SUPPLYCHAINTRIBE.COM January - February 2022 Volume 6 Issue 1 For private circulation only
INSIDE THE BUMPER ISSUE Akhil Srivastava on Redesigning Leadership for Success in VUCA World Prof. Subodha Kumar gets Up, Close & Personal on the need for designing resilient and transparent supply chains SHIELD Your Supply Chains from Cyber Threats India’s Supply Chain – A ‘Sutradhar’ in the Making Supply Chain Tech Companies Shower Their Predictions for the year 2022
‘A’ CLASS APART Decoding The Future & Fortunes of Grade A Warehousing in India
CONTENTS
January - February 2022 Volume 6 Issue 1
10 | COVER STORY
Future & Fortunes of Grade A Warehousing Warehousing is a key pillar of any organization’s value chain. Though the principles of warehousing have not changed much over the years, warehousing solutions have evolved over the last decade. The major contributors being changing customer dynamics, advancement in technology, demographic changes in demand and supply, and e-commerce. These intriguing insights & more were part of our recently held webinar on Grade A Logistics Infra in India where industry leaders shared and deliberated upon what lies ahead and how solution providers can make the BIG DIFFERENCE in realizing the dream of an organized warehousing segment. 06 |OPINION
Redesigning Leadership for Success in VUCA World Thought-provoking leadership insights from Akhil Srivastava, Director Planning & Logistics Business Unit, ABInBev, on prepping up for the future with utmost ingenuity and innovation.
28 | CASE STUDY
Cut Above the Rest Presenting the winning startups leading the pack with their innovative streaks during the maiden Innovation Challenge by Nasscom CoE
20 | INTERVIEW
Helming the Winds of Change “When the dust settles down, we will see some substantial changes in supply chains,” believes Prof. Subodha Kumar, Paul R. Anderson Distinguished Chair Professor of Marketing and Supply Chain Management and the Founding Director of the Center for Business Analytics and Disruptive Technologies, Temple University’s Fox School of Business. PERSPECTIVE 24 | India’s
the Making
Supply Chain – A ‘Sutradhar’ in
Excerpts from Resilient & Sustainable Supply Chain panel hosted by NASSCOM CoE during Enterprise Innovation Challenge 41 | A
Peek into 2022
2021 was full of immense opportunities for supply chain companies and specially tech startups in this highly dynamic space. With high hopes and aspirations in thoughts and strategies, supply chain technology companies shower their predictions for the year 2022.
36 | FOCUS
SHIELDING The Supply Chains from Cyber Threats Anil Kumar Pandey, PhD Candidate (Finance & Economics), NITIE, offers a sneak peek into the ways to shield the vulnerable supply chains from the threats of cyberattacks RECAP 44 | The
Year That Was
Our 2021 issues were laced with treasure trove of insights for the industry. Here’s the RECAP of some of them… 48 | Trending
Globally
News & Views from across the globe
Editor: Prerna Lodaya DISCLAIMER: This magazine is being published on the condition and understanding that the information, comments and views it contains are merely for guidance and reference and must not be taken as having the authority of, or being binding in any way on, the author, editors, publishers who do not take any responsibility whatsoever for any loss, damage or distress to any person on account of any action taken or not taken on the basis of this publication. Despite all the care taken, errors or omissions may have crept inadvertently into this publication. The publisher shall be obliged if any such error or omission is brought to her notice for possible correction in the next edition. The views expressed here are solely those of the author in his private/professional capacity and do not in any way represent the views of the publisher. All trademarks, products, pictures, copyrights, registered marks, patents, logos, holograms and names belong to the respective owners. The publication will entertain no claims on the above. No part of this publication can be reproduced or transmitted in any form or by any means, without prior permission of the publisher. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only.
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How’s the Josh? Dear Readers, The year gone by was phenomenal in more ways than one! It was a year of vaccines and variants, and the year of Reset. Pandemic reset our professional and personal lives. As we enter the 3rd year and the 3rd wave, this has taken a sort of permanency, leaving our living to be extremely fluid. The Tokyo Olympics took some heat off with Indian athletes performing their best in four decades and Neeraj Chopra became the ‘Most Searched Person’ on Google in India and Sports was one of the top searched topics. No prizes for guessing the few others. This year was also the year of Unicorns. India has witnessed the birth of 44 unicorns with a total valuation of $ 89.17 Bn. Which probably got Shark Tank to India! Coming to supply chain and logistics, we became stronger as a domain within the organization, the champions of resilience and change. We were the quickest to adopt technology, many companies rode the D2C wave successfully thanks to quick re-organisation by their supply chain, and we are seeing an infrastructure building boom by the government as well as private players. Our Cover Story on Grade A Warehousing makes for an informative read. Innovation became a sustained effort towards problem solving and the next phase of growth. NASSCOM COE’s Enterprise Innovation Challenge saw real life problems solved by smart start-ups. Read our Case Study section to know more. Logistics continues to be one of the fastest-growing industries in India despite the pandemic disruptions. As we continue to evolve towards greater efficiencies at lower costs, here’s to a 2022 where our tribe continues to thrive, whatever be the challenges!
Charulata Bansal Publisher Charulata.bansal@celerityin.com www.supplychaintribe.com Published by Charulata Bansal on behalf of Celerity India Marketing Services Edited by: Prerna Lodaya • e-mail: prerna.lodaya@celerityin.com Designed by: Lakshminarayanan G • e-mail: lakshdesign@gmail.com Printed by: Xposures, A 210, Byculla Service Industrial Estate, D K Cross Road, Byculla, Mumbai- 400027. Logistics Partner: Blue Dart Express Limited
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OPINION
Redesigning Leadership for
Success in VUCA World “Every Shadow has light behind it, Embrace the Shadow and you will get to the light”. Future Readiness with resilience and agility achieved through mindful and skillful evolution will be pivotal for organizations, teams and individuals’ success beyond 2021. Here’s the thought-provoking leadership insights from Akhil Srivastava, Director Planning & Logistics Business Unit, ABInBev on prepping up for the future with utmost ingenuity and innovation. Welcome to 2022 – a year filled with immense possibilities & unlimited avenues to drive indelible growth…
V
UCA is an acronym for Volatility, Uncertainty, Complexity and Ambiguity that was coined by the US military and warfare since early 90’s. The word VUCA has gained most mainstream prominence over last two years than it has since its inception. The precise reason being COVID-19 that has been disrupting both Demand and Supply side with regular and unprecedented shocks. Setting up a Chain reaction of Change… A supply shock reduces the economy’s ability to produce goods and services at given prices. A demand shock, on the other hand, reduces consumers’ ability or willingness to purchases goods and services at given prices. This fundamental
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impact and 48 months of outliers, depending on sector and industry, have already and most probably will continue to diminish any forecasting tools capability to predict the forecast accurately. With each COVID wave, Demand Sensing and Demand Shaping has hit its Nadir for even the industry leaders leaving firms only trying to gasp and brace for impact on their revenues, profits and most importantly their cultural ethos and people stability. These prominent and sudden shocks have had demonstrated their relevance and need to respond with agility to every business and review the cultural context of leadership. Winston Churchill was famously quoted as saying, “Difficulties mastered
Akhil Srivastava, a Stanford Sloan Fellow, believes in Changing and Inspiring Change to thrive in the V.U.C.A world. The inspiration to write the article came from his interaction with cross-functional teams and members. Some who thrive in the wake of change and uncertainty while others who needed help to understand the power of Change. Akhil has undertaken several mindful and skilful sessions with world renowned coach (Vivian Rank).
are opportunities won." The time couldn’t have been more perfect than the present times we are living in and going through. While some organizations, teams and individuals might rebuff, joke or simply brush away the power of VUCA, its amply clear that Leadership as usual, including creating a vision, is not sufficient in a VUCA world, which probably might continue to be the norm for a long time ahead. Hence the challenges for businesses today – in driving innovation, evolving organizational structures, business & planning strategy, orchestrating partnerships across ecosystems, and managing (hiring, developing and retaining) talent will require to deploy innovative thinking and disruptive
OPINION execution levers at neck break speed. The environment is changing rapidly, and any organization that doesn’t change as fast as the environment faces extinction. The sad news is that very few organizations are prepared to operate in this higher level of Volatility, Uncertainty, Complexity and Ambiguity only to realize that they have or will set themselves for failure and probably oblivion.
EMBRACING THE CHANGE As an advocate of embracing VUCA and its power to disrupt the world, this article attempts to demonstrate how future of businesses and relationships will evolve resourcefulness with two key concepts of mindfulness and skilfulness. These upgrades necessitate for building new muscles (pivoting and adaptability) for emerging leaders in every organization to gear up for further future shocks and prevent the plans from coming to a grinding halt. Mindfulness refers to the ability of knowing oneself internally with focus, wisdom and balance for restorative adaptability of the mind to drive resilience. Resilience has 7 key attributes of self-awareness, self-compassion, self-emotional regulation, realistic optimism, flexible thinking, self-efficacy, empathy and reaching out for help and
support. And with mindfulness, through conscious reflection and assimilation, one can regain inner peace, mental stability, reduce anxiety and negativity. Being mindful is thus living more in the present with lesser stress, emotional overwhelm and overthinking especially as strategic thinkers and decision makers. Mindfulness helps drive focus attention and quickly shift thinking by realizing inner strengths and zen (no assumptions, expectations nor prejudices). Although very topical, a healthy mind paints a picture of success of work as both important and personally meaningful. It also helps build relationships with empathy and compassion, which very likely helps prioritize behaviors that benefit physical and mental wellbeing. A healthy balance between work & life priorities and managing their stress levels helps in living NOW and HERE vs THEN and THERE, which is foundation to executive presence and decision making. Balance in life is like a thermostat, where there is only one ambient point anything too high (hot) or too low (cold) makes one feel uneasy and uncomfortable. And guess what is needed the most by all of us, with all the VUCA world around, is to make decisions with resilience and candor to strike a balance.
Skilfulness refers to the ability to upskill, adapt and grow ones’ knowledge and thinking towards becoming resourceful. While change might destabilize people’s routine and make them anxious, the truth is that change is the only constant and unpredictability is itself a hallmark characteristic of complexity. More importantly change is a precursor to upskill and prepare to face future. Historically, what made for successful leaders in the Industrial Era (viz., technical skills, personal strengths such as communication, charisma and vision, and an organizational focus on efficiency and cost management initiatives), simply won’t work in the rampant unpredictability of the VUCA era. Traditionally, skilfulness was correlated with problem solving capability and reaction time (most education system still bank on timed tests and stress-based interviews as POE-Process of Elimination for screening candidates), this I call is RAT (Race Against Time). RAT based tests help the candidates who can triage a situation and deploy set patterns of knowledge (mostly theoretically assimilated) qualify but the world today is opening new ways of challenges, new and unprecedented questions around change itself, which no books or theory has comprehensively
The next skill we need to evolve is how to do things differently and build environment where all ideas are invited, openness to experiment for out-of-box thinking and failure is celebrated and not penalized. Hence the new age skills require an overhaul from “managing inertia to change through top down approach” to a place “where change is not a management problem but an ethos of everyday and everyone’s life”. As new skillsets, we need people who see the need for the company to thrive in a V.U.C.A world in which change is business as usual. That’s very different from seeing change as an implementation problem rather change as an opportunity to evolve, redesign and innovate. The new skills require, out-of-the-box thinking, the generation of new ideas, and the ability to visualize all the possible ways to thrive in wake of change. This means evolving leaderships skills which capitalize on change by being unconventional, inventive and enterprisingly entrepreneurial. supplychaintribe.com
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OPINION
covered. In fact, the next skills we need to evolve is how to do things differently and build environment where all ideas are invited, openness to experiment for out-of-box thinking and failure is celebrated and not penalized. Hence the new age skills require an overhaul from “managing inertia to change through top down approach” to a place “where change is not a management problem but an ethos of everyday and everyone’s life”. As new skillsets, we need people who see the need for the company to thrive in a world in which change is business as usual. That’s very different from seeing change as an implementation problem rather change as an opportunity to evolve, redesign and innovate. The new skills require, out-of-the-box thinking, the generation of new ideas, and the ability to visualize all the possible ways to thrive in wake of change. This means evolving leaderships skills which capitalize on change by being unconventional, inventive and enterprisingly entrepreneurial. Times like these always reminded me
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of the words of Arthur Golden, “Adversity is like a strong wind. It tears away from us all but the things that cannot be torn, so that we see ourselves as we really are.”
GOING BEYOND COMFORT ZONE Although easier said than done, as humans love predictability and stability, the new skillset required is to embrace change and its ingenuity, thus purposefully unsettling oneself out of comfort zone. As the key question is not how can we best respond or adapt to change? Rather the moot point is to envision how can we make the organization stronger through the change? How versatile can the organization, its purpose, people and culture become to not just endure the challenges of Volatility, Uncertainty, Complexity and Ambiguity in an everchanging world? Finally, it’s either you allow VUCA to "manage," overload and overwhelm you, or you accept and manage it, so that you and your team
encash the opportunity than W(h)ine over it. The answer to above lies within YOU (your mindfulness and your skillfulness) by embracing change and breaking VUCA down into its component parts with Vision with Understanding, Clarity and Agility to make this world a better place! When you decide to accept VUCA (Vision with Understanding, Clarity and Agility), you choose to make yourself and your organization relish and thrive with Mindful and Skillful Leadership Development to embrace future of change…
COVER STORY
Future and Fortunes of
Grade A Warehousing
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COVER STORY Warehousing is a key pillar of any organization’s value chain. In the advanced economies, the warehousing quality & delivery efficiency scaled-up & transitioned due to the combined push from modern industrial growth and advancement of technology. The quality of the warehouse has severe impacts on the movement of goods, on storage and retrieval of materials and achieving sustainability in safe and healthy environment in the warehouse. However, in the developing economies, this scenario is still evolving. Though the principles of warehousing have not changed much over the years, warehousing solutions have evolved a few notches higher especially in the last decade. The major contributors of this change are changing customer dynamics, advancement in technology, demographic changes in demand and supply, and proliferation of e-commerce, just to mention a few. Organizations like Amazon have revolutionized the concept of warehousing from a STORAGE function to FULFILMENT function, contributing significantly to an organization’s efficiency in delighting their customers. All such intriguing insights & more were part of our recently held webinar on the future & fortunes of Grade A Warehousing in India where industry leaders shared and deliberated upon what lies ahead and how solution providers can make the BIG DIFFERENCE in realizing the dream of an organized warehousing segment.
