By Sabit Tapan, Partner, Global Key Account Development at Pedersen & Partners and Emin Birsel, Senior Executive and Board Member - International Markets:

Sabit: Hello, Emin. We've discussed international market expansion from various angles. Once a company operates in a host country, it encounters new realities, both positive and negative. Based on your experience, how should companies learn from negative outcomes in the international markets?

Emin: Hello, Sabit. Stepping into an international expansion project, companies may be confronted with a few unexpected developments. The first possible situation, is deviating from original plans due to the new or unexpected market realities. The second is facing issues that the company and the organization are and were not exposed in their domestic markets. Many companies have a plan or investment thesis. Hence, plans and thesis immediately start getting tested.

Among various issues, investment project cycles may be longer. Customer purchasing cycles may take longer. For example, I have seen companies who step into European or American markets to realise later that there are strict listing windows for new products.

If you have missed that listing window for your product, the next time you could place your product on the shelf can only be the next year. Many times, companies find out that the synergies that they thought were going to be there between parent, subsidiary and other group companies are not as large, or will take a longer time to realize and or material investments. You can also find yourself facing difficult organisational challenges; the new organisation or the new stakeholders may not be as welcoming as you wish they were.

Obviously, you must evaluate the reasons why the expansion is not going well and make the necessary changes. It's not a shame to adapt your strategy. You may find yourself needing to localise your approach. This may include customising your products, services, marketing campaigns, customer support or management approach, indifferent ways that were not imagined earlier. A good example is Procter & Gamble’s experience in Japan. After struggling for many years and it is only when they have found their exact market success recipe that they thrived. So even for the most experienced companies and their brands, it may take a while to prosper.

You must build relationships and invest in talent while seeking also external expert advice.

You cannot place yourself in a vacuum. You must build alliances with your stakeholders to understand exactly what's happening. Also, you must be flexible and patient and learn from your mistakes. If this is particularly the first international expansion, there are a lot of learnings that can be taken from here and adapted to future projects.

Sabit: Very interesting that you have mentioned that companies should not be ashamed of re-considering their original plans. Do companies often prioritize maintaining their original strategy over restructuring their approach or redefining their strategy, viewing it as a matter of business principle or pride?

Emin: I would say that this is mostly an emotional topic. There is a lot of vested interest. The board, the CEO, the management, everybody wants this project to succeed. And there is actually wishful thinking many times where the companies may be getting blindsided and the strategy is actually a choice of products, a marketing campaign, or recruitment of some key people. By setting aside emotional considerations and leveraging strategic insights from stakeholders, the company can effectively address such circumstances and overcome them.

Sabit: Do you see companies planning such failures in their scenarios or are these faced as unexpected? How do you see companies absorbing unexpected developments into their plans?

Emin: I have rarely seen companies preparing themselves robustly for such eventuality. Everyone is vested in success. Usually, the board or the management chooses one course of action, follows it and want to give it its proper time. Early in my career, I have seen some companies that made sure that they understand the worst possible outcomes, assign a probability to it, make it part of their investment plan and move forward.

I have seen this practice in non-profit space as well. Sometimes the negative outcome can be so overwhelming that nobody wants to think or talk about it. However, I have rarely seen organisations that robustly discuss, dig deeper or formalise these scenarios.

Sabit: The caveat is to assign the right probability to the negative outcome so that you can plan accordingly. You've mentioned that the other bucket is about issues companies may not have faced in their domain in their domestic markets, but these becoming very critical or sensitive in the host markets. Inherently, some of the natural points are diversity, and being considered as a direct foreign investment. These are issues on diversity and inclusion. What are the critical points to think about these items?

Emin: Diversity is potentially a huge asset to leverage for international companies. A proactive and positive approach needs to be taken to make sure that the company can benefit from it. To start with diversity must be recognized, respected and managed proactively and carefully. Understanding and navigating cultural settings and differences require a high level of cultural sensitivity, but also adapting to and really understanding the local work culture, hierarchy, even the decision-making processes.

The leaders and leadership teams must set good examples of how diversity should be managed, but the companies must also realize that even with the best of intentions, there may be issues. Unconscious biases are just a simple and obvious example. There may be cultural integration difficulties and difficulty in promoting inclusivity. Addressing those proactively is going to make the company stronger than where it started. Think about diversity and inclusion together and foster a culture of inclusion where all the employees feel that they can contribute to the outcome.

It starts with senior leaders required to demonstrate a strong commitment to diversity and inclusion. With their behaviours, their words and their decisions, it is important to involve employees from diverse backgrounds in the decision-making process. Obviously, training and education programs towards that topic are fairly important.

Sabit: When you've mentioned diversity and inclusion being natural issues in international expansion, my question would be, are these to be tolerated or to be sought after, to add value to the original company? These are two completely different perspectives. One can be a cost of doing international business. The other is the benefit of doing international business.

Emin: Diversity and inclusion are important traits of international companies that need to be celebrated. A richness that gives them a competitive advantage. I think it's well documented in the management literature and research about how diversity can positively impact the performance of the companies. It is very important to make sure that during the talent acquisition, even the language of that talent acquisition shows how the company values and celebrates diversity and looks at it as something sought after.

In addition to having good intentions, it’s crucial that companies adopt an analytical approach. Organizations should gather and scrutinise data related to recruitment, retention, and promotion, which includes demographics and hiring trends. Essentially, companies need to set aside subjective perspectives and objectively assess the diversity within their organisation through quantifiable metrics.

Sabit: Exactly. Getting into talent acquisition issues related to the international markets, the general tendency is to seek local leadership in the host country.

Companies always try to find a way to find an association, a common ground instead of fully accepting that it is fully diverse.

Indeed, while industry similarity may be a factor, companies often look beyond quantitative data when seeking talent. They value qualitative attributes that contribute to diversity and inclusion. These attributes, which may include cultural fit, leadership potential, or unique skills, can greatly enhance the richness and effectiveness of a team. This holistic approach to talent acquisition is key to building a diverse and inclusive workforce. When it relates to talent acquisition, what are the success factors? What companies should do to add value to their process?

