14 minute read
India’s Supply Chain Revolution
COVID-19 pandemic, port congestions, pollution control boards forcibly shutting the Chinese factories, so on. To make in India in pharma, we need support from the government and local bodies in terms of infrastructure creation so that we get the economy of scale and start competing in the global market. In the early 90s, India was probably importing 30% of its APIs from outside India. That number has gone up to 65-70% today. Over the last two decades, the number has more than doubled. We need to do something to reverse the trend. It's going to be a time-consuming and lengthy process.
Over the years series of technological advancements in China have given companies an edge to manufacture specialty chemicals. With that, they have had colossal infrastructure support and benefits provided by the government, which have helped them scale up the volume and brought them to economies of scale. Most of the bulk chemicals that we are now importing were getting manufactured in India in the '90s. Over the years, due to better pricing and availability, sourcing has moved to China. Now the Indian government has also realized the crucial importance of the value chain. The government's PLI initiative is undoubtedly a step in the right direction. The pharma and medical device industry have been allocated about US$2 bn over the next five years to encourage entrepreneurs and manufacturers in this space to invest, and the government is willing to support them on this journey. Deglobalization is a reality, and companies and governments need to come to terms with it sooner. De-risking supply chains is a great start to move ahead in this journey of de-globalization. What is India's potential to take Industry 4.0 further in the pharma landscape? Not just India, the entire pharma industry around the globe is somewhat laggard when it comes to adopting Industry 4.0. Because we are a highly regulated market, the controls around continuous manufacturing and batch quality monitoring have been a hindrance. But the scope and potential of advancements in technology have made 4.0 a reality to reckon with. We are already seeing a lot of headway being made in production control technology, R&D, and overall supply chain monitoring, and management. I firmly believe that in the 'controlled,' 'contained,' and 'connected' world that we live in today, industry 4.0 will be a great enabler in ensuring more efficient and cost-effective ways to deliver life-saving drugs to the 7+ billion people around the world.
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Vinod Mathur, VP – Product Management, Blue Yonder
How can India leverage this opportunity to create value and a competitive advantage in the global market by manufacturing for others and being a global factory eventually? Today it isn't easy to differentiate between a physical product and a technology product. Even cars today are more of a computer, which is driving you around as opposed to what it used to be about 10-15 years back. In both these sectors (technology and manufacturing), my experience has been that we usually struggle when it comes to product design. We have many established companies and startups providing services. This competitive advantage has taken us to a certain level. Our capabilities as far as benefits are concerned are very well accepted by the world, now we must bring the same leadership in design skills. Working with a product business model takes a lot of risk-taking ability. Our incredible talent is moving out of India and is offering its design prowess to manufacturing companies in other parts of the world. We need to leverage such innovative talent somehow and strengthen our design capabilities. We have numerous product design innovations at the grassroots level, but many of those do not make it to an organized corporation for the scale they deserve. These areas should be our next big challenge that companies must take to ensure an all-encompassing growth and make India a true manufacturing superpower.
How can Blue Yonder play an enabling role in making it possible? We have come up with India-specific offerings because one of the key learnings gained over the span of my professional career is that something that works in the European or North American market may not work the same way in India. We have finetuned and created technology offerings that are more relevant to the Indian ecosystem. Along with our partners, we have also localized tracking mechanisms to suit our Indian customers' needs, such as SIM-based tracking rather than a smartphone-based GPS which might be hard for a small fleet owner to afford.
How are the global supply chains adopting the risk mitigation strategies post-pandemic? Risk mitigation is a strategy that has always existed if we look at the topperforming supply chains globally. These companies always have a plan B in place. The scale of a pandemic that we witnessed, even the plan B, was not enough. Risk mitigation should be a part of systematic planning rather than a one-off exercise. I know of many Indian companies that have a proper risk mitigation plan in place. Blue Yonder helps companies analyze & evaluate the impact of a scenario and develop an alternative plan. Building redundancies into the system is also part of the risk mitigation strategy.