S
INCE the global pandemic sent supply chains into a tailspin, delivery delays have affected everything from toilet paper to bicycle parts. Wary of continued disruption, logistics and manufacturing businesses are hunting for larger warehouses, where bigger inventories can provide greater resilience during difficult times. Globally, business demand for larger warehouses is expected to be significantly higher over the next three years, according to JLL’s Future of Global Logistics Real Estate survey, particularly for warehouses between 10,000 to 50,000 sqm. Though demand for more space has prevailed over the past decade, COVID-19 emphasized the need to transform supply chain models. The pandemic has reversed the trend of streamlining inventories, adopting a ‘just-in-case’, rather than the traditional ‘just-in-time’ delivery method. Big box and mega box (100,000 sqm and over) warehouses are playing crucial role to the supply chain response. Often, they are complemented with smaller suburban delivery stations, a model referred to as ‘hub & spoke’. While this was an evident global scenario, back home too the scenario is pretty much the same with the warehousing stock in India expected to touch 380 million sqft by 2024,
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due to increased logistics and storage requirements particularly in urban settings. The covid-19 pandemic has caused a paradigm shift in consumer behaviour from offline to online shopping, leading to an increased activity in sectors like e-commerce and thirdparty logistics. About 27 million sqft of warehousing stock was added during the January-September period, bringing the total stock to 265 million sqft in the year 2021. The total stock of Grade A and B warehousing space in the top 8 cities increased at CAGR 16% from 2018 to September 2021. India has a per capita warehousing stock of just 0.02 sqm compared to the USA, China and the United Kingdom that have 4.4 sqm, 0.8 sqm and 1.09 sqm respectively. Even in terms of transaction volumes, USA's industrial and warehousing market saw 20.4 mn sqm (220 mn sq ft) transacted during 2020, 7 times that of India in FY 2021. The story of modern Indian warehousing is a little over a decade old when logistics companies such as Future Value chain built the first Grade A warehouses in the country. The entry of institutions, lured by the vast opportunity presented by a growing economy with a consumption base of over 1.3 bn people, made the Indian warehousing market a compelling investment proposition. The
introduction of the GST and the prolific growth seen in the e-commerce and 3PL sectors caused warehousing demand to grow at a CAGR of 44% in the FY 2017 - 2020 period. While the pandemic in FY 2021 has caused demand to drop during the year, the longer-term demand potential for warehousing properties continues to remain strong. According to a recent Knight Frank report, while transaction volumes were subdued in FY 2021, occupiers showed a marked preference for Grade A properties as they are much better geared toward tackling exigencies such as those posed by the pandemic. The inherent operational efficiencies, adherence to safety standards and better contingency planning because of greater expertise of personnel due to higher institutional participation are some of the factors that drew occupier interest even during the challenging environment of FY 2021. E-commerce players have always coveted the value additions that Grade A properties bring into their supply chain operations and the increase in their share of total transaction volumes also had a significant role to play in the increased take-up seen in Grade A properties. Around 64% of the area transacted during FY 2021 was located in Grade A properties. Except for Bengaluru and Ahmedabad, more than half the area
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COVER STORY transacted in all the top markets occurred in Grade A properties. The development of Grade A warehousing facilities has been increasing in recent years, currently constituting 35% of the total stock compared to 34% in FY 2020. The larger warehousing markets of Mumbai and NCR have a significantly lower proportion of Grade A warehouses as they are much older markets and a bulk of their stock had been built before the demand for Grade A warehousing gathered momentum. Pune and Chennai have the highest concentration of Grade A stock due to their primary demand base of auto and auto ancillary occupiers. Notably, Mumbai, NCR, Bengaluru, and Ahmedabad have more than a 50% share of Grade B properties. Interestingly, despite having a high proportion (82%) of Grade B stock, the fact that Mumbai still enjoys market level occupancy of close to 87% underscores the strength of the market and need for quality supply. Vacancy in Grade A properties is significantly less than the total vacancy for the eight primary markets under coverage. In fact, Grade A vacancy has also reduced or stayed the same YoY for all markets except Ahmedabad which saw a significant speculative development during FY 2021. Growth in supply of Grade A spaces over the years is due to high demand for spaces with high specifications, citing increased inclination for high-grade structures and introduction of new
players in the market. The Indian market has now firmly established itself for a more predominant position in Grade A space as opposed to Grade B spaces. Net absorption was hit in 2020 due to the pandemic but started recovering in 2021 especially for Grade A spaces – from 56% last year to 73% in this year. JLL said this shift is due to the high demand for quality spaces complying with covid-19 norms. Of the total absorption till the September quarter, more than half the share is taken up by third-party logistics and e-commerce (55%). More than $6.5 bn have been committed by private equity players in the warehousing market since the GST reforms were applied in 2017. However, the relative dearth of supply of high quality warehousing facilities that conforms to contemporary compliance norms, continues to be a challenge. The availability of suitable land is the biggest impediment in creating supply as lands with clear title continue to be scarce and digitisation of land records which can address this issue is still a long way from becoming a reality. Bhiwandi and the Nashik Highway in the Mumbai market are a case in point where there is very strong occupier demand but issues with land titling curtail institutional interest. Additionally, persistently high land prices and the complexity and time taken for acquiring regulatory approvals continue to impact the viability of warehouse projects and are significant impediments
in creating warehousing capacity. It is estimated that the e-commerce sector will consume the most space in the next five year block of FY 2022 – 2026 at 9.1 mn sqm (98 mn sqft), 165% more than the preceding period of FY 2017 – 2021. Similarly, 3PL and Other Sector companies are expected to take up 56% and 43% more space in the next five years compared to the preceding period. These three occupier groups are expected to account for 86% of the total transacted space in the next five years compared to 78% of the transacted space earlier. Market traction was seen improving toward the end of FY 2021 as vaccine availability improved and occupiers looked to revive expansion plans. However, the second wave of COVID-19 infections in FY 2021 slowed the momentum again. Occupier activity in FY 2022 will clearly be dictated by the intensity of the pandemic and should regain lost momentum as vaccine deployment improves and restores normalcy to economic activity. The Indian Government's focus on manufacturing with the Make in India initiative and Production Linked Incentive (PLI) scheme among others, and with India being among the possible beneficiaries of global companies looking to disperse manufacturing capacity from China across Asia, should enable warehousing demand from other sectors to grow at a CAGR of 16% in the next five years compared to 15% in the preceding period.
Grade A warehouses offer tangible benefits such as 50% additional floor-load capacity, 40% more operational efficiency, efficient material handling space, safety & security of employees, etc.
Sanjay Desai, Co-founder & Regional Director, Humana International (S) Pte. Ltd.
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What is Grade A Warehouse? Can you briefly cover few technical details? Grade-A warehouses are facilities, which offer efficient operations to organizations in a synchronized manner regardless of customers or industry segments. These facilities are designed
for additional height and better floor quality. Innovative materials handling equipment can be used as the flooring allows for such implementation. Better time management is achieved due to provision of better loading & unloading docks with wider dock aprons. Overall, a planned and systematic infrastructure
COVER STORY ensures a compliant and safe and secure movement of men and materials. In most cases, the true, technical design and basic specs for Grade-A warehouses are standardized, major ones are identified below… • Minimum height at an eave of 11m, • The building aspect ratio of a Grade-A Park would range from 1:1.5-1:3. • The number of docks in such a park is 1 in 10000 SF on plinth area or lesser • The warehouse flooring is at a level of FM2 with a minimum floor load (UDL) of 5T/SQM. • An apron length of a minimum of 25.5 m in concrete • Support movement of 40 FT trailers including internal roads will support such trailers • The number of lanes in total should be 2-4, depending on the size of the warehouse • Amenities (i.e.) fire-fighting systems, CCTV surveillance, building insulations, LED lights, security system, Fire alarm and Sprinkler system will be part of this infrastructure • An adequate number of entry / exit gates and parking slots based on traffic study
Which factors are responsible to drive this growth in Grade A warehousing demand in India? There are several factors that are responsible for driving the shift in demand from Grade B and Grade C warehouses to Grade-A Warehouse. Primary factors responsible to drive this demand growth are customer expectations on the last mile delivery, the scale & complexity in fulfilment operations, EHS of employees housed in the facility, advancing compliance scenario and lastly proliferation e-commerce. For any large, emerging e-commerce, modern retail or food grocery business, the scale and complexity will assume greater importance in the next 2-3 years. These few factors alone are crucial to increase the demand of using Grade-A warehouses in India and a cardinal shift from C & B Grade to A Grade Warehousing.
What is the scenario in India with reference to demand supply of Grade A warehousing?
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In general, it can be said at 30,000 feet, that it is a combined play with real estate availability and strategic thinking ability of an organization. It is estimated that India's current quality Grade A warehousing stock in top eight cities (ONLY) will be close to 180~190 mn sqft, which is expected to grow to 250 mn sqft by year 2024. This spurt in demand has led to real estate prices as well as rentals on escalated path in regions like Maharashtra and Bengaluru. The demand for quality warehouses is far outstripping supply at the moment. While new warehouses are coming online every month, the supply scenario is not going to change anytime soon. According to industry watchers, it could take nearly two-three years for the market to be flooded with enough 'Grade A' warehouses. India has 504 million active internet users, of which 50% (230 mn) are based in rural areas. What this means is companies need to develop an efficient backend supply chain / fulfilment infrastructure in rural or tier II / III cities in the next couple of years, very similar to the one that is available in urban India. For example, mall cities like Coimbatore, Ambala, Siliguri, Visakhapatnam, Kochi, Indore, Jaipur, Vijayawada, Nagpur, Guwahati are projected to emerge as warehousing clusters. Added to this is the ‘Make in India’ – manufacturing initiatives hasten their scale; tier II and III cities will see emergence of smaller / nodular warehousing clusters. Presence in more locations for warehousing gives them the flexibility to create value chains, which will ensure higher productivity, optimized operations and a seamless supply chain network that will work like clockwork. Finally, with the various initiatives taken by the Indian Government, the warehousing and logistics sector is now steadily marching towards growth. Granting infrastructure status to the logistics industry along with GST, National Logistics Policy have created a favourable regulatory ecosystem.
that we will see in next 3-4 years across many industry segments. Companies are looking at warehouses with international standards, which ensure efficient operations of the supply chain and a lower Total Cost of Ownership. Grade A warehouses offer tangible benefits such as 50% additional floor-load capacity, 40% more operational efficiency, efficient material handling space, safety & security of employees and adherence to international standard compliance. Companies can align their operational requirements to warehouse availability, while also having flexibility as they build a robust supply chain.
Is there a role for e-commerce in this shift? In a recent survey, KPMG India mentioned that the “Online” market in India is close to US$20 bn in transactions value. COVID pushed Indian population off-the-cliff and forced them to embrace new ordering patterns using increased internet enabled platforms. Customer satisfaction is critical and a key differentiator when ordering via online platform. Most online customers are reluctant to reorder in case there was a problem with their last order. e-commerce platforms will become increasingly demanding of their logistics supplier in an increasingly competitive landscape. It is important to establish a new ecosystem to address three interconnected components: out of town storage, smaller advanced stock locations nearer the city centre and intracity last mile delivery. Supply chain organizations need to integrate a more sustainable long-term approach from order to customer delivery bringing together all the elements required to develop a coordinated end-to-end customer delivery system.
What is the value that Grade A Warehousing brings to the table in the value chain? There are huge opportunities for Grade A Warehousing in India given the growth
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COVER STORY
Speed of execution and shortening the timeline for the construction of a warehouse is critical for a developer while maintaining fundamental performance standards of safety and quality.
James Anderson, Head of Development, Logos India
What is a Grade A warehouse? How is Logos aiming to transform the landscape?
• Extent of automation, • Specification, • Quality.
It is a simple but a complex question because the devil is always in the detail. In Grade A, we look at it in two components (1) functional and then (2) Estate level (external development and infrastructure) provisions, which we aptly call “beyond the building” at Logos. There are two facets on what transpires in the Indian market – one is what we perceive as Grade A and the other is what is actually Grade A. Perceived Grade A warehouse is regulatory compliant, adequate floor loading and fire protection system and suitable docking and road access for serviceability of that facility. From a global perspective, grade A strictly adheres to regulatory compliance, the performance characteristics of warehouse facilities being building height, floor quality, docking depth and internal road width are consistently upheld and defined in the market as Grade A parameters. Materiality selection, quality of construction and Estate level design are further defining quality parameters distinguishing the standard of Grade A warehousing. Grade A is upgrading with the advancement in water and energy management, greater feasibility of battery technology will enable renewable power generation during the day extend to night usage. The provision of electrical vehicle charging stations is becoming standardized, this will further evolve as cars, trucks etc., convert to EV. Water treatment, recycle and capture are enhancing sustainability parameters.
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Safety in design in both the construction (methodology used to build the facility) and in operation for users and employees at the Industrial Estate has vastly improved, ensuring segregation of people and vehicles. Monitoring platforms at an Estate level provide live tracking and feedback on aspects such a vehicle movement and mapping, temperature monitoring, energy and water usage enabling live performance monitoring of the Estate. This further enables evaluative analysis of the effectiveness of initial design and planning parameters, and to derive learnings to factor into the design for future industrial Estates. In a competitive landscape park level amenity such as landscape, illumination and transportation facilities or provision creates an environment that people enjoy working in or “want” to work in which is important when warehouses require high amounts of staff. Considered landscaping further counteracts ‘heat island effect’ which is a direct effect from largescale industrial development. Logos has adopted the ‘Miyawaki Plantation Scheme’, which adopts the methodology of the maximum efficiency of tree plantation in a given area, we have further devoted a higher apportionment to green space.
What are the peculiarities between warehouses in the western countries vs. warehouses in Asia? The defining differentiators constitute: • Regulatory compliance and adherence,
Singapore & Hongkong have the best entrepôt trading. India is not a very strong entrepôt trading country. Can this be the reason for the lack of Grade A warehouses in the country? I don’t think India has promoted its ports in Chennai or Kochi well enough, the Government could further support the development of infrastructure to enhance port facilities. Singapore and Hong Kong geographically very well located with strong regulatory enforcement, which derived the benchmark for Grade A warehousing to be defined far earlier. Coupled with a limitation on land availability, buoyant demand has enhanced the level of technology and quality of development being produced in these entrepot trading posts.
Don’t you think it is the right time for the companies and the government to invest in Grade A warehouses? Absolutely it’s the right time. There is such a need for Grade A warehouses with an inherent undersupply and the demand of the huge and growing Indian market. Anomalies associated with land acquisition make it difficult to develop Grade A warehousing at the required speed which the market needs, henceforth demand will remain robust over the next decade.
With the growing traction in
COVER STORY Grade-A warehousing, quality and time would be the major contributors. What technological changes would be likely in coming years? Speed of execution and shortening this timeline for the construction of a warehouse is critical for a developer while maintaining fundamental performance standards of safety and quality. Coupled with a push towards sustainability and waste minimization offsite prefabrication and “assembly” at the construction site
Hemaraju Vasanthakumar, Leader, Udaan As a user, is there a real advantage in using Grade A warehouse? How do you weigh the cost component while selecting a grade A warehouse? Grade A warehousing holds promise from an end user viewpoint. In India, the way warehousing has grown in the last two decades, people earlier never understood the real meaning and importance of a warehouse. In the early 2000, the first warehousing revolution happened where the cube utilization came into picture. That was the time when PEB vendors started coming to India and set up their bases. As an end user, it’s a trade-off because ultimately most of the facilities are leased. When it is leased, the developer always looks for optimizing his profits while as an end user, I will try to optimize my throughput per square feet. One can have low cost of construction and bad quality of building, and you
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enables achievement of all these facets. The pre-engineered building process for warehousing is highly efficient as the above ground structure is made entirely offsite and assembled at the site. Contrastingly precast concrete can produce the same for the below ground structure “substructure” i.e., footings/ pedestals, plinth beams, etc., and further superstructure (above ground) components of walls panels etc., enabling most of the building to be fabricated offsite under controlled conditions and
arrive in site as a ‘plug and play’ solution. This reduces construction timelines significantly as materials are fabricated in parallel, improves quality, minimizes waste, and inherently makes the site safer taking activities offsite into controlled environments and reducing workforce numbers. Precast concrete and further developing material advancements will evolve that will continue to improve both functionality and durability of warehouses.
As the country readies itself for the global players to set shops, they need to have warehouses which are compliant with the global benchmarks. can get it at cheaper rent, but it will have long-term negative implications – be it maintenance issue with respect to floor, roof, availability of the adequate apron space, truck manoeuvrability, etc. Thanks to institutional players, last 5-6 years have set the ball rolling for organized warehousing in the country as the new age players understand the market demands. They bring global best practices and as the country readies itself for the global players to set shops, they need to have warehouses which are compliant with the global benchmarks. An ideal warehouse should always aim at reducing truck turnaround time, which ultimately results in better throughput as same dock can churn more trucks from the same dock door. Developers also need to address the ideal plinth height. Building interior should have good column spacing of 16 x 24 m. The most important thing that everyone neglects
is the right flooring. Flooring is the heart of warehouse, and it can’t be changed throughout the life cycle of a warehouse. The quality of the floor and the roof must be so high that it can withstand any wear & tear for at least over 50 years. There are constant material handling equipment working round the clock in the modern warehouse. Equipment performance depends on the quality of the floor. Unfortunately, in India, we don’t have set standards for warehouse flooring. Hence, we have borrowed it from Europeans. In warehouses and logistics buildings, the concrete slab and flooring are critical to the effective functioning of the operations. However, it is often the perception that the concrete floor is one of the most straight forward elements of the project, and many times the overall attention paid to design and construction detail is less than proportional to its ultimate importance in the efficient
15
COVER STORY operation of the facility. To ensure that the concrete floor will continue to carry its design loading successfully, it is vital to design and construct the subgrade as carefully as the floor itself. Pressures exerted on the subgrade due to loading are usually low because of the rigidity of concrete floor slabs and loads from forklifts wheels or high rack legs are spread over large areas. However, subgrade support must be reasonably compacted to 95% proctor density which can be confirmed by plate load test.
