“Chaos”. The word chosen by Camille Demarquilly to describe the arrival of the Covid-19 pandemic is unequivocal. “We are a globalized company. At that time, there was not a point in the world where we were not in difficulty,” recalls the vice-president of the Michelin supply chain. From March 16, 2020 and the entry into confinement of France, the group decided to interrupt almost all of its production in the territory, but also in Spain and Italy. A few days later, the sites established in the United States and India suffered the same fate. In almost 130 years of history, the tire manufacturer has never experienced such a situation.
Very quickly, Camille Demarquilly’s teams found themselves thrust into the heart of strategic discussions. Crisis units are set up, including one at group level led by the supply chain management itself. “We had an immense need for responsiveness. We went from monthly to weekly management by getting as close as possible to the field,” says the manager. It then applies a plan in three stages: prevention, “with mechanisms that make it possible to absorb the shock”, management, with the creation of these regional units, and finally exit from the crisis by “restoring performance”.
Classic processes when the problem identified is local. But when it takes on a global dimension, it changes the situation. “Knowing who to bring together, determining which people are sick, who can take over whose position… This led to reflections on the organization,” recognizes Camille Demarquilly. In the space of a few months, the health crisis will permanently transform the way in which Michelin understands its supply chain division.
“Decisions had to be made very quickly”
The start of a paradigm shift for many CAC 40 companies, particularly in the industrial and luxury sectors. “The supply chain has become extremely important to businesses, whereas it was previously seen as a supporting function. The bosses of these divisions are today at very high management levels. They have greatly gained visibility and their favorite subject is really taken into consideration, much more than before,” assures Fabrice Bonneau, founding partner at Argon & Co, an operational strategy consulting firm.
At Safran too, the pandemic has shaken up habits. “Historically, aeronautics is a long-cycle activity. During Covid, we experienced a collapse in traffic like we had never had before. Our market, but also our activity, risked being shut down “Decisions had to be made very quickly, even though this is a sector that favors long-term thinking”, relates Marjolaine Grange, group director of Industry, Purchasing and Performance within the world’s second largest aeronautical equipment manufacturer. Usually managing their supply chain independently, the engine manufacturer’s various subsidiaries worked hand in hand, with central management.
A long series of crises
Covid-19 was only the first crisis to be managed in a long series. Caused by a combination of factors, including increased orders for electronic products during various lockdowns around the world, the semiconductor shortage has given many companies a hard time. “This resource was not considered critical until the disruption of value chains,” recalls Damien Mariette, manager of the CPR Invest – European Strategic Autonomy fund.
In the automobile industry, the impact was major. Like other manufacturers, Renault went through a completely atypical period with the pandemic. Initially, “we were able to build cars as much as we wanted, but we no longer had any customers,” remembers Denis Le Vot, supply chain director of the diamond group. With semiconductors, the situation is reversed. “We paid dearly for the availability of components. We had a lot of demand, but not enough cars.”
As early as 2018, Renault began transforming its supply chain to move to an organizational model end-to-end [NDLR : de bout en bout]. The principle: being able to manage all stages, from the departure of parts from suppliers’ stock to delivery of the vehicle to the customer, in a transversal manner. Covid-19 played an accelerating role. “We spent our time managing extremely short-term crises, we were constantly in a “war room”. We shut down a factory and we lost 10,000 cars. We learned a lot during this period,” confides Denis Le Vot.
Internally, with the help of Google and the Shippeo platform, the French manufacturer’s teams put themselves “in start-up mode” to develop a tool called Control Tower. This technology, powered by artificial intelligence and algorithms, makes it possible to follow in real time the route of the 6,0000 trucks that take the road every day to deliver parts of all kinds to factories. “Before, when a delivery vehicle was broken down, we received an SMS with the missing references and we contacted the site concerned to find out if it had enough to cover the day. Now we follow everything live,” explains Antoine Gatignol , Vice President Supply Chain Capacity and Resilience.
Another major development: Renault has acquired much better knowledge of suppliers and subcontractors. To locate them, the manufacturer carried out extensive data collection work. It lists no less than 5,000 supplier sites with which it is in direct contact and now identifies 100,000 others of ranks 2, 3 and 4. The entire system is constantly updated with the latest weather data and road traffic from way to react immediately in the event of a problem. A real data culture has developed in companies. “Man’s capacity for adaptation is quite impressive. In a few days, large companies began to extract data, things they had never managed to do before,” notes Fabrice Bonneau of Argon & Co.
Climate disasters, the new risk
A technology that is now crucial for responding to other shocks, such as in the event of a natural disaster. Recently, thanks to its system, Renault’s supply chain management was able to determine whether its suppliers in Turkey had been affected by the earthquake or react almost immediately when the floods in Slovenia in August 2023 severely damaged the factory of one of its key partners. “We have entered a period of instability, in which access to a certain number of products, which seemed simple to us, will become much more complicated,” warns Vincent Viguié, researcher in the economics of adaptation to climate change in Cired.
To avoid disappointments, the cost of which can sometimes amount to several tens of millions of euros, the materials manufacturer Saint-Gobain has, under the pressure of successive crises, identified the territories where it only had a single source of ‘supply. “To put it simply, we can use a raw material that costs very little, but which is used in the composition of half of our products. If it ever comes from a country or a supplier for which we do not have a solution emergency, it’s very problematic”, points out Rafael Anchustegui, vice-president of purchasing for the group. To remedy this, the strategy consists of diversify sources of supply locally, regionally and internationally. “This may cause a small additional cost, but the risks avoided are enormous and we gain peace of mind.”
At the same time, the company, which employs 160,000 people worldwide, has put the supply chain back at the center of decision-making. “Previously, purchasing did not have the resources and importance that this service deserved, we began a process of professionalization of the function by integrating profiles who have both technical but also relational skills,” continues Rafael Anchustegui , with a new credo: “There is not one person who thinks, but 1,000. We rely a lot on collective intelligence, this allows us to solve 99 problems out of 100”.
However, it is impossible to anticipate everything. In this case, “you have to be able to react very quickly,” recognizes the Saint-Gobain manager. Recently, Houthi attacks in the Red Sea have largely disrupted shipping through the Suez Canal. “We have not stopped any factories and this would not have been possible without digital tools,” says Antoine Gatignol of Renault. One thing is certain, the supply chain has earned its stripes and is ready for the next crisis.
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