Full mag december 2014

EDITORIAL

Will Supply Chain Derail the India Story?

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week back, at the ISCM supply Chain Summit in Mumbai, a statement by Cyrus Guzder caught my attention. He was talking about the India growth story. It set me wondering – do we as supply chain professionals really appreciate how central we are to the India growth story. The rub is – the back room boys of the great Indian story have the ability to halt our growth story. That itself should give us a sense of purpose. Think of it – there is no one item we consume which does not have a supply chain story.

And every one of us are a part of that.

GIRISH V S EDITOR

True, there are challenges – poor infrastructure, no co-ordination among the various stake holders, and each person in the supply chain trying to maximize their gain. The list is endless. To add to it, there is no guarantee that every shipment will reach the destination. I heard of three instances of shipment being hijacked from across the country.

Fortunately, two days later, I attended a technology summit, where continuous tracking of vehicles was a theme. Apparently, today we have the technology to track individual components of a consignment in real time. And no – the technology is not that expensive. The question we need to ask ourselves is – is it worth our while to invest in technology that will provide us the visibility, or risk losing a consignment once in a while. The argument that we have insurance which will take care of losses is stupid.

Remember, the insurance firm is not going to bear your loses. It will come back to you as higher premium. Now you have higher insurance cost and loss of consignment – a double whammy.

We thank our readers who attended the first ISCM Supply Chain Strategy Summit. And do look forward to our next event – Demand Planning Forum. We will shortly come to you with more details.

In the meanwhile, happy reading. And a Merry Christmas and a Happy New Year to you.

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December 2014

CONTENTS DECEMBER 2014 December 2014

08 SCM NEWS >>

32 SME CORNER >>

Analysis of latest Supply Chain and Logistics happenings.

28 ISCM-SCMPro EXCELLENCE AWARDS >>

In this issue of SME Corner, we examines the importance of SCM for SME’s.

ISCM and SCMPro recognise the excellence and transformational efforts in the Industry.

36 LSP FOCUS >> 30 SCMPro CLASSROOM >>

Prof. Piyush Shah provides a simple way to apply the theory of inventory management to the everyday work scenario

10 LEAD STORY In this Issue, SCMPro brings you the ring side view from ISCM SCMPro Strategy Summit held on 21st November in Mumbai.

The summit was addressed by four prominent speakers and three panel discussions on issues on strategic issues in SCM in India.

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In this issue of LSP Focus, SCMPro spoke to Balaji V., COO Allcargo Contract Logistics on the emerging freight scenario in India.

40 SME SPARK >>

For the inaugural issue of SME Spark – a series of inspirational stories of SME Supply Chains firms, we bring you the story of Jeevan Rao Saheb.

44 HUMAN RESOURCE >>

Darryl Judd, COO, Logistics Executive shares his perspective on art of winning.

204-D, Riddhi Siddhi Complex, Off. S. V. Road, Opp. Patkar College, Goregaon (West), Mumbai 400062, INDIA.

46 ACADEMIC ADVOCACY >> This research addresses current gaps in the literature by investigating the buyer–supplier integration dynamics in a global context with a focus on the antecedents and outcomes involved in the process.

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December 2014 October 2014

NEWS

One in five suppliers bullied, says UK small business lobby

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pparently, India is not the only country where the big buyer bullies the SME supplier. A research by the Federation of Small Business finds that one in five small businesses in UK is bullied by the big companies they supply to. In July 2013, Premier Foods, a leading UK food group introduced a policy that forces it suppliers to pay upfront cash to remain as a supplier – called the “pay to stay” policy. The fallout – the company cut its supplier base from 3000 to 1230. The company feels it has done nothing wrong, and it is a valid business practice. Tesco, another major UK retailer has disclosed that it had overstated its profits by GBP 250 million, due to dodgy supply chain practices. According to the survey, trend of late payments are rising. We, on the other hand are used to late payments – an on time payment for us is luxury. In 2011 the EU issued a directive requiring all businesses to pay their suppliers within 60 days or face interest payments on money owed. Apparently the pay to stay policy could be practiced by a quarter million firms. Countries like the UK have adopted the voluntary Prompt Payment Code, which encourages large firms to clearly state their payment terms. Till date around 1700 firms have signed the code. And apparently promptly forgotten!

