Celerity, in business through Supply Chain July- August 2018

SUPPLYCHAINTRIBE.COM July - August 2018 Volume 2 Issue 4 For private circulation only

PERSPECTIVE Industry’s reactions on the newly introduced e-way bill

CLICK & BRICK

An infectious Mix A look at Retail supply chain’s preparedness to offer the ultimate experience to customers by providing them with truly omni-channel integration

LEADERSHIP Kazutada Kobayashi, President & CEO, Canon India Pvt Ltd., shares plans to provide 360 degree input-to-output experience to their customers

PUBLISHER’S NOTE

Country Roads Dear Readers, Logistics has come a long way. The e-way bill which is now in use for all States and Union Territories, has hit the 10-crore mark within 3 months. Remarkably, more e-way bills are being generated for intra-State trade than for inter-State trades. The Industry reactions have been positive so far with benefits already being experienced.

Another notable contributor to India’s GDP, the retail industry is gearing up to attract consumers through technology. Multiple disruptive technologies and a demanding customer who orders products using more than one touchpoint has made the lives of the supply chain team very eventful. Read about how they are coping in this issue’s cover story.

Just a decade ago, customer-centricity was a good word to use. However, a few years on, all major decisions are revolved around the consumer. From Canon India’s strategy to provide a complete 360-degree input to output experience to consumers on the demand side, to companies creating a warehousing and network strategy to being closer to the consumer on the supply side. Now, its all about where the customer is and not where the tax benefits are.

Procurement as a function is also making into its own. Read all about the big trends and their implications in a procurement manager’s life.

And to sign off, India continues to be the fastest growing country among the world’s major emerging economies, says the World Bank.

Please do write in. We continue to wait for more bouquets or brickbats.

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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3

CONTENTS

July - August 2018 Volume 2 Issue 4

16

COVER STORY MIDAS TOUCH Supply chain in Retail Industry is quickly coming of age since the only differentiating factor that will shape the growth of the industry is serving the customers in the shortest possible time.

This cover story reflects the vibrant side of retail and supply chain’s preparedness to service the demands.

6 OUTLOOK

23 Be Prepared for the Unknown

A Good Move

Umesh Madhyan, Associate Vice President Logistics, Hindustan Coca-Cola Beverages Pvt Ltd., feels that the industry is moving out of specialists and towards generalists

One year on, impact of GST has been positive for the road logistics sector, analyzes ICRA

7 PERSPECTIVE

30 The Times are A’Changin

All India Permit

Umesh Joshi, Senior Supply Chain Professional, elucidates the criticality to maintain service with optimum inventory

First-hand insights from industry players on the scenario post e-way bill and the progression ahead

26 FOCUS

10 LEADERSHIP

Procurement Trends of Today, Goals of Tomorrow

Strike A Pose Kazutada Kobayashi, President & CEO, Canon India Pvt Ltd., shares his experience, expertise and Canon’s India strategy to capture the burgeoning market

Milind Tailor, Director – Procurement, Asia Pacific & Supply Chain, India at Diebold Nixdorf, decodes the five big procurement trends that are going to become tomorrow’s tradition

INTERVIEWS

34 RECAP

14 GST: Debottlenecking Supply Chain

7th Cold Chain Strategy Summit

Yogesh Sarin, Director – Supply Chain, Dell EMC, delves into the promising expanse post GST

Post event coverage of the cold chain event hosted by Kamikaze B2B Media

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.

4 CELERITY July - August 2018

ADVERTORIAL

Meeting the multi-channel challenge in Supply Chain!

Source: Beumer Group

destinations and operate at higher speeds than other types of equipment.

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Multi-channel order fulfilment is today’s order fulfilment buzzword.

Retailers and wholesale distributors are struggling to fill online orders, replenish stores and ship large wholesale orders from the same facility. The trend is to find a single piece of sortation equipment that allows a company to handle e-commerce and store replenishment in the same facility. “The BEUMER Group sorter can provide the flexibility to commingle inventory for both of those sales channels.”

That requirement is leading to more tilt tray and cross-belt sortation systems that deliver cartons or individual items to a packing station.

The sorter doesn’t care whether the item is for a store or an individual consumer. The advantage is tilting toward cross-belt units. When you require volumes of 15,000 units per hour or more, a cross-belt sorter is more accurate, can service more

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M

anufacturing Industries has been moving toward lights-out automation for years—that’s a factory that operates with minimal human intervention. Warehouse Distribution systems are now moving in that direction as well and demand of automation is really going high.

The amount of automation being requested here in the India is unprecedented, Sales and System engineers question whether there are diminishing returns, but we’re being pushed by our customers to automate the last processes.

The cost of labour has always been the most important factor in automation projects, but we don’t believe it’s just the current cost of labour. Instead, it’s the cost of going through labour cycles, including the negative press that goes along with downsizing. Automation is one more way to deal with the speeding up of the business cycle and where we help our customer with our solution.

The consumers expect their goods to be delivered fast, in perfect condition, around the clock. Retail Supply chain conglomerates expect their logistic system to transport and sort everything quickly, precisely and gently - from camping equipment, to shoes and clothing - especially when you need to respond to changing product ranges and seasonal demands.

BEUMER Group helps you address every aspect of the Sorting and distribution process The rise of e-commerce continues to impact the retail industry, upending buying habits, marketing methodologies, brand management, customer expectations, selection, delivery, and customer service. Drastic changes in retail have forced drastic changes in the supply chain.

The increasing percentage of e-commerce orders needing to be fulfilled from distribution centres and warehouses demand new concepts for modifying existing warehouse systems to satisfy both retail store replenishment and individual deliveryto-customer requirements. Operations that have turned to warehouse execution systems (WES) should consider implementing an integrated order consolidation approach, leveraging loop sortation.

Abhishek Prakash (Head Sortation & Distribution Business - BEUMER India) - "The state-of-the-art sorting technology provided by BEUMER Group hosts a new era of consolidated and automated warehouses within the warehousing sector, Including the IT backbone for reliable operation. We do so by designing highly efficient, seamless systems that integrate our own equipment with other best-ofbreed products".

5

OUTLOOK

A GOOD MOVE One year on, the impact of GST has been positive for the road logistics sector; although full benefits are yet to be realized over longer-term, analyzes rating agency ICRA…

I

t is almost a year since the implementation of the Goods and Services Tax (GST), which was implemented in July 2017. The effect of the GST has been largely positive for the roads logistics sector and has led to several benefits. As per ICRA’s comprehensive survey, the findings have been encouraging, though a lot remains to be achieved. Further enumerating on the impact, Shamsher Dewan, VicePresident, ICRA Ltd., says, “As was expected, the removal of inter-state check-posts has resulted in significant reduction in waiting/idle time for trucks, thereby improving their turn-around time and efficiencies, as confirmed by 60% of transporters that we interacted with. So far there has been about 1820% improvement in turnaround time because of GST. The impact has been more pronounced in a few states such as Kerala, West Bengal, Maharashtra, Madhya Pradesh and Bihar, which were earlier known for notoriously high waiting time spent at their inter-state borders.”

6 CELERITY July - August 2018

As for the trends in warehouse consolidation, the trend has been mixed. While logistics efficiency is certainly a key factor influencing the location for warehouses, other sectorspecific nuances have also influenced the extent and pace of consolidation in each sector. Sectors like FMCG and consumer durables have reported limited consolidation, as maintenance of de-centralized warehouses remains necessary to ensure product availability and timely customer servicing. On the other hand, sectors like tile manufacturing, which have a more predictable demand and can be served from a centralized location, have already consolidated their warehouses.

Many companies are also interacting with supply chain management companies and taking their assistance in redesigning and revamping their networks.

E-way Bill The e-way bill, which got implemented from April 2018, too has been received

positively by the transporter community.

Around two-thirds of transport companies that ICRA interacted with reported that operations have become more systematic, and there is significant time saving and paperwork reduction due to the digitization of processes. A few companies though faced difficulties due to teething problems like technical glitches, limited awareness etc. The overall response to e-way bill has been positive.

The full benefit of GST on the road logistics sector and the costs savings due to reduced transportation, warehousing costs and the associated efficiencies are only expected to be realized over the longer term. About 10% of the transporters indicated that their overall costs have reduced post GST implementation, while more than 40% suggested that costs were increasing. Higher compliance costs related to GST due to technological upgradation, up-skilling of workers, penalty charges etc. have added to the cost-burden of transporters, which coupled with the increasing diesel prices, have taken a toll on their profitability.

Adds Dewan, “In spite of these short-term pains, in the long-term, it is certainly expected that truck turnaround times would reduce, and the set-up of efficient warehousing networks would improve the overall efficiency within the system.

This would bring about a reduction in logistics costs.”

PERSPECTIVE

ALL INDIA PERMIT Peddled as an anti-evasive measure, the government hopes that the E-way bill system will help boost tax collections by clamping down on trade that currently happens on cash basis. After the roll out of e-way bill, transporters need not visit any tax office or check posts for permits.

Here’s getting first-hand insights from the industry players as to how’s the scenario post e-way bill and the progression ahead…

T

he logistics market in India is expected to be worth US$370 billion by 2022. India spends around 14-15% of its GDP on logistics and transportation as compared to 7-8% by developed nations. The sector is expected to grow at a CAGR of 15-18 % between FY19-22. The logistics cost remains a worrying factor due to the regulatory and tax structure challenges in the country. The increase in the number of un-organized players, tax evasions and inefficiencies in the use of technology has been impacting the

logistics service providers. In order to circumvent the issue, the e-way bill was introduced to replace the earlier existing Way bills to curb tax evasions.

The implementation of the e-way bill nationally, from June 1, 2018, has been a positive move in promoting the organized sector and consequently the growth of the organized logistics sector. There is a visible growth in the GST revenues during the month of April and May, which highlighted how the e-way bill has helped in curbing tax evasion. However, the growth is still

below expectations. For the organized players in the logistics industry, the implementation of the e-way bill has helped in reducing the delivery time of freight and transportation cost. The integration of the FASTag and RFiD onto the bill, will further lead to a reduction in the dwell time of the trucks at the toll booths. The bill can significantly help in reducing the unorganized trade as the focus of the administration goes into engaging the potential defaulters directly.

CHECKS & BALANCES for smooth tax administration and process simplification for easier verification of e-way bill by Tax officers

EASY & QUICK generation of e-way bill

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USER FRIENDLY

TAXPAYERS/ TRANSPORTERS

e-way bill system

need not visit any tax officers / checkposts for generation of e-way bill / movement of goods across states

NO WAITING TIME

at checkposts and faster movement of goods thereby optimum use of vehicle / resources as there are no checkposts in GST regime

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E-WAY BILL BENEFITS

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PERSPECTIVE

PERSPECTIVE Major impact of e-way bill has been:

The e-way bills are fairly easy to prepare. This has offered greater accessibility for all the stakeholders including the supplier, the receiver and the 3PL players. Further, the simplification of the bill has also helped the drivers in understanding the necessity of the bill. The organized sector is well adapted to it and most of the players who handle it prepare the e-way bill by default. The uniform implementation of the bill, nationally, across each state has helped in avoiding the erstwhile challenges of visibility, where consignors having shipments from multiple states had to keep track of the intra-state movement, especially in places where the bill was required.

The linkage of e-way bill to a truck’s FASTag number is now available at the check-posts, but it is still necessary for the truck to halt, as the linkage of RFID to the check-post system and thereafter and an advance intimation of go / no-go, is still not present. The government has worked really hard to simplify the mechanism. This has also helped in making compliance easier for the stakeholders in the sector, including transporters, fleet owners and transportation companies. The implementation of the e-way bill has significantly helped in reducing the halt time at check posts, thereby improving the efficiency of the sector.

