SUPPLYCHAIN.CELERITYIN.COM March - April 2018 Volume 2 Issue 2 For private circulation only
INTERVIEW Kapil Maini, Head of Global Business Services, Global Operations, Nokia shares his experiences in supply chain transformation
PERSPECTIVE Corporate head honchos reflect upon the shape of things to come post-budget
The rise & rise of consumer electronics With consumers driving the market, supply chain is re-aligning strategies to deliver service satisfaction
PUBLISHER’S NOTE
A Potpourri of Insights Dear Readers, The last day of February brought the good news that India has regained the status of the fastest growing economy in the world ahead of China after a year’s gap. India’s economic growth surged to a five-quarter high of 7.2 per cent in the October-December quarter of the current fiscal. The detractors argue about the quality of data used, I would ask if a 7 per cent growth is enough and what is it that we should do to get into double digit growth. The last two days of February were also spent at a conference where I did all my business through the phone. I have two handsets and I noticed that quite a few people had either two handsets or a handset and a tab. In the 80s era having one TV for the entire household was a luxury and there was a waiting time. Circa 21st century and almost all rooms in a home have a TV. The time between wanting something and getting it is shrinking into a matter of hours. That’s how the consumer electronics industry has grown, and the growth is visible across the length and breadth of the country. Our Cover Story looks at how supply chain has evolved to keep pace with the growth and customer expectations. This issue is also packed with insightful interviews with senior supply chain practitioners. Building agility has been the key driver of supply chain transformation at Nokia. With Metro becoming a ubiquitous part of the urban landscape, Bombardier Transportation has shared interesting figures on the growth of Rail and Metro Cars across the world. Their evolved supply chain practices also make a thought-provoking read. This February the NDA Government presented its last full-fledged budget, before the elections next year. We spoke to corporate honchos across industries to get their deliberated views on the same. Enjoy the read and do write back to us with suggestions to help us improve further.
Charulata Bansal Publisher Charulata.bansal@celerityin.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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CONTENTS
March - April 2018 Volume 2 Issue 2
12 COVER STORY Consumer Electronics – Delivering Service Satisfaction
While consumer durables companies have been making efforts to deliver service satisfaction, it’s a great team work of the entire value chain be it manufacturers, dealers, 3PLs and service centres, which will make it work in the long run. An in-depth story inside…
20 Networks for the future Agility is a prerequisite and not an option to stay competitive in the long-run, asserts Kapil Maini, Head of Global Business Services, Global Operations, Nokia.
23 Chugging along the success track 6
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Nudging towards effective collaboration Well-designed Digital Nudges are effective in freeing up time spent in regular activities and nudging them to focus efforts in long term goals of a OEM-supplier relationship, shares Divakar Karanth, head – client success for supply chain and innovation platforms, worxogo.
INTERVIEWS
9 Accelerating access to good health Anand Garg, Senior Director – Head India Supply Chain, Dr Reddy’s Laboratories, enlightens us on the strategies to offer affordable and innovative medicines.
Sachin Chhabra, Head of Procurement and Supply Chain, India, Bombardier Transportation, opts for lean logistics and advance warehousing for optimization of value chain.
32 Fortifying healthcare value chain Dr. Dharminder Nagar, MD, Paras Healthcare, aims to catapult healthcare infrastructure in the country.
28 PERSPECTIVE The battle for power begins A sneak peek into the recent reactions shared by the corporate head honchos on the shape of things to come post-budget…
34 RECAP Catching up with the Industry 4.0 wave
Editor : Prerna Lodaya
The 7th Annual Manufacturing Supply Chain Summit & Awards event recap
DISCLAIMER: This magazine is being published on the condition and understanding that the information, comments and views it contains are merely for guidance and reference and must not be taken as having the authority of, or being binding in any way on, the author, editors, publishers who do not take any responsibility whatsoever for any loss, damage or distress to any person on account of any action taken or not taken on the basis of this publication. Despite all the care taken, errors or omissions may have crept inadvertently into this publication. The publisher shall be obliged if any such error or omission is brought to her notice for possible correction in the next edition. The views expressed here are solely those of the author in his private/professional capacity and do not in any way represent the views of the publisher. All trademarks, products, pictures, copyrights, registered marks, patents, logos, holograms and names belong to the respective owners. The publication will entertain no claims on the above. No part of this publication can be reproduced or transmitted in any form or by any means, without prior permission of the publisher. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only.
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41A, AJC Bose Road, Kolkata- 700017. Tel.: 91 33 22640046. Email: mailus@innovativelogistics.in. www.innovativelogistics.in
Regional OďŹƒces: Kolkata, Delhi, Bangalore & Mumbai
FOCUS
Nudging towards
EFFECTIVE COLLABORATION
While OEMs want to build collaborative relationship with suppliers, it has largely remained an elusive goal as significant time is spent in order follow up and other short-term goals. It requires significant behavioral alignment between buyer & supplier to spend quality time to build collaborative relationship. Well-designed Digital Nudges are found to be effective in freeing up time spent in regular activities and nudging them to focus efforts in long term goals of a OEM-supplier relationship, writes Divakar Karanth, Head – Client success for supply chain and innovation platforms, worxogo.
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oving away from arm’s length relationship and towards collaborative relationship with suppliers has remained an elusive goal for OEMs for decades. Though it is can be found in some form between OEMs and tier-I suppliers, it is completely non-existent between tier-I and tierII or tier-III suppliers. Collaborative relationship is advocated to minimize supply vulnerability and hence risks associated. Developing collaborative relationship with suppliers requires buyers to spend more time in building supplier capability, do root cause analysis, improve processes at suppliers’ end, address executional challenges, etc. However, most of the time, buyers are seen spending time in firefighting on order follow up and other shortterm goals. Very little time is spent on collaborative activities by buyer or supplier unless forced to. This is seen across organizations despite » WELL QUALIFIED TEAM: Most of the organizations today have a highly technically qualified buying team, however significant proportion of their time goes in order follow up with suppliers. » PROCESS MATURITY: Across industries such as auto, industrial
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products, etc., the procurement related execution process is reasonably mature. This argument suggests that the buying team should have enough time to spend in developing collaborative relationship with suppliers; however, what is observed is contrary to this expectation. » PROCESS AUTOMATION: Further, with the advancement of IT, most of the processes today are automated, thus eliminating high proportion of low value-added activities. Again, the question really is how has this released bandwidth been deployed by the buyers. » AWARENESS OF RELATIONSHIP PRACTICES: Since Kraljic proposed the purchasing portfolio matrix (strategic, leverage, bottleneck and non-critical), significant research has gone into understanding buyersupplier relationship and brought into practice by leading OEMs as well. While the research talks a lot about approach to better relationships, they are silent on what is required to transform relationship from transactional to collaborative one.
The behavioral view to the challenge The answer may lie in re-imaging buyer & supplier behaviors. It is important to
understand how does the buying team utilize their available time effectively: » Do buyers chase schedules or shortages on a consistent basis? » Does buying organizations evaluate supplier performance against schedule? » Do they give sufficient lead time to supplier? What’s the proportion of low lead time orders and what are the implications? » How much time is devoted in working with suppliers improve processes, develop capabilities and execute orders? etc. Some of the wrong behaviors could get initiated in certain contexts such as frequent schedule changes, uncertain demand environment, supply chain bottlenecks, etc., and become habit. Also, while high performing buyers
might be doing some of the things right, the question really is, how do you get this done from each and everyone in the team? In simple terms, this requires: » Buyers / suppliers need to be aware of expected behaviors, for example, focus on schedule rather than shortages or complete process checks on every visit to supplier shop floor. » Display these behaviors consistently at every instance. Behavior economics as a subject helps in dissecting the behavioral issues that lead to delayed decisions and actions. It changes how the problems are diagnosed, designed and executed. For example, many a times, it is assumed that access to information or a service solves a problem (say access to better medical facilities). Behavior economics pushes the frontier to understand the problems that might exist even after access is given (Do people really go to hospitals even if they are accessible), thus opening new possibilities to solve given problem statement. Behavior economics & psychology suggest four behavioral impediments in achieving best of individual efficiency. These are lack of self-control, limited attention, scarcity of cognitive capability and flawed mental models or understanding. SELF-CONTROL: Any process improvement activity to be conducted at supplier’s end always gets procrastinated despite knowing that it can improve execution efficiency which results in lower incidences of firefighting. Further, we succumb to immediate temptations. When going is good i.e. there are no executional issues at a supplier end, the buyer does not visit the supplier to spend time on improvement activities. ATTENTION: Significant technology introduction has happened over last 2 decades in procurement supply chain, from automating the procurement process to technology to gain visibility into the supply chain. However, adoption of technology takes huge effort and time. Most of the time, hardly few of the features of any platform get used in practice. It is typically assumed if training is given, users get to understand the technology and can start using it right away. For this assumption to work, it requires user to be attentive to the specific features. If the user does not pay attention, he
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SHUTTERSTOCK
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is unlikely to be adept at using the features. Psychology says attention is as scarce a resource as self-control. Multiple experiments have been done by psychologists where they have demonstrated that attention is paid to the aspects that typically an individual is comfortable with. Limited attention may be addressed by giving information in limited steps. Simple and timely reminders can help them completing various tasks they are supposed execute. COGNITIVE CAPACITY: One of the assumptions when it comes to people is about their ability to process, comprehend and consume large amount of data or information. It is usual to see the management designing multiple dashboards and MIS sheets and sharing with the team assuming they too can easily process it for their consumption and hence decision making. However, in practical, this is far from truth. Every individual has limited cognitive resources available at any point time very much like physical resources such as money, staff, etc. So, increasing cognitive demand may in fact make them less likely to succeed. In practice, we tend to use fast, intuitive thinking or rules of thumb. Further, more the choices, more it is cognitively taxing for any individual and decisions get procrastinated. Simplified plans, fewer alternatives and agreed rules of thumb can drive efficiency up. In a buyer’s context, given the process maturity in the current scenario across manufacturing sector, the management should aid them with these easy to manage guidelines. UNDERSTANDING: Many a times flawed mental models are at work, which results in adopting wrong practices. For example, suppliers most of the time
are driven by the buyers with whom they work. A typical practice followed is to take those jobs on priority as asked by buyers. When multiple buyers are working with a supplier, whichever buyer sits in front of him, his jobs get priority. As the suppliers satisfy buyer’s requirements on the go, they always feel their performance is good. However, if you show with data that their performance against PO schedule date is not so good, they get surprised. Overcoming this challenge requires change in behavior from buyers and setting expectations right for suppliers. Gradually they get nudged towards focusing on schedule dates rather than shortages.