Emin: I think Pedersen & Partners is the expert on this one. The search for affinity often results in unconscious bias. There are tools available in the market that companies utilise for performance-based recruitment and talent acquisition. Furthermore, some companies are adopting practices to redact CVs to ensure gender neutrality or to minimise the prominence of demographics, age, or geographic location. This approach helps to mitigate bias and promotes a more diverse and inclusive hiring process. Assisting managers in selecting candidates with the highest performance expectations is indeed a challenging task. However, it’s essential for companies to focus on indicative data. By analysing the data, companies can gain valuable insights into their performance and make informed decisions. This data-driven approach can significantly improve the effectiveness of their recruitment and talent management strategies.

Sabit: Our experience shows that companies are increasingly setting specific targets within their talent acquisition processes to ensure outcomes align with their objectives. These targets often encompass various aspects of diversity, including gender. This proactive approach to diversity and inclusion is a marked shift from practices observed 20 years ago, reflecting the evolving priorities in today’s corporate landscape.

Emin: Absolutely. Inclusion is a critical aspect of the talent acquisition and recruitment process. After making significant efforts to attract a diverse range of talent, it’s important to avoid creating isolated groups or subcultures within the organisation. Instead, companies should strive to foster an inclusive environment where everyone feels valued and can contribute to their fullest potential. This approach not only benefits the individuals but also enhances the overall performance of the organisation.

Sabit: In our previous discussions, we’ve emphasised the importance of stakeholders. When we refer to stakeholders, we’re considering all parties involved in a broad sense. So, what are the key areas where stakeholders should be actively involved to ensure success and add value?

Emin: As a company expands internationally, it encounters a new environment with both internal and external stakeholders. Many companies are often surprised by the number of external stakeholders and struggle to understand why so many others are concerned about their entry into the market or acquisition. These new stakeholders can include advisory boards, supervisory boards, works councils, unions, and local authorities.

In this context, the best solution is to communicate with these stakeholders transparently and strive to understand their perspectives and how they are linked to the company’s success. As long as companies can align their strategies with their stakeholders, they can reap tremendous benefits. Stakeholders often bring new ideas and concerns to the table, sometimes highlighting issues that even local managers may not have considered.

The second group of stakeholders, which is perhaps the most obvious, are the internal stakeholders - your local organisation.

I’ve seen many times in my career the danger of creating an ‘us and them’ culture. This breeds a very negative situation. Companies may not be able to avoid this at the outset, but they must address it quickly and in an organised manner. The solution to this is clear communication, particularly of the strategic objectives, vision, and values of the international parent company. This ensures that everyone understands the overarching goals and helps the local organisation understand their strategic role and how their strategies and KPIs align with the company’s strategic objectives.

Creating an environment where there’s mutual understanding and communication is crucial. This should be followed by empowering managers and teams in international units to make autonomous decisions.

Sabit: The key concept here is the collective mission between the home and host country organisations, creating a joint effort for success. These are crucial points that can be overlooked, even by home country organisations. They may think they’re not involved in the operations of the host country, but in reality, there’s an integrated, vested interest for the home country as well.

Emin: In the language of a home country, host country, or even when you say parent company or subsidiary, there’s a hierarchy and a ranking of things. Trying to avoid that language as much as possible and promoting the concept of ‘one company’ is a significant step and effort.

Sabit: Precisely. When you mentioned responding to the needs of the times, today’s most important topic is ESG. That’s what we see across the board. Is ESG a concern for companies embarking on international expansion? Or is it a concern for other, larger companies?

Emin: That’s a good point. ESG is already an important issue to address for many companies in their domestic markets. But once you step into international markets, the sensitivities increase.

Today, international companies are under greater scrutiny to adhere to best practices in environmental issues and sustainability. Customers and consumers are curious about what you’re doing, not only in your local market, but also in other markets, and what your global policies are.

I’d actually like to view this from a positive perspective of opportunities. I find that embracing sustainability as a policy can drive innovation and differentiation. It can lead to the development of new products, business models, and services that evolve with consumer, industry and regulatory requirements. I’ve seen many times how sustainable practices lead to cost savings across the supply chain. Reducing water and energy consumption and waste are good practices for any company, as well as for environmental concerns.

Innovative sustainable or environmental products can certainly open up access to new markets. But I also want to mention stakeholders - customers, suppliers, investors - who require and want related parties who are concerned and responsible. Local communities want this; the new generation of employees wants to work with companies that care about the environment, about the world.

I’ve seen many interviews with new-generation employees who really want to understand how the company acts on environmental issues and sustainability, and what the company’s position is. They want to associate themselves with companies that have a positive footprint.

However, this is not without challenges. Anything that can be considered a lag or lacking in a given market may be reflected on the corporation as a whole. And companies are faced with varying environmental regulations in different countries, which bring yet another layer of complexity.

Sabit: Thank you, Emin. I guess we had an opportunity to discuss details at length for all aspects of expansion to international markets. Look forward to discussing additional topics in the future.

As the aviation industry enters a transformative era, the rise of electric Vertical Takeoff and Landing (eVTOL) aircraft brings about exciting possibilities for transportation. Brian Cartwright, Client Partner, Global Supply Chain Solutions, Pedersen & Partners, and a regular contributor for Global Supply Chain, recently spoke to Mark Robert Henning, Managing Director, AutoFlight Europe, a leading player in the Electric Vertical Takeoff and Landing (eVTOL) space. In this exclusive interview, Henning shares insights into AutoFlight's groundbreaking “Prosperity I”, the challenges faced by aviation suppliers in adapting to this new development, the influence of automotive suppliers, and the crucial role of an efficient and scalable supply chain.

Global Supply Chain (GSC): AutoFlight has been at the forefront of eVTOL development. Can you tell us more about the Prosperity I and its significance in the industry?

