“Silo mentality is a thing of the past."

The heartbeat of a global supply chain echoes the pace of events on the political stage and that applies at DMK too. Hermann Köster and Dr. Ralf Zink outline the extensive challenges the company is facing and how people are handling them.

Supply chains worldwide have become more fragile due to the war, the pandemic and inflation. How is the situation at DMK?

Hermann Köster: Just a few months ago, it was difficult to procure chives from China or sunflower oil from Ukraine, for example, but that has now eased somewhat. However, the energy crisis is having a considerable impact. Energy shortages mean higher energy prices both for consumers and for the entire production and supply chain, from farmer to retailer. The consequences are far-reaching, affecting the availability and prices of fertilizers, packaging materials, jars for baby food production, cleaning agents, and iron sulfates for pre-treating wastewater, to name a few examples.

How do you handle these problems?

Hermann Köster: We keep a very focused eye on the global political stage. And we coordinate with purchasing, SCM, management and sales on almost a daily basis to discuss the situation in the value chain and implement any measures that are needed. Sometimes we see changes in the supply chain on an hourly basis. We have to reorganize everything each day. Take the current situation with cleaning agents, for example: How can plants help each other out, or what similar products can we use?


How far ahead can a dairy plan at all?

Hermann Köster: We are increasing our stocks of critical materials where we can. When the war broke out, it was clear that there would soon be less sunflower oil and wheat available to make our products, so we responded right away by looking for alternatives such as rapeseed oil, for example. However, we cannot always predict every single change in the supply chain that way.

Dr. Ralf Zink: You cannot simply exchange one ingredient for another, either: We have to check and make sure we find the equivalent texture, taste and quality. We also have to ensure there aren’t any additional allergens, that the traders are certified, and we have to declare what we have changed on the packaging, so adjust the labels accordingly. All that is expensive and involves a lot of effort. It’s better when you can return to the original recipe and the regular value chain. And yet our approach shows how flexibly and quickly we can react in order to keep production going, even in times of crisis. Thankfully the shortages of chives, sunflower oil, vitamin K and many other raw materials have eased somewhat, as the situation has improved in China, and due to new supply routes from Ukraine and new trading partners from North America or Europe, so we aren’t seeing as many shortfalls at present.

As COO Supply Chain Management, he coordinates the supply chain from raw materials to customer delivery across all BUs.

Hermann Köster

DMK faces a lot of competition when it comes to finding alternative suppliers …

Hermann Köster: That is true. Our suppliers are trying to raise prices both in current contracts and for new ones with us. So our experts have to find alternatives and use all their negotiating skills to find the best possible combination in terms of price, performance and quality for DMK.

Dr. Ralf Zink: We are also looking within the company for ways to obtain raw materials more easily. Research & Development at DMK carried out several projects in recent years that are increasingly delivering benefits. Five years ago, we were looking for an alternative raw material for waxy corn starch, for example. We developed a recipe that, although not quite the same in terms of texture and color, is already very close to this carbohydrate in terms of taste. We can now use this to quickly make any necessary adjustments to the recipe. In the end, however, a great deal of trial and error is involved in these improvements.

Key transport routes into and out of China were blocked until recently. How is freight traffic moving now?

Hermann Köster: Container ships from China are getting here more regularly thanks to the easing of pandemic restrictions, so we can obtain important raw materials again. However, we may see a new lockdown in Shanghai, as the zero- Covid policy has not changed much. We also still have a severe shortage of drivers, which hampers road transport logistics. Many drivers come from Ukraine and were called up for military service. We are increasingly noticing the effects of that shortage of young drivers. We are working with several external service providers to minimize this risk and keep transport logistics running, but we urgently need a longer term solution.

What is challenging DMK the most at the moment?

Dr. Ralf Zink: The severe shortage of cleaning agents. We did not expect such shortages a few months ago.

Hermann Köster: Of course, at DMK we have to switch to clean energy more quickly. We laid the foundations in Strategy 2030 when we started a continuous transition to more sustainable production. We have changed to renewable power sources in many areas.

As Director Research & Technology, he is responsible for all scientific investigations and development.

Dr. Ralf Zink

Can we compare the current crisis with previous ones?

Hermann Köster: Not at all. That is why the daily inventory of raw materials and consultation with employees from the plants is so important, to check and ask questions such as do we have enough cleaning agents? Do we have the packaging materials and ingredients we need? Are goods being picked up on time? Even during the pandemic, it was a challenge to ensure our transport chains kept functioning smoothly and we had enough materials available. We worked to make sure that milk was collected from our farmers so the supply to customers was not interrupted. We have done well so far. But it is not possible to forecast exactly what effects the war will have when it comes to further challenges worldwide – as a global company, we cannot predict every single detail.

Dr. Ralf Zink: The effects are manifold, because they are so closely linked to political events. For example, the Azov steel plant in Mariupol was destroyed which meant practically the whole of European nail production was brought to a standstill within a very short space of time. There was barely any production of wooden pallets for transport, not due to wood shortages – they are less of a problem now – but the lack of pallet nails to put them together.


What makes you confident despite all these difficulties?

Dr. Ralf Zink: We are making all the key adjustments to keep production going, and so far we see that is working and our efforts are paying off. But what I find really striking is that we almost have more of a sense of togetherness than we did during the pandemic. Everyone is doing more to keep the company on track. We already saw how well that worked in the pandemic, because everyone was thinking, working and helping as a team. It is the same now.

ermann Köster: I find our sense of “we” and of unity is even stronger now. More and more, it is becoming one of the company’s strengths, how we work together hand-in-hand. Everyone benefits from each other and, in my opinion, employees see it that way too. Silo mentality is a thing of the past, it seems to me


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