Digital nudges Richard Thaler & Sunstein define nudge as, “A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives.” To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not. In this digital era, where a connected smartphone is an integral part of an individual, it is possible to nudge an individual towards an expected behavior gradually over a period. Leveraging digital capabilities and using behavior economics principles, one can influence buyer and supplier behaviors. The nudges in this context can take any of the following form to assist them in their activities: » Reminders on today’s delivery schedules » Highlighting recent performances » Warning on orders that may fail
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FOCUS » Any process checks to be executed at supplier premise » Root cause analysis along with supplier team of a previously failed delivery, etc. This takes away the cognitive effort in synthesizing information to manage transactional activities and drives them towards sustained behavioral change, thus addressing the cognitive scarcity challenge. Overall, this has potential to release significant bandwidth for both buyer & supplier, enabling them to focus efforts where it is due. The digital nudges can take multiple forms; they may be sent to the management at both OEM and supplier for appropriate intervention from their side, it could be to do a simple review or to do a GEMBA walk at supplier shop floor or conduct a knowledge workshop for supplier personnel or as simple as to send appreciative message to supplier for their performance. In a nutshell, digital nudges can be deployed at multiple levels to nudge everyone involved in purchase process execution to consistently display expected behavior. Over a period, one can expect a gradual shift towards more collaborative efforts from both OEM buyers and supplier team.
Prerequisites Are there pre-requisites for such nudges to work? According to Richard Thaler, nudges work best with ‘automatic system’ of human thinking. It relies on some of the cognitive biases usually associated with ‘automatic system’ such as anchoring, status quo bias, herd mentality, availability heuristic, etc. The nudge content would be such that they work to overcome these biases or take advantage of them. A nudge design considers user’s workplace behavior type, individual performance, peer performance and expected outcomes. A good nudge engine gets better in achieving desired behavioral outcome as it works with an individual over a period and starts acting as personal assistant in work space, thus enabling the user on quicker decision making. Further to digital nudges, other digital technologies such as leaderboard of suppliers or buyers, which brings a social or community element to improve goal and performance orientation. Real-
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SELF CONTROL
ATTENTION
CONGINITIVE CAPACITY
UNDERSTANDING
Digital nudges can be deployed at multiple levels to nudge everyone involved in purchase process execution to consistently display expected behavior. Over a period, one can expect a gradual shift towards more collaborative efforts from both OEM buyers and supplier team. time performance measure and peer comparison has the potential to drive higher performance levels. These digital interventions work best when: » Right skill set, or ability exists: The buyer & supplier team should be competent on product technology and process requirements. Low ability or skill set does not help in achieving requisite behavior even if the motivation levels are high. » Right working environment exists: In procurement context, it could be as simple as data integrity to as complex as managing frequent schedule changes in a mutually beneficial way. Absence of right environment can lead to lack of trust and belief, hence impact desired outcome. » Right stimuli exist: Stimuli could be in the form of timely supplier payments or supporting suppliers financially for necessary capital investments. Individuals respond to different kinds of stimuli in different context. The stimuli can be a simple cue, call to action, request and so on.
Achieving greater collaboration Effective outcome, especially in complex environment such as procurement supply chain depends not just on the process or technology but also to a great extent on behavior of buyers & suppliers. Influencing them and achieving desired behavior is fundamental to sustained outcomes. The advent of digital era is an opportunity to address thus ignored age old aspect. It has the potential to aid the transformation from transactional to collaborative relationship between an OEM and its suppliers. Divakar Karanth is an experienced management consultant with focus in supply chain & operations domain. He has run multiple transformative engagements in his consulting career. He currently works with worxogo in the domain of Persuasive Technology applied to enterprise domain across sales, innovation and operations.
INTERVIEW
ACCELERATING ACCESS TO GOOD HEALTH ‘Accelerate access to affordable and innovative medicines because Good Health Can’t Wait’, has been the driving force for supply chain team members at Dr Reddy’s Laboratories. “In line with company’s belief, we continue to work towards meeting unmet patient needs through our well-coordinated, communicative and collaborative supply chain efforts,” elucidates Anand Garg, Senior Director – Head India Supply Chain, Dr Reddy’s Laboratories. Excerpts… In the recent times, the Indian pharmaceutical industry is impacted with varied regulatory & quality challenges. Please share the some of the major concerns and actions.
Given the above challenges, it would be difficult to meet customer deliveries on-time. What is the USP of Dr Reddy’s supply chain that supports business to grow?
Over the last few years, Indian pharmaceutical industry has been grappling with various compliance challenges like never before: increased regulation, harmonization push and data integrity concern to name a few, which is not only impacting revenue stream and cost escalation for the current business but also hampering the ability to get approval for new drug applications. To address some of the concerns, industry has started gearing up quality and compliance capabilities through: » Making regulatory compliance part of their corporate strategy » Enforcing the culture of quality and imparting adequate periodic training to employees » Attracting & retaining best talent in an increasingly competitive market » Automating systems and infrastructure to reduce manual intervention (LIMS, DMS, DAS, SCADA, etc) » Practicing quality by design in early stage of product development » On-boarding right suppliers in network (Raw materials, packaging material, logistics service providers), who understand evolving regulatory requirements and proactively institutionalize the change with timely communication to manufacturers.
The above stated challenges have made our jobs more relevant and compelled to continuously evolve ourselves, bringing flexibility, agility, responsiveness and cost effectiveness in supply chain, to meet organization purpose ‘Accelerate access to affordable and innovative medicines because Good Health Can’t Wait’. Over a period of time, we designed and built our supply chain to deliver sustainable results through: » Seamless integration of demand and supply planning (using customized IT platform) across markets to improve visibility and delivery till country specific warehouses. Also, our planning philosophy is based upon forecast & replenishment (pull & push) model, which takes care of any upsurge in demand, seasonality or short-term supply disruptions, thus meeting our promise to patients on medicines availability. » De-risking critical material supplies using dual site sourcing strategy to avoid potential supply disruptions. At the same time, there is an inordinate focus to enable and help our partners build sustainability (financially and operationally) in their overall supply chain. » Simplification and automation of procure to pay process with minimum touch points ensuring faster cycle time and providing end to end visibility to the partners (right
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from purchase order to payment status), thus practicing ease of doing business. » Outsourcing of non-core areas such as logistics and warehousing operations to 4PL service providers to leverage best technologies and capabilities to serve patients, effectively and efficiently » Geographic oriented supply chain structure for both commercial and new product launch to bring enormous focus in planning and execution irrespective of size and value of markets » Institutionalization of continuous capability building programs for supply chain managers across levels on softer and harder skills. One of the most successful program is ‘PACE’, where people get trained on 2D/3D negotiation skills along with various levers on cost excellence, which provides competitive advantage in the market. Also, at an organization level, there is an elaborate ‘New Horizon Leadership Program,’ which helps individuals to
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INTERVIEW irrespective of one’s domain, start connecting and internalizing various aspects of the business to sharpen their business acumen; and putting management concepts into practice not only helps business to get fresh perspective but also individual imbibes these learnings, perpetually.
What’s that one mantra you follow to stay ahead of your competitors? We offer our patients the products they value the most and help our partners succeed through our flexible supply chain and services.
Increase in trade through e-commerce platforms and significant investments by private & foreign players are continuously improving the capabilities of 3PL/ 4PL service providers, which offers better service levels and data transparency. connect deeper with themselves and others so that they can live a more powerful and fulfilled life, redefine happiness, enhance their leadership capabilities and performance at work
What are the innovative measures that you have adopted in the areas of warehousing and transportation? Increase in trade through e-commerce platforms and significant investments by private & foreign players are continuously improving the capabilities of 3PL/ 4PL service providers, which offers better service levels and data transparency. Some of the innovations that we adopted are: » Reducing carbon footprint through usage of solar panels & LEDs, environment friendly expired pharmaceutical destruction process, usage of sea route than air, etc. » Reduction in transit lead time for distant routes through relay drivers concept » Outsourcing of warehouse and logistics operations to 3PL/ 4PL partners » Reduction in inventory and cost through Network optimization (post GST) » Online temperature monitoring across warehouses for all temperature sensitive products.
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How do you keep your team motivated amid such pressure conditions? People are the most important asset of the company and needless to say that motivated people help company to improve engagement, productivity, and quality of work. Some of the activities that we undertake include encouraging people for internal job rotations which provides opportunity to cross train themselves; providing challenging projects with freedom to operate; recognizing and rewarding highperformers; creating lively and fun-filled environment; and respecting each and every individual and encouraging to work in a transparent way.
What advice would you like to give new age professionals. Where do you feel Indian education system lacking? Today’s new age professionals are well equipped with the latest technology and have access to a larger knowledge base, helping them to improve their learning curve. They can further leverage these skills and build their foundation much stronger in the early stage of the career by nurturing their inquisitive mind to understand finer nuances of the business which later helps in their career for quick decision making; thinking & acting like an entrepreneur which means
How do you view the supply chain landscape of India going ahead? Indian economy is well poised for multi-fold growth with the influx of government spending on infrastructure (roads, railways, ports, and mega cities), better cross border relations and free trade arrangements, benign regulatory climate, and availability of newer and affordable technologies. With this rapid economic development, some of the changes in supply chain likely to manifest are: » ‘Make-in-India’ campaign will proliferate local manufacturing footprints to reduce dependency on imports (particularly from China). » Logistics service providers will consolidate their supply network across industries to provide faster, better and cost-effective solutions. » With the availability of new technology platforms and access to real time data (Inventory, point of sales, raw material prices), decision making process will become much quicker and better. » Capability building and retention will be paramount with leaner organization structure. Anand Garg is an Engineer & MBA graduate with 14+ years of experience in management consulting and industry. Currently, he is handling demand & supply planning for in-house & contract manufacturing sites, new product launches, distribution network (mother warehouses & CFAs) and logistics for India Business.
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COVER STORY
Consumer Electronics Delivering Service Satisfaction
Consumer electronics industry has been shaping up extremely well ably supported by the advent of MNCs in India and a stronger domestic companies’ emergence. While companies have been making every single effort possible to deliver service satisfaction, it’s a great team work of the entire value chain be it manufacturers, dealers, 3PLs and service centres, which will make it work in the long run. The need of the hour is to establish stronger partnerships, build an unparalleled service network and be an ecoaware company to win over customers’ latent demands.
