Interview: Syngenta's supply chain strategy
Headquartered in Basel, Switzerland, Syngenta is a leading agriculture company helping to improve global food security by enabling millions of farmers to make better use of available resources. Through world class science and innovative crop solutions, its 28,000 staff in over 90 countries are working to transform how crops are grown.
Head of Global Operations, Mark Peacock explains: “Syngenta has been very successful in achieving sustained growth since its creation in 2000, supported by our supply strategy which focusses on innovation, leverage, agility and customer experience. Logistics is critical to the effective delivery of agility and customer experience; it became clear that our current logistics operating model would not be fit for purpose to drive value and operational resilience.
“One of the critical questions was whether we could or should invest in building internal capability and technology to achieve and sustain the performance that we target, or whether professional logistics providers could do this more effectively. The answer was clear – specialised logistics providers were better equipped to assure service and leverage, and technology was available to enable a seamless integration with our ERP systems and we could establish the governance required for a beneficial partnership and the achievement of our targets. And so, our logistics journey started.”
Head of Global Supply, Mike Hollands, adds: “We have a history of contracting with many third party logistics providers across the globe, and felt that consolidation would allow us to further professionalise and automate our logistics function.
"Of course logistics can have a real impact on our customer experience and is highly integrated with our planning and commercial teams, so we needed to manage this risk and find partners that understood what we were trying to achieve. I am very proud of our logistics team and their ability to balance delivery agility and cost savings in our very seasonal business.”
Head of Logistics Marion Matthewman, and Global Logistics Capacity Alexandre Leopoldes, explain the story of how Syngenta implemented this change, the launch of the Global Logistics Optimisation (GLO) program, how it started, what the challenges were, and what solutions they chose to apply. “Once we had made the decision to leverage specialised logistics providers,” Matthewman explains, “we elected to focus on creating an operating model fit for our business, understand what kind of information and transparency we wanted to manage, and what kind of technology we needed. We created a compelling story that proved to the business the benefits and future value creation as a result of implementing this change.”
A new model Matthewman explains: “With support from Accenture, Syngenta developed a logistics strategy which will be enabled through a new operating model. The model is structured around the use of an externalised central operating desk, facilitated by fourth party logistics providers (4PL) that specialise in logistics execution. This is along with a decision to invest in a cloud-based supply chain collaboration platform provider, to enable a digital logistics solution that would deliver the desired transparency.”
Matthewman continues: “Logistics strategic direction, budget visibility and key performance tracking is directed by myself as the Global Head of Logistics. The logistics team is responsible for the deployment of the strategy in the relevant regions, territories and countries. I have global visibility of the cost of logistics for Syngenta, which is an important enabler to support the implementation of our logistics strategy.” This transformation is managed under the banner of the Global Logistics Optimisation Program (GLO).
“The program’s intention is not only designed to manage Syngenta’s growing supply chain demands and complexities, but aims to leverage innovative thinking in logistics through working closely with our partners, so that we can bring agility, scale and simplification,” says Matthewman.
Leopoldes adds: “Syngenta has elected to go for an operating model that is structured around Partnership, Lead Logistics and Continuous improvement. Our 4PL model, as we call it, concentrates on governance logistics rather than managing the transactional side. The 4PL actually embraces four key processes on behalf of Syngenta: sourcing the 3PL, executing the operations, monitoring the proper execution of logistics operations, and eventually delivering continuous improvement and productivity gain.”
Syngenta has elected to manage its operations using a cloud-based solution in order to connect systems, ERP’s, and other elements of the 4PL strategy to ensure ownership of data, “which is the backbone and intelligent side of the operation,” Leopoldes says. “It offers a single point of truth on a global scale looking after various metrics that are embedded into GT Nexus.” Any large logistical operation requires a great deal of IT infrastructure planning, and a company with a true global footprint like Syngenta requires high levels of technical organisation more than most. “We started having more and more discussions around IT integration as GLO developed. We have a multi-dimensional culture because we span regions. In areas where many companies are struggling with data and systems, Syngenta found a way to basically harvest all data which is logistics-relevant in a single cloud. From there you can drive the next logistics structure forward.”
Working in partnership
While developing the 4PL model, Syngenta enlisted the expertise of Accenture to help develop and support the project delivery; Michael Dittrich, Strategy Supply Chain Manager at Accenture, describes the relationship: “Accenture has supported Syngenta on its journey towards a digitally-enabled logistics operating model by providing end-to-end consulting services, starting with strategic conceptual design and finishing with implementation of the cloud-based multi-4PL solution. We’ve achieved excellent work with Syngenta. The project team has been able to deliver the leading edge solution in a very efficient and effective manner. We’ve built a long-lasting relationship with Syngenta and would be happy to support them with other digitally-driven supply chain opportunities in the future.”
GT Nexus has also been a key player in Syngenta’s technological advancements, as its Executive Vice President Global Sales Mac McGary explains: “We connect Syngenta to their global partners enabling them to collect, centralize, and analyse all information around shipments, inventory, and trading partners. We collect data and turn it into actionable intelligence and at the same time automate process. Syngenta will use business rules to accelerate decisions. Visibility improves both the accuracy and velocity of decisions as well as it improves the collaboration between partners.
