The focus of running supply chains has always been on Enhancing Operational Efficiencies. In the post-pandemic world, many more variables have come into play such as Environment Sustainability and Customer Centricity. Creating and delivering a supply chain which is more resilient, integrated, innovative, hyper-personalized and forward thinking is key to gaining competitive advantage. The common thread among all these has been the seamless & fast paced adoption of new age technology tools to drive growth and establish Intelligent Supply Chain Networks. This Cover Story deep dives into ensuing Digital Transformation, which is driving supply chain and logistics performance, and scaling digital capabilities of companies. Encapsulating nuanced insights of industry experts from both the spectrums – users as well as logistics companies – we present to you a repository of sorts, which will facilitate you in carefully crafting as well as advancing your supply chain transformation journey…
By now, we all have realised the drastic impact of the geopolitical crises, climate change, and pandemics on global supply chains, which has mandated global organizations to first resolve their own supply chain disruptions and make it more resilient to such contingencies. However, Dharmendra Patwardhan, Executive Vice President, Global Head – Intelligent Supply Chain Operations, Capgemini Business Services, in his foreword of a recent Capgemini report, emphasised that what we are facing now isn’t a supply chain crisis but rather a consumer crisis. “The expectations we, as consumers, have all been conditioned to demand, such as greater product customization, ever shorter order fulfillment times, and immediate logistics management, have now been called into question. However, for organizations that can manage this new complex ecosystem, and continue to deliver on-demand service, huge opportunity awaits. To deliver on this challenge, organizations need to reimagine the traditional supply chain through holistic digital transformation and ecosystem collaboration, and in doing so roll out intelligent, end-to-end data-driven solutions for consumers,” he stated.
In tune with the fast shifting paradigms, the journey towards developing Intelligent Supply Chains warrants the implementation and leveraging of modern technologies to optimise various facets of the supply chain. With an intelligent supply chain, companies leverage modern technologies to collect data and develop insights to better optimize their supply chain. This can save on costs, increase profitability, increase their speed to customers, and get ahead of their competition. Moving towards an intelligent supply chain requires significant and consistent investment. Not only in streamlining processes and implementing new technologies, but also supporting emerging roles and skillsets to respond to and stay ahead of the evolving nature of work within the supply chain. With this as the thread, let’s take a look at the thought-provoking opinions of industry experts…
Mohit Jauhari, Head – SCM, Shriram Pistons & Rings Ltd. - "Supply chain managers need to unleash the power of 3Cs — Connect, Communicate and Collaborate to drive SCM efficiency."
What according to you are the key challenges being faced by supply chain managers?
We live in a continuously changing VUCA World where the customer expectations are also changing very quickly. Today's customers are spoilt for choice and hence it is imperative that the companies and their supply chains get equipped to handle & service the ever-changing customer needs. Being able to meet the ever-changing customer needs 'in-time' and 'without incurring extra costs/ redundancy/obsolescence involved in doing so', are the key challenges for supply chain managers.
We before I - How do you see collaboration shaping the supply chain model especially post Covid? Please also share your insights on how data & technology can add value to a Supply Chain function.
Supply chain managers have to be good at predicting customers’ expectations. They should also be able to take action in advance so as to serve the customers as per their expectations. In order to do so, they need to have a seamless & real time view of the entire chain from the customer's customer to the supplier's supplier. This can be done using the 3C Concept, coined by me, where the 3Cs stand for Connect, Communicate & Collaborate. In essence, sharing data across the chain and using the same to collaborate & make decisions is the key to a successful supply chain. Companies which are willing to collaborate with their channel partners and are also good at using data to build algorithms so as to predict/ preempt customer behaviour will be the leaders in this day & age. Those who are secretive about their information and operate in silos will find it tough to stay relevant in the ever-changing business landscape.
What steps need to be taken so that the supply chain is able to meet the ever-changing customer requirements?
As stated above, once the 3C state is achieved, companies will be able to leverage/mine the available end to end data so as to predict customers behaviour. They will be able to optimally plan execution in sync with the projected customer behaviour. While doing so, they will also harness the benefits of optimal use of resources. Companies need to be aware of the importance of data - and should have teams to make use of the available data so as to make decisions towards ensuring customer delight. Integrated Planning based on projected customer behaviour and optimized execution as per the same will be the key differentiator between companies.
Sanjeev Suri, Sr. VP Global Omni Channel and Logistics, Amway India - "Technology is a great tool for improving the overall customer experience and increasing customer satisfaction levels."
What according to you are the key challenges being faced by Supply chain managers?
We have all seen the impact of the Covid-19 pandemic. The moment the first lockdown was announced on March 24, 2020, the operations at Amway India, like any other company, were stalled. That was the time when the Supply Chain division was at the fulcrum of every industry and business globally. The Supply chain managers became frontline warriors. Keeping global uncertainties in mind, we had to be ready with a mitigation plan for uninterrupted supplies, and that was the biggest challenge for any supply chain professional.