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I
ndia is expected to rank fifth in the consumer durables market in the world by 2025. By 2020, India is expected to reach US $20.6 billion, growing at a CAGR of 13%. Among many reasons that have accelerated this demand growth, the key causes are rising disposable incomes and easy access to credit. Increasing electrification of rural areas and wide acceptance of online sales are also aiding the demand. With the government’s plans to invest in rural electrification, consumption is expected to grow in rural areas significantly. Other important factors such as growing awareness, easier access, changing lifestyles and progressive government reforms such as Digital India and Make in India will drive growth. The approval of 51% FDI in multi-brand retail and further approval of 100% FDI in single brand retail will further fuel growth in this sector. The consumer electronics industry is characterized by high degrees of new product introduction, relatively short product life cycles, supplier variability,
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high levels of competition, and required speed to market. Companies producing or selling consumer electronics products must compete not only on the price, quality, and features of their products, but also on related customer service strategies. Developing appealing products is essential, but if they are not supplied to customers when, where, and how they want them, electronics manufacturers and distributors will underperform, stress One Enterprise Inc officials. Jatinder Panjwani, AVP India operations & Head supply chain – India, Micromax informatics Ltd., avers that a robust distribution and supply chain network to ensure wide presence and a best-in-class service experience is essential. Supply chain capabilities are key to delivering on the consumer electronics industry’s value proposition. Offline and online inventory integration is always a challenge in the new digital era. As more consumers now research for products online and make their purchase decision, the final sale happens
in the offline market. Talking about the transformational landscape of consumer electronics supply chain, KK Kaul, MD, Pantos Logistics India, a subsidiary of LG Group Korea, highlights that the changes have been dramatic over these years. The customer demands have increased. Inventory management at the customer level has reduced. Today it’s the time to ensure immediate delivery and overall inventory control at the customers’ end. “The entire supply chain dynamics have changed from stocking to sell. It has also resulted in faster delivery and minimum inventory carrying at the manufacturers’ and traders’ end. We call it ‘meet the market’. Our entire emphasis has been shifted to meeting consumers’ demands in the shortest possible time to gain an edge,” states Kaul.
ARE WE LIVING UP TO THE DEMAND? Supply chain capabilities are key to delivering on the industry’s value proposition. However, it also comes with
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COVER STORY
Ashutosh Varshney,
Senior Director – Logistics, Supply Chain & General Affairs, Canon India Canon engages in the development of supply chain partners’ information sharing system. It allows firms to increase the volume and complexity of information which needs to be communicated with the inter-trading partners. It also helps firms to provide real-time supply-chain information. Increased access to real-time information enables Canon to synchronize its inventory level, delivery status, and production planning and scheduling. It also facilitates the alignment of forecasting and scheduling of operations between Canon and its supply chain partners, allowing better inter-firms coordination.
a whole new set of challenges unique to its many processes, data requirements and functions. Relatively short product lifecycles (typically 6-9 months) with multiple feature changes throughout creates an atmosphere full of risk. With so many changes happening over the course of the lifecycle, you’re likely carrying extra inventory to make sure you have enough stock on hand to cover any part substitutions or adjustments. That means higher carrying costs and a greater risk to your bottom line if the product ends up as slow moving, excess or obsolete inventory, states Alexa Cheater, Product Marketing Manager, Kinaxis. Dhiren Vora, Vice President – Commercial, Godrej & Boyce, highlights that there is a high dependency on seasonality leading to variability of demand for consumer electronics. Because of which some of the major challenges such as sales push during the off season, higher inventory levels at stocking points ahead of each peak season, demand uncertainties that arise within these, hamper efficient functioning of the supply chain. As consumer electronics industry is a very dynamic market and the models keep on changing rapidly depending on the upgradations and application expanse, the major issues arise in making the newest model available to consumers in minimum time, informs Kaul. Consumer perception is also changing, and he has become very
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demanding in terms of advancements. The biggest challenge is to meet customers’ demand and the availability of the product at the counter in the fastest way and how to achieve the turnaround of the product in no time so that customers’ demands are met immediately. As LG’s manufacturing units are spread across the country, the major issue comes in terms of seasonality, transportability and the handing of products while in-transit. According to Kaul, the government hasn’t laid out any rule & regulation for transportation and the current infrastructure is not at par with the demand that we have to serve. It’s a time-consuming process if we have dispatched a consignment from Noida to Kochi and sadly, it takes 10 days. The transit times are very high because of poor infrastructure. Offering a 3PL perspective, Dr Arunachalam R, CEO, ProConnect Supply Chain Solutions, asserts, “Electronic products are highly sensitive and thus require special handling along with coordination. Monetarily they are at a higher end. There might be a possibility of pilferage and for this proper inventory management & dynamic security measures are required. Earlier the mass usage of electronics was in metros, but the network is growing and so is the reach. Reaching out to tier 2 & 3 towns at times can be challenging but at ProConnect with strong warehousing combined with transportation network,
we are able to cover more than 36000 customer locations.” Jaideep Ghosh, Partner & National Head – Transport, Leisure & Sports, KPMG India, elaborates on the challenges and says, “There are key supply chain challenges that need to be addressed by leading consumer product companies. Even though digitization has picked up and companies are looking to digitize their operations and leverage technology to strengthen supply chain, lack of end-to-end visibility and PoS data has hampered the growth. End-to-end visibility, from production to end-consumer sales, will help streamline operations with improved forecasting, visibility and collaboration between partners. Timely fulfilment and effective supply chain planning requires high level of co-ordination and collaboration between supply chain tiers. Apart from data visibility, choosing the right partners is crucial for companies to operate efficiently and effectively. Demand skew, inventory planning and timely product movement requires effective logistic partners.” According to Nidhi Markanday, Director, Intex Technologies, consumer durable products today have become an intrinsic part of daily lives and so have to be treated like FMCG and not as luxury or sin goods. Keeping the changed reality in mind, the industry expects the government to shift the consumer durables and LED TVs from the current 28% slab to 18% slab,
prior to which the industry saw a dramatic decline in sales and consumer sentiments post-GST implementation in July 2017. There’s a push for energy-efficient electronics, compelling manufacturers to develop new technologies to produce devices that consume less energy. Environmental concerns are paramount not only during the manufacturing process, but also throughout the lifespan of electronics devices. Reducing energy consumption is an effective way to cut costs, leading both businesses and consumers to opt for energy-efficient electronics. The pressure is on manufacturers to adopt green manufacturing processes while simultaneously producing electronics that are cheaper to use thanks to lower energy demands.
DISCERNING ROLE OF 3PLs Today’s day & age demands a highly responsive 3PL service provider who could devise strategies based on any situation and can adapt to any unknown or uncalled for complexities arising out of turbulent economic scenarios. Panjwani feels that this would be one of the biggest performance enhancers for any 3PL to gain an edge over others. This aspect also involves inclusion and deployment of new age technology tools to enhance the entire process and can aid in offering a transparent system. The second and the most important aspect that a 3PL needs to take care of is the timely delivery of goods. No customer these days can wait for even a second to receive products what he desires and with omni-channel retailing, it has become all the more
crucial to serve customers as & when the demand arises. If you fail to do so, you lose that customer for lifetime and chances are because of this one unfortunate incident, you might end up losing brand loyalty. So, a 3PL who can guarantee you the best possible service is sure to be a favoured among all. One of the crucial deciding factors is the cost advantage that they can bring to the table. Yes, cost is an important barometer for any organization for selecting a partner. A 3PL needs to position itself in such a competitive way that no user company can think of rejecting their offer by providing a very comprehensive mix of all the aspects that hold immense importance for the success of the entire value chain. Sharply defining the role & importance of 3PLs, Markanday elaborates, “Third-party logistics providers specialize in integrated operation, warehousing and transportation services which can be scaled and customized to client’s needs based on market conditions, such as the demand & delivery service requirements for their products and materials. Often, these services go beyond logistics and include value-added services related to the production or procurement of goods, i.e. services that integrate parts of the supply chain. When this integration occurs, the provider is then called a third-party supply chain management provider (3PSCM) or supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.” According to Vora, the role of 3PLs is to offer consistent support and
provide value-added services, for both the B2B and B2C segments. 3PLs will help address some of the challenges these segments face like higher inventory levels just before sale seasons, the demand uncertainties and more. By collaborating with manufacturers in the SCM process on sourcing, storage, logistics and distribution, manufacturers can focus on their core operations. Talking about the crucial role of 3PLs, Ghosh claims that electronics industry logistics is segregated and usually complex, with multiple players operating in the supply chain of large companies. Most companies face challenges of designing a common, cost-efficient infrastructure across supply chain. Such challenges in terms of reducing operational complexities and logistics costs provide huge opportunity for 3PLs. 3PLs offer services in terms of increased visibility, inventory hubs, inventory rationalization and cycle time reduction. Large consumer electronics players outsource key parts of their supply chain to 3PLs, so as to reduce the burden of managing operations. Also, in a complex and volatile market such as India, where different regions require different capabilities and outlays in terms of cost and infrastructure, outsourcing operations to 3PLs leads to operational simplification. Factors such as overtime at warehouses, union charges, regional permissions, etc. can be managed by 3PLs. 3PLs also manage compliance and risk related concerns for the companies. Further, 3PLs can provide value added services e.g. packaging operations, provide supply chain visibility for high value products, which is critical for inventory availability, order status and security
Nidhi Markanday,
Director, Intex Technologies The demand for smart electronics devices and durables continues to rise. However, consumer devices like smartphones, which become an integral part of our life is not alone and seeking for connectivity or integration to become prominent in everything from vehicles to microwaves. The challenge lies in the ability to get secure, scalable connected products into consumer’s hands, when for most manufacturers the connectivity aspect isn’t their core expertise. Manufacturers will need to be flexible and adaptable to keep up with constantly evolving electronics demands.
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Jatinder Panjwani,
AVP India operations & Head supply chain – India, Micromax informatics Ltd. With the introduction of GST, India has become a seamless market without any difference between inter-state or intrastate sales. This has essentially disrupted the existing ineptitude and facilitate structural re-engineering of the logistics and supply network. Service providers are being incentivized to leverage hub-and spoke supply chain networks by operating large central warehouses and remodeling transportation routes. On the taxation front, at national level, it has resulted in more competent and efficient cross-state transportation, lesser paperwork for transporters, thereby reducing the logistics costs. Not just costs, it is also helping them save a lot of transportation time. while in transit. The advent of GST and corresponding warehouse consolidation has created opportunities for large 3PL players to manage large warehouses through specialized manpower and build corresponding logistics capabilities. Discussing the stringent selection criteria for 3PLs, Ashutosh Varshney, Senior Director – Logistics, Supply Chain & General Affairs, Canon India informs, “We are in continuous process of formalizing a structure to lay out a very stringent yet smooth operating process with our 3PLs. We prefer to work with one 3PL company who can fulfil all our requirements. We analyze their processes, their infrastructure, the quality systems they have adopted, the way they manage their operations and basis that we take a call for our services. All warehouses follow the same sets of standards and processes. Having said that, once we partner with a 3PL company, we sincerely believe in having a transparent & long-term relationship. Our systems get connected and we have regular interchange of information flow. Such information is shared on our customer portal, where they can view real-time status of their orders and track their shipments.” Highlighting green procurement initiatives, Varshney elaborates, “Guided by its corporate philosophy of ‘Kyosei’, Canon Group has been conducting global environmental conservation activities. One of these activities is green procurement, in which procurement and purchasing of environment-friendly materials,
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parts, and products are prioritized when necessary resources are procured and purchased. Canon would like to proceed with ‘maximization of Resource Efficiency’ together with suppliers to realize global environment conservation. To attain this objective, the Canon Green Procurement Standards prescribe the conditions for starting dealings with suppliers. Each supplier is asked to develop and operate an environmental management system related to business activities and the system for management of chemical substances in products to achieve the expected performance level based on the requirements stipulated in the Canon Green Procurement Standards. Based on that, we evaluate our suppliers.”