“GT Nexus is committed to the Life Science and Chemical verticals; Syngenta is a prestigious brand to join our network. Our partnership with Syngenta is about transparency – between each other and how the platform will provide transparency to their network. It’s mutually beneficial and we challenge each other. It is long term and strategic. We align on an ambitious vision to achieve inside three years, but we are determined to solve real and immediate challenges – to provide measureable results within a year.”
Once Syngenta’s logistics vision was formalised in September 2014, the executive board of the company gave its approval to move into the model in early 2015. Leopoldes says: “The design and delivery of the first deployments were conducted over the course of 2015 in record time covering both Europe and Northern America. In October of that year, Syngenta went live with two 4PL’s – one in north America (XPO Logistics) and one in EAME (DHL LLP) for the seeds business.
"Since then we’re operationally live in those regions and we have approval for the next waves involving various dimensions over 2016. Our NA and EAME-nominated 4PLs are preparing to orchestrate across the other core business unit of Syngenta – crop protection – and on the other hand, we are accelerating our global deployment with the launch of a third 4PL partnership (Damco) for the inter-regional air and sea operations.”
Three of Syngenta’s Lead Logistics partners – Damco, XPO, and DHL – comment on the importance of their relationships with Syngenta: “We’ve been working with Syngenta since 2010 on a number of supply chain areas in Asia and Europe, which has progressively grown to recently agreeing with the company to be part of its global 4PL pool,” says Anthony Elwine, Global Head of Chemical Vertical at Damco. “It’s a journey of innovation to optimise the supply chain. Syngenta is a great company to work with; it’s very open-minded, and they, like us, aspire to achieve win-win results. They’re very engaged in terms of what is best practice, how they can adopt best practice, and what other practices could be applicable to their business. There’s a spirit of understanding between us. We’re working on this journey together, and how to make sure we deliver on it.”
These sentiments are shared by XPO’s SVP of Business Development, Marty Smith: “The biggest advantage for both companies is partnering together to be able to centralise the day-to-day decision making for transportation planning,” he says. “We have a holistic view of the Syngenta network; you can see where trucks are unloading, where the same carrier can be used again and how we can optimise the networks. Syngenta will look to us as being almost their own in-house transportation providers. Our people are essentially Syngenta employees. We do their carrier bids, we’re looking at new capacity to bring into the network, and we’ll always look for ways to lower costs so that our partners can benefit from the savings. This is something we – with Syngenta – drive together as a team.”
Thomas Weins, Head of LLP and MD Agheera GmbH at DHL DE, adds: “We want a relationship with the customer which is strategic and not just a standard service. Our logistical operations are much more than just A to B. Our relationship with Syngenta goes beyond a business relationship; it’s a true partnership and I see and feel from both sides that people are aware it’s not a normal connection; it’s more about working together, not as a customer and a service provider. We have only just begun with Syngenta. None of our 4PL customers have short-term relationships with us, and I see a long future with Syngenta. Strategically, we’re a good fit.”
DHL’s implementation reaped benefits early on, say Syngenta’s Julie Tempesta, EAME Logistics Manager, and Paul Lidbetter, Head EAME Logistics: “DHL has worked with Syngenta Seeds to clarify and improve our logistics processes. We are working together to identify KPI’s and further supply chain improvement opportunities. DHL is very focused on delivering a solution that is fully aligned to the customer needs.”
Scott Kincaid, Syngenta’s 4PL Implementation Manager within the North American Logistics Team comments on the advantage of having so many logistics partners: “The goal of this project has been to leverage the tools and resources of our 4PL to reduce empty miles and other waste, while maintaining or improving the delivery experience for our customers. Historically our shipping sites have worked hard to maximise truckloads and avoid empty backhauls, but visibility to those opportunities was limited. This year we have been excited to see routes which connect multiple shipping locations on the same equipment with less empty miles. Such network connectivity has not been possible before and the outsourcing to our 4PL has been a great success.”
Green thinking As an agriculture-based company, sustainability is important to Syngenta. The Good Growth Plan initiative, launched in 2013, aims to improve fertility and biodiversity of land. This means keeping a closer eye on the carbon footprint produced through logistics operations, Leopoldes explains: “What we did was fairly simple, but we wanted to be able to measure the carbon footprint directly at the source of our operational setup and execution. With GT Nexus, we have developed a way to measure the footprint by considering what we move from a volume standpoint, what we move by distance from A to B, and how we move it – whatever transport we use, we have a matrix. GT Nexus technology means we can create an automatic calculation of our carbon footprint taking those transactional elements into consideration.”
This system is not wildly different to that of other systems on the market, but it allows Syngenta to calculate its environmental impact on an individual level. Now that Syngenta has started operating in the 4PL environment, it is ready to take the next step in improving its operations: “The way we have conceptualised our model is that the 4PL partners are compensated on an incentive based element, if and when they deliver continuous improvement and productivity, they get a share of the value created,” Leopoldes says. “We use GT Nexus to reflect on our various logistics execution elements such as from a load factor and financial standpoint, and together with our 4PL we look into areas of opportunity to improve. If we are able to optimise load factors, to maximise load-by-transport distance coverage, and to drive price reductions, we have leverage to motivate continuous improvement.”
Matthewman concludes: “By leveraging and working with strategic partners in this way, we can reduce logistics costs for Syngenta, gain full transparency of logistics operations around the world, and help us to understand and manage our impact on the environment. Finally, as Syngenta continues to grow in the future, I can be assured that the logistics operations with our chosen partners will be ready to respond as needed”.
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.