Current Challenges in Supply Chains
The Croatian text has been translated into English exclusively with the assistance of ChatGPT.

Current Challenges in Supply Chains

(1) After demonstrating its importance during the pandemic, the supply chain industry recently faced new challenges in the Red Sea. How do all these situations affect supply chains and their role?

As always when discussing supply chain challenges, I would like to emphasize the need to distinguish between the supply chain and logistics. The supply chain encompasses the flow of materials, services, and information. Lately, there has been much discussion about financial flows as well, so we can define the supply chain as the flow of materials, services, information, and finances from suppliers to customers. The task of supply chain management is to balance supply and demand by implementing supply chain management strategies. To balance supply and demand, we must predict demand, define the quantities to order and replenish, produce, and deliver. To make this possible, among other things, we also use logistics. Logistics is defined as the movement of materials and goods (mostly involving transportation, storage, and packaging).

Therefore, when discussing the pandemic and crises in the Red Sea, we are mostly talking about disruptions in logistics. Or, we can say, in logistic chains. These disruptions have always existed and will always exist. Whether they are caused by pandemics, geopolitical situations, terrorism, sudden changes in demand, or climate change. Croatia experienced a war, and there were disruptions in logistic chains. Yet, in the end, everything somehow worked out. The supply chain, and consequently the logistic chain, always find a way to function. Of course, this affects costs, but that's why I believe we should view supply chains as one entity and introduce end-to-end visibility.

If we recall the concept called the Supply Chain Triangle, everything will become clear to us. The crisis in the Red Sea forced shipping companies to travel around Africa. This increased transportation costs and carbon dioxide emissions. But there is no other choice for now regarding maritime transport from Asia to Europe. However, there are choices in production methods, storage methods, selection of raw material, goods, and energy suppliers, inventory management, and every other point in the supply chain. And if we set KPIs at the level of the entire supply chain, we can always optimize. When we lose in one silo, we can compensate in another silo. At the supply chain level, we will remain the same, if not become better.

Therefore, I believe there is no room for panic. Disruptions have always happened and will continue to happen. The future is never completely certain. What we can do is be agile and flexible. Being agile means we must learn to act quickly, and being flexible means we must be prepared for alternatives. And we can achieve this by developing multiple scenarios. And we will be good at developing different scenarios if we are equipped with knowledge and experience. And if we realize that integration, collaboration, coordination, and communication in the chain are crucial. And we must make the supply chain resilient. This means we must be prepared to accept disruptions, face problems, and address them. And all of this, of course, supported by digital technologies and data-driven decision-making. Risk management to the nth degree!

(2) Challenges go beyond supply issues, and one of the current ones is the global problem of labor shortages. How to approach solving this problem, and what can Croatia do in this regard?

When we mention labor shortages, we primarily think of truck drivers. Gartner has published its research on this issue, from which we gain insight that good financial conditions are something that is expected if we want to attract and retain the workforce. Additionally, employees attach great importance to flexible working hours. For drivers over 45 years old, good retirement and health insurance benefits are very important, while for drivers under 45 years old, education and obtaining a commercial driver's license are important. Regarding employees in ports and warehouses, I believe we can apply similar thinking. Working conditions are indeed important, and companies must take care of them.

As for employees in positions such as planning, forecasting, ordering, optimization, digital support, and others, let's call them office jobs, in Western countries, the higher education system has recognized the importance of these jobs, so there are many education programs in this area. Every reputable business school offers an MBA in supply chain management. Although, in my opinion, someone working in these positions must primarily have analytical thinking skills, must be a problem solver, and know how to use digital technologies, and then complete an MBA. Supply chain management is very interdisciplinary, and people need to be educated in various fields.

As for Croatia, I'm not sure what to say. Everything is still in its infancy, although people in the field like to say that there is significant progress. I don't think we have any progress. Look at university programs, and everything will be clear. However, despite that, we are witnessing the development of logistics in Croatia lately. Ports in Rijeka and Ploče are being built, negotiations for railway modernization are underway, Croatia is starting to be mentioned as a logistics hub. Logistic and distribution centers are being built around Zagreb, and slowly in other areas across Croatia. All of this gives hope, at least in the field of logistics. In any case, I advocate the view that not everything in Croatia has to be about tourism; we have an excellent position for the development of logistics, which can be interesting and challenging for young people. So, we can start moving in that direction.

(3) Through your many years of experience working with students, you can talk about their interest in employment in this area. Are young people interested in working in the fields of logistics, transportation, and related industries, and how can these professions be popularized among young people?

At first glance, students are not interested in these jobs. Actually, it's not that they are not interested, but there are no sources from which they can obtain information about this field. I note that I do not have much contact with logistics students (these topics are mainly covered in studies of transport, logistics, mechanical engineering, and sporadically business administration), I mostly work with business administration students (which, in Croatia, is equivalent to economics) and business and financial mathematics. So, these programs cover supply chain management jobs without logistics, such as demand management, production planning, inventory management, supplier relationship management, and procurement, as well as digital technologies, algorithms, and methods used to optimize all these processes.

Since I am a big enthusiast in popularizing these topics, I often conduct surveys among students about their interests and opinions. Their opinions mostly repeat that there are not enough sources from which they can obtain information, companies do not educate the community enough, there is no clear definition of what the supply chain is, there is no clear job description, job advertisements require a minimum of three to five years of work experience immediately, companies are not present enough on social media on these topics, there is no structured cooperation between the business and academic community.

Students still favor marketing and finance, but I believe they do so because they have a clearer picture of those areas. Lately, I have been researching finance in the supply chain, and I have come to the conclusion that corporate finance can also be called supply chain finance because today a company cannot survive on the market alone; the supply chain survives. So maybe attracting students could go in that direction. Or if we look at marketing, we come to the conclusion that this area is increasingly becoming data analytics; it's less about promotion and more about targeted targeting, distribution, demand management.

I believe everything should become interdisciplinary, especially now in the age of digital technologies and artificial intelligence. And we should stop drawing sharp boundaries between fields. Because as I said, why shouldn't we call corporate finance supply chain finance, why shouldn't we call marketing demand management, distribution, pricing, and promotion?

To attract young people to the field of supply chain, we need educational promotion. Because parts of the supply chain exist in all fields, we just have to start using that term. Then what it is will be clearer. And, of course, the business community must engage more in educational processes in collaboration with the academic community, and must be present with educational topics on social media in the form of storytelling and business cases, in organizing various workshops, competitions, support for startups, and general education of potential employees.

 

 

Diana R.

Supply Chain Manager Japan Tobacco International

6mo

Thanks for sharing

Absolutely agree. Adaptability and preparation are key in navigating uncertainties. 🌟 #embracetheunexpected Kristina Soric

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