Is this view specific to any industry such as e-commerce or FMCG? The requirement of such advanced and sustainable warehouse is paramount across the industry. If you look at the e-commerce industry, automation is quite prevalent there. In that case, quality of the floor or levelling is not that important, whereas for FMCG players or other manufacturers, quality of floor is extremely important because they use pallet trucks. The moment they start using industrial pallet trucks of 17m height, quality of floor becomes crucial. Otherwise, throughout the life of the warehouse, occupiers of the warehouse suffer due to suboptimal quality. That’s the reason we have to educate investors who are getting into warehousing as a developer. They need to build warehouses as per special industrial needs. What used to be the scenario two decades back has completely transformed today and we need to move ahead and not behind if we want to be in the race to survive and sustain our market share.
What impact do you envisage on the quality of warehousing? Are there any benchmarks that companies follow? It’s not only e-commerce, though it has today become the key driver. Quality of warehousing is extremely important because time is money in e-commerce, now-a-days people are talking about 15-minutes delivery. If that’s the kind of demand that are intending to generate, it all boils down to the throughput. If companies want to achieve such a decisive initiative, then everyone in the supply chain right from the warehouse to middlemen to the retail fronts need to have fantastic facilities that can churn out products faster without any hiccups. I would like to draw your attention to one of the most striking aspects of a warehouse in India – have you ever realized that the warehouses in India today are getting airconditioned. What does this entail? Unless you have the right infrastructure in place, you can’t achieve your set objective and not only this, but it also percolates down the value chain and hamper the product availability in the market and the loss of equity for the company. Additionally, the right warehouse also helps in reducing wastages and the maintenance cost and deploy capital where it’s needed to get the right equilibrium. Udaan is an e-commerce company. We are strong supply chain technology driven company. Our growth depends on the rural market penetration. The rural penetration is growing at the lightning speed. With 5G coming into picture, the penetration will see a further boost.
Our main business line is grocery. It is estimated that in 5 years’ time, it will be US$1 trillion business in India. At Udaan, our target is to achieve 10% share of such burgeoning market. We are targeting US$100 billion business in the next 5 years. We will see traditional players move to e-commerce, all thanks to COVID-19 pandemic.
Does asset-light model have any impact on Grade A warehouse in India? Asset-light model may not be suitable for everyone in the industry. For the start-ups, this is fantastic model because it is light on the Capex. Though there are players for the past 15-18 years in this field, it has not picked up so much. Having said that, there is a demand and there are service providers. The problem in India is that when the equipment is taken on hire, the developer always looks in for a minimum lock-in period. Otherwise, he looks out to write-off all his investments in 5 years’ time. Though the life of MHE is at least 10 years, the developer wants the quick RoI, which implies that the cost of rental per month could be higher, making it unaffordable for the player in the long run. That’s why initially people start with the rental model, once their strategies are clear and have accumulated funds, then they move to Capex model. Today there is a whole gamut of refurbished MHE available on rent, which are either imported or manufactured in the country.
Chandranath Dey, Head - Operations, Business Development, Industrial Consulting & PAGI India,JLL
Warehousing is among the most resilient real estate asset class in India and is likely to bounce back soon once the pandemic is over. 16 CELERITY January - February 2022
Is there a desired build quality that can withstand wear & tear? Are there any standards that we must adhere to?
Use
Share (%)
Warehouse Building
50%
Warehousing is on a three-dimensional growth path. The three dimensions are length, breadth, and height. In terms of length, growth across the length of the city – suburban to urban. In terms of breadth – growth across the breadth of the nation from Tier I to Tier II & III cities. In terms of height, it is the increasing importance of mezzanine floors in warehouses and development of multi-storey warehousing facilities. Over the last 10 – 15 years, India has evolved from going-down era or 'Go-down Era' to modern ‘Grade-A Era’ in warehousing. While the standards are not actually laid out by the governing authorities, the warehousing fraternity including users have been working on creating all-encompassing standards, which are not only quality-intensive but are also forward looking and sustainable in the long run. The warehousing who’s who have come together and prepared a very practical Good Warehousing Practices (GWP) document that serves as the ready-reckoner for the new players in the industry. Grade A building or PEB structure has a lifespan of 50 years. During the course of this time, gauging the wear & tear such buildings is a crucial aspect. The National Logistics Policy draft, once it comes into fruition, will expected to streamline the warehousing operations in the country and might concretize such operational nitty-gritties as we move along. The good part is that the users are also well aware of the changing warehousing paradigms and are pushing service providers to offer them such new-age propositions which prove to be highly effective in the long run. At JLL, we are honoured to be able to provide inputs to the Department of Logistics in harmonizing the various logistics aspects including standardizations in logistics parameters and warehousing in due consultation with the industry players on various topics including but not limited to FSI norms, Master Planning Area Distribution for Logistic parks with area more than ~ 15 acres.
Dedicated Truck Parking Area
Utility (Roads, common infrastructure, circulation, open space, 20% - 35% truck apron area, excl. parking) Min 15% Source: JLL Logistics & Industrial
GOOD TO HAVE FACILITIES/ AMENITIES (PARK LEVEL FACILITY) AS CHOICE OF VALUE-ADDED SERVICE (OPTIONAL) • Additional benefits to developers for green rating of Warehouse (e.g.: Rooftop Solar PV Panels, Rainwater Harvesting, EV Charging Station, etc.) • Benefits for additional amenities such as conference room, food court/ refreshment joint/ cafeteria, display area/ experience center for product, ATMs, Billboard panel (provision for additional revenue collection source), retiring rooms, creche/ playrooms/ baby care rooms, etc. Logistics and industrial park developers are finding it difficult to make financial sense in such developments with the rising cost of construction and thinning rentals. Additionally, what would help is any favourable structural / policy level change would help developers navigate two primary constraints i.e.
‘DOUBLE A’ CONSTRAINTS FOR DEVELOPERS / INVESTORS; • Acquisition: Hurdles in land acquisition • Approvals: Hurdles and delays in statutory approvals.
While the government has taken several corrective measures in recent times like National Single Window System, ‘PM GatiShakti’, etc., which is expected to make some positive changes, the perfect world is still a distant cry.
How will changing market dynamics be having a significant impact on the growth of Grade A warehousing in India? E-commerce and GST implementations are two good reasons to catapult warehousing industry in the country. Warehousing will be closer to the customers with supply chain being the king of the value chain. We are seeing significant upward trends in warehousing activities in tier I and tier-II cities. India is growing its portfolio of world-class Grade A warehouses in the past 4-6 yeas. A correlation with the global markets shows the potential of growth is even higher. If we compare the warehousing stock of USA, we are talking about a total stock in excess of 13 billion sqft. Chicago as a city has 1.2 billion sqft of warehousing supply. It implies that the potential of warehousing in India is humungous. On the demand / absorption side, absorption in Top 8 cities is expected to have a ‘V-Shaped recovery post COVID. What’s important is that this pandemic
Source: JLL Logistics & Industrial
COVER STORY
Source: JLL Logistics & Industrial
tenants?
has pushed the demand of Grade A even more as it offers a platform for technology implementation that can reduce human intervention. There has been a quantum leap in demand for Grade-A space over Grade-B over the years from 42% in 2016 to almost close to 73% in favour of Grade A warehousing in the last year till 2021 Q3 (i.e. Jan-Sep 2021), It is expected to further grow as occupiers look for spaces with higher specification as per requirements. The liquidity infused by global investors is prompting the market to move towards organized and globally accepted warehousing space. We expect technology to be one of the most important aspects to optimize and bring in the much needed efficiency enhancement inside the warehouse operations.
A JLL Industrial research on comparing Grade-A & Grade-B warehousing cost to end users/occupiers reveals the following: While the above comparison shows that while Grade A might have a rental premium on the space, , but when comes to rent per pallet it is ~50% cheaper than Grade B warehouses. Additionally, there are several other tangible and intangible benefits that Grade-A warehouses bring over Grade B in a platter; • Better infrastructure to increase operational efficiency by mechanization & automation • Better fire detection & prevention systems in the warehouses also bringing down the insurance cost • More safety to the goods in the warehouses • Cleaner, cooler, and hygienic environment to people handling operations in Grade A warehouses. • Better out-side the box facilities like truck parking areas and truck manoeuvrability
Is there a possibility to have mini grade A warehousing facility? The economics of scale doesn’t fit in when you try to develop some 4k-5k sqft warehouses vis-à-vis mega warehouses. In order to achieve the efficiency level of Grade A warehouses, one needs to have scalability intact.
How do you see growth of warehousing in Tier 2 cities in India?
How would you like to compare Grade A and Grade B warehouses in terms of returns to users /
GST implementations and ever increasing consumer demand in tier 2 cities are taking warehouses in such
GRADE A VS. GRADE B BENEFITS TO USERS: Details / Assumptions
Grade A
Grade B
Height of warehouse (Mts)
13
8
Floor Strength (Tons/sqm)
6
3
Actual Storage space / Total Area
65%
75%
Assumed Rentals (INR / sft / month)
20
15
*Rent / pallet positions (INR / month)
57
87
Source: JLL Logistics & Industrial (*Note: Taking into consideration several assumptions on racking, cargo churnings etc.)
18 CELERITY January - February 2022
locations. If we leave out the 8 top Tier 1 cities (NCR Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad & Ahmedabad), at JLL, we are experiencing strong demand in tier 2 cities with increasing sizes in nearly 30 cities in the country. A few cities that stand out include; • North India – Rajpura- Chandigarh, Jaipur, Lucknow • East India - Patna, Guwahati • West India - Indore, Nagpur, Surat • South India - Vijayawada, Coimbatore, Kochi This is probably the inflection point in tier II cities in India to develop Grade A warehouses as most of the requirements for Built-to-Suit (BTS) warehouses are GWP complaint / FM Global complaint.
What are the key trends in warehousing in India? Some trends in warehousing in India are: E-commerce is going In-City: Faster last mile delivery focus of e-commerce boosts the in-city / urban logistics sector, where conventional retail spaces, workshop sheds, banquets, marriage halls are being considered for alternative usage for in-city warehousing across top cities. As per JLL estimates, there is a demand in excess of 7 mn. sqft demand from top players in tier 1 & 2 cities in next 2 years. Developers are exploring investments in Multi-storied / In-city WH: To cater to urban logistics requirements and Point of Delivery (POD), dark stores, etc. No major success stories yet. Rise of third-party logistics: Outsourcing of logistics is being evaluated by many companies to achieve better efficiency in logistics. Automation is now considered a ‘Good Cost’: The cost of automation in warehousing is gradually coming down due to technological advancements and most users are considering automation as a ‘good cost’ to incur that can yield long term benefits Warehousing box sizes are growing: Average sizes of warehousing boxes have come a long way from 25K – 50K sqft, 3-5 year back, now hovers ~ 100K sqft + for Grade A spaces.
COVER STORY
Low rental and higher construction cost are compressing developer returns. High steel price and other commodities have increased construction cost up 20% - 30%. On the other hand, 5 years, CAGR of rental growth is around 3.5% per annum. This is unsustainable in long term, upward correction is expected in medium to long term for equilibrium. Large players are taking long-term positions: For very large boxes in hub locations, e-commerce, 3PL are even buying land from government / private and building their own WH. In such warehouses, tenants are spending heavily in automation, AS/ RS, VNA, etc. Palettized cold storage demand on the rise: Frozen is the New Fresh. Temperature Controlled storage
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requirements are gaining with consumers looking for ‘hygienic and safer’ frozen commodities. While the demand is floating high, but prices / rentals doesn’t tally for a good investor return for development of such spaces. Manufacturing is going asset light: Manufacturing firms, especially in the ancillary and assembly space, are finding solace in built manufacturing spaces on lease. Manufacturers are positioned to realize the benefits of conversion of CAPEX (land & building) to OPEX (rent), ready-tooccupy and built-to-suit industrial spaces, higher specifications, faster entry, and pre-approved usage associated with built spaces. JLL estimates show close to 12 mn. sqft. of manufacturing leases in top cities.
Early days of Multi-modal logistics in e-commerce: Multi-modal Logistics Parks are having a real capacity to bring down the logistics cost as it relies on rail for long haul transportation which can bring down the transportation cost significantly. Some e-commerce companies are now seen to go for such rail & road linked logistics facilities to reap the benefits in the long run.
19
INTERVIEW
HELMING THE WINDS OF CHANGE “When the dust settles down, we will see some substantial changes in supply chains. This disruption has been a wake-up call for many supply chains. In my opinion, the new changes will be the positive outcome of the pandemic. More and more supply chains now realize that they cannot operate effectively in the long run unless they account for the possibilities of disruptions. This is pushing them to design resilient and transparent supply chains,” believes Prof. Subodha Kumar, Paul R. Anderson Distinguished Chair Professor of Marketing and Supply Chain Management and the Founding Director of the Center for Business Analytics and Disruptive Technologies, Temple University’s Fox School of Business.
Prof. Subodha Kumar has secondary appointments in Information Systems and Statistical Science Departments. He also serves as the Concentration Director for Ph.D. Program in Operations and Supply Chain Management. He is a board member for many organizations. He has been awarded a Changjiang Scholars Chair Professorship by the China’s Ministry of Education. He is also a Visiting Professor at the Indian School of Business (ISB). He has served on the faculty of University of Washington and Texas A&M University.
During and just before COVID-19 pandemic struck business in the end of 2019, businesses couldn’t forecast demand patterns. How did companies deal with such uncertainties? Let me answer this question by first discussing the key causes of disruptions in demand forecasting and then comparing/contrasting the response of different supply chains. During the pandemic, businesses had problem in forecasting demand because of multiple factors. First, the forecasting models are usually based on repeating patterns, but what we saw during the pandemic was unprecedented. Therefore, our models were unable to capture the continuously moving unforeseen parts (especially for those products/services that got severely impacted by the pandemic). Second, for many products/services, we do not have clear visibility in the supply chain.
20 CELERITY January - February 2022
INTERVIEW Therefore, the fast-moving pattern at the retailer level was not easily visible to the manufacturers. Because of how many of the supply chains are designed, time delay from purchase to signal at the manufacturer level is up to 50 days or even longer for some of the products. Such delays not only hurt the response time, but it also leads to more inventory at each step of the supply chain (referred to as the Bullwhip Effect). Different supply chains handled the situation differently, and some could not manage it at all. Their reaction depended on multiple factors, e.g., (i) how resilient the supply chain design was, (ii) how much technology was being used, and (iii) how agile the firms involved in the supply chain were. For example, to meet the demand for N95 mask, 3M employed multiple strategies. First, 3M had designed a lot of resilience in the supply chain following the SARS outbreak by investing in extra capacity. This capacity was mostly idle before the pandemic, but they were able to respond quickly during the pandemic because of this extra capacity. Second, the COVID response caused huge changes for 3M’s supply chain because they were faced with more than one wave, and therefore more than one demand spike. Hence, they needed to somehow accelerate the need for realtime visibility. However, what helped them was their supply chain team had a plan in place. They were already working with FourKites to improve visibility in the supply chain. They had to prioritize the management of at-risk shipments and specific SKUs. They tagged the priority SKUs, such as personal safety and healthcare items, and sent them to the FourKites team. The FourKites data science team was then able to pull those isolated SKUs with the most recent
tracking data and put it in to a power BI dashboard to send to all stakeholders. This allowed disparate systems to become one platform where all stakeholders could get the information they needed. As a result, 3M was proactive with customer communication, and they were able to manage the disruption much better than the others. In my opinion, this is a great case study and a great learning experience on how to be ready for such disruptions. On the other hand, many supply chains were unable to handle the situation in an effective manner. For example, it took a long time for the toilet paper supply chain (and other similar supply chains) to recover from the pandemic. Food supply chains (especially the meat supply chains) were also unable to recover from the disruption quickly. Some of these supply chains have not recovered yet. Most of these supply chains were slow to respond mainly because they did not have much resilience and flexibility in their supply chains, as well as the visibility was very poor.