REVERSE LOGISTICS Talking about the crucial role of 3PLs in reverse logistics, Vora opines that 3PL is going to play a big role in after sales service support along with reverse logistics. Apart from this, handling of damaged stock, service spare parts, repair and maintenance, rework, refurbishment, and so on also form an integral part of 3PL DNA. According to Ghosh, service parts logistics can provide companies with a critical competitive advantage and involves supporting the products after they have been sold. Depending on the nature of products, average restoration time can be as low as 2-4 hours, and failure to meet the service commitments can be costly. Along with well-organized facilities and warehouse management
systems, efficient service parts logistics requires core competency and is typically serviced through specialized 3PLs. In some cases, outsourcing the service parts logistics also enables the companies to move the inventory off their balance sheet and onto the 3PLs. The extent of reliance on 3PLs can vary, with some companies relying entirely on 3PL for managing the end-to-end service parts logistics, while others could be relying on 3PLs for supporting after-business hour’s requirements. Key aspects of the capabilities for 3PLs to showcase include distribution centers and a network of field stocking locations, inventory and order management capability, quick turnaround time, direct delivery of parts and supplies to field service engineers and customers. 3PL provider must be capable of handling reverse loads too by following the milk run concept, using vehicle routing simulations, handling of warranty stock, return of damaged stock, defective parts, etc., all of which play a vital role. It is also essential that they provide and execute services for after sales support, distribution of spare parts, etc., through dedicated key account and customer service teams. By handling reverse logistics, 3PL partners will not only help OEMs get additional business but also enable them to play a role in e-waste management which is becoming a norm now-a-days, believes Vora. They should also be equipped with the application of appropriate information technology to integrate and
standardize the reverse chain processes, especially, in the case of handling of customer calls and complaints, maintaining customer satisfaction scores and efficient feedback collation. ProConnect has a separate division to work for this model with meticulous planning. It is important to get the correct contact & details of the material to be returned, also approvals for return, proper packaging of material, adherence to timeline for pick up. Proper shipping documentation from customer’s end is crucial. Coordination between three parties – customer, courier & recipient is important and so is the system visibility. “We help in moving the service centres, after service picks & we handle e waste with proper compliance norms. Numerous occasions we have handled the products through reverse logistics till they are exported abroad,” adds Arunachalam. Offering statistical insights, Ghosh comments that the return products and volumes in the past have been low. With rising disposable incomes and increased customer awareness, product returns could increase. Reverse logistics has been treated as a crucial function for customer service and as a key cost center by major consumer electronics players. With the rapidly changing customer demands and needs, there is pressure on consumer electronics companies to not only push the products in the forward supply chain but also how the returns are dealt in the reverse logistics. Companies prefer to outsource their reverse logistics operations to ensure flexibility and completeness of supply chain. It is crucial for companies to have robust reverse logistics in
place for high quality services and customer experience. In case of product mishandling – delays, order mismatch, broken products, brand equity is at risk, even if it is not a retail point. Companies also need to focus on refurbishment and repair service centers. As return volumes of highpriced products increase, it impacts a company’s bottom line. Repair and refurbishment centers are crucial for recapturing or creating value or for proper disposal of dead products. Returns need to be managed in an efficient and effective manner – sorting, repairs, reuse, repackaging, and disposal.
STRATEGIES ADOPTED POST-GST GST provides opportunities for companies to improve operational efficiencies by shifting to a more integrated and streamlined supply chain network, backed by data and technology. Implementation of digital e-way bill, will also streamline the processes, states Ghosh. “Large 3PL players will be crucial to manage such complex operations and the setting up of big transportation/distribution hubs near big cities will pose additional incentive for specialized large 3PL players to manage operations,” he adds. According to Vora, network realignment will lead to savings post GST implementation. Warehouse consolidation and reduction in the primary and secondary transportation will be the major contributors. Interstate movements will also undergo a change after the GST. Faster vehicle movement will lead to a reduction in transit times (a 30-40% increase in average km/ day) due to the removal of inter-state
border check posts. More and more 3PL providers are becoming aggregators and are moving towards becoming assetlight. Markanday feels that although GST has been a long-awaited reform its implementation and some looseends still remain. It hasn’t been able to address the Inverted Duty structure issue and so a Reduction in GST rates on components used for mobile phones is necessary. GST rates on some products used in the manufacture of mobile phones or used as subpart of mobile phones are on higher side like parts of Battery, shield cover which attracts 28% GST. Though the main product – mobile phone incurs only 12%, since these sub-parts in general have no other use than to be used in mobile phones, it should be categorized in the same GST rate bucket of 12%. Further, reduction in rate would ease some pressure on mobile phone manufacturers and support the Make in India agenda of the government. Refund of Accumulated IGST/ SGST is required. The government needs to incorporate provisions that any accumulation of IGST due to local sales of products shall be refunded instead of carrying forward presently. This shall relieve industry from working capital blockage and shall help use of this fund in enhancing business. “For encouraging businesses to reach to the remotest location to have last mile connectivity and presence, an increase in refund limit under area-based exemption schemes is needed. Presently, the limit of claiming refund under the area-based exemption scheme is 29% of the IGST which
Dr Arunachalam R,
CEO, ProConnect Supply Chain Solutions It is all about placing the right product at the right time at the right place. Life span of electronics is very short as once a new product is launched, the client’s start working on its next model. ProConnect pioneers in electronics supply chain management from smallest products like pen drives, mobiles to heavy products like big servers & highend Indigo printers. We handle household appliances, white goods as we are preferred service partners for big brand names. We do deliver last mile to the residences and handle these products with lot of care.
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KK Kaul,
MD, Pantos Logistics India We always try to mould ourselves as per customers’ and market demands. Because of large network that we have, we have developed warehouses based on hub & spoke model. We have small warehouses across the country near the market and we have large warehouses in the vicinity of our factories through which we cater to small regional distribution centres. We have developed large network of transportation business through which we are catering to all our customers. We are also deploying all the channels of transportation be it rail, road or water to meet the seasonality. We have to prepare ourselves well in advance to serve to our customers.
should be increased to 50% and 58% of the CGST which should be increased to 100% paid through cash (after utilization of input credit). This incentive is not enough and is not in line with the expectations of the industry that has been set up in such remote areas. Such low refund amounts may even result in loss for some units based in remote locations. Therefore, government needs to bring aggressive reforms if it wants the domestic players to rule their market and be the drivers of Make in India,” asserts Markanday. Varshney also feels that GST has really given an opportunity to relook at domestic logistics systems. “Strategies would be brought in to provide complete customer delight going in line with our tagline of ‘delighting you always’. Post-GST, we are looking forward to consolidating and cutting down on our warehousing & transportation networks, which would bring in efficiencies in our operations and give advantage to our customers in terms of speed and cost.”
CHANGES DESIRED Companies have been quite vocal about the changes that they need from the government. On this, Kaul adds, “Our transportation policy is critical to develop logistics industry. There are n number of various size of vehicles moving around carrying goods. Size of vehicles, weight of vehicles and the regulations to move those vehicles on
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the road need urgent standardization. No transporter since the last 5 years has invested into vehicles because of hurdles when they move on the road. There should be specified route planning for the easy movement and connectivity from one part of the country to another. Then there are additional challenges that are plaguing the growth of the industry. We need to have a better control of manpower movement. Unionization needs to be abolished. Government needs to be come up with a crystal-clear logistics movement policy. There needs to be minimum & maximum norms as per seasonality of business. We don’t have port to operate, which is the biggest logistics bottleneck in India.” We have vast inland waterways but there is extremely poor network connectivity. If the government finds a way to develop inland waterways transportation, it will be a tremendous help to the industry. For Ghosh, with changing consumer mindsets and evolving industry, it is crucial for the consumer electronic companies to understand this change and leverage the new trends and technology to optimize and strengthen their operations. Consumer electronics companies need to embrace agility in supply chain by opting for data-driven logistics as reduction in technology costs is leading to availability of huge amounts of data and information on supply chains. Organizations will need to build
up their technological and analytical capabilities to leverage and benefit from this data. “Right from production to warehousing to last mile delivery, OEMs will need to adopt flexible automation solutions to increase the agility and elasticity of the logistics and production infrastructure so as to be able to meet market fluctuations, cost effectively. Reverse logistics also gains prominence as consumers become more aware and demand for higher value for money and organizations looks at re-creating value through responsible handling of returns and refurbishments. The economic value of automation/ digitization, reverse logistics and sustainability initiatives will create more stringent methods of evaluating vendors and supplier driven innovation more and more important,” avers Ghosh.
EXPANDING HORIZONS For making a supply chain lean and optimized, wastage needs to be eliminated, processes and costs need to be optimized throughout the supply chain. All the departments and functions of the organization need to work in an effective collaboration. Companies typically need to optimize and reduce things like unnecessary complexities in the system, lead time optimization, product movement optimization, inventory management at all touchpoints and evaluate major cost headers. “From procurement of raw materials to the last leg of
Dhiren Vora,
Vice President – Commercial, Godrej & Boyce With recent changes in government regulations, GST network re-alignment will leverage the following: Direct Plant dispatches; Movement across state boundaries; Larger and modernized warehouses; Warehouse Consolidation through closure of small warehouses. We are moving towards CII Warex certification for our warehouses. We are also using Warehouse Management Systems (WMS) to improve productivity. With real-time MIS generation, we are continually reviewing the performance of our 3PL partners.
transportation, all the nodes need to be analyzed and optimized. Effective sales and operations management can help in optimizing procurement functions. Manufacturing can be automated upto a large extent to ease manpower costs. With advancements in technology, factories and warehouses can be automated to simplify operations and reduce costs,� opines Ghosh. Visibility of data throughout supply chain, from production to retail PoS, will help in further driving supply chain optimization. Also, as infrastructure improves, lead times will reduce along with transportation costs. This will also help in timely fulfilment of products. With optimized lead times, customer demand can be met through smaller shipments, which help in managing inventory levels. All processes will also need to be analyzed and studied to
evaluate the criticality. This will further help in process optimization at all touchpoints and make the supply chain lean and optimized. With increasing economic reforms and economic stability, ecosystem currently offers a lot of opportunities for both 3PLs and manufacturers. With GST and increasing focus on digitization and technology, the entire ecosystem will evolve. For manufacturers the new policy presents opportunities to re-organize their manufacturing footprints based on demand centers simultaneously increasing the existing capacity/greenfield capacity and relying less on finished goods imports. Simultaneously, India is undergoing a phase of infrastructure development, with transport hubs coming up in different regions. This will provide additional benefits to the supply chain.
