Celerity September - October 2020 by Celerity Supply Chain Tribe

SUPPLYCHAINTRIBE.COM September - October 2020 Volume 4 Issue 5 For private circulation only

SPECIAL REPORT Procurement Today & Tomorrow HARNESSING THE POWER OF SUPPLIERS

PERSPECTIVE Industry leaders decode the way forward for supply chain to wade through the pandemic

THE INDISPENSABLE SHIELD Encapsulating the growing VALUE & WORTH of 3PLs

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CONTENTS

September - October 2020 Volume 4 Issue 5

COVER STORY

THE INDISPENSABLE SHIELD Today more than ever, supply chain fraternity needs to reclaim its stake to play the final move in the game of chess for a classic checkmate situation. While the industry at large has done few things right, there’s still a long way to lead the growth and here’s where the logistics specialists – third party logistics service providers play the role of an enabler and together – the user & the LSPs – have to bring that much needed equilibrium to refuel the economic growth wheels. The question is ARE WE READY??

6 SPECIAL REPORT Procurement Today & Tomorrow - Harnessing the Power of Suppliers During the recently held maiden e-conference & Awards ‘Procurement Today & Tomorrow’ by Celerity and Quantic Business Media, Chief Procurement Officers (CPOs) decoded supplier management in the New Normal.

10 FEATURE Supply Chain Leaders: Are you ready to share Leadership?

Businesses should aim to ‘get right’ to achieve success, states Richard Wilding OBE, Professor of Supply Chain Strategy, Cranfield School of Management.

INTERVIEWS

14 Leading the Course of Drug Discovery

Supply chain with high level resiliency has been able to recover faster due to strong risk mitigation program and agility,” states Chandan Shirbhayye, Director – Supply Chain, GVK Biosciences Pvt Ltd.

30 Back to Basics

“The global supply chain will continue to evolve as more and more pockets of excellence will emerge,” asserts Ingit Saxena, Head – Manufacturing Business, SSIPL.

40 Blockchain: Transcending Possibilities in SCM

17 OPINION Supply Chain Re-invented post COVID-19

Piyush Chowhan, Group Chief Information Officer, Lulu Group International, enlists four big themes to align and transform the global supply chain.

FOCUS

19 AGRICULTURE 4.0: Is it the Panacea to revive Farmers’ Fortunes?

“Industry 4.0 technologies will increase the communication between the market and fields, which will thereby enhance the competitiveness of the food supply chains,” believes Rohit Sharma, Senior Research Scholar – Operations and Supply Chain Management, NITIE Mumbai.

36 Alliance Across the Chain

Strategic alliances are an instrument for combining cooperation and competition in corporate strategies, writes Harinarayanan S Nair, General Manager – Strategic Planning & Business Development, Signode.

33 PERSPECTIVE The Golden Sparrow?

This segment captures intriguing voices of the user fraternity on the Covid challenge and brings to you a crystal-clear path to lead the growth graph…

“Blockchain has the potential to revolutionize stock management,” highlights academician Hedwik D Giesel. 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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ACTION PACKED IN NEW NORMAL! Dear Readers, It’s time to get over the pandemic uncertainty and lethargy stemming from the last four months. To get the economy back on track, we must overcome our fears, since Covid is not going to go in a hurry. We must get back to normalcy. Celerity organized its first e-Conference with Procurement in the forefront. Discussions flowed from how new products were co-created with Suppliers and new product launches were turned around in a matter of weeks. This pandemic has shown the real importance of suppliers and why they are critical in the Atma Nirbhar Bharat vision. In our Cover Story we speak to a few CEOs from the 3PL industry and how, while facing numerous problems, kept the supply chain going for Essentials going. The business scenario has transformed across industry verticals during COVID-19 and this has placed unprecedented stress on supply chains. There is an interesting Feature article on leadership behaviors and implementation characteristics that business leaders should aim for to ‘get right’ to achieve success. This issue is packed as usual with multiple interviews, Opinions and Focus articles to give you your food for thought! Stay Healthy, Stay Safe!

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

4 CELERITY September - October 2020

SPECIAL REPORT

Procurement Today & Tomorrow

HARNESSING THE POWER OF SUPPLIERS “Suppliers can be equal stakeholders in your success.” This was the most insightful phrase that truly set the tone of the recently held maiden e-conference & Awards ‘Procurement Today & Tomorrow’ by Celerity and Quantic Business Media. During the conference, Chief Procurement Officers (CPOs) decoded digitization and supplier management in the New Normal. The panelists were vocal about the stance that the suppliers and the users need to take to be in sync with each other, more so in current times when the small suppliers need lot of handholding and financial muscle from their customers. As one of the panelists aptly said, “We owe them their success.” Covid era has made everyone realize the value and the worth of the suppliers. It is about time the user fraternity come together to strengthen and support the mighty suppliers to mutually harness the power of each other. This special report is the lowdown of the e-conference and the thought-provoking conversations that made this maiden webinar a yet another successful initiative for team Celerity…

Rahul Gupta, Vice President Procurement, Planning & Contract Manufacturing, Amway India

Nikhil Puri, Global SCM Head – Cabling Solutions, Sterlite Technologies Ltd

Somnath Chatterjee, Head – Procurement & Logistics, Foods Business, ITC Ltd

6 CELERITY September - October 2020

Amandeep Singh Bhan, Senior Vice President, Moglix

Gaurav Arora, Senior Director – Global Sourcing, Biocon Ltd

SPECIAL REPORT How can we harness the power of supplier ecosystem? Rahul Gupta, Vice President Procurement, Planning & Contract Manufacturing, Amway India: With the heightened awareness about holistic health and wellbeing, consumers are becoming more conscious about health and immunity. Especially, in the wake of the current global health crisis, selfcare has become the new essential. This change in consumer preference reflects in surge in demand for our immunity, health and wellness product portfolio with a preference for herbal SKUs. In line with this, we are ramping up production for immunity supporting and hygiene products by four times in the coming months. Considering the importance of getting the products to our consumers, the support of our suppliers was crucial. With the nationwide lockdown, realtime visibility into supply chains was critical to enable operational resilience. Normally, supply chains have been stress tested during disruptive times as they function in a linear, auto-pilot’ mode, which become more important during this major crisis. Traditionally, due to natural calamities and geopolitical disruptions, organizations had started looking beyond the few concentrated procurement and supply points. The current pandemic is a truly global phenomenon wherein companies across the board are experiencing change at an unprecedented pace. This calls for a transformation in critical operations such as supply chains to ensure business continuity and build a robust supply chain for the future. Nikhil Puri, Global SCM Head – Cabling Solutions, Sterlite Technologies Ltd: The biggest problem for procurement function is to shift their short-term cost savings to a more holistic objective. We need to work with the suppliers to identify opportunities to deliver more innovative products & services. For Sterlite, our suppliers are our partners whose synergies we harness for mutual benefits. We need to work on five factors to transform the relationship between partners and the buyers – Responsibility, Appreciation, Transparency, Openness and Trust. These core values must be imbibed when you are interacting with the two parties. Industries have started

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gaining competitive advantage by just quickly changing the management of the partners. These partners account for 60-80% of the manufacturing cost varying from industry to industry. They technically influence new product development. We need to start looking at the values and not the cost. This pandemic is the real test for the supply chain management where everything was shut down. Many businesses today have realized the strategic importance that supply chain plays. These improvements have enabled us to slash the development time by 40% by closely collaborating with the partners. Amandeep Singh Bhan, Senior Vice President, Moglix: Harnessing the supplier ecosystem is a compelling subject and a topic close to my heart. As I reflect upon the last 6-8 months, I realize that the Covid-19 pandemic has exposed vulnerabilities in the way we are managing suppliers both at the local level as well as global levels. Today, perhaps there is a brilliant opportunity for us to bring the power of the supply ecosystem into play through the process of digital transformation. Digitization is nothing but unlocking the digital, whereas digitalization is far more holistic as it's centered upon people's capabilities, operating models, business processes, etc. Digital transformation is more about overhauling the procurement function that needs to collaborate strategically with suppliers as well as differentiate and change the benchmarks that were traditionally being followed for a very long time. Leveraging the power of technology to collaborate better with suppliers ensures that the annual cost of managing suppliers keeps going down and, at the same time, quality, delivery schedules, and co-innovating with the suppliers keep going higher as a benchmark. Now is the opportune time to revisit the old processes and bring in the desired operational change to reap the benefit in the future. At Moglix, we are at a unique juncture where we take care of the indirect expense of the manufacturing organization while managing 10,000+ suppliers. Hence, when we embarked upon this journey, we took a 'Digital First' approach. We brainstormed certain aspects such as what are the steps we can adopt to take procurement to

the next level for our suppliers and hence bring radical technologies at play to ensure that not just transactional tasks are entirely automated but also how suppliers can be engaged in a much more strategic fashion to the extent that they have visibility into our inventory, they know when to replenish it, we know when to replenish it through our customers. The current situation gave us the brilliant opportunity actually to put it to test, and to our surprise, during this whole lockdown period, our supply chains kept operating. We were then wholly convinced to take the big plunge into the world of digital transformation. Somnath Chatterjee, Head – Procurement & Logistics, Foods Business, ITC Ltd.: There’s an apt quote from Lenin, ‘There are decades when nothing happens and there are weeks when decades happen.’ I am sure all of us would agree that we are experiencing such turbulent times in our lifetime today. That is precisely what we are witnessing today. This black swan even not only took us and our supply chains by sudden surprise, but it also showed us where we stand in terms of preparation. As recently as March 20, we had no clue that we would be launching products like Savlon Disinfectant Spray and Veggie Wash. With the help of our R&D team and our suppliers, we were able to roll out these products in the market in record time. We were also able to quickly repurpose our deodorant spray plants in Baddi, Himanchal Pradesh. As far as long term is concerned, about three years back, we took a call that we would not make our Natural Juices from imported concentrates, which most of our competitors do. We wanted to ‘Aatma Nirbhar’ at that point in time. We reached out to our farmers through whom we have connect through our e-Choupal initiative. Over the last two years, we ensured that all our juices are freshly produced. Such partnership with vendors takes time and companies to work on strategy to meet the ends meet. Gaurav Arora, Senior Director – Global Sourcing, Biocon Ltd.: There is a growing need of developing domestic vendor base for various industrial segments right now. The government

SPECIAL REPORT has also been working at a fast pace in terms of introducing various policies in place to make it happen sooner. We agree that there is a lack of funding and technology inclusion for SMEs & MSMEs but a large scale buyer, we need to focus on scaling technological advancements to our small scale suppliers to help them produce the required raw materials or components. Secondly, the funding aspect where we do not have much support from the government, as buyers, we should help our suppliers to support of some kind of model on exclusivity. Certainly, this will not completely de-risk our business proposition as far as geopolitical boundaries are concerned, but it will at least ensure a steady supply of inbound materials to help the overall supply chain going. We need to take a balanced approach to align our operational strategies as per market dynamics.

What are the ways in which the expertise of suppliers can be realized to solve problems? Nikhil Puri: We need to establish supplier relationship management (SRM) into the organization. It sounds easy that you choose suppliers that are cost efficient and are easy to work with, maximizing the value of the relationship. There are few points that you need to consider while establishing SRM. Your suppliers are just not vendors. You must make use of the technology to make SRM simple. Invest in supplier management software to keep track of information about your supplier in one place. You can go forward and purchase advanced purchase order management software, which you can use to track purchase order. Mature organizations still delegate but I am telling from a broader aspect. Some software like purchase control integrate this supplier management system into the same platform. Most important thing is that timely payments are very crucial if you don’t want to lose your suppliers. This way you would get a reliable partner and in turn they would also be loyal to you. Make sure to have timely and frequent communication with your suppliers. They need to be regularly informed and kept up to date about your strategies. Most of the suppliers don’t even know an associated company’s five years plans, so how is

the relationship going to fructify in the long run. Price is what you pay, and value is what you get. If you have the financial muscle, make sure it reaps benefits for you and the suppliers. Detailed agreements must be there to make supplier relationships easier and seamless. Companies that are horizontally integrated are at a disadvantage with their outside suppliers, but they are subject matter experts. Vertical integration offers advantage to everyone and this is where suppliers who are subject matter experts should be given authority and in fact offered transparency to your business process so that they can add value in the product you aim to offer to your ultimate customer. This process increases the speed of the new product development. It builds stronger relationships between your partner and your company. Most importantly, it increases the competitive advantage at the time of Go-to-Market. Amandeep Singh Bhan: Digital transformation is a lot about creativity also. It is not re-engineering. Number of times when companies have evolved over the decades, they were averse to changing policies and processes that have worked for them in the past. They find it very tough to do that, given the internal dynamics. That's where your supplier ecosystem, which is agile, smaller, and tech-savvy, can bring those skills to play. But if you have the opportunity to bring in those best practices using a supplier ecosystem aligned to the new way of working and trying to find these suppliers of tomorrow with whom you can work in the long run or who can help you improve will be a win-win formula.

Please share with us some of the case studies in harnessing synergistic relationship with vendors. Somnath Chatterjee: I am happy to share the dais with Rahul Gupta from Amway today as during this crisis situation, he would vouch for the fact that in very small time, we were able to partner with our suppliers and bring out an immunity juice. In fact, Amway is marketing for us. We have tied up with Amway India with a focus on products in the health and nutrition space. This partnership has been kickedoff with the launch of ‘B Natural+’

8 CELERITY September - October 2020

fruit beverage range, which has been developed by ITC, and positioned in the immunity-boosting space. The range will be exclusively distributed by Amway through its direct selling network in the initial period. This collaboration reflects the synergies between the two companies and their teams will be working closely the area of health and wellness. With consumers increasingly looking at products that offer them nutrition and support immunity, we fast-tracked the launch of the B Natural+ fruit beverage range and launched it within two months. Other products in the health and wellness space are also in the pipeline, which will be launched under this partnership in the coming months. In another instance, as a part of ramping up production of our Mangaldeep brand of agarbattis (incense sticks), we are working with farmers on growing bamboo plantations in NorthEastern state of Tripura. The agarbatti sticks are made from a specific species of bamboo, unique to the North-East. Lack of widespread availability of plant type, absence of machinery and low import duty saw local manufacturers and traders import round bamboo sticks. Around `300 crore worth of such sticks were imported last fiscal. We are targeting to stop imports of bamboo sticks for our entire requirement over the next 15-18 months. In a nutshell, we need to train our minds to think win-win and there’s surely a way to get there.

