“Even when you think you are covered, keep assessing the risk”
Supply Chain Discussion Series
Views From the Top – AgriTech Supply Chain
Brian Cartwright, Client Partner, Supply Chain & Logistics and Aykut Özüner, CEO of TürkTraktör
As part of the Pedersen & Partners AgriTech Working Group’s ongoing dialogue with leaders in the AgriTech sector, Brian Cartwright, Client Partner, Supply Chain & Logistics, spoke with Aykut Özüner, CEO of TürkTraktör.
TürkTraktör is one of the leading AgriTech manufacturers in Turkey, and exports to more than 130 countries, including the Americas.
Aykut explained that when Covid first hit, TürkTraktör simply had no idea how it would affect demand, and with the information available at that time, it was very hard to anticipate what would happen. However, domestic demand in April, May, and June 2020 was higher than normal, mainly due to the Turkish government providing financial stimulus during March and April. However, the month of May brought major pressure for TürkTraktör’s supply chain, as they could not get hold of many critical parts.
Simultaneously, international demand was increasing; since June and July 2020, the demand for agricultural vehicles and machinery has continued to grow steadily in markets all over the world.
Aykut believes that the high demand in the AgriTech sector has been largely driven by increased focus on the food chain and food security, due to a major imbalance in food distribution across different geographies.
His supply chain team are focusing on trying to figure out what the new normal is going to look like. The pandemic has completely changed priorities, and this transformation is still ongoing.
In the past, a one-supplier strategy enabled cost reductions based on volume, but Covid has taught them to check and prioritise all potential risks such as geographical risks, risk of plant closures, lack of critical components, and constraints in carrier capacity.
Immediate impact areas include trying to source closer to the manufacturing site, and working on a dual sourcing strategy if importing from abroad, for at least the next two years.
Other areas will include investing in new manufacturing plants to accommodate the more critical components, as well as working with other suppliers in Turkey, so there is always a local backup supply, rather than relying on overseas suppliers.
The most important attributes in supply chain are agility, flexibility – and leaders with the confidence and know-how to move fast and take decisions quickly. If a decision is 80% likely to be the right one, it is best to go ahead. Hesitate, and the situation will have changed.
When asked what changes he would have made if he had known Covid was coming, Aykut cited his pre-Covid priorities: cost reduction, and efficiency improvements.
With a crystal ball in the boardroom, TürkTraktör probably would have prioritised sourcing and forecasting, especially for strategic components such as special machined parts, critical components, and sub-assemblies. The aim is for TürkTraktör to be able to produce these itself, or have a proper sourcing footprint which is not dependent on a single company or single location. Although it is not possible to source everything locally in Turkey, a safety stockpile can be kept.
Going forward, the lesson learned is that even when you think you are safe, keep assessing the risk.