A: The Prosperity I represents a significant milestone in eVTOL technology. It embodies advanced electric propulsion systems, cutting-edge autonomous capabilities, and an aerodynamically optimized design that prioritizes safety and efficiency. With a range up to 250 kilometres and the capacity to transport up to four passengers and a pilot, it signifies the realization of our vision for sustainable urban air mobility and has the potential to revolutionize the way we travel.

GSC: With the rapid advancement of eVTOLs, what challenges do you anticipate aviation suppliers will face in adapting to this new development?

A: The aviation supply chain will undoubtedly encounter various challenges in this new era. One of the most critical aspects is the establishment of an efficient and scalable supply chain. As the demand for eVTOLs rises, suppliers must ensure timely and reliable access to components, systems, and raw materials. The challenge lies in meeting increased production volumes, maintaining quality control, and optimizing costs, all while adhering to stringent aviation regulations.

GSC: What can aviation suppliers learn from automotive suppliers in terms of mass production processes?

A: Automotive suppliers have excelled in streamlining their production lines to meet market demands. Their expertise in efficient manufacturing, supply chain management, and cost optimization is invaluable. Aviation suppliers can draw inspiration from automotive practices to achieve faster production cycles, reduce costs, and ensure consistent quality across their operations. Collaboration between the two industries can foster knowledge exchange, driving innovation and expediting progress in the eVTOL sector.

GSC: With a global reach, how can the industry manage the supply chain and service locally to ensure efficiency and avoid delays or logistical challenges?

A: It is crucial to efficiently manage the global supply chain while providing localized services. Advanced supply chain management tools, such as blockchain technology, can enhance transparency, traceability, and efficiency across the supply chain. At AutoFlight we are working on these projects and trying to learn from different industries. For example, learning from the telecommunications sector, where global companies maintain local service centres, can help address logistical challenges and ensure timely support for eVTOL operations.

GSC: Considering the challenges faced by the eVTOL industry, how can issues such as customer service and Maintenance, Repair, and Overhaul (MRO) be addressed to ensure timely delivery of replacement parts?

A: Customer service and MRO are great challenges as the global reach of the eVTOL operations will demand innovative solutions. The industry will need to work with advanced tracking and logistics systems to streamline part deliveries. Additionally, adopting predictive maintenance technologies and leveraging data analytics can enhance MRO operations, enabling proactive maintenance and minimizing downtime. Also, in this area eVTOL companies can learn from best practices in the automotive industry such as just-in-time manufacturing and after-sales support to streamline production. By establishing strategic partnerships with trusted suppliers and service providers, we can streamline the supply chain, expedite parts delivery, and maintain rigorous quality control standards to meet the needs of our customers.

GSC: In the aerospace industry, counterfeit or unapproved parts can be a concern. How can the industry tackle the issue of bogus parts to maintain the highest standards of safety and reliability?

A: In the helicopter industry we encountered the issue of bogus parts. Being a new industry, the eVTOL ecosystem might face similar challenges with counterfeit parts, which can only be talked about with a multi-level approach. This should include strict supplier vetting processes, including thorough audits and certifications. Leveraging emerging technologies such as RFID tags or digital twins can enhance traceability throughout the supply chain. Finally, implementing rigorous testing procedures for every part will be important to ensure the highest safety levels.

GSC: In light of the challenges and opportunities discussed, what do you see as the key to establishing a successful supply chain for the eVTOL industry?

A: Building a successful supply chain for the eVTOL industry requires collaboration, innovation, and adaptability. Suppliers must actively engage in partnerships, exchange knowledge, and embrace new manufacturing techniques. It is crucial to establish robust quality control processes, optimize logistics and inventory management, and invest in advanced manufacturing technologies. Also regional distribution centres and service hubs can help to reduce transportation costs, optimize inventory levels, and provide fast support to our customers.

GSC: AutoFlight recently achieved a world record in the eVTOL field. Could you share some details about this accomplishment?

A: Indeed, we are proud to have set a world record for the longest eVTOL flight. Our Prosperity I aircraft completed a non-stop, autonomous flight of 250.5km on a single battery charge in February 2023. This achievement underscores the progress we have made in extending the range and endurance of eVTOLs. It not only paves the way for longer-distance urban air mobility applications but also demonstrates the feasibility of electric aviation as a sustainable transportation solution.

GSC: Finally, as the industry evolves, do you see a shift from transportation of people to cargo logistics in the eVTOL sector?

A: Absolutely. While passenger transportation remains an exciting prospect for eVTOLs, the cargo logistics segment holds immense potential. eVTOLs can offer swift and efficient delivery of goods, reducing road congestion and enhancing supply chain operations. From medical supplies to urgent spare parts, eVTOLs have the capacity to revolutionize last-mile logistics and time-critical deliveries, making a profound impact on various industries. 

Mark Robert Henning is Managing Director, AutoFlight Europe, where he spearheads the design and certification of the eVTOL aircraft, Prosperity I. With 27 years of experience in the aviation industry, Henning has built a formidable reputation as an aeronautical engineer, having graduated from Munich’s Technical University. Throughout his career, he has been instrumental in the construction and certification of various aircraft types. Henning’s unwavering dedication and expertise continue to drive the progress of AutoFlight Europe, propelling the eVTOL industry forward and reshaping the landscape of urban air mobility.

Brian Cartwright is Client Partner, Global Supply Chain Solutions at Pedersen & Partners. He specialises in Board, CxO and Senior Executive Search, leveraging over 20 years of experience in business leadership, executive search, and strategic advisory. He leads the firm's Global Supply Chain Solutions Practice, is a leading member of the Aerospace, Defence & Intelligence team and is a member of the Automotive & E-Mobility Practice Group. Brian partners with listed and privately-owned enterprises, helping them build management teams that raise the bar to transform and improve supply chains and improve the organisations' capability, efficiency, and service levels across the entire value chain. His clients are from a broad spectrum of industry sectors, including Aerospace & Defence, Industrial, Consumer & Retail, Technology & Digital, Oil & Energy, Speciality Chemicals, AgriTech, Automotive & E-Mobility, Life Sciences & Healthcare. He brings extensive experience working with supply chain solutions providers including 3PL/4PL, E-commerce Fulfilment, Last Mile, Intralogistics Solutions, Technology Enabled Aggregator Platforms, Software Companies, Shipping Lines, Ports & Terminals, and Airports & Airlines. He works closely with his colleagues in over 50 countries, spanning the firm’s various practice groups, providing functional expertise for supply chain related searches, as the company's global supply chain expert. He is based in Dubai, UAE.

