Taking the Value Chain forward through Innovation

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Supply Chain Leaders

Taking the Value Chain forward through Innovation

Celerity 40-Under-40 and 30-Under-30 have become the most sought-after awards among the supply chain fraternity in just two years of its inception. While these awards acknowledge and honor the innovative streaks of the new age supply chain managers, the platform also serves as the congregation of the best of the brains in the domain with the leaders leading the pack with their expert insights through thought provoking panel discussions and guiding the generation next to follow the trail. This year’s e-awards ceremony was once again successful in presenting pearls of wisdom from the illustrious panel on SUPPLY CHAIN in the NEXT NORMAL and addressed the changes required to rebuild supply chains for the future.

How can individuals and teams within an organization help foster supply chain innovation? Any experience that you would like to share…

Prof. Ashok Pundir, NITIE: 

Prof. Ashok Pundir

Tough times really teach us to think beyond the NORMAL and create the NEW NORMAL for growth.

The year 2020 has been challenging from all the fronts and the challenges seem to be surmounting every passing day. Hats off to all the supply chain professionals even though productions were not going on and transportation was at bare minimum and vehicles weren’t plying as they used to, supply chain professionals managed to deliver goods & services to ultimate consumers. Rather than going for big bang innovation, they relied on smaller innovations to get the supplies to the end consumers so that the people do not starve for essential supplies. Covid period defined essential and non-essential goods & services for us, which were never given due cognizance in the pre-Covid era. It was a big challenge because consumers were not venturing out of their homes due to lockdowns and supply chain professionals were also operating out of their home spaces rather than being on the field. They had to ensure that the drivers are provided enough & more support to be back on the road with their own food supplies as the highway food joints were completely shut down for months. Before Covid, we also didn’t realize that we can actually deliver everything at home. Many consumer goods companies also joined hands to reach to their consumers in the wake of short supply of vehicles and manpower. This is how companies started looking for new business alternatives as this was the time for survival and sustenance. Collaboration with small kirana stores in the neighborhood areas of consumers made sure that consumers get the convenience of ordering their essential supplies through WhatsApp. Tough times really teach us to think beyond the NORMAL and create the NEW NORMAL for growth. I am happy to witness the resilience shown by Indian companies in such tough times and 7 months into the Covid era, we are still learning newer ways of operating and doing business. These crucial times only tell us how to convert challenges into opportunities and seek for newer avenues of growth to keep the wheels moving. Things are going to look up from hereon.

Raviraj Rodrigues, Director Supply Chain-India, Alstom Transport India Ltd.: 

Raviraj Rodrigues

Our objective should be to Improve Resilience.

I would like to answer the question in two parts – Where should be direct our Innovation focus to and How to do it.

Where to Focus – Our thought process as Supply Chain leaders would be essentially to build resilience in our supply chain and when I say resilience, I mean that our Objective Function would be to Improve Resilience and factors like time to market, Cost would be constraints. This would be different from the way we have looked at our business and supply chains in the past. Why do I say this, it is that our situation is and will continue to remain complicated and ambiguous for a fairly long period of time. We have seen a drop in both demand and supply at the same time, something that has not been witnessed for the last 100 years. We have also seen significant involvement of the State in managing the business flow such as Lockdowns, Phased Unlock, geo restrictions for certain items, etc. Such State Controls are usually seen during war. Also, we are not out of the woods as yet. There is always a possibility of relapse soon. Then there is this big debate on the direction the recovery path will take: Will it be a V Curve, U Curve, or something else. Finally, when will life and demand return to normal? I see too many variables at play even now and I would call it a perfect example of a VUCA event in all its extremes. In such a situation, building resilience would be the best approach to de-risk our supply chain. It’s here that we will need to be innovative in rebuilding our supply chains as no templates exist for this.

Areas that I would like to focus on in the next 6 months would be to:

  • Build redundancy in capacities
  • Build Diversity in Fulfilment – Do not stick to one or two modes, so that we switch over in terms of crisis- For e.g. Food Business - Companies that had Cloud Kitchens and delivery service aligned, had a small blip during the lockdown unlike the big fine dining restaurants
  • Build Diverse teams – The core Crisis management team should be truly cross-functional, so that we can have more ideas about potential solutions & not treating the crisis in one-dimensional manner — as a financial or logistical problem only.
  • Build Modularity – Highly integrated systems were efficient, but vulnerable. If the manufacturing lines, supply sources or even teams are modular, one can combine them in different ways to handle crisis.
  • Drive Digitalization – Now is the time to drive Digitalization. Digital Pioneers can get 5% cost benefits through Digitalization within 2 years. Also, one should treat the digitalization as journey of Perpetual Beta and not try and get it right the first time.