The last three years made us rethink on the key fundamentals of supply chain readiness to deal with such uncertainties, which also included the right talent in the team and the best practices in the supply chain processes. Additionally, we needed to ensure the right adoption of automation and technology, enabling delivery delight for our customers.
Today’s customers are more mature, informed, and evolved than they used to be a decade ago. They are aware of the new-age technology dynamics shaping our industry. The customer evolution process has been so rapid that it has moved from ‘same day’ delivery to a‘10- minute’ delivery concept today.
We need to strike the right balance between the customers’ expectations and the impact on the business to ensure ultimate ‘Delivery Delight’. The supply chain manager has a critical role to play here as business dynamics change with the advent of new technology innovations.
What are the challenges of integrating a supply chain end-to-end?
As supply chain professionals, we constantly challenge ourselves to find ways towards enhancing the customer experience with improved operational efficiencies and cost- effectiveness. We are making strategic investments for transforming Amway’s business digitally, thereby, stepping-up manufacturing automation, home delivery, and strengthening digital capabilities. We are also looking at deploying technology for integrating the whole operations to ensure the delivery of the customer experience that they seek from us.
There was a time when customers used to connect through call centres to check on the possible delivery timelines and take the delivery status update. To make it a seamless process, we tied up with a tech startup, which enabled us in providing real-time automated delivery updates to our customers. This is how we are integrating the front end with the back end. Secondly, when we are talking about planning, sales, or manufacturing operations, all of it is integrated through advanced technology tools. Even the warehouses are wi-fi enabled. We brought in newer dimensions to enhance warehousing efficiency by implementing the latest technology solutions that augment seamless connections between every process, meet delivery timelines, and optimize cost. These are some of the must-dos for a supply chain division in today’s times.
In the pre-Covid era, 30% of Amway’s sales happened through the company’s website and 70% of sales through retail stores. The onset of Covid-19 resulted in 100% online sales and currently, it has stabilized to 70%+ Online sales. The company’s offline and online market presence has been helping us reach our customer base more efficiently in less time. We are reinvesting in technology and augmenting customer experiences through our retail stores, which encourages them to buy online.
A well-integrated business can help achieve customer delight through the use of technology. Please share your thoughts.
Today, customers are more informed and evolved. They expect a seamless buying experience at online and offline stores, fast and low-cost delivery of product and packaging experience, and a variety of other options. Technology is a great tool for improving the overall customer experience and increasing customer satisfaction levels.
Amway India recently launched its website in Hindi. This tech-enabled digital change will help and support our distributors to purchase and sell products efficiently in their regional language. A large chunk of our customer base prefers Hindi as a language and finds it easier to engage and connect with the brand.
Furthermore, technology and its integration with business processes help organizations:
Improved communication for decision-making
More transparency in supply chain visibility
Greater efficiency in supply chain processes
Improved access to information (Order Information)
Improved market insights
Becoming a future-ready organisation
Analysing customer buying behaviour
Since the Covid era, the supply chain has taken a centre stage in the business. As the businesses were hit hard, the leaders understood the importance of an agile and future-ready supply chain, and technology integrated into business processes made the sailing smoother.
Digitization can help add immense value to an organization. What are your views on this? Please share some examples. Please also share your insights on how data & technology can add value to a supply chain function.
Digitization has touched upon all aspects of supply chain management; it helps organizations transform their legacy processes, which include paper-based and manual, into more flexible, agile, and collaborative digital models.
Logistics data is one important source of information used for evaluating all major key performance indicators (KPIs). It plays a significant role in assessing the commercial aspects of logistics. Effective data and technology integration is enabling organisations to focus on the insights that help increase the customer experience. It helps organizations in better decision-making, improving operational efficiencies, endto- end customer engagement, and cost optimization.
What steps need to be taken so that the supply chain is able to meet the ever-changing customer requirements?
It is very important for organisations to be agile and keep pace with the latest trends in the market. A few steps which are important to meet the ever-changing customer requirements are as follows: Expand your supply chain visibility, Develop a good relationship with your suppliers / vendors, Automate your supply chain processes, Implement latest technology, which supports any change at the front-end, and Develop a feedback mechanism followed by analysis which helps us to know customer expectations.
We before I - How do you see collaboration shaping the supply chain model especially post- Covid?
Unprecedented corporate partnership is being seen with COVID-19. Supply chain collaboration is not something that comes naturally to businesses, nor can it be turned on with the flick of a switch. Gaining the cooperation and trust of upstream suppliers is a gradual process and will happen over time.
While the global pandemic forced supply chain participants to collaborate, the partnerships that will be most successful in responding to the crisis are those where working connections already exist. This is since the channels for information and knowledge sharing have already been established, and the goals of upstream suppliers and downstream companies in the supply chain are already congruent.
What, according to you, are the best practices in Supply Chain? Which ones have you deployed in your firm?
A few of the best practices for the supply chain are as follows - Identify risk and develop the strategy, Manage the total cost of ownership, Establish key supplier and vendor alliances, Manage inventory, Monitor the key metrics, Focus on the customer experience, and Integrate the right technology.