This has also led to an increase in the overall demand for the movement of freight for various economic activities by the organized logistics service providers. Furthermore, the sooner the clamp down by government on the non-compliant movement, the faster the organized players will grow, and the unorganized players will move to the organized sector.

LESS DOCUMENTATION: E-way bill has restricted the need for physical documentation. All the state-wise documentation, that were required earlier, for the movement of goods are not needed.

COST REDUCTION: E-way bill has reduced the logistic cost. It reinforces proper invoicing and along these lines has reduced tax avoidance.

Divyansh Rathore, VP – Operations, Future Supply Chain Solutions

EFFICIENT TRANSPORTATION: It has increased efficiency and speed of transportation. A truck in India covers an annual average distance of 120,000 km as compared to 2,50,000 to 3,00,000 km in developed countries, which pose a clear indication that our transportation systems needs some reforms. It has helped to reform the industry. The average number of days for transportation from Delhi to Chennai has reduced by 1-2 days. This is a significant number. The transporters, thus, can manage their businesses with a smaller fleet. There is no waiting time at check post and faster movement of goods, thereby optimum use of resources.

E-way bill roll out can speed up delivery of online orders: This is a big boost for e-commerce industry. Average online shopper may expect a shorter delivery time as transporters now will not need to visit any tax office or check posts for permits. The various permits required for inter-state and intra-state movement of goods used to take up as much as 18 per cent of the time taken for an online delivery to reach consumers. With e-way bill in place, the shipments can be delivered in much less time.

E-way bill system is extremely important, both for the government as well as the logistics industry. While the government expects the GST collections to significantly improve, the industry hopes that adequate attention is given to critical issues, including portal reliability, technical challenges, etc. From the industry standpoint, it requires meticulous planning and execution to gear up for the compliances as any lapse could lead to a supply chain disruption.

E-way bill has brought in more transparency in transactions. It has eased vehicular movements due to no / limited check post and has resulted in the effective utilization of trucks due to better turn-around time (TAT).

Post the e-way bill implementation, the changed dynamics would result in better truck utilization as it is slated to bring bigger efficient trucks into the fray – 40’ multiple trailers. Warehouse consolidation due to GST will result in more load consolidation driving more of FTL loads. As far as our customers are concerned, compliance wise all are cooperating well. While there are teething challenges in generation of e-waybill in terms of time, migration to automated generation through Suvidha providers will aid in resolving the complexities.

8 CELERITY July - August 2018

Anjani Mandal, CEO & Co-founder, Fortigo Network

The GST & e-way bill combination is a great effort taken for changing the existing logistics scenario. An e-way bill is in fact the underpinning of GST, which talks about the seamless movement of goods & services. In the pre-GST era, logistics was affected highly due to complex tax structure & multiple checks at borders. To complement the GST implementation, which has come up as ‘One Nation, One Tax’ and suggested uniform rule throughout the country, the e-way bill was introduced. The E-Way bill promises multiple benefits for the transporters, mainly for those in the organized sector. Few of the positive changes include quicker movement of goods with the removal of the large number of check-posts across state borders and national highways, resulting in ease of movement of goods & less congestion at borders, along with less consumption of diesel at border. It can be touted as an anti-tax evasion measure, as it will reinforce proper invoicing & hence there will be less corruption & bribery. All our large clients are well aware about e-way bill and they have a good option of bulk upload of EWB01- Part A and B, through a JSON file. Our in-house ERP is developed & linked with GSP’s (GST Suvidha Providers) directly through API and if our consignment data shows a gap from that generated by customer (E.g.: Missing Vehicle Number or Consignment Note), we make the necessary updations in PART B. Also, for few customers who are unable to generate e-way bill, we are providing support by generating e-way bill for them and/or making the same bill though our mobile App.

Jasjit Sethi, CEO, TCI Supply Chain Solutions

Dr Arunachalam R, CEO, ProConnect Supply Chain Solutions www.supplychaintribe.com

9

LEADERSHIP

Strike a Pose “At Canon India, we are committed to provide a complete 360 degree input to output experience to our customers. Our retail stores across the country, widely known as the ‘Canon Image Square’ provide a perfect amalgamation of our cutting-edge technology and customer centric service. Advancing our Imaging stores to the third version, we have stepped into the new era of retail evolution, with CIS 3.0,” avers Kazutada Kobayashi, President & CEO, Canon India Pvt Ltd. In this exclusive interview, he shares his experience, expertise and Canon’s India strategy to capture the burgeoning market…

Canon has been a brand to reckon with in the consumer electronics space.

What factors have contributed to such a stupendous success?

At Canon India, we work in collaboration with our customers, partners, employees and the community at large. We consider them integral pillars of our success story. Our corporate philosophy of ‘Kyosei’ – which means, living together for the common good, is embedded in our organization’s DNA. Hence, we take pride in working towards the betterment of everyone who is associated with us, be it our customers,

LEADERSHIP partners and employees or the communities we operate within. Good work attracts good results, and it is a matter of honor for us that we enjoy respect for our conscious and aware functioning in the country.

Two core ingredients of our success are ‘Innovation’ and ‘Customer Delight’.

At Canon, we are at the helm of innovation, with our expansive portfolio catering to the imaging industry. We are renowned amongst the top patent holders, across the world. Innovation has always been core to our DNA, which is explicit from 21 years of our journey in the country. If we look back, unlike most of other companies in Asia, we started our journey with B2B and then built B2C over it, which now constitutes an equally significant share to our business.

We strive to establish and maintain a lifetime positive relationship with our customers. While we are equally focused at expanding our customer base and increasing sales volumes, there is no denying that what helps a company’s growth in the long run is its connect and relationship with its customers. For instance, the adoption of innovation to improve customer experience, going an additional mile to provide clients with services, are some ongoing activities that have added to our success story in India. Along with being recognized for our products & services, through our conscious efforts in our endeavors of HR and CSR, we make efforts to be recognized for our corporate practices in the country.

Your tagline says, ‘delighting you always’. What are the USPs that make it a preferred consumers’ choice?

‘Customer delight’ being the foremost objective for us, we understand our customers and provide them tailor made solutions that are in line with technological advancements in the industry.

From input of images to output, we at Canon take pride in taking care of the entire 360 degree offerings, starting with the camera, then image processing to printing of pictures. The commitment, skill and innovation to offer a complete solutions portfolio backed with a robust after sales and servicing network is what makes our offerings unique and leading in the market. We are committed to delivering delight thereby with an intention of multiplying smiles, we continue to expand and excel in our services

I can proudly share that India is amongst the top performing countries in our Asia map. Last year, we recorded a double digit growth and this year too, we are striving towards keeping that momentum. Last year, we marked our two decades of glorious journey in the country and took the pledge of ‘Vision 2020’. Our Vision 2020 is to further penetrate in the country with our offerings and service, augment the imaging culture in the country and introduce technological advancements across business and consumer products.

10 CELERITY July - August 2018

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outreach to our customers across the nation. Across our businesses, we continuously make the efforts to connect with customers across the farthest geographies in the country. Under the aegis of ‘Regional Penetration’, we aim to expand the imaging culture in the country.

What major transformations you have witnessed over the years in this space?

Technology is ever evolving with innovation and quality being key to our industry. I often get asked this question on how smartphones maybe taking away the camera market but I reiterate that innovation and quality continue to be two integral elements in this space too. With the advent of smartphones, the number of clicks has increased considerably. As more and more people are clicking, the market for the imaging industry is expanding. With imaging industry expanding, only innovative players will continue to lead the space.

With so many images being uploaded on various social networks every moment, the differentiating factor becomes the quality of the images.

And this is where a DSLR camera scores heavily. With results that are unmatched, an important advantage is being offered that smartphone users cannot hope to achieve, unless they adopt a DSLR camera.

There are several areas in which we can further expect some new trends, particularly in camera technology. We lead the world with our innovative products that realize high-quality images using ground breaking technologies such as proprietary lenses, CMOS sensors and image processors.

Continuing to advance the 4K

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LEADERSHIP

LEADERSHIP

We have launched an added customer service called ‘hd Album EZ’, which will be available at select CIS stores.

This intuitive service would enable our customers to select the best design, creative and layout options for their images, which will be printed as photo albums for them on our flagship professional printing product, DreamLabo 5000. Our CIS Version 3.0 are ‘imaging stores,’ that would allow consumers to make memories and be allured by the magic of photography and imaging at large. technology with our EOS series, we have maintained our position of innovation and leadership. Live View focusing technology for DSLR camera models will improve, and we will see more and more cameras featuring touchscreen LCDs for easy user interface. Our everimproving lens and optics technology means slimmer cameras with wider zoom ranges. Meanwhile photo printing is becoming more portable, with Wi-Fi enabled compact printers.

How do you view Indian market in the overall business strategy?

I can proudly share that India is amongst the top performing countries in our Asia map. Last year, we recorded a double-digit growth and this year too, we are striving towards keeping that momentum. Last year, we marked our two decades of glorious journey in the country and took the pledge of ‘Vision 2020’. Our Vision 2020 is to further penetrate in the country with our offerings and service, augment the imaging culture in the country and introduce technological advancements across business and consumer products.

What are the challenges that come in the way of operating

out of India vis-à-vis other countries?

India is a dynamic country and we are very proud of our journey in this nation. Every country comes with its own set of challenges and opportunities.

We at Canon focus on converting our challenges into opportunities.

Our partners, employees and the community, have all been an immense support in our 21 years long journey in the country. We have succeeded in being included amongst the best performing regions in Asia.

With our efforts aligned towards growth, we feel India market still has a huge potential from various point of views. Number of households are increasing more than the population and number of equipment like cameras and printers increase in proportion to the number of households rather than number of people. Groups who can afford such equipment, i.e. mid income and mid - high income families are also increasing. So the demand is definitely going to be higher, and the market is at an evolving stage.

Enhancing experience is one of the keys to win over consumers.

How is Canon doing that?

At Canon India, we are committed to provide a complete 360-degree input to output experience to our customers.

Our retail stores across the country, widely known as the ‘Canon Image Square’ provide a perfect amalgamation of our cutting-edge technology and customer centric service. Advancing our Imaging stores to the third version, we have stepped into the new era of retail evolution, with CIS 3.0.

The idea behind launching Version 3.0 of our Canon Image Squares is to transform retail outlets into a destination, attracting customers to experience a whole new imaging revolution. The objective is to familiarize them with cameras and help them indulge in an extraordinary click-toprint experience with Canon’s new-age technologies and software.

We have also launched an added customer service called ‘hd Album EZ’, which will be available at select CIS stores. This intuitive service would enable our customers to select the best design, creative and layout options for their images, which will be printed as photo albums for them on our flagship professional printing product, DreamLabo 5000. Our CIS Version 3.0 are ‘imaging stores,’ that would allow consumers to make memories and be allured by the magic of photography and imaging at large.

How do you keep your team motivated to deliver the desired results?

In our everyday life, we spend most of our time in office. In my opinion, an efficient work culture is integral to ensure motivation of the employees. At Canon India, our vision statement states that “We will be the company that is respected by people. People who work for Canon and those related with it will

12 CELERITY July - August 2018

take pride in their association.”

In my personal capacity, I engage with all the employees across the country, over a monthly ‘CEO Address’ session, I share the progress and vision of our organisation on a regular basis, followed by a Q&A session, where I address the queries of the employees.