How should companies prep themselves to sustain in such volatile and uncertain times? Any successful example you would like to share of the companies who led the way during such times exceptionally well? Ernst & Young conducted a survey of 200 senior-level supply chain executives in late 2020. In this survey, only 2% of companies said they were fully prepared for the pandemic. Therefore, clearly, the supply chains need to prepare themselves well. As I mentioned earlier, 3M is a great example of how they recovered from the supply chain disruptions quickly. When we learn from this example is that (i) supply chains should not only
focus on getting lean, rather they should also think of keeping some buffer in a strategic manner, (ii) supply chains need to keep investing in emerging technologies to improve visibility, and (iii) they need to be agile. In 1990s and 2000s, many companies started moving more and more towards lean. This was a great movement to reduce cost and improve efficiency. However, at the same time, supply chains somehow ignored the possible disruptions and lost resilience. This is a good time for supply chains to reflect and modify their objective functions to include the possible disruptions.
Transparency & visibility have become the keywords during these times. How can companies ensure visibility & transparency in their supply chains? How can this same strategy be applied in the warehouses of tomorrow? Supply chains lack transparency and visibility because of the following reasons: (i) strategic reasons (e.g., some companies may be afraid of inadvertently leaking too much information to their competitors, suppliers, or customers), (ii) lack of proper IT systems (sharing information, especially in the real-time, require a robust IT system at each step of the supply chain), (iii) culture of the companies involved in the supply chain, and/or (iv) lack of top-level commitment. Some of these may require different solutions, but at the broad level, supply chains need to start looking at the possible IT solutions to share information (in possibly real-time) without hurting their strategic positioning. This applies for both within an organization and across the organizations in a supply chain. In late 1990s, many organizations started
To keep their supply chains sustainable and agile, companies need to take a holistic approach to supply chain management. First, rather than just focusing on reducing cost or improving profit, they need to systematically include the sustainability component in their objective functions. For example, DHL redesigned their routing solutions to develop green logistic solutions. To improve agility in their supply chains, companies need to reduce over-emphasis on being lean. This requires a fundamental change in the mindset of organizations. If companies don’t start incorporating unexpected future disruptions in their decision-making process, we will not be able to find a long-term solution. supplychaintribe.com
21
INTERVIEW moving towards ERP systems that could allow them to have a good visibility within an organization. However, even till now, many organizations (both large and small) do not have good visibility even within their own systems. This needs to change if we want to avoid what happened during the COVID-19 pandemic. In 2000s, many companies started using RFID-based sensors in their warehouses. This helped them in consolidating and collecting data in an efficient manner. This also helped in improving the visibility. Warehouses of tomorrow need to go a step further by utilizing modern sensor and robotic technologies. Warehouses also need to use more IoT infrastructure effectively. For example, Amazon recently opened their largest warehouse in Delaware that has more robots than people.
What are the inherent challenges that companies need to work on in order to harness supply chain opportunities? Companies need to overcome the reasons discussed earlier for the lack of transparency in supply chains. First, they need to find innovative solutions to share data without disclosing confidential information. Second, companies need to keep using emerging IT solutions to enable real-time (or near real-time) communication. Third (which is maybe most challenging), companies need to work on changing the culture of keeping data/information in silos. Finally, the support of top management is essential.
How can companies enhance their existing supply chains and make it sustainable & agile? To keep their supply chains sustainable
and agile, companies need to take a holistic approach to supply chain management. First, rather than just focusing on reducing cost or improving profit, they need to systematically include the sustainability component in their objective functions. For example, DHL redesigned their routing solutions to develop green logistic solutions. In order to improve agility in their supply chains, companies need to reduce overemphasis on being lean. This requires a fundamental change in the mindset of organizations. If companies don’t start incorporating unexpected future disruptions in their decision-making process, we will not be able to find a longterm solution.
Can you kindly enlighten us on innovations in supply chain networks? All the technology trends I discussed above are leading to interesting innovations in supply chain networks. For example, Wal Mart have started collaborating with several suppliers to share their point-of-sales data in realtime (or near real-time). Wal Mart has also mandated many of their suppliers to join blockchain. On the other hand, the logistics companies are collecting and analyzing real-time data to improve their logistics operations. For example, based on the data from their sensors, UPS decided that their trucks should try to avoid left turns. Amazon Logistics is taking a step further by measuring and analyzing data at the granular level to optimize their logistics operations. Many of these innovations are also looking at reverse logistics in supply chain, which is not only helping companies in reducing their costs but also leading to green supply chains.
How can companies work towards achieving forecasting right? To get the forecasting right, companies need to include as many factors and moving parts as possible. For example, they should analyze past data rigorously to predict any possible disruptions in advance so that they can update their forecasts proactively. For example, studies have shown that flu trends can be predicted effective using Google Trends and social media data. Similarly, some recent studies have shown how social media data can be used to predict the actual number of COVID cases. Companies need to start utilizing these techniques along with cutting-edge machine learning and deep learningbased methods for forecasting. This requires them to get out of the mindset of simply using traditional forecasting techniques.
Kindly share insights with us on your award-winning paper ‘Competitive Strategies for Brick & Mortar Stores to Counter ‘Showrooming’. In this paper, we first show that the emerging showrooming phenomenon (where customers evaluate an item in a brick-and-mortar store but purchase it from a competing online store) can hurt the profits of the brick-andmortar stores significantly. Then, we analyze multiple strategies used by the brick-and-mortar stores to reduce the negative impacts of showrooming. We find that the price-matching strategies used by some of the retailers (e.g., Best Buy, Office Depot) can work only in certain situations. More interestingly, if the retailer advertises its price-matching strategy more aggressively, it benefits more in the long-run. We also look at the strategy of making showrooming
Supply chain analytics can help in each step of the supply chain improvement process. For example, it can help in collecting and curating appropriate data. It can also help in developing predictive and causal models that could help supply chain managers in understanding the process better so that they could act proactively. Finally, the supply chain analytics can help in developing and solving optimization models so that the managers can move from data to decisions. Supply chain analytics also helps in looking at the whole supply chain as one unit rather than looking at each driver of the supply chain (e.g., facility, transportation, inventory, and information) separately. 22 CELERITY January - February 2022
INTERVIEW
harder for customers. For example, Macy’s has singed exclusive agreements with Tommy Hilfiger to sell some of their clothes. Clearly, customers cannot find the same item in a competing online store. Some other firms, e.g., TJ Maxx, has started selling more store-brand products that are not possible to find at a competing online store. On the similar line, Target has collaborated with some of their suppliers to use a unique bar code so that it is difficult for customers to easily scan and find the item at a competing online store. We show which strategy works better in what scenarios and provide useful actionable insights for brick-and-mortar stores to combat showrooming.
What are the ways in which companies can build resilient, responsible & sustainable supply chains? This is very important for supply chain managers to understand that data is the new oil. In order to build resilient, responsible, and sustainable supply chains, companies need to (i) collect real-time data from various courses (e.g., sales data, reviews, social media data, images, videos, etc.) both within the organization and from outside organizations, (ii) analyze them rigorously using machine learning methods, and (iii) develop prescriptive
supplychaintribe.com
analytics-based solutions. To collect more real-time data, companies need to move more towards blockchains, sensors, IoT, etc. Similarly, to develop meaningful solutions based on prescriptive analytics, companies need to change their objective functions by including reverse logistics, carbon footprint, landfills, life saved, etc. Companies should also work on sharing data in an effective manner so that the both the response time and safety stock can be reduced at the same time.
Share with us the expanse of Supply Chain analytics. Supply chain analytics can help in each step of the supply chain improvement process. For example, it can help in collecting and curating appropriate data. It can also help in developing predictive and causal models that could help supply chain managers in understanding the process better so that they could act proactively. Finally, the supply chain analytics can help in developing and solving optimization models so that the managers can move from data to decisions. Supply chain analytics also helps in looking at the whole supply chain as one unit rather than looking at each driver of the supply chain (e.g., facility, transportation, inventory, and information) separately.
How do you foresee the future of
supply chain shaping up as the COVID-19 dust settles down? When dust settles down, we will see some substantial changes in supply chains. This disruption has been a wake-up call for many supply chains. In my opinion, the new changes will be the positive outcome of the pandemic. More and more supply chains now realize that they cannot operate effectively in the long run unless they account for the possibilities of disruptions. This is pushing them to design resilient and transparent supply chains.
How would you define Next Generation supply chains? Next generation supply chain will be informed, analytics-driven, forwardlooking, transparent, proactive, and agile based on real-time data communication among supply chain partners so that they can predict future well in advance and act accordingly in a timely manner. Next generation supply chain will consider sustainability as an integral part of their operations. The supply chain technology trends that we need to watch are blockchain, Internet of Things (IoT), robotic process automation (RPA), AI/Machine Learning platforms, mixed reality (along with augmented reality and virtual reality), autonomous vehicles, Industry 4.0, and 3D printing.
23
PERSPECTIVE
India’s Supply Chain
‘SUTRADHAR’ IN THE MAKING On the back of a resilient supply chain aided by GenX technology adoption, India holds tremendous potential to script a success story in times to come. With the COVID-19 pandemic being a great leveler in pushing companies to adopt & up their technological prowess quickly, it’s about time that companies ace their supply chain game and take India’s growth trajectory to unprecedented heights. The panel discussion on Resilient & Sustainable Supply Chain, hosted by NASSCOM CoE during Enterprise Innovation Challenge, threw light on companies’ preparedness & strategies to deal with disruptions and how technology can play an enabling role. Excerpts collated by Kunal Kulkarni, NASSCOM CoE…
Akhil Srivastava, Director Planning & Logistics Business Unit, ABInBev
Nandakumar Kulkarni, Integrated Supply Chain Director, Mondelez International
Nitin Gupta, VP, Olam Agro India
Gowrishankar Paramasivam, Head of Startup Accelerator- Maersk
Sanjeev Gupta, Executive Vice President, Diageo India
Venkata Sridhar, Senior Associate Director, Kellogg Company
24 CELERITY January - February 2022
PERSPECTIVE
W
HILE moderating the session, Vraj Gokhlay, Partner – India Lighthouse at KPMG, aptly described the resilient quotient of Indian companies, "The pre-COVID-19 era saw organizations focusing on globalizing their supply chains to optimize the costs. However, the COVID-19 pandemic uncovered the weaknesses of these supply chains. While many organizations have been able to provide immediate solutions, the fundamental assessment of the strategy is required with a presumption that COVID-19 may not be a rare one-off disruptive event, and we could see other events of geo-political, environmental, and technological nature, among others. A customercentric resilient supply chain strategy leveraging a digital-first approach is expected to be the key to unlocking value. It is high time we draw attention to the significance of building a buoyant and sustainable supply chain, one ready for the future. What does it mean to be resilient as far as the supply chain is concerned? What does it mean to have a sustainable supply chain? It's objective to ask – are you a resilient supply chain? As every company is different, every supply chain is different, and every company's environment is changing today at a very rapid pace”. The insightful panel demystifies what it means to be a truly resilient and sustainable supply chain…
What do you think about having a direct-to-customer model in the context of your business? Venkata Sridhar, Senior Associate Director, Kellogg Company: I think it dates back just before the pandemic, and we have spoken at length about omni-
channel presence - that's the vision we have set in. It has helped us fight the pandemic and prepared us to make sure that we serve the requirements. We have defined the omni-channels in four different segments, which were pertinent at the time of defining the strategy in 2019. We disregarded the impact of the explosion that is going to happen due to this pandemic. We now defined it more in terms of getting very close and changing our approach from a forecast-based servicing model to a demand-driven servicing model and omnipresence, omniavailability across the channels. Due to the pandemic, we had to course-correct because the roadside store(s) were the winners. During the initial period, even e-retail had multiple challenges related to logistics. We also dynamically changed our models to get into retail. We went in with a 3-1-Q model – We looked at the last three weeks for sales pattern, looking at every week in isolation (because no demand predictability model existed at that time for retail) and developed a very quick and responsive mechanism (Q-quick). We had a 190% growth rate in the first few weeks, which went close to about 400% as we moved forward. Sanjeev Gupta, Executive Vice President, Diageo India: When I look at my industry (Alco-Bev), there was a different kind of turbulence when COVID struck us in the year 2020. We've predominantly got two route-to-markets: Off-Trade and On-Trade. On-Trade was completely disrupted because all the hotels, bars, hospitality industries were closed. The whole demand shifted to the Off-Trade as retailers had more demand to be fulfilled from the customers coming into the shops. We also observed another
kind of demand volatility where people moved from smaller to bigger packs as they wanted to sit at home instead of going to the market every day/week. We realized the demand for bigger packs had gone up many folds within a week, and we had never planned for that. Our industry is famous for managing disruptions, so generally, we use scenario planning/ disruption planning. While COVID happened in 2020, we already had tools that helped us prepare for a situation where demand or supply are disrupted. On the other hand, the supply chain also got disrupted big time because people were quite uncertain whether to come to the factory/operations. How do you make them feel confident? We also looked at things inside the factory: beer operations are manual, requiring many people and many touchpoints - How do you automate them? We used to think about digitization earlier as well – like a digital access control for the factory. But post-COVID, the whole thing got accelerated big time. Today we have got paperless/touchless access control in our factories. We have observed that over the past 12 months, automation has been picking up in the industry. We've installed robots, which have completely transformed the way we used to do endof-line packaging.
Rapidly scaling production up/down and reconfiguring production lines to adapt to changing consumption patterns, shortage of materials, delayed shipments, longer lead times, etc., was a common sight during the pandemic. How did your organization tackle such challenges? Nitin Gupta, VP, Olam Agro India: Before moving onto this topic, to give a brief
We need to reimagine how agriculture is done today; that’s where these resilient and sustainable supply chain solutions are gaining more importance. On top of it, the millennial generation is becoming more conscious of their eating habits, especially after the pandemic. That’s where digitalization plays an important role - the only way to create stickiness with the customer is to have an end-to-end presence in the value chain and create that presence right from upstream to midstream to downstream – which is farming, processing, and connecting directly with the customer to offer that kind of visibility.
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PERSPECTIVE background that why exactly today this resilient and sustainable supply chain is getting more relevance and it is even more relevant for the Agri sector where we are operating, as it was the only silver lining during the pandemic. The world population would be reaching close to 10 billion by 2050, and India's population would be close to 2 billion by that time. So, if India must feed that kind of population in 2050, the productivity has to be improved, and the production has to be doubled, but unfortunately, the land resources are finite. So, the only way is to improve productivity, and this pursuit of enhancing productivity in agriculture has been negatively impacting the environment. That's why global warming and climate change are happening, and we can clearly see its impact - weather conditions are extreme today, some part of the world is seeing droughts, whereas, at the same time, some parts are experiencing floods. We need to reimagine how agriculture is done today; that's where these resilient and sustainable supply chain solutions are gaining more importance. On top of it, the millennial generation is becoming more conscious of their eating habits, especially after the pandemic. That's where digitalization plays an important role - the only way to create stickiness with the customer is to have an endto-end presence in the value chain and create that presence right from upstream to midstream to downstream – which is farming, processing, and connecting directly with the customer to offer that kind of visibility. Otherwise, companies like us are no longer going to flourish; in fact, they will perish over a period. So, the only way to survive and sustain in this volatile environment is to create and develop a sustainable supply chain solution. Nandakumar Kulkarni, Integrated Supply Chain Director, Mondelez International: I will divide my response into two parts – 1) how we approach the short term; and 2) in the long term. The short term was all about crisis management – handling concerns around safety and security during COVID-19, creating a war room kind of a situation to get all stakeholders together and bring multiple elements
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together, which would help tide over the crisis. During such times, the supply chain gets tested like never because although disruptions are not new, the kind of disruption which has happened during COVID – the scale and duration is unique. It has created challenges, which were probably invisible in the past across the value chain, and not just the supply chain across the organization. Hence, it was essential to create scenario planning at a different level: Move from static planning to dynamic planning; Add up the technologies which can make a difference as you walk the tightrope; Prepare simultaneously for a long term - understand consumer behaviors and channel shifts, and Understand longterm technology impact and embed them into the overall supply chain strategy for the future. We need to keep our end goal in mind and remember, "don't lose the focus on the immediate needs but at the same time, don't get overwhelmed by only immediate needs. Create seeds for the future and bring a very balanced approach".