Brian Cartwright, Client Partner, Global Supply Chain Solutions, Pedersen & Partners, and a contributor for Global Supply Chain Magazine, recently had the opportunity to catch up with Ingo Kloepper, Global Managing Director, WeFreight.

In this interview, we hear Ingo’s perspective on the global supply chain considering the events of the past few years, and his thoughts on the future for the sector globally and the ongoing worldwide expansion of WeFreight. Ingo has been building WeFreight into a global freight forwarder with a focus on emerging markets since joining in 2021.

The growing e-commerce sector has revolutionised the logistics and forwarding industry in the Middle East. The rise of online shopping has created a demand for faster and more flexible logistics solutions, which has led to the development of new technologies and delivery models such as same-day delivery and last-mile delivery, affirms the Global Managing Director, WeFreight, a provider of a comprehensive logistics products and services, in an exclusive interview.

Global Supply Chain-Brian Cartwright (GSC): Can you tell us more about your career and experience in the Middle East?

Ingo Kloepper (IK): After starting my career as an apprentice freight forwarder in Germany in the early 1990s, I quickly progressed through various roles before joining DB Schenker. In 2007 I was given the opportunity to move the Middle East, which I did with no real expectation of how long I would be here.

After various roles in product management, I became head of Saudi Arabia in 2010, before taking on a regional ocean freight role in 2014. In mid-2015, I moved to Damco as head of the Middle East and joined WeFreight in 2021 in a global role as Global Managing Director.

GSC: What have been the main changes in the sector, since you moved to the Middle East?

IK: One of the most significant changes in the logistics industry has been the shift towards digitalisation and automation. In recent years, the industry has embraced new technologies such as blockchain, artificial intelligence, and the internet of things (IoT) to improve supply chain efficiency and transparency.

Infrastructure in the Middle East has undergone significant improvements, which has led to faster and more efficient transportation of goods. The region has witnessed the development of world-class seaports, airports, and road networks (with rail being planned), which have greatly enhanced the logistics and forwarding industry’s capabilities.

Finally, the growing e-commerce sector has revolutionised the logistics and forwarding industry in the Middle East. The rise of online shopping has created a demand for faster and more flexible logistics solutions, which has led to the development of new technologies and delivery models such as same-day delivery and last-mile delivery.

GSC: Can you tell us more about WeFreight and its focus?

IK: WeFreight is a fast-growing freight forwarder with a rapidly expanding global network. Our focus on digital innovation has enabled us to serve customers large and small with a full range of products and services, while our experienced teams are always ready to support customers.

However, what sets us apart is our unwavering commitment to being the agile logistics leader in emerging markets. We recognise the immense potential of these markets, and our goal is to leverage our expertise to unlock new opportunities for our customers.

GSC: What are the main challenges facing the logistics market in the Middle East in 2023?

IK: The logistics outlook for the Middle East in 2023 is largely uncertain, and many companies face supply chain challenges. Some of the key areas of interest include:

Increasing competition:

With the grip of the pandemic loosening, shoppers are flocking back to brick-and-mortar stores to savour the delights of being able to pick up, try on, and evaluate items first-hand rather than via online images.

For ecommerce retailers, this means facing competition from other retailers as well as traditional outlets. To stand out in a crowded marketplace, some ecommerce concerns are offering online discounts, special deals, exclusive goods, and big sales.

Focusing on customer demands:

In order to survive, retailers must provide what customers demand, and that goes for service as much as product. If customers want on-demand delivery, vendors must pull out all the stops to cater to the growing penchant for immediate gratification.

Meeting the requirement for end-to-end visibility in the supply chain:

While customers increasingly expect end-to-end visibility across their supply chains, the heavy investment needed by companies to achieve this goal means it is unlikely to become the norm any time soon.

Focus on Sustainability:

Companies that have not instituted a sustainability policy throughout their supply chains face being ignored in favour of those that have. Consumers increasingly support companies that demonstrate proactive concern about the impact of their operations on the environment.

Supply Chain Compliance:

This is possibly one of the most complex challenges facing emerging market forwarders. Unless companies are meticulous in ensuring compliance, they can face hefty fines or be taken to court.

GSC: What in your opinion is a major area that companies struggle with in their supply chains across the Middle East?

IK: As mentioned earlier, one major challenge is the lack of visibility and transparency in the supply chain. This is mainly due to the involvement of multiple stakeholders such as suppliers, transporters, and customs authorities, who may have different systems and processes for tracking and sharing information.

This lack of visibility can lead to delays, increased costs, and a higher risk of inventory shortages or overstocks. Additionally, the increasing demand for faster delivery times and customer expectations for real-time tracking and notifications further exacerbate this challenge.

GSC: What are the major challenges when moving goods into and across the Middle East?

IK: When it comes to moving goods across the Middle East, logistics companies and their customers need to consider several challenges. These include:

Border crossings:

The movement of goods across borders can be challenging due to customs clearance procedures, documentation requirements, and security checks. Delays at border crossings can result in significant disruptions to the supply chain.

Infrastructure limitations:

While the Middle East has made significant investments in infrastructure in recent years, there are still limitations in terms of road networks, ports, and airports. These limitations can result in congestion and delays in moving goods.

Political instability:

The geopolitical landscape in the Middle East can be volatile, and political instability can lead to disruptions in the supply chain.

GSC: What role does technology play in the logistics industry in the Middle East, and how is your company using technology to improve its services?