How can we make vendors future ready? Somnath Chatterjee: When the sudden lockdown announcement came, the entire industry was shell shocked, and our supply chain was paralyzed. However, our loyal consumers were counting on us for their daily staples such as Aashirvaad Atta and Sunfeast biscuits, Yippee noodles, etc. Food is an essential commodity. The Government was extremely sensitive to this and ensured that we and our vendors received all kind of passes to operate during the lockdown. However, the challenge was in infusing confidence in our vendors and their larger teams. We reached out to them and said that look, if we can operate our food factories with all protocols of safety and hygiene

SPECIAL REPORT in place, why can't you emulate us? We appealed to them that the people of our country are dependent on the food that we produce. We realized that most of our vendors just needed a little encouragement and within days, over 90% of our backend supply chain was up and running. Going forward, we have shared with our vendors that the key is to be ‘Aatma Nirbhar’. Not only because that is the Prime Minister's clarion call but also to insulate themselves from global supply chain disruptions account such pandemics or even adverse geopolitics. Hence each ingredient that they use should also be made in India, to the last degree possible. To this end, we partner with our vendors by sharing details of domestic alternatives. We sometimes even become "Vendors to our Vendors" by guiding them to the right sources of raw and packing material and at the right price. Ultimately, we win if the vendor wins!

How can we strengthen opportunities of domestic vendors post the pandemic and help the government in ‘Aatma Nirbhar’ mission? Gaurav Arora: It is the perfect time for every company to do its bit in the government’s mission of ‘Aatma Nirbhar Bharat’ by strengthening the capabilities of their respective suppliers. The government has been proactively coming up with policies to enhance the capabilities of small-scale industries of every sector. Indian Central Government has recently published the road map for “India – Towards a Global Pharma Hub” to de-risk the import dependency of 53 Bulk Drugs / APIs and medical devices. This will certainly help domestic manufacturer, specially the new start-ups to build the infrastructure and get ensured business. While these policies are at very nascent stages, but better late than never. Department of Promotion of Industry and Trade (DPIT) has started decoupling exercise. We need to extend the reliance on domestic suppliers of goods & services. Second there are horizontal linkages to strengthen the collaboration between the domestic institutions such as universities and other technical platforms where they can receive the desired education about the new technology and third most aspect would be the movement of the skilled

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workforce out of foreign firms so that Indian domestic small scale suppliers can take advantage of. We need to be committed towards the upliftment of these small players.

How do you motivate your suppliers? Gaurav Arora: In the beginning of Lockdown period, the first need was to keep all the suppliers operational. Being pharmaceutical (essential goods) manufacturer, we have provided the support by issuing the declarations to our suppliers to continue the supply since they are also the essential raw / packing material supplier to manufacture the pharmaceutical products. However, in general scenario, we keep regular and effective communications includes healthy dose of face-to-face discussion with our suppliers. A shared understanding helps avoid confusion and disagreement. We share the company growth journey along with them and the upcoming objectives and their expected contribution into it. This also provides visibility and accountability to them within their organization to recognize the progress they are making or if needed, apply necessary fluctuations when they are behind.

What are the best practices in Supplier Management? Amandeep Singh Bhan: It is vital for an organization to understand the value of each supplier. Well managed suppliers can create a competitive advantage for your business. Once suppliers are onboarded, communicate business objectives, and goals accurately, incorporate supplier information management system for better visibility and control, create KPIs to measure supplier performance and evaluate risks (financial, operational, data security and regulatory), and collaborate from time to time with suppliers for effective relationship management.

How can we leverage procurement as a function in risk mitigation?

with limitations on people’s movement dealt a blow to global logistics. These developments, along with the USChina trade war, have paved the way for economic nationalism in the world today. Consequently, organizations are trying to increase domestic production ability, looking at reducing or even eliminating dependence on distant resources that might be perceived as risky to create an agile value network. From the supply chain perspective, derisking is finding immense importance today because the world is becoming more and more self-reliant. In other words, becoming ‘Aatma Nirbhar’ to strengthen the indigenous supply base, has now become a Global norm. Today, companies need to shift from the traditional ‘at an arms-length’ to ‘arms-around’ approach when it comes to supplier relationships. This can only happen when we move from a purely transactional relationship to a value and outcome-based partnership through increased transparency and support. Both the companies and the supply partners will reap maximum benefits when they are committed to each other’s success. Furthermore, this is the era of bringing the specialists on board to run the show. We, at Amway India, are significantly promoting supplier-led innovations in our KPIs to boost their morale, which ultimately aids in our business performance. Commercializing innovations has been one of the biggest success stories with our suppliers and we will continue to build on more ideas for mutual benefits. Amway passionately believes in the power of collaboration to transform operations. Owing to such strong support, we were able to develop and launch a hand sanitizer in a record 30 days during this pandemic. We are also working on other product innovations, which will be co-developed and cocreated with some of our key business partners in the days to come.

Rahul Gupta: The distress in supply that started in China earlier this year and the resulting distress in demand as the global economy almost shutdown exposed vulnerabilities in the procurement and supply strategies across economies. Closed borders, temporary trade restrictions coupled

FEATURE

Supply Chain Leaders

ARE YOU READY TO SHARE LEADERSHIP?

As Chair (Full Professor) in Supply Chain Strategy at the Centre for Logistics, Procurement and Supply Chain Management, Cranfield School of Management U.K., Professor Richard Wilding OBE is recognized globally for his thought leadership in Logistics & Supply Chain Management. Richard is passionate about taking and creating academic knowledge that creates ACTION in business. Richard’s special areas of academic interest include supply chain 4.0, e-commerce, the creation of collaborative business environments, reducing supply chain vulnerability & risk, balancing supply chain impact on People, Planet and Profits, time compression and techniques for aligning supply chains to maximize customer value and reduce cost.

What could businesses do to improve their chances of success when leading transformational strategic supply chain initiatives? The research suggested that there were a number of leadership behaviors and implementation characteristics that businesses should aim to ‘get right’ to achieve success—leadership behaviors and implementation characteristics such as better change management, better risk management, cross-functional involvement, a focus on ensuring that initiatives were ‘vision led’, high levels of boardroom sponsorship and involvement, writes Richard Wilding OBE, Professor of Supply Chain Strategy, Cranfield School of Management.

Building Trust Shared Leadership Affilia on Values Group Values

10 CELERITY September - October 2020

GOAL & PERFORMANCE FOCUS

INTERNAL COLLABORATION

NEXT GENERATION LEADERSHIP & BEHAVIOR

PEOPLE & TEAM DEVELOPMENT

Int e Em rper so p De owe nal R ve r lop ing E ela on me mp sh nt Va loyee ips lue s s

CUSTOMER & MARKET FOCUS Building trust Building Commitment Clear power distribu on distribu on

AKE a Google search for images of ‘leadership’ and see what the word still implies: there’s one person at the front of the spearhead, at the top of the triangle; one leader fixing the direction and pulling the rest along with them. It’s an idea that been embedded into our thinking of managers since the 1980s - and I should also say, instilled over the years by business schools - as the ideal to aim for. In the old world of supply chains, where change was slow, when products and patterns in demand were fairly predictable and stable, it was simple. The traditional command and control mode of leadership was clear and effective. In the VUCA context of global markets in general (Volatility, Uncertainty, Complexity, Ambiguity), and with the effects of digitization on supply chains in particular, it’s just no

Inn o Fo va v c Fo us on e Tow cu ard s o Fac Ra st ts n o na Cust & Da he F lV utu alu ome ta re r es

ins W rm als Te o t r G ho t to s nS n ue t o itme t Val Ac en mm Co ievem h Ac

EXTERNAL COLLABORATION

CHANGE FOCUS & MANAGEMENT

gy ate ge an s Str Ch s for usine g n i B nis t to re i ga n Or nme Insp ls g il g Ali age & g Sk ng n kin g i ki nc Thin Thin En e u c Infl tegic lis

o a r H l/ St ba Glo

Leadership Behavior Leadership Value

FEATURE longer the right approach for leaders - at least not by itself. Managers need to be looking at equipping themselves to have a toolkit and look beyond the pervasive and monolithic example of the ‘good leader’. When we talked to supply chain leaders last year, the most challenging barriers to success were found to be around leadership and dealing with the human dynamics. Number one was “a lack of resources”, second the “overload of change”, third “too many conflicting priorities”, followed by “overambitious timelines”. “Perceived risks of change” and “fear if change” were in there too. The findings raise fundamental questions over leadership styles and whether they are fit for purpose.

MIX AND MATCH There are three essential models of leadership: command and control, consensus and collaboration. It’s not so simple as saying the first is oldfashioned and bad and we all need to just move to collaboration. All models work well in some contexts and poorly in others. So, command and control is good for getting results against a plan, where a hierarchy defined; it works poorly in larger organizations, where innovation is a priority. Consensus, which works via a small group and matrix across an organization, has been shown to be useful for smaller organizations, but less good when speed is needed. (The recent machinations in Parliament to find a consensus over Brexit has been an interesting demonstration of this principle in action). Collaborative is when leadership activities are dispersed across a whole network, with roles for all levels and locations as well as external stakeholders - something that works well for operations including diverse groups and players, and for introducing innovation.

THE ‘GET RIGHTS’ Our research with supply chain leaders has led to a list of ‘get rights’ – what companies need to do to stand the highest chance of success with their strategic supply chain initiatives. These include making sure the supply chain is paid attention to as an end-toend value chain, a whole ecosystem; the realization and acceptance among leaders of the need for their personal

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Supply Chain remains at the forefront of business, satisfying customer needs and delivering top line growth. New kinds of leadership and behaviors are required to orchestrate and deliver successful change across the Next Generation of Supply Chains. New business models, disruptive technologies and cross-generational talent pools are all challenging the traditional approaches to supply chain and change management. contribution towards achieving change goals; continuously adapting strategy to changing circumstances; and, not dropping the ball during the implementation of change in terms of service, continuing to generate shortterm wins, delivering benefits and building credibility. What’s obvious from this is that one leader, using one style of leadership is going to struggle with the ‘get rights’. The best supply chain leaders will find ways to use different forms of leadership at the right time, to share leadership roles with others across the operation and the supply chain itself; a bi-modal approach, so knowing when to focus on predictability (areas like efficiency and cost reduction, managing predictable swings and inventory fluctuations, risk mitigation and prevention), and focus on exploration (speed, and strategies for solving the unexpected or adapting to new technologies). That’s not as simple as it sounds. Supply chain leaders need to learn to manage both modes simultaneously, and that will involve having the selfawareness and skills to give up on being the single point of the spearhead, and the strength and courage to empower others.

IMPLEMENTING STRATEGIC SUPPLY CHAIN INITIATIVES SUCCESSFULLY In our rapidly changing world, implementing new supply chain strategies has always been recognized as a challenge. With change moving

so fast, having a policy of sitting back and waiting to see what happens can in many situations be dangerous and actions need to be taken today to ensure a supply chain remains competitive. New business models and disruptive technologies are changing the way organizations effectively apply strategic supply chain initiatives. A competitive model that forces supply chain leaders to deliver results today, while simultaneously building a futureproof business for tomorrow. Our research at Cranfield School of Management with Efeso’s suggests that Supply Chain remains at the forefront of business, in fact in some organizations is the business! Having to satisfy customer needs and delivering top line growth. New kinds of leadership and behaviors are required to orchestrate and deliver successful change across the Next Generation of Supply Chains. New business models, disruptive technologies and cross-generational talent pools are all challenging the traditional approaches to supply chain and change management.

TAKING ACTION: THINGS FOR TODAY'S 'TO-DO LIST' To make sure that businesses stand the highest chance of success when implementing strategic change, there are four actions you need on your “ToDo list” today: REFLECTION - Learn from experience: reflect on the successes and failures of previous initiatives.  At what stage were problems identified?

