Philip Morris raised inventory buffers and created a weekly resilience team to track global crises. When Middle East conflict disrupted Red Sea shipping, they opened secondary ports near Jeddah and routed goods through Saudi Arabia and Syria using four carriers, reserving expensive air freight only for urgent shipments.
Coming to the question of Ian about how to mitigate the lead time impacts, right, we need to start from the needs. The needs of the company is to ensure the goods on the shelf every time, right? So based on our experience running COVID and in other wars, what we did is to ensure to have higher inventory levels in the critical part of the war. So that was the first thing that we did already. And this was good because especially in Middle East, we had a number of days of inventory good enough not to go under the water when the war started. And that was the first securing of our needs. The second point was, okay, we need to preserve then the inventory. And then of course, despite of all the resilience team that we set up in order to monitor on a weekly basis what are the events that are coming through the world and eventually activating crisis teams, crisis team in the case, for example, of Hormuz risks. We look also after on what were the alternative routings, right, to the Middle East countries. And then coming back to what Hossein said, we start to explore alternative ports and alternative routes in, in the region. So we started to explore some ports in the area of Jeddah that were secondary ports together with our 4 PLN carriers. that we could use then to activate multimodal through Saudi Arabia and through Syria to reach different countries inside the region. And of course, what we also did is depending on the urgency of the goods, of course, we activated also air shipments. But you know better than me that especially in the first months of the crisis, there were lack of airplanes, costs went up, up to the roof, airports were closed. So were very difficult to use the airports too. And then for the goods where we didn't have so urgent, let me say, needed, we still kept the original flow that we activated with the Red Sea passing through Cape Hope and then going to the south of the MENA region. So, you know, we had several flows depending on the categories. The key point was to have the right inventory level in the region, not to be under the water after the first 2 weeks of the war.
