Amer Sports’ Chief Supply Chain Officer Wilhelm Kerl writes about how the supply chain function needs to evolve as the world changes.
As a global group of iconic sports and outdoor brands, we source, manufacture, store, and deliver more than 170,000 different products to over 200 countries. And the numbers keep growing.
Our supply chain transformation journey started in 2008 when we had a singular focus on costs. Our profitability improved, but a one-dimensional approach was not enough. So, we added a second dimension, service, to better meet the needs of customers and consumers.
In the end, we created a triangle made up of balancing cost, service, and cash. Through managing our supply chain triangle, through managing the “and”, we fueled growth and had happy owners and consumers.
In 2022, we started to think about change again. But why change a winning formula? Simple: The world was changing.
5 challenges that call for new answers
We all know the first challenge: COVID-19. It got us thinking, how can we get more stability and integrate COVID-related themes into the future?
Second challenge is closely related: supply chain disruption. In 2021, there were suddenly no more containers, and we were fighting to get the ones left at a high price. The questions are about stability, how to open bottlenecks, and how to eliminate issues instead of fighting them.
Third challenge is geopolitical. We have ongoing humanitarian crises in Ukraine and the Middle East. What else might happen? How can we mitigate risk scenarios and reduce dependencies?
Fourth challenge is global warming where we have a big role to play. How can we have a positive impact? One important question is around balancing sustainability and financial targets. The pendulum swings forward and back.
Fifth challenge is digital revolution. Here the question is, where are we on this journey? How do we approach it? And how far do we want to go from automation to augmentation to autonomy? We need to be honest about where we are today. It’s an end-to-end story with lots of innovation.
New supply chain triangle around sustainability
Our old triangle is a solid foundation—we still need to manage cost, service, and cash—but it won’t help us win in the future. Our new triangle is made up of innovation, resilience, and productivity—with sustainability at the center.
Innovation can relate to artificial intelligence and product and process innovation, but it also covers questions about future workspace. Resilience in supply chain refers to excellence in planning, managing complexity, as well as lead time management and nearshoring. And productivity is about total cost of ownership.
Let’s look at nearshoring as an example: If we bring manufacturing close to where our customers are, it helps us become more resilient on the productivity ups and downs, because we simplify the supply chain. We win on the cash side, but cost might go up. That’s the insurance premium we pay for stability. We will have a sustainability advantage as we reduce carbon emissions through shorter transportation. And innovation will need to deliver solutions to make all this happen.
We started our journey knowing the road is long
It starts with the first step, and we are already walking. We have areas where we are more advanced, and areas where we are less advanced.
We are aware that change will never stop, and that we can drive change to our favor by being proactive. We set our strategic focus and created our new supply chain triangle to balance innovation, resilience, and productivity around sustainability. Now, it’s about execution and transforming Supply Chain Operations into a real business enabler.