FEATURE Leadership and Behaviours Framework - Explanation of Terms & L #

Dimensions

Change Focus and Management

People & Team Development

Internal Collaboration

External Collaboration

Goal and performance focus

Customer & Market Focus

Description

Clear focus on all aspects of the change needed, and actively managing the change

Clear focus on development of key players and teams

Clear focus on maximising internal collaboration

Clear focus on maximising external collaboration

Clear focus on the overall goals and performance of the Supply Chain initiative

Clear focus on specific end customers and the market development in general

Elements Organizing for change

Applying a structur

Alignment to Business strategy

Aligning the desired

Engage & Inspire others

Engaging and inspir

Influencing skills

Applying influencin

Strategic thinking

Having strategic pe

Global and Holistic thinking

Having a clear focu

Interpersonal relationships

Maintaining and im

Empowering employees

Empowering emplo

Development Values

Commitment to con

Building trust

Building trust betw

Shared Leadership

Distributing leaders

Affiliation Values

Creating a sense of

Group Values

Creating a clear und

Building trust

Building trust betw

Building Commitment

Building commitme

Clear power distribution

Creating and suppo

Act on short term wins

Acting on opportun

Commitment to goals

Showing clear comm

Achievement Values

Promoting accomp

Innovative towards the future

Continuously innov developments

Focus on facts and data

Decision making an

Focus on customer proposition

Customer-centric fo

Rational Values

Having a clear focu

The ‘get right’ leadership behaviors and implementation characteristics have a direct bearing on the observed variability of outcomes. 10 Simply put, it appears that the more of these ‘get right’ leadership behaviors and implementation characteristics are in place, and the more thoroughly they are pursued, then the more likely it is that businesses’ strategic supply chain initiatives will succeed. Put another way, high levels of performance in all of these leadership behaviors and implementation characteristics correlates with achieving the highest chance of success with strategic supply chain initiatives. 12 CELERITY September - October 2020

 What were the root causes?  How could these have been avoided? At what stage? By whom? How?  Reflective practice should be regular habit, the danger in a fast changing world is we rush onto the next new project and forget to reflect and learn from the past to enable the new project to succeed. BENCHMARK - Benchmark your organization and its initiatives (present, future and past - see Reflection!), using the six key success factors as a checklist.  Are initiatives ‘vision-led’, and aligned with the overall business strategy?  Does the organization exhibit global and holistic thinking, embracing the end-to-end value chain?  Is there a top-down, bottom-up

FEATURE Success factor #6:

ink to Key Success Factors

Initiatives that display a progressive approach to planning and execution,

Explanation

where goals and milestones are updat-

red approach in the organization for change, balancing risk, pace of progression, and outcomes

d change to the overall business strategy and implications for the organization

ed and adapted in response to changed circumstances and evolving competitive paradigms.

ring the employees involved in the change Success factor #1:

ng skills to mobilizing employees towards the change

Initiatives that are ‘vision-led’, and which

erspective when managing the change

are aligned with overarching business

us on the overall goals and purpose of the change, and critical inter-dependencies

strategy.

mproving interpersonal relationships

Success factor #2:

oyees, ensuring relevant capabilities to maximize their value contribution

ntinuously developing people and teams

Initiatives that exhibit global and holistic thinking, embracing the end to end value chain.

ween individuals, teams and functions

ship responsibility; people within a team or organization share accountability for leading the change

f involvement and “belonging” with the key-populations involved

Success factor #4: Change management practices that focus on generating short term ‘wins’ and building credibility, backed by pilot implemen-

derstanding that working together will achieve more

tations, proof-of-concept ‘demonstrators’,

ween individuals, team and entities external to the organisation

and demonstrable tangible benefits.

ent between individuals, team and entities external to the organisation

orting a power distribution between entities that permits effective collaboration

nities for short term wins consistent with the longer term vision

Success factor #3: A top-down, bottom-up realisation—and acceptance—that personal contributions

mitment to achieve the overall goals of the Supply Chain initiative

plishment and success, through mastery of skills and high standards

make a difference in delivering the initiative’s objectives.

vating and embracing the challenges/opportunities of social, environmental and technological Success factor #5:

nd behaviour is based on best possible facts, insights and data

Initiatives that maintain a solid focus on

ocus and behaviours that are directed towards value creation and growth

us on logic and reason

realization—and acceptance— that personal contributions make a difference in delivering the objectives?  Is there a focus on generating short term ‘wins’ and building credibility, backed by pilot implementations, proof-of-concept ‘demonstrators’, and demonstrable tangible benefits?  Does the organization maintain a solid focus on customercentricity, and on continuing high levels of customer service during implementation?  Are the objectives updated and adapted in response to changed circumstances and evolving competitive paradigms? BREAKDOWN BARRIERS - How is your business addressing the major barriers to success that have been

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customer centricity and continuing high levels of customer service during implementation.

  

highlighted? Change overload Unrealistic time-scales Lack of resources

COMMUNICATE - Speak to the senior leadership across the business, looking to obtain a cross-functional view of the key success factors and overcoming the barriers to success. To stand the highest chance of success when implementing strategic change, the Reflection, Benchmark, Breakdown Barriers and Communicate need to be at the top of any supply chain leaders’ 'To Do list'. The impact of a failed strategic initiative should not be underestimated. Not only in terms of the wasted resources and management time expended on a frustrated project, but also potential damage to

brand reputation and the strategic consequences stemming from the business finding itself in a sub-optimal position, or lacking clear direction in a fast-moving competitive market place. The article is reproduced with kind permission of Prof Richard Wilding OBE, originally published by Cranfield University.

INTERVIEW

Leading the Course of DRUG DISCOVERY “Supply chain with high level resiliency has been able to recover faster due to strong risk mitigation program and agility. We should continuously identify various supply chain risks and constantly work upon the mitigation plans. Technology, process and people are going to be the key drivers to manage any disruptions, hence we need to keep investing in them,” affirms Chandan Shirbhayye, Director – Supply Chain, GVK Biosciences Pvt Ltd.

Chandan Shirbhayye has 18+ years of diversified Industry experience in the areas of supply chain management encompassing procurement, logistics, warehouse management, production, and people management. In the past, he has been associated with organizations such as ITC, Tupperware Brands & Piramal Enterprises.

Can you enlighten us on the entire value chain of GVK BIO and how is supply chain poised to play an enabling role in such unprecedented times?

team to ensure timely availability and competitive costs.

GVK BIO is a global Contract Research and Development Organization (CRDO) providing Drug Discovery and Development services to the biopharma industry. We are a team of over 2500 highly qualified scientists, strong enabling function structure, backed by well-defined and scalable processes, state of the art facilities and a strong customer-centric partnering approach. Supply chain, particularly, as an enabling function, plays a crucial role in business performance to drive customer satisfaction, profitability and compliance. Supply chain in GVK BIO encompasses activities related to planning, procurement, logistics, warehouse, and compliance.

Being in the service industry, it is important to be highly responsive to client requirements and critical to maintain profitability as well as sustainability. Since GVK BIO has multiple business verticals in service as well as manufacturing segments, it is important for supply chain operations to align its process and activities in accordance to the deliverables of the respective business verticals. This makes the supply chain operations more challenging since different supply chains models viz; agile or efficient; are to be appropriately adopted.

How does the procurement planning happen?

We were part of essential services, hence we got desired support from local authorities in terms of permission to operate and allied activities. Key challenge was that while we continue to operate, we had to ensure safety of all our employees and instil confidence in them to operate from workplace. Few

critical roles, viz., scientific members, manufacturing team, analytical teams, warehouse teams and employee support services such as security, canteen had to operate from workplace only. Specific actions in terms of regular sanitization, regular checks at various entry and operation points, facilitating the travel and food arrangements, rotational shift operations, support to return to workplace if stuck in some location and incentive schemes were driven. Other team members were supported to operate from home. Taskforce was formed to drive the Covid Control specific actions. We had regular review and communication from top management on relevant actions. We constantly engaged our customers and supply chain partners on our operations and progress. We have fairly adapted to new normal of virtual working, social distancing and driving the high level of performance ensuring satisfaction of our esteemed customers.

We have a mix of both product and project business. We have dedicated teams driving all the critical steps right from receipt of customer PO to final delivery. They identify the requirements and work closely with procurement

What are the challenges involved and how do you manage them?

What were the challenges imposed during lockdown if at all any? How did GVK BIO manage them?

14 CELERITY September - October 2020

How do you view supply chain post Covid? COVID-19 impact resulted in huge disruptions and most of the successful fundamentals of supply chain were questioned whether it was just-in-

INTERVIEW time, globalized supply chain or lean operations. Supply chain with low levels of inventory and long-distance supply sources have struggled due to lockdown but it is a temporary impact, which will be overcome as soon as the situation eases out. Short term COVID impact will be seen mostly on the MSME sector. We have been engaging our MSME partners and helping them in reviving their business. Supply chains will have to drive agility and productivity to adjust to new normal and key enabler would be the technology and people.

How did GVK BIO play a vital role in the entire COVID pandemic? We believe in the motto of ‘Safety and Compliance always’ and our core values – ETHICS – are the guiding force of our organization to fight the pandemic impact. We have ensured employee safety along with business continuity following all guidelines issued by statutory authorities. In terms of business and customer responses, there has been prioritization for COVID-19 related projects, which resulted in some adjustment at our end also. There has been impact on ongoing project deliveries due to lockdown related challenges and we are thankful to our esteemed customers who understood our situation and were more than willing to support the recovery in best possible manner. We constantly engaged our supply partners guiding them of requisite measures for safe operations

and assuring of business continuity. We have been operating our sites with all requisite safety measures ensuring that our customers’ requirements are fulfilled.

How do you motivate your team to tide over such testing times and deliver beyond their potential? Role of any leader becomes very crucial to keep team motivated during testing times and this is ongoing process. Being a supply chain leader, we need to acknowledge the fact that in today’s world, we will have to continuously work on risk mitigation and identify necessary actions as part of our day to day routine. We cannot be only focusing on cost or delivery parameters and will have to account for potential risk in our evaluations. Current crisis is unprecedented and would have created challenges for all. However, we can learn from this adversity and be better prepared for future. We need to empower our teams to be more innovative, collaborative, and responsive in managing this crisis. We, as a team, should collectively learn from failures and celebrate the success.

What are the crucial learnings that you have gained during the era? These are unprecedented times for human race and has challenged us. It has forced us to look at alternate dimension of fulfilling our responsibilities. Robust processes, highly

engaged workforce, technology adaption and collaborative approach have been the key differentiator and learnings. Continuously communicating with your key stakeholders helps in minimizing the adverse impact and identifying better solutions to overcome the crisis.

What are the global best practices in the sector you are operating in? We are into life sciences industry supporting research and development programs of innovator drug companies enabling them to bring their products to market quicker and cost- effectively. We develop long term, sustainable and credible customer relationship through integrated offerings, transparent approach and new capability enhancements. Our key differentiator is speed, in terms of understanding the customer requirements and final delivery of the project. Global best practices have been around the same enabled through strong partnerships and technology adaption.

What is the crucial role of technology at GVK BIO? The role of technology in any industry is to improve productivity, transparency, quality and compliance which, in turn must enable the sustainable business growth. At GVK BIO, we strongly believe in the role of technology for business success and have adopted the same in multiple areas of data management, customer update,

Being a supply chain leader, we need to acknowledge the fact that in today’s world, we will have to continuously work on risk mitigation and identify necessary actions as part of our day to day routine. We cannot be only focusing on cost or delivery parameters and will have to account for potential risk in our evaluations. Current crisis is unprecedented and would have created challenges for all. However, we can learn from this adversity and be better prepared for future. We need to empower our teams to be more innovative, collaborative, and responsive in managing this crisis. We, as a team, should collectively learn from failures and celebrate the success. supplychaintribe.com

INTERVIEW

Supply chain is playing a crucial role in our fight against the pandemic. Supply chain will be key enabler for revival of economy and drive the next level of growth. From being a tactical function had been gradually transforming to be strategic function and current times are most suitable for supply chain to establish its value proposition. Many business leaders and industry experts have brought supply chain into core of all their discussions related to recovery and growth of economy. This will help in getting national policy reforms and investment into infrastructure, which will enable supply chain performance generating competitive advantage for businesses. I also foresee improvement in talent availability for supply chain, which was not a first choice as an employment option earlier.

compliance documentation, customer order processing, business development, people management, organizational development and various control as well as operational excellence activities. We constantly evaluate potential opportunities to adapt technology and strengthen our purpose to accelerate R&D for our customers ensuring safety and compliance.

What are the supply chain best practices that companies should imbibe to be better prepared to deal with testing times? As we live in VUCA world, unexpected disruptions are bound to happen with minimal ability in any one individual or organization to control them. Supply chain with high level resiliency has been able to recover faster due to strong risk mitigation program and agility. We should continuously identify various supply chain risks and constantly work upon the mitigation plans. Technology, process and people are going to be the key drivers to manage any disruptions hence we need to keep investing in them.

Share your insights on the digital innovation in supply chain… Supply chain plays a crucial role in driving customer satisfaction, business agility and profitability, at the same time, we need to ensure that we are every time right in terms of compliance

and EHS requirements. Digital transformation will help supply chain community in reducing operational costs, improving quality, productivity, and compliances at deeper levels of supply chain beyond traditional reach of Tier-I/Tier-II levels. This will help in driving high levels of customer satisfaction and having a reliable and strengthened partnerships with supply partners.

‘Success of Supply Chain is directly proportional to high performing Supply Partners and robust SRM’, can you please elaborate on this? In today’s globalized world and highly demanding market, it is not at all cost efficient to have all the competencies in-house. With the right mix of inhouse and outsourced capabilities, having reliable and high performing partners improves the overall supply chain value proposition, driving all three aspects of Iron Triangle (Cost, Delivery and Quality). Effectiveness of any supply chain is dependent on its ability to develop and sustain strategic and long-term partnership with its partners who can provide us the competitive advantage as well as resilience in VUCA world.

How do you foresee the supply chain dynamics of India in times to come? Supply chain is playing a crucial role in

16 CELERITY September - October 2020

our fight against the pandemic. Supply chain will be key enabler for revival of economy and drive the next level of growth. From being a tactical function had been gradually transforming to be strategic function and current times are most suitable for supply chain to establish its value proposition. Many business leaders and industry experts have brought supply chain into core of all their discussions related to recovery and growth of economy. This will help in getting national policy reforms and investment into infrastructure, which will enable supply chain performance generating competitive advantage for businesses. I also foresee improvement in talent availability for supply chain, which was not a first choice as an employment option earlier.

OPINION

Supply Chain Re-invented post COVID-19 The Covid-19 pandemic has forced countries to re-look at the international trade policies, which were pivoted around free trade and global supplies. As a result, these countries are looking at creating sourcing of items locally, which will fuel re-balancing of international trade. Piyush Chowhan, Group Chief Information Officer, Lulu Group International, enlists four big themes to align and transform the global supply chain.

