Chain Reaction: Disrupt, Sustain, Deliver

Discussion with Bart Derde

Bart Derde, a veteran supply chain leader with over 33 years of experience in major corporations like Unilever, Reckitt, GSK and Haleon shared his thoughts on the evolving dynamics of the supply chain industry. In this article, we delve into his views on the rising importance of the supply chain in overall business success, the role of sustainability, the agility differences between large and small companies, the impact of local versus global sourcing, and the integration of technology and AI into supply chain management.

The Supply Chain’s Rising Importance

Derde started by emphasizing how the role of supply chains has fundamentally shifted over the past few years. “The one thing that’s been recognized in the last three or four years that I think is fundamental is how important the supply chain is to business outcomes and to delivering on consumer and customer commitments”, he stated. Derde explained that supply chains are now more central to strategic decisions, highlighting their importance not just for efficiency, but also for value creation.

Derde mentioned that he considers himself “a business leader rather than a supply chain leader”, underlining how modern supply chain management goes beyond traditional operational tasks to encompass broader business responsibilities. He believes the core of supply chain management should be about being a business partner to deliver value to consumers and customers, adding, “Understanding how the supply chain can deliver that value and support delivering that value with cross-functional leadership is the fundamental unlock to value creation”.

This transformation in perception has pushed companies to think about the supply chain as a core driver of strategic business success. Derde explained that in many companies, the supply chain makes up about half of the entire business in terms of both people and gross margin, which highlights its significance in driving profitability and delivering consumer satisfaction. It’s not just about managing operations anymore; it’s about ensuring supply chains are agile and capable of adapting to meet ever-changing consumer demands.

Sustainability as the Future Challenge

Sustainability has become a major focus for supply chain leaders, and Derde is no exception. He spoke extensively about the importance of reinventing supply chains with sustainability in mind, sharing that “there is a huge, really exciting program on the way to use global scale but be locally relevant”. This is a crucial challenge for the next few decades, as companies work to balance the benefits of global efficiencies with the need to address local demands and sustainability goals.

Derde provided insights into how sustainability can be embedded in every aspect of supply chain operations. He used the example of Sensodyne, explaining how they took a holistic approach: “We tried to take a very end-to-end thought and approach, from improving mint supply from India, from a million farmers, to making the toothpaste of Sensodyne carton-free, to making the plastic recyclable”. This holistic view extends from raw material sourcing all the way to end-product design and communication with consumers.

He stressed that supply chains must evolve to use less material, focus on reusability, and employ sustainable production processes. Derde noted, “Using less is the most obvious way to be more sustainable, and it also saves money”. Sustainability efforts should therefore be aligned with both consumer expectations and cost-effectiveness, providing a dual benefit. Derde believes that effectively communicating sustainability efforts to consumers – like Sensodyne did – can lead to an increase in sales, as customers are becoming more interested in environmentally friendly products.

The Small vs. Large Company Dilemma

When discussing the challenges and differences between small and large companies in the supply chain space, Derde shared an interesting perspective: “I think some of the smaller companies are getting it righter than some of the big companies”. He pointed out that smaller companies often do a better job of simplifying their supply chains, which enables them to deliver exactly what the consumer wants in a more efficient and targeted manner.

Derde elaborated that small companies could manage complexity more effectively because they can see the entire supply chain “end-to-end” and make necessary adjustments without the bureaucratic hurdles faced by larger organizations. He noted that smaller companies can take a more consumer-focused approach, “delivering a unique proposition to the consumer based on understanding down to perhaps tier three or four of your supply base and making it either sustainable or consumer-friendly”.

In contrast, Derde acknowledged the challenges that larger companies face due to their scale and complexity. “Big companies find it very difficult to get this right”, he said, emphasizing that while larger firms may have access to advanced technologies, they struggle with effective implementation across their vast networks. Despite these challenges, Derde believes that using technology and giving local teams more autonomy can help bridge the gap between large and small company supply chain capabilities.

Local vs. Global Supply Chains

Derde also discussed the role of local versus global supply chains, particularly in managing complexity and ensuring sustainability. He emphasized that consumers increasingly want products that are personalized and specific to their needs, which makes local supply chains more relevant. “Doing that locally with local supply can help sustainability clearly”, Derde said, highlighting the benefits of localized production in reducing environmental impact and improving agility.

However, Derde also pointed out that balancing local relevance with global scale is not easy. He stated, “It’s about having a holistic view of your product and then communicating that to the consumer”. Local supply can be an effective way to handle sustainability and improve responsiveness, but it requires careful planning and alignment with overall business strategy. Derde believes that integrating both local and global supply strategies is essential for companies looking to meet consumer demands while maintaining efficiency and cost-effectiveness.

He mentioned that big companies need to consider how to manage complexity effectively, using examples like Sensodyne, where the entire supply chain – from mint sourcing to packaging – was thought about with sustainability in mind. Local sourcing, combined with efforts to reduce production complexity and use sustainable materials, is key to achieving a balance between global efficiency and local relevance.

The Role of Technology and AI

Technology and AI are fundamentally changing how supply chains operate, but Derde acknowledged the challenges associated with implementing these technologies at scale. “There is a huge amount of technology now out there to help you understand your supply chain”, he said, but integrating these technologies effectively across a global organization remains a significant challenge. He noted that younger generations are often more comfortable with technology, but the experience of older supply chain professionals is also crucial. “Putting the two together is probably the power actually”, Derde said.

Derde also spoke about the importance of creating consistent technology standards while allowing for local innovation. He highlighted the difficulty of achieving consistency in global technology systems, saying, “Doing things globally consistently in technology is hard, but it’s important”. Derde believes that companies must strike a balance between global standards – necessary for efficiency and data integration – and local autonomy, which allows teams to innovate and adapt technologies to meet specific needs.

He sees AI and data analytics as playing a pivotal role in achieving better visibility and decision-making across the supply chain. Technologies like AI-driven risk management tools can help companies monitor their supply base “right the way through to tier three or four”, providing a level of transparency and control that was previously impossible. Derde emphasized that technology integration must be strategic, with a focus on connecting all elements of the supply chain to enhance value creation.

Looking Ahead: The Future of Supply Chain Management

Looking forward, Derde outlined several priorities for the future of supply chain management. He emphasized the importance of giving more end-to-end accountability to those closest to the consumer, suggesting that companies should “split the company into geographies and rather than functional silos of plan, source, deliver, create end-to-end solutions even down by category as much as you can”. This approach would empower local teams and enable better responsiveness to local consumer needs.

Derde also stressed that sustainability must be embedded from the design phase of a product. He stated, “Design it right from the start, and that will help supply chains be more sustainable long-term”. Instead of trying to retrofit sustainability into existing products, companies should consider sustainability at the very beginning of the product development process. This proactive approach will help companies create supply chains that are not only efficient but also environmentally friendly.
Lastly, Derde highlighted the need to reimagine traditional delivery models in a more sustainable way. He used the example of the “milk float” – an electric vehicle that delivered milk door-to-door in the past – as an inspiration for future last-mile delivery solutions. He suggested that integrating delivery across different brands could create a more efficient system, reducing the environmental impact of having multiple delivery trucks serving the same neighborhood. “There’s a bit of integration there that’s needed to make it more sustainable”, Derde concluded.