IK: Technology plays a significant role in the logistics industry in the Middle East, and WeFreight recognises the importance of using technology to improve our services. The region is known for its rapid adoption of new technologies, and this has led to an increasing demand for innovative logistics solutions.

We have invested heavily in technology to enhance our operations and improve our services. We use CargoWise across our global network to ensure standardisation and data quality, and we also use data analytics to gain insights into our operations and identify areas for improvement.

What has changed over the past two years, and what is next for supply chain leadership hiring?

Recruitment trends for supply chain leaders across all industries and regions can vary significantly, so I am careful to avoid generalising. Nevertheless, a few potential trends have come to the fore over the past two years:

The global pandemic highlighted the importance of efficient and resilient supply chains, and we are not out of the woods yet. Over the past two years, this has led to a phenomenal increase in demand for skilled supply chain professionals in several important functional areas. Much of the overall focus of companies has been on finding ways to accelerate supply chain improvement projects. I want to highlight three significant points which I am sure will be beneficial for employers and individual leaders alike, based on my own experience gained from search mandates that I have led over the past two years.

1. There is now a greater emphasis on digital experience in supply chain leadership recruitment.

I do not use the term “digital transformation” here, and this is deliberate. The supply chain leaders that we are helping organisations to attract are people who have demonstrated the ability to step back from the digital element and focus first on whether the right foundations are in place – in other words, the people and processes. These supply chain leaders have truly walked the walk, and in most cases, have experienced first-hand the ramifications of getting something wrong when implementing new systems to improve end-to-end supply chain operations.

2. Focus on sustainability and social responsibility in supply chains is being taken very seriously.

This focus is being driven by consumers and investors who have become increasingly aware of issues, and it has in turn influenced recruitment in the supply chain sector. Many companies have been looking for leaders who have enough prior experience to help them to address these issues and meet the evolving expectations of their stakeholders.

3. A move towards a more diverse mix in supply chain leadership teams is happening right now.

Companies have been looking to diversify their supply chain leadership teams by bringing in different perspectives and experiences gained in other regions or sectors. This has led to an increased focus on diversity in the supply chain search mandates that we have completed.

In short, companies need to bring onboard supply chain leaders who know what good looks like.

Overall, these are just three of the trends that have emerged over the past two years. Of course, it is important to note that these trends may not apply to all industries and regions, and that recruitment trends can vary significantly depending on a range of factors.

Supply Chain Outlook 2023

One major impact over the past two years has been the disruption to logistics networks. This has led to supply chain bottlenecks, and made it difficult for companies to get the raw materials and components they need to manufacture their products. As companies battle to find better ways to manage their supply chain networks, the increasing complexity of global supply chains will continue to challenge supply chain leaders in 2023. As companies look to reduce their reliance on a single supplier or transportation route, they are turning to more diverse and complex supply chains. Without suitable leadership teams in place, it will be more difficult to manage and coordinate these supply chains and increase the risk of disruptions.

Do you have the right leadership in place to drive success? Are you ready to start the discussions which would determine the critical competencies that your organisation needs to remain competitive in 2023 and beyond? Does your supply chain experience reveal other 2023 highlights?

September 12, 2022 – Dubai, UAE – Pedersen & Partners, a leading international Executive Search and Leadership Consulting firm with 54 wholly owned offices in 50 countries, welcomes Shayma Ibrahim as a Principal in Dubai. She will be responsible for business development, Executive Search, and client management across the GCC region.

Shayma Ibrahim is a Principal at Pedersen & Partners, based in Dubai, UAE. Ms. Ibrahim has over a decade of Executive Search experience with a strong focus in the Natural Resources & Energy, Industrial, Supply Chain, Logistics & Transportation, Consumer, Government, Education & Non-Profit, and Family Groups sectors. She built her career at a major global retained Executive Search firm, where she partnered with senior executives in her specialist sectors across the GCC region. At the same time, Ms. Ibrahim established and led the first in-house customer experience department aimed at improving the client experience throughout the lifecycle of the mandate. Prior to her Executive Search career, Ms. Ibrahim gained consulting experience in the USA as an Outplacement Consultant and Certified Mediator, and worked in the Real Estate sector. In 2008, Ms. Ibrahim moved to the United Arab Emirates, where she first worked in Dubai and then in Abu Dhabi in the Information Technologies Security sector.

“We are committed to bringing our clients strategic and tactical advice through our expert teams, which provide deeply-rooted industry knowledge, diverse perspectives, and rigorous understanding of leadership team challenges in diverse and multicultural organisations. Shayma has built a reputation for superior client service through long-lasting relationships, and I look forward to working with her as we continue to grow our Global Practices and strengthen our holistic approach,” said Michael Al-Nassir, Partner in charge of developing Pedersen & Partners' presence in Middle East & Africa and the Head of Private Equity Practice APMEA at Pedersen & Partners.

“The GCC region offers an abundance of development opportunities for clients looking to strengthen their foothold and expand to other markets. I look forward to further building our capabilities across the region by helping our clients to bring on board talented leaders who will make a meaningful impact on their businesses. Pedersen & Partners’ collaborative style and client-centric approach to search execution is a perfect fit for my own commitment to delivering excellence via pragmatic solutions that drive bottom-line results. I am delighted to join this team, where I look forward to helping our clients build visionary leadership teams,” added Shayma Ibrahim, Principal at Pedersen & Partners.

Pedersen & Partners is a leading international Executive Search firm. We operate 54 wholly owned offices in 50 countries across Europe, the Middle East, Africa, Asia & the Americas. Our values Trust, Relationship and Professionalism apply to our interaction with clients as well as executives. More information about Pedersen & Partners is available at www.pedersenandpartners.com.

If you would like to conduct an interview with a representative of Pedersen & Partners, or have other media-related requests, please contact: Diana Danu, Marketing and Communications Manager at: diana.danu@pedersenandpartners.com

Introduction

Within the last couple of years, it has been almost impossible to have a conversation with an automotive executive without the topic of Supply Chain featuring heavily.