E live in a VUCA world and COVID has challenged every part of the global ecosystem. Globalization was the key theme for the last few decades, which made the world look flatter and interconnected. Countries relied on each other for a lot of essential supplies like food, drugs, electronics, and fashion from low cost manufacturing destinations. This helped fuel economic activities by boosting global supply chains and making international trade a key economic policy. It also helped a lot of developing economics be part of this global ecosystem and build their growth stories around exports. With airspaces being blocked and international borders closed, COVID-19 pandemic has proven to be the biggest disruptor of this globalized supply chain. The pandemic has shaken the resilience of all the global players. Food supply chains and pharmaceutical supply chains

were curtailed leading to strain in food availability and medical supplies in large parts of the world. With this disruption, lot of countries are trying to re-look at the international trade policies, which were pivoted around free trade and global supplies. A large number of countries are looking at creating sourcing of items locally, which will fuel re-balancing of international trade. Local Food security and nationalist themes, which are being played in large parts of the world will have a longlasting impact on this global supply chain. There are four big themes, which need to be understood in detail to align and transform this global supply chain. These themes will help supply chain leaders to create a strategy, which will enable this transition much better.

RE-SHORING OF SUPPLY CHAIN The re-alignment of sourcing from international to local boundaries will

Piyush Chowhan is a digital evangelist with passion of transforming businesses with the use of technology. With over two decades of experience working with global consumer and retail companies, he has excellent track record of delivering results and creating value across organizations. His vision of creating innovation focused digital strategies to maximize today’s opportunities and prepare organizations for future disruptions. His passion of working with startups and innovation led companies has given him edge to create digital assets for organizations with the use of latest technologies like Analytics, Cloud and Artificial Intelligence.

make significant changes in supply chain strategies. The changes in lead times and cost models will need to be re-worked based on these new localization paradigms. This transition to “re-shoring” will not be easy as creating manufacturing back in-home country is not simple and has its own complications. While not all countries have the necessary policies and labor to bring back all manufacturing, and in these countries “nearshoring” will be the answer. These changes will have very drastic impact on cost of goods sold and hence the entire business models need to be re-worked to make this economically viable. This will also depend on the type of good manufactured where availability of raw material will be of key determinant in this change. Creating sourcing pipelines for electronics, fashion, automobiles, and pharmaceuticals is going to be very complex and organizations and countries need to make calculated steps

It’s important that we allow grassroot and frugal innovation models to be propagated in the supply chain organizations. These will help in creating a platform to experimentation and learn to be ahead of competition. supplychaintribe.com

OPINION

The ability of supply chains to absorb shocks and react to situations without disruptions are needed in this VUCA world. The resilience of supply chains was at test during COVID-19 and not many were able to steer the dynamic changes required. Industry 4.0 requires the supply chains to be re-modeled with use of technology. The trend would be to move away from very large monolithic logistics hubs to more nimble micro-fulfillment models, which have better ability to react based on changes in demand. Digital Technologies will play an extremely critical role in making transition from rigid to “Agile” supply chains. without haste and populistic sentiments.

AGILE SUPPLY CHAIN The ability of supply chains to absorb shocks and react to situations without disruptions are needed in this VUCA world. The resilience of supply chains was at test during COVID-19 and not many were able to steer the dynamic changes required. Industry 4.0 requires the supply chains to be re-modeled with use of technology. The trend would be to move away from very large monolithic logistics hubs to more nimble micro-fulfillment models, which have better ability to react based on changes in demand. Digital Technologies will play a very critical role in making transition from rigid to “Agile” supply chains.

TRUST BASED SUPPLY CHAIN Its evident that agility in supply chain can be achieved only where there is extreme trust amongst the supply chain partners. During COVID-19, a lot of fashion organizations cancelled confirmed orders, which led to mass layoffs in countries like Bangladesh and others. Such events break the trust amongst supply chain partners, which makes relationships very brittle. We have been talking about transition to Digital Platforms and Digital Ecosystems, which will drive economic activity in the future. Trust amongst these supply chain partners is going to play an extremely critical role for these ecosystems to work efficiently in future. “Ethical Sourcing” and “Trust” are going to be the biggest differentiators to

create agile supply chains, which will be ready in this dynamic ever-changing world. Bringing transparency across the partners with the help of technology is going to a very important way to build trust amongst these partners.

DIGITAL SUPPLY CHAIN We are living in a Digital era where innovation and technology are going to be the key ingredients of digital supply chain platforms. There are lot of technologies like Image Recognition, Blockchain, Robotics and Sensing technologies which will enable automation of activities to reduce cost and time of movement of goods. These technologies must be tested with the relevant use cases for each supply chain ecosystem to create speed, agility and trust in the supply chain partners. Supply chain managers need to redefine supply chain cost models, which will be quite different from traditional models. Digitalization of supply chains is required and once we take a holistic approach towards this transformation, we can really create a digital avenue for organizations to stay competitive in this fast-changing world.

GETTING FUTURE READY These themes will help organization re-pivot their supply chain strategies and make them shock resistant for the future. As part of the transformation journey, organizations need to build the below capabilities to enable ride this wave: •

18 CELERITY Septmber - October 2020

Data Platforms – Supply chain

•

data is scattered, and it requires a wholistic approach to bring all the data together to get wholistic views. Data, which is the new oil for making processes efficient, will play a pivotal role in this transition. Digital Workforce – Supply chain managers need to be more digital evangelist to lead this transition rather than letting someone else take the lead. This workforce transformation of supply chain organizations is required to make this change smooth. Innovation Mindset – It’s important that we allow grassroot and frugal innovation models to be propagated in the supply chain organizations. These will help in creating a platform to experimentation and learn to be ahead of competition.

Supply chain transformation will be accelerated post COVID-19 and the above themes and capabilities will surely help in making the transformation smoother. Let’s all work towards making a Digital Supply Chain, which is agile and innovative to be ready for future.

FOCUS

AGRICULTURE 4.0

Is it the Panacea to revive Farmers’ Fortunes?

“Agriculture has had a romance with technologies since the times of farm mechanization and precision agriculture. What makes the use case of industry 4.0 technology in agriculture exciting is that industry 4.0 technologies will increase the communication between the market and the production units (i.e. fields), which will thereby enhance the competitiveness of the food supply chains,” believes Rohit Sharma, Senior Research Scholar – Operations and Supply Chain Management, National Institute of Industrial Engineering (NITIE), Mumbai.

GRICULTURE holds immense potential in maximizing land utilization and increasing farmers profits. But the current food supply chains and agricultural systems are under enormous pressure due to unprecedented risks induced by recent events such as COVID19 pandemic, overshooting the timelines in meeting the SDGs, global climate change patterns, depleting natural resources, ever-shrinking land sizes, and food waste. Majority of farmers in India (approximately 86%) have fragmented land holdings, which makes it difficult for the economy to absorb the surplus. Adding to it, there are major demand-supply imbalances in the current agricultural systems, which are a matter of concern for ensuring food security. It is estimated that with the current food production systems and technologies, it will be cumbersome to feed the next billion in India over the coming years. Critical issues that need to be effectively tackled are the lack of industrialization in the current agricultural and food processing systems, lack of information asymmetry, lack of market access, lack of produce

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traceability mechanisms, lack of sustainable agricultural practices, lack of stringent food safety and quality norms, and inefficient management practices. Therefore, in order to double farmers’ incomes and achieve the SDGs, technology intervention and market access becomes a necessity in the agribusiness sector.

THE RESCUE ACT: INDUSTRY 4.0 TECHNOLOGIES The fourth industrial revolution was the national strategic initiative of the German government’s High Tech 2020 strategy. It was aimed to drive digital manufacturing forward through increased digitization and interconnectedness of smart products, business models, and value chains. In short, the fourth industrial revolution or industry 4.0 is the digitalization in industrial production and manufacturing sector, which is emerging from extensive networking and automation of all industrial manufacturing operations. This interconnectedness between the products allows smart networking between various industrial units, leading to mobility in functions and processes, flexibility of industrial

Rohit Sharma’s research interests include agricultural supply chain operations, sustainable operations, and exploring the usage of industry 4.0 technologies in agriculture. He has worked previously with India’s number one agricultural commodities exchange, National Commodities and Derivatives (NCDEX) Limited. At NCDEX, he pioneered the project and successfully executed the one of its kind, RFID tagging of agricultural commodities. His work has been published in journals such as International Journal of Information Management, Computers in Industry, Computers and Electronics in Agriculture, and Computers and Operations Research. He has presented his work in various international and national conferences. He was a recipient of the TATA-Cornell Agricultural Initiative Scholarship (2015).

operations, integration with customers and suppliers, and in the adoption of innovative business models. Industry 4.0 technologies and supporting technologies such as the Internet of Things (IoT), Internet of Services, Drones (UAVs), Robotics and Cobotics, Cloud Computing, Additive Manufacturing, Blockchain Technology, Augmented Reality, Virtual Reality, Big Data and Analytics have the capability to drive the current manufacturing systems towards digital platforms through seamless technology integration. As there is a lot of data generated throughout the food supply chains, the analysis of this (big) data would enable farmers and organizations to draw valuable insights from it, thereby enhancing productivity through data-driven decision-making. The industry 4.0 paradigm creates an ecosystem where all elements are interlinked continuously. It is anticipated that as all the devices and functionalities are addressed as services which are in constant interaction with each other, will help in achieving a high level of coordination in the food supply chains. Industry 4.0 technologies can also lead to sustainability practices

FOCUS along the food supply chains. All the industry 4.0 technologies are transforming the current food supply chains into data driven food supply chains, it is therefore expected that industry 4.0 technologies will help in leveraging the visibility and enhance the sustainability of the food supply chains and agriculture as a whole.

INDUSTRY 4.0 TECHNOLOGIES IN AGRICULTURE Agriculture has had a romance with technologies since the times of farm mechanization and precision agriculture. What makes the use case of industry 4.0 technology in agriculture exciting is that industry 4.0 technologies will increase the communication between the market and the production units (i.e. fields), which will thereby enhance the competitiveness of the food supply chains. Industry 4.0 technologies are highlighted below with their proposed sustainable impact on the triple bottom line frontier:

INTERNET OF THINGS (IOT) Technologies such as IoT (one of the applications of modern information and communication technologies) helps in real-time sharing and collection of information through the help of connected devices. It makes use of low power wireless sensors (soil moisture, temperature, humidity, light) for effective machine-to-machine

Sustainable impact (Internet of Things) Social

Economic

Environmental

Effective tracking and tracing of the farm produce throughout the food supply chain for ensuring authenticity of produce and operations

Enhances the operational productivity while lowering the production cost

Real-time control and resource utilization in farming, thereby reducing the ecological impact

communication. It makes a profound use case in agriculture for real-time crop condition and monitoring and realtime environment monitoring. There are a few challenges associated with the implementation of IoT in farming such as the high implementation costs, hardware and software complexities, and the lack of technical expertise.

BLOCKCHAIN TECHNOLOGY Blockchain technology caused all the hype when it was introduced by Satoshi Nakamoto in 2008. Since then, there’s been no looking back for blockchain

technology with use cases ranging from fintech, healthcare, tourism, and agriculture. Blockchain, as a technology allows participants to transfer value, or assets, among them without the need for a trusted intermediary (or a third party). In agriculture, blockchains are used for land records management, enhancing the real-time food supply chain visibility and produce traceability, and certifications. It allows effective product recalls and prevents fraudulent activities across the food supply chains and enhances responsiveness and risk management practices throughout the food supply chain.

Sustainable impact (Blockchain Technology) Social

Economic

Ensures quality and food Promotes decentralized safety, thereby enhances operations, helps in customer satisfaction reducing information asymmetries, and increases stakeholder collaboration and participation

20 CELERITY Septmber - October 2020

Environmental Ensures minimization of food waste due to produce traceability

FOCUS Despite the promises blockchain holds in leveraging agricultural operations, few of the challenges such as technology integration and interoperability (communication and interaction with other technologies) issues need to be tackled effectively.

Sustainable impact (Big Data Analytics) Social

Economic

Environmental

Transformation of the traditional food supply chains to data-driven food supply chains

Enhances yield and productivity through effective crop planning and integrated field and performance data

Effective resource utilization, thereby reducing the economic footprints (water, energy) and reduces waste generation

BIG DATA ANALYTICS Big data is characterized by its 6Vs (viz. volume, velocity, variety, veracity, visualization and visibility) and is often seen as a prime source of novelty, competition, and efficiency. Big data analytics refers to the process of gathering, organizing, and investigating large datasets for discovering patterns and other useful information. It has transformed the traditional decisionmaking into data-driven decision making. In agriculture, it is useful for pattern identification and crop planning (through descriptive analytics); in supply and demand forecasting, weather, price, and yield forecasting (through predictive analytics); effective decision-making through mathematical optimization (through prescriptive analytics). One of the major challenges in implementing any data-driven technology relates to the ethical usage of data (data accessibility), which leads to trust and privacy issues.

ARTIFICIAL INTELLIGENCE/ MACHINE LEARNING Artificial intelligence is the technology that enables machines to imitate human behavior and machine learning is a subset of artificial intelligence, which allows machines to learn from past data without being actually programmed. Artificial intelligence and machine learning make use of algorithms for varied applications in agriculture and food supply chains such as harvest planning, weed detection, weather management, water forecasting, sorting and grading, production planning, demand planning and forecast, and environmental protection. Artificial intelligence primarily faces social challenges as it is seen

All the industry 4.0 technologies are transforming the current food supply chains into data driven food supply chains. It is therefore expected that industry 4.0 technologies will help in leveraging the visibility and enhance the sustainability of the food supply chains and agriculture as a whole. as a threat in replacing human labor and other challenges include higher implementation costs.