As the market evolves, organizations, both 3PLs and manufacturers, will look to integrate technology in their operations. Automation companies are providing customized solutions to optimize operations and costs for large scale players. Warehouse and factory automation will not only reduce manual intervention but also increase operational efficiencies and reduce operating expenses. Companies should look to leverage the changing dynamics and improve their operations to achieve a lean and optimized supply chain. In a nutshell, technology adoption, ease of use of products & services, evolution of digital India that is changing the lives of every citizen, innovation and of course, being close to customers, are going to be the five trends that will redefine service in times to come.
Jaideep Ghosh,
Partner & National Head – Transport, Leisure & Sports, KPMG India Consumer electronics and appliances industry in India was valued at $9.7 billion in 2015 and is expected to grow to $20.6 billion by 2020 and become the fifth-largest in the world by 2025. While urban penetration has been pretty high for the sector, significant growth potential lies in rural and semi-urban areas, fueling industry growth through first-time sales. Currently, rural areas contribute to 10% of sales. To create such demand, the industry needs to evolve to efficient supply-chain mechanisms and distribution to be redefined as operational efficiencies will play a key role. supplychain.celerityin.com
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INTERVIEW
NETWORKS FOR THE FUTURE “Agility is a prerequisite to stay competitive in the long-run and not an option. It can be achieved through simplification & automation. While agility & digitalization have become an integral part of all supply chain transformation initiatives, we are yet to unleash the opportunities from data analytics and automation,” asserts Kapil Maini, Head of Global Business Services, Global Operations, Nokia, during an interview. What is the typical value chain that Nokia should follow? What are the complications involved and how do you deal with them? We have a complex value chain with products, solutions & services to be delivered to the customers. This includes providing support for extended life-cycles spanning even up to 20 years. Our customers are project driven organizations and the challenges are un-forecasted /sporadic demand and stringent timelines for rolling out next generation products & solutions. On top of that, products and solutions need to be ‘tailored’ to meet the individual customer needs, which again poses a greater complication. Building supply chain agility is one of the enablers to address the challenges in our complicated value chain. We have successfully worked on having a ‘segmented’ supply chain to address the requirements of the different customers and business models, thereby building agility. We are on the way to a digitalized and customized value network.
Supply chain disruptions have been the norm in the industry you are operating. How do you tackle them? Early engagement with customers to understand their demands is key to minimizing the disruptions. While challenges of forecasting are a reality in a fast-moving industry like ours, we endeavor to minimize the supply
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chain disruptions by establishing Sales & Operations Planning (S&OP) process. In addition, we focus on building long-term partnerships with the supplier community and extend planning activities even for the tier II suppliers to enhance the flexibility. ‘Inventory is a necessary evil’… we do stock up standard products based on indicative forecasts from the sales team. Air freight is also used to reduce the delivery time caused by supply chain disruptions.
You have been a witness to supply chain transformation from close quarters. Kindly share with us some of the striking details. The Top 3 enablers for supply chain transformations are: 1. Customer centric supply chain: The mantra for success is ‘Customer first’. Understanding the customer needs and speed of response are the core themes in this regard. Strong interactions with our customers helps to ensure their requirements are built into our supply chain capabilities and Supply chain segmentation helps to bring in the operational efficiencies while meeting the customer demands faster. 2. Digital supply chain: Digitalization of the supply chain provides transparency and helps the enterprise save time, money and resources. In addition to the operational efficiency, the other benefits are: trust earned from reliability, data retention & security
and environmental sustainability through reduction in carbon footprint with paper-less transactions. 3. Global supply ecosystem: Establishing a global ecosystem of partners enhances the flexibility and makes the supply chain agile. Nearshoring of the supply-base not only provides cost optimization but also addresses the risks arising from volatility and vulnerability of global logistics. While agility & digitalization have become an integral part of all supply chain transformation initiatives, we are yet to unleash the opportunities from data analytics and automation.
INTERVIEW What are the missing links in the system that are still coming on the way to reducing logistics cost?
real-time information availability; and data analytics for predictive demand sensing.
There are many missing links in the system that are coming in the way of reducing the logistics costs. Some of them are: • Lack of end to end supply chain visibility • Poor forecast accuracy leading to inaccurate demand planning • Lack of predictive demand sensing • Lack of end to end connectivity • Need for improved infrastructure i.e. roads, etc., for improved last mile connectivity • Inability of people to manage dataenabled systems (drivers, etc.). At Nokia, we have programs to address these gaps. We firmly believe that our investments in End to end Digitalization & Data Analytics capabilities would address some of the challenges enumerated above.
How can an agile supply chain be achieved in such stiff competitive era?
What’s your mantra for supply chain excellence?
SHUTTERSTOCK
For me, the three aspects that make for an exceptional supply chain include simplified supply chain design (segmented) for agility; digitalized environment & automation to facilitate
Agility is a prerequisite to stay competitive in the long-run and not an option. A customer centric and digital supply chain supported by a global supply ecosystem as explained above is fundamental to building an agile supply chain. Process optimization through workflow simplification & automation will enhance the agility further.
What has been one of the most challenging projects managed by you? Establishing a global supply chain for Direct Customer Delivery (DCD) for partner products like Antennas & IP products has been one of the most challenging projects for me at Nokia. This involved eliminating the consolidation points and the inventory there-off. This meant a fundamental shift from an approach of having consolidation points (hubs) and shipping all products together to the customers to establishing a seamless process to ship the products from multiple delivery
points to the customer drop-off points while ensuring delivery of all products at the same time. APPROACH: We established a crossfunctional team of all business stakeholders with clear deliverables to reduce the supply chain costs by 50% and to eliminate the inventory of the partner products in the hubs. The next step was to ensure the sign-off of the objectives with the Business Unit (BU) Head. It was critical to have stakeholders from all functions including sales, product management, operations, services & legal as we had to secure the acceptance from external stakeholders i.e. the customers & the partners (suppliers of the products) as well before changing the mode of operation. In parallel, we went to the drawing board to define the as-is value chain and jointly agree on the to-be value chain. Techniques like Value Stream Mapping (VSM) were used for optimization of the value chain. After securing the external stakeholder sign-off and finalization of the tobe value chain, we decided to have 3 pilots for the Proof of Concept (POC), with the suppliers and customers in different geographies also to address the challenges of customs & trade restrictions. Since products from one partner were being shipped to multiple customers, we also successfully tested high-sea sales in one of the pilots. CHALLENGES: Securing internal and external stakeholder buy-in was tedious and time-consuming. As we wanted to perform the pilots through the normal mode of transportation via sea, involving some products with delivery time of 30 Days, the pilots took about 5 months for validation. RESULTS: The results surprised us as what seemed impossible in the beginning was over-achieved: a 56% reduction in the supply chain cost intensity and elimination of the hub inventories of the partner products.
How does Nokia look at sustainability in supply chain? What are the various initiatives being taken towards the same? Sustainability is a key focus area for the company and embedded in all processes, including supply chain. Some of the initiatives in the supply chain towards achieving the same include digitalization
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What are the tech tools that have helped you in enhancing supply chain network? Some of the recent technological tools that have helped us in enhancing the supply chain network include robotic process automation (RPA), value stream mapping (VSM) and data analytics (mining).
‘Inventory is a necessary evil’… we do stock up standard products based on indicative forecasts from the sales team. Air freight is also used to reduce the delivery time caused by supply chain disruptions. (for paper-less transactions), logistics costs optimization, inventory reduction, strategic supplier management & contracting, as well as circular innovation, by delivering remanufactured product.
What are the external & internal pressures impacting supply chain at Nokia? Ever evolving needs of the customer, growing stiff competition, speed of innovation, as well as 3rd party engagement complexity are some of the external pressures that have a significant impact on supply chain. Talking about internal challenges, legacy IT systems and tool landscape due to multiple mergers & acquisitions in the past decade pose complexities in the smooth running of operations.
You are a supply chain expert. What lessons would you like to impart to new age professionals to be a part of this transformation? New age supply chain professionals need to abide by the ‘customer first’ mantra to be leaders in their business.
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Moreover, early engagement with the customer (sales) can greatly help in understanding their needs for supply chain design & planning. To top it all, they should also firmly believe that supply chain is not a back-end/ support function but a critical business function. This way, they need to look at the game-changers, understand and translate future technologies and their impact to operations; they need to adapt to the upcoming supply chain trends and accommodate the disruptiveness we need for the future. Constant learning is a key success factor. Supply chain leaders need to have people working differently, to interact with diversified teams, to attract the right talent to maintain this constant learning environment. As turnaround times are much faster than before, out-of-the box thinking, curiosity, sharing, gamification of the business… are all elements Supply Chain executives must consider. At the end of the day, everyone needs to behave like the owner of operations, not just owning their area.
What are the crucial aspects that can create an exceptional supply chain in the country? Supply chain professionals need to step-up and think and execute like a business function. The government and the companies need to invest in future technology and work aggressively towards digitization & automation. The ‘Digital India’ Program launched by the Prime Minister Mr. Narendra Modi, the National Highways Development Project (NHDP) for building the road infrastructure and connecting the country and enabling the last mile resources (i.e. drivers, etc.) with the capabilities to manage the future digital supply chain networks will be key enablers to create an exceptional supply chain in India. Kapil Maini has an extensive track record in the automotive, FMCG & telecom industries over the last three decades. Throughout his career, Kapil has held various regional and global leadership positions in procurement, manufacturing & SCM and led transnational teams. Always passionate about contributing to Nokia’s growth, he focuses on achieving e2e cost optimization and delivery capability improvement. He leads his teams to achieve these objectives through the deployment of disruptive delivery models and selecting the right partners for robust performance. He holds a Mechanical Engineering degree from the Delhi College of Engineering and an alumnus of the IIM-A in Manufacturing Strategy.