How do you see exponential technologies like AI, ML, IIoT, Blockchain, etc., playing a significant role in making the Supply Chain more "resilient"…in terms of demand sensing, planning, distribution, etc.? What trends do you see in the market? Gowrishankar Paramasivam, Head of Startup Accelerator- Maersk: As a logistics player, the need to stay adept with all the technologies in the market right now is a lot more important in today's arena. And it's not that logistics companies started looking at it only after the pandemic; we've been looking at it for quite some time. But as many have attributed to – it's accelerated quite a bit, or rather the applications have been a lot more relevant in today's scenario. Some of our ethnic methods have completely gone for a toss – like the methods we use for forecasting our customers' demand and supply; it's not going to be relevant anymore for us. So, the idea started about working on data integration methods: How do I stay entirely connected with my customer and the supply to know what is happening at their end even without them telling
me so? That's how the technology play started; it's mainly in the data integration piece. That's one big emerging trend. Another aspect is the trainability of forecasting models – earlier, we used to believe in statistics alone for forecasting – that is not the case anymore. Now, we do a significant amount of data modeling to understand how the progress would be for every supply chain change. Also, all of these models cannot be set in stone, to the extent that we can't even procure some of these from the market, so we are forced to build technologies in-house. Maersk is investing heavily in building its own technology and has started looking at the startup landscape more extensively to reap instant results from emerging tech companies. To manage the operations, there was a need for technology that we had to bring into play. It also required a shift in our ground operations because earlier, our network was primarily focused on ocean business, but in the last three years, especially when there is a lot of approach towards D2C business models, the need for ground operations to be muscled up is much heavier. So, there's a lot of intermodal operations that we've beefed up, and this also talks about the end-to-end traceability of every single commodity that moves through logistics partners. Sanjeev Gupta, Executive Vice President, Diageo India: I would say if I look at the emerging technologies like AI, ML, or Blockchain that are big buzzwords nowadays – our approach has been to focus on what is the problem we want to solve for our business and what are they going to do for our supply chain? We came across a situation where we didn't have a sound track & trace system in place and had many challenges to doing it manually. So, we have now gone into a blockchain technology solution for the same. Having succeeded in that area, we are exploring how we extend the same concept to solve our interfaces within the supply chain, which will help us deliver best-in-class products and services. Another focus area is in the factory or manufacturing – a lot of work happens in finding out bugs in our lines, why efficiencies are low or why wastages are high, etc.? So, can we use ML and
PERSPECTIVE other Industry 4.0 technologies to figure out how this could be solved? Through Machine Learning, we can create solutions for multiple issues in multiple lines together. Different algorithms can be developed to help our operators solve the problems on a real-time basis. We're working with startup companies to explore what they can do for us to solve these problems. There are particular problems for us, such as checking bottles. We carry out 35 parameter checks, and it takes a long time for a person to check bottles one by one. So, we have gone to a startup to develop a computer visionbased, AI-enabled solution to help us do it in five seconds. Akhil Srivastava, Director Planning & Logistics Business Unit, ABInBev: I spent my hard-earned money going to Stanford and learning about demand distortion concepts. And I regret it because two years later, I'm literally figuring out this demand distortion every day in our industry, and that's true for everyone who's doing a pipelinebased business, for that matter! We used to have a concept called FAV – Freshness, Availability, and Visibility. There's only so much we have done in the last few years for visibility - Tell me how many people have visited malls, but everyone has ordered from various omni-channels, right? So, it's all about the freshness and the availability, and that's where the tech innovations have to work. Cost, capacity, delivery, and capability are significant factors to be combined. Capability building emerged as one of the biggest drivers during COVID- those who were able to service the consumer and customers are the winners, as their models had evolved. I would circle this back into a single statement: 60-30-10 rule. It will enable future supply chains (60% is about People, 30% is about Processes, and 10% is about the Tools that will allow people and processes to be efficient). Venkata Sridhar: Our approach is fitto-purpose automation when we look at the segmentation. We also looked at the pyramid of affordability – what is the value that an average consumer is looking at today? There is a disruption in the whole supply chain, and there is a disruption
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in the economy for the consumers – not all the consumers will sustain their economy. We looked at demand sensing as the most significant opportunity and value maximization for each consumer – the perceived production services we are offering. Value maximization travels all the way back to our farmers, making them understand the impact of environmental moisture on the yield of the crop; ways to maximize yield with the use of technologies; helping them build cold storage units; the right time to cut the crop, and so on. We have used SAP as a significant enabler both downstream and upstream. We embraced a little bit of AI in a few areas; we choose the models that fit our purpose rather than relying on pre-existing ones - they were tailormade for the organization.
How do you balance the trade-off between Resilience vs. Sustainability concerning growth? What are some of the best practices you can share in this regard? Nitin Gupta: I would like to give a small but pertinent example about how rice is grown in India. The paddy is grown under flooded conditions; it's an entirely anaerobic process. But, when you apply chemicals and fertilizers, it releases methane gas, which is the most significant contributor to global warming today - 70% of man-made methane gas is released only due to agriculture. So, clearly, there is a need to change the way we are doing agriculture today, and I think that's where it is becoming more and more pertinent to see how we can develop a sustainable, transparent, and traceable supply chain, which can be done by adopting different kinds of technology. Continuing with the rice example, there are technologies like alternate wet and drying methods, wherein you are not supposed to flood the field across the season. It's all about wetting the field first and then alternatively drying it. Drip irrigation is picking up fast, wherein you are just two supposed to apply water at the plant level and not irrigate the entire field. Land laser leveling mechanism is essentially a water-saving technology that uses scarce groundwater optimally by ensuring even coverage.
an organization, is pretty serious about its carbon neutral efforts. Earlier, when we made these promises that by 2030, we will have our first carbon-neutral vessel on float, and by 2050, we will be a zero-carbon shipping company, it sounded like a flamboyant flaunting for the media sake. But now we've ordered 8 vessels, which are run on alternate fuels. The three elements that we looked at in terms of having a sustainable value chain as a logistics integrator are: • Decarbonizing logistics: How do we do things? Can we fix the machinery that we use? Can we stop polluting in as many ways as possible? • Building a sustainable end-to-end offering: It is not an independent responsibility, as it has to work from the customer's point of view as well. There's a lot of good customers who joined hands with us in terms of having a green logistics or sustainable logistics model, which incurs a definite amount of additional cost as well. And they are okay to incur that, as long as they don't impact the environment. • Having responsive business practices: What do we do to ensure that it percolates down to every bit of the organization? As a company, between 2008 to now, in the last 12 years, we've sliced our carbon footprint by 46%, and we plan to cut it down at least annually by 2.5%, which means by 2030, with baseline as 2008, we would have cut down by 60%. Building these responsive business practices will obviously affect the end consumer because there is a 20% potential increase in shipping rate, which commonly gets attributed to carbonneutral shipping whenever it comes to the play. But if you cut it down to the smallest component that a consumer would eventually incur, an $800 laptop would incur an additional $0.60. That's how much consumers would eventually bear as an additional burden to ensure a sustainable environment.
Gowrishankar Paramasivam: Maersk, as
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NASSCOM CoE Enterprise Innovation Challenge
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“Creating a digital environment to manage the entire supply chain is absolutely critical if companies need to build resilience.” The Enterprise Innovation Challenge was conceptualized as a platform to zero in on the innovative approaches, trends, and technologies playing a crucial role in shaping the future of Digital Innovation. Through this platform, NASSCOM CoE team envisaged creating, leading, and stimulating a co-creation ecosystem that sparks innovation to amplify, enhance and scale up transformation in the Digital era and bring together the best minds and thought leaders from industry, academia, startups, and government to deliberate on building an innovative platform for solving relevant enterprise challenges. This maiden Innovation Challenge brought out the best supply chain tech startups, and we are proud to present the winning startups leading the pack with their innovative streaks…
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O leverage the innovations created by the Indian entrepreneurs and to foster sustained engagement between Enterprises & Innovative Startups, NASSCOM CoE organized Innovation Challenge with Indian startups and premier Institutions for specific Enterprise's problem statements. In compliance with the directions, the Ministry of Electronics & IT Startup Hub (MeitY Startup Hub) collaborated with NASSCOM CoE to provide access to the platform, resources, startups, and institutions, which can be engaged in this process of solution identification based on problem statements as provided by enterprises.
THE NEED The Ministry of Electronics & Information Technology (MeitY) in partnership with NASSCOM CoE launched Enterprise Innovation Challenge to identify impactful solutions from startups to address the problem statements identified by Jubilant Food Works, Diageo & ABInBev. The Enterprise Innovation Challenge with three (03) pre-identified problem statements tried to tackle challenges related to analysis and reduction of in-transit breakages by 50% or Asset Register through bar code/ RFID and Computer vision-based road and driver analytics platform. On the successful launch of the maiden Enterprise Innovation Challenge, Enterprise Innovation Challenge, Dr. Ajai K. Garg, Director, Scientist-F, MeitY, stated, “Enterprise Innovation Challenge provided conducive platform to meet the market demand for quick identification and implementation of solutions through innovation. Initiatives like this are extremely crucial to accelerate innovative solution development & adoption for complex industry challenges through cocreation.”
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While Sanjeev Malhotra, CEO, NASSCOM Center of Excellence IoT & AI, highlighted, “There is a need for a collaborative approach where the companies can quickly transform themselves through innovations to identify emerging challenges and provide solutions in the new normal. Initiatives like Enterprise Innovation Challenge are the need of the hour to help the enterprises discover and adopt ready-made solutions to speed-up their transformation journey in a faster and low-risk manner.”
ASTOUNDING PARTICIPATION A host of budding and innovative startups participated in the challenge. There was intense brainstorming, confabs, and anatomizing of thoughtprovoking ideas in the house for two months. The shortlisted startups set forth their ground-breaking technology solutions that could address the problem statements identified by Jubilant Food Works, Diageo & ABInBev. Great minds from academia, industry, and business were part of this incredible platform in evaluating the use-cases that helped startups in moving in the right direction in terms of developing the right technology that fits best to the proposed use-cases. This successful launch event brought forth many innovative companies and their incredible ideas to help user industry iron out their supply chain inefficiencies. The final event, NASSCOM CoE’s Enterprise Innovation Challenge-a first-of-its-kind initiative focused on The Digital Supply Chain Imperative (“The growing shift to smarter supply chains”), that took place on October 29th, 2021, where the challenge winners were announced, was dedicated to industry engagements, and developing collective capabilities. The initiative has brought together
the best minds from industry, academia, startups, and government to understand the pressing challenges/opportunities that exist in the supply and logistic sector. This episode of Enterprise Innovation Challenge deliberated upon building an innovative platform for solving challenges in the supply chain. The object of the exercise is to endorse Supply Chain 4.0 for ennobling dexterity, enhancement, and competitive advantage in the industry! The theme of this event revolved around the growing shift towards Smarter Supply Chain. The EIC platform zeroed-in on the innovative approaches, trends, and technologies that are playing a crucial role in shaping the future of the supply chain. The various discussion topics and the expert panel shed light on how the supply chain industry has undergone a sea of change in the past few years & how the deep tech companies are rethinking their way to design to build future-fit supply chains. As they have already set the bar higher with such a successful maiden event, NASSCOM CoE looks forward to furthering events, which will allow them to share the platform with great leaders and promising startups from the supply chain domain. This technology and innovation rendezvous will unlock new possibilities to overcome the challenges and enrich the supply and logistic industry!
CASE STUDY
Orama Solutions Analysis and reduction of in-transit breakages by 50% for Anheuser- Busch InBev India Packed beer FG (bottles/cans) are pressurized containers, which, if exposed to extreme handling, temperatures (or any other factor coming from analysis) may tend to burst/leak. This could also have a cascading effect on the carton damage in vehicles, leading to further breakages. An analysis of factors therein is imperative to understand what transpires enroute, determining actions for reducing/eliminating such losses.
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NHEUSER-BUSCH INBEV India was looking for a solution for root cause analysis to understand intransit breakages of beer bottles/cans. The company is a global player in beer industry with 630 brands of beer and operations in 150 countries. Orama Solutions LLP is a startup, which aims to provide solutions to complex industrial problems using Artificial Intelligence, Computer Vision and Embedded Technologies. Orama Solutions is founded by Harshit Aggarwal & Shrinand Aggarwal providing innovative solutions like Smart Industrial Weighing Scale, Real Time Tank level monitoring system, Dimensional/Volumetric Weighing System and Quality Inspection Systems.
BACKGROUND India is a large country with a typical arrangement of a remotely located factory supplying products across the nation. Mostly, the manufacturing is decentralized (multiple factories) to allow for logistics efficiency. This results in a lot of goods moving through Indian roads in trucks of varying sizes and then finally being distributed to shops. While moving through the supply chain these bottles/ cans, being pressurized containers, leak causing damages. These damages need to be ascertained and replaced at distributor level. Moreover, the leaking/ broken bottles also spoil labels of neighboring bottles amplifying damages. This creates enormous financial loss for a global bottled beer company as well as dents brand image. Anheuser-Busch InBev (ABInBev) India is India's second largest beer company with more than
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20% market share. In-transit breakages of Packed beer FG lead to unwanted supply chain losses, adding to operational overheads. Reduction in same would lead to bottom-line improvement.
factor. Once the main features have been identified, corrective action to reduce breakages can be created easily. For the first time, a solution of this sort will be tested in the beer industry.
CHALLENGE
IMPLEMENTATION BENEFITS
The Problem Statements includes Analysis and Reduction of in-transit breakage of beer bottles/cans. Bottles are packed into cartons and then the cartons are stuffed in trucks. The company uses third party vehicles and doesn’t employ a reverse logistics mechanism, which makes repatriation of IoT devices another challenge. Moreover, open body as well as closed body trucks are used for transportation. The trucks are of varying sizes and leave space on the sides while stuffing creating voids and leaving scope for carton movement. Any movement in the carton or the bottle creates rattling inside the carton which is suspected to cause packaging failure. Moreover, the road bumps, potholes, turns, speed, vibration, temperature, etc., are all contributing factors, which must be monitored.
INNOVATION To get a fair assessment, it is suggested to first isolate the contributing factors to breakage. Orama Solutions has proposed to create a 3D printed replica of an actual bottle. This bottle will have various sensors to capture the experience of a bottle during a journey. The raw data of the journey will be divided into various insights like bumps, turns, temperature, speed, etc. Threshold values shall then be determined for each contributing
Anheauser-Busch InBev will be able to reap multiple benefits from this study. The company will get insights into exactly what is causing packaging failure. This will help not only in bringing down direct breakage loss and replacement to distributors but also increase shelf appeal of neighboring bottles, which are partly affected by the leakages. Moreover, the concept can also be deployed on filling/ bottling lines to get more information of processing line parameters to reduce process breakages. Since the concept is modular, it doesn’t need any modification in the current setup. The reverse logistics can be worked out by deploying third party courier agency for repatriation of sensors. Orama Solutions is very excited to work on the project and is confident to gather valuable insights for beer industry with this project. The project has been coordinated with Nasscom’s Centre of Excellence, Bangalore along with Anheuser-Busch InBev India.
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SiSoC Semiconductor Technologies Pvt Ltd. Asset Register to Track asset presence / movement across sites for Diageo India Pvt. Ltd. Diageo India wanted to enhance traceability of assets available at sites and transfer of assets between sites. This was to ensure easier physical identification of fixed assets. They also needed to avoid discrepancies due to Manual Asset management system by proposing a solution that all the fixed assets are to be labelled and mapped to a barcode and sensors. SiSoC Semiconductor, through their innovative offering, aided the company in making the entire process automated and extremely efficient. Here’s the insightful case study describing their plan of implementation.
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IAGEO INDIA is one of India's leading alcohol beverage companies producing and distributing premium alcohol brands for the consumer from its 50 manufacturing facilities spread across Indian States and Union Territories. In these manufacturing facilities, company has many assets, which may be movable or immovable assets. The company has fixed assets like packaging machines, utility equipment, tanks, material handling trucks, lab instruments, etc., at various sites.
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CHALLENGE At many instances, there are requirements that require these assets to be shifted from one manufacturing facility to other on demand basis. Also like any other manufacturing companies, the assets are being tagged and registered in a Software-based Registry. All the registry is done using manual operation where employees audit the asset and manually update the registry. The manual way of auditing and registering the asset can work-out for smaller manufacture
units, while companies like Diageo, who has multiple facilities across locations, cannot handle reliable asset tracking and registry solution. Also during auditing phase, tracking the exact location of an asset within a facility itself is a challenge. This creates discrepancies with the audited data and previous reference data.