    Coming to the How, my belief is that we can foster supply chain innovation in our teams through two distinct actions:
  1. Create an environment for innovation – An example that I can quote is the “I Nouve You Program” of Alstom, which encourages Individuals and groups to bring together implementable innovations.
  2. Recognize the contribution of such talent through National and International Forums. A perfect example being this awards program.

Akhil Srivastava, Director BU South Asia, AB InBev: 

Akhil Srivastava

The key opportunity for companies lies in making breakthrough and Disruptive Innovations to make a new industry and create their own niche.

Basically, I sense it as opportunity. Yes, Covid has been an issue and the demand as well as the supply side both were triggered and impacted significantly. This period also gave us an opportunity as it opened the soft underbelly of the business models. It’s an opportunity because supply chain which was always taken as granted has today become the value driver and the profit driver for the company. Eventually the essentiality, which has changed in the consumers’ mind moving to convenience, efficiency, and economics. That is what supply chain takes care of. An FMCG product must be visible through advertisements and promotion, but if it is not available on the shelf, the ultimate value and the brand equity is lost. The basic premise of an exceptional supply chain network rests only on these critical pillars – convenience to consumers; efficient handling of goods during transport; and economics of scale. I believe innovations can be classified in four buckets which are as follows:

There is fundamental research & development from the academia who can help undertake fundamental scientific concepts like Make to Order and Made to Stock. Then there are sustainable innovations, which companies keep on doing to reduce cost escalations, improving mix, and delivering value.

The key opportunity for companies lies in making breakthrough and disruptive innovations to make a new industry and create their own niche through long term comparative advantage through differentiated and unique product and services offerings.

We as an industry needs to move from a shared economy to a customized co-created economy and supply chain will play the role of a catalyst in attaining the desired objectives.

I would also like to bring to your attention a very critical aspect of job creation – on one hand, we would be seeing job cuts in all the other sectors, people in the supply chain will be in the highest demand going forward and we can definitely see that happening with the festive season coming and the e-commerce companies on a hiring spree. In short, the landscape for knowledge workers will be very favorable for those who keep on innovating, executing and delivering value for consumers in fields of supply chain.

Ravikant Parvataneni, India CEO, Argon & Co.: 

Ravikant Parvataneni

Companies must need to give points for unsuccessful attempts as well, rather than just recognizing the successful innovations.

When you talk about fostering innovations, one of the things which is commonly done is to incentivize innovations. However, NOT penalizing unsuccessful innovations is an equally important point. Only then people will leave aside the fear that if an innovation fails what will happen. Companies must need to give points for unsuccessful attempts as well, rather than just recognizing the successful innovations.

This I believe will be a gamechanger in bringing that culture of innovation and it is incumbent upon us as leaders to inculcate this culture. These innovations could be small. I always used to say that MAGIC doesn’t happen in supply chain overnight, but then MAGIC can happen over a period…say one year. People do 10 things which will bring just about .5% process improvements but over a period of time, these will become significant. Companies need to build a culture to listen to such ideas and grow step by step rather than waiting for a big bang innovation. An employee’s performance shouldn’t just be limited to KRAs, they should be judged on the basis of out-of-the-box ideas however small they are.

This pandemic has laid bare our ability to handle massive disruptions. What according to you is that one single idea that should be implemented by all supply chain operations in India?

Prof. Ashok Pundir: Supply chain professionals have truly stood the test of times and have emerged even more stronger.

Building trust has been one of the most important aspect that we have seen growing during pandemic. Earlier we used to check all the stuff which used to get delivered to us but today the delivery person just drops it off at the society gate. Though it’s a very small change but if you look at it from a business standpoint, people have started placing immense trust on the e-commerce companies who have been with them through such tough times when people weren’t able to move outside their houses. The visibility factor into the entire supply chain has only strengthened this relationship and this is only going to grow from hereon. In fact, return deliveries were also managed quite seamlessly during this pandemic. Supply chain professionals have truly stood the test of times and have emerged even more stronger.

The utilization of local kirana stores has finally seen the light of the day. Though it happened late, my question is why we waited for the pandemic to hit us for this incredible opportunity to connect. Rather than companies going doorto-door or house-to-house, these kirana stores may be utilized as the ultimate customer traction point as these neighborhood shops know their customers and requirements more than anyone else. Second aspect that I would like to bring to your notice is the bullwhip effect. There is a lot of pent-up demand. It’s very difficult to predict demand for products. My hunch is that companies shouldn’t end up producing so much that they are unable to sell in short run. Look at the increasing sales of two wheelers and four wheelers in the month of September, there is likely to be increase in demand due to need to own a vehicle to meet social distancing norms. However, companies need to be watchful as there may be lot many demand variations in the foreseeable future before we see normalization in the economy.

