"The trend is towards being 'glocal'"

COVID-19 and the ongoing war in Ukraine have caused major supply chain challenges. Cost increases due to the need to find new suppliers, supply chains and new types of raw materials, as well as lost sales, are negatively impacting the global industry. We have talked to Karim Allevret, who has extensive experience in supply chain and purchasing, about how to act to minimize risks and crises that arise for reasons that we cannot influence.

Karim has recently completed an assignment as interim COO at Nordic Water Products AB part of Sülzer, which is active in water treatment. The organization works in a more functional than product-wise way with close cooperation between the project managers in all functions, providing a holistic view of all products and the ability to develop synergies and avoid pitfalls. "Together with my team, we have raised the function a whole level.", says Karim.

Karim believes that the bottlenecks in supply chain will continue, but hopefully ease in the summer of 2023 when new large freightvessels, including from Maersk, will be put into service. Depending on the category, the problems with the supply of raw materials will continue to be critical.?Sweden and the EU will have difficulties getting hold of artificial fertilizers as much of the raw materials come from Russia.?With more and more restrictions and trade barriers, it is becoming more difficult to find alternative suppliers who do not have too high distribution costs and who have sustainable solutions.

"An example of trade barriers that can have far-reaching consequences is BAMA (By American Act) which states that companies that are selling to infrastructure projects in the United States must have at least 65% (2023) of the raw materials produced in the United States. Many companies that want to establish themselves in the US have not thought about this and then find it very difficult to get hold of producers or suppliers. This means that it is about 40% more expensive than in Europe, and prices will continue to increase. The trend is towards being "glocal", international but still having a local presence with production and sales where the customers are."

When it comes to food, a lot has happened in the last ten years and there are major challenges, especially in sustainability, as more and more farmers grow fewer and fewer things, but which give a better yield. Much of the raw materials, such as parts of fertilizers, in Europe come from Russia, which has led to prices going up and will continue to rise.

"In general, to secure your supply chain, you need to find regional or local suppliers and have a back-up for raw materials. The internal communication with the supply chain in companies must work so that everyone knows what they are selling and can alert the customer if longer delivery times occur. If purchasing works together with the supply chain, you have a much greater chance of being involved already in product development. Today, I think there is far too little communication through the different parts of organizations."

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IKEA is one of the best companies on smart supply chain

"I made a business case for IKEA in Brazil where I built their food business. By buying whole cows, we worked sustainably and long-term. The meat became food for IKEA's restaurants, the skin became furniture, and gelatin for candy was made from the hull. Unfortunately, there were many diseases among the farms and as these were closed down, we could not continue to buy from them. But it's a good way to show how to shorten the supply chain and work sustainably. IKEA is the fifth largest food producer and restaurant business in the world.

Another example of how IKEA works smartly with supply chain is that they are very good at communicating throughout the business, and purchasing is involved much earlier in the chain. For example, a product owner may say that he/she wants a bowl that will cost x dollars. Purchases then come up with suggestions for a bowl in a different color, but which is cheaper, and so they can discuss the best solution. Another good example is that all IKEA wine glasses have the same foot, no matter what the cup looks like."

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What is the best thing about working as an Interim Manager?

"I learn a lot and build up a large network with each assignment. I sell my thoughts and ideas and adapt these to the customer's needs. It's nice to be able to be in an organization and drive change but not have to take part in internal politics."

What is your view on leadership?

"You have to both talk and listen! It does not have to be large meetings, but having a coffee together, listen and be available. Everyone needs to understand why the change is happening – you can't point with your whole hand. Many people are worried about how their role will be affected, so it's important that everyone understands where we are, where we're going, and that their contribution is important."?

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