At Amway India, we have deployed some best practices in supply chain management. Our primary focus is to achieve customer satisfaction and delight. We regularly monitor the key metrics and data points that help us find the root cause and then focus on corrective and preventive action. When it comes to technology integration, we have warehouse management software, an order management system along with a last-mile track and trace tool. This has enabled us to deliver unprecedented business outcomes, improve employee and customer experience and minimize operational risks.
What is your advice to companies going forward in this digitalization journey?
Be future-ready, that’s the success mantra. Organizations across industries enjoy the benefits of digital transformation: it enables businesses to modernize legacy processes, accelerate efficient workflows, strengthen security, and increase profitability. Organizations will need to integrate the latest technologies to be competitive in the market.
Sanjeev Setia, VP – Supply Chain, Haldiram Snacks - "You must keep challenging the status quo. That’s how you try & find new ways of working and solutions to the problems."
Your insights on the transformative landscape that you have witnessed in SCM…
India has been at the forefront of digital transformation in recent years and has been actively promoting the adoption of digital technologies across all sectors. The Indian Government has launched several initiatives and programs to support the digital transformation of business processes in the country, such as the Digital India program and the Startup India initiative. The widespread availability of affordable technology and the growth of internet and mobile penetration have also played a key role in driving the digital transformation of business processes in India. A significant number of businesses, especially small and medium-sized enterprises (SMEs), have embraced digital technologies and are leveraging them to improve their operational efficiency and reach new customers.
Additionally, the Covid-19 pandemic has accelerated the digital transformation of business processes in India. With lockdowns and restrictions in place, businesses have been forced to shift their operations online and have had to embrace digital technologies in order to survive and remain competitive. Industry 4.0 and Industry 5.0 are the next phases of industrial evolution that are characterized by advanced technologies such as artificial intelligence, the Internet of Things (IoT), and robotics. These technologies have the potential to greatly improve productivity, efficiency, and competitiveness, but there are also several enablers and barriers that must be addressed in order to fully realize their benefits.
How has Haldiram done the transformation?
For us, it has been a conscious journey that we have embarked upon. We are taking incremental steps at a time. But more importantly, we are making these efforts at the right time. We are trying to break those changes into smaller milestones so that that helps us keep a track on our progress. In that sense, I would say digitization is a journey, which I’m not sure where it will end because it’s a continuous process as our businesses and the economy progress and we keep evolving to the customers’ needs.
How do you transform a company which has been for years into processes and is ready for the change?
I think supply chain, as a function, understands the way businesses operate. Supply chain encompasses almost every other business function, and they are able to bring the pain points on the table. Technology is proving to be a great enabler in streamlining supply chain bottlenecks. It’s helping companies in accurately carrying out demand predictions and analytics. It’s offering companies end-to-end visibility into the system. As we move along, tech-enabled supply chain is going to be a great asset for the companies. There are several ways in which India can accelerate its adoption of technology in supply chain and business operations to catch up with the Western countries:
Government support: The government can play a key role in promoting and supporting the adoption of technology in SCM and business operations. This can include providing tax incentives, subsidies, and other financial support for companies that invest in technology.
Talent development: India can develop a strong pool of talent in technology and SCM by investing in education and training programs. This can include providing scholarships, internships, and mentorship programs for students and professionals.
Infrastructure development: India can invest in infrastructure development to support the growth of technology in SCM and business operations. This can include building data centers, developing high-speed internet connectivity, and investing in energy and logistics infrastructure.
Collaboration between industry and academia: India can promote collaboration between industry and academia to drive innovation and the development of new technologies in SCM and business operations. This can include setting up research and development centers, co-creation initiatives, and technology incubators.
Digital transformation initiatives: Companies in India can take the lead in adopting digital transformation initiatives in their operations. This can include implementing digital systems, automating processes, and investing in technology infrastructure.
Encouraging entrepreneurship: India can encourage entrepreneurship in the technology and SCM space by providing support for start-ups and promoting innovation. This can include providing funding, mentorship programs, and access to networks and resources.
In a nutshell, there are several ways in which India can accelerate its adoption of technology in SCM and business operations. This can include government support, talent development, infrastructure development, collaboration between industry and academia, digital transformation initiatives, and encouraging entrepreneurship. By taking these steps, India can catch up with the Western countries and become a leader in technology and SCM.
How has innovation changed your story?
You must keep challenging the status quo and that’s how you try and find new ways of working and solutions to the problems. That’s the beauty of what humans bring to the table in terms of trying to have the same thing in a different way of place to bring in efficiencies. I recently read a quote somewhere that the laziest people are the biggest innovators because they find ways to cut down their times. Innovation is never ending. The Covid-19 pandemic has had a significant impact on supply chain and has accelerated the need for innovation in supply chain platforms. Here are some of the forms of innovation we can expect to see in the post-Covid era:
Digital transformation: The pandemic has accelerated the shift towards digital transformation in supply chain management. We can expect to see a continued focus on digital solutions, such as cloud-based platforms, data analytics, and automation technologies, to improve supply chain visibility and efficiency.
