Supply Chain Tribe by Celerity May - June 2022

SUPPLYCHAINTRIBE.COM May - June 2022 Volume 6 Issue 3 For private circulation only

INSIDE Nihar Parida, Senior Consultant, SpiceJet Ltd., talks about the buzzing Air Cargo segment Leading Pharma CSCOs demystify Intelligent Healthcare Supply Chains

CELERITY WEBINAR EXCLUSIVE

TRANSFORMING BUSINESS THROUGH PROCUREMENT

Capturing the changing Procurement landscape from two lenses:

Sustainability & Ethical Sourcing Technovations in Procurement

CONTENTS

May - June 2022 Volume 6 Issue 3

COVER STORY 14 | The

Green Canvas

Our recently held Webinar on ‘TRANSFORMING BUSINESS THROUGH PROCUREMENT’, had two panels. Panel One - ‘Sustainability & Ethical Sourcing, Supplier Diversity, brought forth leading global companies’ strategies towards ensuring sustainability. The panel discussion offered interesting success stories & best practices for others to imbibe and start their sustainability journey.

27 | Technovations

in Procurement

Panel Two discussion on ‘Digitization & Automation in Procurement’ focused on the various pieces of digitization and digitalization and their effective implementation, which is both costeffective, fast, and brings in resilience across the Value Chain.

6 | PERSPECTIVE

Intelligent Healthcare Supply Chains – Driven by Traceability This section unravels the intriguing facets such as healthcare companies’ resilient attitude that sailed them through unprecedented times, their journey towards digitalization during & post pandemic, the future of therapeutics, and India’s stronghold in global vaccination success.

FOCUS 25 | Starting

INTERVIEW 10 | Happiness

in Every Bite

Mr. Anil K Mishra, National Logistics Head – South Asia, pladis Global shares pladis’ triple bottom line phenomenon – Environmental, Economical & Social.

40 | Ready

for Take Off

Mr. Nihar Parida, Senior Consultant, SpiceJet Ltd., talks about the challenges & opportunities for Air Freight and Cargo.

at the Source

Constantin Blome, Professor of Operations Management and Associate Dean for Research, University of Sussex Business School, pinpoints that we should not forget sustainable supply chain research while pursuing research in new topics.

36 | Decentralized

Supply Chains using Disruptive Technology Abhishek Behl (Management Development Institute, Gurgaon, India) & Nirma Jayawardena (Griffith University, Australia), unravel the immense possibilities that a decentralized supply chain backed by disruptive technology can offer.

The Celerity Supply Chain Tribe Conference and Awards 2022 are scheduled for 06 August 2022 in Mumbai. For award nominations, sponsorships, speaker opportunities or registrations write to us on connect@supplychaintribe.com.

Editor: Prerna Lodaya

DISCLAIMER: This magazine is being published on the condition and understanding that the information, comments and views it contains are merely for guidance and reference and must not be taken as having the authority of, or being binding in any way on, the author, editors, publishers who do not take any responsibility whatsoever for any loss, damage or distress to any person on account of any action taken or not taken on the basis of this publication. Despite all the care taken, errors or omissions may have crept inadvertently into this publication. The publisher shall be obliged if any such error or omission is brought to her notice for possible correction in the next edition.

The views expressed here are solely those of the author in his private/professional capacity and do not in any way represent the views of the publisher. All trademarks, products, pictures, copyrights, registered marks, patents, logos, holograms and names belong to the respective owners. The publication will entertain no claims on the above.

No part of this publication can be reproduced or transmitted in any form or by any means, without prior permission of the publisher. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only.

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Ethical, Sustainable, Tech-enabled!

Dear Readers, Our consumers are a smart lot. The millennials or the Gen Y began the trend of wanting to know everything about a brand before buying it. Gen Z are taking it to the next level. They are comfortable with collecting and cross-referencing many sources of information, and therefore have become a potent influence on people of all ages and incomes. Gen Z is also considered as one of the most ethical/sustainable sensitive cohorts ever. Therefore, businesses and brands must look at their sustainability and ethical sourcing policies before selling to them.

Our panel on Sustainability and Ethical Sourcing looked at the ways companies have integrated this aspect in their policies and their implementation. This was Panel 1 of the e-Conference that Celerity Supply Chain Tribe hosted on ‘Transforming Business through Procurement.’

Panel 2 looked at the various technologies available to make procurement and supply chains costeffective, quick, and resilient. Read on to find the opinions given by the expert panel.

Healthcare supply chains have shown their resilience and much has been said about them. The panel hosted by NASSCOM CoE during SCM Enterprise Innovation Challenge, unraveled many intriguing facets.

This issue also as all our issues packs in many more topics, including challenges in the Air Freight industry. Hope you enjoy the read and find it useful in your professional life.

Charulata Bansal Publisher Charulata.bansal@celerityin.com www.supplychaintribe.com

Published by Charulata Bansal on behalf of Celerity India Marketing Services Edited by: Prerna Lodaya • e-mail: prerna.lodaya@celerityin.com Designed by: Lakshminarayanan G • e-mail: lakshdesign@gmail.com Printed by: Xposures, A 210, Byculla Service Industrial Estate, D K Cross Road, Byculla, Mumbai- 400027.

Logistics Partner: Blue Dart Express Limited

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PERSPECTIVE

Intelligent Healthcare Supply Chains

DRIVEN BY TRACEABILITY Healthcare supply chains have experienced the worst nightmares perhaps in a Century. While companies made rapid reshuffle in their supply chains, the situation was still beyond control.

With more than 24 months into the pandemic, pharmaceutical & healthcare companies seem to have a better grip of the situation and are striving towards a sustainable growth path backed by new-age technology adoption. Moderated by Dr. Lakshmi Jagannathan, Chief Executive Officer, DERBI Foundation, this panel discussion, hosted by NASSCOM CoE during SCM Enterprise Innovation Challenge, unraveled many intriguing facets such as companies’ resilient attitude that sailed them through unprecedented times, their journey towards digitalization during & post-pandemic, the future of therapeutics, and India’s stronghold in global vaccination success. Read on…

Dr. Lakshmi Jagannathan, Chief Executive Officer, DERBI Foundation

T

Mr. Debashish Roy, Former Head – Digital Innovation & Strategic Initiatives, Abbott

HE pandemic's disastrous impact on the healthcare system can't be expressed in just a few words: hospitals on the verge of collapse with overflowing capacities, critical item supply chains disrupted, Central and state governments struggling to figure out preventative measures, and the list can go on. While governments and private sector organizations did have disaster plans and stockpiles in place,

6 CELERITY May - June 2022

Mr. Deepak Bisht, Head - Strategy & Innovation and Environmental Sustainability, Novartis

the pandemic laid bare open several significant supply chain vulnerabilities, including shortages of personal protective equipment (PPE) and testing kits during the start of the pandemic.

Fearmongering and stringent lockdown only added to the woes.

Dr. Lakshmi Jagannathan, Chief Executive Officer, DERBI Foundation: Healthcare supply chains

Mr. Vickram Srivastava, Head of planning – Global Supply Chain, SUN Pharma

are complex structures spanning across multiple organizational and geographical boundaries - providing a critical backbone to the services vital for everyday life. The inherent complexity of such systems can introduce challenges, including inaccurate information, lack of transparency and limited data provenance. India is going through a very interesting phase, especially in terms of the global pharma industry.

PERSPECTIVE Companies are fearlessly embarking on a growth trajectory, aspiring to become a low-cost hub for manufacturing and R&D. Yet, of course, they are facing a huge set of opportunities, both local and global, specifically on the supply chain.

Forward thinking firms are turning their attention to build their capacity and their capabilities. The supply chain’s effectiveness and efficiency are emerging as a new paradigm in the entire pharma industry.

Why do we need real-time supply chain visibility and traceability?

Mr. Debashish Roy, Former Head – Digital Innovation & Strategic Initiatives, Abbott: At a high level, in supply chain parlance, there is a famous saying, “What gets measured, gets done”.

That is where you will hear industry stalwarts saying, “You give me a better forecast visibility and I will give you a better supply chain”. So, which is nothing but alignment of supply with demand and that is where most of us struggle in our day-to-day life. Visibility generally allows enterprises to identify disruptions up and down the supply chain and synchronize supply and demand both at the point of sale and at the required time of delivery.

At the same time, it also helps companies reduce risks and costs throughout the supply chain while improving the overall service levels.

How do you decide on evaluating the key elements that will help to fully integrate innovations such as smart factories and digital planning throughout the value chain?

Mr. Deepak Bisht, Head - Strategy & Innovation and Environmental Sustainability, Novartis: I think we all agree with the fact that digital technologies are expected to transform every link in the supply chain whether we talk about R&D, sourcing, factory operations, marketing, etc. But when you really look at the value creation from an innovation perspective across the value chain, there is no particular element, but we really need to look at a more holistic perspective.

As the saying goes that a chain is as strong as its weakest link. So, what really happens if you try to over-optimize one part of your value chain? Typically,

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the bottleneck shifts, so let's say if you over-optimize your sourcing process, the bottleneck really shifts to the manufacturing, and if you try to overoptimize manufacturing, the bottleneck further shifts to your distribution network.

So, as a company, we are really making a mindful investment to build a high-tech manufacturing and supply chain network with technology as a key enabler. We are partnering with some big tech companies to really transform our core supply chain manufacturing and distribution network.

One of the interesting use cases, which we are working, is establishing an Insight Center that really allows us to view our whole value chain from the start to the end in terms of how we source, how we do demand forecasting, how we operate at a short scope and how we really supply our products. To summarize, if you really need to bring the value from the digital innovation across the value chain, one really needs to look at a more holistic perspective, from choosing the right strategy and look at the right areas where the value creation becomes more tangible.

How has the digital imperative had an impact on the entire globalization of procurement and manufacturing and its allied impact on the supply chain itself?

Mr. Vickram Srivastava, Head of planning – Global Supply Chain, SUN Pharma: Digitization is here to not just impact every value node of the supply chain, but the entire value chain of the pharma. Just to share a quick anecdote on how digitization and digital transformation is really helping pharma – we typically talk about S&OP (Sales & Operations Planning) cycles, which have a longer planning horizon from three to six months. The entire digitization imperative – smart forecasting, demand sensing – right from MRP, production scheduling to procurement process has been squeezed into one seamless activity like IBP (Integrated Business Planning) and has enabled us to be more agile. The three to six months are now squeezed to about four to six weeks. This is all digitally enabled, which helps us to be closer to the market, so we manufacture what is needed in the market and we can better

sense what the sales and marketing team needs to do. We have become more agile, flexible and at the same time, we are more accurate with respect to how we service our demand. So, it's a win-win.

The widely accepted effect of digitization is in e-commerce.

Customers are expecting immediate deliveries of their orders, which has led to the springing up of a lot of aggregators such as Pharmeasy.

Are they boon or a bane for the pharma industry? What supply chain constraints are they solving?

Vickram Srivastava: My personal view is that this is the New Normal. The Gregorian calendar talks about BC&AD - So I talk about the new BC and AD Before Corona and After Disease. This phase that we are living in now is going to be the way forward, the way we are going to interact with our doctors is also going to get digitized along with the way we procure our medicines via e-commerce.

But that's not the end of it, this is just the tip of the iceberg in my view because all this is going to further get aggregated and consolidated into a single platform where you will get your insurance, doctors will view reports, testing will go online, medicines will be online and you will get them delivered ASAP to your doorstep and then the doctor will also – through smart packaging – monitor how you're consuming your drugs and monitor your vitals through smart gadgets. So, this is the way our healthcare is evolving, it is going to enable access to critical lifesaving medicines, and enable a lot of people to consult doctors, which wasn't feasible in the past.

On the supply chain part of it, the upstream part of it does not really get impacted because procuring of the material and manufacturing will remain the same. On the other hand, sensing the demand through apps and tools, forecasting what is needed, logistics and distribution, these are the key elements that will change a little. We are going to start looking at smaller stores, not huge warehouses where we store millions of dollars of medicines. We are going to store the key fast-moving medicines closer to the consumer, so that the moment you add order on the app, within two hours, you get the medicines. In my mind, this

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PERSPECTIVE is just the start, it must evolve a lot more and it's going to get consolidated and aggregated to a far greater level.

Any take on how it would impact the existing players in terms of managing the new dynamics…

Debashish Roy: While we continue to work on optimizing our internal processes, it's very important to keep an eye on the evolving marketplace:  Large stockists are aggressively acquiring to increase or retailer reach.

There is an increased competition among the stockists that we have seen.  Chain and E-Pharmacies already constitute 5-10% of the Indian Pharma market sales and are growing at two to three times the market, so that is something we should be cognizant of.  Especially post-Covid, the government is taking keen interest in trackable supply chain by leveraging digital solutions.  Competitors have already started to invest in capturing secondary sales data, using it as a decision and performance parameter.  We are also seeing multiple regional vendors cropping up with solutions offered to stockists and retailers.

Talking about the implications on the other hand:  Digital analytics will play a key role in bringing efficiency, reducing the cost, increasing reach and managing the inventory complexity.  Pharma companies are already moving towards harnessing supply chain as a strategic differentiator.  Upward trend in vendors seeking partnership with pharma companies for scale.

With the emergence of innovative personalized therapies (focus on individual treatments), how do you manage the supply chain complexities?

Deepak Bisht: As the name suggests, personalized therapies are tailored therapies to individual patients. Here we make use of the individual genetic profile and that really guides the medical treatment for the person. The supply

8 CELERITY May - June 2022

chain for such treatment gets complex because they are meant for one individual usage. To give an example, we draw the blood from the patient and extract a typical type of cells. Then these cells are genetically engineered in the labs to become “smart cells” that can identify and destroy the cancer cell when they're infused back in the patient. Here, the source and the consumer are the same, which is the patient. In such a case, there are number of challenges that need to be considered when designing a supply chain for such advanced therapies:  The shelf life of such a treatment – everything needs to be turned around within a week, unlike the typical manufacturing process cycle for conventional therapy, which takes months to years.  The temperature needs to be maintained not only during the transit, but all throughout the manufacturing and through different nodes of the supply chain.  End-to-end visibility so that all the activities across the stakeholders – doctors, patients, manufacturing, organization, or quality team should be in one place.  High data integrity, full traceability and auditability In the future, we need to see how best we can really scale and make sure that the affordability and the accessibility of such therapies can be broadened so that a larger patient pool can be addressed.

us have really read those tiny, printed leaflets, right? Since it must go through the entire cycle of manufacturing, the updates cannot happen instantaneously because it is linked with the production cycle. And there is a cost in terms of the environmental impact because we need paper, printing, ink and logistics to transfer those materials, and the paper waste that happens at the consumer's end.

So, we are working on a concept called e-leaflet, which is electronic.

Basically, how can we transform the paper leaflet to a QR code on the product itself so that the patient can get all the important product information related to the treatments on their smartphone.

With this implementation, we are saving paper in terms of printing and reducing waste because of the outdated labels. Also, we can update all the information in terms of safety and clinical information in real time and it offers real benefit in terms of anticounterfeit checks as well. More and more companies are coming into this space because I think it's a clear value not only for the patient but for them as well in terms of reducing their costs and for the environment.

What are your thoughts on incremental innovations around traceability driven by tech such as blockchain? Are we there yet in terms of tech maturity and tech adoption in pharma?