INTERVIEW
CHUGGING ALONG THE SUCCESS TRACK “We see the transformation across the chain in near future. Our focus is on lean logistics and advance warehousing for optimization of value chain along with collaboration with our suppliers through online portals sharing information on real-time basis. Supply chain of the future, while more complex, will be less expensive and more efficient with money spent across the four key variables: energy for transportation, labour, inventory carrying, and rent, which will further undergo a notable change,” envisions Sachin Chhabra, Head of Procurement and Supply Chain, India, Bombardier Transportation. Bombardier has to its credit a global accreditation when it comes to building rail transportation. What were the challenges in managing supply chain in India? India is the fourth largest country in the world from a Purchasing Power Parity (PPP) perspective and with 1.3 billion people, one of the youngest consumer base, rapidly expanding middle class, all these factors make a huge market for every kind of company in the world. We are young, ambitious, developing and fast paced growing country with our unique set of challenges. Some of challenges to manage supply chains in India are pertaining to quality of infrastructure which also has a direct impact on overall costs. » If we compare supply chain costs, in developed economies like the US is in the range of 8~8.5% of GDP while in India, it goes as high as 13%. » Historically, we have had complex tax structures which never made your life easy, we are simplifying by introduction of GST, and is a very welcome move of the government. » National highways in India comprise around 2% of the road network but carry around 40% of the load. Shipments by roads generally take 2~3X time as compared to the developed world. » Ships can stay up to five days to
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dock at ports, which can be improved significantly. » Due to the presence of large number of intermediaries, product costs get artificially boosted, which decreases margins at the retail point of sales.
How do you see the rail infrastructure growing in India? How can it be brought at par with the global standards? According to the UITP, by late 2014, there were 157 cities with metro systems across the world, with 53 added since 2000 and in 2016, some 2,700 km of metro lines are under construction. This trend for metros is expected to continue, especially in Asia. Government of India is encouraging cities of over two million citizens to develop mass transit systems. This translates into a healthy market for approximately 3,000 metro cars in the next five years just for India. Indian Railways has a bold and ambitious vision for our country. Ambitions of Indian Railways are huge and focused, with emphasis on improving safety, expanding rail infrastructure, increasing track capacity, reducing congestion, raising passenger comfort levels, technological innovations, and faster train speeds. Rail is considered a significant engine of inclusive growth for India, with potential to contribute up to 2%
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INTERVIEW of GDP, compared to current 1% levels. To maintain historic levels of national growth at 7-8%, railway needs to grow by ~9.5% every year. This will create millions of direct and indirect new jobs, save energy and improve the environment, while moving people, raw materials and goods more efficiently nationwide. Bombardier aims to partner in transforming rail transportation in India by not just bringing it at par but by setting up new benchmarks for the world.
How does the entire value chain look like specifically talking about supply chain? By streamlining work processes, developing stronger relationship with suppliers and using technology, you can significantly improve company’s profitability. Supply chain is a vital part of this value chain where manufacturers, suppliers and contractors put concentrated efforts in providing value to direct and indirect customers to support company’s objectives. At Bombardier, Integrating the concept of sustainability into our sales strategy is a specific focus area at the operating level. We accordingly concentrate our sustainability activities on those parts of the value chain and interact where our influence on processes relevant to sustainability is the greatest. This reorientation is designed to optimize and standardize all supply chain and logistics processes as well as to increase supply chain transparency. Our entire supply chain comprises the following areas: procurement, production & processing, transport, warehousing and stores, customs & dispatches.
What are the latest trends in rail transportation globally as well as in India? Around 8,000 new metro cars and 3,200km of new urban tracks were added in the last two years globally.
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Capacity and safety are very important for cities, it’s an unstoppable trend. Digitization is not just the new buzzword but a new future. Digitization helps us to increase capacity and deliver more and increased automation in everything we do: preparation, driving and maintenance. Digitization is both a challenge and an opportunity for companies. With possibilities provided by Big Data, Bombardier is using fresh ideas from start-up scene to reinvent itself and whole concept of mobility. In terms of the environment too, it is imperative that the key issues of transport are addressed in a way that continually strive to improve ecological standards and protect the environment at large. The transport industry in India is now coming under a huge amount of scrutiny wherein issues concerning environmental standards and sustainability are concerned. Use and application of rail transportation solutions are an answer to this problem as rail transportation accounts for only 1% of the world’s CO2 emissions. In addition, with government’s strong focus on e-mobility vehicles across the world, PRIMOVE is a complete e-mobility portfolio developed
by Bombardier allowing cities and transportation industry to easily incorporate electric mobility. It includes wireless charging, compact battery and efficient propulsion systems for electric rail and road vehicles. PRIMOVE makes sustainable mobility a reality by reducing local CO2 emissions to zero. It eliminates noise pollution and integrates seamlessly into the environment.
Supplier selection is one of the most crucial aspect of your entire operations. How do you do that? What are the stringent measures that are being followed? Choosing the right supplier involves much more than scanning a series of price lists. Choice depends on a wide range of factors such as value for money, quality, reliability and service. How to weigh up the importance of these different factors is based on our business' priorities and strategy. A strategic approach to choosing suppliers also helps us to understand how our potential customers weigh up their purchasing decisions. We follow a stepby-step approach that helps us to make right choices. It helps to decide what
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we need in a supplier, identify potential suppliers and final supplier selection. Some of key criteria are: willingness and ability to share market risk; ongoing performance; systems or services facilities capabilities; financial strength; location; and certifications.
Supply chain holds a critical connect in the entire business. What are the USPs of Bombardier in brining innovative SCM practices? In today’s competitive landscape, though basics always remain the same, companies need to improvize ways of operations to maintain its lead position in the industry. At Bombardier, we aim to continuously optimize our supply chain and ensure efficient project and commodity management. We engage our suppliers early in the process to ensure flawless execution of our projects and enhance competitiveness through standardization and innovation.
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Our plan is to establish strategic partnerships with suppliers and work out supplier development plans in the future. As a strategic level, we deliver top performance, leverage Bombardier’s global scale and integrate suppliers in mutually beneficial partnerships. At Bombardier, we are focusing on few initiatives: » ‘Variablization’ of costs which is a paradigm shift from pure cost reduction. Supply chains must be agile and flexible, taking full advantage of increased instrumentation, interconnectivity and intelligence. » Enhance real-time information and sophisticated modelling to predict outcomes and take actions ahead of time over vanilla inventory reduction exercises. » Smarter supply chain operations matching demand with sourcing and manufacturing capacity around the world, instead of running each facility
separately. Today, through Intelligent business analytics, we can track and synthesize demand & supply trends to evaluate the ‘what if’ scenarios.
How aligned are you with your global counterparts? To leverage Bombardier’s full scale and combined knowledge, we have implemented a centralized global procurement & supply chain organization, not just for Bombardier Transportation but also Bombardier Aerospace. India is a very important part of this organization, which has common goals & objectives tied to the overall objectives for the company. This organization oversees company’s procurement, as well as their supply chains. It provides globally shared & united teams speaking with one voice to our key suppliers. Our ambition is a robust & cash positive supply chain across all business segments.
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Customer centric supply chain and customer centric behaviors do become important topics for sloganeering and the latest buzzwords but cascading and translating customer centricity into DNA of organizations is yet to happen and is need of the hour. What are the SCM best practices being brought by you in India? Companies that view themselves as dynamic and global establish prospects for themselves. At Bombardier, we have value propositions and supply chain best practices that separate us from competitors. For us, we know these value propositions are about surpassing the expectations of our customers from a total cost of ownership stand point. We not just try to understand trends but strive to lead them. We have a clear understanding in our organization that supply chain management can not only create service advantage but also acts as a catalyst for gaining new business. Few of Best Practices are: standardized product platforms; implementation of lean logistics; optimized inventory levels; balanced scorecards on supplier performance; and supply segmentation.
How has technology impacted the supply chain? What are tech tools implemented by you to streamline operations? Technology is shifting the centre of gravity in supply chain world. With delivery time frame getting shorter and shorter, material flow is at centre of this shift. Traditional warehouse model is getting obsolete. On production end of supply chain where upstream parts feed the factories & then to start downstream journey which is end-to-end supply chain. We see the transformation across the chain in near future. Our focus is on lean logistics and advance warehousing for optimization of value chain along with collaboration with our suppliers through online portals sharing information on real-time basis. Supply chain of the future, while more complex, will be less expensive and more efficient with money spent across the four key variables: energy for transportation, labour, inventory carrying, and rent,
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which will further undergo a notable change. At Bombardier, we are working on each one of them to keep our pencils sharpened always and stay competitive in market.
How do you aim to deliver transportation excellence and innovation? Expertise, creativity, market knowledge, sharing best practices across regions and vision are just some of the reasons why Bombardier is setting the industry pace in providing most innovative and cost-effective rail solutions in today’s market. We strive continuously to improve reliability, availability, maintainability and safety while supporting and strengthening sustainable rail transport. Predictive Asset Management, a ground-breaking capability, combines data gathered from rolling stock with Bombardier’s fleet knowledge and engineering expertise to enhance active management of vehicles and infrastructure maintenance, performance and operation. We ensure product quality meets customer needs by developing
standardized methodology and tools across the global organization. In the end, we can view the developed vehicle on high resolution ‘powerwalls’ – and even touch it. This innovative technology enables our team, as well as at management levels, to make considerably more precise and quicker decisions in real time and in different locations around the globe.
What are the sustainable supply chain initiatives taken by you? For us, sustainability in supply chain encapsulates number of different priorities which is over and above the focus only on bottom line: Environmental stewardship; conservation of resources; reduction of carbon footprint; financial savings and viability; and social responsibility. Our recently launched MOVIA Maxx metro’s appeal with consideration given to best value for money in terms of passenger capacity, acquisition costs, energy consumption, reliability and availability is focusing on our priorities. In addition, we are in process of adopting supply chain sustainability practices like Collaborative Planning, Forecasting & Replenishment (CPFR) by making use of our online portals to collaborate with our suppliers. This is an important initiative that provides supply chain collaboration and visibility.
You have spoken about building a customer-centric supply chain. Can you please elaborate on that? Customer centric supply chain and
INTERVIEW customer centric behaviors do become important topics for sloganeering and the latest buzzwords but cascading and translating customer centricity into DNA of organizations is yet to happen and is need of the hour. Historically, division of labor has been used to manage businesses which in today’s set ups, gets reflected in form of product organizations; functional organizations; regional organizations, etc. Customer centricity needs to dissolve these segments and create a bigger theme or mission of solving / easing a basic problem and that needs to become enterprise thinking. To build a customer-centric supply chain organization, I would focus on the following: » Map the supply chain process which begins from the customer and ends with customer » Implement Cost to Serve analysis to drive actionable results » High Say/Do ratio; deliver as promised » Establish Listening Posts » Use measurables like balanced score cards cross functionally to drive behaviors.