Resilience and agility: The Covid-19 pandemic has highlighted the need for supply chain resilience and agility. Supply chain platforms will need to be designed to quickly adapt to changing market conditions and unexpected disruptions.
Collaboration and interconnectivity: Supply chain platforms will need to be designed to facilitate collaboration and interconnectivity across different stakeholders, including suppliers, manufacturers, and customers. This will enable real-time visibility and coordinated decision-making.
Sustainability and social responsibility: Companies are increasingly recognizing the importance of sustainability and social responsibility in their supply chains. Supply chain platforms will need to be designed to support sustainability initiatives, such as reducing carbon emissions, improving resource efficiency, and ensuring ethical sourcing practices.
Predictive analytics and AI: Predictive analytics and artificial intelligence (AI) will play a critical role in supply chain management. AI-powered platforms will be able to analyze large amounts of data to provide real-time insights and improve decision-making.
In effect, Covid-19 pandemic has accelerated the need for innovation in supply chain management. We can expect to see continued focus on digital transformation, resilience and agility, collaboration and interconnectivity, sustainability and social responsibility, and predictive analytics and AI in supply chain platforms. By adopting these innovations, companies will be better equipped to respond to future challenges and improve the efficiency and effectiveness of their supply chains.
Please share your insights on how data & technology can add value to a Supply Chain function.
Managing the availability of supply to meet volatile demand has never been easy. Even before unprecedented challenges created by Covid pandemic and war in Ukraine, synchronizing supply & demand was perennial struggle for most businesses. This is not because of lack of effort. Most businesses have made strides to strengthen their planning capabilities in recent years. IBP is a powerful process that could become central to how companies run their businesses. It is decades ahead of S&OP.
The key differentiators are:
Full Business Scope: Beyond balancing demand & supply, this synchronizes all of a company’s mid & long-term plans including management of revenues, product pipeline & portfolios, strategic projects, capital investments, inventory policies, procurement strategies and joint capacity plans with external partners.
Risk Management along with Strategy & Performance Review: IBP uses scenario planning to drive decisions. There is varying degree of confidence about-
how the future will play out,
how much revenue is reasonably certain as a result of consistent consumption pattern,
how much additional demand might emerge if certain events happen,
how much unusual or extreme occurrences might affect additional demand…
These assumptions are assessed against business targets, options for mitigating actions and potential gap closure.
Real-time Financials: To ensure consistency between volume based planning and financial projections, IBP ensures strong linkage between operations and its impact on business. This helps eliminate surprises.
High Quality Process Management - Rhythm with meetings, Cross functional decision makers, Agile forums
Accountability & Performance Management - Define, monitor forward looking matrices, Tradeoff for conflicting KPIs, Clear accountability for shared metrics
Effective use of Data & Analytics and Technology - Right slice & dice of data, Scenario planning, Optimized operational execution, Specialized Organizational roles and Capabilities, Process owner, Integrated role, Cross functional collaboration
The mature IBP process significantly improves collaboration, pushing up Service Levels, bringing in efficiencies and higher productivity.
What are the best practices of the supply chain that you want to share with this audience? How do you go about implementing it? How important is upskilling of people in this journey?
The supply chain is all about ensuring Right Product in Right Quantity in Right Condition at Right Place in Right Time to Right Customer and at Right Price. In a nutshell, this manages Customer Service, Cost, Waste, and Inventories. Supply Chain should be Agile & Responsive; Customer Centric; Automated & Digitized; Foster Collaboration; and lastly and most importantly it should be sustainable. As best practice, supply chain should be aligned to overall Organizational Objectives; Customer Focus; Should have the right talent; Capability Assessment & Skill Upgradation; Performance Management; Performance Driven Culture; Leverage Technology & Data Analytics.
What is your advice to companies going forward in this digitalisation journey?
We have overload of data, but how do we convert this data into actionable insights and act on this to ensure that we remain agile to the ever-changing business and customer needs will always be the key. For this, we need to ensure we have the required skill sets and mind sets for the teams. Upskilling on this will enable and fast track the digitization journey.
Pavel Mehta, Vice President and Head - Supply Chain, Pernod-Ricard India - "You cannot have an underpinned digital process without inculcating a culture of innovation."
To what extent has India accepted and accelerated the digital transformation of business processes?
The acceptance, especially over the last few years, has happened, in my view, because of the huge supply chain crisis, which we all have faced during the pandemic. There was a huge volatility in demand, fast shifting consumer patterns and preferences, a very big and a sudden push towards e-commerce and direct-to-consumer models and therefore there was a completely new way of looking at inventory. Traditionally models of inventory management were quickly relooked. Companies placed a lot of thrust on risk mitigation strategies. A greater emphasis on contactless manufacturing and warehousing operations offered a huge fillip to robotics and automation within the manufacturing processes and similarly within warehouses. Another area which became clearly apparent during the pandemic is a huge focus on end-to-end supply chain visibility. Very quickly organizations realized that unless they invest heavily into building digital twins, it will be virtually impossible to manage any kind of crisis in the future, irrespective of its magnitude.