Vickram Srivastava: This is pivotal to how we are going to de-risk our supply chains going forward. Pharma being heavily regulated, we hardly had just-in-time. But just-in-time is getting coined as a different connotation – it has now become Just-In-Case. Having alternate vendors or alternate sources of manufacturing is both costly and time consuming because anything that we change in terms of our raw material or active APIs (Active Pharmaceutical Ingredients), or any primary component needs to go through a stability cycle or regulatory approval cycle because we are probably the third most regulated industry in the world after nuclear and aviation. And rightly so, because we are dealing with critical lifesaving drugs, which are meant for human consumption.

Deepak Bisht: I think Blockchain is one of the promising platforms we are seeing in terms of track and trace. One use case that we are working on with PharmaLedger, which is a consortium of 28 partners coming from the public and private sectors – around the paper leaflet usually found in a medicine packaging box, which contains product information that is meant for the patient or the healthcare professional.

We print billions of these leaflets every year, and the challenge we have seen is that no one really knows how many of

The pandemic is forcing organizations to rethink just-in-time sourcing and manufacturing. Compared to 24+ months ago, how has the process of sourcing raw materials changed in the pharma industry?

PERSPECTIVE Having said that, in the last 24 months or even before that, a lot of companies have been looking at localization and onshore sourcing to derisk supply chains and make global supply chains a little more localized. I've heard a term which I would want to share is – Deglobalization. Earlier we used to talk about globalization, now we're talking about localization or deglobalization where we are trying to be much more in control of our supply chains.

A lot of digital initiatives are helping over here because we are trying to get information about not just our suppliers, but also the suppliers’ suppliers and have that kind of visibility through platforms and technologies like blockchain.

In the future, there are going to be a lot of transitional shifts with respect to how we source our material? Which areas do we source from? How many vendors do we have for critical products? Which are the top line blockbuster products for a particular organization? We must look at all those things, but it is going to be a long-drawn process.  Currently, we are sourcing almost 65-70% of our API and raw materials from China.  India is the pharmacy to the world – about 30-40% of the drugs which are generic drugs consumed in USA are supplied by India.  More than 30% of the drugs which go to Europe are coming from India.

A lot of world healthcare is relying on India right now. We can see in the vaccine space also – how quickly we were able to develop the vaccine and deliver it (the AstraZeneca model), and how many people we've been able to vaccinate all over the globe. So, the onus is really on us as an Indian pharmaceutical industry to look at initiatives which can make our supply chains a little less complex. I don't think they will become completely complexity free but make them a little less complex and so that we as supply chain managers have better control on the critical nodes of the supply chain.

Debashish Roy: I will just take one example about how we have been struggling with accuracy and agility – these are the two terms which have been long debated in the demand planning world. Agility is something which is

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post occurrence of an event, which is the reaction agility and trust me, this is very difficult to achieve because it increases the cost of the overall supply chain. While reaction agility in execution is very important, anticipation agility in demand planning is also possible.

So, what if instead of reacting to an already occurred event, one could anticipate the event well in advance to either mitigate or leverage the impact of that event? And in such a methodology, is where technology comes into play.

With AI and Machine Learning, empowered with the right business context and forecasting models, teams can be equipped with the ability to anticipate future changes or exceptions, empowering them with the true agility that helps them be better prepared and improve both accuracy and consistency together.

Touching upon Blockchain, especially from a counterfeit standpoint, we are doing some pilots just to see how it can help us evolve the overall track and trace, tracking secondary sales data, all the way to tertiary sales. In addition to that there are certain other areas, which have evolved a lot post pandemic. One of which is operational effectiveness.

When I say operational effectiveness, it is helping us enable tracking of near expiry of goods sold to ensure liquidation and reduce expiry claims. Then the second is Insights, which is helping us have a dashboard type of view on the sales performance at a territory level to have more informed decision making. Then there is better customer engagement that can help increase influence over distributors plus increasing efficiency by reducing order intake times.

inventory levels we look at and the kind of warehousing we have.

Deepak Bisht: I think technologies are just tools of achieving what you really want to achieve, but I think more fundamentally, we are making things more transparent, whether we were able to communicate, onboard our suppliers and understand where the gaps are. I think the focus, for us, has not been looking into the supply chain, manufacturing, or distribution, but really looking more from a product perspective, only then can we look at where are the opportunities to really serve our patient with less costs, with less inventory and at the same time, manage high service levels. So, I think a product management view is very important rather than a technological view. Technology is our enabler, but we need to have an end-toend product view, at least for the major brands, to really support our patients at the end of the day.

Debashish Roy: We have spoken about various technologies, but the one thing common to all are the stakeholders.

The shift that is required in the industry – researchers, academia, drug manufacturers and all the distributors in the supply chain network would need to work together to make things happen.

And that is a big change from how we operate today.

Which are the technology enablers that could play a very important role going forward specifically in the pharma supply chain industry?

Vickram Srivastava: There are multiple things, but in my mind, optimum demand sensing and forecasting could be a good start. I feel that if we can look at that one piece, the starting piece of information that can have a cascading effect down chain, in terms of how we are building capacities, what kind of technology/tools we are keeping ensuring procurement happens smoothly, what kind of

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Happiness in

EVERY BITE

“As a responsible business, delivering the highest quality products and exceptional service, pladis’ products have the potential to reach more than 4 billion people across the world. pladis people are passionate about collaboration and creation, using consumer insights and trends to fulfil its promise; ‘to bring happiness to the world with every bite’. This, combined with rapid speed to market, enables the company to bring its products from idea to on-shelf quickly, so they are available for consumers all over the world,” shares Mr. Anil K Mishra, National Logistics Head – South Asia, pladis Global, during an exclusive interaction…

Kindly share with us pladis Global’s journey in the India market.

UB is a leading international baked snack business, part of pladis, which combines three centuries of baking and confectionery expertise by bringing together its iconic Godiva, McVitie’s and Ulker brand. Our company was established in India in March 2009 as United Biscuits. In June 2016, United Biscuits became a part of pladis Global having three iconic brands under one umbrella – McVitie’s, Godiva and Ulker. pladis is the proud steward of over 300 years of family baking and confectionery experience. The expertise of its 16,000-strong global workforce spans 25 factories in 11 countries, and is founded on collaboration, agility, and resilience. We believe all foods can be enjoyed in moderation as part of a healthy diet, including our snacks. We’re committed to providing our consumers with the right information to help them understand how our products can be part of a healthy and balanced lifestyle.

How do you plan to take on your contemporaries with your product offerings?

Our unique selling proposition is our constant focus on producing healthy

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products through continuous innovation, with a customer first approach. Besides, we place immense thrust on our maintaining agile distribution system, a strong pan-India network, constant customers’ feedback and priority action, regular market visit by all departments apart from sales team to know your customer, know your business & take positive action. Our aim is to adhere to zero defect policy and relentlessly raise the standard of our offerings. We lay immense thrust on bonding and aligning within internal and external stakeholders, omnichannel ordering pattern, e-commerce. Our incredible social network helps us keep a constant connect with our consumers.

How do you differentiate Indian market vis-à-vis global markets?

What are the challenges in operating in India?

Indian market is quite dynamic and diverse. The key to Indian market is the adaptability to changes and quick response time, which scores an edge against other global markets. India is highly competitive market and can compete with any country of the world.

We are growing much faster than any other economy in the world, but it does

Anil K Mishra CLTD is an astute professional and IIM Calcutta and BHU alumni with nearly 20+ years’ experience of continued career progression accompanied by key accomplishments in the areas of SCM logistics. He has sound domain expertise in SCM, Logistics, Procurement, S&OP, Demand Planning & Forecasting, Inventory management, 3PL, Export, Import vendor development, etc.

He has exposure to multiple business verticals including FMCG, consumer durables, electronics, power solutions, retail, IT & Hi-Tech, automotive, service etc.

not really reflect our real potential, which is helping us grow amidst several adversities. There are global challenges and one of the lessons for India to learn, therefore, is to build such firewalls around its own economy that the impact of these global developments can be minimized. Most global industry leaders

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We work on a triple bottom-line phenomenon – Economical, Environmental and Social. We focus on alternative ethical sourcing principles. We map our supply chain based on requirement and geography. We always have a backup plan in place and are being more vigilant. We focus on improving visibility, increasing feasibility, close coordination, communicating effectively. We quickly embraced the New Normal and changed our mentality. We started adopting CPFR approach (Collaborative Planning, Forecasting and Replenishment), which aims to enhance supply chain integration by supporting and assisting joint practices. are expressing interest in India, and they also acknowledge our true potential. The slowdown in China does not directly impact India adversely, but it does impact the rest of the world. As the world has become more globalized and connected, companies have sought to capitalize on the opportunities presented by countries beyond their own. These opportunities are both supply related like more abundant raw material or cheaper manpower, and demand-driven like growing incomes of larger consumer populations.

With many of these emerging market economies opening in the last few decades, home-grown companies saw an opportunity to scale themselves up – indeed, in many cases, it was a door-die situation. Many of them succeeded exceedingly well in doing so – becoming, what we’re terming ‘Local Giants’.

Despite the slowdown in the last twoodd years since Covid & several other global uncertainties, India’s long-term potential as an attractive marketplace remains as strong as ever, buoyed by healthy demographics, such as a young population. Today, global MNCs and local giants compete in almost every sector of the economy. Indian market is very competitive market, low price driven market with a vast geography having different cultures, different tastes, different language, etc.

Despite India opening its borders to international trade, there are still several hurdles to overcome when importing and exporting goods like Custom, FSSAI, etc.

Several layers of bureaucracy make it very challenging to move goods efficiently, and companies must file a long list of documents before moving goods across borders because every state has its own set of rules & regulations when it

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comes to setting up business. The LPI (Logistics Performance Index) by World bank is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance.

How were the last two years in terms of managing supply chain of your products amid the pandemic?

The COVID-19 pandemic is not just a short-term crisis. It has long-lasting implications for how people work and how supply chains function. Last two years were very challenging in terms of managing supply chain during pandemic.

Supply chain and logistics were costlier.

We had vehicles but there were not enough resources to run the show due to Covid-19 induced guidelines and scare among people. Sea freight and domestic freight rates were sky high, due to reasons such as shortage of vehicles, manpower, congestion at different ports, government rules, etc. Challenges were faced in lifting the RM /PM till factory

due to government restriction in the first and the second wave.

What came to the rescue was aligning IT and digitalizing systems and support to evolving work requirements. We placed more focus on omni-channel to collect orders from customers. Due to dynamic demand, we did mini S&OP to align production and sourcing of RM/PM. Online shopping and local shops played crucial role in reaching to end consumers.

Our human resources team also played crucial role during the pandemic. They were in constant touch with us and helped us immensely in taking care of the family when it came to any medical emergencies.

What are the crucial learnings gained during this time?

We created contingency plans and laid emphasis on business continuity plan (BCP) – starting with scenarioplanning strategies for different demand environments, preparing succession plans for key executive positions. We realized that plan B should be in place in case plan A gets failed. In order to mitigate supply

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Solutions powered by Artificial Intelligence have played a crucial role in automating various sections of the food industry’s operations particularly the monotonous, repetitive duties so that the more creative and strategic efforts can be concentrated on with more focus by the human personnel. The technology is particularly effective in sections in which enormous amounts of data are required to be processed for solving optimization issues and driving operational efficiency.

Our focus is also in ascertaining sustainable supply chain in the coming year. shock, we worked closely with existing suppliers while diversifying the supply base, as well as government officials. We managed demand volatility by managing panic buying situations while taking on a responsible retailer and sales role. We ensured a safe working environment by investing in protective gears for supply chain workers and communicating with the teams via Apps to manage time, availability, and safety. Our company became more focused on cash flow and understanding & developing alternate sources of supply. We leveraged advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI), robotics, SaaS, blockchain, machine learning, etc. Now our digital supply networks are designed to anticipate and meet future challenges as well. We also ascertained that in case of exports, we should have multiple registrations at different sea and dry ports.

We work on a triple bottomline phenomenon – Economical, Environmental and Social. We focus on alternative ethical sourcing principles.

We map our supply chain based on

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requirement and geography. We always have a backup plan in place and are being more vigilant. We focus on improving visibility, increasing feasibility, close coordination, communicating effectively. We quickly embraced the New Normal and changed our mentality.

We started adopting CPFR approach (Collaborative Planning, Forecasting and Replenishment), which aims to enhance supply chain integration by supporting and assisting joint practices.

How do you foresee the performance of FMCG in the next few years and how is supply chain going to be a key enabler in this journey?

With a growth rate of 14.7%, the FMCG sector has been projected to grow to a market size of almost US$220 billion by 2025. With household goods and personal care products amounting to up to 50% of FMCG sales in the country, the FMCG sector has proven to be India's fourth-largest income-generating sector. We believe focus on sustainability, customer experiences, Digitalization, e-commerce, Big Data & analytics,

artificial intelligence, direct distribution, hyper local market, IoT, SaaS, blockchain, 3D printing will be the major trends going forward.

Retail has gone digital. Smaller brands are evolving to reach a wider audience, selling through communities, direct and doorstep delivery. They are focusing on environmentally and socially-friendly brands. There is a great emergence of online shopping in B and C tier cities.

We believe simplifying supply chains creates business efficiencies and can help to reduce uncertainties and risk. A more streamlined supply chain increases the importance of each supplier relationship, creating incentives for companies and suppliers to collaborate on development opportunities and innovation projects.

The four key enablers of supply chain management implementation are managerial understanding of the implications of increased customer power; establishing appropriate relationship structures; leveraging technology for enhanced visibility and communication; and the use of supply chain facilitators.

The use of artificial intelligence (AI) and automation is on the rise in many supply chains. Automation allows you to streamline repetitive tasks, while AI — which attempts to mimic human intelligence and “learn” — can assist with more complex, challenging tasks.

Earlier Supply chain was considered as a sub-optimal function in the entire value chain but now after pandemic it has become the nerve center of the business as it carries 55-65% cost during buying RM/PM /service, so if they do economical buying in comparison to competition, then the company gets more profit. A sound supply chain should have future buying and visibility capability and most importantly, the SCM department should

INTERVIEW

act as the GUARD to any company.

How can the industry revolutionize the food supply chain and what role pladis Global can play in these evolutionary dynamics?

A food supply chain encompasses all the processes –how food grown in a farm arrives at the dinner table. This includes the farm, manufacturing/processing, distributing/supply, retailer, and consumer. The goal of the grocery stores/ FMCG industries is to achieve quality food at a low price from the supplier, so they can still make a profit and offer competitive prices to the consumer.

Wastage in food industry is big issue, which is directly impacting to company’s P&L. More focus should be placed on how to reduce it. The food industry has been adopting the IoT technology for a variety of tasks, which include enhancing companies’ capacity of keeping track of food production, ensuring the safety and quality of the food, keeping an eye on the maintenance systems to avoid errors, and handle facilities remotely. IoT is also adopted to reduce food waste and boost yields.

Solutions powered by Artificial Intelligence have played a crucial role in automating various sections of the food industry’s operations particularly the monotonous, repetitive duties so that the more creative and strategic efforts can be concentrated on with more focus by the human personnel.

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The technology is particularly effective in sections in which enormous amounts of data are required to be processed for solving optimization issues and driving operational efficiency. Our focus is also in ascertaining sustainable supply chain in the coming year.

Any remarkable government policy initiative that you would like to highlight, and you would like to give any feedback on the upcoming policy that can shape the future of food & FMCG supply chain…

Fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector with household and personal care accounting for 50% of FMCG sales in India. Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$220 billion by 2025, from US$110 billion in 2020.