What are the aspects that make up for an exceptional supply chain network? A supply chain network can be strategically designed in such a way as to reduce the cost of final product. But unfortunately, it is observed that many companies, to begin with, have a divide between procurement and supply chain operations that robs the organization of vital efficiencies. Bombardier has worked hard globally to firstly recognize that gap and then to close it envisioning sizeable benefits. Our Procurement and supply chain teams share responsibility of integrating between themselves and extending
that integration outward, strategically, to suppliers. By considering both, their individual organization’s supply chain requirements and supplier organizations, supply chain costs and capabilities during contract negotiation or renegotiation, procurement professionals also gain access to some important new levers that they can pull to reduce total cost of ownership and improve the overall value of the supply relationship. Some key aspects related to drive these objectives are: demand forecasting and inventory planning; optimization of material lead times; and capacity planning both at suppliers’ and at our factories.
Has GST impacted your business? Implementation of GST in India is a welcome sign for the industries and one of most important moves administration has made post liberalization. GST would be good economic driver for the country, which eventually will result in more investment for improvement of railway infrastructure. GST will bring more transparency and process driven approach with less documentation, which will give confidence to MNCs like Bombardier to operate, invest and Make in India. With modernization and restoration of balance in the intermodal transport, rail transportation can be a significant engine of inclusive growth and development for India and can potentially contribute upto 2% from the current 1% GDP levels. With the impetus of GST, rail transportation will then, create new jobs, save energy, improve environment, while moving people, raw material and goods more efficiently nationwide. As a supply chain leader, certainly, there has been minor impact in the way we handled business transactions as tax levies concept has changed, from
pre-GST days where it was mostly on manufacturing (Excise) and sales (VAT) to post GST concept of supplies. It’s a journey which requires some re-alignment and planning and with this transformational approach, we are modifying some of our processes, realigning our business models to drive efficiencies and boost profitability.
What are the opportunities that India possesses for Bombardier? Over the next 5-7 years, various cities in India will procure approximately 3000 metro cars and plan 20 signaling lines. The Indian Government expects 50 cities will have population over 2mn by 2050 and is encouraging them to develop mass transit systems. This will generate demand for the urban transit solutions that we excel at. We are focused on projects, which we consider as strategic and have long term prospects for our operations in India. We are closely pursuing various metro projects in the cities of Delhi, Mumbai, Pune and Bengaluru along with light rail projects in the state of Kerala amongst various other projects across cities in India. There are various projects of Indian Railways for delivering rolling stock, components, signaling and services and Bombardier is keen to participate. Sachin has more than 20 years of work experience in global sourcing, supply chain, business operations, strategic planning & organizational management across the globe in different domains. He started his Procurement career at GE, where he was instrumental in setting up the sourcing hub in India, and later managed Sourcing activities for GE Oil & Gas business in Asia Pacific. He holds Bachelors in Mechanical Engineering from PEC, Chandigarh and is a Certified Six Sigma Black Belt. In addition, he holds PG Diploma in Materials Management & MBA in Finance.
Projects under New Metro Policy would prove to be significant to the country with technology injection, moving millions of people faster and enabling economic growth. With focused approach on innovative financial models and private investment, New Metro Policy will supplement domestic capital, technology, skills for accelerated growth. It clearly outlines importance of Make in India and Bombardier is one of the few rail companies, which is truly delivering the Make in India promise by manufacturing rail products and solutions in India for Indian rail operators and for exports. Bombardier is one of major suppliers of rollingstock across the world and we are delighted with the prospect that new policy allows for alternate analysis of mass transit mode basis requirement of Indian cities.
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THE BATTLE FOR POWER BEGINS! The Union Budget 2018-19 was essentially a run-up to the Lok Sabha elections 2019 and has developed a blueprint for New India. While it may seem enticing enough for the masses, the Budget has received a neutral reaction from the corporates and industry at large. While the ongoing GST conundrum and various other policy initiatives are yet to settle down, the Union Budget 201819 got thumbs up from the energy & healthcare sectors, MSMEs and budding entrepreneurs. Here’s a sneak peek into the recent reactions shared by the corporate head honchos on the shape of things to come post-Budget… ADITYA V AGARWAL, DIRECTOR, EMAMI GROUP A budget is not a collection of figures. It is an expression of aspiration and the vision of a Government. In order to maintain the socio-economic balance of a country, it is very important to bring up the quality of life and the income of the lower and middle class. The budget is in the right direction to bridge this gap. The four pillars of a nation’s development - infrastructure, education, healthcare and rural economy are the major beneficiaries from this budget, signaling more job creation and spending power in the hands of the largest population which will automatically help the fifth pillar – industry by generating strong demand across business segments, which is expected to boost the economy.
SUNIL DUGGAL, CEO, DABUR INDIA LTD Bharat, or Rural India, has been the key focus of Finance Minister Mr. Arun Jaitley’s Union Budget for 2018-19. It presses all the right buttons and ticks all the right boxes when it comes to fueling the Rural and Agrarian Economy with a slew of measures including higher MSPs for Kharif crops, upfront agriculture focus, institutional support for price discovery and upgradation of rural haats to give farmers better access to formal mandis. These measures, coupled with the mega Health Insurance programme for the poor and massive spending on rural infrastructure, will go a long way in strengthening the rural economy and boosting consumerism in the hinterland. Overall, the Union Budget 2018-19 is on expected lines and is focused on improving the quality of life in Rural India. He has re-iterated the Government’s promise of doubling farmers’ income by 2022 with various additional allocations and funds in this sector. The Budgetary allocation for cultivation of specialized medicinal and aromatic plants is another big positive and will help promote India’s Ayurvedic heritage. While there may not be any big-ticket Income Tax relief for the middle class, the increased standard deduction against travel and medical expenses will add to the disposable income in the pockets of the common man. The revision in fiscal deficit target for 2018-19 to 3.3% of GDP as against the earlier target of 3% is an area of concern.
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PERSPECTIVE RAJEEV JAIN, DIRECTOR & CFO, INTEX TECHNOLOGIES The Budget is focused towards increasing the personal disposable income in rural India and critical areas like education, health and infrastructure. This will further enhance the Make in India initiative of the Government in critical electronic industry particularly mobile, which is the key product of all the Government’s initiatives. The Budget will spur the demand side of the economy by proposing various rural income enhancement schemes and reducing various pain areas of farmers. This will in turn rejuvenate the overall economic growth and spur demand for consumer electronics items like mobile phones and LED TVs, thereby fueling domestic businesses. Intex has been known to cater to the developing tier 2 and 3 cities since inception with its affordable consumer products and with the various rural personal disposable income enhancement schemes introduced in the budget, it will give a fillip to the sale and demand of electronic products. The Budget has further
strengthened the Digital India initiative with the boost in increasing allocation for digital education through classrooms and continue with the further broadband penetration in the country. I welcome government’s move to walk the talk on ‘Make in India’ by increasing customs duty (to 20%) on the imported mobile phones and in PCBAs of accessories like batteries & chargers (15%), which will prove to be the big boost for localization and setting up of a domestic component ecosystem. This is big thumbs up to domestic players like Intex, which have been developing domestic capacities since long in electronics manufacturing. The Budget has also increased duty on certain LED TV components such as LED panels (15%), which will push for developing capacities for local manufacturing of components. Such move encourages Intex that has been working on enhancing domestic capacities and has recently began its own Open Cell Manufacturing or LED Panel manufacturing to improve quality control and produce affordable quality products. It will encourage localization in India with domestic manufacturers now implementing plans for local production capacity. Overall, the budget is development oriented fulfilling the ease of doing business and ease of living for citizens.
RAVICHANDRAN PURUSHOTHAMAN, PRESIDENT, DANFOSS INDIA Through the government's efforts to double farmer incomes by 2020, through initiatives such as setting up of an agricultural market fund of Rs2000 crores, doubling the budget allocation for the food processing sector from Rs750 crores to Rs1500 crores and the upcoming 42 food parks for agriculture exports, India is set to uncover its potential to emerge as the food factory of the world. This development-oriented budget’s focus towards strengthening India’s infrastructure sector through the expansion of highways, railways, metros and airports are set to re-write India's growth story. With the projected growth rate of 7.4% per annum in the coming year, India can look forward to furthering its development across all sectors, but the key growth outcomes will depend on how states execute the new projects on ground.
KUNWER SACHDEV, MD, SU-KAM The announcement of establishing 20 GW of solar power capacity and feeding 7,000 railway stations with solar power will go a long way in the adoption of solar energy. Measures such as lower corporate rate for small enterprises, the increased turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act for assessees in MSME category will create an enabling ecosystem for startups in the renewable energy category.
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ANSHUL SINGHAL, CEO, EMBASSY INDUSTRIAL PARKS India is one of the fastest growing economies in the world today. The inefficient logistics account for about 2% of the country’s GDP, so high costs could be attributed to inadequate infrastructure. There is a massive need of optimization. There is no doubt that the current government is highly supportive of developing logistics and infrastructure. We are well aware of the fiscal deficit and reducing exports in the country and this is a reason to worry but the high cost of logistics in India is coming into sharp focus as one of the key factors affecting the country’s cost competency. We hope that new reforms like Make in India, GST, Digital India and some reliefs given to the industry in the upcoming budget would help enhance performance in this segment and help grow trade nationally. We have huge internal consumption, which needs urgent addressing. Focusing on improving trade efficiencies within the country, creating millions of new jobs and contributing significantly to the country’s GDP.
TARANPREET SINGH, PARTNER – TAX & REGULATORY SERVICES, TASS ADVISORS LLP The Budget 2018 continued to reflect the government’s intention to brand a ‘new India’ as the budget proposals continued to put more focus on infrastructure development with the robust allocation of Rs5.97 lakh crore towards this sector. A strong infrastructure sector will support the stated objective of the government to boost further investment as well as generate employment. Continuing the focus on increasing air connectivity to support the regional connectivity scheme – UDAN, there is a lot in store in this budget for the aviation industry. Similarly, the budget proposal acknowledged the need to restore trust in the national transporter (railways) with focus on redevelopment of 600 major railway stations and setting up of escalators, CCTVs and Wi-Fi facilities. Significant spend on the infrastructure sector is indirectly going to boost growth in the logistics industry, which is likely to touch $215 billion in the next two years as per the Economic Survey. The policy initiatives announced in this year’s budget for the logistics industry is in line with the growth potential of this sector. The announcement of the development of online National Logistics portal to provide a single window clearance for all major issues faced by the logistics industry is a step in right direction. With new E-way bill regime in process of being implemented under the new GST law, India logistics industry is going to witness a smooth turn in operations increasing profitability. Reduction of the corporate tax rate to 25% should provide some relief to new infrastructure/logistics companies having a turnover less than Rs250 crores in FY2016-17. Considering the all-time high allocation to rail and road sectors and the intention to promote investment in infrastructure, the Government has certainly taken a step in the right direction to fulfil its agenda for inclusive growth and development.