Akhil Srivastava: Expectation management is especially important for the industry to deliver products using supply chain.

We all in supply chain are hardcore execution specialists. We know how to create and build value for consumers and corporations. Supply chain professionals need to work on 3Ps – Passion, Purpose and Profit wherein professionals need to have the right passion to be in this industry. They need to be aligned with the purpose that the organization has. Lastly, supply chain innovation helps in enhancing profitability.

I would like to give you 60:30:10 formula, which implies that there needs to be 60% Change Management, 30% Process Improvement; and 10% on Tools & Technologies. The consumer landscape is fast changing while the Gen X started with digital pioneering to Gen Z are in the era of digital natives. Today’s consumers do not just accept innovation, rather they expect that companies will come up with something extraordinary. Expectation management is particularly important for the industry to deliver products using supply chain.

Raviraj Rodrigues: Drive digitalization to maximize remote working opportunities.

I would not call as this innovative idea but a pragmatic approach for all supply chain practitioners – To define what can be done remotely and what needs physical contact. Drive digitalization to maximize remote working opportunities. This will ensure that we minimize risks of disruptions to the supply chain when someone falls ill needs to be quarantined.

How can executives support innovation-led growth given that cost cutting while maintaining business would be priority? Are you encouraged by the talent while judging the entries? What do you see as lacking in them?

Prof. Ashok Pundir: Don’t shy away from sharing the smallest every day innovations implemented by you in the organization because that will form the base for a big bang innovative approach.

When we talk about innovation, they always think about a big innovation. I would like to emphasize here that don’t shy away from sharing the smallest every day innovations implemented by you in the organization because that will form the base for a big bang innovative approach. Like retailers’ theme of Everyday Low Pricing (EDLP), companies should harp on Everyday New Innovations (EDNI). Covid has taught us to go by the day as well and not only the long-term planning as it has completely shaken the way we have been functioning for years and decades.

Akhil Srivastava: I envision unique and customer centric supply chains will rule the roost in purpose driven businesses for sustainable profits.

A big shout out to all the supply chain professionals who actually helped us wade through the never-seen-before pandemic by having supplied all the essential items at our doorsteps even during the lockdowns. It’s because of supply chain professionals our Indian economy has been able to stay afloat during such tough times. I believe execution trunks Knowledge and Supply Chain Professionals today are both highly knowledgeable and perfect executionists, poised to transform outlook of the global economy.

As per me, supply chain is the best function to be in right now. I am super excited for the future journey. I would just like to point towards gender diversity that we really need to work on as it really brings a lever of focus in the working environment. It is equally important to market yourself and your brand. I am sure when we are past the pandemic, companies will realize the importance of a supply chain professional and we will soon see organizations promoting supply chain professionals to the ranks of the CEO like we have in Amazon and Apple as I envision unique and customer centric supply chains will rule the roost in purpose driven businesses for sustainable profits.

Raviraj Rodrigues: Now is the best time for Innovation.

It is said that Necessity is the Mother of invention and this is true for Innovation too. Innovation and Frugality have for years co-existed in India…It’s also called Jugaad. It’s something we are good at and we must drive. For e.g. at Alstom, someone came up with an idea of doing Remote First Article Inspection using “SMART Glass”. Now why did we not think of it before and spend Million Euros+ in a year on travel budget…we thought of this only when we could not travel due to safety restrictions.

I must admit I was quite impressed with the kind of talent we have in Supply Chain today. These youngsters are both skilled and determined to make an impactful change…I saw a lot good ideas spawned… Implementation of Vending Machine for Spares, 3D printing in Manufacturing, Mobile Collection Centres for Copra…even simple intuitive concepts like raw material specification, harmonization and unique raw material optimization can make a big impact. Then there was this creative (or I could call Jugaad) innovation of Tagging Cement bags with colored Flags for FIFO that I liked, besides the well-known concepts like RPA, Freight Management Systems, cross-utilization of resources across facilities, etc. So yes, these people know what they are doing…They have a Laksh and they are doing it well. Awards like this will go a long way in recognizing such talent.

Ravikant Parvataneni: Now is the right time to shift focus and be a part of this most promising domain to be the catalyst of change.

Supply chain is not a very glamorous profession. But the way these youngsters have projected themselves and their profession, I am sure that one day supply chain will also emerge as one of the most preferred domains to be in. Now is the right time to shift focus and be a part of this most promising domain to be the catalyst of change. Transportation has become the most important value chain in the current dynamic and I was amazed to see decent number of entries coming from this very sub-vertical of supply chain. If we can push people into transportation, our journey as leaders will be fulfilled. Times are changing and I am sure next year would be another year of greater innovations and greater opportunities.

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