BACKGROUND A wide range of tracking technologies are available to cater the business needs. Arranged from the most localized to
CASE STUDY
the most global and ubiquitous, today’s leading asset technology categories are Barcodes; RFID; Ultra-wideband (UWB); Bluetooth / BLE; Wi-Fi; LPWAN technologies; Cellular; GNNS (GPS), etc. Choosing the right asset tracking technology depends on the end-use. Whatever the use case, a few general parameters can help you make a smart decision. These include: Desired accuracy or granularity of data Update rates for each assets being monitored The number of assets being tracked The value of assets being tracked The costs or risks associated with asset loss The physical environment(s) in which tracking is carried-out The global / locational area. Ease of use, including installation of the asset tracking technology Costs to purchase and maintain an asset tracking system Requirements for collecting and transferring asset ID or other metadata Though SiSoC Semiconductor Technologies could work on any of the above technologies, considering the use case and future growth perceptive, the company proposed to use LPWAN
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Technologies.
SOLUTION SiSoC, with their expertise in IoT Solutions, had finalised to use LoRaWAN based Asset Management solutions. Aptly designed LoRaWAN sensors stores an ID that is mapped with the bar code of particular asset. These sensors are Low cost, Long Ranges and Ultra-Power devices that transmits the Asset data to the main server on regular interval. With our custom-made Hardware and Software solution, the collected asset data is curated and integrated with existing SAP system. LoRaWAN Wireless technology: The LoRaWAN® specification is a Low Power, Wide Area (LPWA) networking protocol designed to wirelessly connect battery operated ‘things’ to the internet in regional, national or global networks, and targets key Internet of Things (IoT) requirements such as bi-directional communication, end-to-end security, mobility and localization services. SiSoC Semiconductors is one of pioneers to work in LoRaWAN Technologies. SiSoC has broad set of IoT Products based on LoRaWAN wireless Technologies that include Smart Water Meter, Smart Energy Meter and Smart Gas Meters.
EXPECTED OUTCOMES Solution comprises of Low cost LoRa Tags. These tags will be attached to the assets to be tracked. The tags send data (Serial Number, Part details, Specifications, Location, etc.) to the cloud and integrated with existing SAP database. The solution is simple, use minimum number of devices with no modifications or disturbance to existing infrastructure. There is a flexibility to add more features in future (like capture asset related live data like temperature, pressure, flow, energy consumption, etc.) and add predictive & prescriptive analysis of every asset. With this, the end-toend fixed asset management system is automated with best of IoT Technology available in Industry.
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Roadcast Tech Solutions Reduce secondary distribution vehicle accidents and breakdown through road condition for Jubilant Food Works It has been observed that accidents of refrigerated trucks happen due to drivers' loss of focus on the road due to drowsiness during driving and reckless driving. Whereas vehicle breakdown can occur due to wear & tear of mechanical parts and irregular maintenance/repairs, distribution of goods to the restaurants requires utmost care of maintaining the material temperature and following the hygiene protocols. Any deviation in the process can lead to food safety concerns. Here’s an interesting case study that helped Jubilant Food Works solve this complexity…
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UBILANT FOOD WORKS engages 200+ refrigerated vehicles for distributing raw materials to the Dominos/Dunkin/Other restaurants. These are mission-critical supplies, and any delays due to unforeseen circumstances may result in operational challenges due to material shortages. Unforeseen circumstances such as vehicle breakdowns, accidents, natural calamities, or political unrest cause significant supply delays, forcing restaurants to close. Mitigating these risks is essential for business continuity. While we cannot influence natural calamity or political unrest, vehicle breakdown and accidents can be avoided. All vehicles have a policy of double drivers, so that the vehicle is on the move without breaks to maximize the vehicle utilization and reach the destination in time. Our observation is that vehicle accidents usually happen during night hours, where the driver tends to sleep while driving. Observing the driver behavior and road conditions are crucial for reducing accidents and important for post-accident analysis. Vehicles are maintained and managed by the vendors, and as a client, JFL policies for penalizing vehicle breakdowns. Even with a penalty clause in place, there are vehicle breakdowns, leading to supply delays. Reducing vehicle breakdowns is crucial for improving on-time delivery.
PROBLEM STATEMENT Reduce secondary distribution vehicle accidents and breakdown through road condition, driver behavior and vehicle
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condition monitoring/analytics. Improve the distribution process compliance and reduce food safety risk by measuring temperature compliance through our iOT devices. Provide end-to-end visibility of the vehicles that are being sent out of the distribution centers with the consignments/packages along with dedicated monitoring of loading/ unloading process. Entire vehicles trip details will be captured which include In/Out time of vehicles through AI, time taken for the loading, etc.
BACKGROUND For businesses that provide delivery services, it is imperative that they stay on top of their delivery teams, monitor their performance, and guide them realtime information as they go out in the field. It is also essential
that resources such as trucks and other delivery vehicles are well managed to ensure high profitability. As an IT company, Roadcast Delivery and Order Management Software gives businesses a reliable platform that lets them track their delivery teams and their deliveries in real-time by offering end-to-end supply chain visibility & logistics automation by connecting drivers and vehicles onto a single platform. Roadcast’s unique IoT capability allows businesses to monitor important parameters such as driver behavior, movement & report any violations which helps the organization’s vehicles reduce accidents and breakdowns. The platform also offers a mobile application for driver
CASE STUDY management with additional features for capturing fuel details, attendance management, shift planning of drivers alongside real time tracking. Creating data reports is a timeintensive task and can be prone to many errors, such as duplicate data entry, inaccurate calculations, and more. With RoadCast, reports are automated and digitized. Keeping data and creating monthly assessments are no longer manual processes, saving you time and effort that you can use elsewhere. Hence, Roadcast saw this challenge as an opportunity to showcase the solutions that would help Jubilant meet its visibility requirement for drivers and vehicles.
INNOVATION The solution offered by Roadcast combines the power of an Ai enabled dashcam that will monitor the driver behavior and report any violations/ hazards such as fatigued driving, distraction and smoking. Also, the device will monitor the real-time vehicle parameters such as speed to ensure that the vehicle is not overspeeding. Along with this, the proposed solution also involved a mobile application that uses image recognition to identify vehicles from their license plates. This App will also allow the business to track & manage the movement of the vehicles within the hub/facility while tracking other activities such as
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loading, unloading, idle time, docking, etc., using real-time data. IoT sensors trace food products, followed by monitoring of food safety and quality. It mainly monitors temperature, humidity, and location. A food temperature sensor will improve food safety in your vehicle by continuously monitoring the temperature and power status of your equipment. When an issue is detected, such as an increase in temperatures or loss of power, your sensor will immediately send you an alert to notify you of the situation. These notifications will allow you to quickly resolve the problem and reduce the chance that the product becomes unusable. Every second is being counted when an issue arises involving food safety in your vehicle. Our driver management solutions monitor behaviours like rapid acceleration, inefficient or sudden braking, and high-speed turns or jerks on the wheel to measure drivers’ alertness and general safety while driving. By monitoring driving behaviour over time, the solution can alert drivers and managers to issues like fatigue or unsafe conditions and chart a driver’s improvement to adjust insurance premiums. It allows supervisors to remotely monitor the performance of drivers, optimizing their performance to reduce fuel costs, to increase fuel efficiency and increasing the safety of their drivers on the road. Track driving behaviours over time to measure driving practices and reward improvement.
IMPLEMENTATION BENEFITS The solution is currently being implemented. Once deployed fully, the proposed solution will increase the operational efficiency and help reduce discrepancies. It can be configured to identify and track sudden acceleration or braking, speeding, high-speed turning, frequent stopping, and slow driving on a per-driver basis. Supervisors can use these reports to track individual driver’s performance, harsh breaking & harsh accelerating, identify fatigued drivers, capture fuel efficiency, decline in accidents & breakdowns and flag unsafe driving practices. With IoT technology to help trace food shipments, monitor safe temperatures and prevent contamination, the future of food safety looks healthier.
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SHIELDING The Supply Chains from Cyber Threats Supply chain attacks are mainly particularly pernicious since a single exploited supplier can result in attacks on hundreds of companies or organizations. For many firms, the supply chain is the weak link in their cybersecurity protocols. One can do all the right things to protect yourself from cybersecurity attacks, which also includes the adoption of a zero-trust approach to your network security, but if you don’t make sure your vendors are equally conscientious, you can be exposed to harm from a supply chain attack. Anil Kumar Pandey, PhD Candidate (Finance & Economics), National Institute of Industrial Engineering (NITIE), gives you a sneak peek into the ways to shield the vulnerable supply chains from the threats of cyberattacks.
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ERE’S an astonishing statistic for you… “97% of firms have been negatively highly impacted by a cybersecurity breach or threat that looms largely on global supply chains and have gained traction and occurrence in their supply chain.” In conjunction to this, a leading global security company GreatHorn, stated, “It’s no longer enough to defend only your own organization’s attack surface. You also need to protect against phishing scams and network compromises within business partners up and down the supply chain.” This current year, according to A 2020 Global Insights Report survey, not only explores the scale of the challenge but also the amount and severity of supply chain breaches is mindboggling. It also tracks the way that different companies, industries, and regions are responding to a year of cyber crisis. The responses show a fractured landscape, with different industries and regions
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responding differently to the challenges posed by another year of damaging, costly cyber events. Firms across all industries and across all over the globe have been investing largely in the cybersecurity. However, some firms still hesitate to have third-party cyber risk as a strategic priority and to coordinate and formalize their approach to cyber defense and to its remedy. Additionally, many firms struggle to assign the ownership of their third-party cyber risk program. Also, adversaries can now actively scan firms across the globe to identify the supply chain attack vectors that can aid significantly in the adverse cybersecurity events, including damaging data exfiltration and crippling ransomware attacks. Firms need to commit more to incorporating continuous monitoring and remediation into their third-party cyber risk program, as well as raise awareness at the senior executive and board level to help the business understand the
Anil Kumar Pandey is a Final year PhD Student at National Institute of Industrial Engineering Mumbai. He works in Supply Chain Finance and Working Capital Finance. Prior to this, he holds an MBA from Aligarh Muslim University (Supply Chain Management & Operations/Finance. He also holds a B. Tech in (Electronics & Instrumentation/ Control Engineering).
resources needed to protect the business. ENISA, regarded as the European Union Agency for Cybersecurity, monitors supply chain attacks on a day-to-day basis. They have further developed a taxonomy of supply chain attacks, which are vulnerable to the global supply chain that allows for the systematic analysis. The taxonomy is basically based on the four major fundamental elements of a supply chain attack: Attack technique used to compromise the supplier Supplier assets targeted Attack technique used to compromise the customer Customer assets targeted What is particularly interesting about this taxonomy is where it begins: While most focus – and certainly most news stories — about supply chain attacks focus on how, which and how many victims are attacked — there is
FOCUS A 2020 Global Insights Report stated that managing third-party vendor cyber risk is fast becoming the defining cybersecurity challenge of our time. The cybersecurity landscape in 2021 has proven that statement. Third-party cyber-attacks have affected multiple industries in waves: Actelion, SolarWinds, Kaseya. In some cases, a single breach in one vendor network or program affected tens of thousands of companies. Accelerated by the worldwide rise of ransomware activity, cyber-attacks on third-party vendors led to intrusions into major banks, defense companies, utilities, healthcare systems, and governments. SolarWinds is estimated to have cost more than $100 billion in losses. The main importance of third-party cyber risk management has been proven to be a necessary component of an overall risk management program. The question remains as to how companies and the industries in which they operate respond to the challenge of ensuring that their supply chain is secure. The solution is complex, but achievable. Vendor supply chains are often interlinked, resulting in overlap and complicated dependencies. They are multi-layered, meaning that sensitive information might be stored or processed by third- and even fourth-party providers. Simply gaining visibility into the supply chain can be difficult and costly, even before attempting to secure it.
little discussion about the starting point. That is, the fact that a successful attack on the supplier is what sets the full chain in motion. Supply chains are compromised with the same techniques used in direct attacks: malware, brute force attacks, social engineering, exploiting software vulnerabilities, etc. The ultimate targets can be anything that would be targeted in a direct attack: ransom, extortion, theft of personal data or trade secrets, espionage. The recent supply chain attacks on SolarWinds and Accellion are two attacks are among the highest profile supply chain attacks. With recent breaches, companies are now starting to understand that their supply chains have become their weakest link. To address this problem, companies should apply similar security methodologies that they use to protect their own infrastructure. Of course, there are some limitations, but this is still
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possible. The first step is to gain visibility. For example, map all the different assets that the suppliers are using within the company, and/or have access to in a secured (or unsecured) manner. The second step is to introduce or improve controls. Most companies already have some controls in place around the assets that involve the supply chain. The company should improve those controls to address access of an external entity with higher risk (the supplier) or introduce new controls around those assets if they do not exist. The last step is incident response. Companies should realize by now that eventually security incidents will happen. They must include steps and workflows within their incident response process that involves their supply chain. For example, what happens if the source of the leak is the supplier? What should we do if the compromised asset belongs to the supplier? etc.
THE ENHANCED VULNERABILITIES When I look for key areas where information security may be lacking, one place I always come back to is the supply chain. Businesses are increasingly concerned about managing major supply chain disruptions, and rightfully so. Supply chains are a vital component of every organization's global business operation and the backbone of today's global economy. However, security chiefs everywhere are concerned about how open they are to an abundance of risk factors. A range of valuable and sensitive information is often shared with suppliers and, when that information is shared, direct control is lost. This leads to an increased risk of its confidentiality, integrity or availability being compromised. Security is only as strong as its weakest link. Despite organizations' best efforts to secure intellectual property
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FOCUS and other sensitive information, limited progress has been made in effectively managing information risk in the supply chain. Too often, data breaches trace back to compromised vendor credentials to access the retailer's internal networks and supply chain. Mapping the flow of information and keeping an eye on key access points will unquestionably remain crucial to building a more resilient information system. Organizations need to think about the consequences of a supplier providing accidental, but harmful, access to their corporate data. Information shared in the supply chain can include intellectual property, customer-to-employee data, commercial plans or negotiations and logistics. Caution should not be confined to manufacturing or distribution partners. It should also embrace professional services suppliers, all of whom share access, often to your most valuable assets. To address information risk in the supply chain, organizations should adopt strong, scalable, and repeatable processes – obtaining assurance proportionate to the risk faced. Supply chain information risk management should be embedded within existing procurement and vendor management processes. The time to make supply chain security enhancements a priority is now. A wellstructured supply chain information risk assessment approach can provide a detailed, step-by-step approach to portion an otherwise daunting project into manageable components. This method should be information-driven and not supplier-centric, so it is scalable and repeatable across the enterprise.