This regular engagement ensures clear and focused goals, for all Canonites.

Through my monthly blog, ‘Frankly Speaking’, I interact with the employees, I share my thoughts on various subjects and strategies and answer all their questions. Communication methods like these enable me to share my reflections, experiences & expectations, along with helping me to connect with the last employee in the organisation.

We consider our employees our biggest assets. Our HR policies are designed to facilitate the professional and personal growth of the workforce.

Various employee engagement initiatives are organized which ensure that all Canonites are motivated to contribute to the organization’s success, along with an enhanced sense of their own wellbeing. All employees at Canon India are dedicated to the commitment towards the community. Under ‘Canon Involve’, employees regularly volunteer to visit the adopted villages and serve the community. We select all our adopted villages in close proximity to our office to ensure constant engagement.

What’s your leadership style?

How do you plan to prepare the next generation to take on the lead?

As leaders, we know change is unavoidable. There is a paradigm shift in the way employees were trained earlier, in comparison to the current scenario. It’s important to understand what an employee is thinking and feeling at different stages of their career, and then use that knowledge to transform any employee’s day-today work experience by showing our appreciation for their work and the career stage they are in. I have secured a belief in the importance of celebrating careers. We have a dedicated concept in this endeavor in this area, called ‘Coaching Culture’, where people grow people. At Canon, we are extremely committed to this aspect of the development of human resources. We have already concluded coaching for

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UP, CLOSE & PERSONAL What’s your passion?

In my free time, I enjoy cooking Japanese dishes for my family.

A recent book that you have read and implied its learnings in the business Two of my favorite books include ‘Letter to a business man to his son

by G. Kingsley’ and John F Kennedy’s biography.

the Senior Management and have now rolled out coaching for Senior Managers, to help them elevate themselves professionally and personally. Soon, the process would be rolled out company wide and we hope that every employee, working at Canon India, may benefit from this initiative.

In my opinion and experience, people stay longer if they see growth for themselves in an organization and at Canon India, we ensure the same. I feel proud to give away awards to employees for their 5, 10, 15 and even 20 years of long service with Canon.

What’s your advice to fresh graduates and new age managers to gear up for the future?

My advice would be every manager should be responsible for 'leading by example'. The fundamental is to respect human resources. To secure, build and progress with your teammates, colleagues, seniors and even trainees is an art. Someone who believes in progressing and walking alone, is not really a leader. I believe in nurturing, listening and progressing with my staff.

At Canon, our guiding principle is the ‘San-ji spirit’ (San-ji is a Japanese term for three self’s), which means the spirit of self-awareness, selfmotivation and self-management.

All our employees are encouraged to follow these this principle and ensure self-progress along with that or the organisation.

Where would we see Canon growth story heading 5 years from now?

We aim to penetrate further with

our complete 360 degree portfolio, contributing to the growth of the imaging culture in the country. Regional penetration of our products & services will once again be a core pillar of our journey this year. Our retail expansion with our experiential retail stores, Canon Image Square have recently achieved a significant milestone of completing 250 stores.

Alongside our continuous innovation and growth in our B2B and B2C segments, I would like to add that we are also heading strongly towards the industrial equipment segment. Our advanced industrial equipment meets the needs of semiconductor and display panel manufacturers, helping connect IT to everyday life. Our industrial equipment will be revolutionizing the manufacturing workplace.

CSR is very close to my heart and I am looking forward to making this year a milestone year for our CSR endeavors. Over a period of five years, our endeavors like ‘Adopt a Village’ and ‘Support A Life’ have succeeded in impacting several lives, this year we are furthering our endeavors with our initiative called ‘Learning Beyond Books’. As part of this, late last year we have started to take children from our adopted villages to visit places like Planetarium, Zoo and Science city along with our offices. These visits are aimed at providing them the required exposure to learn and grow in the real world. Our aim is to strengthen the aspirations of these children and inspire them to dream bigger in life. We want to handhold them into a brighter future and support them to lead more meaningful, well-developed and holistic lives ahead.

13

INTERVIEW

INTERVIEW

GST: Debottlenecking Supply Chain

How difficult & complex is the Indian market vis-à-vis other territories?

Supply chain challenges in India are mainly on tax complexities, poor distribution system, dispersed markets growing into tier 2 & 3 cities catered through lack of proper infrastructure.

Good news is that scenario is changing at a great pace to catch up with the demand.

“Post GST, decisions pertaining to location of warehouses are purely based on logistical efficiency and not tax considerations with companies now strategically locating their manufacturing units and warehouses to secure an optimum supply chain model,” believes Yogesh Sarin, Director – Supply Chain, Dell EMC, during an exclusive interaction…

Having more than two decades’ experience, you have seen supply chain transformation from close quarters. Pls share with us some of the major changes that have happened over the years.

Supply chain has always been evolving to keep pace with the business dynamics. However, the most dramatic one is happening now in conjunction with the fourth industrial transformation in history: Digital Transformation. It has opened newer avenues enabling organizations to be as close as possible to their customers.

All this is aimed at seamless, satisfying experiences, from customers’ first visit to a store or digital channel to the moment when they receive exactly what they ordered, as was promised.

Besides the customer experience aimed at matching expectations, there is also a continual improvement of supply chain via access to large data & its analytics.

What are the complexities in managing consumer electronics supply chain?

Some of the key complexities listed below: » Demand fluctuations in quick tech changing environment which makes it most challenging to maneuver supply chain » Inventory management as a consequence of fluctuating demand in the entire product life cycle, minimizing excess & obsolete in an environment of technological advancements

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economic growth, rising affluence and booming consumer demand, many international businesses are seeking to capitalize on the growth in South East Asia’s developing markets. Being an incredibly attractive region with rapidly growing markets and low cost operations, the challenge remains to address fragmented supply chains and the shortage of right supply chain skillsets. It’s important to realize that ‘one size may not fit all’, hence while the emerging countries continue to get the basics right, the mature markets need to catch pace and join the transformational journey with sustainable improvements that can be leveraged through disruptive technologies to drive business performance.

What are the recent innovative supply chain techniques? » After-market services & reverse logistics needing to increase velocity, enhance revenue from service market and achieve sustainability goals.

You are heading supply chain of the entire South Asia.

Presumably this is one of the most happening markets as far as industrial development is concerned. So, comes the challenging task as well… what peculiar difference have you noticed in different geographies?

South Asia has a mix of mature and emerging markets. With the

Some of the time-tested supply chain techniques that work well are agility in supply chain build in entire network of suppliers and service providers; and measuring performance as close as possible to real time with quick course correction when needed. Besides these, there are digital technology enablers such as: » Real time tracking on end to end visibility » Robotic process automation (RPA) & Machine learning » Unmanned Aerial Vehicles for deliveries » Data analytics and business intelligence.

What has been one of the most challenging and fulfilling projects that you have managed?

Most challenging projects have been around the tax issues where sincere intent to abide with compliance rules has been the winning strategy. Some of the most fulfilling projects have been working with 3PL partners on pain areas like long lead time challenges which when debottlenecked, drove a significant positive customer experience besides raising the bar on process capability. Another good one was in establishing the next level contracts between airlines & freight forwarders in securing dead freight agreements with a view of assured lead time between key origin and destinations. Other simple but very effective projects on mode change from Air to Sea have been enormously successful to drove cost optimization.

Technology is changing the way one manages supply chain.

What are the new age tech tools available today?

Recent examples of initiatives, some of which are in various stages of implementation include: Real Time KPI measurement: ‘What cannot be measured, cannot be improved’ is a manta behind establishing control mechanisms to monitor the health of operations. This is now getting more aggressive and advanced with real-time information enabling proactive avoidance of accidents and optimizing the output.

Robotic Process Automation: It has been successfully tested with machine learning replicating the sequence of a set of events in warehouse operations.

This is hugely successful in reducing operator effort and increasing accuracy.

Added to these, other upcoming tech tools include: » Augmented Reality for order

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processing in warehouse » Internet of Things for productivity tracking » Business analytics of data with simulation of scenarios » 3D printing for end of life service spares.

How has been the scenario post GST? The radical shift in the country’s taxation policy has witnessed quite a few indubitable advantages to offer in the Indian logistics landscape. With the removal of bundled indirect taxes such as VAT, CST, service tax, excise tax, etc., we now have a more simplified tax policy compared to the previous tax structure. The long prevalent need to install warehouses across all states is no longer a need owing to removal of road permits and interstate barriers leading to an increased efficiency in interstate transportation with a better lead time & less in-transit inventory.

Organizations are now remodeling their supply chain to consolidate their warehouse operations and thereby reducing inventory. Post GST, decisions pertaining to location of warehouses are purely based on logistical efficiency and not tax considerations with companies now strategically locating their manufacturing units and warehouses to secure an optimum supply chain model.

The check post clearance processes which used to be quite complex with numerous paperwork have now become a thing of the past. There is also a tangential decrease in the costs of incoming logistics, allowing manufacturers to enlarge their vendor base outside state boundaries and alter sourcing models profitably. One major change of GST was the implementation of e-way bill replacing the paper forms / road permits. This has encouraged companies to invest in technology in order to ensure that they synchronize their data and stay compliant.

Pls share with us some of the striking supply chain trends that we will witness in times to come.

would invariably help to improve customer experience & provide cost savings. » Supply chain modeling would be looked at for global implementation for consistent products & services. » Increase in supply chain Universities globally offering graduate & undergraduate degrees in supply chain management.

How can companies achieve supply chain optimization to reap benefits?

Successful supply chain organizations have a seat at the executive table when strategic decisions are made.

This is not just owing to the enormous spend the org handles but more so to align well with business segment leaders especially sales on procurement strategies. The financial success of the operations/business units is closely linked with the performance of the supply chain procurement initiatives.

The best organizations are known to follow the Balanced score card as a way to focus on financial targets at the top of the pillar, which are achieved when customers buy the products & services.

These products & services are worth having edge over competition only if the operations are strong, backed again by the valuable assets called people in organisation that need to be nurtured to continuously evolve.

Yogesh Sarin had his entire schooling in Dehradun, and is a Mechanical Engineer by profession, with a specialization in material management. He has been instrumental in developing diverse range of procurement and logistics solutions with proven track record of formulating and implementing effective systems for greenfield operations.

He comes with more than 25 years of experience of formulating agile logistics solutions in leadership positions with corporations like Samsung. Yogesh has been with Dell EMC since 2010 and now leads the aftermarket service supply chain operations for South Asia.

» ‘Pay per use’ model would gain momentum replacing the large fixed costs of infrastructure, IT maintenance, etc. » Technology tools would pave way for various operational process enhancements & optimization which

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COVER STORY

MIDAS TOUCH

India is amongst the fastest growing economies in the world that will see a significant population growth in influential consumers by 2020. This number is estimated to range between 350 million and 400 million by 2020, which is similar to the entire population of the United States. Many Indian consumers are looking for differentiated products. Meanwhile, there’re more than 30 million retail stores in India, which is about one store for every 100 people and that’s where the true potential of retailers lies. The only differentiating factor that will shape the growth of the industry is serving to the customers when needed in the shortest possible time and that can only happen through an EXCEPTIONAL SUPPLY CHAIN ably aided by technology & automation. This cover story reflects the vibrant side of retail and how each player is doing their bit to give this sector a MIDAS TOUCH …

etail industry has been very disruptive over the recent years, from being just brick & mortar stores to now delivering goods to customers almost the same day, it has come a long way in the last decade. The key drivers of this change seemingly are speed, choice, price, and convenience. As Rakesh Biyani, Joint Managing Director, Future Retail Limited, aptly puts it, ‘Retail is always about detailing.’ It’s about providing better service to customers and meeting their evolving demands. And those front-end service upgrades must be crucially backed by back-end supply chain enhancements. As leading retail supply chain experts hail, over the next decade, the difference between the companies that thrive and those that fail will be which ones master the modern supply chain and which don’t.