Companies must build or strengthen their digital capabilities of getting end-to-end visibility of their entire supply chain. These are some of the factors, which accelerated the appetite of many organizations to augment their digital journeys, not just in supply chain but in the overall business. The good news is that change is happening at all fronts…
The government is doing a lot of fantastic work. Our 3PL and 4PL partners are also fast embracing the changes. We must realise that cost pressures are never going to go away and as the economy grows and as organizations grow, there is very little choice left for organizations to become more efficient to maximize profit than to invest far more heavily into the digital capabilities than they had before.
The new workforce is very tech-savvy. Is the supply chain industry ready for accepting the new age thought processes, especially at the innovation level?
First of all, when you start a new company and you already have a very clear digital footprint and your entire digital model is based on the digitalization strategy, in my view, it’s much easier now. Over the last few years, I’ve driven a lot of digital transformations and it is much more difficult in organizations who are trying to adapt to it and there is a fundamental difference between the cultural aspects, which in digitalization journey drives and the inherent cultural aspects of an organization. I’ll give you a few examples… as soon as you start digitalizing your processes, decision making has to be decentralized. You cannot be in an environment where you will continue to follow standard hierarchical decision-making process and digitalize everything. It will fail miserably.
You cannot have an underpinned digital process without inculcating a culture of innovation, challenging everything, challenging the status quo and then having that hunger of finding new things. The level of collaboration that you need in a traditional environment and the level of collaboration that you need in a digitally enabled operation are remarkably different. The cultural aspects of driving a digital transformation, especially in a big organization having an inherent culture, in most cases, has not been understood and not been given the weightage it deserves. The other part that I would like to mention is on the workforce that we have in a traditional supply chain set up from the bottom to the top. A lot of it has grown in-house and has jumped the corporate ladder. They have grown up the ladder following set processes and ways of working and the appetite for change is obviously less.
We must understand that, and we must drive the change. If we want to make our workplace attractive to new people and if we don’t have tech-enabled processes, we will not be able to attract people at all. They will simply go to the startups or e-commerce companies. I would say all these are intertwined because on one hand, it is difficult, on the other hand, if you don’t know the developing changes, you will miss out on a huge opportunity, both in terms of your processes and also in terms of attracting and retaining the right talent. There has to be a standardized supply chain accreditation certification process. There needs to be a program where supply chain professionals are accredited based on certain standards, which are defined in a collaborative way between institutions and industries. Additionally, at the pace and the scale with which supply chain is transforming in our country, we need more institutions such as NITIE who are prepping supply chain professionals of tomorrow to be future-ready and bring impressive changes on the job. Without investing into technology or rather investing only into technology without investing into people is certainly not going to work. It has to be balanced. The need of supply chain professionals today is growing at an exponential pace. The need for standardized basic competencies and capabilities in supply chain is huge especially when you go down the line. Today, it’s very difficult to find people who possess the desired capabilities.
Do you see innovation happening at technology level or at a mindset level or at infrastructure level?
You have to be open and mentally active to anticipate the unforeseen changes that may come your way. I’ll give you a simple example… The kind of ecosystem that we are living in are starkly different than the traditional mindsets or the mindset that we used to have many years ago where there used to a dedicated innovation team, which only used to focus on innovative ideas and then drive the whole organization to follow that innovation pipeline, those days are now gone. There are innovation opportunities everywhere specially in supply chain. If I am going to sit in siloes and think that I will be able to identify innovation opportunities across the value chain, we would be going nowhere. We have to constantly keep looking for those opportunities and that’s the only way any organization or industry can keep pace with changes.
Abhishek Joshi, Country Lead - Ag-Business & Supply Chains, Transform Rural India - "We need to starkly differentiate between ‘Doing Digital and Being Digital’.
What is going to be the inventory model be going forward?
A few years back, we used to perform comparative analysis of our manufacturing processes vis-à-vis our competitors and align our processes to be “best in class” with focused benchmarking in tune with the market & consumer demands. Some rapid changes around visibility, adoption of end-to-end visibility as a fulcrum, both supply & demand side was felt, not only for inter but intra organizational aspects as well.
Intent was to continue to sharpen it, add tech layers where it was needed & develop some homogeneity to operational process. It was yet static whether resilient we didn’t know. Post-Covid, we all are witness to the kind of metamorphosis that inventory management has underwent. We all have been followers of the lean policy where it was ‘just in time’ and we were looking at connecting and disconnecting as consumer shifts were witnessed, but now we’re seeing even that linearity in supply chain also is being challenged. Companies’ supply chains today are being judged on the basis of agility they showcase during tough changes, their adaptiveness to changes, and building quick response mechanism basis the need. Another important factor highlights the inventory strategies that companies implement. Purely from manufacturing or demand fulfilment perspective, we are probably more rapidly than ever embracing the visibility of digital platforms, which used to be an uncommon phenomenon earlier. What perhaps was a 5-year plan was achieved in 5 months. Increasing visibility is helping companies in redefining their value chain. In this VUCA world, it’s extremely challenging to estimate the best-case scenario for businesses, in my view generically. In a nutshell, today inventories for an organization are divergent upon organization to organization. They are revamping and reimagining supply chains. They are looking at whether inventory consolidation can possibly help them.