FOOD FOR THOUGHT The Industry 4.0 technologies in agriculture hold the potential to disrupt the conventional agricultural practices and make way for sustainable agricultural practices. Government and policymakers should therefore take adequate steps in improving the infrastructure (enhanced connectivity for cloud and ICTs) for accommodating industry 4.0 technologies in agriculture. Data is the new currency and is more valuable than oil, hence, data will be the key to enhancing farm productivity and farmers profitability. Practitioners should ensure data standardization as data will be collected from various sources and data interoperability will certainly be a critical issue. Agribusiness practitioners can expect process transparency and visibility throughout the food supply chains with improved product traceability and efficient demand forecasting. Organizations

Sustainable impact (Artificial Intelligence/ Machine Learning) Social

Economic

Effectively reduces chance of human errors and enhances automation

Enhances operational Helps in reducing waste efficiency, reduces costs, and helps in autonomous decision-making

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Environmental

will have to ensure data security and accessibility so as to have an even power symmetry with the farmers. The data-driven capabilities will enhance the quality control practices across the food supply chains and therefore guarantee food safety and quality. The computing and data capabilities of the food supply chains will also allow them to be more resilient and effectively tackle events such as the COVID19 pandemic. The need of the hour is to go for collective farming (as majority of the farmers have small landholdings) in order to reap the benefits of agriculture 4.0. This will increase the affordability and distribute the risk equally among the stakeholders. Agricultural sustainability holds the key in eradicating hunger and poverty and agriculture 4.0 will help in achieving this goal (as well as UN SDGs). As the agricultural operations generate tremendous amounts of data, conventional analysis techniques and processes will find it difficult in deriving useful insights. Therefore, Industry 4.0 technologies in agriculture are expected to leverage the development of smart farming techniques by introducing more automated solutions and artificial intelligence techniques. Overall, agriculture 4.0 will facilitate optimal usage of resources throughout the food supply chains and enhance sustainability and farmersâ&#x20AC;&#x2122; profitability.

COVER STORY

THE INDISPENSABLE SHIELD Have we ever imagined how the industry would function without the literal WHEELS of MOTION? Yes, we are talking about the INDISPENSABLE SHIELD of the value chain – the SUPPLY CHAIN. CxOs are looking for resilience in supply chains, which are able to withstand uncertainties. Gone are the days of cost cutting for the sake of financial gains. While the industry at large has done few things right, there’s still a long way to lead the growth and here’s where the so called logistics specialists – third party logistics service providers play the role of an enabler and together – the user & the LSPs – have to bring that much needed equilibrium to refuel the economic growth wheels. The question is ARE WE READY??

INDING a way to make thirdparty logistics companies stand apart from each other is like finding a needle in a haystack. Fortunately, third-party logistics providers (3PLs) can successfully add to their own value proposition by understanding the challenges in building a unique value proposition, how collaboration empowers 3PLs to stay proactive with customers to provide a better experience, and a few best practices to help 3PLs stand apart from competitors, states a recent blog on Turvo. As per the Grand View Research estimate, the global third-party logistics market size was valued at USD830.99 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 8.3% from 2020 to 2027. Having said that, the Coronavirus

pandemic has impacted the supply chain operations globally. The crisis placed an unprecedented strain on transportation and logistics resources. The logistics service providers had been facing uncertainty in the movement of goods owing to the mandated lockdown in the countries. The logistics networks were disrupted due to the supply/demand imbalance and lack of capacity for the long-haul and last-mile fulfillment services. The limited staff and reduced working time have further impacted the logistics activities adversely. The outbreak of COVID-19 has had a domino effect on the domestic transportation services. There has been an imbalance between the incoming and outgoing freights in the infected areas, which is increasing the lead time. Service providers are facing numerous problems such as disruption

22 CELERITY September - October 2020

of transportation due to the boundary closure and increased demand for warehouse facilities to store the existing goods that can no longer be sold due to lockdown. To tackle this situation, 3PL companies have started short term storage identification services. Giving insights into pre & post Covid era, Dr R Arunachalam, Supply Chain domain expert, highlighted, “Generally business potential across verticals was flourishing and there was huge potential in the market. Large RFQs floated across all verticals. There were no restrictions in movement across state borders to serve the purpose of B2B and B2C that added government revenues and importantly, there was no supply and demand gap with respect to availability of laborers and space. Cut to March 2020, as we entered into the Covid era, we have had to adopt to

COVER STORY the “New Normal ” with synergies like virtual meetings with stakeholders. Our business conversion is now based on differentiators and new business model rather than conservative method of solutions. In this era and going beyond, digitalization will definitely play a vital role.” Mohandas Menon, CEO – Contract Logistics, Stellar Value Chain stressed that unfortunately, it is not postCOVID yet. We are still living in the Covid era. The business scenario has transformed across industry verticals during COVID-19 and this has placed unprecedented stress on supply chains. According to R Shankar, CEO- India, TVS Supply Chain Solutions, “Country wide lockdown was announced all of a sudden in the last week of March even while we were contemplating the best way to go about ensuring things are safe at work. Initially there was some

confusion with respect to the lockdown guidelines as well as the implementation process. The Centre provides the guidelines at the national level, the state government forms the rules, and the local authorities, comprising collectors, district magistrates, corporation commissioners and the police authorities work towards ensuring the set rules are adhered to. Though there was some ambiguity in interpreting the rules, our liaison with government authorities helped us in understanding the boundaries and constraints and we could accordingly manage the critical businesses /essential services of our customers. I am happy to say that we were even successful in connecting with prospective customers as we could mobilize trucks and manpower. We have, in fact, signed up close to a dozen deals during this period.” He added, “As the lockdown and unlock conditions kept evolving month on month in different states, we have

learnt to adapt to the different sets of rules and regulations. With proper representation, we were able to impress upon the authorities that it is imperative to keep the supply chain alive and running for the public to avail essential services. While on the one hand, we focused on supporting our customers, on the other, we took proper care of our frontline staff and drivers. We designed and developed the COVID Kavach, a protection gear for our staff. We instilled in them the need to undertake comprehensive safety precautions comprising masks, social distancing and personal hygiene like using soap or sanitizers to maintain clean and healthy hands.”

MEANS TO SURVIVE & THRIVE According to McKinsey & Company, the trend for product value chains to become more regionalized is also likely to accelerate, as companies reassess

Source: Nilkamal Ltd

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Improved connectivity & linkages- inland waterways, ports, national road network

COVER STORY The Circuit Breakers AT RISK

The Circuit Breakers AT RISK

• Labour issues- adequacy & timeliness

Rail based supply chain distributions- Roll OnRoll Out services by Konkan railways were in action as substitutes

• Closure of ports, airways, railways and local transport for nonessentials • Procurement & distribution impact

• Global supply chain disruption • Import & export impacted as well • Demand affected temporarily in few segments

USD 180 billion annual imports and exports linked to high exposure countries- US, UK, Europe, Iran, etc. GST REIT FDI API

Indian pharma depends 70% by value on Chinese imports (APIs included)

Goods & Services Tax Real Estate Investment Trust Foreign Direct Investment Active Pharmaceutical Ingredients

Source: Savills Research: COVID-19: India Front & Center – Production & Supply Chain

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the risks of globally integrated asset networks and supply chains. For example, to increase agility in the event of regional shutdowns, a leading fashion company has already started to develop new supply sources beyond its current network in Southeast Asia. Second, companies will likely reassess their make-versus-buy options. A leading consumer company has accelerated the outsourcing of manufacturing and logistics for some products to specialized players in different regions. This approach improves security of supply, thanks to increased local content, while also reducing costs and allowing the company to ramp volumes

Mohandas Menon, CEO – Contract Logistics, Stellar Value Chain

up or down more rapidly. Therefore, companies are actively looking for third-party services, provided those services align with the vision of more transparency, ease in collaboration, lower costs, and improved efficiencies. Of course, customers always want a demo and assurance that they have chosen the right option, so third-party logistics companies that can provide immediate access to shipmentlevel information at any time will always win out in both collaboration and ability to flex to meet changes and disruptions within the supply chain. Talking about the challenges faced during the lockdown, Mohandas

Menon remarked, “Managing fixed costs during complete / partial lockdown in April 2020 and May 2020 respectively was the biggest challenge. Customers became paranoid facing zero revenue and started demanding cost reduction on all fronts. Our customer management skills were put to test during these months. Another challenge has been managing manpower when there was no work or far less work. One of our key strengths – ability to manage large work forces across multiple geographic locations – became very handy during these challenging times. We managed to hold continuous meetings with the customers and tried

The risk mitigation measures in SCM can stretch to increased outsourcing of logistics activities, move from dedicated facilities to multi-user operations, taking a serious look at inventory holdings – optimum inventory with visibility (Technology), etc. Some of these measures will increase demand for modern warehousing and e-commerce will dominate over omni-channel distribution models. International supply chains will have to give way to national / local supply chains. The situation will also encourage warehouse operators to increase levels of automation within their operations. In short, COVID-19 era will challenge many of the key supply chain theories of the past several decades.

24 CELERITY September - October 2020

COVER STORY

R Shankar, CEO- India, TVS Supply Chain Solutions

Supply chain management will undergo a major transformation: • Key components of the network will get re-designed to suit the latest in technology and the changes in the business environment. • De-layering of the supply chain will make for better management of SCM and more ‘direct to consumer’ models will emerge. • Digitization and technology deployment will make business operations seamless and real time integration will become predominant. • Significant investments in newer technologies will be made that will equip supply chain with speed and efficiency. • Data scientists will delve into the wealth of available data and will be use patterns and insights to manage the operations better and also to predict future changes in business. • AI, ML, Blockchain and IoT will get used extensively and from being experimental pilot projects will get scaled up substantially to the real time environment. This will lead to a total transformation of the SCM processes and the organizations’ ability to differentiate and add value will significantly depend on appropriate use of technologies.

to balance / align their commercial expectations with our internal cost structure. This was the only way to ensure a ‘win-win’ situation for both the customer and Stellar. We were successful in achieving the objective with most of our customers. Though the business scenario has improved for many of our customers, we are still far from normalcy – or the ‘new normal’ as it is famously known now a days.” TVS faced challenges of varying types at every phase of the lockdown. As R Shankar explained, “Topmost on our mind was the need to ensure our people are adequately protected and are working in the best possible healthy and safe environments. We then had to understand the states’ rules and implementation guidelines in the right perspective and strive to work with the authorities to obtain permits for people, vehicles and warehouses. The third challenge was arranging manpower and trucks for our operations. Our HR and Operations teams did a fabulous job of connecting with the 12000 staff and executives who were on our rolls. They effectively engaged with them as well as their respective families to allay their fears and return to work in an environment which was safe. Through our control tower and with digital tracking of our long-haul vehicles, we were able to source vehicles that were needed to meet our customers’ trucking requirements.”

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Dr R Arunachalam enlisted pointers as to how companies fought their way out and tide through the tough times: ◆ Port congestion due to materials ordered and reached before lockdown (Managed through taking Adhoc warehouse to support customer from demurrages charges in Port) ◆ Availability of workforce with respect to blue color jobs. (Managed by engaging multiple service provider to have the quantity/quality of resources as needed) ◆ Restrictions within city and outside for the movement of executive level staff movement to warehouse. (Generation of E-Pass supported, working with lean manpower, making them to stay nearby, etc., to serve the customer in critical times). ◆ Transport vehicles shortages even for critical items – plied dedicated vehicles at high cost and connected multiple newer operators.

DRAMATIC SHIFT IN THE CONSUMER BEHAVIOR KPMG analysts rightly point out that the COVID-19 pandemic is challenging businesses to think in unique and different ways. The disruptions caused by the virus outbreak have left deep impacts on consumer behavior and preferences. Customers are now increasingly exercising caution on

what, where, and how they buy. As demand surges for essential products, companies across the globe have been scrambling to streamline their supply chains to secure immediate operations. At the same time, there is pent-up demand waiting to be released for semi-essential and regular consumption categories that do not qualify for the ‘essential’ tag. According to Mohandas Menon, one of the features of the crisis have been the impact of erratic customer behavior on supply chains, causing an increase in volatility. This resulted in some products seeing good demand whilst there has been significant erosion in demand for many ‘non-essential’ items. “The business models of most of our customers have moved towards e-commerce. With the extended closure of malls and the fall in footfalls in stores after partial / full re-opening, customers are forced to move towards B2C model. Several retail outlets of customers also faced permanent closure. On a lighter note, many of our customers have started selling face masks!!” Seconded R Shankar, “Given the situation, there are indeed some dramatic, even drastic shifts that we perceive with regard to our customers. For them, the priority now is to reorganize their network and come up with innovative ideas to improve efficiency and effectiveness.

COVER STORY

Dr R Arunachalam supply chain domain expert

Five supply chain transformations that the industry will witness: ▪ Diverse sourcing and digitalization will be the key to building stronger and smarter supply chains. ▪ Creation of Duopoly situation in order to have multiple sources of supply ▪ Online demand platforms will emerge stronger linking supply and demand ▪ 3PL companies’ consolidations may happen ▪ Next 5 years are going to be a good period for SC transformation.

We find our customers more open to outsourcing end to end and they have all evinced keen interest in receiving suggestions for implementing “lean “practices. The second significant shift is in digitalization. Our customers are more receptive to touch free, paperless operations and are seeking real-time integration of their IT systems with their 3PL partners’ IT systems.” Dr Arunachalam informed, “Customers are looking at maintaining safety stocks at all warehouses in order to avoid uncertainty. They are purchasing less and postponing new buying decisions. There is an increased requirement of adhoc space in the existing warehouse set up. We are witnessing cost reduction across the supply chain to withstand the race. There is an increased trend of digitalized mode for all transactions and lastly, work from home for as many as 10 to

50% for staff, reduction of office space.”

TECHNOLOGY – THE SAVIOR Technology plays a major role in these tough times by supporting B2C market especially for essential products and Pharmaceutical industry. According to Dr Arunachalam, “Frequent online meeting with customer boosts customer relationship as well as results in huge savings in physical travel cost, stay and time. Additionally, ePoD (electronic proof of delivery) is helping the industry to reduce the service to pay cycle. Agreed Mohandas Menon, “Technology played a significant role in facilitating online meetings during these WFH days. We could conduct town hall meetings / cultural sessions, etc., with 200+ participants in one go. Meetings with customers and vendors are also on online platforms.” For TVS as well, technology

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has always been an integral part of its business and has been a key differentiator. “All our planning and running of our operations has been aided by technology. Our value add to our customers is to provide them with visibility across the supply chain, and technology plays a critical role in this. We also leverage predictive and prescriptive analytics backed by data from our transactions for the benefit of our customers. We adopt technology to make our operations better, smoother, leaner and efficient and of course, faster. Data has helped us gain insights to deliver higher value to our customers. We do not believe in using technology in pockets and select areas of our business. Technology pervades our entire business and we depend on it for robust data, higher efficiency and quicker turnaround times,” highlighted R Shankar.