Indian packaged food market is expected to double to US$ 70 billion by 2025. The sector witnessed healthy FDI inflow of US$ 18.59 billion from April 2000 to June 2021. Rising digital connectivity in cities and rural areas is driving the demand for FMCG (through e-commerce portals).

Investment approval of up to 100%

foreign equity in single brand retail and 51 % in multi-brand retail and the Union Government’s productionlinked incentive (PLI) scheme gives companies a major opportunity to boost exports. Atmanirbhar Bharat Abhiyaan, Digital India, Fasal Bima Yojana, Mudra Yojana, Mission Shakti, Skill India, Matsya Sampada Yojana, Gati Shakti, etc., are supporting the faster growth.

Going ahead, we believe initiatives such as National Logistics policy (NLP) will create a single window e-logistics market and focus on generation of employment, skills and make MSMEs competitive. India's logistics sector is highly defragmented, and the aim is to reduce the logistics cost from the present 14% of GDP to less than 10% by 2022.

The National Logistics Policy (NLP) is aimed at streamlining and strengthening India's logistics sector, promoting the seamless movement of goods across the country, and increase the ease of doing business for players in the sector.

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COVER STORY

The

GREEN CANVAS

14 CELERITY May - June 2022

COVER STORY

With the ESG norms gaining centerstage, many corporations have pledged to work with only those suppliers that adhere to social and environmental compliances. While the statement might seem simple and workable, there are myriad challenges in ascertaining that everyone in the value chain is aligned with a bigger corporate goal of enhancing sustainable expanse. The complexity further accentuates when there are multiple small sourcing partners spanning global geographies. Our recently held Webinar, ‘Sustainability & Ethical Sourcing, Supplier Diversity,’ brought forth leading global companies’ strategies towards ensuring sustainability.

The panel discussion offered interesting success stories & best practices for others to imbibe and start their sustainability journey. Excerpts…

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COVER STORY

Holding your organization and its partners to a high standard is not just good ethics, it is good business which fuels customer loyalty and brand building blocks.

SANJAY DESAI Co-founder & Regional Director, Humana International (S) Pte Ltd.

What is ethical and sustainable sourcing?

What is the role of supply chain (or sourcing) in this equation?

Ethical sourcing can be explained as the process of products being sourced from sources which are manufactured or procured responsibly and sustainably. It is a component of sustainable sourcing but not the same thing. Sustainable sourcing is a process of selecting materials, products, and services from suppliers in a sustainable way. In applying sustainable sourcing, organizations integrate social, ethical, and environmental factors into selecting their suppliers. An entire value chain of an organization needs to be committed to the cause of sustainability.

Sourcing is one function, which is uniquely positioned to contribute to meeting a corporation's sustainability goals because of their overall control and span of responsibility. Few key elements…  Sourcing leaders and teams should review their spend and identify categories in which sustainability efforts may achieve success.  They should build a program that defines and adopts common methodologies and approaches.

Focused effort should be made to promote the program and create awareness.  Sourcing operations group should develop sourcing policies (Governance), which become their SOP (Standard Operating Procedures). These policies should clearly explain the corporation's sustainability goals and expectations from their suppliers.  The sourcing compliance group can then govern and score suppliers according to these policies. They can build questionnaires, surveys, reviews, site visit audits, scorecards, and the like to measure how their suppliers are complying with the stated goals and how well sourcing has aligned with the corporation's sustainability mission.  Finally, sourcing organizations should benchmark and compare their own mission, policies, and achievements

Are these two terms different and is there an inter-play between them?

Yes, this is a very pertinent question and there is no straight answer since one complements the other and only one is not complete without the other. From the way you look at the words, they do look and feel the same. But just like most words, the difference can be seen in their actual meaning or execution.

Ethical sourcing is the art of selecting the suppliers based on how ethically and responsibly they have produced or procured their products / services as well as their suppliers. Sustainable sourcing is the process of looking for a sustainable solution to keep up with the demand for a certain product including managing the value chain (life cycle) of those products / categories in a circular manner.

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with other organizations/ vendors in the same industry.

What are the silent benefits of Sustainable and Ethical Sourcing?

Primary benefits of sustainable and ethical sourcing are  Reduced environmental impact: Reduce waste, improve environmental footprint  Manage Risks: Reduce supply chain disruptions, improve risk management cadence  Reduced Cost: Develop Vendor quality, reduce errors in operations, increased total cost of acquisition or ownerships with key suppliers  Increased top line & bottom line: Differentiated products and service offerings, increased competitiveness with competition, ability to attract / retain new customers  Develop / penetrate new markets: Focused product offerings in specific markets, circular product life cycle management  Brand management: Brand promotion / protection, customer loyalty integration.

Is there a “shifting” mind-set on sustainability and ethical procurement in last 3-4 years?

Yes indeed, there is a clear sign that top class multinationals are moving the needle in the right direction insisting on sustainable and ethical procurement practices with their major vendors, their tier-I and Tier-II suppliers. This is helping

COVER STORY

67% 56% of consumers prefer to work for socially responsible companies.

52%

of consumers will pay extra for products and services from socially responsible companies.

of consumers made at least one purchase in the past six months from socially responsible companies.

52% 49% of consumers check product packaging to ensure sustainable impact.

the organizations to change the mindset of consumers who are more aware and conscious of the brands they purchase.

The young cohort (Gen X and Gen Y) make decisions that support environmental and sustainable enterprise in a serious manner. According to (SIG) Sourcing Industry Group Survey (2021), these are some of the interesting statistics.  67% of consumers prefer to work for socially responsible companies.  56% of consumers will pay extra for products and services from socially responsible companies.  52% of consumers made at least one purchase in the past six months from socially responsible companies.  52% of consumers check product packaging to ensure sustainable impact.  49% of consumers prefer to volunteer/donate to organizations engaged in social and environmental programs.

How do customers react to ethical and sourcing strategies by an organization?

In recent years, sustainability has become the front and center for both consumers and brands to reduce the impact and effect of climate change. A big part of these sustainability initiatives includes the use of ethical sourcing.

According to a survey conducted by Software giant OpenText (2021), 81% of customers value and prefer to buy from organizations who embrace sustainable and ethical sourcing.

What is even more interesting is that 25% (of 81%) respondents said that

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of consumers prefer to volunteer/donate to organizations engaged in social and environmental programs.

the mindset changed since last 20-24 months, clearly indicating that customers indeed have started to re-evaluate their stance on ethical / sustainable sourcing.

Another interesting survey result was 71% of respondents said that businesses have a responsibility to ensure their suppliers abide by an ethical code of conduct. And this is something that we have seen garnering a lot of attention with F100 organizations.

Another survey statistics highlight that nearly 60% of respondents indicated that (Governance) government needs to introduce regulations, which hold businesses more accountable for responsible & ethical sourcing. This can get a bit tricky when considering how consumers feel about governmental oversight into their daily lives. But, in 2019, the Trump Administration stopped imports of clothing, gold, diamonds, and other items believed to have been produced with forced childlabour by companies based in Brazil, China, and Malaysia, as well as some gold mined in eastern Congo and diamonds from Zimbabwe. Nearly 88% of survey respondents said when shopping online after the pandemic, they will prioritize buying from companies that make it clear the organizations have ethical sourcing strategies in place not just on paper but in their operations (example - last mile delivery).

What is the next frontier for Sustainable & Ethical sourcing?

just like checking a box. Instead, the phrase represents the culmination of several coordinated efforts, suggesting that an organization is committed to enforcing sustainability, ethical behaviours as well as a serious awareness to social responsibility. While cynics might once have dismissed sustainability and ethical sourcing as catchy buzzwords, they have become an essential element of any risk mitigation strategy. Holding your organization and its partners to a high standard is not just good ethics, it is good business which fuels customer loyalty and brand building blocks.

For organizations without the resources or vision to kick off comprehensive initiatives, a more sustainable and ethical approach can begin with something as simple as behaving more transparently with trust and strong operational processes in dealing within their supply base to start with. Then, on the demand side, they can invite their consumers to provide their feedback, engage more directly within their distribution network, and reach out to competitors as peers to leverage open data which can be shared. You do not need to change the world (or even the foundations of your company) to make sustainable & ethical sourcing a reality.

This is an evolutionary process, which will not happen tomorrow, but it will happen one day if the leadership stays committed and strong in their execution.

The terms Sustainable and Ethical sourcing will continue to evolve in a serious manner. Ethical sourcing is not

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COVER STORY

KANISHK NEGI Sustainable Procurement Director, Schneider Electric How do you see sustainable procurement and how does Schneider Electric approach it?

If we look at the strategic mission of Global Procurement at Schneider Electric, sustainability is one of the core pillars along with bottom line and other key impact areas. Generally, we not only focus on the achievement of business targets but equally analyse how these targets are achieved. And our sustainable procurement strategy, which is a subset of the global procurement strategy, provides us with this framework.

Sustainable procurement for us is to ensure an ethical and compliant supply chain, where we not only engage with our suppliers to avoid malpractices on environmental and social aspects but also review the premise/selection/ composition of materials that are purchased. We have special programs with our suppliers on different thematic areas, guided by our sustainable procurement strategy.

On the topic of climate action, we launched The Zero Carbon Project on 2021 April. And now we’ve formally onboarded more than 1000 suppliers globally and are working together to reduce their overall operational emissions by 50% by end of 2025.

On circularity, we are working with our raw material suppliers on material innovation and development, to make the materials more sustainable, for example, with lower environmental footprint, throughout their whole life cycle including when being disposed.

We are also revamping our packaging

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Think of sustainability as a transformation measure for your organization. Companies need to constantly innovate and upgrade to respond to the evolving trends in our operating environment. You can’t stay static. These are way too powerful trends to ignore. So, treat it as a lever to drive change and just go with it. to make sure that we phase out all the single use plastics and use only recycled cardboards in packaging by end of 2025.

We are pushing the boundaries of working conditions and expect all our strategic suppliers to follow decent work practices, in addition to auditing the high-risk suppliers.

Besides being audited by statutory auditors as part of our annual financial disclosure, the performance of above areas together with several other commitments are linked in the financial incentives of the senior leadership.

As a result, I can confidently say that sustainability has been embedded in the DNA of procurement at Schneider Electric.

How do you ensure a uniform implementation globally in a global organization?

Schneider Electric’s sustainable procurement strategy guides and identifies the thematic areas of intervention and the Sustainable Procurement team develops supplier engagement programs for each area with operational details and specific KPIs. These programs are adopted in the annual working plans by the procurement teams globally and implemented with suppliers.

Performance on sustainability programs is a key area of review for procurement teams, along with productivity and quality parameters.

The recent IPCC report suggests

that we are falling behind in efforts to limit climate change and 2030 has been declared as the decade of action. How can procurement contribute to this and what is Schneider Electric doing in this regard?

It’s a very important question. As a global society, we are not meeting the pace of action required to prevent the catastrophic climate change. The emissions from upstream and downstream of the supply chain are significantly higher than the company’s own emission and that’s why procurement’s role becomes extremely crucial.

Procurement team can engage suppliers and influence them to reduce their emissions. Without active participation of suppliers, we cannot make significant improvement on the climate action.

Schneider Electric launched the massive “The Zero Carbon Project” on 2021 April to engage and onboard more than 1000 suppliers globally and reduce their operational emissions, which is part of our upstream emissions, by 50% by 2025. This program is part of the overall Schneider Electric ambition to operate Net Zero carbon emission supply chain by 2050.

It is indeed an ambitious program, can you share insights on how you are approaching The Zero Carbon Project and what have been your learnings?

The strong relationship between procurement teams and our suppliers

COVER STORY provided a very concrete foundation for this initiative. Without their efforts, we could not have launched this program.

One interesting insight that came from the Carbon Maturity Survey, which was conducted to understand the stage of decarbonization of our various partners and how much effort they need to take to meet the requirements, was that more than 70% of participating suppliers are at very initial stage and they just started the discussion around carbon emission.

This called for intensive engagement with our business partners to help them get familiar with the sources of emissions, calculation process and actions required to reduce the emissions within a limited timeframe. To support our partners in this endeavour, we developed and deployed an elaborate supplier support framework. This framework comprises of 4 quadrants: The first one is extensive training, curated at different levels of support required. Last year, we conducted 8 technical training sessions across multiple geographies, time zones, in different languages, pulling experts from different functions of Schneider Electric to explain decarbonization, actions implemented

by Schneider Electric (Schneider Electric reduced its operational emissions by more than 50% between 2017-20). This assured our suppliers that Schneider Electric has already walked this path so with proper planning it is possible to achieve large decarbonization in limited period. To complement this big picture, we also provided extensive support to initiate carbon footprint calculation.

More than 50 sessions were conducted to provide practical guidance on process of calculating the carbon footprint, data sources and collection, emission factors, etc. Additionally, more than 40 one-on-one handholding sessions were conducted with various suppliers who asked for additional support, to solve the inquires raised by suppliers.

We also initiated a series on peer-topeer experience sharing, during which we invited some of our partners (and internal experts) who are leading the decarbonization journey to share their experience. All of these engagements comprise the ecosystem of multiple formats of training, coaching, which are currently extended and are available for

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our suppliers, making sure they could get a head start in this journey.

The second quadrant is the self-help mode. We have developed a dedicated web portal, which is available exclusively for our participating suppliers and contains multiple training modules, thought leadership, and new research on decarbonization. The web portal makes all the information available for the partners round the clock for them to move forward with their actions. We are also working to include premium content into this web portal, which is about to release soon.

In the third quadrant we look at making the expertise of Schneider Electric available to our suppliers, from the experts at our own manufacturing locations as well as Sustainability Business division, who can offer advice services on decarbonization.

The last quadrant focuses on developing customized solutions that leverage incentives available across the board. This includes leveraging local government support on decarbonization to Schneider Electric partnership with CDP to make ensure additional training and resources available to the partners.

Many more initiatives are in progress.

more than 50 of our facilities globally, by the end of last year were 100% operating on clean energy sources. They have completely phased out the fossil fuels and the RoI has stayed within the regular consideration for financial decisions.

Another point is early adoption.

Keeping sustainability lens helps the leadership take a long-term horizon in decision making. It helps to identify the future trends at an early stage, so to enable an early preparation.

Another important consideration is the drastic evolution of the environmental regulation globally, over the past decade. Several new regulations have been introduced that mandate the corporations who are operating global supply chains responsible for the actions of their suppliers and to require sustainability due diligence, public report on the hot spots and remedial actions.

In many cases, countries link these disclosures to financial instruments.

All these regulatory shifts are making sustainability as a baseline now for procurement operations.

What, according to you, is the “sustainable” model for the success for companies?

It’s ironic that this topic is still part of discussion today, although a little less.

Our experience on this has been very clear that companies who follow responsible business practices, will perform better than the companies who do not. This point has also been resonated by various rating agencies in their studies, and there are reasons for that.

If we ask the question at the very fundamental level, what is sustainability, it’s all about efficiency – efficient use of resources, efficient use of raw materials, and efficient use of energy, water, reducing the waste. It’s also about switching from conventional carbon intensive sources to clean sources, which require innovation.

Of course, you need to be strategic, approach it in a planned way, but all these actions – if implemented in a right way, pay you back with positive returns.

If we talk about our own experience,

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COVER STORY

ASHWIN KAK Procurement & Sustainability Head India & Southeast Asia, AB InBev

What is supplier diversity to you and how does it affect sustainable and ethical sourcing?