Himanshu Maloo, Supply Chain Head – Pharma, Udaan
How are the supply chain horizons changing? All of us have been talking about strategy and agility for so many years now, but I think this is the best time to realize the impact closely. If we reflect upon the last 18 months, we clearly see the horizons of our strategy have been changing. Earlier, we used to plan 5-10 years in advance. Now the strategy horizon has been reduced to 6 months to one year, with the pace at the world has been changing. Such fast-changing dynamics call for a lot of agility in executing things faster. The important thing is that one must keep driving strategy into implementation in a shorter period; Fail fast but keep moving on correcting. Keep learning from the mistakes but keep improvising. This is how I feel the whole horizon of strategy is changing and calls for greater agility for all of us. In the last 18 months, we have already moved 4-5 years ahead than no one had even imagined in adopting technology. This is the perfect example of being agile enough to work with changing times.
It's more about being able to meet customers' demands. How can the supply chain play a critical role in developing new competencies? All of us are working for business and customers' satisfaction. It's no more a supply chain role that we are limited to. Competencies need to be customercentric to develop skill sets that can help us deliver the last mile of customer experiences. When we bought groceries from the market a few years back, we never thought we would start buying them online. Earlier, we used to place an order today and receive deliveries tomorrow, but today it has been express 90 minutes delivery. Now companies are even talking about delivering groceries in 10-15 minutes. This is how the back end has been matched to deliver goods as per customers' changing behavior and expectations. As customers, we aren't going to be happy if someone says that the order will be delivered the next day. All these require a full-proof back-end supply chain in ensuring that whatever a company promises to deliver gets delivered. That's where it becomes imperative to start thinking innovatively. This is the NEW NORMAL now, which we must embrace to survive. In the last 18 months, many companies had to change their entire business model, and those who didn't bend down in tune with the customers' requirements are getting vanished.
Rajat Sharma, VP – ISCM & Customer Service, Hamilton Housewares Private Limited - India
What are the challenges that have been faced in delivering products through e-commerce on time every time? Yes, India has seen a lot of flux on the online channel. A massive set of our customers and consumers have moved on to the online channel. While it was not just an easy way to get things, it was perhaps the only channel to get the desired products delivered at your doorstep during the pandemic. Fortunately for us, as an organization and country, online sales were introduced a couple of years earlier before the COVID-19 pandemic hit us. Let's be honest… COVID-19 has been a massive booster for this channel. As all of us have adopted this channel, we also faced challenges.
First and foremost, we were relying on Amazon and Flipkart to ensure last-mile connectivity. We have never gone to the depths of understanding the challenges of the last-mile delivery, especially in the non-tier I & II cities. That's perhaps has been the biggest challenge for everyone who tried to move from offline to online. I am happy to share that many startups and erstwhile startups have been phenomenal in enabling this transition for all of us. Now the optimization of the last mile freight is going to come along the way for all of these organizations because as they can absorb data, which is tertiary data, and then define patterns, segments, and heatmaps in their territory, it's when they will be able to get to defining where do they need to go from here on, the FCs, delivery partners, traffic forecast, etc. The world is expanding. Other than the last mile, I think for many of us who were in the offline channel, everything we did was always a part of the supply chain. In the online channel, the most significant change is that we are delivering directly to the consumer, which encompasses a whole set of responsibilities – right time, right product, returns management, customer service, managing order experience, to name a few.
Additionally, e-commerce platforms such as Amazon, Flipkart, and Cloudtail have the economies of scale to create these large FCs, so companies can imagine the complexities such scenarios bring. That's where the strategic vision of the organizations has made the differences in the result. We had thankfully chosen to take this path before the COVID-19 era. Hence, we were able to capitalize on the opportunities.
What's your take on reverse logistics and the value it possesses? Return logistics in the erstwhile systems was very much dependent on the partners. With the advent of channels such as online and retail, the return percentage is quite sizable. The 'No Questions Asked' return policy has necessitated supply chain teams to emphasize the cost attached to the returns alongside the insight that you draw from returns management. The data around reverse logistics is bringing a lot of early demand sensing, early feature sensing, early change of consumer buying behavior, etc. shared ecosystems with last-mile partners have made it much easier to deal with direct returns from consumers. Yes, it is challenging to manage the returns physically, but the data that reverse data analytics generates balances out those hiccups. Consumer insights, product insights, and buying behavior are the three key elements that return logistics brings with themselves.