COVER STORY

Organizations are having to quickly adapt by accelerating their digital transformation agendas owing to the Covid-19 outbreak. This process has been happening for several years, albeit slowly. Driven by heightened consumer expectations from interactions with online retailers like Alibaba and Amazon, logistics businesses have started to introduce capabilities like real-time order monitoring, end-to-end inventory visibility, and super reverse logistics experiences. Incumbent businesses are being forced to innovate and adopt new digital tools faster than ever to minimize disruptions. Leaders must take urgent action to RESPOND to new conditions, support the workforce and sustain business operations. But they should also use this opportunity to RESET their operations with digital capabilities and RENEW their logistics operating models. This reset will help increase operational efficiency and effectiveness. By doing so, companies will emerge from the present crisis with more resilient supply chains to future disruptions. Source: Accenture

OPPORTUNITIES AMID THE GLOOMY DAYS For Dr Arunachalam, geopolitical reasons will give leverage to India with respect to Make in India as well as Digital India plans. Investments in Indian companies will lead to lot of business potential across all business. New companies will get formed and will do well with technology. Increase in safety stock leads to more space for storage and leads to increase in business volumes for 3PL. Mohandas Menon stressed, “There is a distinct possibility for customers to increase outsourcing of logistics activities to mitigate risks of employing large work force. There would also be an increased demand for quality modern warehousing facilities. Technology and automation will play a significant role in warehousing going forward. We are expecting a boost to 3PL industry due to all these factors.” TVS is constantly scanning the environment and the market for opportunities. “We seize any opportunity we may sight in the areas of end to end supply chain management. Our mission is to engage with the customer to be able to `resolve' their pain points and

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deploy appropriate technology solutions to make their operations more effective. In addition, we are increasing our focus on the fast-moving consumer goods and healthcare sector and are evolving newer business and operating models in partnership with our current and prospective customers for them to, in turn serve their customers effectively and quickly,” added R Shankar.

ON THE TRANSFORMATIONAL PHASE A paradigm shift in supply chain management going forward is already evident in line with the changes in consumer behavior, according to Mohandas Menon. “The risk mitigation measures in SCM can stretch to increased outsourcing of logistics activities, move from dedicated facilities to multi-user operations, taking a serious look at inventory holdings – optimum inventory with visibility (Technology), etc. Some of these measures will increase demand for modern warehousing and e-commerce will dominate over omni-channel distribution models. International supply

chains will have to give way to national / local supply chains. The situation will also encourage warehouse operators to increase levels of automation within their operations. In short, COVID-19 era will challenge many of the key supply chain theories of the past several decades,” he added. “Since the time the world of business became global supply chain transformation has become sharper with more vigor on seamless and smooth operations. Supply chain is set to become the key component of all industry sectors. As the bedrock of the industrial sectors across, supply chain will use advanced technologies and digitization to become more agile, error free and highly efficient,” believed R Shankar. He added, supply chain management will undergo a major transformation: ◆ Key components of the network will get re-designed to suit the latest in technology and the changes in the business environment. ◆ De-layering of the supply chain will make for better management of SCM and more `direct to consumer' models will emerge.

• Land acquisition of 3000+ acres under various stages of due diligence /closing.

Blackstone on warehousing

John Chambers

• Institutional Investment deals ~ USD COVER STORY 600 Mn are underway.

avills.in

out successfully during this COVID crisis” Chairman Emeritus, Cisco /CEO, JC2 Ventures recently at USIBC strategic partnership

Source: Savills Research: COVID-19: India Front & Center – Production & Supply Chain

◆ Digitization and technology deployment will make business operations seamless and real time integration will become predominant. ◆ Significant investments in newer

technologies will be made that will 7 with speed and equip supply chain efficiency. ◆ Data scientists will delve into the wealth of available data and will be use patterns and insights to manage

28 CELERITY September - October 2020

the operations better and also to predict future changes in business. ◆ AI, ML, Blockchain and IoT will get used extensively and from being experimental pilot projects will get scaled up substantially to the real

• Selectively and sparingly, vacant retail and commercial spaces could undergo refurbishments as warehousing spaces.

COVER STORY

Automation and Technology Resets

Source: Savills Research: COVID-19: India Front & Center – Production & Supply Chain

time environment. This will lead to a total transformation of the SCM processes and the organizations' ability to differentiate and add value will significantly depend on appropriate use of technologies. Dr Arunachalam offered five supply chain transformations that the industry savills.in will witness: ◆ Diverse sourcing and digitalization will be the key to building stronger and smarter supply chains. ◆ Creation of Duopoly situation in order to have multiple source of supply ◆ Online demand platforms will emerge stronger linking supply and demand ◆ 3PL companies’ consolidations may happen ◆ Next 5 years are going to be a good period for SC transformation.

RESET & RENEW As the Accenture study says, the COVID-19 emergency will pass. Leaders know that the speed of the economic recovery depends on the ability of companies and industries to bounce back from the crisis. That means making decisions and taking actions now that will generate revenue, protect jobs and support the return to growth.

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This is also an opportunity to look at the future of logistics. Companies should be considering how to RENEW their logistics operating models to increase resilience, responsibility, effectiveness and efficiency. The most significant change agent for supply chain renaissance of the country would be the need for 6 conversion of international supply chains to national / local supply chains, remarked Mohandas Menon. “We are expecting introduction of much broader industrial strategies (protectionism), which would promote development of national supply chains. The Aatmnirbhar Bharat Abhiyan policy announced by the PM to help the economy recover, strengthen supply chains across industries and promote domestic production is in these lines.” For R Shankar, “These are exciting times for all in the industry. The pandemic has disrupted businesses and lives. Instead of reeling under the pressure of downtimes, it helps to use this time to think through and bring about swift changes that will make us realize Covid 19 has given an opportunity to re-imagine our business and make significant changes for enabling a new but thriving normal in the post pandemic world.” Savills Research sums it up perfectly,

““VUCA” (Volatile, Uncertain, Complex and Ambiguous) is upon us. Each passing week adds more smoke to the screen, the latest addition being the fall of the global crude. Through the VUCA smokescreen, and despite the build-up of COVID tempest, the one sector in India which promises hope, is Industrial and Warehousing. Indeed, it appears to be poised to gain more in the aftermath than it loses during the wager. To that end, it will certainly undergo resets and makeovers, but it never had a better opportunity.

INTERVIEW

BACK TO

BASICS “The global supply chain will continue to evolve as more and more pockets of excellence will emerge. Companies are looking to source from the best and at the least possible risk. In next few years, I believe India will become an important manufacturing hub for international footwear,” asserts Ingit Saxena, Head – Manufacturing Business, SSIPL…

Now that we are in the middle of the pandemic, how would you describe pre & post Covid era? Covid led to a shift in the strategy for most companies since business dynamics suddenly changed. The emphasis now is on ensuring business continuity and maintaining a healthy cash flow. Therefore, post Covid, our focus has been on lean operations, consolidation and cutting down on discretionary expenditures. In a way, it is return to the basics.

What were the challenges encountered by you at the start of the pandemic and how did you manage them? The biggest challenge at the start of the pandemic was to create awareness about Covid among our employees so that they can keep themselves safe. We took a lot of measures to create the awareness, not only for the employees’ own safety but safety of their families too. These measures included distribution of Do’s and Don’ts pamphlets, running awareness sessions, safety displays, etc. We also took measures to ensure social distancing and maintaining hygiene among employees when they are inside the premise through distribution of sanitizers, staggered lunch timings, promoting online meetings, spread out seating, etc. Operationally, there were challenges in terms of managing our raw material inventory and our order commitments to the customers.

Thankfully, both our supplier and customers were supportive in this regard.

How has been the demand since then? There was some short-term impact on demand due to the lockdown and complete stop on sale of non-essential items because of which our customers were stuck with inventory, which is now starting to move out. Our long-term order book is good.

How easy or difficult was it to motivate employees to get back to work post lockdown and how do you keep their morale in high spirits? It was not easy since there was uncertainly around the extent and duration of lockdown. Remote working potential is limited in a manufacturing environment, so most employees were keen to know when the company will resume normal operations and they can resume work. Post Covid, we did a gradual ramp up of operations and started calling employees in batches, till we reached our full capacity.

What are the operational innovations that SSIPL has achieved over the years as you are one of the largest shoe manufactures for the leading brands of the world? Our biggest strengths are our integrated manufacturing capabilities and our strong footwear design and

30 CELERITY September - October 2020

In a career spanning 22 years, Ingit Saxena has worked in the domain of operations and supply chain across leading Indian and MNC companies. He has had a stint of around 12 years in management consulting where he worked with clients in consumer electronics, mobile handset, FMCG, Auto and Steel sector.

development team. Our design team continuously looks for innovations that reflect market trends and offering the best shoes as per the requirements of the customer. We have also invested in footwear technologies such a computerized stitching, to achieve operational efficiency.

What are the inherent strengths of SSIPL that none of your competitors possess? We work with the biggest brands that operate in the country and hence we understand their pulse and are fully compliant to their requirements. As I said earlier, we are a fully integrated company with capability to manufacture all kinds of shoes in a single facility, something that no other competitor possesses.

What are the peculiar demands from your customers and how do you ensure to deliver these demands are duly met with? Enlist 5 factors that make your relationship with them more transparent. Our customers are some of the biggest brand names in the industry and hence are very particular about their product quality and timely delivery of their orders. Of course, they expect to get the best return for the money they are investing. We are in constant collaboration with them when it comes to new product design, assortment planning, developing new sourcing base or optimizing the costs. On operational

INTERVIEW

front, we jointly discuss their seasonal quantity requirements by shoes, sandals, slippers, accessories, etc., and spread them out across the months as per the demand. There is collaboration and transparency at all stages.

With rising challenges in global trade, how do you see the demand of raw materials getting fulfilled by you? What is your Plan B in place if at all you have been importing raw materials from other parts of the globe?

We understand the challenges the pandemic has posed when it comes to international trade and sourcing. Moreover, there is a push for local sourcing through government initiatives. We are working with our customers in taking this initiative forward and trying to develop local sources, which can offer same quality of raw material as available internationally. This will be a journey and will take time to develop. The good thing is that even the customers realize the risk of dependency on imports and are supporting this initiative.

The footwear industry is seasonal in nature and the entire season planning is done approx. 6 months in advance. For example, currently our customers are planning for the next season (Spring Summer 2021) and the indications are looking positive. We hope the demand picks up during the upcoming festival period and continues for the next season. supplychaintribe.com

How effective is the role of technology in reaching from sole to store? It is particularly important. Technology plays a role right from conceptualizing the shoe, to managing the supply chain, manufacturing, and distribution across the value chain, etc. Finally, it is all about timely availability of the SKUs at the right store when the season gets launched. Any delay can lead to markdowns and /or accumulation of non-moving stock.

It has been voiced by many global shoe brands that India does not offer quality that they seek in their goods. How would you counter this statement? It could have been true in the distant past, but India has been offering the same quality that is available globally for past many years. The best counter to this statement is that footwear is being exported from India to other countries, including those in the developed world.

When do you see demand picking up? The footwear industry is seasonal in nature and the entire season planning

INTERVIEW

Retail will continue to be a preferred channel for shoe buyers. As you rightly said, most customers need a firsthand feel of shoe from comfort, sizing, style perspective before making a purchasing decision. This is especially true for those who are into fitness and running as their shoes gets rigorously tested during usage and hence it becomes a very involved purchasing decision for them. So, while e-commerce will grow, retail will continue to have its presence due to the inherent advantages it offers to the consumers. is done approx. 6 months in advance. For example, currently our customers are planning for the next season (Spring Summer 2021) and the indications are looking positive. We hope the demand picks up during the upcoming festival period and continues for the next season.

Where does the future hold for the lifestyle sector and shoe segment with most of the business happening through e-commerce now? No doubt, e-commerce as a channel will grow further. Most brands already have an online presence through their own portal or through the portals of the key e-commerce players. Post Covid, growth has been fueled through e-commerce as retail channel has still not fully opened across the country. What this means is, brands will come out with products that meet the demands of an online customer â&#x20AC;&#x201C; who typically look for more breadth and options while searching for a style of shoe.

What would be the future of retail as we step into post Covid world? As we know shoe buying is still predominantly physical owing to its very nature of sizing challenges and comfort? Retail will continue to be a preferred channel for shoe buyers. As you rightly said, most customers need a first-hand feel of shoe from comfort, sizing, style perspective before making a purchasing decision. This is especially true for those who are into fitness and running as their shoes gets rigorously tested during usage and hence it becomes an involved purchasing decision for them. So, while e-commerce will grow, retail will continue to have its presence due to the inherent advantages it offers to the consumers.

How do you view the global supply chain shaping up from here on? The global supply chain will continue to evolve as more and more pockets of excellence will emerge. Companies are looking to source from the best and at

32â&#x20AC;&#x192; CELERITYâ&#x20AC;&#x201A; September - October 2020

the least possible risk. In next few years, I believe India will become an important manufacturing hub for international footwear. India is an attractive proposition due to multiple reasons. Most global brands are already present in India and have over the years, seen the quality of products manufactured locally. There is confidence in the local produce, to the extent that some of them are already exporting to other countries. This makes it easier to position India for furthering exports to other parts of the globe. Also, the domestic consumption of India is good, so it gives economies of scale in manufacturing. There are players like us who offer the best in class infrastructure and facilities for manufacturing. Like I said, local raw material ecosystem still needs to be fully developed. Once that is done, I see no reason why India cannot become a global footwear manufacturing giant like China.