I think it's important to realize that probably an incident like the Rana Plaza, which happened a decade back, acted like a flashpoint when it comes to D&I in general in supply chain. I think from that point if you see how far we have progressed now and what really is happening in the larger corporate space in which we are in is immense, the kind of changes that have taken place now when you look at diversity, I am also intentionally adding inclusion because those are two sides to the same coin. I'll probably take 2 examples to explain how we probably address it in a supply chain. When you look at the work that we do with barley farmers in India, we are very clearly looking to ensure that the farmer soil test results capture what input to apply, and they are not excessively applying something. That's probably one way we are working with them in a 360-degree approach. We also ran a pilot last year on responsible sourcing principles (RSP), which is an embedded principle where we started reaching out to the women farmers in the family because we realized that although women in the family are doing most of the work when it comes to farming, they are not officially registered anywhere as farmers. So, they probably have lack of access to finance, and we did a pilot in the state of Haryana and parts of Rajasthan. The response that we received was immense in terms of those women farmers completely embracing

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We must stop thinking that sustainability is something which the sustainability team does, it has to be embedded within the organization, engage your employees more, your shareholders more, your consumers more and talk about it at the top of your voice. Silently doing it in a corner and not talking about it will not make people learn from those successes. this initiative and starting their own micro entrepreneurship journey. That was probably one way we started looking at it from our farming ecosystem.

When you look at the packaging space, it's very interesting, the industry we are in, we have returnable glass bottles, and we have cans. There are ways in which we work with our suppliers or intermediary partners to either increase the returnable content, returnability of those bottles that are there for increasing the recycled content in the cans but somewhere in getting those numbers right. What is important for us also to understand is that the way these bottles and cans return in our supply chain. They pass through probably 7 or 8 layers and the first mile in the supply chain is the waste picker or the waste handlers. I will give you a startling fact here… waste pickers in the country have an average life span of 39 years, which is half of the average lifespan of a general population.

We started working with our bottles and cans suppliers and now we are looking at how can we address the needs of these first-mile collectors in the supply chain. That's how we look at the entire sustainable and ethical sourcing merging together within the procurement function and getting embedded because a lot of what I'm talking about is not being implemented by people who carry sustainability designations, but these are procurement category leads or the agriculture team, which is implementing all of this.

Is there any other function that you need to have a corporate social responsibility kind of a structure overarching, that will drive this, what do you what's your take on this?

Different corporates have different structures or the way they address it.

There are certain corporates, which would either have an integrated team, while there are others, which would have a separate CSR team or a separate corporate affairs team. In some cases, the HR or the peoples’ team in the plant itself is implementing it, so I would say, looking at it agnostically in terms of what the structure is, these teams will need to work with each other. At AB InBev also, we work very closely with our corporate affairs team, which also has the CSR professionals. We collaboratively work when it comes to implementing these initiatives and it would be the same when I was in my previous organization in Pidilite where we were implementing a foundation-based approach to CSR, but we were working with a lot of technical experts, which would otherwise have been in the sustainability. Integration & merger will be the future, which is hopefully the present in most of the corporates.

Are there any quantifiable benefits for me as a consumer of being sustainable and ethical sourcing player and these benefits are applicable to whom – to customers to the buyer or to the

COVER STORY seller?

Talking about quantifiable benefits, I would look at ethical sustainable sourcing in the supply chain and its final impact on the consumer from three perspectives – Consumer, Employees, and Shareholders.

From a consumer’s perspective, one of the points, which was probably in my mind was the Premiumness of sustainability in general because a lot of times, I hear pushback from certain innovators in the field, certain startups who are trying to do something innovative and they're saying this is something sustainable, but this costs like 10% more, but then my question back to them always is but have you found out if the consumer is also willing to pay 20% more for this. I think that is very important and that's where I would say a lot of start-ups, which are coming up with innovative ideas, should not be bogged down because in many cases, we are seeing consumers who are actually willing to pay premium also for sustainable brands.

Coming to the second aspect of Employees, we see it constantly in all of our internal surveys, all of the great places to work surveys that our own employees are number specifically calling out their happiness or their positive association with better world or sustainability initiatives that we are doing but I would say more importantly are also in those surveys calling out a lot more ideas on what we can do and so that is literally a quantifiable metric that we see internally in terms of our own employee engagement, which is literally when I'm talking about the employee engagement score. When I'm talking about an audience, which is also our consumer, which is the Gen Zs and the millennials, we see an internal validation also of it, people accepting it, and wanting more of it.

The third and the most interesting side and in which we have grown the most in the last five to six years is the Shareholder’s perspective. Why is this important? There are now dozens of surveys, which are showing investors willing to pay more for companies, which are sustainable stocks, which are being rated much better on stock exchanges, which are authentically reporting, which are having the proper disclosures in place, having the right actions in place,

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etc. In our own organization, for the Asia Pacific zone, of which India is a part of, we have taken a 500-million-dollar loan, the interest rate of it is completely connected to our ESG performance. The better our ESG performance, the lower will be the interest on that would be for us. It's incentivizing again not just the sustainability team but the entire ecosystem to help deliver on those ESG and sustainability metrics. That's literally something quantifiable in terms of P&L impact also that we are seeing in front of us. These are a few ways we can look at and how the quantifiable impact is embedded in our ecosystem.

could be something as simple as actually knowing what's your baseline in terms of scope 1, 2 and 3 emissions. We have also started doing the supplier carbon baseline assessment and we want to probably take the full year to do the first pilot of it because we realize it's not something, which can happen overnight. Covering and jumping over that data barrier, which exists right now of, actually knowing what your baseline is, so that then your interventions can be addressed accordingly.

What are the top two or three biggest social barriers that you can talk about achieving sustainable growth in the procurement?

To give you an instance, we were trying to create more transparency in a returnable glass bottle supply chain, we created this nice application with a bunch of intelligent start-up participants. It was all in English and Hindi, but then we realized that we must do the pilot in South India. So, at some level, I think the way we are also looking at transparency through digitization will need to embed multiple languages within it. That would be one thing, which was an important learning for us, which stood out for us.

The other thing is for a lot of MNCs like us, we have strong global guidelines and global SOPs, but a lot of time they just get embedded into a contract in that same English language, which I don't know how many of the suppliers as an addendum to that agreement would really understand fully, and the scope of what is being talked about there when it comes to certain responsible sourcing practices. More and more these languages of different global best practices, which exists, must be customized and that's the only way forward now.

I would say externally the biggest barrier would be certain sectors or categories where we are trying to bring about a change from a sustainability and ethics perspective and it's very unorganized.

Classic example being the returnable glass bottles category - when you are trying to create a full supply chain impact, you need buy-in from six to seven different intermediary layers.

One clear challenge we are facing is in the way those sectors are organized.

The other one if I look internally and I think it's time for us also to be a bit more introspective and sceptical, it's also the traditional procurement mindset. We understand we are progressing and we understand in the last one decade itself, we have progressed a lot, but I think somewhere the more we have to make the supply chain sustainable and ethical, the less we have to start thinking of just from a cost control mindset but actually start looking at it from a cost optimization mindset, start looking at how procurement as a function can also value add to increasing the net revenue.

I think within procurement, getting that larger business case commercial concept to actually embed and sell these cases much better within the business that will really help. I would say that would be an internal social mental barrier in that sense within organizations that has to be transferred. It's the lack of transparency in the entire supply chain right now, it

How much does (Technology) education and language play a part in that?

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COVER STORY

Sustainability is an opportunity, go grab it.

VINAY CHAUHAN Head Procurement – Emerging Markets, Bridgestone Can you provide an example of ethical sourcing?

Since I come from a tyre industry and we are all consumers of tyres, let me start with a base by decoding what a tire is.

Basically, tyre is made up of number of components, of which 50% is rubber and out of this 50%, 25% is natural rubber and 25% is synthetic rubber. Then we have 23%, which is carbon black – partial combustion of oil. So synthetic rubber and carbon black come from the oil industry. Then we have got polyester, which is again a petrochemical product.

Then we have steel wire, belt wires, lead wires, which are coming from the steel industry, iron mining and coke and then we've got multiple chemicals – organic, inorganic, oils – which are mixed and that is how a tyre is prepared. Now let me take the example of natural number because nature rubber is composing of 25% also natural rubber sources are limited in the world, which are coming from Southeast Asian countries, West Africa, South America, and these are in the rainforest areas. Now what happens in this industry is 85% of the land holders are smallholders, so they've got very limited voice.

Bridgestone continues to work to support these farmers by educating them in the ways to improve productivity, better farming techniques to reduce soil degradation & fetch with superior Breed seeds which continuously We are also founding members of Global Platform for Sustainable Natural Rubber (GPSNR) which has the small form owners, OEM’s, NGOs, and tyre

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manufacturers as members. The agenda is to drive capacity building, sustainable sourcing & tracing, Small farm holders’ representation & a shared responsibility working group so that the burden of developing sustainable natural rubber production practices does not fall disproportionately on a single node.

Do end users and customers really care that Bridgestone is indeed sustainable and ethical in their sourcing strategy? Does it necessarily reflect in your top line and bottom line or especially when you go to Nasdaq, do you do you get any kind of preferential awards?

To answer a question, we must see it from multiple perspectives – from the customer’s perspective and from the stakeholders’ perspective. If I talk about the stakeholders’ perspective or management perspective, the answer is an empathetic YES. Everybody is aligned, in fact, Bridgestone has gone ahead and now we are calling ourselves as Sustainable Solutions company. So, sustainability is something, which is at the core of the operations and the strategy. If I talk about the consumers and that is where I slightly disagree with some of the panellists, what they mentioned. The question is whether it will hit the bottom line or the top line. To hit the top line, if your cost is going up, your price gain should go up, then you will have the top line increase without hitting the bottom line. If you can't increase the price, will your volumes go up sufficiently enough to reduce your fixed cost and thereby giving you a better bottom line or a combination of these things? It's not very easy to say yes or no because there are shades of grey.

There are different levels of maturity of people, different levels of evolution of countries and their perspectives are different. Coming to the Indian perspective, if I can take the example of Amazon Great Indian Shopping Festival period, we find they sold 4 billion dollars in that period while their annual sale

was 13 billion dollars. So, 30% of their sale is coming from that segment of offer, which they are offering during the festival. That means the price sensitivity of the customer is still very high. So, the people who are there, who are aware, who are mature, do they add up to the level of scale where companies can go and invest and charge premium. That is still a question mark. In fact, we also have some products, which are fuel efficient, but the wear life is less, and they are not selling to the extent just because the awareness is not there and the price is high, though eventually the value of the money is much better using those products. So, the question here is, should we discard sustainability or should the companies pursue sustainability? The answer is yes, sustainability is about existence. If you are not working on sustainability, your existence will be under threat. Take for example the electric vehicles, we all know that tesla became the number one automotive company in the world in a very short span of time. Had the other companies not invested in electric vehicles, they would be looking at a very bleak future. Though the cost of electrical vehicle was high, yet people continued to invest in electric vehicles and the future is of electric and renewable energy itself. Similarly, if you take example of solar energy, initially the solar energy was much expensive, yet investment kept going into this innovation, and eventually today the cost of solar energy is much lower than the fossil fuel or coal energy. The question – why is this happening? The answer is very simple… we have 195 leaders of the world coming together and stating that we will reduce our NDCs by so and so volume. Why is that happening? Because the situation is very alarming. If we don't act right now, it will change the paradigm. These leaders are setting the targets and these targets will come out in terms of policies & framework and people who are working on sustainability will get the definite advantage over here. Sustainability is key to the operations; it may not reflect in short term. It will reflect in the long

COVER STORY term. You must continue working on sustainability and keep on innovating so that you are able to bring down the cost of operations and prove that sustainability is sustainable in operations as well.

What is climate finance which was addressed in the cop26 convention?

That's a very interesting question. Every year we have this assembly of leaders, and which we call as the confederation of parties and this was the 26th meeting, which took place just recently. Before this, an important meeting took place in 2015, which was Cop21, also known as Paris agreement and there they realized that whatever the NDCs, which have been proposed by the respective governments, if they abide by those NDCs, the climate temperature will increase by more than 2.7 degrees. As of now, the temperature increase is 1.3 degrees and the target is to

have it well below 2 degrees and ideally, target is to have at 1.5 degrees. That is the whole thing about why we need to be so aggressive in our approach towards sustainability and climate finance. Now the question is how we achieve those finance and there the principle was common but differentiated responsibility and respective capability. It is a wellknown fact that since the Industrial Revolution, the developed countries have contributed significantly towards the greenhouse emissions and thereby they own the major responsibility. Also, they have a significant capability to finance because of their status of affairs and the developing countries or the small island nations would require that support in terms of finance to work on the sustainability models. Therefore, at the Paris agreement, it was decided that the developed countries will contribute 100 billion dollars per year, which they

could not do it, they were able to reach up to 70-80 billion dollars. The discussion is still going on to re-fine-tune that figure, and which will subsequently come to us in the next Cop27 meeting. It is also worthwhile to note that though they could not contribute hundred billion dollars but when we had three storms in the US, the US Government had to invest 256 billion dollars to recover from that situation. Also, there is a study which says that in 15 years, post-Paris agreement, we will have to invest 90 trillion dollars for the infrastructure to control the climate change, which means approximately six trillion dollars per year and no government, in any world, can contribute that kind of amount of finance. Therefore, the government, the private companies and individuals have to contribute to this mission of controlling climate change.

Start the leadership thinking about sustainable and ethical sourcing, don’t wait till the customers come after you. It’s okay to start small. Learn to crawl before you walk and learn to walk before you run.

PETER WOON Senior Director – Supply Chain, Cushman & Wakefield Can you explain this whole focus on responsible sustainable and ethical from a procurement standpoint and what does it mean to the end customer?

Responsible and ethical procurement is not new and yet it’s not old in the way the procurement organizations have been traditionally linked with a cost saving, getting the best cost from system, getting best value out of that cost, and so on. Recently what we have realized that in supply chain, another area that has gained a prominent mention is that

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of Risk Management and Compliance.

Ethical sourcing came about from the need for risk management for the company, which is primarily aimed at protecting its product & services and trying to ensure that whatever sourcing activity that they do for the company to manufacture products & deliver services they offer, must be obtained through a sustainable and responsible methodology.

This process ensures that every company protects its brand so that if there's any negative reporting vis-à-vis sourcing, doesn’t impact the company in a long run.

This is getting more important with new age consumers taking the reins of buying ethical products. They are beginning to get more aware about the sustainability initiatives around the world. They are demanding that manufacturers and service providers get more responsible in their sourcing strategy and deliver a sustainable and ethical product to them.

How do you do as a procurement person to develop ethical sourcing strategies if you have a massive scope? Is there any SOP available

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COVER STORY or is it something that the procurement function needs to write?

I wish there was a standard SOP. If you look at it today, our suppliers’ portfolio is wide & varied, ranging from multinational companies to SMEs to mom & pop shops within the country and local regions and local countries.

They possess different levels of maturity and capabilities. Having said that, this is also a fact that the scope of ethical and sustainable sourcing is very wide, be it climate change, deforestation, human rights violations, forced labour, etc.