NIKHIL AGGARWAL, CEO, CAMPUS FOOTWEAR We welcome the increase in custom duty from 10% to 20% on footwear industry, a great move to boost ‘Make in India’ by the finance minister and we congratulate him for the same. Also, the 2600 crore allocation to the leather and footwear industry, will auger well for job creation in the country. Budget 2018 has a lot for the 40% of the agricultural and rural population base, the national health cover and MSP is a fantastic step, which would result in generation of disposable income and inclusive growth for years to come.
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JASMINE SINGH, EXECUTIVE DIRECTOR NATIONAL HEAD - INDUSTRIAL & LOGISTICS SERVICES, CBRE SOUTH ASIA PVT. LTD. The logistics sector comprises road transport including small businesses, truck fleets and large transport companies, warehousing & third-party logistics companies. The sector has recently gained a stronger role with the growth of technology and digital commerce. Keeping the sector’s growth in mind (in addition to the infrastructure status granted in late 2017), the government has made some significant announcements in Union Budget 2018, especially with the emphasis on highways, railways and inland waterways infrastructure; all of which are likely to result in enhanced cost and time efficiency for the transportation and logistics in India. The proposed target of doubling 18,000km of railway lines and said gauge conversion is underway to enhance capacity. Additionally, the government aims to add 9,000kms to the highway network of India. Moreover, the budget focuses on constructing the rural infrastructure, earmarking Rs14.34 lakh crore from extra budgetary and non-budgetary resources, of Rs500 crore for ‘Operation Green’ to promote agriculture logistics along with Rs168 crores for port development and modernization.
ANJAN GHOSH, CHIEF RATING OFFICER, ICRA LTD The NDA Government’s last full-fledged budget, before the elections next year, was widely expected to deviate modestly from the fiscal deficit targets, while prioritizing its expenditure outlays on areas that could support the ongoing economic recovery and also address some of the critical issues plaguing the rural and agricultural sectors. Additionally, an area of interest was the forecast on revenue buoyancy for FY2019, given that the series of structural reforms carried out over the last couple of years was primarily expected to provide a fillip to tax revenues – both direct and indirect. With the GST having been implemented, there were no changes expected on the indirect tax front. There has been an increase in customs duty on several items which is expected to provide a boost to local manufactures of such products. The reduction in tax rates for corporates with a turnover of less than Rs250 crore would primarily benefit sectors like textiles, leather and ceramic tiles, which are highly fragmented and have a large number of small players. Overall, the budget is clearly focused on the rural and social sectors with the objective of increasing agricultural income and improving the quality of rural infrastructure and healthcare.
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Fortifying Healthcare Value Chain “Paras Healthcare works on the principle of bridging the gap. By providing exceptional medical expertise, infrastructure and technology to areas that lack the same, Paras is able to initiate a healthcare revolution in the rural areas,” avers Dr. Dharminder Nagar, MD, Paras Healthcare. How has been the performance of healthcare sector in the country? The present condition of the healthcare industry is far from sufficient. Although some ground has been covered, both by the government and the private sector, a lot needs to be done. We are far from fulfilling all the healthcare needs of the people, especially the poor and rural people. We have to find ways to reach out to them and also make healthcare more affordable to be effective in the
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Indian context. The most important aspect that needs attention is – Affordability, Accessibility and Quality. Problem of finding the right talent, in terms of doctors and nurses is one of the challenges. Finance is another issue that is plaguing the growth of the industry as a whole.
How have been the government initiatives in this regard? The government efforts have been praiseworthy in some respect. There are
about 26000 primary healthcare centres in the country and certain colleges and hospitals like AIIMS of very high repute. But a holistic approach by the government to address the healthcare challenge seems to be lacking. Even in terms of number of hospitals and hospital beds, a lot can be done by the government. The private sector is bridging the gap left by the government sector but there again a lot needs to be done in a country as large as India. The
INTERVIEW private sector is bringing in the latest technology, trained manpower and high-end equipment. The private and the public sector can play an important role in plugging the gaps that exist, and the process is well underway. It is also important to understand that the public and the private sector need to work in cohesion. The government needs to definitely regulate the industry and at the same time support our endeavors.
How is Paras Healthcare aiming to change the business dynamics? Paras Healthcare is a differentiator in the health industry today. We believe in bridging the gap and providing the community exceptional medical care. We aim at playing a smaller role in making the concept of healthcare for all a reality. The success of our hospitals is that we follow the motto of the organisation – Partners in Health. We believe in associating with the community at every level and standing by their side at times of need.
What are the expansion plans of Paras Healthcare? The expansion strategy of Paras Healthcare has been broken into two Phases; Phase 1 is from 2015 to 2020 and Phase 2 is from 2021 to 2028. Expansion will primarily be in Tier 2 cities of the North Indian Hindispeaking belt. Our target is cities with a population of 2m+ that have a medical college. The focus will be on establishing tertiary care centers that focus on Oncology, Cardiology, Orthopedics and Neurology. These will evolve into specialized transplant centers. By 2020, Paras Healthcare intends to establish tertiary healthcare facilities in other Tier 2 and Tier 3 cities too, to bridge the gap between demand and supply. Five years from now, we will have a bed strength of 2000. Partnerships with private and governmental organizations are in the offing.
How rife is the sector for PE investments? External funding is imperative and helpful for growth. We have recently been funded for ₹275 Crores and we have a clear focus for the utilization of the funds for our expansion. We see immediate opportunities in Uttar
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UP, CLOSE & PERSONAL How do you keep yourself healthy & fit? I regularly exercise and lead a balanced life. My routine consists of going to the gym, playing cricket with my nephews and not leaving any opportunity to travel. My diet is also balanced and I try not to overload my system. How do you keep your employees motivated? I believe in empowering my employees. Until and unless one doesn’t feel comfortable, they will not be able to perform and contribute. The other aspect is ownership – after all – with great powers comes greater responsibility. The minute you empower your employees, they become the gears who propel your organization to success. The last and the most important aspect is to appreciate. A simple nod and an appreciation can go a long way. What’s your leadership style? I think I shall classify myself as an ‘Activator’ – an activator of change and an initiator. I like to keep my goals clear and work with teams to overcome the same. What’s success, according to you? Success, according to me, is making a difference to the lives of the people and an acknowledgement of your contribution to the masses. Through my small contributions, I aim to be an active participant in bridging the healthcare gap.
Pradesh and Jharkhand. We also want to add around 100-200 beds to our Gurgaon facility. The current PE funding scenario for the healthcare industry is quite positive as they understand and recognize the true potential of the industry as a long-term revenue generator and as an active participant contributing towards the growth of the nation and its economy.
How do you envision the future of healthcare sector in the years to come?
of analytics that can be applied with technology for the betterment of the patients and healthcare delivery. We shall definitely witness a change in the pricing with healthcare becoming more affordable, accessible to the common man. More than the technology, we shall witness a sea change in the financial instruments employed. We shall witness an increase in insurance and a spurt in other models that reduce the healthcare burden on the common man.
I see a lot of quality care and professionalism coming in. I also see technology playing a game changer role it the healthcare sector. There are lot
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MANUFACTURING SUPPLY CHAIN SUMMIT 2018 CATCHING UP WITH THE INDUSTRY 4.0 WAVE With the theme, ‘Supply Chain Orchestration: Collaborative, Integrated, Digitized’, the recently held Manufacturing Supply Chain Summit 2018 hosted by Kamikaze B2B Media, touched upon the right chords for the supply chain fraternity to gear up for the Industry 4.0 or smart manufacturing wave to deliver up to the ever increasing demands of companies.
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he two-days power-packed event on Next Gen Supply Chain best practices held on February 27 & 28, 2018 in Mumbai was all about preparing companies to meet the everincreasing consumer demands in the most seamless and integrated manner. Right from the first session till the end, the event helped attendees in charting their supply chain improvization journey by adopting to the fellow companies’ best practices and strategies. The event managed to bring together some of the best supply chain and manufacturing strategists such as Amit Kumar Ghosh, Head – Operations & Manufacturing Excellence, Britannia Industries Ltd.; Girish Parundekar, Head – Manufacturing & Projects, Blue Star Ltd.; Sriram P, Executive VP – Operations, Pernod Ricard India Pvt Ltd.; Basavraj Biradar, GM & Head – Supply Chain, Siemens Ltd.; Anil Tomar, Director – Operations, Danone India, etc. During the panel discussion on ‘Future of Manufacturing: Digital transformation – the process of refining manufacturing and evolution into Industry 4.0’, Parundekar enlightened audience as to why the transition is
required. According to him, to erase inefficiencies out of the system, reduce cost, enhance competitiveness of products & sustainability, one needs to move up the technology ladder. The next very pertinent question that was discussed during the panel discussion was whether India should go for the transition. According to panelists, the country must gradually meet the criteria of enhancing competitiveness to make way for future generations. Kuntal Chaudhury, Senior Solutions Advisor, JDA Software, shared three pillars towards implementing Industry 4.0. These are interoperability, information transparency and easy access of technology.
OUT OF THE BOX INITIATIVES Deep dive sessions on the first day of the summit were a complete winwin as they not only connected the audience in brainstorming critical scenarios but also offered brilliant networking opportunities. Parallel round table tracks on technology, pharma, innovation, auto, CPG and warehousing provided various innovative case
stories. Individual presentations from companies such as Danone, Blue Star reflected upon companies’ best practices on enhancing productivity, employee engagement, product development, etc. The first day of the event also saw the glittering awards ceremony where innovative companies were awarded for their pathbreaking initiatives in various categories. The second day started with a panel discussion on ‘Manufacturing 4.0 in Action: How leading companies are creating the future today to deliver a customer centric supply chain’. Here the panelists presented their best in class initiatives to drive growth. In order to achieve the desired goal, panelists harped on the power of customer & supplier collaboration and deliberated as to how empowering manpower and enhancing skill sets can be game changing for companies. The last panel of the day and the event spoke about Customer Centricity and customer being at the centre of all decisions. Mr Deepak Patkar, HeadPatchems, Sical Supply Chain Solutions, gave an example of how a lifesaving drug was dispatched in time for surgery, bringing the JIT concept to Pharma.
THE AWARDS NIGHT Day one of the conference was followed by the much-awaited Awards ceremony. While the joy of winning was evident in the faces of every winner, The Bad Salsa Group (winners in a Talent Show on TV) added to the thrill by performing complex lifts and acrobatics. The entire two-day program was packed with key takeaways for attendees and reflected the need gaps that the industry needs to address to devise a seamless and integrated value chain.