PERSPECTIVE

THE GOLDEN SPARROW? Covid era has come as a blessing in disguise for the supply chain community. When the entire country was put under the world’s most stringent lockdown for almost 70 days, it was only the supply chain that kept the wheels of the economy moving, albeit with many teething issues be it inter-state movement, non-availability of labor or various check posts on the way. The incumbent times call for a dramatic shift in the way supply chains function and gear up for the promising times ahead and prove its stance as the Golden Sparrow of the Industries, which had so far been neglected by most CEOs. This perspective segment captures intriguing voices of the user fraternity as to how did they fight the Covid pandemic and brings to you a crystal clear path to lead the growth graph…

the same time. The pandemic imposed VUCA played out in three parts across most organizations:

Raviraj RODRIGUES, Director Supply Chain-India, Alstom Transport India Limited

Phase 1-The Shock & Awe Phase: At Alstom, this was from Mid-January to February end. This was when news of a pandemic in China and the ensuing lockdown began to get international attention. During this time, we were unclear on what would be the longterm effect of the pandemic and how it would pan out. Our efforts were largely in drawing out various scenarios and potential solutions.

Supply Chain Managers are called upon to build systems that have two distinct capabilities viz. To be able to “Anticipate better” the future needs of the business and to “React faster” to changes in the environment. Each organization has built over a period of time Structure and Processes to manage both these capabilities though not necessarily equal. The COVID-19 pandemic and the resulting lockdowns in India and abroad brought out sharply each organization’s capability to handle the changes that came with it. The supply chains were no different and largely a manifestation of the organization’s capability to handle VUCA situations. The current situation is a unique case of VUCA, in that for the first time, we have seen a simultaneous drop in both demand and supply at

Phase 2- The React Phase: Once the pandemic began to spread to Europe and our supplies in Europe got affected, we understood that this pandemic will result in mid-term disruption to our supplies. We immediately set up a War Room in the Office (which moved on to become a virtual War Room by end March) and we created two Control Towers for end to end visibility viz. Supplier Control Tower to ensure prioritize supplies from International Vendors to our four sites in India and a Logistics Control for End-toEnd Visibility of shipments from our consolidation centres. We also created a Peer Network group of all Supply Chain Heads across the Alstom group to review our challenges and find solutions together. As a result, we did not have our sites shut down for a single day to

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non-availability of materials. Phase 3-Build Resilience: After 2 months of Lockdown and all the challenges associated with the Lockdown, we were increasingly clear that this is a new normal and we set about revisiting our Supply Chain Structure, Processes and Controls. This is born out of the need to create an agile supply chain capable of handling similar situations in the future. In the short term, we have embarked upon initiatives like Complete Procurement Diagnostics, Review Supplier Vulnerability and building of Collaborative Inventory. Next, we will work on our Sourcing Strategy, Collaborative Planning-Forecasting & Replenishment with key partners and Virtual Co-location & Information Sharing to create planned redundancies. In the long run, we will need to drive Digitalization, Predictive Supply Planning and SMART Logistics to get a complete End to End Transparency in our Supply Chain. This is the only way we believe we can make our Supply Chains more predictive and agile at the same time. The most important contributor here would be our people. Here, our focus on building a Strong Supply Chain team across all our sites over the last 2 years has paid off and we now have an incredibly talented team ready for the future and capable of handling any challenge together.

PERSPECTIVE

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

Ashutosh Dhar, Director-Supply Chain, BD India

Did we ever imagine that our lives would hit a PAUSE button the way we are experiencing right now. Retail businesses used to enjoy 30% y-o-y growth rate in the country before it nosedived to near zero in April 2020 be it online or offline. There was no respite to be seen soon as we are already 4 months into the lockdown. So how are retail companies managing such a dramatic shift in fortunes? Changed customer preferences: During the lockdown times, retailers realized that the customers’ buying intent has become refined. Their shopping preferences have changed from fashionable & stylish to casual & comfortable. Customers are asking for Retail Stores to come @ their doors. Fashion on Wheels became common, just the way we have been seeing Food on Wheels for some years. Customers are becoming wary of trials and returns, which never used to be the case earlier. We are seeing appointment-based stores in the country to disallow any crowd in the shops. The era of Window Shopping has gone is what we believe. Today it’s completely selective and refined way of shopping. It has become truly Omni Retail NOW. We are seeing the trend of WhatsApp buying, digital buying, contactless shopping as the new Norm. What has changed for supply chain in these times? We are facing serious staffing problems when it comes to floating population or migrant laborers who are not ready to get back to their workplaces. Inventory management has become a bigger challenge with retail stores closed for more than 100 days. Additionally, we cannot buy new inventory from suppliers because of cash crunch. Online demand is surging day by day. Amid all these cost escalations need to be kept in check. We are opting for newer ways of retail to customers such as hyper local distribution, WhatsApp, Store2door, venue sales, etc. This has all been possible due to technology enablement in the shortest time to suit customer needs. In the end, it’s all about customer centricity and being close to them to understand their preferences. Customer engagement is the key. Understand your customer expectations and sell them what exactly they want. With this, I believe we will fully adjust to the NEW NORMAL and NEW OPPORTUNITIES.

Top challenge faced by any organization in the last 5 months was to ensure business continuity amidst lockdown announcements. Warehouse closures, restricted road/rail logistics movement to containment zones across the country and no passenger flights (domestic as well international) severely restricted transportation of our products during this period. One of the great learnings and our success to manage the crisis was to have a refreshed Business Continuity Plan ready when the pandemic hit the country. We had multiple scenarios basis assumptions on lead indicators that were simulated as table-top exercises to assess the progress of pandemic and linking it to business performance for rest of the year. Another learning during the crisis was to map the end to end supply chain i.e. from our supplier’s supplier to our customer’s customer. This was crucial to ensure that all raw material risks were mitigated for manufacturing and we made best use of the Control Tower to track and trace stocks through the entire value chain. Since most of our team members were working from home, we ensured that we connected daily through the entire period to be able to guide, support, acknowledge and thank the team during this unprecedented situation.

34 CELERITY September - October 2020

PERSPECTIVE Challenges Supplier Plants Shutdown No workers available Multiple Countries Locked down

Ensuring Business Continuity

Converting Crisis to Opportunity

State Borders Closed Ports Shutdown

Sanjay Agarwal, President & Chief Procurement Officer, Hindalco Ltd. The Covid-19 lockdown came with a complete disruption of the entire supply chain allowing no time to secure supplies. Here is story of a great challenge faced by Hindalco, that got entire team of stakeholders to align together to respond quickly, make alternative/innovative strategies and achieve one common goal of “No production loss on account of raw material or spares.” We were faced with a situation where overnight many of key suppliers had to shut down operations as they were not classified under “essential” category and were not even able to move their already stock up product. Transport came to a complete halt in the first week, as we saw state borders sealing their operations and ports unable to operate due to lack of manpower. Ground authorities in different states, borders were interpreting the rules laid out by Government in different ways. A situation of panic was emerging as all the movement from domestic and

Challenging personal situation Limited Storage Space

import seemed to come to a standstill along with an acute shortage of manpower. We responded to this by deploying 4 key strategies: ◆ Communication, communication, communication: A fortnight before the lockdown, the team geared up by getting the resources from people to work from home and started testing the virtual meeting platform. As the crisis continued, the most important thing that emerged was ‘close communication to keep up the morale of the team. All levels were conducting communication meetings and daily meeting was chaired by MD with all plants as well. In the time of need, we reached out to all our clients and key suppliers through video calls to let them know that we are in this together. ◆ Focussed Approach with close collaboration amongst all stakeholders: A task force comprising of

Setting a new normal Procurement, Logistics, Operations, Legal and other were put together. Close collaboration with suppliers and on ground monitoring of situation by the team helped us stay abreast of the situation and react quickly. ◆ Quick decision making: This came out to be the corner stone of getting things back to normal. Exceedingly difficult but quick decisions had to be made looking at the cost vs. the criticality. ◆ Alternate scenario building & risk mitigation plan: As soon as the crisis was controlled and stocks brought back to at least 15 days, the focus was changed to ensure business continuity and supply resilience going forward. With this view, multiple plan alternate plans were made and executed which included ordering supplies from different geographies, onboarding multiple new suppliers.

The Learnings

supplychaintribe.com

FOCUS

ALLIANCE ACROSS THE CHAIN

Strategic advantage

Shared information between supply chain partners and customers can be fully leveraged through process integration. The co-operation in the supply chain is becoming more common for focusing on managing competencies and contracting out all other actions. Today a greater faith on suppliers and alliance partners has become critical. In this regard, strategic alliances are an instrument for combining co-operation and competition in corporate strategies, writes Harinarayanan S Nair, General Manager – Strategic Planning & Business Development, Signode.

Harinarayanan S Nair is a supply chain professional with over 25 years of experience spanning across contract logistics P&L roles, supply chain consultancy, automation & digitalization, sustainability projects across manufacturing verticals, developing inorganic business growth platforms, corporate development and strategic planning in a regional role. Hari is a Mechanical Engineer from University of Kerala and alumni of SPJIMR – Mumbai in Operations & Supply Chain.

Sustainability (3,1)

Capital efficiency (3,2)

ISCM platform (3,3)

Strategic

Transactional efficiencies (2,1)

Collaborative logistics (2,2)

IT - LMS platform (2,3)

Tactical

Strategic sourcing (1,1)

Logistics engineering (1,2)

Yield Improvements (1,3)

Operational

Cost advantage IT- LMS : Integrated tracking & Logistics Management system ISCM : Integrated supply chain management

URRENT supply chains are only integrated up until the suppliers and customers. It does not progress beyond the next level to reach the supplier’s supplier and customer’s customer! Can we form a supply chain alliance integrating members from upstream - downstream - convertors consumer segments as a pull strategy? Most definitely! This article discusses a

possible Integrated Supply Chain (ISC) community. The key criteria here is identifying high impact material flow tracks and networks, the rate of inventory flow, critical paths, selection of members for each track within the chain, score cards, SOPs, IT platform and communication plans. The fundamental principle here would require each constituent member

36 CELERITY Septmber - October 2020

to be aware of ‘what they are creating and what they are getting’. Additionally, who pulls and controls the chain is also especially important. I am pleased to present a cost-vsstrategic advantage grid for defining the business and social values for the community. Here, the strategic focus is on the top 3 quadrants (3x3, 2x3, 3x2). In this material flow model, packaging,

FOCUS logistics and inventory (cost vs value) is monitored at operational, tactical and strategic levels. This model also presents a mechanism to review the behavioural competencies of members via a 360-degree evaluation. The alliance can be effectively monitored, once the supply chain infrastructure is digitalized and can be managed by a hosted command center

Upstream

Downstream

Industrial & Packaging Brands, Consumer Brands & B2C/B2B Retailers Convertors

Paper Mills

Paper convertors

Convertors ,Printing & Packaging

CPG

Retailers

Petrochemical

Plastics

Industrial & Packaging

CPG

Retailers

Aluminum/Copper -downstream

Industrial applications & Packaging Brands - Al Cans,Foils

Industrial , CPG

Auto/Engg , Retailers

Cold rolling Mills, Service centers

Stamping vendors /convertors, Packaging

Auto/Engg, Durables, Construction, CPG

Retailers

Metals - Non-ferrous Metals - Steel

OPERATIONAL INITIATIVES Strategic sourcing: For economies of scale, it is wise to consolidate volumes at the supply chain community level for raw materials/packing materials (RM/PM), logistics and MRO in general (maintenance, repairs & operations). Beyond the purchasing decisions, there also exists a strong case to evaluate the inventory levels and cost of storage/ movements in an alliance. Logistics engineering explores packaging & logistics re-design in an integrated supply chain community! • Logistics unit: Higher logistics unit size, bulk packaging & palletized logistics are the steps in this direction. Industry still uses large quantities of jungle wood for Pallets/ skids/crates currently on a single use basis and this should change. FIBC (flexible intermediate bulk containers) bags and container liners are two best practices in bulk material handling for agro commodities, chemicals and minerals. • Returnable packaging service models should evolve with clear

•

contractual arrangements at both the ends. Supply chain managers should check for a right ratio of returnable: expendable packaging and must use velocity (turns/year) and life (number of cycles) as critical performance measures. Pack re-engineering takes an integrated view of transit packaging-logistics decisions. Without the clear logistics visibility, outside the factory gate, industry tends to overdesign and keeps a much higher safety margin than required. With an improved logistics infrastructure across the network, we should be able to optimize the packaging cost. Multi-modal logistics: We should look at containerized, multi-modal logistics for cost advantage here, looking at our large coast lines and rail networks connected by roads for the first and last mile. We should be able to give an overall positive impact, comparing logistics cost in terms of freight, transactional costs, transit days and inventory.

Yield Improvements: Yield losses are always budgeted in individual cost folders due to challenges beyond their span of control. Once we have visibility

of the root cause analysis for these losses and controls in an extended supply chain, it is possible to improve these yield levels. A few examples here are:• Product damage due to handling / transport concerns. • Commercial security, calibration and weighment tolerance concerns • Packaging failures in supply chain • Pilferage /Shrinkages in supply chain Yield losses are one of the largest hidden costs in the supply chain and there is a very clear scope for improvements, once we have an integrated view of the impacts.