Ethical & responsible focus can be very wide from company to company and industry to industry. What is important to succeed in this area is to have a topdown approach from the leaders of the company. They need to set an example as to how they view the company should be doing, taking the cue from not only within the leadership or the company but also taking the cue from the customers’ requirements. Some customers mandate that you do certain things in the area of ethical and responsible. So, you take the queue from there to deliver what the customer expects of and sometimes also take leadership to demonstrate to the customer that you also are doing it as your own initiative. You have to start off with the basics first because the range of suppliers’ maturity is very wide, creating awareness, what is your scope and your program, what's important to your company, how is it important to your company and to your supply base, you need to emphasize whether is it climate change, deforestation or decarbonization or whichever aspect that you choose and then you have to prioritize as you can't really tackle all at once.

The process needs to be step by step, starting from basic and graduating till advance level. Companies need to learn how to crawl first before they start walk, learn how to walk first before running.

Only then you're able to measure your emissions target. You need to also put in an implementation monitoring and assessment methodology and again you can't do this for 50,000 suppliers. You must demarcate your critical suppliers having high impact on your processes and start with them to derive the tangible benefits rather than taking a

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big bang approach. You also need to segment your supply base and then work on different segmentation with different implementational strategies. I think these are the few areas that need to be looked at in different ways. We cannot have a one-size-fits-all approach. We must customize it according to the needs of the suppliers. We must segment it and we should take a gradual approach. We must take the segments of our partners, segment of our suppliers, which are much more critical, initially engage them, chart the path for their journey, how will they move from stage one to stage two to stage three and then we graduate and evolve to extend the coverage to the other segments, which are available.

How would a B2B environment versus a B2C environment, that segregation strategy would work? How should a procurement professional take into consideration?

It’s a tough question… A B2B environment tends to be a bit tricky because when you're dealing with business where someone is supply based, it doesn't really come under your control and purview unlike where you are doing your manufacturing and you have your supplies directly under your control. The best way to look at it is to take the cue from the top management leadership to understand if this is important for the company, an important aspect that is needed to make the company to deliver a unique selling proposition for the company and its important clients, then we then go and approach it from a strategic point of view, how to then roll it out within the company and then within the supply base and then within the open ecosystem throughout. Within the company with the customers within the company and then with the supplies, so it's a whole ecosystem supply chain for the internal customers and then to the supply base.

How easy it is to transform your supply chain or your valuation from a linear to circular?

This is one of the interesting new thinking processes that a lot of companies are beginning to explore. Typically looking at it from a linear perspective again can be

complex as we're not just talking about supply chain within certain geographies or region or industry, we are talking about literally supply chains across industry and right now there's a new terminology we're talking about – Supply Web, which is not just a chain but web in the whole ecosystem, so looking at it from a supply web means it's not just one supplier but suppliers’ suppliers and so on. That tends to be quite a massive network, which may be quite challenging but looking at it from a circular economy space and circular approach, primarily what it essentially shares with you is the basic tenet of three Rs – Reduce, Reuse and Recycle. Companies need to look at any of the current inputs that goes into the process and whether that process can then be reduced or recycled throughout the supply chain such that you minimize the wastes associated. Similarly, it's not just a raw material, but also a resource around it and this resource can be a precious material, that also could lead to decarbonization initiative. That leads us into a different level of thinking process and different level of maturity. Not many companies today can really explore into this area of circular supply chain. Those who can do it, will probably be able to simplify as much as possible and that they target certain specific areas.

FOCUS

Starting at the

SOURCE Since the beginning, we have always talked about the environment being greener, but we neglected the social sides of matters, at least on the research side. Of course, there were people in ethics conducting research, but we were not confronting this topic sufficiently in the supply chain.

Constantin Blome, Professor of Operations Management and Associate Dean for Research, University of Sussex Business School, takes his research path to criticize just like a mirror to pinpoint what the whole discipline probably has done and what should be considered for the future in research to do even a better job that helps people on the ground.

J

UST like there are many waves in the ocean, in the academic citation data too, we can already see that in the last year, the citation rate for sustainable supply chain research is far lower than what you would expect for Covid related research. While that's completely natural, we should not forget that there are so many topics and many questions unanswered for each of these waves, be it operations excellence, supplier management, or quality management. Of course, as research professionals, we have to jump on the new waves to address because there are societal needs, but I think, at the same time, we should not forget that we also address topics that are still out there in the more classical domains.

If you look at the supply chain, we typically have three challenges in this sustainable supply chain field… first, let's take the example of Nestle to understand what's happening in their upstream supply chain. Around 278,000 people are working in the upstream supply chain, but more than 25 million people are impacted through their upstream supply chain. If

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we calculate GHG emissions and water consumption, we would be surprised to realize that the footprint is enormous.

It makes sense for firms to concentrate on ensuring sustainable supply chains. If you optimize your sustainable footprint, that would be great. Still, the big lever and the big necessity lie in the upstream matters, which is a bit difficult because the supply chain cuts through multiple institutional contexts. We did the sustainable procurement training for Nestle on a global roll-out happening from Switzerland for different categories.

We aimed to help these firms during this journey because they had a question.

We could help them understand how to better conduct due diligence in the supply chain, a chain of custody for different areas of cocoa, coffee, fish, etc., which proved to be quite insightful.

WHEN IT'S THE SLAVES THAT PAY Academically speaking, the most severe environmental and social breaches happened in the upstream supply chain.

Lead firms have inadequate information

Prof. Constantin Blome’s research interests include supply chain management, procurement, and operations management, with a strong focus on sustainability, innovation, and risk issues.

Constantin is also co-owner and board member of two companies: n-side is one of the fastestgrowing companies in Belgium, specializing on the optimization of energy markets and clinical trial supply chains. He studied at the University of Bielefeld and Technical University of Berlin (M.Sc. and Ph.D.) and finished his habilitation at EBS Business School, Germany. He is also a certified purchasing and supply manager (C.P.M. and CPSM).

about their lower tier suppliers and have limited control, and very often, it's the sub-suppliers that are not visible for the focal firm; however that's all clear, but we very often think about sustainable supply chain management from the focal firm side, and my view is that this is not really helping too much because we need to understand that there will be potential extra benefits for the focal firm.

But we neglected the triple bottom line, as I mentioned earlier of the local people.

Also translating to the Indian context, you might think about tree plantation, the garment industry if you can pursue sustainable supply chain management, one side of the coin is to think about the focal firms and then how they benefit and implement, but even more important is, of course, if you talk about sustainability that this happens on the ground, at the source, at the local site.

In our earlier studies, we realized that companies perform supply chain due diligence only to create an impression on their consumers that they are ethical firms. However, we figured that the objective costs, in comparison to their

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FOCUS Blockchain-enabled systems can support the reduction of environmental impacts, and knowing where impacts occur allows supply chain companies to address these concerns.

Buyers can directly help supply chain firms reduce impacts, incentivize good behavior by incorporating environmental impacts as a purchasing criterion, and providing consumers better information to make buying decisions.

turnover, are minimal what they have to spend if you look at the focal firm.

To ascertain that the rules are followed across the chain, typically, these focal firms assume their first-tier suppliers to comply with those standards, and they ask that those suppliers, in turn, seek compliance from their suppliers, and the cycle continues till the last supplier. The intent is to develop a seamless network of sustainable practices flowing smoothly throughout the supply chain. While it might sound like a great plan, it's often hard to implement.

In order to ensure that the best practices percolate down the value chain, lead firms need to empower their firsttier suppliers with hands-on training and even offer some incentives for adhering to sustainability practices. Such training has had a positive impact on the suppliers' operational processes. Focal firms need to understand that lowertier suppliers are the least equipped to fulfill sustainability requirements due to no expertise and lack of resources.

Additionally, these suppliers are located in countries with non-existent or highly relaxed regulations. In the end, no matter what you do, they might not entirely change the supply chain as you expect.

The focal firms in the western world ask for sustainability certificates, but unfortunately, they always say that they cannot pay for it because the price is fixed through markets in competition, and in the end, they expect every member of the supply chain to pay for their due diligence costs. They cannot really charge higher prices, and then you can already make the mathematics up for yourself. In the end, this means the focal firm who benefits the most from sustainability standards because their consumers like their image and can protect against further issues

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and credit value. The local firms, which are not visible to their consumer, will not get more business. Supply development is one way to improve the local situation, and it has to be the local government to bring the change.

As compared to other countries, legal regulations surrounding sustainability are quite different in India. These standards are not easy to adapt to and manage actively across the absolute supply chain. In the Western world, they lay a lot of emphasis on focal firms as responsible NGOs rightfully attacked the most powerful players in the supply chain. For instance, Zara was even held responsible for independent suppliers' failure in falling worker standards in Brazil. One more classic example of the Greenpeace campaign on KitKat demonstrated the impact that society can bring in enhancing sustainable paradigms of companies globally.

BLOCKCHAIN & SUSTAINABLE SUPPLY CHAIN Consumers increasingly today are demanding brands to be accountable for product integrity and process integrity, involving their third parties as well. Such circumstances demand focal firms to understand and manage the performance of their partners. With increased globalization, companies often do not know their tier III or IV suppliers, owing to limited visibility beyond the first tier. Many a times, due to a highly unorganized long tail of suppliers & distributors, producers don’t know who consumes or manages the materials they supply. In short, information flow and visibility between focal firm and their indirect suppliers in supply chains has traditionally been very low. In such

scenarios, it becomes prudent to identify product or material sourcing and process activities that may include some unethical illegal practices, including human rights abuses, environmental damage, or fraud, which may lead to a great brand image damage later on.

Traditionally, such lead firms have been deploying a a time-consuming process with no factual data to track suppliers’ performance. With the advent of latest technological advancements, blockchain technology is proving to be highly effective in addressing these challenges. What does it do?

This tehnology facilitates all suppliers in a brand's supply chain to record information about their activities in a single, chronological and unchangeable record.

Blockchain-enabled systems encourage sustainable production.

Companies can utilize trusted and accessible data on environmental and social hotspots in the supply chain provided by blockchain-enabled systems. Companies can specifically support supply chain firms asking suppliers to reduce impact, and criteria such as carbon footprints can become procurement conditions—incentivizing greener practices. If these new age technological practices are deployed to their full potential, they can truly become the savior in ensuring sustainable paradigms and ultimately aid companies in becoming Green Crusaders.

COVER STORY

TECHNOVATIONS IN PROCUREMENT A recent Kearney study highlighted that while helping businesses gain a competitive advantage by tapping into the value of their supply chains, procurement has become more sophisticated.

Over time, the function’s role has been elevated from transactional management to strategic sourcing. Surviving in the digital reality will require procurement to move beyond bottomline efficiency by embracing digital and transforming the supply chain to become a valuable strategic business partner. Our panel discussion on ‘Digitization & Automation in Procurement’ echoed the same sentiments by focusing on the various pieces of digitization and digitalization and their effective implementation, which is both cost-effective, fast, and brings in resilience across the Value Chain. Excerpts…

COVER STORY

SAURABH PALSANIA Executive Director, Dalmia Cement (Bharat) Ltd. What do you have to say about technology helping in evaluating and onboarding suppliers? How do you use technology to evaluate on onboard suppliers? Do you practice an e-bidding process?

How do you do it and how successful has e-bidding been in your organization?

Digitization is now as essential as a mobile, which has replaced landline phone. Whenever we talk about suppliers, we should have a visibility of partners we are working with and whom we can further get on-boarded. Supplier onboarding process must be able to facilitate companies to investigate the compliances of vendors, their risk management, extending existing suppliers, better data quality, self-service capability in the system as well as transparency & speed. In short, supplier on-boarding is the first software that one should start with when they think of digitization of procurement.

Apart from that, there are two more things that has helped us, first we got an e-auction platform and have been using for the last 3-4 years. The biggest advantage that comes out is speed and second is discovery of price. In this economic scenario and the volatile times today, we need to get into healthier activities to bring new suppliers to our vendor base and parallelly we need to explore new and cheaper metallurgy which can replace the existing ones; hence, we need to put our workforce more on those activities which can bring further value addition to the organization. We can take out 3-4

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Supplier on-boarding process must be able to facilitate companies to investigate the compliances of vendors, their risk management, extending existing suppliers, better data quality, self-service capability in the system as well as transparency & speed.

people from the team and could create a procurement excellence group, post putting all these things to auctions to save lot of time of the team. We could make them free from those activities and put them on these healthier activities, which can add greater value to the organization. We are operating at a level of almost 55 – 60% of total procurement through auctions in a company like ours, which has got cement units at 14 locations. Auction has given more value in terms of services contracts as well as the raw material procurement because you do not know what is the exact price that a service provider can offer us. As in today's scenario, people are building up not less than 50 – 100% on the cost of the services in many cases and e-auction has given us a big leap into their pocket and we could get very attractive and competitive prices through auctions.

With so much of data, how is data analytics being leveraged for better management and different tools you have would look at data in different manner, so how is the data standardization process happening in your companies?

This is a big challenge being faced by many organizations. The problem is that there is a lot of data into the system. You need the right data to analyse to ensure that right information has come to you at right time to take the right actions there on. We have created a data lake into the system and through the data lake, we can collect the data of different requirements and sometimes different

functions. Through the data lake, we are trying to get the reports being prepared and categorizing those reports, which is required by the top management, middle management, and execution team.

Creation of data lake is helping us to take out the right data for the right function and right level. One more step, we are trying to do now is to set up the frequency of reports to look at, but sometimes we are not able to look into those reports or maybe that important issue is not being highlighted at the right time and at the right place. For that, we are trying to create a pipeline where various analysis happens through AI & ML also. The data is being popped up on the screen of the right person at the right time to take the right steps. For instance, if there are certain stocks, which are required to be maintained at plant level, popping up of such information on the screen of the person who has to take care of those material, that this stock has gone below the reorder level, the rates of particular material are shooting up, if you have to order aluminium or nickel or any other material where the prices are going high, maybe oil or granules, it is being highlighted in the morning hours at around 10.00am that these are the price list of various items. This is the way we are trying to set up certain information – first is data lake, then certain reports for different levels and then for the pop-ups, which require immediate attention.

What we have done in our organization is that the low value items or where repetitive POs are there, it hardly makes a difference whether we negotiate,

COVER STORY or we buy it through a catalogue buying system because value may be 5% of the total procurement spent but the number of POs may be almost 30-35% of the total POs. We have put all those items on auto indents and also we have taken a platform like Amazon where all such items, which are of non-industrial use, we are buying it through that platform that is as good as a catalogue buying and we have observed that there is hardly any impact on the spent while the team on other hand is able to put more time on high value items and thus can save more.

What kind of start-ups do you see in this space, how do you differentiate and are there many me-too’s in the space?

The biggest concern to my mind, has been that, while they offer an incredible solution, its integration with my existing processes has been a challenge. Apart from that, we were not able to come out of our existing system 100%, so there was certain duplicity of both the systems running parallelly and maybe that 100% attention was not there, but as far as the auction platform is concerned, what I could see that even if it is not so much integrated, still it was delivering. These new start-ups must somehow develop APIs to integrate it with the existing systems of the customers and I think then it will give a very fruitful result, which will be online also and very much

acceptable also, right from the bottom to top line. The way oil prices are going up, how they can help us in providing solution for replacements. For example, it may be a product, which is made from steel, but you can use it in other materials also, which can be cheaper. Certain materials are mined materials and we are looking for a waste from an industry, which also gives the same specifications and can replace the mine material that will help conserving these resources also and will help us in utilization of making the earth green as well. This is where we are looking for start-ups to work for us.

What kind of technology skills and value-added skills you would like to see in a procurement manager?