Automotive manufacturers (OEMs) and their suppliers have been challenged in two main ways:

• They have been unable to source the correct type or sufficient volume of the multiple semiconductor chips and other components that are needed for their vehicles and underlying systems; and
• The shifts in manufacturing priorities and planning that result from these problems (e.g., the allocation of limited supplies of key components to the most profitable vehicles in an OEM’s model line-up) have played ‘knock-on’ havoc with the suppliers’ own priorities and planning – and thus their cashflows.

Disruptions arising from Covid, and now the war in Ukraine, have also added to the industry’s woes, particularly in terms of supply cost, and these are likely to continue.

It is probably fair to say that although Supply Chain has been a tremendous headache for Automotive OEMs and their suppliers, many players were to some extent ‘the architects of their own demise’. Automotive OEMs and their suppliers have sometimes behaved unreasonably as buyers, thinking tactically about short-term challenges rather than concentrating strategically on long-term supply sustainability.

However, one exception to this general ‘rule’ may have been Tesla.

Tesla’s Supply Chain Approach In 2020

In 2020, as the pandemic and lockdown measures first started to impact demand, many automakers cut their chip orders. At the same time, many semiconductor manufacturers switched their priorities towards their less ‘challenging’ and more profitable customers.

Meanwhile, Tesla anticipated continuing demand over time, and as a result, never reduced its production forecasts with suppliers. This left Tesla in a position where it was much more able to weather the same chip shortage that quickly became such an incredible ‘pain’ for most other OEMs.

Tesla was also smart in how it approached potential Supply Chain bottlenecks from a tactical perspective. Examples of Tesla’s pragmatic thinking included:

• Telling some customers that they could take delivery of vehicles with certain parts missing, such as Bluetooth chips and USB ports;
• Removing certain features from its vehicles, such as radar sensors and lumbar support for front passenger seats, which made the car less complicated to build; and
• Increasing vehicle prices to address higher costs, including ‘expedite costs’ for parts. US consumers must now wait for seven months if they order a Model Y version, the price of which went up by 18% last year.

Of course, by virtue of its brand and reputation, Tesla probably has more ‘market permission’ than many other players to act in this way.

However, there is a clear indication that this non-traditional company simply has a different way of thinking and is, therefore. less bound by industry norms and constrained thinking that sometimes exists amongst other players.

There is a strong case that different thinking only comes from different (and differential) people.

Potential ‘Take-Aways’ for the Automotive Industry

Philosophically, Tesla takes a different approach to Supply Chain management, compared to the more traditional OEMs:

Most of Tesla’s rivals rely on automotive suppliers for support, but Tesla designs a lot more of its own hardware and writes more of its own software than its competitors.

Tesla can quickly modify circuit boards to accommodate alternative chips, because the company designs its own circuit boards.

Tesla has a team of in-house engineers who design the majority of the software in its vehicles.

Perhaps it is time for other OEMs to consider bringing more ‘mission critical’ activities in-house?

Other lessons for OEMs might also be drawn from Tesla’s approach:

Sustainable battery supply will likely be a key determinant of success in an electrical future. From the outset, Tesla set out to take control of its battery supply chain by building its own Gigafactory in Nevada;

Tesla built in-house capability to write the software code that runs its cars, whereas its competitors have relied on external suppliers for this expertise. This decision gave Tesla the ability to rewrite its code in order to accommodate whatever semiconductors the Company was able to procure;

Tesla’s control over its own software has given it the flexibility to change suppliers and semiconductors as needed;

Tesla’s ownership of onboard computer design and software has allowed it to standardise chips, so each car has fewer chip SKUs to procure; and

Tesla has fewer finished product SKUs. There are only four models of Tesla vehicle, compared to over 40 passenger vehicle models for large manufacturers such as Toyota.

“We’re designing and building so much more of the car than other OEMs who will largely go to the traditional supply base and like I call it, do ‘catalog engineering; … which is not very adventurous.” Elon Musk, ‘Technoking’ - TESLA

Tesla is providing valuable pointers to the Automotive Supply Chain on the power of building in flexibility, seeking design standardisation where possible, and reducing the costs of complexity that large SKU portfolios can bring.

Do you have the same ability to create your own leading Supply Chain approach, based on a solid vision and strong execution?

Driving the Right Outcomes

Of course, many factors influence Tesla’s success – but it is hard to dispute that the company’s approach is both purposeful and impactful. We would argue that innovative Supply Chain thinking has been a critical success factor for Tesla: 

• In 2021, Tesla made a record US$5.5 billion profit;
• Tesla had an 87% jump in auto deliveries last year, despite the global semiconductor shortage;
• Tesla’s Q1 2022 delivery and production results hit a new all-time delivery record – a year-over-year increase in production of 69%, and
• The Company reported a 71% rise in revenues to $53.8 billion for the year in 2021.

Thus, the potential rewards for putting the right Supply Chain systems, processes, technology, and PEOPLE in place are considerable.

Critical Supply Chain Questions to Ask

At Pedersen & Partners, we believe that there are several questions you can pose as you consider your position relative to today’s Supply Chain challenges:

• What are the main Supply Chain bottlenecks that you are currently facing?
• How do you plan to mitigate this risk in the future?
• Do you have full visibility across your Supply Chain, or do you still need to develop solutions to manage this better?
• Do you have plans to relocate any of your manufacturing or logistics operations?
• Are you ready to understand and fully address the people and processes driving your Supply Chain before considering any kind of transformation?

Most importantly, do you have the right leadership and team(s) to drive success? If not, Pedersen & Partners will be happy to facilitate a discussion with you to determine the critical competencies that your organisation needs – not only to perform better today, but to transform for tomorrow.

Sources:

https://www.reuters.com/markets/europe/how-tesla-weathered-global-supply-chain-issues-that-knocked-rivals-2022-01-04/

https://www.supplychainmovement.com/tesla-supply-chain-from-cautionary-tale-to-role-model/

https://www.bbc.com/news/business-60149374

https://electrek.co/2022/04/02/tesla-tsla-beats-all-time-delivery-record-q1-2022/

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.