Talking about the changing retail dynamics, Dr. Anil Chinnabhandar, Senior Vice President – Planning & Supply Chain Management, Landmark Group India, elaborates, “Omni-retail is the current trend in Indian retail.

Customers have become powerful after the explosion of online retail. In apparel retail, it’s the ‘Lady with the smart phone’ who is dictating the choice around trends, variety, freshness, frequency, value for money and service levels. Customers are demanding ‘nothing but the best’ from the retailers in terms of customer experience, quality and delivery. Same day delivery, click & collect (at stores), COD, assured delivery, etc., have become the ‘norm’.

Such a highly committed and responsive consumer demand obviously exerts enormous pressure on the supply chain.

The modern supply chain needs to be agile right through, by ensuring that each order is treated with utmost care and acted upon within the shortest lead-times. Customers are highly aware of the processes such as Pick-Pack-Ship and expect ‘six-sigma’ level accuracies with the deliveries all the way to the last-mile.

SCM at Shoppers Stop begins and ends with customer. The

16 CELERITY July - August 2018

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guiding philosophy is to improve the organization’s performance by managing constraints and uncertainty inherent in the prevailing system. The focus is to use new tools and technique and change of mindset to manage the constraints and uncertainty. Devadas Nair, Customer Care Associate & Head – Supply Chain, Shoppers Stop Ltd., adds, “Supply chain management is the top management priority for retailers in today’s business scenario. Fierce competition is forcing retailers to respond to changes in the market quickly. This highlights the growing importance of supply chain management in managing stock availability, supplier relationships, new added value services and cost cutting.

SCM is a key management function viewed to enable profitable growth in line with company’s strategic growth planning. The SCM function at Shoppers Stop coordinates and integrate all activities associated with moving products, services and information into seamless processes. This is facilitated by embracing all the partners in the chain including various departments, vendors, transporters and other service providers and necessary information system to monitor the SCM activities facilitates this.”

FACTORS CLAMPING GROWTH The biggest challenge in retail supply chain is to manage the supply for demand variabilities which in peak days and festivals goes more than 100% in terms of the average volumes.

“Especially since we are in value retail business, ensuring that the alignment of the same happens in an agile manner, without cost over runs, adds to the challenge. Also, in a fast-growing organization like ours where our CAGR is 30%, scaling our supply chain model to meet the aspiring goals of growth

and keeping all our variables within limits would be the other big challenge,” informs Srinivasan Muthukumaran, VP – Planning & Supply Chain, V-Mart Retail Ltd. According to Amit Gupta, HeadRetail Supply Chain, Future Group, complexities in retail supply chain are more or less the same as any other industry managing huge SKUs and large transactions on a regular basis be it from vendor to DC or vendor to store, for whichever place the supply chain is set out. Future Group is quite clear on time-to-market and inventory management as those are the key cornerstones of decision making.

“We should be able to connect to the shelf in the best possible time while keeping overall inventory in check. We adopt multiple strategies for different lines of businesses. For example, in fashion merchandising, we have single warehouse strategy while for food, we have multiple warehouses, much closer to consumption centres. Transport efficiency is also achieved,” he adds.

For Chinnabhandar, the biggest challenge with the omni retail supply chain is to handle the higher number of return merchandise as refused/ rejected/returned by the customers. Noquestions return policy by the retailers has become a norm now. Hence the retailers have to quickly get the merchandise back from the customer and make it either saleable again or salvage whatever best is left with? This activity is also putting lot of pressure as the entire activity has to be treated as an inevitable evil of the business and dealt with.

Elaborating on this, Shamsher Dewan, Sector Head - Corporate Ratings, ICRA, says, “In the retail industry, the presence of multiple SKUs with variable demand is one of the key challenges to matching

Retailers continue to invest in their physical stores and enable their sales associates with the right technology tools to serve as business development personnel providing the visibility and actionable insight into shoppers, inventory and other valued assets that help elevate the customer experience and strengthen operations.

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COVER STORY the demand with the supply. In addition to the nuances of managing this, the inefficiencies in the Indian transportation network also pose its own set of challenges in matching supply with demand in a timely manner.

Visibility in the time required to move a consignment from one location to another is usually limited, on account of factors like waiting time at toll booths, inter-state check posts, tax booths, entry restrictions in major cities, bad condition of roads etc.”

RIDING OVER ROUGH TIDES While challenges are abound, leading companies are taking many unique initiatives to tide through challenging scenarios. As Chinnabhandar adds, “We are in a great position to offer a holistic solution to the omni-customer.

Customer can choose to buy apparel, FW, accessories… etc., from brick & mortar stores, online, kiosks, tabs, click & collect, COD, door delivery options seamlessly. We are able to offer the entire merchandise across by using a common-single-inventory-dashboard through which customers can order any item from anywhere in the country!

Even if a customer is browsing at the B&M store and wants to order an item which is available from other stores or on line, they will be ably assisted through for this sale. All of these orders get serviced by the nearest location (Fulfillment center) with fastest delivery schedules. Customers can choose to order a click & collect at 220 stores across the country on a given time slot.

Similarly, customers may also choose to return the merchandise physically to these stores which is highly convenient for returns or exchange. Overall the Omni retail is being embraced by every function to ensure an absolute customer delight!”

Talking about V Mart’s offerings, Muthukumaran, says, “We focus on each part of the value chain right from the vendor (and further on) till the customer, and see how they can be further optimized by having technology and process interventions. Also having a pro-active approach and ensuring that there is focus on reducing the variability between plan and actuals helps a lot. Increasing efficiency with technology and improving productivity with automations, help to take more

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presentation, visual management, digital payment options and fulfillment technology-tools are also under rollout,” Chinnabhandar adds.

Agrees Muthukumaran, “Since we believe that our supply chain is unique, and we are taking an unchartered path, we implement the ‘best of breed’ technologies, which would meet our requirements rather than take a complete suite of applications. We further integrate them to meet our requirements. We have an Oracle based ERP solution and are in the process of implementing a merchandise planning solution, which would get integrated to the home-grown allocation tool. We have implemented and streamlined the best-in-class retail WMS solution and to top it have started adopting n off the

out of the current eco system. Building systems, processes and infrastructure which take into account the future growth plans and do course correction wherever required help in keeping the operations commensurate with the growth requirements.”

TECHNOLOGY RULES Forward thinking merchants are investing in technology solutions — from radio frequency identification tags that boost inventory accuracy to sensors that beam consumers personalized offers — to overhaul merchants upended by digital disruption, according to Zebra’s 2017 Global Retail Vision Study. Indeed, the technology revolution that continues to unfurl is changing the shopping expectations of shoppers young and old. And consumers, who have grown accustomed to the convenience, speed and personalization of online shopping (think product recommendation engines), are now demanding the same of their in-store journeys, and as they shop both bricks and clicks.

Out-of-stock inventory at a retailer will quickly send Millennials — who’ve come of age amid an endless aisle of merchandise online — running to another brand. And inventory holes are a recipe for eroding shopper loyalty across demographic groups.

On the criticality of opting for the right IT solutions, Gupta highlights that managing single warehouse strategy for such a large country can only be possible through adoption of technology & automation. “We have the capability of managing a few million garments a year through the Nagpur facility.

It’s not only garments, we have our own upholstery brand which is being operated out of Nagpur warehouse, which have slower inventory turns. We are able to manage average connectivity of 4-5 days owing to technology adoption and it gives us huge advantage in terms of inventory optimization. We don’t have the challenge of inventory lying in the North vis-à-vis where it’s required the most.”

Chinnabhandar adds, “Right from sourcing activities, all the way to the store shelves we use a host of technology and tools. We are also updating our technology tool continuously to be at par with the market needs. Some examples of

Srinivasan Muthukumaran, VP – Planning & Supply Chain, V-Mart Retail Ltd

Omni-channel supply chain requires real-time, channelagnostic visibility of inventory across the supply chain and a single view for customers.

Currently we are designing the strategy and the operations of the same and we should see action around this in this year. technology reside around enterprise management (ERP), warehouse management, supplier management, distribution management, planning, labor, slotting and various business intelligence tools.”

Warehouse automation and integrated business planning are the main focus areas for Landmark. “We have been building highly automated warehouses, which can deliver 3X to 5X during peak seasons. We have also been training our staff to adapt to such technology driven productivitybased operations to complement the automated workplaces. Integrated business planning suite would help us plan better, source quickly and reach our customers quickly and safely. As India being such a diverse country with competing trends and tastes, it’s very important for apparel retailers to remain ‘in touch’ with customer needs. Series of design, product development, product

Dr. Anil Chinnabhandar, Senior Vice President – Planning & Supply Chain Management, Landmark Group India

Supply chain has become an integral part of the growth strategy for us. Planning & Supply chain activities and considerations are even part of the business strategy discussions now. Supply chain ability to fulfill customer orders across the country within the Omni retail environment, has become critical, more than ever before.

We have certainly recognized and elevated the supply chain function in our growth journey.

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shelf retails specific BI platform. Though the architecture is complex, it gives us the flexibility to get the solutions to meet our needs rather than the market needs.”

According to Nair, lot of technological interventions have been taking place at Shoppers Stop, which would aid them in attaining their vision of being a truly omni-channel company. For the company, digital evolution relates to the application of digital technologies across three main functions: Customer Experience and service (both online and offline), Merchandise and Supply Chain Management and Customer Analytics.

“We have made significant investments in multiple technologies such as Warehouse Management System(WMS), Order Management System, CRM, Master Data Management, etc., to enable single view of the customers.

This will allow us to provide our customers with a contextual, targeted, personalized and integrated shopping experience. With warehouses in Mumbai, Bangalore, Kolkata, and Delhi, we wanted to build certain capabilities for the digital future. We had a powerful warehousing solution that met the demands of the varied distribution environment in which we operate. But we wanted an integrated, optimized and feature-rich WMS to help achieve our omnichannel vision. So, we deployed the new WMS solution in January 2017. The project has reduced warehouse operating costs, 24x7 warehousing operations have reduced the store replenishment cycle time drastically, systemized put-away has ensured a 30% increase in order picking accuracy while also leading to an overall inventory accuracy.”

Adding further, he says, “We also implemented a Master Data Management solution. The procurement process will gather data and digital content from Shoppers Stop’s vendors through a standardized process; merchandising will be able to quickly grow the portfolio of private and exclusive brands with rich content for every product feature. Between the Warehouse Management System, the Order Management System, Master Data Management, and Customer Relationship Management – there are multiple data points and data flows that need to be streamlined

and unified across the channel. An Enterprise Service Bus was needed to process this data swiftly and accurately across channels. In order to address this requirement, we are adopting Enterprise Service Bus. We have last 2 decades’ data with us as far as demand planning is concerned. We exactly know customers’ requirements based on the past data. We also can calculate like-tolike growth for each store.”

3PLs DRIVING GROWTH This journey would be incomplete if 3PLs aren’t taking into consideration.

Says Muthukumaran, “Currently, 3PL plays a major role in our warehouse operations and outbound logistics.