I'll require people who are good visionaries and have good networking skills, so more time will be devoted by them on-ground. Apart from data analytics, they will have to move out and explore what is happening around the world to find out new technologies, to meet people, and set up a target to work for future because current work will be taken care of by digitization. What is required to be done in next three years, aligning the goals with the company's goals, what they are looking for, how they are expanding and ultimately, they have to be more futuristic and set targets based on the company's goal; and third

is having good data analytics skill and presentation skills.

Can you share a case study?

We have implemented from PR to PO and an auction platform. Now we are trying to integrate PO to payment like the downstream part where post PO, dispatch readiness at the suppliers’ end dispatch from the supplier’ end, and then receipt at our end. We have been processing waste from any industry in our kilns and as on date, we are collecting good quantity of waste per month from pharma companies, FMCG companies, municipal corporations, fertilizer companies, automobile companies and it is being transported to our units. All customers of ours are not having storage capacities to store the waste that they are generating every day, so material has to be brought to our plants in time. We are looking to integrate the system in such a way that the waste generator and our plant team can know each other’s requirement and cater to it in time. We are already having one of the start-ups working with us for the outbound part, that is cement dispatches, now we want to integrate it with the suppliers’ end as well so that we can know the visibility of collection of material to disposal at our end and disposing it off in an environment friendly manner.

Going forward, we need more data analytics in procurement team.

A plethora of digital technology solutions are available today.

Cost is a very big factor while evaluating technologies, so how does a procurement head decide on the best fit technology?

JASWINDER SAINI Head – Procurement, Tata Play

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I think that when any organization is starting the journey of digitization, it must start with the problem statement.

Every organization should check what is the problem that they are trying to address through this digital journey

that they are embarking on. Second important element is, it must be aligned to the company's goal, and it must sync with expectations of management.

As, each organization has its own set of challenges, and their own ways of working, it can’t be a one-size-fits-all approach. For instance, whether you are a manufacturing organization or a service organization or are into product distribution and selling, all these segments will have different challenges,

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COVER STORY and accordingly the different tools will fit into their requirements.

Similarly, whether you are a start-up or MSME or a large conglomerate, each one will need different solutions, it will also depend on which sector you are working in like automobile, telecom, pharma, retail, IT each segment or each sector has got its own challenges and today when we go to market, there is plethora of tools available. There are enormous numbers of companies offering solutions and they are offering their services in multiple shapes, sizes and formats, so based on what is your problem statement is and what solution your company looking at, should be the deciding factor and based on the problem statement, what is it that you want to achieve, then you can select your tool whether you want to pick the full P2P suite, whether you want to go for some particular segment of the whole suite, is it the on-boarding process or an e-bidding tool or an invoicing tool or vendor entitlement that you are looking at. Also, you should be cautious about the cost, and you need to be sure that whatever you are choosing, should give you the returns on the investment properly. I think that's the way to look at it.

What do you have to say about technology helping in evaluating and onboarding suppliers? How do you use technology to evaluate and onboard suppliers? Do you practice an e-bidding process?

How do you do it and how successful has e-bidding been in your organization?

I will touch upon vendor onboarding as well. We have on-boarded full P2P suite and vendor onboarding is part of our full P2P suite. As far as onboarding for suppliers is concerned, anybody can go to our website and register to be a potential partner for us, and all the information comes to us through the online tools.

We do 170 checks on the partner before we start working with them and all these checks are performed in less than two days’ time. This was not possible without putting proper technology in place, so we have got bots and search engines, many web scrapping tools, which are working behind the scenes, pulling out entire information about the partner

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from various platforms available across the Internet. That is one on the vendor onboarding part. We have a well-defined process for entire procurement and as per that, anything above Rs Two Lakh worth of procurement, which doesn’t fall under the regulatory, statutory, rental, and proprietary category, and needs to be negotiated, has to mandatorily go through e-bidding process. We adhere to this policy to the ‘T’ and we run roughly around eight to ten e-biddings daily and I feel that this has been very successful for us because it has brought in four important success elements to the whole process of procurement. These include:  It delivers huge savings. Some time, it surprises even me that if I would have done this, I could have closed it at much higher price because at times, it is your limited visibility to the world, which you may miss during the manual negotiation.  It is super quick. I can configure e-bidding within one hour and you are on to the results in a couple of hours. If you must go through a manual route of negotiation, the same negotiation can take between four five to six days because you have been waiting for partners to revert on it.  It is a very transparent process.

When we do a e-bidding, there is no grudge from the partner because while they are on e-bidding, they are clear that what level they are whether they are winning or losing, so there is absolute transparency when the e-bidding is happening. That brings lot of satisfaction on the partner side.  It is very unbiased. Whenever a manual negotiation happens, there is always an element of bias of buyer or the person who is negotiating, so those bias goes away when you are on the e-bidding platform.

A big issue, suppliers are experiencing today is that technical issues are ambiguous and evaluation criteria seems to be doubtful. What’s your take on

this?

As a partner, the amount of fear that you have in your mind related to technical specification, let me assure you, as a partner and a procurement professional, we are equally scared of unclear technical specification. Whenever we run e-bidding, on the back end, we always go to user teams, saying that technical specification must be clear because unclear technical specification will end up making our entire process futile, either we need to run e-bidding again if specification change or we are in threat of ending up paying much higher than the anticipated price. So, as a procurement team, we are on the side of partners. We always try to get as clear specification as we can, but there are cases where, as an organization, we are not clear what are we looking at.

In those cases, we go ahead with some partial technical specifications, or we add specifications at the later stages.

For a large organization, which has huge procurement spends, even they would not like to have ambiguity in their entire process because every sourcing, every requirement that they have for partners, is equally an expensive process.

What kind of technology skills and value-added skills you would like to see in a procurement manager?

Going forward, we need more data analytics in procurement team. I see that most of the things will get automated and people sitting on this side of the table, must actually read through more and more data and data is such a thing that numbers may say something, but underlying information or underlying message could be different under the data, so I think we need more and more people who can understand and get meaningful insights from the data.

Second is that we need people who can train AIs. Future is going more and more towards AI, we have already implemented AI in procurement for Tata Play and we need people who can actually train these AIs because in the initial phases, they need to be trained as more and more AIs will be implemented, it needs to be trained more and more, so we need people who can actually understand data and train AI, that's the future trend for,

COVER STORY at least, next seven to ten years.

What do you think could be a very futuristic procurement technology?

Two things that are going to happen in very near future – one is the consolidation of the tail spend that is bound to happen in very near future.

More and more companies and more and more organizations are moving to catalogue buying including us as well.

This is going to be the norm of the industry that all the tail spend will move to catalogues and these catalogues will be AI enabled. I see that tail spend and the core spend will be differentiated going forward. Core spend will continue to be managed by procurement people directly because it is the lifeline of the business, it will continue to be there. The tail spend, which is actually contributing more than 30 – 35% of the POs that we issue year on year, will go to the automation tool, which will be a catalogue buying wherein you just type in your requirement, where do you need it, when do you need it, how

TANNISTHA GANGULY Global Delivery Lead – Procurement IT Delivery, Kimberly-Clark What are the AI and ML opportunities in procurement?

There are many opportunities that we have for advanced technologies today, where we can use AI ML or automation in procurement. If I just break down certain areas, for example, spend analysis – people who are from procurement, they will agree with me when I say that spend

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much do you need it and it will throw back that this is the partner, this is the price, this is the place and this is the time when it can be delivered to you if we are okay, just say yes and it will be done. That is what is going to happen, and this is not very far away from now, this is a matter of couple of more years and that is what I envisage as of now.

Kindly share a case study We have implemented full P2P suite in our organization, which has been a very great success for Tata Play. It starts from vendor on-boarding and ends up to the payment. The full procurement suite has been implemented and delivered a lot of advantage to us. I will cite five top advantages and there is a long tail of advantages…  Our internal stakeholders were very happy after implementing this tool because our overall lead time to issue purchase orders and in completing the entire process has been shrunk to one fifth.

 It saved huge amount of time from my procurement team because this is a seamless process.  It is end-to-end seamless process. It brings huge amount of efficiencies in the whole ecosystem.  It's a very transparent process, so my user teams were very happy because they don't have to hunt out where the process is currently stuck at. From all the perspective – internal stakeholders or vendors, it is transparent because everyone in the system knows where the registration process is, e-bidding also happens on the same tool, so they are fully aware what is happening to the negotiation, payment update is also there on the same portal, purchase order is also issued to the partner on the same portal, so on & so forth.  It throws huge amount of analysis and huge number of reports to us, which enables us to improve further.

It is not always necessary that you need to have a fancy tool, it can be a simple automation without having a fancy expensive RPA license or AI/ML being implemented, it can be a simple excel automation as well. It’s all about striking the right equilibrium.

analysis is one of the key areas where everyone at least, in my experience so far, we have struggled. Spend analysis is one area where AI & ML is useful. Then you have price forecasting, it is spent budget forecasting for you, then supplier performance management, supply risk management assisted search sourcing.

If you break down the end-to-end

S2P process, everywhere, whether it's sourcing or contracting or P2P area, there are enough opportunities to utilize the AI ML automation. Supplier relationship management when you want to have a data driven conversation with your suppliers and how do you get meaningful information out of the vast data that you collect from your suppliers, these are

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COVER STORY some key examples where AI ML today facilitates or enables the business to have more meaningful conversation with your suppliers.

What kind of technologies are being used in supplier management and how is it playing a role in managing it end to end?

Supplier management is a big umbrella and if I have to say how technology is being used in supplier management today under the umbrella, there are many buckets and in each bucket, you will find technology being used, whether it is out of the box or whether it is advanced technologies – right from supplier onboarding to supply risk management to supplier performance measurement, the entire life cycle of a supplier once you onboard a vendor, it is today going through some tool or the other. Chances are it's going through multiple tools and talks in between to multiple tools and the need of the hour is that this data goes through each of the systems smoothly, that's where technology plays a big impact. Supplier data itself is vast. When you talk to any procurement professional, there are so many criteria that comes with the suppliers right from the onboarding phase to the entire life cycle, where you are regularly having your performance measurement conversations with your suppliers, the quality checks that you are doing, all that data is taken and it's not enough just to take data, you also must have meaningful insights out of it. For example, you create reports of let's say, On Time In Full (OTIF) or your quality checks reports, this is where the advanced technologies or even our standard out of the box software play a very important role in bringing out that insight from the data that you collect, When your teams talk to the procurement professionals and when they go and have their regular meetings or reviews with their suppliers, they need the entire performance of how the supplier has been performing year on year or month on month.

The other area where technology plays a significant role in bringing out these reports or insights from the data is for the leadership team where they can see where the inefficiencies are lying. For

32 CELERITY May - June 2022

instance, we're talking about a KPI for the suppliers On Time In Full, that is a very key KPI for suppliers. Now when you analyse, you look at your key suppliers and their OTIF scores and then you go into the details like why is the score of your key supplier so low and out of all the times that it has not met the OTIF, how many times was it something triggered by the supplier themselves that they wanted to delay the date of delivery of a material or was it from our side where we didn’t want it on X date, we wanted it on Y date. Such analysis is needed even at our own level before we go and talk to our suppliers.

Another example that happens during on-boarding time. When you are on-boarding, you want to perform background checks of your supplier, their financial condition, if they are not financially viable, are they going to be financially viable in the next one year or two years, their reputation in the market especially when in some critical industries where you are looking for sustainable sourcing, all this data need to be gathered and processed. It is impossible to manually do this gathering of information and then processing and bringing out insight. I think these are the key areas where technologies are really going to be a shot in the arm, be a help for businesses and for the teams.

What are the challenges, which come up when you are implementing such a technology, when you are trying to automate some manual processes, what kind of change management is required?

Our own teams get more excited even if it's a simple solution that we put in, but it is really impacting their lives, their dayto-day work. For example, we have also implemented RPA in our company, which is a simple solution, but it really eases the life of the requisitioner and here is where I will link it to your question, what are the challenges that in terms of change management we find when we try to do automation. The first is to get the user buy-in, people will come, different teams, different team members will come with a lot of automation requirements. But they would also come to us with requests to

implement new solutions because they would have heard from the market, from our vendor partners that this tool is so cool, this tool does this activity, with very spectacular user friendly UIs, all that and they would come to us directly with a request to implement this for them without telling us or forgetting themselves what is the problem that they're trying to solve. What we normally do is go through this entire process of understanding what are their pain points are and which technology would be the best to fit in and solve their problem. It is not always necessary that you need to have a fancy tool, it can be a simple automation without having a fancy expensive RPA license or AI/ML being implemented, it can be a simple excel automation as well. Getting the expectations set on automation is one thing. The second thing is there is always somewhere in the back of the mind of many people that automation, at a large scale, somewhere down the line, will impact my job, but for us, it's an effort that we make where we play out the scope of the software or the automation that we are doing. I think that is one of the key aspects that, as leaders or as from IT department, what we need to do is clearly write out the scope of how much a software can do for you and how much guidance is needed from the team members, so that balance needs to be clearly mentioned. Otherwise, the acceptance of tools may or may not be 100%. You can put in a fancy tool, but you have only 10-20% usage. These are the aspects where a lot of focus needs to go right at the beginning when you define the scope, and the expectations are set correct.

What kind of start-ups do you see in this space, how do you differentiate and are there many me-too’s in the space?

I have looked into a lot of start-ups who have pitched for their products. Today if you look at the market, there are very specific solutions that the start-ups are providing across all sectors but even in procurement, they come with very specific solutions. There are start-ups who will do only spend analysis or price forecasting. Since the last decade, the

COVER STORY start-ups have filled up a huge void, which is targeting specific problems because earlier we used to have an ERP system or an SAP or some procurement specific processes like Ariba, Coupa etc. While all these are good and they are there from an end-to-end procurement process, but many times, these start-ups come up with very key solutions that can help you to get more value of your investment. It solves your problem without incurring a huge investment with even a shorter implementation cycle. This is where I think start-ups play a big role. As far as challenges are concerned, it's upon us when we are evaluating a product whether it is a start-up or whether it is an established vendor. You must look at aspects like who are the founders, what is the experience they are bringing in, who are the SMEs, what is the thought process

DEREK LEE VP – Pharma & Healthcare APAC, JAS Worldwide A plethora of digital technology solutions are available today.

Cost is a very big factor while evaluating technologies, so how does a procurement head decide on the best fit technology?

From the procurement head’s perspective on technology, we are really looking at Value for Money. We want to find out if I can get the most value from the solution, which we are implementing and that offers me a total cost of ownership.

For sure, I am not looking at a cheap software, we look for a software, which

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that's going behind that start-up and especially when you are working with the start-up, you also must be mindful, how financially viable they are going to be in the next 3-5 years. Sometimes the brain behind the start-ups are actual industry experts who would have extensive years of industry experience, so the quality of start-up depends a lot on the founders also. You can look at it as a two-sided sword, it can be a USP and a risk as well.

Give us one example of a successful implementation?

In our company, we did realize that tail spend is, although a very small percentage of the total spend, taking up a huge amount of effort, number of hours percentage-wise. We connected with a start-up and what they promised us is they would take care of this entire

process for all our PRs that we raise for a particular category of spend. The tool that we have from the start-up, integrates with our ERP system, and based on the defined criteria, the PRs which will be raised under a certain value, etc., those PRs will be picked up. The tool has its own network and its own AI ML algorithms, through which it will bring out the best bid to be delivered for us. It will select the best fit for that PR, it will connect back to our system, and it will help to create the PO and from there, rest of the process is automated again back in our system. We've done this just last year and we do look at not only a cost saving in terms of the values, but also a lot of man hours are being saved from our team perspective as well.