October 19, 2020 – Texas, USA – Pedersen & Partners, a leading international Executive Search firm with 54 wholly owned offices in 50 countries, is pleased to announce that Casey Fisher has joined the firm as a Senior Advisor to the Global Supply Chain & Logistics practice, based in the United States.

Mr. Fisher has over 25 years of experience in supply chain leadership and general management across the United States, Asia-Pacific, and Australia/New Zealand, with organisations including Compaq, Apple, and CEVA Logistics. Mr. Fisher served in a variety of top management roles with Compaq, spent over a decade in senior Supply Chain Leadership roles in North America and Asia with Apple, and subsequently worked in senior P&L leadership roles with CEVA Logistics in Asia and Australia/New Zealand. Upon returning to the United States with CEVA, Casey was promoted to Executive Vice President for Business Development. Casey is currently the Managing Partner of a management consulting firm which he co-founded in 2017, providing C-suite interim and fractional executive advisory services.

“We are extremely pleased to have Casey join the firm. Casey is an international executive with unparalled expertise, which he has been able to develop throughout his career with blue chip multinational organisations. With Casey joining the firm, we will be able to further enhance the expertise and value that we deliver to clients across the globe,” said Gary Williams, CEO at Pedersen & Partners.

“Clients demand expertise and a thorough understanding of their shifting business risks and opportunities when calibrating their executive teams. Pedersen & Partners has the reach, scale, and commitment to serve a multicultural client base that encompasses mature, emerging, and developing markets across the globe. I am excited to be part of the Pedersen & Partners team and I look forward to driving value to clients as they continue to evolve and grow their leadership teams,” added Casey Fisher, Senior Advisor at Pedersen & Partners.

Brian Cartwright, Client Partner, Supply Chain and Logistics for Pedersen & Partners, and regular contributor to Global Supply Chain, meets exclusively with Hussein Wehbe, CEO, Fetchr, to discuss a wide spectrum of issues from the current state of his company’s business, priorities, his vision for the future and how technology is altering and reforming the industry landscape.

Hussein Wehbe CEO, Fetchr.

Brian Cartwright Client Partner, Supply Chain and Logistics for Pedersen & Partners.

Dubai-based Brian Cartwright specializes in Supply Chain & Logistics-related functions for CXO, VP, and Director-level in global, regional, and country level roles, working with service providers and end-user companies across the globe including large listed corporations, family-owned conglomerates, SMEs and start-ups. Cartwright has over fifteen years of experience in Executive Search and Recruitment. During his career he has owned and managed successful businesses in the Middle East and Europe.

Earlier this year, the COVID-19 pandemic immediately drew the world’s attention to the fact that major issues can arise due to supply chain disruptions. It has become clear that individuals and organisations are far too dependent on extended global supply chain networks. The failure of supply chains in the life science and healthcare sector during a global pandemic can be a literal matter of life and death.

In preparing this article, we sought insights from Pedersen & Partners colleagues who focus on Supply Chain and Life Sciences & Healthcare, based in diverse locations across the world: UK, Switzerland, UAE (Dubai), and India. 
 

COUNTRY FOCUS: Switzerland

Our colleague Thomas Heeger, based in Zurich, shares the following insights from Switzerland:

In Switzerland, all shortages of pharmaceutical drugs are registered in a central database. A quick check of the drugshortage.ch database will show that hundreds of drugs (including many generics) are permanently unavailable, and need to be replaced by others with the same active ingredients. Heeger adds that drug shortages were a problem in Switzerland and many other European countries even before the pandemic.

During the height of the outbreak, most pharmacies and wholesalers were completely cleaned out of the drug Plaquenil (hydroxychloroquine), and the supply was eventually coordinated by the state through the Swiss army. In addition, several drugs could not be sold via pharmacies as usual; instead, GPs had to send their prescriptions to the hospital, where the hospital pharmacist approved the prescriptions, filled them, and mailed or delivered the drugs to the patients. Likewise, the Swiss army was responsible for securing hospital supplies of equipment such as masks, gloves, surgical instruments, ventilators, anaesthetics such as propofol, and disinfectants.

Swiss textile companies have retooled their machines in order to produce masks, part of a trend that we have seen in textile companies across Europe. In Romania, Pedersen & Partners have been instrumental in helping to find and recruit a CEO for such a textile business, which has quickly responded to changing market needs with a new medical venture, and is able to serve the EU from within the borders of the single market.

In all European countries, there has been a push to obtain as many of the critical products as possible, using all available supply channels. This includes grey channels such as direct deliveries from Chinese dealers (sometimes at highly inflated prices), and can cause issues in the manufacturing countries. For example, Russian ventilator manufacturers have sold ventilators in Western Europe, despite domestic shortages causing disastrous situations in Russian hospitals.

Today, pharma companies and contract manufacturers are preparing for the production of coronavirus vaccines, without knowing exactly what they will be producing. Lonza/Basel Switzerland has received USD 200 million from Moderna to construct two manufacturing lines. Moderna’s drug is currently in Phase III of development, and Lonza/Basel’s share price has increased from 350 USD in January 2020 to over 500 USD in August 2020.

COUNTRY FOCUS: India

Our colleague Rakesh Sharma, based in the New Delhi region, shares the following insights about the market in India:

In India, the Life Sciences & Pharmaceutical industry has been deemed an essential industry under the current circumstances. The Indian government exempted employees and contractors in pharma and medical manufacturing and operations from lockdown, and manufacturing facilities remained operational, albeit at only 50% manpower availability.

Special attention was given to a number of key issues, including challenges for imports due to low shipping availability, lack of storage space at airports and inadequate staffing.

Indian companies scaled up operations to meet the increase in demand for chloroquine phosphate, which has antiviral effects and has been highlighted by the World Health Organisation as a research option to treat COVID-19. In addition, companies are ramping up production of vials (specifically, Type 1 Moulded Vials) in anticipation of the demand when a coronavirus vaccine is ready.