PROTECTING AGAINST SUPPLY CHAIN ATTACKS Supply chain attacks have been notoriously hard for end-victims to defend against since these attacks generally originate with a presumably trusted vendor firm. Since almost all firms depend on vendors that mainly leverage global electronic supply chains, and it’s important to perform the cybersecurity due diligence on vendors, and then monitor them to be sure they continue to follow good cybersecurity procedures and practices. Accellion and SolarWinds have both been sued for negligence around their security practices in global supply chain. This represents an organizational challenge at the firm level and thus the IT people are often hard-pressed against time to manage internal requirements, much less finding time to check up on external providers. In addition, IT is seldom involved in vetting and approving vendors. To reduce supply chain risk, best practices for customers call for identifying critical vendors and verifying their security practices. “Critical vendors” are those that either provide critical services to the corporation, or who have access to sensitive corporate information. All critical vendors should be subject to a cybersecurity review as part of the company’s vendor management program. Since site visits may not be practical, you can look for independent audits that have been conducted to verify the vendor complies with cybersecurity best practices, including adoption of zero trust capabilities. Particular attention should be paid to how the vendors defend their endpoints
against web-based malware and phishing, since these delivery channels are involved in most attacks. For instance, remote browser isolation might have stopped the SolarWinds attack before it began, if the original breach was carried out through social engineering. Likewise, micro segmentation might have halted a brute force attack before the malware reached the Orion monitoring platform. Finally, adopting a Zero Trust approach, which operates on the assumption that breaches will occur, may help limit damage to your own network and data in the event that one of your vendors is compromised. For example, implementing least privilege access can minimize damage that occurs in the event of a breach by restricting what the vendor can access. The National Cyber Security Centre (NCSC) has also heeded that it has defended the UK from a record number of cyber-attacks in the last year including those targeted at Covid-19 vaccine research, distribution, and supply chains. The agency, which is a part of GCHQ, released its annual report showing that it dealt with an unprecedented 777 incidents over the last 12 months – up from 723 the previous year – with around 20% of firms supported linked to the health sector and vaccines. The health sector and in particular the vaccine rollout was a major focus for the NCSC, as it was forced to tackle threats levied against the NHS, healthcare, and vaccine supplier IT systems from malicious domains billions of times. Over the past 12 months, the NCSC also responded to a rise in ransomware attacks. A range of services have been provided to businesses over the past year to help protect them
Threat prevention is a constantly evolving industry itself with a wide range of new security, protection, and detection solutions. The challenge is to identify the set of products that can function well together across prevention, detection, and response. Threat detection service providers assist in identifying better-fit solutions for the supply chain to make sure not only internally but across their supply chain ‘members’ are following best practices in cyber security. 38 CELERITY January - February 2022
FOCUS from ransomware including the Early Warning Service alerting organizations to emerging threats and cybersecurity advice for those working in education. Last year, cyber criminals took advantage of the surge in home working and people moving to online services due to the pandemic. The City of London Police reported that the first month of lockdown saw a 72% surge in financial losses from cybercrime. There has also been several significant global incidents revolving around global supply chain management attacks in the recent past, including the attack on the SolarWinds IT management platform by the Russia’s Foreign Intelligence Service – one of the most serious cyber intrusions of recent times – and a major ransomware attack on the American software company Kaseya. To shield against attacks of this kind, businesses should utilize technologies such as biometrics to improve upon identity management processes.
RECOMMENDATIONS Gaining visibility into the supply chain supply chain ecosystems is large, multilayered, and complex. Getting complete visibility into the supply chain is hard. It is necessary, however, to fully understand third-party vendors beyond the first tier or most critical suppliers. Companies should drive supplier risk-reduction activity by building constructive support for suppliers into their third-party cyber risk management program. They should alert the vendor when new risks emerge and provide practical steps for them to follow to solve the problem. Until third-party cyber risk is a clearly defined mandate at the executive level, it is difficult to effectively coordinate resources and define clear strategies. Companies must integrate continuous supply chain monitoring with appropriate reporting to the board and senior executives. Too many cyber-attacks in 2021 occurred after patches were released, after vulnerabilities were disclosed, or after vendor monitoring systems would have revealed suspicious activity. Auditing or assessing supply chain every few weeks or months is not sufficient to stay ahead of agile, persistent attackers. Continuous monitoring and quick action against newly discovered critical
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vulnerabilities needs to become the sine qua non of effective third-party cyber risk management. Automate analysis; expand assessment to include the ‘long tail’ of vendors and not a limited number of critical suppliers; identify areas of nonsubstitutability or where risk is pooled. Improving cybersecurity education and training for vendors for years, employee education programs have demonstrated outsized impact on organizational cybersecurity. The same is true for vendor education. Too often, vendors are unaware of their cyber risk, and so do not implement appropriate asset management, cybersecurity training, or cybersecurity protocols. These are a few steps firms should take to secure their global supply chains against cyberattacks and data breaches: Firms should consider defining reasonable levels of security and associated controls; requiring subcontractors, vendors, and critical supply chain partners to meet or exceed those standards as terms and conditions of established business agreements. Companies should consider adding vendor-identifiable information to any existing cyber threat intelligence activities to identify instances of emerging threats or active attacks. Threat actors may compromise a lesser-defended vendor network identified as having access to the principal enterprise network. Awareness of these activities would allow the parent company to initiate countermeasures before the threat actor can move laterally onto their network. Cybersecurity, much like life, requires collaboration.
a thorough, annual vendor risk assessment and perform the necessary due diligence with thirdparty relationships. Due diligence can help you identify what the vendor might require in terms of controls and monitoring. Defining data ownership/stewardship requirements: Who maintains ownership of data being shared and what is acceptable use of that data? Defining regulatory compliance requirements: Are there regulatory requirements that need to be met and maintained by both parties? Be able to monitor compliance. Maintaining incident response plans: Both parties need to have a plan to notify the other if their network, systems, or data have been compromised or a compromise is suspected. Information and Communication: Written communication plans that address what information is distributed to whom are highly recommended. Third parties involved with your organization's IT security should be considered part of this communication plan, and your organization should be part of theirs, as data breaches on their end could affect your data.
When dealing with your supply chain in a B2B relationship, you are able to be more prescriptive as to how you interact with members of your supply chain and what security measures you are expecting to maintain. When working with a supply chain vendor's organization, assess the vendor's cybersecurity risk for sharing data, interfacing networks/systems and establishing access to networks/systems. Areas that should be looked at include: Conducting vendor risk assessments: To mitigate your vendor-related risks, organizations should conduct
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EVENT RECAP
Propelling the
Indian Supply Chain The exuberant atmosphere at the recently concluded 2nd Annual Warehousing & Logistics Excellence Awards 2021 hosted by Quantic India was quite palpable with it being one of the very first events conducted offline. Meeting the fellow supply chain members and exchanging dialogues, this event set the pace of opportunistic horizons waiting to be harnessed.
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UANTIC India’s 2nd Annual Warehouse & Logistics Excellence Awards 2021 proved to be a successful gathering of supply chains leaders, which offered an ideal platform for companies from the manufacturing, e-commerce, retail, FMCG, pharma & automotive sector to demonstrate their thought leadership on their outstanding supply chain & manufacturing performance throughout the pandemic. It brought all stakeholders together under one roof and provided the ideal Business to Business (B2B) and Business to Government (B2G) platform for companies and industry leaders to present new warehouse and logistics related technologies and services direct to investors and decision makers driving the growth of Indian trade competitiveness amidst the pandemic. The event started with an intriguing panel discussion on ‘Business-driven Warehousing & Plant Strategies – Integrating Infrastructure, Logistics, Manufacturing and Technology’. With Chandrashekar N, GM - Integrated Supply Chain and Commercial, Gencrest Bio Products; Prashant Kanhed, Head Warehousing & Logistics, Hindalco; Amit Arora, GM – Manufacturing & Supply Chain, ACC Ltd.; as few of the august panelists, the discussion revolved around embracing digital transformation – shift from leaner sequence to digital supply chain; bringing the data together; SCM 4.0; making warehouses & plants great and future direction of warehousing in India. During the discussion, Amit Arora highlighted, “In adversity lies the biggest opportunity’ and this is what we as supply chain players need to
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Engaging panel discussion underway during the event
leverage on.” According to Ronit Verma, National Logistics Manager, Red Bull India, “Post-Covid world has necessitated variabilities in the warehousing space and the developers need to create exceptional benchmarks in developing Grade A warehouses in the country as we move ahead.” Akash Singhai, MD, Dura Floor, raised a very pertinent point that companies often miss out on the importance of right flooring. He emphasized on the need to spend considerable time in deciding the right flooring. The second panel on future challenges for SCM threw light on important aspects such as managing in the VUCA world; structuring a resilient & efficient supply chain architecture; solving the logistics puzzle; equipping people with right intelligence to harness digital tools, etc. Another panel discussion delivered key insights on ‘what to expect from the future supply chain leader’. This talk revolved around shifting leadership mindsets from reactivity to proactivity; powering operational excellence through
integrated planning & execution; aligning SCM strategies with business strategies in the current scenario.
THE MAGNIFICENT AWARDS SAGA In between such an engaging affair, Quantic team awarded accolades to the deserving companies and individuals who have shown resilience and achieved breakthroughs in their respective fields. These awards bolstered their confidence and inspired fellow professionals to follow suit. Winners took away the crowning glory in categories such as Warehousing & Logistics Excellence; Manufacturing & Operations Excellence; Supply Chain & Procurement Excellence Awards. With the promise to be bigger and better than its previous editions and offering a much needed platform to SCM leaders, this event successfully carried forward the baton of aspirations, exceptional benchmarks and intriguing insights.
PERSPECTIVE
A PEEK INTO
2021 was full of immense opportunities for supply chain companies and specially tech startups in this highly dynamic space. While the year saw many logistics startups turning unicorns, it was also the year of innovation in abundance in not only fighting the COVID-19 nightmare but also keeping this industry well-updated with the global trends. With high hopes and aspirations in thoughts and strategies, supply chain technology companies shower their predictions for the year 2022.
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UTOMATION in warehouses will remain a top priority for supply chain operators, particularly as personnel/staffing will continue to be a challenge in 2022. As raw materials start to freely flow through the supply chain, it will be critically important that 3PL companies adopt automation solutions that reduce onboarding time and bring task workers to a state of peak performance quickly. Warehouse automation comes in many forms, including artificial intelligence, machines, cobots and robots that assist workers with processes related to inventory planning, asset tracking, order fulfillment and more. In short, supply chain automation can save a company time and money, while helping warehouse operators improve efficiency, accuracy, and productivity. I expect we’ll see this technology take warehouse operations to a whole new level in 2022, as automation tools can help fill the worker shortage gap, secure the supply chain and future proof businesses in the
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face of uncertainty.
IIoT APPLICATIONS WILL ENABLE ORGANIZATIONS TO FURTHER MODERNIZE THEIR SUPPLY CHAIN OPERATIONS Today, many organizations lack visibility into where their products or components to build products are located. In 2022, more organizations will turn to IIoT solutions to achieve real-time intelligence into the location of shipment and health of their equipment, enabling them to achieve operational excellence as well as proactively detect and auto-remediate vulnerabilities. Companies across industrial verticals, including transportation and logistics, manufacturing, oil & gas, healthcare, and retail, will further automate their workflows and transform their environments through innovative IIoT applications. IIoT will accelerate supply chain digital transformation with driving
Brandon Black, VP & GM, Ivanti Supply Chain
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PERSPECTIVE value to vehicle fleet management, yard management, remote asset monitoring, location tracking and intelligent distribution.
ASSET MANAGEMENT WILL BECOME INCREASINGLY IMPORTANT WITHIN THE FOUR WALLS OF A WAREHOUSE The ongoing global chip shortage has left businesses struggling to get hold of new handheld devices and instead must make use of what they already have. But all too often, businesses don’t have the visibility into where those devices are at any one time. If businesses lose or misplace devices, not only is there a cost associated
with renewing them, but warehouse staff doesn’t have the equipment to pick at peak times. With visibility over handheld devices, business can understand where the devices are, when was the last time they were seen and who was the last person to have them. This visibility also provides operational efficiencies to charge devices when they aren’t being used so people can get through the whole shift without having to stop and charge the device.
OVERCOMING THE GLOBAL CHIP SHORTAGE WITH EVERYDAY CONSUMER DEVICES
causing huge disruptions and causing organizations to think differently and evaluate what they can do with what they already have. For example, organizations can no longer expect to buy and quickly receive devices whenever they need them. So, they may consider blowing the dust off their old Android and iOS devices, migrating to the latest operating systems, and running operations that way to improve their workflows. In 2022, I think we’ll see more organizations rapidly deploy mission-critical applications on mobile devices to streamline warehouse operations and increase workers’ productivity and accuracy, while also reducing on-boarding time.
A global shortage of computer chips is
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Rahul Vishwakarma, Co-founder and CEO, Mate Labs
UPPLY CHAIN has been at the heart of growth, particularly in GTM strategies, and at the heart of growth tactics. The reason is simple: what shows, is what sells. Given that supply chain plays a critical role, supply chain executives are gearing up to quickly understand and pivot whenever something stops working. Over the last few years, supply chain executives and professionals have been warming up to the idea of AI and implementing newer methods. They are shifting away from traditional sales-led inventory allocation methods and toward a more pull-based approach that is more focused on visibility rather than sales. During this process, supply chain teams ensure that products are available as soon as possible and never run out of stock, for which companies are now turning to artificial intelligence and theory of constraints. 1. Demand forecasting will be at the centre, and businesses will use a combination of AI-led demand forecasting and the theory of constraints approach, in which expectations are set well in advance and the path to success is known. Companies and teams all over the world will begin to focus on AI and theory of constraints in the next 1-2 years, but the work will begin now.
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2. Tracking the right KPIs: At the moment, KPIs such as SLA, Fill Rate, and Inventory Turn are all available. Some of them, however, are based on functions. I feel in the coming year, there will be a greater emphasis on collecting data at the most granular level - at the customer level. 3. Automation will occur at the warehouse, plant, and planning levels; response time will be reduced from 40 days to 25 days in response to an entirely new and calculated response from production to endcustomers. 4. Companies will now focus on demand shaping activities, where AI will play a significant role. Supply chain will continue on its journey of almost unprecedented levels of change, with digital transformation and automation at the heart of efforts to improve efficiency and effectiveness while remaining resilient to further, unavoidable disruption.
PERSPECTIVE
2
Piyush Sharma, VP-Business, Locus
021 was a year filled with uncertainties for the logistics industry. It led businesses to make some temporary immediate changes in their operations. In 2022, brands will make significant and foundational changes to their logistics operations. The pandemic resulted in a huge inflow of home deliveries and businesses are adding more emphasis to their last-mile capabilities. With last-mile delivery costs contributing to more than 50% of total shipping costs, the rising expectations of in-home delivery increase the risk of encountering inefficiencies. In 2022, a steady rise in enterprise businesses investing in last-mile delivery software is expected. Driver shortages were one of the most prominent challenges in 2021 so there will be greater emphasis on driver recruitment and retention in 2022. Increasing pay rates and incentives, although beneficial, are not enough to help businesses to retain fleet drivers. Regulatory changes and changes in business practices to improve the working conditions of drivers are much needed. Brands are moving towards localized supply chains to tend to consumers who want ultra-express deliveries. Localizing
the supply chain provides better control on delivery times, minimizes carbon emissions, and mitigates risk during times of political or economic risks. Also, going local helps the logistics industry to connect with small businesses. With a steep rise in e-commerce demand, the demand for 3PL and 4PL services has increased drastically. 2022 will see businesses increasingly investing in 3PL majorly for logistics cost reductions and scalability. Firms that want direct control over their logistics operations more than cost reduction as their priority will go with alternative distribution models. One other trend that has come to the forefront is green logistics and the dire need for sustainable supply chains. The serious concerns about the impacts of logistics on the climate crisis have spurred new innovations in logistics like electric vehicles, autonomous delivery vehicles, drones, and so on. Companies are also leveraging logistics software to assess and minimize carbon footprints. By paying attention to the trends and by being agile to adopt and adapt, businesses will be able to easily build a strategic roadmap for managing their logistics operations in 2022.
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RADITIONAL planning methods, which are often driven by complex Excel spreadsheets, don’t allow to structurally include predictive data and events, aside from historical sales. This way of working means demand planners spend too much time on tedious data processing, and the forecast tends towards a moving average. Coming to a cross-departmental consensus can take weeks, as the discussion isn’t fact-driven, and the result tends to be a compromise with excessive stock positions and lack of service as a consequence. At Garvis, we are convinced that the future of planning lies in assumptionbased forecasting. Technologies like Artificial Intelligence and Machine Learning allow the inclusion of customer (actual sell-in and sell-out), competitor (pricing and sell-out), and causal (events
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and promotions) data into the demand plan. This results in an automated, event-driven forecast that explains the past (peaks/exceptions) and predicts the future. The role of planners becomes more strategic as they need to analyze and correct the assumptions made by the technology and add new assumptions to the forecast based on the inputs from different departments (sales, marketing, finance) in the consensus meetings. This process results in a more effective, data-driven forecast (-30% error), better service levels (1% or more increase in sales) and reduced safety stock (4-5 days).