Digitization really solves not just a procurement problem, but also a traceability and compliance problem. By digitizing, we have a single source of the truth, and we have that ability to trace the steps and that, for a lot of organizations, is the key for digitization.

is simple to use, which may not have the full functionality but it's good enough that can aid my teams in efficient functioning and ultimately, we achieve cost savings, efficiency enhancement as a by-product. Through the digital solutions, my team should start placing orders quickly enough, they should not need to be working until midnight every night. For me, that is what I call value for money. Naturally it also depends on the size of the business, but the most important part of it is just to make sure that what you get, can scale from

a smaller to a larger business or in fact from a larger business, sometimes you look at the ability for it to shrink to a smaller business because of the M&As, that you may actually spin off a department, you may actually sell it out, you may do different things, you may want to manage it in different markets. So, we want extra flexibility and efficiency, to decide on the solution. Ultimately three defining factors for me are Cost Efficiency, Savings, and Scalability while evaluating any technology solution.

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COVER STORY We expect that suppliers communicate and over communicate with us to ensure that we know what we’re buying, we know what you’re offering and then if there are any doubts, we can have those conversations. I think we always need to have a balance in certain projects like these, it’s also usually often high value and this is also the best opportunity for e-bidding and when you have e-bidding with not very clear technical requirements, that’s a recipe for disaster.

How does digitalization create value in procurement?

Digitization really solves not just a procurement problem, but also a traceability and compliance problem. By digitizing, we have a single source of the truth, and we have that ability to trace the steps and that for a lot of organizations is the key for digitization. Besides, we also enhance our knowledge because the information is available in one single system. We can have that information shared to different departments across the globe and of course, we can start doing comparisons side by side in a much easier way. All of that used to happen on paper earlier, through the right deployment of technology, we have the vision about it but between that kind of comparisons, global knowledge basis and really being able to communicate as a team internally and of course to extend it out to supplier networks that's where the digitization fits in. If I extend that to an overall supply chain network and digitization, the extended benefit is the ability to get supplier pools where you can have people joining into a network and you can start sourcing for suppliers. There are tons of these supplier portals available where the ability to start price comparisons, quality comparisons, getting feedback, all that as a holistic procurement ecosystem is what makes the digitization very powerful. To summarize, you've got an internal inward facing compliance and then you've got a company to the world, which is bringing everyone to the same ecosystem.

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A big issue, suppliers are experiencing today is that technical issues are ambiguous and evaluation criteria seems to be doubtful. What’s your take on this?

I think technical specifications are quite often written with something in mind, for example, I want to build a warehouse and I want four walls. I want a white colour paint, but there are some things, which I am unaware of. For example, will my requirements comply to the regulations?

Do I need to do something, which is in addition to the basics to meet mandatory requirements? In such scenario, the expectation is that supplier would know all these things. Supplier, in this context, has two functions – one is to supply the product or service and other is to act as a subject matter expert to provide intelligence and knowledge about the conditions or how we meet regulations.

We expect that suppliers communicate and over communicate with us to ensure that we know what we're buying, we know what you're offering and then there's any doubts, we can have those conversations.

I think we always need to have a balance in certain projects like these it's also usually often high value and this is also the best opportunity for e-bidding and when you have e-bidding with not very clear technical requirements, that's a recipe for disaster. In a sense that the supplier has one thing, the client has a different vision completely and when the contract is awarded, the SOW is so brief that no one understands what they are going to get because you're going

to have 10 different parties for writing different documents who are not really communicating as well. If you ask me for evaluation criteria, I should be able to at least give you the high level evaluation criteria. I'm not going to tell you that I will give you three points for this activity, but I can tell you that 70% is price, 30% is quality or 30% is price, 30% is expertise, 40% is ESG for example and that's where I think the communication is really required between all the parties especially when you don't even understand the technical specifications.

With so much of data, how is data analytics being leveraged for better management? Since different tools would look at data in different manner, how is the data standardization process happening in companies?

We are trying to get a standardized taxonomy that we can use to talk across the globe with multiple entities, so first we actually use the USNSPC code, and we align all our taxonomies to the USNSPC. With that, all our reporting is based on that code and as an extension, we do have sub-categories, which extend the USNSPC code to get level of details. For us, transportation is a big one, so we end up breaking down into two-ton truck, four-ton trucks, outside of just local land transportation but I think from an analytics perspective, we're trying to get reporting reorder points. Besides, we are going one step further and looking at what analytics and reports can do for us. Are

COVER STORY they predictive and are they actionable?

We are trying to get to a point where the analytics provides us with something where we can action in time, and we are also trying to look at pulling in external data market information to give that prediction. To give an example, if I know that like last year, there was the evergreen vessel, which was stuck and blocking the Suez Canal and after one day, they should predict that my supply chain will be at risk, should I reorder more now before prices go even further or should I wait and pray for the best. I think that's where we're trying to get to from just analytics or post activity reporting into actionable analytics so that I get information far ahead enough and of course, going the next step is predictive analytics where we can get predictions of what to do and let that AI machine learning make a recommendation. Right now, the recommendations are done by ourselves based on that information, which we get, and I think a lot of it becomes the experience of the person, experience of the team and what we're trying to get away from this is trying to ‘bring back the brain’, bring that knowledge of the people into a system, which can make predictions and start learning & gaining systemic experience.

How can you automate manual repetitive tasks, and if you could come up with some examples there or direct uh if you could go first?

The sexy one in the room is always saying that we use RPA (robotic process automation) to systematically manage invoices and so on. In my previous role, we had an RPA system, which was reading invoices and doing GL posting. That was actually a very efficient way of managing the task, but I think where we also saw a lot of value and a lot of buy-in from staff, from just a standard Microsoft form, which they could key-in themselves and which would populate into a system and generate POs and the POs of up to a certain value on a certain category would automatically be approved to give detail of for example stationary orders under $25 were automatically approved, so that actually got more interest from the teams and more happiness and internal

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engagement compared to doing RPA, which was extremely efficient, really sexy but that only got the buy-in from the suppliers and who got paid faster and the finance team who didn't have to work as long. The rest of the organization, which is 80% of the organization, didn't feel anything. So, I think when we talk about implementing these, we need to balance the visibility, how do we make life easier for a bigger audience, at the same time, we need to work on efficiency, which is the sexy stuff like RPA and so on to make things more efficient.

What kind of technology skills and value-added skills you would like to see in a procurement manager?

I echo these sentiments completely – the AI knowledge, the ability to ‘bring back the brain’, transfer their knowledge to a machine, is actually very important, so they have to be comfortable, I expect all of them to be professionals to start with but they also have to be willing to share that knowledge to a machine without the fear of losing their jobs, but I think along the way, with a procurement manager outside of technology, they also need to be able to motivate their staff to use technology, there is a large community of middle, senior age procurement buyers and so on, which have a fear of technology and as a middle level procurement manager, I would also want someone to be able to bring the whole team of people and have the ability to enhance technology to a large range of users, to a certain extent, the procurement manager is also a salesperson for the function and for the technologies implemented by the function. So, the people's skills in addition to the technical skills are equally important compared to just having a technically sound person.

negotiated a X percent of their catalogue rates. So, the upside for that was they had access to the full catalogue. Instead of everyone going to procurement team to do a transaction, they could do a selfservice model and you could go in look at their own catalogue like their Flipkart catalogue and just buy what they want and if it's within their department budget, they'll be approved. This made whole process easier and the objective of that was really to enhance user experience.

The second part of the catalogue implementation, was for contracted spend where we have repeated POs and being purchased by different departments in different countries, so again instead of various buyers coming to the procurement team and coming to my team asking to help raise PO for 100 units of a particular item, we actually put all that on the catalogue negotiated prices and suddenly I had a team which is much more free and a lot of the users who are self-service, what we've actually found quite interesting is that, well I need a full-time buyer to manage all the requests when I spread that role out to 20 over different departments and who split up to say two persons per department for them to raise that one extra PO or they require their PR, it's really probably only taking them three minutes or something. So, the actual activity was split out and we had our procurement team being more focused on negotiation.

Supplier management is working purely on the escalations, prioritization and so on, so that whole implementation of a two section of a catalogue was actually really valuable and I think the benefits it brought was so much more than we actually expected.

Can you share with us a case study?

We did catalogue implementation a few years back and we did a very much simpler version of it, but we did two parts of it.

We had one part, which is a punch-out catalogue, which was for tail end spend, low value spent and that really punched out to only one agreed supplier where we

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FOCUS

Decentralized Supply Chains using

Disruptive Technology We are living in an interesting era where the rules of the game have changed dramatically – from global to local and from centralized to decentralized. The Covid-19 pandemic has proved to be a great teacher in making companies realize how dependencies on one company can lead to unimaginable disaster in such times. While earlier such strategies used to be the norm, they have been put to test in the last two years and what emerged because of it is that companies need to take the decentralization route when it comes to their supply chain. Abhishek Behl (Management Development Institute, Gurgaon, India) & Nirma Jayawardena (Griffith University, Australia), through this article, unravel immense possibilities that a decentralized supply chain backed by disruptive technology can offer…

COVID-19

has caused damage to global supply networks. Multiple lockdowns around the country continue to impede, if not entirely halt, the flow of raw materials and finished goods, putting businesses at a disadvantage. Since digital literacy and technology solutions aided the pandemic response, a significant split has risen between high-income/upper-middleincome nations and poorer countries after the COVID-19 epidemic. Supply, demand, and logistics are all facing disruptions in global supply chains. Due to COVID-related closures and lockdowns, factories have functioned at a fraction of their total capacity. The pandemic has resulted in employee shortages and losses for many organizations. As a result, the supply chain has been adversely affected,

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exacerbating, and hastening previously established issues.

Disruptive technologies have permitted several responses to the COVID-19 epidemic in emerging economies despite the restrictions. One of the main advantages of a decentralized supply chain is that it may dramatically reduce local logistics expenses. Because operations are located close to the end client, shipping expenses are reduced significantly. Nodes that have access to local suppliers may also be able to reduce incoming expenses. Despite capital outflows from emerging nations, technology businesses in these regions continue to garner investor attention.

For example, 54Gene, a two-year-old Nigerian start-up that collects genetic data, secured $15 million in equity fundraising in mid-April. At the same time, BigBasket, an online shopping network

Dr. Abhishek Behl is a faculty at MDI, Gurgaon, and is an expert in gamification. He has earned his second Ph.D. from the Indian Institute of Technology, Bombay where his research is in the area of crowdfunding and gamification.

He holds rich experience in teaching, research, and consultancy. He has also served as a Senior Manager- Research at Centre for Innovation Incubation and Entrepreneurship, IIM Ahmedabad.

His research is in the area of business analytics and decision sciences with a focus on gamification, stakeholder engagement, sustainability, and e-commerce start-ups.

Nirma Jayawardena is a PhD student at Griffith University, Australia (Marketing Department).

She completed BSc in Business Management with first-class honours from NSBM Green University and completed MBA in international business from the University of Colombo, Sri Lanka. Her research interests include social cognition, consumer visual memory, and advertising.

FOCUS in India, raised $60 million during the country's shutdown. A system like this makes it simple to reward participants for working together, resulting in a more efficient supply chain—MNCs’ attempt to grab market share through centralized supply chains in today's globalized economy. This is opening possibilities for disruptive technology as disruptive technology is a technological advancement that alters how consumers, industries, and businesses operate. It has the potential to replace age-old practices.

Such changes are more prevalent in a few business areas than in the supply chain.

In a decentralized supply chain, operations are dispersed throughout a network of nodes. Small offices and warehouses are frequently used as nodes, as they are meant to be closer to the organization's ultimate client. It is not uncommon for companies not to own their nodes. It is relatively common for organizations that wish to expand but do not have the funds to purchase their premises to outsource certain operations to partners who possess the appropriate facilities. Companies may even rent space in a shared warehouse. Some of the advantages of a decentralized supply chain include reducing costs at the local level and higher flexibility.

Disruptive online healthcare, blockchain-based platforms for epidemic monitoring, robots that deliver food and medications and monitor patient temperatures, online education, and home-based work solutions; and augmented reality and 3D printing technologies that address social distancing in manufacturing facilities are among the technologies that have been adopted to address these challenges.

The government has employed digital platforms, big data analytics, and artificial intelligence to conduct social welfare initiatives typically supported through mobile money. Individual units in a decentralized supply chain make decisions based on local knowledge.

To ensure products reach the end customer in today's globalized world, supply chain professionals collaborate with other business units within the same organization and across different organizations. As part of this process, supply chain managers are faced with the challenge of controlling inventories

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The Flow of

goods

The Flow Infomati of on De suppcleyntralised networ k

Figure 1: The flow of decentralized supply chain

and costs while maximizing customer satisfaction.

What does a decentralized supply chain offer?

One of the main advantages of a decentralized supply chain is that it may dramatically reduce local logistics expenses when considering reducing costs. Since operations are close to the end client, shipping expenses are reduced significantly. Nodes that have access to local suppliers may be able to reduce incoming expenses too. Decentralized nodes can function more flexibly than centralized hubs. They have the semiautonomy to go into a local market and maybe test new items if there is an opportunity. Furthermore, suppose a company is already skilled at managing its supply chain from afar. In that case, it may find it simpler to expand its reach into new countries with no established node – especially if it takes advantage of outsourcing possibilities.

THE FLOW OF DECENTRALIZED SUPPLY CHAIN Information management is critical for

many businesses and is seen as one of the most significant components in achieving success in a competitive market. The logistics industry benefits from using information systems, and research on information systems in logistics has been performed since the 1990s. Ira Lewis and Alexander Talalayevsky 1997 mentioned that they concentrated their first study on the potential of information systems in management and their influence on organizational structures. Findings indicated that. According to studies on organizational structures, information technology impacts the strategy and capabilities of logistics organisations in terms of competitive advantages. Figure 1 shows the flow of the decentralized supply chain as mentioned below.

THE FLOW OF GOODS The re-allocation of physical items is the most basic operation in the logistics process. To be more specific, logistics ensures that items are delivered to clients on schedule and in sufficient quantities.

The complexity of this operation is determined by the number of shipping and receiving sites. The control of the flow of commodities becomes increasingly

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FOCUS One of the main advantages of a decentralized supply chain is that it may dramatically reduce local logistics expenses when considering reducing costs. Since operations are close to the end client, shipping expenses are reduced significantly. Nodes that have access to local suppliers may be able to reduce incoming expenses too. Decentralized nodes can function more flexibly than centralized hubs. They have the semiautonomy to go into a local market and maybe test new items if there is an opportunity. Furthermore, suppose a company is already skilled at managing its supply chain from afar. In that case, it may find it simpler to expand its reach into new countries with no established node – especially if it takes advantage of outsourcing possibilities.

challenging as the system's complexity grows. Information systems assist in the management of products flow. According to Lewis and Talalayevsky (1997), logistics is driven by a proliferation of products, increasing customer demands, just-intime manufacturing, and a globalized market. It is reflected, for example, in the availability of custom-made products and next-day delivery. A successful flow of physical goods depends on the flow of information, which means shipping information should be communicated before the goods arrive.

