How do you escape the margin squeeze? With costs increasing at the fastest pace in decades, inflation has unsurprisingly risen to the top of the agenda for leadership. And for good reason. It is projected that over the next years, inflation will chop off EBITDA margins. Unless you take effective countermeasures to genuinely enhance your business operation in stead of simply passing through or roaming off costs to your customers. @Maersk adopted a systematic approach that any organisation with a sophisticated multinational supply chain can learn from — one that integrates strategy, processes, and talent in a coordinated way. What are the insights? 1. Focus on priorities Maersk’s innovation centre focuses on aligning innovation with strategies, not chasing shiny tech. For instance, instead of micro-fulfillment for consumers, the centre focused on port-transload operations. This reduced door-to-door times for container shipments from 35-75 to 35-40 days. It also cut 100,000 local truck trips annually, reducing CO2 emissions by over 15%. 2. Create an effective system internally with input from externally Isolating yourself from customers can lead to failure. To avoid this, create a group with key stakeholders and maintain relationships with external parties such as universities, government entities, and other organisations to bring an outside-in perspective. 3. Create repeatable processes for your team For example, when looking to improve labour efficiency, an innovation team determined that manual picking and packing was especially time-consuming. An innovation team created “goods to person” robotics, automated technologies that deliver the right item at the right time to the right worker. The results speak for themselves. The net result is a 46% reduction in the lead time variability of shipments from Asia to North America, as well as significant savings.