Our expectation from 3PL partners is to ensure that they retain skilled manpower and maintain overall turnaround time in warehouse fulfillment operations. We expect the 3PL logistics partners to commit on meeting the agreed delivery timelines and cost, so that store serviceability is maintained.” For Landmark Group, 3PLs play an important role in their business. “They offer an integral extension of services arm for us across the country. Both warehousing and distribution activities are dependent on the capabilities of these 3PL service partners across 8 warehouses and 250 stores. We grow together, and the least expectation is that they partner with us on this journey of building highly capable and productive operations. It’s about building capacity, competency and collaborative logistics capabilities in the country,” informs Chinnabhandar.

Dewan highlights that to have a successful e-commerce platform, it is important for the retailers to ensure that customers receive goods in the shortest possible time and the cost of shipment is low or for free. To do this, the retailers can outsource the supply chain to 3PLs who will manage all aspects including inventory management at warehousing and transport. 3PLs have established relationship in the logistics sector and have expertise in managing different supply chain functions.

According to Gupta, retail is about connectivity and inventory management.

Once you manage both well, you have won half the battle. Timely connectivity and being involved in the business objective are two key parameters based on which a 3PL is selected by any

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COVER STORY retailer. Having the infrastructure & resources aligned to match the future requirements will what set them apart from the rest.

INNOVATION EXPANSE To win over customers, companies have been taking various innovative measures. In line with this, Chinnabhandar offers a sneak peek into their unique endeavors… “We have been able to scale up our infrastructure at the backend. All our fulfillment centers are equipped with smart gadgets, sorting systems, stricter quality control and accurate order processing mechanisms.

We have deployed tech tools right across the value chain. Suppliers are mandated to use vendor portals while processing the orders and to scan & supply quality assured merchandise.

Smart cross-docking, usage of PutTo-Light sortation systems to ‘prebuild’ ‘store-ready’ merchandise gives higher efficiencies. We deploy multiple strategies in picking, packing and shipping to ensure timely supplies for both season launches as well as Replenishments. Custom made delivery apps ensure timely deliveries with minimal errors or conflicts between warehouses and retail outlets. Omni orders are serviced by dedicated team of fulfillment centers and delivery partners.

Entire backend teams are trained regularly and encouraged to practice doing ‘first-time-right’ as the mantra across the backend.”

For V-Mart, ‘Every day’ innovation is the key – how do we manage to keep the entrepreneurial spirit alive in the team at the same time have control over processes and systems, is the key to nurture that spirit. “If we talk about some of the innovations in supply chain, I would highlight the unique sorting mechanism and merchandise returns management through optimal mix of technology and insights. This has been unique and new to the industry and it reduces the processing cost, helps in processing faster. Our home-grown allocation tool has been designed to be reactive and responsive to customer demand at stores. This has been built on a flexible platform so that any logics or algorithms based on the change in business need, can be relatively easily incorporated,” Muthukumaran adds.

The future winners are those organizations that have a supply chain

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that can cater to specific customer needs and are very agile to the changes that happen in the market. This is especially true for players like V-Mart who are in the fashion segment supply chain needs. “We have been fast catching the trends in supply chain innovations and would implement them at some point of time,” Muthukumaran asserts. Micro-segmentation is the key to success, aligning the microsegmentation with supply chain in terms of planning and buying and pass on the value to the customer.

Embedding of AI in mainstream supply chain activities is another area where retail companies must focus to lead the race.

For the retail pioneer Future Group, logistics is what forms the backbone to the entire science of retailing. “We have always been frontrunners when ensuring the strength and consistency of our supply chain. We have been the pioneers in adopting barcoding as a key component in keeping our supply chain efficient. We recently launched a distribution center in Nagpur which is the largest in the whole of Asia Pacific region, barring China. We boast India’s first automated high-speed cross-belt sortation technology, which has an incredible sorting productivity of over 36 crore pieces per annum. This sorting capacity has an accuracy of over 99%.

In fact, our newly-installed sortation system comprises a cross belt tray sorter, enabled with approximately 2.5 km of conveyor system. This sortation system will make the delivery of the stock to the store a faster process, benefitting all the stakeholders involved in the process,” highlights Biyani.

USPs DEFINING RETAIL FRONTRUNNERS Knowing the pulse of the market by having a thorough understanding of our customers and their needs has been the guiding force behind all Future Group’s endeavors. “The ability and agility to blend the ‘traditional’ with the ‘new’ has lent us the resilience to evolve with the changing retail landscape. This is a critical parameter for building a brand that wants to be associated with excellence. Furthermore, our robust backbone of distribution channels and our solid consistency in supply chain management that banks on the latest technology allows us to envision a

Shamsher Dewan, Sector Head - Corporate Ratings, ICRA

E-commerce is growing at a significant pace and as a result most retailers are launching their e-commerce website/ app. This has led to increased use of technology in the retail sector, which aids in real time track and trace using GPS, IoT, telematics and sensors.

To provide customized service to its customers, there will be investments in machine learning.

To have an efficient inventory management, investment would be required in sorting technology and ERP systems. double or even triple business growth by 2020-2021. In a nutshell, we aspire to be the ‘clothier of the nation’, in times to come, so that’s the level of growth we are eyeing,” avows Biyani.

For Landmark, People, Process and Customer focus are the USPs. “Our staff who has been working with us for over 5 years has been carefully trained and nurtured to excel in warehousing and distribution activities. Technology enabled processes have ensured discipline and consistency in delivery.

The entire backend understands that without customer focus and first time right delivery, the sale does not happen. Without quality the sale does not get completed; hence the entire profitability and sustainability depends

on this customer focus right across the chain. Similar focus is also seen with the supplier network, wherein there is an absolute transparent technology driven process which brings suppliers and the staff together with minimal or zero confusion about deliverables,” says Chinnabhandar.

New store business forms a crucial part of V-Mart’s growth strategy and its USP has been ‘Cluster-based’ keeping in mind the logistics required for delivering the same. “We ensure that we go region by region while opening stores so as to have unique load to each of stores/ region, hence with proper route network optimization planning and unique mix of own vehicles and transporters, we dispatch merchandise keeping the delivery costs under control,” informs Muthukumaran.

DEVELOPING A SEAMLESS NETWORK An open ended, collaborative, mutual learning and prospering partnerships between various stakeholders is the need of the hour. India is at the brink of supply chain and logistical opportunity explosion. The country will see the creation of the largest pool of employment; helpers to data scientists; drivers to analysts; warehouse staff to CEOs. The industry as a whole has the responsibility to build talent pool across the spectrum; build efficient processes minimizing waste and non-value-added task; adapt technology to excel in its day to day operations and create a homogenous supply chain community, which is learning and prospering continuously. Another important

Amit Gupta, Head- Retail Supply Chain, Future Group

Retail is about connectivity and inventory management. Once you manage both well, you have won half the battle. Timely connectivity and being involved in the business objective are two key parameters based on which a 3PL is selected by any retailer.

Having the infrastructure & resources aligned to match the future requirements will what set them apart from the rest.

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consideration for the seamless supply chain network is also to build ‘Environmentally friendly’ network.

Maintaining the carbon footprint and energy efficient operations has become not only a necessity but has also become a point of survival of the community and the planet itself.

Therefore, the entire supply chain community needs to adapt the ‘green supply chain’ in a big way. There is a need for a multi-modal transport framework to be in place, so there is a seamless integration between multiple transport systems to ensure better utilization of available infrastructure and optimal turnaround in a costeffective way. The retailers can improve their supply chain by investing in the technologies mentioned earlier or outsource it to 3PLs. Outsourcing will help the company focus on its core strengths and save its investments in warehouses, transportation, etc.

As Nair has precisely explains, “For change to happen, the entire industry needs to unite. Push needs to happen from the industry’s side. Support is needed from all spheres to attain a holistic development. We have been taking lot of first-time initiatives in the supply chain domain. If there is support from the service providers, distributors and the retailing fraternity at large, the magnitude of impact would be much higher. We need a common platform where all of us can discuss and deliberate upon the challenges faced and come to a consensus to drive the growth ahead. Until and unless that happens, it would be extremely challenging to change the dynamics of the industry. There are finer nuances that need to be ironed out. Supply chain has to be play an enabling role because the expectations are what’s sold today need to get replenished tomorrow. If that’s the kind of commitment we are desiring, we need to have systems & processes and a common goal in mind to achieve the same. For me, this is one of the biggest challenges leave aside the government side bottlenecks be it infrastructure or anything. We as an industry first need to play our part.”

GST & RETAIL GST had mixed impact on the retail business. Customers used the retail channels initially to ‘liquidate’ the cash on hand. “Modern retail as such was affected least as our customers also had

access to the digital money all along.

We have been able to pass on the lower prices to our customers, with whatever savings that we could make as a result of GST. Customers are smart and well informed; they would immediately recognize the ‘good retailer’ who has been truthful with any such major shift in the systems. GST has further bonded our loyal customers as a result of these lower MRP benefits,” believes Chinnabhandar.

Gupta asserts that there’s no denying the fact that the GST was a very disruptive move as a whole, but Future Group was able to manage it pretty well, owing to its preparedness towards the slated changes in advance.

Seconds Muthukumaran, “From a GST rollout stand point, we did not face much issues as we were well prepared.

When it came to documentations and other credits, there were some initial hiccups which have got streamlined.

From a customer stand point in value retailing, there was not much of an impact, as our contribution in MRPs greater than Rs1000 is less.”

While Dewan avows, “On the logistics front, GST has helped retail companies improve their supply chain network, thereby improving its efficiencies. As opposed to the earlier practice of maintaining multiple warehouses around a single city premise, with purposes such as avoiding the payment of octroi charges, the retail companies have been able to consolidate these warehouses to a single location, thereby resulting in significant costs savings. There has also been material reduction in transportation time post the implementation of GST, on account of the abolition of waiting time at inter-state check posts, octroi booths etc., and this has also favorably impacted the industry.”

TOWARDS A HOLISTIC PLAY All the retailers in unison believe that the omni-channel wave is here to stay.

Omni retail will continue to grow strong given the benefits to the customer and the connect it can create between the brand and the customer. “We have been actively progressing with this omni-journey in a methodical manner.

Supply chain has already integrated the variations of the customer retail paths and offering a unified customer

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COVER STORY

experience. Our customers can see us anywhere, touch us anywhere, feel (the need) us anywhere, order online, kiosk, digital or at stores; we will be able to deliver to them across stores, door delivery, through click and collect.

We also have facilitated no-obligation return to stores option for their utmost convenience. An integrated supply chain team manages the entire backend for the omni orders from the existing warehouses across the country,” shares Chinnabhandar.

Agrees Muthukumaran, “We envision a smart supply chain for the future.

Our focus will be on building a more agile, aligned & adaptable and customer centric supply chain, which is futuristic and capable of meeting the goals of our organization. We are trying to expand our fulfillment from single to multilevel warehousing model and reduce the overall cost alighted to it. We plan to optimize our inventory so as to maximize sales and reduce the working capital involved.”

Today sky is the limit in retail, but it just can’t be one person or one company driving the whole revolution, it must be holistic. It’s time for manufacturers and retailers to sit together, do a milk run. The goods can come in containers

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for 4-5 retailers so that the cost can be shared and there can be a better use of vehicle instead of four different vehicles plying on roads. Similarly, when it comes to reverse logistics, there should be a mechanism where no empty vehicles move on the road. In fact, the quotations can also be negotiated well with the transporter as going alone, he can quote any random amount, but if five people go together, he might give a better deal, asserts Nair.

In the words of Rakesh Biyani, today, India is brimming with the energy of the youth that is pumping in fresh consumption. “The country is witnessing a massive increase in buying, and we are excited to be an integral part of this dynamic environment.

