Weekly Roundup - Aerospace Procurement, Global IT Outage and Aldi Süd Pick-up Machines

The aerospace industry is essential for global economic growth and security but is facing significant challenges that other industries have recovered from since the pandemic. Key issues include persistent commodity shortages, demand uncertainty, supply chain consolidation, and workforce transitions, placing procurement leaders in a difficult position.

Many aerospace organizations were not well positioned to react to these challenges in terms of their overall procurement capability. According to a McKinsey study of overall procurement functional maturity, aerospace companies have underperformed relative to their peers in automotive by an average of nearly 15 percent over the past 18 years. However, within aerospace, performance among participating firms has maintained a narrow variance. In nearly every other sector, a small group of companies stand apart, performing about 30 percent better than their peers’ average.

McKinsey analysis shows A&D companies have the highest mismatch in supply and demand for skills in general supply chain management, contract management, production planning, and supplier quality management. For some skills, there’s a four- to six-percentage-point gap between open positions citing a need for these skills and talent available in the market with these skills, and many workers with these skills are already employed.

A software failure affecting the global supply chain has caused widespread disruptions in daily commerce. The issue, attributed to an improperly executed update on Microsoft systems by cybersecurity firm CrowdStrike, highlights the risks of overreliance on a single system. This outage has impacted airlines, port authorities, train systems, hospitals, and banks. Experts, including Wesley Miller, a research analyst and former Microsoft employee, argue that the interconnectedness and market concentration in the tech and cybersecurity sectors make the system fragile. They point out that even with initiatives aimed at enhancing supply chain resilience, the pressure to maximize profits often prevents necessary precautions from being taken. Jennifer Cobbe from the University of Cambridge emphasizes that the repetitive involvement of the same companies in supply chains means a failure in one can have widespread consequences. High-profile companies not affected by this outage, such as Southwest and Frontier airlines, have faced their own issues due to outdated technology in the past. The pandemic has exacerbated staffing challenges, further straining IT and testing teams. Despite efforts to improve resilience, Miller believes the current system’s vulnerabilities will persist due to the prioritization of speed and profit over stability and safety.

Aldi Süd has launched a pilot project with pick-up machines to test their functionality and understand evolving customer preferences. The test, which started in mid-July, includes machines in Düsseldorf and Mülheim an der Ruhr. Customers can order online and pick up their goods from a refrigerated container next to an Aldi branch. Orders are available within a specific time window, and there is no extra fee for using the machine. This initiative is similar to Rewe's "Click & Collect" service, which allows online orders to be picked up later, often through an employee in-store. Rewe also has 16 pick-up machines nationwide, primarily in Cologne and Berlin, which are available 24/7. Experts are skeptical about the economic viability of these machines due to high costs and limited impulse purchases. Aldi Nord, in contrast, is not exploring pick-up machines and focuses on modernizing its branches to enhance the in-store shopping experience. The overall aim for both companies is to adapt to new shopping behaviors in the era of online retail.

Read more on recent highlights

• What disruptions have been reported after the global tech outage?
• Colgate’s classic approach to AI for supply chain
• Taiwan firms shift supply chains to India from China, trade body chief says
• Armani, Dior face Italian antitrust probe on labor practices
• Serbia, EU and Germany sign battery supply chain deal
• German industrial and logistics real estate market: Continued subdued demand for space
• Aviation summit opens amid jet shortages, supply chain turbulence
• GE Aerospace to invest $1 billion on upgrades at its engine repair shops
• E-truck: Daimler Truck starts battery pilot production in Mannheim

Dive deep into research

"The resilience of on-time delivery to capacity and material shortages: An empirical investigation in the automotive supply chain" by Carvalho, H., Naghshineh, B., Govindan, K. and Cruz-Machado, V. (2022)

"Assessment of centralised and localised ice cream supply chains using neighbourhood flow configuration models" by Dorneanu, B., Masham, E., Keykha, M., Mechleri, E., Cole, R. and Arellano-Garcia, H. (2023)

Events

LOGMS 2024

When: 26. - 29. August 2024

Where: Hamburg, Germany

What: The aim of this conference is to offer the extera of ideas about the latest developments in the fields of logistics and maritime information systems between academic and industrial participants from all over the world a forum and to open up opportunities for them to work together. Since global volatility in the areas of shipping and logistics has intensified during consistent times of crisis, optimizing global supply chains is of essential importance. In our globalized environment, the creation of efficient and adapive supply chains with the help of smart technologies such as AI, IoT, and Big Data is without alternative. The LOGMS 2024 conference is intended to offer an open academic discussion platform on these topics.

IntegrityNext Xplore

When: 10. - 11. September 2024

Where: Munich, Germany

What: Keynotes, panel discussions, and breakout sessions with leading experts provide new insights on key developments shaping the field of supply chain sustainability, including AI applications, n-tier visibility and more. Connect with more than 250 industry leaders and policymakers to forge new partnerships, learn from your peers, and discuss solutions to the most intricate challenges.

European Transport Conference 2024

When: 18. - 20. September 2024

Where: Antwerp, Belgium

What: The European Transport Conference is the annual conference of the Association for European Transport, attracting transport policy makers, practitioners and researchers from all over Europe and beyond. ETC offers in-depth presentations on policy issues, best practice and research findings across the broad spectrum of transport. ETC also provides an opportunity where delegates can enjoy networking opportunities, participate in technical visits, and explore the exhibition.