9 Dec 22

What are the solutions for the two major threats in supply chains in 2023?

Global Fleet Conference 2022 VEx, moderated by Global Fleet Editor-in-Chief Steven Schoefs (top left), gathered hundreds of fleet industry members, unlocking the "knowledge chest for 2023", and provided a complete guide for fleet managers through presentations from industry experts. 

The first two topics were the most concerning for fleet managers: solving the supply chain problems and the keys to global TCO management.

Expanding the supplier base is crucial 

The conference's first session was joined by Guillaume de Subercasaux (top right), Global Fleet Manager of the Year 2022 and Head of Global Indirect Procurement at Schindler and Zoltán Sziller (bottom), Global Category Leader for Fleet, Mobility and Travel at INGKA. 

De Subercasaux manages 21,000 vehicles worldwide, 65% being vans used by technicians. According to him, TCO is increasing everywhere; vehicle costs, especially in North America and Europe and energy prices in Europe, compared to other regions. Schindlers consult local fleet managers and leasing companies to get the big picture and calculate costs. 

"We have around 25 global KPIs. But we don't compare countries. To calculate the CO2 emissions, we don't look at OEMs or lease companies but analyse the data by integrating external and internal tools", says De Subercasaux.

Sziller, who is managing 2,600 vehicles in 35 markets, says there's a double-digit increase in the percentage of TCO. Following the announcement of the zero-emission goals of INGKA, Sziller assesses the availability of all new models. According to him, following the market dynamics is critical in the initial stages of electrification to benefit from lower prices. 

Sziller defends broadening the supplier base during the electrification journey, and De Subercasaux agrees. "We are looking at exotic manufacturers, providing small commercial vehicles, and we look at all options." 

"2023 will be a tough year too"

This is another point both fleet managers agree on. "We don't have a crystal ball, so we have to be reasonable and anticipate what is waiting for us, and we make the top management stay alert," says De Subercasaux. "I don't think that 2023 will be a better year. Prices will increase, and geopolitical issues will create complexity. 2024-25 will be a better period," he says. For De Subercasaux, every fleet manager must be careful about spending in the coming 12 months. 

Sziller advises reviewing all cost elements of a fleet and the transition the industries are going through. "These are not easy times", says Sziller. 

Two solutions for two threats in 2023 

Alex van Breedam, CEO at TRI-VIZOR, provided a comprehensive picture of what happened in the supply chains in 2022 and gave vital tips to overcome the major problems to be faced in 2023. 

Defining 2020 as the year-zero for supply chain management, Van Breedam named the four issues that erupted with the pandemic: VUCA (Volatilability, Uncertainty, Complicity, Ambiguity). Capacity shortages created semiconductor, electronics and construction material problems. Climate change disrupted shipping lines and created bottlenecks in road transportation. Geopolitical issues pushed the energy crisis into the picture. 

This is when companies change their philosophy from "just in time" to "just in case" to anticipate how problems may disrupt their operations. As disruptions and bottlenecks emerged, more stock became obsolete, creating more immobilised capital and increasing costs. And the companies reacted by:

  • Increased their resilience by focusing more on supply chain management, 
  • Expanding supplier base from Tier 1 to Tier 3 companies to get multiple sourcing,
  • Reshoring: not supplying everything from overseas but in the region, companies operate. 

"Overall, the key role of supply chain management has been confirmed in 2022", says Van Breedam. Yet two significant threats remain:

  • Consumer behaviour changes as e-commerce explodes and current logistics can't keep up. 
  • Sustainable transportation technology, like hydrogen trucks, still need to arrive, and decarbonisation is not easy. 

To overcome these problems, Van Breedam reminds us, and De Subercasaux and Sziller underlined the point: Anticipate the changes to adjust their capacity to unexpected disruptions and expand their partners. Moving onto the problems as a group is much easier than fighting alone. 

Authored by: Mufit Yilmaz Gokmen