This current scenario carries immense opportunities for us to grow as a nation and a business house. Our primary focus, in the coming times, will be on carrying our fashion business to the next level. One of our key focuses will be on acing our efficiency levels through our recently-installed state-of-the-art supply chain system and the best use of technology and data, to power our production and distribution. We are now set to reap the benefits of scale, experience and power of brands in

creating value for all our stakeholders.”

With consumers increasingly defining the supply chain delivery model, the next few years will be test for retailers as they seek to differentiate themselves from the rest through their innovative approach to sourcing, replenishment and distribution. By 2020, leading retailers will have done this by winning on ‘customer experience’ – excelling at responding to consumers who are demanding more specialized products to fit their changing lifestyles, providing greater product availability in a more cost-effective manner and offering the best service, pricing & overall experience. Furthermore, the leading retailers will shift focus away from ‘on-shelf availability’ to ‘ondemand availability’, with the aim of providing 100% product availability to fulfil customer orders for delivery in various formats anytime and anywhere, using low-cost approach for distribution. Gupta concludes, “There’s no stopping the retail consumption story for India and I am extremely poised about the future!”

INTERVIEW

BE PREPARED FOR THE UNKNOWN “The most important skill that new age logistics managers need to possess today is creating disruption and accepting the change management of a disruption. Implementing a change is equally a key imperative, one has to be able to appreciate the change for every aspect of the change to implement the change more effectively. I feel the industry is moving out of specialists and moving towards generalists,” asserts Umesh Madhyan, Associate Vice President Logistics, Hindustan Coca-Cola Beverages Pvt Ltd, who is managing by far one of the most complex and biggest warehouses in the country of the FMCG giant.

Excerpts…

Logistics has received renewed thrust from the government by giving it infrastructure status.

This was long overdue. What does it spell for the logistics industry as a whole?

Logistics is the most disruptive industry as of now, not only in India but also across the world. In addition, the icing on the cake is the shift from the government driving changes in our landscape like GST. We all logisticians believe that the true benefits of GST are in bringing flexibility in transportation through eased out regulations and infrastructural development. This change will also help our sector get competitive rates as rising logistics costs due to commodities & various category proliferation complications impact global competitiveness of exporters. Therefore, it makes a lot of sense to focus in this area through a dedicated logistics industry. Infrastructure development and specifically placing an impetus on dedicated freight corridors would go a long way in boosting economic growth.

The average per day running of trucks in countries like Australia & the US is 450 Kms per day to 600 Kms per day. It is a similar number in the European countries too. This average, in India, is not more than 200 Kms per day. It is clear that there is a lot of catching up we need to do here. Hence, all the efforts in this area be it road, rail or sea will always be appreciated and support logistics. While, we have

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not been able to see great economic benefit of switching from road to rail yet, we hope the ‘logistics efficiency enhancement program’ initiated by the ministry of road transport will help.

How has been the scenario post GST and how can logistics players leverage the opportunities?

GST has made logistics scientific – now we can design our warehousing footprint basis demand and supply

points. Organizations have started working on the footprint since long (just like GST was supposed to GoLive since long) & finally the execution has started. We started work on the footprint long back in 2014-15. Today, we have tried to leverage the GST benefit by changing source of existing customers from one state to another.

GST has not rationalized warehouses, it has changed the warehousing footprint completely. As a result, it is expected: 3PL organizations

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INTERVIEW to become more capable of handling large warehouses; To use technology in making processes more productive; Transporters to ease out movement of trucks from one state to another (Essentially, all trucks in the market should be with All India Permit post GST because the prime idea of GST logistically is to make One India).

You have been involved in managing ‘one of the largest warehouses in India’. How do you manage the complexities that come your way?

Yes, we are working on the most complex and best warehouse in the country so far. It is a real leverage of GST with the most optimized Single Touch Logistics. This warehouse in Gujarat is next door to the plant and will serve the entire state and beyond. It will have one of the highest throughput along with the full complexity of servicing the customer direct. In today’s supply chain, where proliferation of SKUs is only increasing, the solutions need to manage scale as well as be nimble.

I can write a thesis on the complexities and challenges that has come with implementing this solution, which is live from April 2018. For now, the key challenge one faces during implementing such changes is accepting the change itself. Changes of such scale are interpreted differently by different parts of the organization. Even if one starts raising alerts right from the beginning, there will be surprised reactions exactly when the rubber hits the road.

What are the complexities associated with the industry you are operating in?

Obviously, we are in a large-scale industry and an organization. So, all the complexities in a traditional FMCG would multiply here with the scale be it last mile deliveries, metro servicing complexity due to no entry restrictions, increasing catalogue size, truck turnaround times and many more. One specific complexity we have as compared to most of the other organizations is reverse logistics – probably a reason why we cannot benchmark our freight cost levels across the industry. Therefore, we size our transport for forward and reverse

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INTERVIEW movements and sizing of transport will of course consider one more variable of seasonality.

One bigger complexity is the unorganized transport industry… there are about 720 dimensions of trucks prevailing in our country. How could one design the entire logistics utilization in such a variable market condition? Our regulations provide outer limits of every dimension of trucks but there are no definitive limits. So, every trucker goes for a size as per his limited wisdom.

This is a big deterrent to move to palletized transportation as against than case loading. The average time taken to load a manual 9 metric ton is 90 minutes and the same could come down to 20 minutes if loaded by pallets.

Having witnessed supply chain from close quarters for almost two decades, what transformations have you seen during the journey?

Supply chain has been ever evolving and it is still nail biting to see the disruption under way. Technology has impacted every process – from taking an order to closing a trip, from ordering a raw material to posting a production, from calling a truck to paying the freight.

Who would have imagined in 2001 that there could be a science in deciding the number of warehouses in a geography – all thought that just because the trade is not allowed across the state borders, we have warehouses in almost every state. Today, we have a destination, or

a picture of success known which was never evident earlier. Just penning down few thoughts: ◊ All Inbound Material get automatically replenished to the production line without placing an order ◊ Smaller lead time cycles in product innovation and design through technologies like 3-D printing and more ◊ Auto-connected manufacturing lines to large safe & automatic storage and retrieval system warehouses enabling Single Touch Footprint ◊ Automated Docks for bulk dispatches and sorters, mixed pallet makers for detail picks and order preparation ◊ eTendering of transport from the open but visible truck market ◊ Single Piece Flow from truck reporting to gate out inside the yard ◊ Track & Trace enabling auto closure of trips, auto payment of freight, auto management of ePOD ◊ Auto-Replenishment from distributors to the market, warehouses to the distributors, plants to the warehouses, inbound material to the plants, inbound material from farm to the inbound manufacturer.

The best part is that the government is receptive, progressive and thinking of changes in the status quo.

You have been involved in managing supply chains of MNC giants such as L’Oreal, Heinz and now Coca Cola. What are

One bigger complexity is the unorganized transport industry… there are about 720 dimensions of trucks prevailing in our country. How could one design the entire logistics utilization in such a variable market condition? Our regulations provide outer limits of every dimension of trucks but there are no definitive limits. So, every trucker goes for a size as per his limited wisdom. This is a big deterrent to move to palletized loading as against case loading. The average time taken to load a manual 9 metric ton is 90 minutes and the same could come down to 20 minutes if loaded by pallets. the crucial learnings you have gained?

As my Boss says, “I'm responsible for one of the Largest Logistics in India.”

No one handles the scale and the complexity we do at Hindustan CocaCola. Every organization has its own complexity from managing a large catalogue to infant nutrition logistics to a large-scale reverse logistics. I have been through almost all the functions of supply chain in the last 2 decades and I have always learned more when I have moved from one function to another.

It is like unfolding a new aspect of the same subject from the point of view of another stakeholder & it keeps on making you better and better.

What are the major supply chain innovations you have brought?

Loading a 1000 Cases Truck from an automated dock in 3 minutes by press of a button: We have designed and implemented a solution that provides productivity beyond Palletized Transportation. This could be the ultimate destination of how productive a dock could be.

IoT enabled Dock-Scheduling & Yard Management: We have used upcoming technologies like IoT to schedule docks with BLE beacons communicating to the gate – enforcing a single piece flow in a yard is the best productivity one could get.

Automated Storage & Retrieval System Warehousing: One of the best warehouses in the country probably designed in-house and being implemented in Ahmedabad not only

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manages bulk throughput, it also provides nimbleness for customer deliveries through mixed pallet making.

Mixed Pallet Making through Layer Pick: Layer Pickers are attachments on forklifts that provide layer picking productively to support customer orders palletization.

GPS Control Tower based escalations: GPS alone cannot improve turnaround of vehicles, the benefit is in linking all the information to an actionable dashboard which can be used as a control tower for expediting deliveries. ePOD based freight processing design: With so many increasing variables in an unorganized transport industry, ePOD is the only solution that can help capture every information of the trip, connect it to the ERP shipment and wirelessly transmit for freight processing.

Docking Solutions for Palletized Loading – EOT (Extended Overhead Trolley): There are no side open trucks or flat platforms available in our country. Loading a truck from the top was very new when we thought of it.

This is true transportation gaming tool in which you use a remote to move the trolley to load the pallets from top of the truck.

change management of a disruption.

Talking about change, implementing a change is equally a key imperative – one has to be able to appreciate the change for every aspect of the change to implement the change more effectively. I feel the industry is moving out of specialists and moving towards generalists. Technology is eventually going to make most part of every function automated. What would become more important is to have the chain connected and keep it as leaner as possible. One has to be updated of what is in the store to remain more relevant.

For example, most of the professionals today are reluctant to technology due to a pre-conceived notion of high cost.

I have a dock in Siliguri, which loads a heavy sized truck in 3 minutes – and it also pays back the cost of it in less than 2 years.

Umesh Madhyan is supply chain expert in Multinational FMCG businesses with more than 17+ years of experience including 2 years in Regional Sales Administration & Logistics; 3 years in International Procurement; 8 years in National Physical Distribution & 2 years in re-engineering supply chain processes for SAP implementation with 5000+ SKUs; 2 years in National Demand Planning. He has been formulating and implementing key SC strategies with an innovative & competitive edge since 2013 for Coca-Cola.

What are the key skill sets that new age logistics players must possess in order to enhance overall operational efficiencies?

The most important skill needed is creating disruption and accepting the

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In order to sustain in the prevailing global economic conditions, a Corporate Procurement Officer’s mantra needs to be ‘Think Global, Act Local; Think Strategically, Act Tactically’, writes Milind Tailor, Director – Procurement, Asia Pacific & Supply Chain, India at Diebold Nixdorf. In this thought provoking piece, he shares with us the five big procurement trends that are going to become tomorrow’s tradition. Read on…

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n today's economic environment, doing what you've always done— even if you do it very well—is no longer acceptable and certainly does not assure future success. Under pressure to contain costs and produce results despite challenging circumstances, procurement professionals must transform rather than simply improve current operations. That means adopting the philosophies, methods,

and processes that will make the organization future ready. The top Procurement functions will not simply focus on making incremental improvements on what they do today.

Instead, they will proactively make fundamental changes in the way they operate including how they harness digital technology, the ways they manage & use data, and how they interact across the end-to-end value

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Improved Perception about Procurement 26 CELERITY July - August 2018

chain and with business partners.

When we think about trends – in procurement or in general – we probably think about things that come in and go out of style very quickly.