A lot has been discussed and debated upon the future and fortune of India’s supply chain during & post-pandemic. While companies have devised innovative ways to deal with the pandemic of such magnitude, it’s their supply chain’s resilient nature that helped them sail through the tough times. During the Celerity Supply Chain e-conference & Awards 2021, our first panel discussion on ‘India’s Supply Chain Revolution,’ moderated by Sanjay Desai, Co-founder & Regional Director, Humana International, industry veterans brought out exciting facets of new-age supply chains, which are tech-driven, agile, sustainable and resilient to deal with any eventualities. A report…
Akhil Srivastava, Director Planning & Logistics, BU ISEA, Ab InBev India
According to you, what has this global disruption taught to the global supply chain, and what will the successful supply chain companies do to bankroll their capabilities and invest more in a sustainable business model? We all struggled for existence for two years in various ways, whether on personal lives or at professional fronts of saving lives & businesses. Just like Oxygen in personal life, money was critical for the business to keep afloat during trying times. To me, sustainability is all about being relevant and being differentiated. As we move towards the end game, having witnessed the worst on both the personal & professional fronts, it's time for businesses to think afresh. Companies need to think beyond cost and profits. It has to be a holistic gain where everyone has to start with the end game in mind, which means we are all looking forward to a unique start. We are looking for ability & ambitions. While most of us and every business will have a purpose, there is also the ability, which needs to be developed to continuously monitor our progress, delivering results, both profitably & sustainably. It's about the ability and the willingness to be sustainable. Ability because we still are looking for innovative ways to be sustainable; and willingness because it becomes difficult to execute on the ground unless you don't have that willingness to look at the ability to deliver. It would then just be a whitepaper. Time is right for us to start thinking about disruptions, work on implementing them on the ground, and make this a better world for all of us to thrive for a million more years.
How will businesses accelerate from here, especially talking about their transformation journey in matching demand and supply? What does resilience mean in the business? Believe it or not, it's a new world, and we need to come to terms with it. The supply chain doesn't exist alone. It exists as a part of the value chain. To me, today's best practices lead to a dead end. There will be new unexplored paths, untried practices which will spring up, and that's what we talk about resilience. Resilience means imbibing new practices, being open to change, and looking forward to doing things better than yesterday to evolve much faster. Customers wouldn't buy any technology. Customers want a straightforward thing – solve my problem in a superior way than how you are doing today. That's where new businesses stand a chance to gain market access and penetration. The changes will happen across the value chain and not in a piecemeal format. By choice, I entered the supply chain and chose to be a supply chain professional because this is where the next level of differentiation lies. This is where the relevance of the companies comes into being. It was proven the hard way in the last two years through COVID. These disruptions will enable us to strike more change, ask for more collaborative actions, and bring visibility together. We all are the beacon of light for that resilience to the world. While the world grew dramatically in the last three to four decades with globalization, with COVID, the urge is to localize the entire thing. This means new technologies and the new resilience will help us embark on a new journey to make us resilient, differentiated, and, most importantly, sustainably relevant for the future. Ravikant Parvataneni, CEO, Argon & Co, India
How will organizations manage massive variability in demand, including the long-time fences, and align to manufacturing and distribution capabilities? Short-term demand management is the real challenge. I think not knowing what will happen tomorrow or the day after is the biggest challenge. If there is some level of certainty, one can plan for it. Flexibility is the key aspect organizations have started imbibing to the 'T' – flexibility in their approach; it is not about the destination. Instead, it's about the journey; how do you plan it for today and tomorrow. When a person visits the office the next day, there will be the next set of variabilities; the key lies in planning those adversities. While flexibility will cost you, but today it's not about the cost; it's about being able to achieve and deliver something. Think short-term, even in contract management, which offers companies the flexibility to make quick decisions during eventualities. Organizations are trying to be more agile and flexible. These aspects need to be brought into their DNA, and it has to be imbibed in their day-to-day businesses. Enjoying the journey and don't plan for the destination should be the motto that companies should work on.
How does fulfillment complement the whole manufacturing wave and efficiency, and do you think automation can play an enabling role in all of these?
