea or overland freight to air cargo from one hour to the next.
Evva focuses on Europe for its production; it is set to invest approximately EUR 23 million by 2023 in expanding its Vienna site, which is more than 100 years old. Outsourcing production to low-wage countries is out of the question.
New and proven solutions
Kiel has identified a trend in the industrial segment to relocate production processes from overseas to Austria or Europe. The concomitant shorter transport routes make chains more manageable and easier to control – another one of the findings of this Covid-19 era.
Knauf, a building materials firm from Weissenbach, near Liezen, in the federal state of Styria, has maintained its logistics chain without interruption despite Covid-19, “because we made covering purchases at an early stage, and increased our stocks,” as head of logistics Herbert Moser proudly told the ITJ.
Buffer stores are experiencing a renaissance. Just-in-time and just-in-sequence approaches were customary in pre-Covid-19 times; now logisticians in industrial companies tend to frown on them. Knauf produces dry-wall and composite thermal insulation systems, among other things, working in 250 locations worldwide with 35,000 employees – and carries out its logistics planning in-house. This proves valuable in times of crisis, due to faster reaction times, Moser said.
Apart from border closures and the short-term lockdown in March this year, “we haven’t experienced any significant interruptions to our logistics processes,” Constantin Beelitz said, RHI Magnesita’s manager in charge of business in Europe, the CEE countries and Turkey.
Strong partnerships with logistics providers, and targeted and reliable communications, make it possible for RHI to maintain logistics in these challenging times.
The conclusion? Back-ups, buffer stocks and ‘normal’ logistics chains can absorb disruptions for some time.