I think organizations post-Covid are still looking at what kind of inventories they need to carry whether it needs to be scattered or consolidated at one node point in time, how they would react to each of those multi-channel configurations, which has sprung due to an e-commerce boom. During lockdowns, we got quick response order fulfilment initiatives. Organizations are still trying to carry on with the conventional, I say with respect “statists” practices alongside finding newer and innovative ways to inventory management to serve customers’ ever-growing demands. Perhaps new alignments might resultantly appear.
In the pre-Covid era, inventory was oft being regarded as a necessary evil and there used to a lot of focus on reducing inventories across the board. Now the scenario has completely changed. What’s your take on this?
Honestly, inventory is never bad, it just needs to be in planned & desired constant motion. Inventory was a subjectivity of maintaining an optimum throughput by turnaround time. This has put constant pressure on supply chain managers to rapidly increase throughput and ensure that the inventory is actually being targeted, available to serve customers’ demand. A recent survey has brought this to fore where even the visibility for some 62% of the organizations are restricted only to tier I suppliers & difficult beyond for tier II or III suppliers.
Forecast needs to be as robust matching to the demand lead generations and in equilibrium, however what has changed owing to the disruption has pushed the boundaries beyond it as well. Having said that, inventories are bulging up in certain cases, the move now as we have seen is towards “just in case”. It’s further being pressured on external circumstances, be it interconnecting nodes of transportation capabilities of organizations to fulfil demand through stocking locations “near shoring” as we see or decoupling from off shoring locations to ensure inventories are available when needed. If you look at the manufacturers, I can distinctly bring out an example about the semiconductor chip shortages. There was a sole source supplier, there was a strategic association with the dominating countries manufacturing the same. There was a struggle in terms of getting of the first lot to be picked up because everything was on hold. Sensing the problem early on, suppliers had developed a dashboard, which offered enhanced visibility into the system of not only the primary suppliers, but also tier II & III suppliers, predicting their inventory. Through this innovative offering, organizations were able to handhold and support as to what level of inventories they can possibly manage for them. Looking at the speed of the emerging demand, increasing visibility, reducing the volatility of inventory, reducing the stock-out situations, were the best bets that supply chain managers took and worked towards turning these challenges into advantages. Going forward, I think we are still in the process of settling down. Three years down the line, we’ll probably be back to the same sequence of what we are doing currently, but with far better digital capabilities to predict, manoeuvre the supply side ambiguities and more sharply attuned to changing complex demand patterns.
The investments and learning from these experiences would draw much better integration, however the model certainly will not be the same what we are accustomed to in terms of operating presently.
What, according to you, are the best practices in supply chain? Which ones have you deployed in your firm?
I come from services side of supply chain. However, to respond, I think we need to starkly differentiate between “doing digital and being digital”. Over the last few years, we have seen large organizations getting into an integrated Network Enterprises, trying to achieve a mature stage of operations. But to my view, & as we have seen, the more you are tightly integrated, the more fragile you become. You need to look at multifunctional enterprise solutions where people, processes and the implemented technology are orchestrated in such a way that there is a synchronicity in your supply chain. Additionally, Human element has also got lot of traction post Covid. I think organizations really need to look at the predictive and the prescriptive side of the digital technology. If you have already identified a black hole and you are confident that that a particular technology can help you increase visibility, then probably that’s the way to go for it. Increasing visibility necessarily but does not mean it by default shall translate to a multisynchronicity for your supply chains.
And that’s where I say, these are two overlapping at a glance but different in practice adaptation. In order of priority as to where the organizations are on the digital models, first one essentially is any tool, technology or adaptation of any processes is to answer key elements of it, is it reinforcing? is it expanding? is it generating value for the customers? or is it taking you away from your goalpost as defined to your objectives?
Basis these insights, companies need to reimagine their entire supply chain. Second important aspect is to have a resilient supply chain, which is able to foretell the risks, anticipate those risks and then develop digital adaptation strategy, which essentially can respond to questions such as whether my risk mitigation is creating resilient supply chain or not. Resilience is to navigate & be quick to respond to both internal & external risks. Not that you can absorb how much and wait for tide to turn over.
Next pillar is going to be about the people and the skilling part. People need to be at the centre of the strategy and drive the change. Organisations will need to invest in upskilling and reskilling their biggest assets – People. The next pillar is Sustainability. Going ahead, ESG norms are going to be more rigorous and inclusive. I am confident and very pleased to say in this well attended forum, that supply chain professionals are going to lead this ESG drive for every organisation. No other corporate function on its own will be in a situation to lead this agenda.
What is your advice to companies going forward in this digitalisation journey?
Organizations need to look inwards. Randomness, the velocity and the vulnerability have actually altered the way the supply chains were structured till today. We are into a very different Universe and a very different world now altogether. Earlier supply chains used to be determined by a mindful constant, as closely as one could predict. The VUCA world has brought in a big shift in the way supply chains have been functioning today. They are changing within the organisation on a six-monthly basis depending on the business requirements.
