12/07/2021 | News release | Distributed by Public on 12/07/2021 06:05
The global pandemic has challenged businesses around the globe with many unforeseen circumstances. In this series, I will discuss how Schneider Electric has been innovating our business strategy to address these challenges to keep our operations running sustainably to minimize impacts on our customers. An important part of this is our 'multi-hub' strategy. We hope you may find these ideas helpful for your own operations.
Since early 2020, the COVID-19 pandemic has affected almost every business, institution, and individual in a massive, sometimes catastrophic way that we have never experienced before.
In my career, I have been responsible for many aspects of supply chain management, including procurement, logistics, industrialization, and supply chain strategy.
From my perspective, it is easy to see that the conditions caused by the pandemic have created a huge risk for many companies, especially those with industrial manufacturing operations. This risk is more serious than any we have seen in the past 20 years, both in severity and scale. For any company, it is not just a slowdown or a minor impact on sales; and rather, it is a matter of business continuity and survival.
Schneider Electric has implemented several best practices representing a complete, end-to-end approach in response to these challenges. In this post, I will briefly describe one of the important parts of this strategy: multi-hub.
Five to ten years ago it was common for companies to use a centralized/globalized mode of research and development (R&D) with continuous engineering. In that structure, each redesign and modification requires validation from one central R&D center, typically taking a minimum of six months to a year for testing and qualification. This traditional mode of operation lacks the agility and speed for redesign and switching to alternative materials, parts, and suppliers when required.
Fortunately, our group CEO and division's EVP had the vision to start us on a transformation journey to a multi-hub strategy a few years ago. We moved from centralized R&D, offer management, industrialization, and supply chain management located in one place to a decentralized, multi-polar approach. By setting up hubs close to each major market, we now have much closer proximity to our customers, country operations, and suppliers.
A multi-hub setup helps support operational continuity in three important ways:
The multi-hub strategy is in line with the mega-trend of supply chains moving from globalization to a multi-polar approach. Implementing a multi-hub approach has made Schneider Electric more agile in its innovation, more resilient in mitigating business continuity risks, and, ultimately, better able to serve our customers' needs. If we had not made this transition, we would have faced much bigger challenges during this COVID-19 crisis.
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