The unexpected is the new normal: Creating value for resilient supply chains in an ever-changing world

Keynote address by Klaus Staubitzer, Chief Procurement Officer at Siemens AG.

Some people still think procurement is mostly just logistics: Getting stuff from A to B for the cheapest price. In truth, the supply chain function holds many complex dimensions. And it is a constant weighing of varying priorities: Always cheap and almost never late? Low on carbon and priced at a premium? Run by experienced professionals or dominated by autonomous sourcing bots? Resilient against every single black swan event that could occur or stringently lean and functional in day-to-day use?

Instead of just cost-cutting, it is much more about maximum value creation through a 360-degree world view: through digitalization, through ecosystems, and through a deep understanding of the business. What we look for, in short, is building sustainable resilience.

Supply chain and procurement managers as futurists and trail blazers

This requires monitoring and managing a multitude of factors – such as geopolitical developments and extreme weather threats. Supply chains need to be aware of natural disaster risks, anticipate social and economic changes, and, most importantly, prepare for them.

 

The role of supply chain and procurement managers is undoubtedly going through a shift. We are now futurists and trail blazers, guaranteeing that all the necessary parts of a product are available on time so that factories operations are never disrupted. We achieve this by anticipating an unpredictable future (which is just as difficult as it sounds), which itself will be defined by ever-new parameters.

 

Not an easy task for sure – and it entails collaboration across other disciplines. This has become more pivotal in recent years, and also more rewarding. Constant dialogue with for example R&D departments, product management and manufacturing enables us to identify the best possible source of components for the next big product. This in turn of course enables suppliers to ensure that parts – and the way they are made – are fit for purpose.

Adaptable strategies, new tools and cross-functionality are key

At Siemens, 65,000 suppliers in more than 140 countries – together with their respective suppliers – deliver the goods and services we need in order to create and produce for our customers. In fact, about half of Siemens’ annual revenue of 62 billion Euros is our purchasing volume.

 

If something goes wrong in the supply chain, the impact can be huge and instantaneous. That’s why the function always makes sure strategy is adaptable, while continuously developing new tools and communicating cross-functionally. Business practices, corporate game plans and technology keep evolving. And everyone needs to be on the same page.

 

Unsurprisingly, explaining the advantages of new tools and of the opportunities provided by global trends to all stakeholders – both internal and external – is one of the key roles of a modern supply chain. 

Global community meets in in three different continents – and virtually

In September, we organized a series of meetings for key members of the community. First, we had in-person events in India and the U.S., then a virtual global conference at the HQ of Smart Infrastructure in Zug, Switzerland.

One of the goals of these “Supplier Collaboration Days” was to explain why we place such a high value on our partnerships with suppliers. And why ESG – Environment, Social and Governance – criteria have become such a strong focus for us. Another important message were the benefits of Siemens-driven, collaborative innovations such as the Green Digital Twin, Carbon Web Assessment, Estainium and the Siemens Xcelerator; as well as our carbon reduction program, which can support suppliers on their journey to decarbonization.

Ecosystems, partnerships and collaboration

It was great to see everyone pulling in the same direction at these events. The common consensus is one that I feel very strongly about: A modern supply chain must focus on adding value – which is all about balance. Sometimes it means securing parts at the lowest cost. Sometimes that means using technology to measure a component’s carbon footprint. Sometimes it can mean that you have to allow the primacy of politics or ecology over economics when making decisions.

But it always means trying to anticipate the unknown and being aware of its complexities and interdependencies.

Today’s procurement and supply chain managers need to be visionaries and consultants. They think outside the box about how to create maximum value in a complex ecosystem, working together in all directions and with all partners to achieve one goal: Creating value to make a difference for the business.