TACTICAL INITIATIVES 1. Transactional efficiencies primarily address the productivity & manpower cost concerns. Multi-vendor purchase orders, manual weigh bridges and manual data entry, paper-based invoice generation, physical inspection and maintaining manual records and all the other manual logistics transactions are the few low hanging opportunities for improvements. Transactional costs are considered one of the major hidden costs in logistics and this

We need to connect all the links in the supply chain for an ISC alliance using a digital platform. Let the last mile segments at last mile take the lead here as a pull strategy! Pull strategy will be more effective here than push, while integrating a 5 to 6 layer supply chain structure from the first mile to last mile with a large community base of members. The challenge here is identifying the key measures with their impact score in the supply chain community with the right measures with clear visibility to all the stakeholders. A digital platform should be backed up with a centralized command enter for real time monitoring and exception management. supplychaintribe.com

FOCUS becomes truly relevant once we replicate these inefficiencies across supply chain networks. Material flow in-lining and automation should be evaluated in packaging, warehousing, and logistics (both inward & outward) with an extended network. Artificial intelligence tools & robotics can offer a large canvas for improvements, especially on forecasting and demand planning.

De-layering the waste flow: There is a clear opportunity for delaying the waste flow from the current 5-layer structure to either a 3 layer or a 2 layer structure in the organized waste flow: 1

Rag pickers

Kadaiwala

Aggregators

Recyclers

User

MRF

Recyclers

User

forklifts, trucks, and warehouses. 2. Collaborative logistics: Logistics asset utilization (back loads for trucks, turnaround time challenges at both the ends, capacity utilization) and budgeting for traffic spikes across the networks are few key challenges today. Once we have a shared logistics cost folder, industry can collectively work towards improved truck utilization, turnaround time, back load integration & warehousing costs within the network. Back load integration is a clear opportunity here, where freight models can be configured on a fixed and variable cost model than a fixed route-based cost model, which is always market driven.

Containerized coastal – rail centric multi-modal logistics with road connectivity at first and last mile is a scalable logistics model for India, looking at our large coast lines and hinterland distances. This may call for setting up handling and warehousing infrastructure across key traffic minor ports/ railways hubs and the industry can take a collaborative view of the infrastructure development, once we have a supply chain alliance in place. Supply chains can collaborate here for improved capacity utilization in a closed loop logistics network. Additionally, there is a strong business case for an optimum mix of dense and voluminous loads in order to further improve on cost efficiency. Shared logistics asset management is another large scope for collaboration, once we can achieve some level of standardization of assets and handling processes. Few examples here are pallets, intermediate bulk containers,

3. Inventory & Real time inventory visibility across the supply chains will help to reduce inventory levels and improves response time to markets. An integrated track & trace with logistics management systems (IT-LMS) platform connecting processes, logistics assets and inventory is way forward. This material flow tracking technology platform using automatic identification & data capturing (AIDC) technologies and AI tools is well placed in the digitalization strategy.

STRATEGIC INITIATIVES Sustainability: Packaging waste in a circular economy: Packaging waste recycling in a B2B and B2C business, greenhouse gas emissions and water conservation are the key supply chain collaboration opportunities and we will keep the focus on plastic waste recycling in this article. India generates an estimated 21,000 tonne of plastic waste per day and recycles 60% of it. Global recycling percentages stand at 9% with a Landfill: Incineration: Recycling ratio for plastic waste of 79%: 12%: 9%. Since the waste is not segregated in India prior to collection, a major share goes towards landfills along with other waste, resulting in plastic litter clogs in public spaces and water bodies. We can segment the action plans in to four key initiatives: Organized waste flow: There are clear gaps in the current operating model: • Conflicting technologies – Recycling Vs Energy routes: Governments should prioritize recycling approaches that align with circular economy goals and energy models should be considered as an alternative. • Traceability of waste from source

38 CELERITY Septmber - October 2020

to consumption: Currently there is no transparency of waste supply chain processes and transactions. The industry should work alongside technology providers in establishing traceability from source to consumption in every cycle. • Supply chain QCD advantage: We should evaluate line items for correction — the leakages in the first mile from source and price realization in recovery facilities, segregation, and grading SOPs for preparing the waste and freight disadvantage for recycler dispatches from recovery facilities.  Going forward, MRFs can do both backward and forward integration, thereby performing both first mile collection and recycling functions.  Recycling parks can be established at a state level, targeting improved price realization for waste, logistics cost advantage and improved employment opportunities.  Use of technology platforms: The industry should digitalize the waste flow from source to consumption to meet the circular economy process standards. There exists several digitalization technology providers that are willing to operate in a hosted service model. Production Innovations: Consumer brands should go beyond their current product baskets and should explore new product-markets. Most virgin plastic applications can be replaced by recycled plastics and the industry should actively collaborate with the end-users to drive this. Additionally, there exists a window of opportunity to move up the value chain that will improve better price realization for plastics. Some examples include:  HDPE /PP plastic pallets is a large business opportunity where consumer brands can collaborate with recyclers and pallet makers/

FOCUS

pooling companies to convert from wood to recycled plastic pellets.  PET sheet applications in thermoforming/ Blister packaging applications and furniture /Solar frame. Also, there is a large pool of engineering plastics applications too exists. Green alliance: The industry can address most of the change management challenges, only when all the stake holders are held together by a set of common goals like UN-SGDs. Few of the green marketing and alliance opportunities include:  Extended Supply chain (ESC) Alliances: Here, the brands collaborate with their customers, competitors and suppliers in the supply chain. Some examples are Pet Packaging Association for Clean Environment (PACE), Action Alliance for Recycling Beverages Cartons (AARC), Aluminum Beverages Can association of India (ABCAI).  Integrated Supply Chain (ISC) Alliances: Here, the supply chain boundaries can be extended to next 2-3 levels to include the suppliers’ supplier and customers’ customer network. To establish this, the key plastic waste generators and end users must come together to promote R&D for new products. Consumer brands must go beyond their supply chains and collaborate with industrial segments to design and implement new applications.

CAPITAL EFFICIENCY Organizations may prioritize capital efficiency over cost efficiencies and these efficiency improvements projects

supplychaintribe.com

Strategic

Recycling % & traceability

Capital efficiency

ISC KPIs

Tactical

Productivity

Asset utilization

Inventory days

Operational

Material cost

Packaging Cost

Yield levels

should be ideally asset light from a cash flow perspective. The capital projects should have a strong business case and an acceptable payback period. Businesses will always prioritize growth investments that are linked to their production volumes and will prefer an outsourced service model for non-core activities. Technology providers and logistics providers should encash opportunities and should place outsourced service models with process ownership. Industrial leasing business is large opportunity in India on a strong win–win value proposition for all the stakeholders, looking at the value to unlock in supply chain. Capital costs can be taken on a finance or operating lease at an acceptable IRR levels. Alternatively, operating cost of an existing operation can be compared with the proposed lease service model. In the lease proposal, we can look at the breakeven NPV for an acceptable interest level for the contract period. The interest rate can be linked to credit rating, Marginal Cost of funds based Lending Rate (MCLR) for banks. The period can be linked to the payback period or economic life of the asset, whichever is smaller. Outsourced lease service model with capital investments:

Proposed (CAPEX + OPEX) < current OPEX General purpose equipment, assets which are mobile and can be re-located are well qualified for lease models – Forklifts, AGVs / Cobots, Generators, WHs, trucks are few examples of supply chain assets here.

ISCM PLATFORM – A PULL STRATEGY Finally, we need to connect all the links in the supply chain for an ISC alliance using a digital platform. Let the last mile segments take the lead here as a pull strategy! A pull strategy will be more effective in this context, rather than a push strategy, especially while integrating a 5 - 6 layer supply chain structure with a large community base of members. The challenge here lies in identifying the key measures with their impact score and clear visibility to all the stakeholders in the supply chain community. The digitized ISC alliance should be backed up by a centralized hosted command centre for real time monitoring and exception management. Once we are ready with the high impact material flow tracks in the supply chain network with the right process designs and SOPs, we are ready to move forward….

INTERVIEW

Blockchain: TRANSCENDING POSSIBILITIES IN SCM “Blockchain has the potential to revolutionize stock management, as it enables validation, traceability of information, automation, and simplification in its management. Due to the refinement of the information exchanged by the interlocutors, it is possible to relax the safety stock and improve financial results such as free cash flow and profitability. In addition, it enables a more sustainable supply chain, with a more rational management of inputs and tracking and accountability of the entire chain, enabling the opening of a new strategic brand positioning and new markets,” highlights Hedwik D Giesel.

Hedwik D Giesel has 11 years’ experience in the automotive industry, of which 9 years are dedicated to improve the supply chain performance in Brazil and other countries in Latin America. She is currently a Master’s degree student in management, leadership and decisions (PPGOLD) at Federal University of Parana (UFPR).

Can you explain what exactly is Blockchain?

receptive value. Thus, once the product is received or realized, the protocol will start the validation and consensus for payment and registration in the organizations’ books. However, a way that is still not very widespread is the use of the smart contract in conjunction with other tools, for the management of stocks. It would be a step beyond what is commonly used for payment; however, the principle would be the same. This application is ideal for cases where the inputs come from different suppliers, with different lead times, and their management is categorized as complex. The general idea is that all the company’s stock is in big data, so when the material is used for production and an asset retirement order is registered, automatically, according to the established security stock, a purchase order is issued the smart contract protocols were triggered. Together with several sources, whether virtual or physical, such as data sent by customs or RFID for location of materials, the entire flow can be automated. In this way, the blockchain is fed by

Blockchain is a disruptive technology that has emerged with cryptocurrencies around the year 2008 and is one of the tools that compose the Fourth Industrial Revolution, furthermore, known as, Industry 4.0. Based on a process in which each transaction is verified, validated, and distributed among all users in an encrypted form, thus allowing greater transparency and reliability. They can also be used in public or private systems. This technology has numerous advantages such as the decentralization of systems, traceability, security, privacy, removal of intermediaries, automation, which enables cost reduction. Due to its characteristics, this tool has been widely used in the financial sector currently. Besides, there are initiatives in the health, energy, real estate, and supply chain sectors as well. Another factor that strengthens the blockchain application is the combination with other disruptive technologies emerging from Industry 4.0: Cyber-Physical System (CPS),

Internet of Things (IoT), Artificial Intelligence (AI), Analytics, Cloud Computing and Robotics, which can automate the data collection and processing of big data for use on Blockchain platform. The Blockchain enables a functionality called Smart contract. This tool is a virtual contract that can automate and reduce or eliminate intermediaries, be it legal or financial. Composed by a series of protocols and using encryption and decentralized storage, the rules that are normally attributed to a traditional contract between one or more institutions are established, thus including rules and penalties agreed between the parties, and these are consented by those involved.

How can companies use the Smart Contract? We can see that the most common form of Smart Contract is for the automation of payments. For this, it is necessary to include in the contract the registration of payment and validation rules for products or services and their

40 CELERITY September - October 2020

INTERVIEW real-time information, in an encrypted form, decentralized and validated by its interlocutors, avoiding possible disputes and errors in the exchange of information, making it possible for all inputs to be clear and traceable from the supplier to the edge of the production line.

What are the advantages? This tool has the potential to revolutionize stock management, as it enables validation, traceability of information, automation, and simplification in its management. This enables cost reduction by reducing or eliminating intermediaries, reducing possible risks with litigation, fines, and emergency freight. Due to the refinement of the information exchanged by the interlocutors, it is possible to relax the safety stock and improve financial results such as free cash flow and profitability. In addition, blockchain enables a more sustainable supply chain, with a more rational management of inputs and tracking and accountability of the entire chain, enabling the opening of a new strategic brand positioning and new markets.

What are its limitations? As any new technology has its challenges, one of them is the complexity and for networks composed only by customer and supplier, the higher cost and response time, compared to other tools already used in the market, may not be so attractive. Also, there is a need for a robust IT infrastructure with adequate network, hardware, and software to meet the requirements of this technology. Thus, it is recommended to use this tool, for more elaborate processes and with several interlocutors, whether they are reliable or not.

How is it going to be beneficial for supply chain domain? Blockchain has great potential for the supply chain perimeter due to main advantages as traceability and reliability. With this tool, you have the capacity to identify the origin of each input in the chain, its quality, and the conditions of its production. Associated with other disruptive technologies, it can add even more to the management of the supply chain, such as technologies IoT, Cloud and Big data, promoting real-time

supplychaintribe.com

The possibilities are countless, from automating the sending of purchase and payment orders to the supplier, tracking inputs, finished products and assets to being able to control the physical performance of transportation and stock management. The first and main step is to conduct an analysis of your processes, identify which ones are costly, with various intermediaries and bureaucrats, to outline the plan for the application of the tool. It is recommended to use a Proof of Concept (PoC), to check the feasibility of this project in the organization. management of every input or finished product. It enables the empowerment of the supply chain team and the consumer who may have the security of what they are consuming.

What are the innovative examples of blockchain in supply chain? The biggest case of this technology applied, thus far, is the Danish multinational Maersk case, which together with IBM developed a blockchain, primarily, for products from Africa. Currently, the network has expanded, with other shipping companies such as MSC and CMA joining this platform called TradeLens. This movement allows greater reliability, reduction of interlocutors and bureaucracy, which results in cost decrease and improvement in the performance of the entire process. Recently, the World Economic Forum (WEF) highlighted the relevance and demonstrated its support for this technology, with the initiative to standardize blockchain applications already existing in the industry, mobilizing public and private institutions.

How do you see the future of blockchain in supply chain going to be?

association of new companies on the TradeLens platform, will be increasingly common and vital. Like any innovation, the pioneering companies in a certain technology, have the privilege of being the first to enjoy the benefits and become a reference, this implies a lot of effort, high costs and, of course, the hypothesis of failure. Now, we are in the moment that some features of this technology are becoming clearer and more accessible, thus, it is the time when companies should look at their processes and see how this tool could add value and bring a competitive advantage.

How can companies in supply chain harness the power of blockchain? The possibilities are countless, from automating the sending of purchase and payment orders to the supplier, tracking inputs, finished products and assets to being able to control the physical performance of transportation and stock management. The first and main step is to conduct an analysis of your processes, identify which ones are costly, with various intermediaries and bureaucrats, to outline the plan for the application of the tool. It is recommended to use a Proof of Concept (PoC), to check the feasibility of this project in the organization.

I believe that this movement, as the

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