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Syngenta interview: If there’s going to be a crisis, decide to manage it early
14 July 2020
Sanjiv Rana (SR) talks with Syngenta's head global supply &
HSEQ, Mike Hollands, to discuss the company's response to the
global supply chain disruptions caused by the Covid-19
pandemic.
Sanjiv Rana (SR): What is the level of forward and backward
integration in Syngenta's manufacturing?
Mike Hollands (MH): In crop protection chemicals, about 50% of
our manufacturing is in house and the rest is through external
vendors. Of course, it changes by active ingredient and by country,
but that's sort of the general number.
SR: What is the geographic spread of your manufacturing
facilities?
MH: If we look at active ingredients, there are over 30 ais
manufactured at seven facilities globally. The biggest of them is
in Switzerland. So, we have a couple of factories in Switzerland,
two in the UK, and one each in the US and China. But if you look at
the formulation, fill and pack side, we have around 25 internal
sites and those are spread out globally across Asia, Europe and the
Americas.
SR: China was the first to go into lockdown. How did you
deal with that before the subsequent spiralling in the rest of the
world?
MH: The first impact was the government locking down the Wuhan
area and that was a big logistical challenge. The lockdown shut
down all our manufacturing for three or four weeks and we couldn't
ship anything. We didn't have any assets actually in Wuhan itself
but we were caught up in what were the closures outside of Wuhan.
And then, of course, they shut a lot of the ports and transport on
the roads. So, just moving things around was very tricky.
SR: How long did that last?
MH: I think we were in a solid lockdown for only about three
weeks and we then began to be able to move things around. We ended
up being quite innovative. For instance, it was hard to move things
on the road, so we moved things by barge. We moved to river
transport instead just to try and get around some of this stuff. It
was pretty neat that we could start to get things moving really
quickly.
SR: How were things affected as the lockdown moved to other
geographies?
MH: The next hot spot after China was Italy and then France and
Spain. So, we briefly shut down a seed plant in Italy. Then as
other governments started to restrict things, we had quite a bit of
trouble with people movement and some goods movement in Europe,
especially France. But we never actually closed down anything for
any significant period of time - we managed to keep everything
going.
SR: Was the disruption more in terms of shutdown of
manufacturing facilities or in terms of logistics and
transport?
MH: Well, our risk profile sort of moved backwards and forwards.
In China, it ended up being mostly about logistics. When it moved
to Europe, we initially thought it would be about manufacture
because our Swiss manufacturing site is quite close to Italy. So,
we were very worried about getting contagion on our sites in
Europe. But once we settled those down and made sure that the sites
were safe, it moved back to being about logistics again. Then it
was all about what we could do to get things across borders because
governments were doing things quite quickly and we had to move
quite fast.
After Europe, it moved to India. India shut itself down and that
was about both manufacturing and logistics. And then it was about
trying to get things in and out of ports and re-opening all of our
manufacturing assets. Once we got that sorted out, it moved to
Latin America. Latin America at the moment is still very much a
developing situation and we have concerns about preventing people
on our manufacturing site from becoming infected. So, it's all
about protecting manufacturing sites. As you can see, it has sort
of been a moving target all the way through.
SR: How long would a lockdown need to last before supplies
really started getting disrupted?
MH: It's a seasonal business. So, in February in Europe, for
instance, products are just starting to load into the channel and
we are starting to move things out to distribute to hit the
springtime. If we had an interruption in key European markets of
more than two to three weeks, we would feel an impact. It would not
be across everything, of course, but things would start to become
tricky in terms of product availability. I think if anything looks
like it's going to shut for ten days, it could be risky for
customers in the sense that we would not be able to get stuff to
them.
SR: Was Syngenta prepared for such a disruption or was it
more a case of learning as things progressed? What sort of planning
is required to deal with something of such global
proportions?
MH: I think we have a good long-term strategic view. Companies
talk about supply chain visibility and try to get end to end
visibility. We did a lot of investments in terms of platforms so
that we know where all of our products are all of the time. We have
got real time monitoring and that has allowed us to weather quite a
lot of disruptions. Before Covid-19, the previous disruption would
have been the environmental shutdowns in China. And before that,
there was even a cyberattack on logistics providers a couple of
years ago. So, there's always something going on and strategic
investments are key.
It's also important to trust your teams locally because anybody
who thinks that he can manage a response to a global pandemic from
an office in Switzerland is kidding himself. So, you have got to
empower teams and keep your key suppliers close to you. For
instance, we have strategic collaborations with the shipping
company, Maersk, on logistics. We are also very close to our Indian
and Chinese suppliers, even to the point of helping them with their
business continuity plans. We ensured that because we had an
"essential industry" status, we were providing letters to packaging
suppliers in India to ensure that they could operate when they were
being told that they could be shut down. So, really looking at the
whole ecosystem is essential because you are only as good as your
weakest link.
SR: There has been talk of companies seeking to reduce
dependence on China as the main manufacturing hub globally.
Environmental pressures on Chinese manufacturers, the US/China
tariff war and the recent impact of Covid-19 seemed to have raised
questions.
MH: We have a long-term strategic approach and always try to
look at whether we can have multiple sources to make sure that we
have some flexibility and manage risk. Initially, there was thought
of China being a tricky place to manufacture not least because of
the environmental clampdown that was going on there. But now you
have India becoming quite protectionist and there is a question
about whether India is a good place for sourcing. India has
recently talked of banning some products as well, so that becomes a
bit trickier. And then you have geopolitical situation with the US
starting to make noises about not wanting Chinese goods and India
too saying the same. So, some of the global flows look a bit
tricky. Multi-sourcing and good risk management up front is what
will set the winners apart.
SR: Do you feel adequately prepared for another disruption
of this nature?
MH: I think one of the key things that helped us was the fact
that we reacted fast to the developing situation. So, maybe that's
something to think about for the next phase because the quicker you
can react to something, you sort of stay ahead of it. We were able
to put in pre-production or stock builds or segregating workforces
or even preventing visitors going to sites before it really got
bad. Therefore, we always kind of slightly stayed ahead and that's
probably why we were probably industry-leading in this. We were
just faster off the mark. I would say that if there's going to be a
crisis, decide to manage it early.