However, some trends have the staying power and become the “Business As Usual (BAU)” of the future. Here are some of the current procurement trends that are likely to evolve into BAU and traditions of the future:

As we talk about the future trends, it’s certainly very tempting to talk about blockchain, artificial intelligence, robotics process automation, etc., and while I will touch upon these as well but one of the things that I really see the maximum change in is the perception about procurement practitioners. The conventional stereotype of “pencil pushers” is becoming less relevant as organizations begin to rely more heavily on procurement to create value. We were often accused of being obstructive, out of touch and in conflict with the business functions. “Gatekeeper” is one word that summarizes the perception of procurement. However, that is changing and changing at a rapid pace. Today, procurement is moving much beyond just “buying stuff” by supporting product development, market research, risk management and problem solving. The transition from “cost savings enabler” to “trusted business partner” is in the making for majority of the corporations and the next level would be of “supply chain innovator”. To reach this stage, we would need to establish a vision for procurement transformation and require outcomebased trust development with the stakeholders.

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Value Creation

Procurement will be expected to deliver solutions to business and implement new innovations that align with the organizations’ strategic objectives and deliver business value. Value is in the eyes of the beholder! While for most, the value that procurement delivers is defined by the ability to generate cost savings or mitigate cost increases, they are not the only ways of generating value. Value is a multidimensional concept that provides procurement professional with a wide range of tools towards contribution to a firm’s goals & objectives. The challenge for procurement organizations however, is to expand the scope of responsibility to create more opportunities for adding value.

Value is created when sourcing professional span traditional functional boundaries, functional silos are broken and end to end view is taken in to consideration. The delivery of value is one of the most important goals that we must focus on to be relevant in tomorrow’s world.

Today we are more connected than ever. The developments in digital technologies have completely changed our lives – in the old days, we’d have the morning paper delivered to our doorsteps and read it on the way to work or while sipping the morning cuppa. Today, the news stories are automatically delivered to our mobile devices, and we scan them while enjoying the beverage that was ready and waiting for us at the local coffee shop after we ordered it via mobile app. Technology has enabled us to gather a lot of data and convert it into usable information, which can enable us to learn about the future & shape it to our advantage. This is happening in Procurement as well & fundamentally transforming the function. We already see that with IoT & Big Data, procurement is becoming smarter & more predictive than ever, yet to me this just the beginning of the transformation. As analytics gets more dynamic, procurement teams will have the data they need to make better decisions than ever before. This will mean that procurement finds itself becoming increasingly involved in the development, rather than merely the execution, of business strategy.

Enabled with data, future procurement teams will be much closer to the strategic leadership of the business. Procurement can be expected to play an active role in the financial thinking & analysis. Analytics will give the organizations access to valuable data about their supplier’s business as well as customer priorities and align their supply chains to customer priorities. Several business models built around procurement have met with grand success – Amazon & Flipkart are classic examples who have changed the face of retail by managing a complex network of supplier thru use of technology. In both cases, procurement shaped the strategy and lead the change. In future, procurement teams will be moving decisively from “serving” a business to being a truly integrated part of its management and long-term strategy. Data will be the new Global Currency & the key will be to unlock its true value.

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Procurement Trends of Today, Goals of Tomorrow

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Predictive Procurement SystemsTo get real!

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Global Shared Services

FOCUS Today, strategic spend is managed by Global Categories or on regional level with strategic &/or preferred suppliers. However, the challenge is that the Tail spend and countries with smaller spend are not managed or partially managed leading to missed savings and also compliance risk.

Intelligent & innovative organization models are required to manage this untapped spend and/or small areas as well as drive the compliance.

Global Shared Services Models, either outsourced or captive, would be used extensively to expand the reach of procurement organization in the future. Organizations could have one central global shared services center for all countries, while providing their own services from human resource to finance and accounting to marketing to travel management.

It’s not that shared services model does not exist today, but its adoption is very fragmented and only a few transactional pieces of procurement end up folding into finance shared services model (accounts payable).

As more organizations realize the strategic nature of procurement, an integrated vision for shared services in procurement will get into prominence with more focus on adding value and will encompass numerous activities like a. Sourcing Support – Specialized sourcing analyst can support category manager with data analysis, supplier profiling, e-sourcing requests, RFP analysis and preparations for fact-based negotiations. b. Spot Buys – Handle one off purchases, ensuring proper follow up for on time delivery. c. Master Data Maintenance & Compliance – Maintain the master data in the ERP, ensure compliance to the data integrity, requisition to pay and reporting. d. Contracts Services – Maintain all contracts centrally and also monitoring contract related follow-up activities.

Enabled with data, future procurement teams will be much closer to the strategic leadership of the business. Procurement can be expected to play an active role in the financial thinking & analysis.

Analytics will give the organizations access to valuable data about their supplier’s business as well as customer priorities and align their supply chains to customer priorities.

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In future, procurement teams will be moving decisively from “serving” a business to being a truly integrated part of its management and long-term strategy. Data will be the new Global Currency & the key will be to unlock its true value.

The world will be moving from Knowledge Based Society to a Human Economy, where abilities like collaboration, communication, creativity & flexibility are in demand. Innovation, authenticity & services are the driving force of the times. The classical career ladder to CEO would start in procurement and require CPO experience. This is due to the fact that the CPO would possess the complete supply chain “data treasury,” the necessary IT and risk assessment skills and comprehensive budget management expertise. Data analysis, IT competence, risk and budget management would be the four future-ready proficiencies, making CPOs the only logical choice for the CEO position.

Any business function is only as good as its people — and particularly its leaders. But the new generation of procurement leaders will need new skills. And since the leaders of tomorrow are the recruits of today, procurement teams need to think carefully about the future as they make recruitment decisions. Future procurement leaders need to be comfortable looking at complex categories, information on suppliers, and third-party data on supply chains, suppliers and markets. Beyond the traditional skills in category expertise and negotiation, the ability to collaborate and build lasting relationships with value chain stakeholders will be central.

Procurement will employ people from variety of backgrounds – statisticians, physicists, social scientists and financial risk specialists, to name a few. Further, the procurement professionals will be uncompromising on issues of sustainability and ethical practices. They will operate on the mindset of reuse rather than waste. Therefore, the future procurement teams should be ready to think of themselves as business, rather than simply function leaders.

We all believe that our businesses & issues are very unique. However, over my experience working in various industries, I find that there are more common issues. Most companies want to achieve similar goals in procurement – smarter, faster & more profitable. We all can better ourselves and it will be likely to happen if we improve 1% everyday. If that is the goal every day, 2018 will be your best every year & your organization will be most ready to face the VUCA (volatility, uncertainty, complexity & ambiguity) world.

Remember, you don’t drift to Success…you won’t succeed “by luck”! Commit to taking the next steps!

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Talent Milind Tailor has over 15 years of experience in SCM that spreads out through different industries both in India and international markets. In his present role, he is responsible for end to end SCM for Diebold India managing procurement and logistics operations including warehousing, transportation, import/export, inventory planning and control. In addition, he also responsible for $400Mn spend in Asia Pacific across 11 countries. Milind moved into Diebold from NCR Corporation where he worked as APAC Head for Service Parts Operations & Inventory Control.

He has also worked as Country Logistics Head at Videocon industries responsible for end to end logistics. He started his career in contract manufacturing operations in paint industry.

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INTERVIEW MATERIAL FLOW

THE TIMES ARE A-CHANGIN’ “In FMCG, product moves with high speed. Product should be available at shelf when customer requires it. Stock-out will directly lead to sales loss. It is very critical to maintain service with optimum inventory and in such a scenario, quality, cost and service become the key parameters. Newness, promotions, renovations, weight changes, standardizations, innovations need to be monitored very closely to maintain better availability,” asserts Umesh Joshi, Senior Supply Chain Professional, during an interview…

How has been the supply chain transformation taking place in the country over the years?

Supply chain function was earlier part of either finance or sales, now it is an independent function, which itself reflects its growing importance in the overall business strategy. In most of the organizations, it is reporting directly to MD or CEO. Today customer service and order fulfillment have become prime objective. In lieu to this, most of companies have implemented ERPs, planning system and migrated to collaborative SCM tools. Supply chains are becoming much leaner over the years and is playing a key role in capturing correct demand, design optimized network and executing required production and demand plan.

Supply chains are becoming more agile and efficient based on type of segment they are operating in. As the economy is growing, more innovation is happening in supply chain. It has societal roles in sustaining human life like lot of work is happening in health care, food and cold supply chain. In a nutshell, times have changed from what we were used to seeing decades ago.

What are the weak links and how can we mitigate them?

Any link in supply chain which can reduce the throughput is a weak link.

It may be physical or policy constraint.

Each company needs to study their

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system and debottleneck the constraint.

Weak links need additional buffer to mitigate. Some weak links are incorrect forecast, not having good primary and secondary distribution system. Other types of weak links are supply and price risk. Prices of raw materials get impacted due to disruption in supplies owing to natural diversities, terrorism, political instability, labor and dock strikes, etc.

You have been a part of one of the most complex industries – FMCG. How complex is the scenario?

In 2016, FMCG market was $49 billion and by the year 2020, the figure is estimated to be $104 billion. Typically, in FMCG sector, around 19% revenue is generated by food and beverages, 31% from health care, and 50% comes from household and personal care. In FMCG, product moves with high speed.

Product should be available at shelf when customer requires it. Stock-out will directly lead to sales loss of any FMCG. It is very critical to maintain service with optimum inventory and in such a scenario, quality, cost and service become the key parameters. Newness promotions, renovations, weight changes, standardizations, innovations need to be monitored very closely to maintain better availability.

FMCG supply chain should be the most efficient, typically margins in

FMCG are lower, most of the products do not require high technology. Key element in FMCG is branding and distribution because it works on the simple philosophy, ‘What people watch, listen and buy’. There are approximately 70 lakhs outlets in the country today with modern trade outlets numbering around 4000. Reaching to these many

Post GST implementation, lot of network optimization work is happening for depots and customer mapping. Government fiscal policies play a large role in setting up plant in fiscal zones. Maximum loading needs to be given to fiscal benefit factories. Now-a-days, companies are even focusing on last mile optimization.

outlets is a challenge. Setting up own secondary distribution model is again a big challenge, because still 30-40% of the secondary distribution happens via wholesalers. Getting visibility of sales from these unorganized retails is a big challenge. Companies like HUL, ITC, Britannia, Marico have invested significantly in technology to capture secondary sales. However, capturing tertiary sales can still be a task. In all these circumstances, brand loyalty of customer gets impacted if product is not available on shelf when he desires it and end up buying products of competitors.

Competing with local players is a biggest threat for any large company.

Media exposure also brings lot of complexity as most of us remember as to what happened with Nestle in 2015.

What are the innovative measures brought by you in streamlining supply chain?

Visibility is the key element in supply

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Collaborative SRM

RM/PM suppliers FactoryOwn CP/ POFG

Modern trade

Primary transaction system

Consumer Mother Depot/ Child Depot

Retailer

Secondary transaction system/ Collaboration with retailers

Distributor

chain. We have brought lot of visibility in system from secondary sales to RM/PM supplier. We have done lot of automation in planning and execution system. I was part of SAP APO transition in 2007-2008 in ITC Ltd. I lead Britannia’s SAP APO implementation in 2012-13. Lot of work happened in integrated demand & supply planning.

Initial first 2 months was big challenge and hiccup. All the lines of plan were touched by sales team, latter we published FVA (Forecast Value added) at each step. Best plan was demand planners forecast, post discussion with head sales and marketing, we got full buying from sales and marketing.