Since the beginning of the pandemic, the shortage of active pharmaceutical ingredients (APIs) and packing material from China has caused immediate disruption and led to drug shortages. India imports 70% of its APIs from China, so as the virus has spread, the pharmaceutical industry in India has inevitably faced higher material costs, as well as shortages that affect its export of generic medicines. The disruption has also affected clinical research into investigational drugs; such research relies on the availability of similar manufacturing plants. Clinical trials and long-term studies of drugs used for conditions such as Type 2 diabetes have been paused temporarily; there will be a concerted effort to create alternate supply sources, but this will take time to stabilise.

With regard to the domestic supply of drugs in India, there has been a gradual shift to online delivery as e-tailers start to provide last-mile solutions. However, they are new to the business of supplying medicines, and thus unfamiliar with pharmaceutical delivery SOPs.

Going forward, there is much that we can learn from this situation about the ways in which supply chain networks can be structured and managed in the future. One positive development for life science and healthcare supply chain leaders is that the crisis has highlighted the importance of supply chain oversight at all levels of an organisation: strategically from the perspective of the boardroom, and operationally from start to end – the sourcing of raw materials and manufacturing, right through to the last mile. As businesses start to adapt to what many of us are calling the New Normal, supply chain leaders will increasingly find themselves having to strike a balance between the long-term strategic visions of a business and the need for increased regularity of planning and forecasting, providing an ability to flex and pivot to meet changing market demands caused by unexpected events or disruptions.

Our Supply Chain experts, Brian Cartwright and Marc Kramers, have provided some insights into recent developments that will benefit Life Science & Healthcare Supply Chain leadership and networks:

Supply Chain leaders in the boardroom

In order for supply chain leaders to operate effectively at board level, it is important to give them wider exposure across the business so they can learn to speak the language of the boardroom as well as the language of the supply chain. The new skills and capabilities that supply chain leaders gain by having a wider understanding of the entire business will give them an understanding of shareholder value and expectations, which will ensure a smoother transition when they move to the role of Chief Supply Chain Offer (CSCO). The CSCO will play an increasingly crucial role in all manufacturing companies, adding real value to both bottom line and top line growth. Together with the CFO, the CSCO will become one of the key players in the boardroom and a crucial hire!

Real-time supply chain visibility, and a shift to manufacturing

The pandemic has helped to accelerate the digital agenda faster than ever before. The increased use of technology such as blockchain is helping to stop poor-quality and counterfeit medical equipment and medicines entering the supply chain. The way products are sold and distributed is changing, with manufacturers and retailers increasingly using omni-channel go-to-market strategies. Supply chain software platforms are constantly being developed and improved, with added efficiencies coming from the use of artificial intelligence and automation.

Advanced technology plays a major role in decision-making, and more and more start-ups are providing enterprise solutions to better predict demand, optimise production and provide more customised products on demand. Adapting to the new paradigm really is a case of damned if you do, damned if you don’t; companies must be prepared to make mistakes as they learn what works for their particular use cases. The Fourth Industrial Revolution will revolutionise the relationship between manufacturers and end-users through IoT (Internet of Things), but more importantly IoS (Internet of Services) – this is the real value creator.

As sourcing and production move closer to end-users, most companies are now considering building new manufacturing facilities. Global supply chains were predominantly built to lower the cost base and reduce warehousing capacity, using the just-in-time delivery model. The weaknesses of just-in-time have been highlighted by the supply chain issues of the pandemic.

A global reset, not a new normal

The global Pharmaceutical & Life Sciences companies will overcome this pandemic with relative ease, due to their larger cash balances and diverse product portfolio. What is really hurting them right now is their lack of agility, and inability to bring enough of their high-value products to the end- users quickly enough. The supply chains are still too silo-focused, and it takes too much time to get from product innovation to final delivery. Moreover, the bigger brands do not appeal to the younger generation, as plenty of startups bring trendier brands to the market more quickly, and with a superior social media presence. These startups continue to eat away at the revenue stream of the large consulting firms, with more use cases and better-executed solutions.

Going back to the new normal is not the way forward; the old normal was broken in many of our global economies. In order to stay competitive, we need to press the reset button in order to compete independently and be less reliant on, for example, China and the USA.

It is now widely accepted we have entered the Fourth Industrial Revolution, and pretty much everyone gives it the German name: Industry 4.0. As with the previous industrial revolutions, Industry 4.0 is mainly centred around manufacturing, at least in the early stages of transformation. Are SMEs and large corporations adapting fast enough in digitising their supply chains? According to a CPG benchmark Factory of the Future report conducted by SmarterChains and sponsored by EY, under 10% of the factories assessed are at a stage of maturity in their incorporation of advanced technologies. This is a shocking figure, as some of these companies have vast cash reserves to invest. The obvious question is, why are we so slow to adapt?

Transformation starts with an inquisitive mindset. The curious mind leads to a desire to take risks, for instance by collaborating with startups on a user case basis – and if it works, helping them to scale across the enterprise. This can be contrasted with the current status quo, where large consultancy firms create a report (which is often the best-kept secret within the company) of which technologies to use. This system may not be the best solution; no two manufacturing plants are the same, and therefore a one-size-fits all solution does not scale and is not sustainable.

So what is the next step, if we want to be less reliable on global supply chains, from a cost point of view? Shorter supply chains are an obvious solution, but they inevitably bring higher costs with them. Ultimately, we as consumers will pay the price. If we bring manufacturing closer to the end-user, there will be a lack of capacity, and therefore new factories will have to be built (good news for lower-salary countries), together with new and expanded warehouses and distribution centres. It remains to be seen whether we forget the lessons learned from the current pandemic, and keep pushing forward with the ‘old’ model, which is typically risk-averse and keeps people safe in their jobs for a little while longer. It is our opinion that the more adventurous and agile companies will take a hard look at their leadership teams, and assess whether they are capable enough to bring their organisation through this crisis – and more importantly, how competitive they will be at the other end.