You just cannot be sitting on your laurels basis what’s your supply chain strategy is or how you are implementing digitalisation in your operations and how integrated they are. Companies must reinvent themselves to stay ahead of their competitors and survive any foreseen situations coming their way. I think the organisations really need to be a little more cognizant of the fact of ensuring that they are continuously doing a stress test on the supply chains and be a little ahead of the curve in understanding that even my existing supply chain or what I probably am ahead to my mind, for might also change. The digital twin needs are now a more firm embedment than ever before. The collaborative supply chain models are here to stay, organizations will have to alter their strategies of going alone, they just can’t now. Partnerships have to be built, sustained driven from the top and pockets of operational excellence between peers on noncompeting aspects will also have to be strongly built in and digital innovations, tools and technologies can lend a hand if boundaries are wilfully being expanded.
Sahil Saini, Senior Director – Enterprise Sales, PandoCorp - "The Go-To-Market strategy has been the biggest catalyst of transformation."
Is there a shift from culture to transformation or transformation is a new culture now in the organization?
Whether it’s the culture driving digitization or vice versa, I think today’s culture is nothing but agility or the velocity of innovation we’ve seen around decades back. E-commerce, for instance, we wouldn’t have even heard of the name around a decade back, especially in India and now we are living in an era where brands are defined by their competent supply chains, for example, there would have not been a Blinkit today if people were not even thinking that a product can be delivered in 10 minutes. It’s not that only the new brands are driving this shift, even traditional brands are staying in tune with the changing times. When there is a new product launch or a new vertical launch, the first thing that a sales team does is align the strategy with the supply chain. This is to ensure that we are the fastest in whatever we are envisioning to bring to the market. The Go-To-Market strategy has been the biggest catalyst of this transformation.
For this to happen, the supply chain needs to be robust enough to meet the unforeseen or anticipated demand variabilities. I think even the adoption of change has become faster now. People are expecting the supply side to be more agile and faster to innovation because they can adapt to it quite quickly as well. That’s the key cultural difference to me.
How is AI and now openAI changing the face of logistics and supply chain management (SCM)?
I can surely say that half the people today wouldn’t realize that we are already amid the transformative landscape of Industry 5.0. The speed of innovation is probably the next big thing, which is nothing new from an era when libraries used to be completely manual. The librarian would help us to pick up a particular book from the right shelf with the use of a manual record. The biggest change has come in the way humans think about technology and analyze data. It’s simply technology replicating that in some sense and then that technology helping itself to grow at a speed which humans would have grown. It’s simply a direct overlay of human thinking on technology, the way data can be analyzed and to put it on more impactful things. Without that, I think nothing else would work out. In India, we are trying to solve a different set of problems in some sense. We have a variety of problems to solve with the underlying infrastructure and even though manpower is there to support it, unless technology comes in and with open AI changing the technology game, playing the scale game of the people who are supporting it, it’s not going to work. It has a pivotal role to play as we move ahead.
How are the upcoming companies or startups shaping up?
Let me respond to this question with an interesting meeting that I had with a global Supply Chain head of a CPG company. During the conversation, he categorically mentioned that about two decades ago, he had this idea of having a unified platform to solve anything related to supply chain. At that time, he did try and approach one of the largest companies who was on a mission to solve the maze. There’s a reason why West is fundamentally bent towards a points solution sort of approach because the innovation has happened with time with very biopic view on some of those problems to solve and that’s exactly what the startups today are trying to bring the change. India is at a stage where all the Indian brands are expanding globally from here, a phenomenon peculiar with the Western companies. They realized that how important it is to have that core infrastructure ready, imagine one company having 100 SKUs and at least five go-to-market channels. Now imagine a conglomerate having six business verticals with each having 100 SKUs to do the same thing. That’s where the problem arises and that’s what startups are now trying to solve from digital transformation perspective and they are offering an end-to-end spectrum of things that companies are looking for.
This transformative landscape also offers companies a great head start to be ready for the big bang technology changes to be embraced in future such as AI or ML. Companies need to understand that if their value chain is disjoint, then each of the disconnected parts can have leakages of their own and in today’s competition, no one can afford leakages anymore.
Is there a way to make students deconstruct the most complicated technologies as if we probably are trying to understand the ABCs of technology?
I think India has been that land of innovation much before even the word patents existed, and we have been doing it very frugally. We’ve heard a lot about companies like 3M who have dedicated hours in the week to just innovate, be it a process or a product and they’ve come up with some fantastic ideas. I know a couple of Indian traditional organizations that ensure that there is a rotation of roles of everyone, just to have a different perspective to solve things. There was a large manufacturing company who had transferred their senior sales personnel to their Horticulture Department of all the properties for one month and the kind of innovation it brought in to reduce the overall expenses on property management was simply remarkable.
Ramkesh Jangra, Head – Supply Chain - SCC, Ericsson - "The government is placing immense thrust on technology implementation to drive growth."
We would like to know from you supply chain transformation landscape you have witnessed over the years...