Forecasts accuracy became far better than industry average. SAP APO has given ROI much faster. We have improved continuous replenishment system (CRS), started direct dispatch to the customer at many places where full truck load formation happens. Like in ITC, Atta moves directly from mill to the

distributor. To improve the distributors’ return, we have implemented GTM/ Zero days inventory concept in many metros. We have rolled SAP WMS in Britannia in one of most complex warehouses.

How has been the scenario with the GST coming in?

GST implementation is win-win for everyone in long run, initially there were challenging scenarios due to starting hiccups. Most of the companies are bringing benefits of GST to the customer. GST is easing out the distribution and over all cost reduction in supply chain. Most of the companies are saving in distribution cost due to GST. This year most of FMCGs reported double digit growth. As net sale is moving up, cost per kg is coming down and all the companies are passing on the benefits to customers. Tax collection for the government is touching 1lakh crores per month. Long haul trucks

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Inventory is a part of working capital of the company and this is one of the large portions of the cost. By selecting least cost lanes and optimum service levels, holding the inventory at the highest node will reduce the overall inventory. When demand variability and number of products are very high, TOC model is the best for replenishment. If we increase the service frequency to the customers, they can manage with less space, less overheads, better freshness, low damage.

My only message to new age professionals is to see the full picture, connect the dots how supply chain can help to increase sales and reduce cost. Scope of work in supply chain area is increasing, there are wide range of roles available in supply chain now-a-days. One should do one role at least for 3 years for better understanding of the role before jumping on to another role to master the subject. Try to create legacy in any role.

are covering higher distance, transit time has been reduced 10-20% in long haul routes. Most of companies are remapping their depots and customer network. Small depots are merged with larger depots. Today, there is no need to maintain warehouse in every state.

All in all, there is overall benefit of this consolidation. To keep tax evasion under check and better monitor trade, GST Council has decided to launch E-way bill. E-way bill is solution to connect all stakeholders, suppliers, transporters, and recipients. It will bring lot of efficiency in system.

How is technology transforming the supply chain landscape?

What are the new tech tools that are shaping the future?

How can companies achieve supply chain network optimization?

Each company is focusing on cost saving initiatives, most of the companies are running cost efficiency programs. In Optimization, total delivered cost of the product should be minimum. Most of the FMCG companies follow Hub & Spoke model. They run long term capacity planning 3-5 years in advance to see their factory footprint and see how their demand clusters are growing.

They try to utilize the existing capacity by creating more interchangeability in lines and maximum utilization of head room. Distance travelled is the most critical factor for bulky and low margin products.

Most of the companies take help from consultants to start the process, latter move the process to internal team. If any company has more factories, depots, SKUs and customer combinations, number of variables in optimization problem multiplies. This requires algorithms. Large companies run optimzation for quota/ sourcing allocation every month. If there is no addition of new factory, 85-90%

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souring map remains the same. If a new factory is added in the network, this exercise must be done again pre and post stabilization for new plant.

Ideally speaking, every large FMCG must do network optimization for sourcing pattern at least once in a quarter.

Post GST implementation, lot of network optimization work is happening for depots and customer mapping.

Government fiscal policies play a large role in setting up plant in fiscal zones.

Maximum loading needs to be given to fiscal benefit factories. Now-a-days, companies are even focusing on last mile optimization.

Inventory optimization seems to be one of the biggest segments when it comes to supply chain.

How can we achieve this?

Yes, inventory is a part of working capital of the company and this is one of the large portions of the cost. By selecting least cost lanes and optimum service levels, holding the inventory at the highest node will reduce the overall inventory. When demand variability and number of products are very high, TOC model is the best for replenishment. If we increase the service frequency to the customers, they can manage with less space, less overheads, better freshness, low damage. It gives better return to the customers. When you increase the service frequency with smaller lot supply chain cost increases. If as business case better service brings more sales, lean model needs to be implemented.

Inventory policy should be based on service level desired, demand and supply variability.

Multi-echelon inventory model is the best approach to optimize inventory in full network i.e., plants, depots and customers. Biggest opportunity in

FMCG supply chain best practices › Optimize the full network, supplier to customer › Improve the inventory velocity, increase the inventory turns › Have strong S&OP process implemented › Implement lean supply chain practices › Implement pull system for high demand variability SKUs, only push stable demand SKUs › Use technology, implement best CPFR tools for suppliers and customers › Monitor cost and other KPIs on a regular basis › Reduce distance travelled for product, improve vehicle utilization, keep balance between service and cost.

this is to reduce skewed primary and focus more on secondaries. If demand and supply variabilities reduce, you can manage with uniform inventory.

Implantation of pull based CRS (continuous replenishment system) will reduce variability in the system.

Companies like HUL, ITC, Britannia, Marico follow typical replenishment model, while on the other end, GCPL (Godrej Consumer Products Ltd), Pidilite, VIP, Bajaj Electricals, etc., work on the TOC model where you hold maximum inventory at RDCs and replenish as pulled by actual sales.

Technology has brought lot of online data visibility from capturing the demand from market to communicate purchase order to the vendor. Lot of applications are getting implemented in digital space. Digital applications can improve service, cost, agility, and inventory. Tools such as GPS, RFID, EDI are helping companies in a big way.

Companies are moving towards setting up supply chain control towers where decisions can be made quickly based on real time data.

What’s your take on infrastructural bottlenecks and how is the scenario shaping up now?

Poor infrastructure leads to long lead times, more transit damage and more inventory in the system. Many products with low shelf life are unable to reach to market on time due to poor infrastructure. Over the last 2-3 years, the government is putting lot of emphasis on infrastructure. Post GST, lot of 3PLs are coming with better infrastructure for warehousing, which will lead to better efficiency in supply chain.

What are the peculiarities you find in today’s young talent and professionals?

Today’s young talent is much smart, tech savvy and acquainted with latest tools. Operations and supply chain is taught in all B-schools and more professional talent is available these days. These days knowledge and information is available on the finger tips. Today’s professionals have better

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opportunities and platform to show their potential and talent.

My only message to new age professionals is to see the full picture, connect the dots how supply chain can help to increase sales and reduce cost.

Company goal is first, department goal is second, self-objective is the last.

Scope of work in supply chain area is increasing, there are wide range of roles available in supply chain now-a-days.

One should do one role at least for 3 years for better understanding of the role before jumping on to another role to master the subject. Try to create legacy in any role.

How do you foresee the Indian economy and its subsequent impact on the logistics & supply chain segment going ahead?

There are notable trends being witnessed in the FMCG domain currently, which include: Product innovation, premiumization, product customization, brand consciousness, expanding horizons, focus on rural market, expanding distribution networks, third-party manufacturing, rising importance of smaller-sized packs, increased hiring from tier II/ III cities, increasing private label penetration, etc., which are slated to ride the growth in times to come.

As the Indian economy grows, consumption of goods & services will increase. There will be better infrastructure in the country. The Central Government announced its plans to spend $9.16 billion for creating more jobs opportunities in the rural sector, which will in turn propel demand for FMCG products.

Currently supply chain cost is 4-10% of net sales value of the product in FMCG sector. As the demand will move

up, cost of servicing per kg will come down in industry, which will ultimately benefit the customer. Overall, service level will also improve.

Lot of investment is coming to national highways. Freight corridors are coming up in 15 states all over India.

Government is planning to improve speed of goods trains and double to cargos over 2-3 years. 100% FDI is coming in free trade warehouse Zone schemes. Incentives such as duty free import of building materials and equipment are attracting investors as well as lot of investment is coming in cold chain sector. With such positive news around, we will have all the means & resources to better our supply chain network and lead the growth.

Umesh Joshi is a senior supply chain professional with significant working experience of 18 years in FMCG/consumer goods/auto sectors. His core expertise lies in demand-supply planning, purchase, sourcing, customer service management, logistics & warehousing, operations, analytics, team management, interpersonal skills, innovation skills and project management, etc. During his career so far, he has been a part of leading firms such as Pidilite Industries, Britannia Industries, ITC Ltd, Murugappa Group, etc.

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RECAP

7 Cold Chain Strategy Summit th

SIMPLE. SMART. SECURE

Kamikaze B2B Media delivered yet another successful edition of Cold Chain Strategy Summit by ensuring meeting of the minds and reflecting the loopholes as well as decoding best of the breed products & services. The event finale also witnessed best companies taking home the excellence awards.

T

he recently held 7th edition of Cold Chain Strategy Summit decoded 3S to enhance logistical efficiencies: Simple, Smart, Secure. Yes, these three trending words aptly sum up the dire need to change the cold chain diaspora in India. Packed by intriguing discussions, industry experts made the entire day worthwhile by sharing best practices, global strategies and the scope & expanse of technology & automation.

The event started with one of the most critical topics – ‘The Last Mile Is the First Mile To Improve’. Moderated

by Prahlad Tanwar, Director – Transport & Logistics, KPMG India, the panel comprised of industry veterans such as Vinay Pathak, Head Quality – South Asia, Bayer Pharmaceuticals; Dharmesh Jain, Head – Logistics & Sourcing, Reliance Life Sciences; Ashutosh Taparia, Regional Business Head, BigBasket; Saikat Sarkar, COE – Bakery & Fresh, Future Consumer Enterprise, etc. During the discussion, they all brought to fore very interesting insights as to how the last mile can be made more efficient for perishable & temperature sensitive goods, the best practices followed and the gaps that are still existing in the segment. Rishi Michael Herenz, Head – Operations & Business Development (Cargo), GMR – Delhi International Airport, came up with an excellent analogy that even though they have best of the breed equipment to serve the needs of companies who are looking out services for their super-critical temperature-controlled products, there is hardly any demand.

With the start so enriching, the entire day panned out to be quite an experience for the audience with the discussions ranging from ensuring quality throughout the product supply chain: From manufacturer to Customer Quality Control in Emerging Markets & Global Supply Chains; to Removing silos in end-to-end supply chain; and creating high performance &

34 CELERITY May - June 2018

cost-effective temperature controlled supply chain operations.

Some of the influencing speakers included Sunit Mukherji, Associate Director – CS&L, Mondelez India Foods; Pradeep Sharma, GM – Supply Chain API, Sun Pharmaceuticals Industries; Shailesh Ghodekar, Head – Quality Assurance, Marico, to name a few.

Mukherji highlighted the dire need of investment and skilling the talent pool, “Behaviour is very unorganized and more & more training needs to be imparted to the employees.

We are investing heavily in the infra and training the transport professionals. Today the industry is struggling with the cost of running cold chain. We are not seeing any improvements in technology to bring this down. In the western countries, there is a lot of innovation being done to keep the cold chain cost down.” Bringing in tech perspective, NV Chadramouli, Head – SAP OTC Applications Support, Business Technology | Life Science – Digital Transformation Technology, Merck, SigmaAldrich Chemicals, said, “There has been a lot of learning in the industry. A lot of gaps have been filled in by technology for the industry to function efficiently. It has helped us maintain the right quantity in the right batches and maintain the supply chain cost effectively. Technology empowers us to achieve higher customer satisfaction levels, leading to reorders and hence higher revenue.”

An evening to remember…

The intellectual proceedings of the day gave way to an entertaining evening with the 4th Edition of Cold Chain Awards. Illusionist Clifford Parakh enthralled the audience with his mind games. And 39 companies walked away with a total of 40 awards.

End-to-end customised solutions No wonder majority of our revenues come from diverse consumer driven sectors

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FUTURE SUPPLY CHAIN SOLUTIONS LIMITED www.futuresupplychains.com

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TEMPERATURE CONTROLLED LOGISTICS