THE FLOW OF INFORMATION To add value to the logistics process, managing the flow of information is just as crucial as managing the movement of physical items. In logistics, the function of information systems is to turn data into information to aid managers in their decision-making. Numerous parties are involved in the logistics process; therefore, information is shared not just inside a single business but also between multiple companies. Prajogo and Olhager in 2012 recommended exchanging strategic information with partners to enhance demand estimates and planned production. However, sharing strategic knowledge is not without danger, and the partner may raise pricing because of this information. Based on a magazine published in Harvard Business

38 CELERITY May - June 2022

Review magazine, exchanging strategic information flows benefits buyers and suppliers financially and non-financially.

They say that there is a danger of abusing the parties involved, which might result in losses. The sensible distribution of wealth from a decentralized supply chain fosters greater macroeconomic growth by increasing consumer buying power and lowering taxes. Since each actor has a lower impact on the overall supply chain, those with opportunistic behavior have less to benefit. Each decision-maker has fewer earnings to lose by behaving opportunistically and a more extensive client base to gain by working in the supply chain's best interests. As a result, the fragmented supply chain results in smaller businesses and a lesser likelihood of mergers and acquisitions.

DECENTRALIZED SUPPLY NETWORK A decentralized supply network promotes cooperation over rivalry among supply chain participants. Decentralization increases overall customer satisfaction while also resulting in stronger longterm connections with end consumers by placing a more significant focus on creating a relationship with them. The supply chain's decentralization also leads to more flexibility and decentralized decision-making. It improves customer satisfaction by ensuring product delivery via a different route if the usual supply

chain is disrupted by unanticipated events such as natural catastrophes or social and political unrest. Decentralization has also performed well in developing market cooperatives, urban logistics, and micro-retailing, among other areas.

ROLE OF DISRUPTIVE TECHNOLOGY TOWARDS DECENTRALIZED SUPPLY CHAIN Like most other industries, the logistics business is undergoing significant transformation, which carries with it both danger and opportunity. New technologies, new market entrants, new consumer expectations, and new business models have emerged recently.

There are a variety of approaches for the sector to evolve to face these difficulties, some evolutionary and others revolutionary. The concept behind digital transformation is to use technology to increase a company's performance and reach dramatically.

Today, many technologies are available, such as cloud computing, mobile apps, the Internet of Things, social networks, data analytics, machine learning, robotic process automation, augmented reality, virtual reality, and blockchain.

The supply chain and manufacturing industries have historically been slow to take advantage of the opportunities presented by the digital revolution.

Technological advances are on the

FOCUS

Replacing the traditional supply chain practices

rise, and it's time to break the trend.

Digitization is at the forefront of every CEO's mind across all industries, from consumer goods to health care, manufacturing to finance. Supply chains must connect diverse systems, give endto-end visibility, and gather and analyze enormous amounts of data to fulfill their full digital potential. Managing the supply chain is no longer business as usual as novel technological solutions continue to shake up logistics. Historically, the supply chain has changed dramatically during the previous 30 years. Historically, the role of a logistics department reporting to sales or manufacturing and focused on ensuring the supply of production lines and customer deliveries has evolved into an autonomous supply chain management function. Integrated sales and operations planning or analytical demand planning have become established business processes in many companies, whereas operational logistics is frequently outsourced to third-party logistics providers.

ROLE 1: REPLACING THE TRADITIONAL SUPPLY CHAIN PRACTICES Disruptive technologies are characterized by distinctly superior characteristics to the systems or habits they replace.

E-commerce, online news sites, ridesharing apps, and GPS systems are examples of disruptive technologies.

ROLE 2: APPLYING BLOCKCHAIN IN THE SUPPLY CHAIN Blockchain technology stands out as a programmable, distributed, secure, and immutable database that is helping to redefine how and what a business transaction should look like. A blockchain supply chain may be used to solve a variety of challenges. Its use in financial

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Applying blockchain in the supply chain

New social and Organizational arrangements

transactions has the potential to help supply chain management operations function more smoothly. The technology provides this strict transparency, also known as Distributed Ledger Technology (DLT), which records data in blocks, duplicates them, and then distributes them throughout a network of computer systems on the blockchain.

the simple principle of trust between multiple parties.

Among the major advantages and impacts of Blockchain are the trust in transactions and the ability to share assets. Due to the presence of ledgers, all transactions are secure and trustworthy.

Nevertheless, this trust business is about to be disrupted and transformed with the emergence of blockchain technology.

Finally, our article summarized the main aspects of the decentralized supply chain as operations dispersed throughout a network of nodes and then the flow of the decentralized supply chain, including the flow of goods and information. A decentralized supply network promotes cooperation over rivalry among supply chain participants. Decentralization increases overall customer satisfaction and results in stronger long-term connections with consumers by placing a greater focus on creating a relationship with them. We propose an authentic framework for the role of disruptive technology in a decentralized supply chain based on the triple perspectives of replacing the traditional supply chain practices, applying blockchain in the supply chain, and creating new social and organizational arrangements.

ROLE 3: NEW SOCIAL AND ORGANIZATIONAL ARRANGEMENTS Disruptive technologies, such as the Internet, are rarely good or bad but rather create and shape social dynamics. To understand the role of new phenomena such as the Internet, social media, big data, and now blockchain in organisational transformation, business scholars tend to research these areas. As with the Internet, blockchain is set to be the basis for new forms of business and social interaction. It already alters these through its decentralized architecture, trustless and permissionless systems, smart contracts, and data, privacy, and information management. Blockchain is viewed by its proponents as a classic example of a "disruptive innovation."

CONCLUSION New scientific breakthroughs, commercial motives, or a mix of both cause technological upheaval. According to the " science-driven " innovation concept, individuals' interests are constrained by the existing knowledge or scientific frontier. Scientific advances are one of the most powerful accelerators for innovation, but they aren't the only ones. Breakthroughs are rare and very surprising. Some instances are as follows: Antibiotics, electricity, computers, the internet, and other technologies are examples. Businesses, and in some cases entire industries, have been built on

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INTERVIEW

READY FOR

TAKE OFF

“The airfreight segment is very challenging as we not only handle the temperature sensitive products, which is time sensitive too, but the social obligation of carrying lifesaving drugs is much more critical. Training the team to handle cold chain shipments is also a big challenge. Ensuring no shipments are offloaded at the last minute and if at all it happens, how to maintain the cold chain is very critical. One lesson learnt during this period was vaccines moving at subzero temperature, which need Dry Ice. As Dry ice is a hazardous cargo, it is not allowed beyond a certain weight in the aircraft. This is when we started looking at PCM (Phase Change Material) as coolant. The challenges are now almost worked upon, for which the opportunities ahead are tremendous. The cold chain industry is in focus now,” informs Mr. Nihar Parida, Senior Consultant, SpiceJet Ltd., during an exclusive interview…

How would you describe the last two years in the purview of supply chain?

The pandemic has been the worst that could have happened and with many disruptions in supply chain. I feel myself lucky to be a part of a period, which taught us more about supply chain. We, in all our projections or risk managements, had never thought a disruption beyond may be a month. This pandemic taught us how things can change. Many other factors and geopolitical issues also changed the supply chain of the future. The biggest being, ‘Looking beyond China, it also gave a push for technology. I am happy that I became a part of AI and ML as a domain knowledge expert. The supply chain will be more resilient now and has pushed us to think beyond the box.

How has technology enhanced the operational efficiencies during these times with respect to supply chain?

The biggest example of this is our e-commerce industry. It showed how technology helps during these situations.

Otherwise, to tell the truth, the focus of our technology was postponement of manufacturing by reading the demand better. That has fallen flat. This pandemic showed us how tight roped inventory management laid to disaster in most of

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the industry verticals. I agree many a company bore the loss for high inventory too. The best thing that happened due to technology during this period is, many things went online. GOI also looked at putting all stakeholders of supply chain under one platform.

As you are associated with SpiceJet, kindly share some inspiring insights that you have witnessed during the last couple of years in the context of support being offered by the airline industry in vaccine delivery.

Using Airfreight is still a crime for lot of supply chain professionals due to the cost involved. But I had always been of the idea that if you take a holistic view of the cost and faster ROI, Airfreight is not that high. We saw how Airfreight saved many lives during the pandemic by moving the tests, consumables, and vaccines to reach the corners of the world. But at the same time, it was a worst hit industry during the pandemic. We used our passenger planes for cargo movement. We were the first ones to move into Cargo-on-Seat.

We also leased wide body planes with seats taken off to use it as Preighters (Passenger+Freighter).

Times when everyone was pondering what to do, we were working round the

Mr. Nihar Parida is a tenacious professional with strategic and analytic approach to innovating new ways, solving problems, bringing in customers and accomplishing profit targets. His expertise lies in identifying and capitalizing on emerging market trends, ideas, and revenue opportunities. His skills in key negotiations and strategic decision making have been perfected by 32 years of experience and 20 years of leading organizational business units. He envisions to help build Supply Chains with innovations to ensure it meets customer demands in the shortest possible time with help of Digitalization and AI.

INTERVIEW

LEARNINGS TO IMBIBE

 Supply Chain is vulnerable, and changes are the only constant in Supply Chain  Back to old school of holding inventory at different points and for a longer period  Adapt technology as fast as possible  The vendor relationship must improve, and the Supply Chain Partners should be inclusive clock to get the RTPCR kits, gloves, Oxygen Concentrators, and many other, things from different parts of the globe for India. The way the team worked and coordinated with different authorities across the globe to land and take off with cargo was really very interesting. The resilience of the team (Covid Warriors) helped us in distributing the first batch of vaccines from Pune and Hyderabad.

Kindly enlighten us on the airfreight dynamics along with the challenges and the opportunities that exist in the segment.

This segment is very challenging as we not only handle the temperature sensitive products, which is time sensitive, but the social obligation of carrying lifesaving drugs is much more critical. Training the team to handle cold chain shipments is also a big challenge.

Ensuring no shipments are offloaded at the last minute and if at all it happens, how to maintain the cold chain is very critical. One lesson learnt during this period was vaccines moving at subzero temperature, which need Dry Ice. As Dry ice is a hazardous cargo, it is not allowed beyond a certain weight in the aircraft.

This is when we started looking at PCM (Phase Change Material) as coolant. The challenges have now been almost worked upon, for which the opportunities ahead are tremendous. The cold chain industry is in focus now. There is a huge amount of public awareness. Hence, the companies will try and use airfreight more to be within the time.

How do you view the cold chain segment taking a big leap and what are the opportunities?

Yes, it is now poised to take a huge leap. Covid has made people aware of cold chain. Government of India has realized the lack of facilities and how our healthcare has been neglected due to poor cold chain infrastructure. Today

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we have a wastage of 30% or more to the cold chain products. This is a highly capex intensive segment. With the government realizing the ground reality of supply chain hurdles of the largest producer of vaccine and other lifesaving products, I am sure it will take certain initiatives to ensure this vertical has proper infrastructure.

Reusable refrigerated packaging solutions are proving to be a solution for the future for minimizing the environmental impact of transporting cold chain healthcare products and reducing costs. Kindly elaborate on the new age solutions…

I have been working on this for the last few months. My realization is that this is the segment, which all of us should look at. Till now, we have been using methods, which are not validated and are not the right ways to carry our life saving drugs and reagents. Through such measures, we are spoiling the environment by using one-time packaging solutions. We can give a much better cost saving solution to our pharmaceutical companies. We can save our wastage. We can challenge the world with our pharma supply chain.

Kindly enlighten us on the recent news of SpiceJet’s customized cargo warehouse at India's first and only airport based Free Trade Warehousing Zone (FTWZ). How is it slated to transform the airfreight

landscape?

Free Trade Zone is not a new concept to India. We already have few FTZs running across India. Our initiative was to create one on the airport side as all of them have been in the wet port because of the sheer volume. We, being the airline, wanted to ensure how we can take advantage of this. This is when we realized that e-commerce, pharma, aerospace, and perishables moving via airfreight, need a place like this to hold and do some value addition to their cargo. Today we are looking at creating a transshipment hub in the country along the airport.

We have been losing Southeast and neighboring country cargo to Dubai or Singapore. In turn, we had been helping their freighter industry. By creating a transshipment hub, we can consolidate and offer many value additions to the Sri Lanka, Myanmar, Bangladesh, and few other countries’ cargo in India. This will not only help us but will also help our freight forwarders and packaging companies. Foreign customers can get their consolidation centers upstream in their supply chain. By remaining closer to the source, they can plan things much better and save money while changing their supply chain in short time.

Please share with us India’s potential as far as transshipment is concerned.

This is a huge subject and an old subject when it comes to India. Yes, we have been in the center for ages when it

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INTERVIEW

UPCOMING TRENDS IN SUPPLY CHAIN

 Supply Chain Digitization will give better visibility and analysis  Embrace AI and ML to a larger extent but keep using Human Brain as a decision maker  Collaborate better and strongly with all your Supply chain partners and set the process  Focus more on resilience through visibility and better risk management

A while back, you had written a piece on ‘Where do I keep My Inventory to Reach My Customers Faster and How’. The subject holds immense importance in today’s times. Kindly share with us the right way to go about it as ‘Inventory on the Go’ is a hot topic in today’s scenario?

to keep how much inventory. Today the inventory is everywhere and, in some places, aging of certain inventory at certain places are very high while the same inventory is in short supply somewhere else. This is happening due to wrong assumptions within the inventory management team who currently work in siloes. Most of us are target driven and in our hunger to achieve targets, we forget about inventory management and most of the time give wrong projections.

The market behavior to your products can be analyzed and right inventory can be predicted by AI. Even if there is a shortage of it, can be fed in by Air within 48 hours. This also can be well predicted

by AI. Today most of the companies are dying because of wrong predictions, which leads to over production. I will not say low production because none of us predict low sale from the previous month.

This, in turn, leads to over production, overspending and many more. Use AI to predict. If it says low sale, AI will also give you the reason. Pay heed to the reason and it will make your decision making stronger. But a word of caution here is, hire proper domain knowledge experts to tell your coders what to include in your analysis.

What I meant and I understand about ‘Inventory on the Go’ is use of AI driven data analysis to ensure when and where

What’s your take on recent government policies and where do

comes to logistics. But, unfortunately, the laws of our land and our attitude have never paid heed to the facts. We have a huge hinterland with great population too. But look at UAE and Singapore. These countries are surviving by being transshipment hubs. We are losing our business and our foreign exchange to these two countries mainly.

Transshipment hubs are a core to any supply chain. Government of India has been talking about logistics hubs, but majorly domestic. Yes, we do need them. But our exporters and importers are looking at earning more foreign exchange. How much are we helping them? Look at the Colombo Port. It does more business than our ports because of its ease of transshipment. We have a huge scope, and we have enough ports and land to build one. We just need to define our policy well for it.

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you feel the government should put more emphasis on?

Government is doing as much as possible. Things are moving in the right direction. From my side, I would like the government to look at the transshipment hub with FTZs and ensure we facilitate our logistics and packaging companies to grow together.

How can companies shield themselves from such unforeseen events, which have now become a way of life?

The best part of Supply Chain, which is close to life’s learning, is unforeseen events. You can never forecast everything but yes you can always forecast a few…

• Be innovative. They say “Crisis is the mother of all innovation” • Expect the unexpected • Don’t run on a tight rope expecting cost reduction • Have good relationship with every vendor or supplier because at the time of crisis the team always work.

One disgruntled vendor or supplier can ruin the whole chain • Lead the team with empathy • Be resilient by designing from your heart and owning your narrative • Embrace technology and have a better forecast

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