When tomorrow will be different from today
Three trends are changing our future – and offer us potential to grow
Only very few people know it: There is hardly anything in our everyday lives that has not been supplied, processed or moved by thyssenkrupp Materials Services. The car we drive, the building we work in, the equipment used to manufacture the things we use every day.
Day in, day out, our materials supplies and services help more than 250,000 customers worldwide to go about their core business – in exactly the right quality, at exactly the right time. Social and geopolitical trends influence the needs of our customers.
"The demands of our customers are constantly changing, especially against the backdrop of global tensions and upheavals as well as dwindling resources. Our job is to find solutions for these needs," says Martin Stillger, CEO of thyssenkrupp Materials Services. We see three trends that will determine the direction: Nearshoring, resilient supply chains and sustainability. The reasons for these developments are manifold. The recent past – marked by skyrocketing raw material prices, lockdowns and delivery delays due to the Covid 19 pandemic and the war in Ukraine – has accelerated them dramatically. As a result, all of our daily business lives are increasingly burdened by uncertainty, less ability to plan, and rising costs.
Managing uncertainty is a complex undertaking. In the past, companies were concerned with one thing when designing their production and supply chains: cost efficiency. This will always be an important consideration. Nevertheless, many companies are currently looking at the issue of nearshoring. Behind this is the search for alternative or additional production sites and suppliers in their home regions, primarily Europe and North America. The need for local inventories will therefore grow. We are ideally placed to meet this demand: We have a broad network of strategically distributed logistics and warehouse locations in Europe and North America. This means we have our finger on the pulse of the times. Studies1 show that manufacturers are again increasingly relying on local production and warehousing in order to become more independent of external influences and more sustainable. Shorter material routes, reliable partnerships and a strong network offer the right solutions for this.
Digitalization as a key lever
The pressure on global supply chains has always been enormous – occasions such as natural disasters or trade wars have also caused disruptions in the past. However, the dynamics have increased significantly. As a result, companies are increasingly concerned with how to make their supply chains resilient. We will hardly be able to influence external disruptions. But we can influence how we deal with them. We are already building digital supply chain solutions for our customers by generating a big data picture that captures all the building blocks in the supply of materials, ensuring a high level of transparency and thus enabling adjustments in real time as soon as they become necessary. And demand for such solutions is growing steadily. Research2 confirms that companies are increasingly concerned with improving their planning accuracy. At thyssenkrupp Materials Services, this is exactly where we come in with solutions such as pacemaker®, our AI-based supply chain solution.
Sustainability" as a purchasing argument
And finally, the issue of sustainability is high on the agenda of both our customers and ourselves. Sustainability has long been more than a trend and is driven not only by the European Union's goal of being climate-neutral by 2050 and the rising costs of offsetting CO2 emissions, but in particular increasingly by our own sense of responsibility. In order to meet the diverse requirements, a large proportion of customers already consider sustainability to be one of the most important purchasing arguments in the coming years, according to our surveys. Companies are investing in assets that will help them work towards climate neutrality and are also willing to pay higher prices for environmentally friendly products. In this context, the circular economy is changing the entire market landscape, as waste, for example, is becoming a valuable resource. We want to support our customers in meeting their sustainability targets with smart solutions and low-emission products. To achieve this, we take a holistic approach to sustainable development, i.e., ecological, economic and social – and even go beyond the internationally recognized ESG standards. With our sustainability manifesto "BEYOND", we have supplemented these guidelines with points that are of central importance to us, our customers and thus the success of our business.
Closer, more resilient, more sustainable
The world of manufacturing is highly complex. With the right approach, we have the potential to make materials supply sustainable and supply chains resilient as well. At thyssenkrupp Materials Service we are shaping the materials business of the future.
1) Around 79% of automotive manufacturers in the USA are focusing on onshoring or nearshoring according to Fictiv, "State of Manufacturing Report, 2021", 58% of German manufacturers are increasing their inventories according to the DIHK Supply Chain Report 2022 & Bertelsmann Foundation "Democracy under pressure" and for 83% of US manufacturers sustainability was already becoming increasingly important in 2021, as can also be seen from the "State of Manufacturing Report".
2) According to the Council of Supply Chain Management Professionals' study "Digital Transformation in Supply Chain Planning: 2021", increasing planning accuracy is a high priority for 40% of companies.