The whole ecosystem of the world is changing very fast. India became globalized more than two decades back and since then the organizations have been working with the attitude of an MNC culture. Added to that, if we see the pre and post covid transition, the speed of change has been too steep. Giving example of the telecom sector where I am involved extensively, the rate of transition from 1G to 2G to 3G to 4G and now 5G has been reducing day by day. As a matter of fact, we are not even used to the transitional changes that 5G has to offer, researchers have already given us the possible launch period for 6G and 7G. That’s how sharp the transition has been shaping up. The government is also placing immense thrust on the technology implementation to drive growth.
There have been various remarkable technological initiatives that have been achieved by the government in a highly seamless manner even during the Covid period, for example, implementation of FASTag technology at the National Highways across the country, or for that matter, the COVID dashboard. Such innovations have made everyone’s lives hassle-free and offered the government bodies a faster mechanism to deal with the crisis situation. FASTag, on the other hand, has brought in organized way of facilitating electronic toll collection across the country, thereby saving people’s time and efforts in the long run.
UPI transaction have made e-commerce a hassle-free affair for consumers and sellers alike. UPI payments are changing the way we send and receive money, reducing dependence on bank systems. It has simplified transactions, made them more secure, and made them easier. The popularity of UPI payments is not just limited to big merchants, the winds of change have been brought by small merchants, even the vegetable vendors are more comfortable using this mode of payment, irrespective of the volume of transaction. While these are some of the consumeric front examples,
if I talk about supply chains, each and every process has been enamoured by the mask of digitalization and has made the processes integrated with each other and have ensured greater transparency within each node of the value chain.
Rajesh Kaushik, Senior Supply Chain Professional - "The implementation of digitalization from upstream to downstream holds the key."
Please share your insights on how data & technology can add value to a supply chain function.
There are a few aspects that need to be considered while implementing digitalisation strategy in operations. Every organization is looking at optimising cost and improving the speed to market. The implementation of digitalization from upstream to downstream holds the key. I was part of implementation of improving the speed to reach our suppliers in terms of implementation of SAP ARIBA, from very simple models of sending the PO, getting the purchase order, and then working on the purchase order with the vendors, making sure that the entire upstream supply chain gets strengthened by implementation of SAP ARIBA.
Through such exercise, we were able to reduce TAT by 20% in terms of sending the purchase order, acknowledgment of the purchase order, dispatch of products and then finally receive that product to the plant. Similarly for boosting supply chain, we implemented some of the aspects such as forecast using data and technology, and worked around responding to questions such as is the forecast very close to the market or not, what are the constraints and then getting that information from the system using that information in S&OP to get the right integration and then work on the working capital management, ensuring that the product reaches to the customers using the optimum transportation route on time. Another very important aspect that technology helps in enhancing customer traction & satisfaction is the seamless communication where they get real-time update on the whereabouts of their products.
What are the barriers that companies typically face in this digitization journey?
In my previous organization, earlier we were operating with 25 warehouses across the country. The question we asked ourselves was, ‘Are we really efficient with 25 warehouses? The objective was to find out the optimum number of warehouses required in India to serve all the customers in timely manner.
In doing this exercise, we realised that our warehouses were not optimally networked as to where they should be located to reach the customers faster. We performed the optimisation study as to where are our customers based, in which state, what is the logistics infrastructure available to reach the customers and then using some of the statistical inputs alongside supply chain planning, we were able to optimise and come to a conclusion that nine warehouses across the strategic locations will be able to better serve our customers instead of 25 warehouses, which have been located in a asymmetric fashion. This restructuring helped us achieve cost saving to the tune of 10% and also reduce the turnaround time by 60%. In turn, the chances of the business getting on a growth track also improve multifold, which is an intangible gain which we may not be able to quantify. Going one step further, we also decided the location of our central distribution center, our satellite distribution centers, the amount of inventory to be stored, our inventory quality ratio, etc. instead of increasing the inventory, most organisations have started focusing on searching alternate reliable vendor bases who can also cater to demands during volatile and uncertain times.
The biggest barrier during the entire digitalisation journey was Change Management. When we started implementing digitalisation. We not only faced internal resistance, but our external partners such as vendors also were reluctant to this change. Through a round of meetings, we had to convince them and make them understand the impact that digitalisation would bring for everyone. The moment, we were able to get a buy-in from all the stakeholders, the adaption rate got increased to 85%, which was earlier 40-45%. We were able to bring 80% of our vendor under SAP ARIBA platform.
What is your advice to companies going forward in this digitalisation journey?
Supply chain is a revenue generator now and had become a competitive advantage. Supply chain owns 50 – 55% of the entire cost of goods sold. As we focus more on digitalization, which will increase the speed and reduce our cost. Tomorrow the organizations will start competing among themselves on the basis of a competent supply chain. Early adapters will have an edge over others in this evolutionary journey.
(Disclaimer: All these views expressed are experts’ individual views. Their respective organizations or any other management member has no role, whatsoever in these views and should not be held responsible for any claim whatsoever.)