Chinmay Narwane, India Head, Garvis 43
RECAP
THE YEAR THAT WAS As we step into another year, that we hope will come with incredible opportunities, let’s pause for a moment and dive into the year 2021. Last year proved to be a stepping stone for supply chain fraternity across the country where many innovative start-ups took the onus upon themselves to chart the future of supply chain, and the established ones brought in their technological prowess to enhance supply chain visibility & transparency. During the last year, team Celerity also got heavyweights to participate in some pathbreaking webinars sharing intriguing insights on the future of supply chain. Our 2021 issues were laced with treasure trove of insights for the industry. Here’s recapturing some of them for our readers…
Supply chain
Sachin Gupta, Country Planning Manager, Shell
is nothing but applying Common Sense to improve efficiency. While sales and marketing functions of organization drive top line, supply chain and operations drive bottom line of the balance sheet. More and more companies are realizing the importance of having an efficient and agile supply chain to increase profitability. Beyond this, having a reliable supply chain is becoming a key competitive advantage to increase market share. Customers and consumers are expecting faster and convenient ways of getting the products. Supply chain professionals must focus on developing new age skills. Concepts
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like AI, ML, IOT and Big Data are becoming foundational to grow in a modern age supply chain. Other than this, SCM professionals must acquire Project management, Financial Management and Accounting knowledge skillsets. Supply chain professionals need to understand modern ways of forecasting and planning. Data analytics is going to play a major role there. Concept of descriptive analytics is now moving towards prescriptive analytics. If these are merged with supply chain fundamentals, it can be a super-combo to have.
RECAP
Mr. Shailesh Haribhakti, Board Chairman, Board Director, Chartered and Cost Accountant, an Internal Auditor, and a Certified Financial Planner & Fraud Examiner
Dr. P. Siva Kumar (SK), Medical Technology Advisor, ESI MedTek Solutions
I think
we need to get to the start-ups who can suddenly become unicorns. We have already seen a few decacorns who are emerging out of India, ex. Paytm, Zomato or Swiggy. We are seeing multibillion dollar enterprises emerging and the idea that good governance can risk-manage the flight path is becoming very much embedded in the mind frames of these start-ups and the people who have this driving exponential mindset taking the moonshots which they believe in, having this
massively transformative purpose, looking at technology as an enabler, they are the ones who are truly making artificial intelligence their partners. They are talking and thinking about it as augmented intelligence and are not fearing it. They are embracing the change. That is what is leading to this exponential change in India. The number of digital transactions we are doing, the extent to which we are now able to deal with things at a molecular and cellular level, is astonishing.
70% of the population live in rural areas while 70% of the healthcare infrastructure is in the urban area. This statement is a testimony to the clear divide that persists and at the same time presents a unique opportunity for the government to expand medical facilities in the rural regions. India produces 30,000 to 40,000 doctors every year. Most of them desire to be in the urban areas for obvious reasons. Ayushman Bharat is one of the most promising schemes of the government to make healthcare facilities accessible for all. To make the Ayushman Bharat successful necessary infrastructure should be established in rural areas. Digital technologies should be employed to ensure that healthcare is accessible to a large section of the people. With the country
now widely covered with mobile network, accessibility could be easily addressed using appropriate solutions. AI enabled solutions will play a major role in making this initiative a success. As an example, diagnostic solutions are undergoing revolutionary changes that would enable healthcare providers to provide solutions without the patient having to visit the clinic or healthcare center. Similarly, significant amount of integration is happening between various sectors of healthcare to ensure that healthcare is accessible to larger percentage of people living in remote areas. Covid-19 pandemic has already accelerated remote care where in medical professionals and the patients have utilized teleconsultation to their advantage.
India Inc. has a promising future when it comes to striking an optimal balance between industrialization and protection of natural, ecological, and social assets. All stakeholders including governments, businesses, investors, social enterprises, academia, and consumers have critical and complementary roles to shape a greener, safer, and more sustainable India in the times to come. Given the population
rise and other global megatrends impacting India, there is a distinct opportunity for us to epitomize sustainable development on a global canvas. Education, tech-enabled disruptions, impact leadership from corporates and favourable policy mechanisms can fulfil our vision of replenishing natural resources and restoring ecological sanity.
Bipin Odhekar, Head – Sustainability & Operations Excellence, Marico Ltd.
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RECAP
Nikunj Desai, Head Global Supply Chain, ACG Group
Aparna Sharma, Sr. HR Professional - HR Advisor, Board Member, Coach, Counsellor, Trainer, Best Selling Author, Motivational Speaker
Shital Kakkar Mehra, Executive Presence, CEO Coach, Board Advisor, Social Entrepreneur
The way
India is developing as a manufacturing Hub and being looked at as an alternate destination to our large neighbour, supply chain function has and will have to play a paramount role to make this happen. Importance of having a resilient and reliable supply chain function has been realized across the industries and governments across the globe. Thanks to PLI schemes being launched by the government and realization of the geographical de-risking aspects by all global players, as India leverages this scenario to leap ahead into playing a larger role and becoming a global manufacturing hub, then definitely
that dream will be built only with the supply chain function doing the heavy lifting. I always tell our team that SCM is like what an Army is to its nation. Some day you fight in desert, some days on land and some days in snow. We must be always on our toes like an Army is always ready to protect our nation’s turf and fight the new battles/challenges which we encounter. In general, I have a belief that if my team is successful, then I will be successful. My job is to make my people successful and create environment where they can thrive. In following this belief, I am sure they too feel motivated enough when they see this happen.
Stereotyping is a real phenomenon not only at workplaces but at our homes too. Women’s share in the engineering space has gone up to around 40% at the educational level. This suggests that more and more women are getting into engineering which otherwise was always seen as male territory. However, this does not reflect in the actual employment numbers in terms of how many women are employed in organizations. In fact, women in the technical field especially conventional engineering are still in abysmal numbers. If we look at the field of technology, the percentage of female employees in Software Testing is higher than in Core Programming as if relegating female employees to “less critical, lower complexity” jobs. There are certain qualities which can
be attributed to male gender and certain characteristics to female gender. However, if you look at a corporate leader of any organization, any leader must focus on things which are gender agnostic. They must be more empathetic at certain times, very assertive and aggressive at other times. To succeed, women try to ape men, but the beauty lies in collaborating and co-existing in the ecosystem by complementing each other and not giving into stereotypes that the society has put in. I do not think females need to become alphamales or vice versa. Each gender has their own strengths and that is what everyone needs to bring to the organization. In short, stereotyping exists because of societal conditioning.
If you hire 50% women at the entry level
take the time out. Otherwise, many women feel that it can impact their career development or their future in the organization. When I coach women at any level, I always tell them that you are the CEO of your own personal brand. Companies spend billions of dollars every year in promoting their brand, so nothing should stop women from promoting their achievements and their credentials. Firstly, brands need investments, so please invest in yourself and do it guilt-free. Secondly, brands need promotion, so do not be guilty promoting yourself. It is important to create a strong internal and external network because brands need visibility. Become the CEO of your own brand and take it UP!
and only 11% at the leadership level, that means there is a leakage in the pipeline. Now the leakage clearly is for every organization to address and examine What, When and Where it happened. Mostly it happens at the mid-level. Research has shown that if you can support women at mid-level, then you can have adequate women representatives in the leadership position. Of course, having better policies, maternity leave, paid & unpaid leaves, paternity leave, are always a great addon. I believe senior leadership should lead by example and harp on the importance between work-life balance. If that happens, women also feel secured and are convinced that it is right to
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RECAP It is easy to get wrapped by technology
Sandeep Raut, Digital Transformation, Analytics Big Data, Mobility & IoT Evangelist
Nikhil Puri, Global SCM Head – Communication Cabling Solution, Sterlite Technologies Ltd. (STL)
Aniruddha Banerjee, Sr. Vice President – Supply Chain, Spencer’s Retail Ltd. & Nature’s Basket Ltd.
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but without considering human element the transformation process will fail. CEOs are taking a digital-first approach to change the business. Digital transformation cannot thrive unless your organization has a culture that is willing and able to embrace it. Organizationwide adoption requires teams to change their attitude, automate the processes, shift their thinking, and reject the status quo. People are engaged by people. Productive and satisfied
employees who like their work, go out of the way to satisfy customers. Digitization is by no means de-humanization. It is 20% technology but 80% human touch. Without a strong involvement and without taking the human element into account on all levels, digital projects are going to fail. The best results will occur when technology and humans collaborate to create an entire ecosystem, which technology alone cannot achieve.
Today’s globalized supply chain network has been optimized to identify minimum lead times at the lowest possible price. We want electronics ‘Made in China’, so we can buy them cheap. However, rapid political developments, a shift towards consumers buying niche products and now, this pandemic has revealed the weakness that lies at the heart of this model of manufacturing. The hidden costs of single-source dependencies and poor flexibility in adapting to real-time shocks have been laid bare. Today, we will tolerate higher prices for certain goods, if it means we get them faster and more in line with our aspirations. As a result, the change that had already begun, towards more flexibility and multi-level sourcing, will accelerate tremendously. Over the next years, we can expect to see a broad overhaul of our supply chain infrastructure.
Logistics hubs will re-emerge at the regional level. To eliminate single-source dependencies, and to establish a flexible and adaptable supply chain, sub-system suppliers and component suppliers will source, assemble, and deliver from their own backyards. The supply chain has become a main protagonist everywhere, it has moved from playing a “behind the scenes” organizational role to being a prime driver of the company business. As volumes become more variable, supply chains must become more adaptive, especially if, as forecasts suggest, large suppliers and logistics operators in the supply chain industry must prepare for major catastrophic events such as weather events (fires, flood, tsunami), lethal pandemic outbreaks, strikes, social unrest and associated disruptions.
The unorganized
FMCG Players need to build infrastructure that allows customization of orders within the supply chain, without adding any cost. Smart supply chain control tower is the need of hour, which can anticipate potential problems in an automated and optimized fashion at a regional and global level. More and more companies are trying to transform their traditional supply chain models to digital supply networks (DSN). It is seen as a long-term solution to build a more resilient supply chain that can withstand disruptions like COVID-19.
retail sector in India has a huge untapped potential for adopting digital mode of payments as 63% of the retailers are interested in using digital payments like mobile and card payments. Companies should delve into ways to interact and deliver directly to consumers. We need to focus on Omnichannel and flexible online delivery models. Also, the focus should be on investing more towards infrastructure development for strong last mile delivery setup and on personalization of shipments.
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RECAP
Trending GL BALLY For mining giant BHP, Blockchain is ‘key to supply transparency’ Leading global resources company BHP has proved Blockchain technology can ease concerns about sustainability and humanrights transgressions in the supply chain. Australia-based mining and metals giant BHP has been piloting Blockchain to maintain high ESG (Environmental, Social and Governance) standards across its supply chains. The technology is already being adopted by the mining industry to trace materials to the mine of origin and make precious-metal investments more transparent. Blockchain helped with Tesla supply chain ESG targets The company recently ran a blockchain pilot in which it traced nickel shipments from its nickel operations in Western Australia to Tesla’s Gigafactory in Shanghai. Nickel is a key ingredient in the manufacture of car batteries. The pilot supported Tesla’s “due diligence on product provenance”. BHP ran a similar trial with rubber sourced for use in truck tyres. A major concern around rubber is whether it has been ethically sourced. BHP procures more than 6,000 giant tyres a year. Natural rubber carries a high-risk of modern slavery and illegal deforestation for supply chains. BHP was keen to see if Blockchain could mitigate such risks, by helping the company trace rubber from its source through the supply chain. She revealed the trials - which have been running for the past two years - were successful.
BHP will use Blockchain on copper value chain. BHP will run similar trials with suppliers, focused on tracking products from manufacturing to fitment, before expanding further down the supply chain. The company also plans to use Blockchain tech to trace emissions from copper used in electric cables and wires. While ensuring a more ethical supply chain, blockchain can mitigate against supply issues, as well as supporting decarbonisation initiatives by tracking greenhouse gas emissions. A BHP spokesperson said that customers increasingly care about where products come from and to this end, traceability is a key enabler to lifting sustainability standards across the value chain.
Walmart adds science-based targets to supply chain financing option
In its announcement, Walmart noted new research from HSBC and the Boston Consulting Group, which found that as much as half of the $100 trillion of investment by 2050 to achieve net-zero across global supply chains needs to come from small and mid-sized businesses. But those businesses often don’t have the in-house climate expertise and access to capital to tackle sustainability goals, the report noted. Walmart is taking the cue from the research findings
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that larger corporations need to "provide liquidity and share knowledge and resources with smaller businesses." To get access to the retailer's Sustainable Supply Chain Finance program, suppliers have two options. They can set science-based targets that will get validated by the Science Based Targets Initiative, a joint venture between CDP, the United Nations Global Compact, the World Resources Institute, and the Worldwide Fund for Nature aimed at improving companies’ work to reduce greenhouse gas emissions. Or they can meet certain score thresholds on their CDP climate change reports. Financing for eligible suppliers with Walmart-approved invoices is linked to their CDP scores, targets and reported impacts, with lower pricing linked to more ambitious efforts, per the announcement. Walmart has been working with HSBC since 2019 on the retailer’s Sustainable Supply Chain Finance program. The financing program announcement is the latest one by Walmart to advance its sustainability goals. The retailer is targeting zero emissions across its global operations by 2040.
RECAP Siemens has developed an ecosystem-based approach for the exchange of emission data
Since the supply chain accounts for the largest share of the ecological footprint of products, the decarbonization of industry is a challenge, which must be tackled by all the stakeholders together. As a leading provider of automation technology and industry software, Siemens has, for the first time, launched a solution for the efficient query, calculation, and transfer of information on the actual Product Carbon Footprint (PCF). SiGreen now makes it possible to exchange emission data along the supply chain and combine it with data from a company’s own value creation to obtain a product’s true carbon footprint. To achieve this, Siemens has initiated the open, cross-industry Estainium network with the aim of enabling manufacturers, suppliers, customers, and partners to exchange trustworthy
PCF data. With SiGreen supporting companies in tracking their Product Carbon Footprint, they can take targeted reduction measures providing a quantifiable effect. CO2 management thus supports companies on their way towards carbon neutral production and helps them to transform sustainability into a decisive competitive edge. Cedrik Neike, Member of the Managing Board of Siemens AG and CEO Digital Industries, said, “All our customers share the desire to reduce the carbon footprint of their products. But to do so, they first need to know exactly the CO2 emissions of their supply chain. And they need to know which adjustments can save them the most CO2. SiGreen and Estainium enable them to do just that. It allows us to bring much-needed transparency to supply chains while protecting the confidentiality of the data. This technology can bring us a big step closer to our goal: a carbon neutral industry.” Precise data is a key prerequisite for effectively achieving the emission targets in the value chain. With SiGreen, Siemens has successfully developed an application for the efficient acquisition of real data collected where emissions are produced, i.e., in the corresponding steps along the supply chain. To calculate the carbon footprint, SiGreen makes use of real data rather than industrial average values. Product Carbon Footprints thus become a measurement and control instrument – and can be actively reduced by applying targeted improvement measures.
Supply Chain Analytics Market Is Projected to Reach $15.61 Billion by 2028 The global supply chain analytics market size is expected to reach USD 15.61 billion by 2028 according to a new study conducted by Polaris Market Research. The market is expected to expand at a CAGR of 17.5% from 2021-2028. Key factors projected to boost demand for the global market include increased adoption in sectors such as retail, consumer goods, automotive, manufacturing, and healthcare, among others. Rising government measures in supply chain management to rebuild the global economy from the covid-19 pandemic are driving market expansion globally. Moreover, the increasing presence of global leaders in the market and huge R&D investments are also positively impacting the market growth.
KEY HIGHLIGHTS OF SUPPLY CHAIN ANALYTICS MARKET Based on solutions, manufacturing analytics emerged as the dominant segment and is projected to grow at a rapid rate over the forecast period. The growing healthcare industry and rising government initiatives in the manufacturing industry are fuelling the manufacturing segment's rise in the global supply chain analytics market. By deployment, the cloud segment accounted for most of the market and is predicted to witness exponential growth soon. The analytics in the cloud solution offers a centralized
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reporting solution as well as assistance with many elements of troubleshooting, use, and optimization. It provides enterprises with improved supply chain outcomes and more detailed reporting. In terms of services, the professional service segment registered the higher revenue growth and is expected to take this lead ahead in the coming years. Professional services are required to ensure that the new systems are compatible with the existing ones and to integrate the new with the old to avoid data loss or theft. Companies across industries are heavily spending to increase operational and supply chain efficiencies and digitize their business models. The supply chain function's emphasis has turned to sophisticated planning procedures, such as integrated sales, analytical demand planning, and operations planning, which are among most preferred business processes in many firms. Key players are adopting new growth strategies such as new technology development, product innovation, mergers, and acquisitions to gain market share, and business expansion in the global supply chain analytics market.
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