Managing Supply Chain Risk

The Diwali Expose – Our Supply Chains Falter

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nlike the rest of the country, Diwali is turning out to be a period of high anxiety for the Indian ecommerce companies.

The high voltage advertisement, jaw dropping discounts and a tech savvy population ensured that the e-commerce players raked in the orders. But the logistics industry was not up to the mark. There are hilarious complaints – an order placed on a major e-commerce player on the 11th of October was not delivered till November 6! The weakest link in the e-commerce story in India is its logistics network. India has just six dedicated cargo planes. And the trucks move at a leisurely 23 kmph. Apparently, logistics and delivery firms can service just 30 percent of India. India needs more than USD 2.5 Billion in investments in the logistics industry to service the growing e-commerce industry alone.

lobalization opens up opportunities and challenges.

As supply chains go global, they add layers of complexity to an already inefficient process. To stay in business, manufacturers have to come up with innovative solutions.

A UK based electronics manufacturer aptly sums up the challenges. One of the basic components of any equipment is the Printed Circuit Board (PCB). Till the Earthquake, Tsunami and Nuclear disaster that hit Japan in 2011, things were fine. Now they have to worry about supplier risk. The next time around, they distributed orders to multiple vendors. Now they have to manage vendors in two countries – means setting up a new office in the second country. They normally transport the PCB via ship.

This takes time. And they need to retain the flexibility to ship by air, if the shipment is delayed. Or hold higher inventory- Both of which increases costs. Supply chain managers now have to make decisions based on exposure to delays in the supply chain.

However, help is at hand. Zurich Insurance uses historic examples of supply chain disruption to project possible problems on the customers supply chain. Customers can access it on-line. Time for the Indian Insurers to step up.

December 2014

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U

Next time you want to shop on-line for Diwali….do it well in advance – or get it for Christmas!

UPDATE Om Logistics Ltd. receives award by Tata Motors

JBS Academy publishes 2 books – 1 on Customs Clearance and 1 on Port Management JBS Academy – Centre for Logistics, Maritime and Management Studies – part of the 57-year-old JBS Group has published 2 books, which were dedicated to the fraternity at a function in Ahmedabad on Saturday 22nd November 2014.

Om Logistics Ltd. received “Special Citation Of Distinction” Award and the certificate for recognition of Extraordinary Contribution, from Tata Motors, for the second time in a row, in Tata Motors Annual Suppliers Conference held at Hotel Renaissance, Mumbai, on 1112 November 2014, Mr Ajay Singhal, CMD, Om Logistics Ltd. said “We are sincerely grateful that our efforts have been appreciated

by Tata Motors. Om is committed to deliver excellence across all verticals and this recognition serves as further motivation in our efforts towards being one of the top logistics service provider in the country. It provides recognition of our dedication to Logistics and focus on permanent improvement. Besides, it adds another positive impulse to the growth of our company in terms of service offering as well as geographical expansion. On behalf of all employees, I thank Tata Motors”.

Tata Motors awards recognize suppliers that 'continuously deliver excellence in logistics operations and superior service to their customers'. Om Logistics Ltd. is a Supply Chain Service provider supported by a state-of-the-art Logistics platform. Our company reduces the complexity of logistics while enhancing flexibility, transparency and control. We have a proven track record in developing and executing optimized endto-end solutions, essential to improving and maintaining customer satisfaction and experience.

Om Logistics Ltd. offers best-in-class logistics solutions that meet changing needs in service, commercial, ecommerce. By putting customers in a very central position Om Logistics Ltd. is able to translate specific requirements into its daily operations. Om Logistics Ltd. is looking forward to a continued partnership as a logistics service provider to all our clients.

December 2014

A comprehensive guide to make Customs Clearance simple and increase the Domain knowledge of the reader – “Clearance thru Indian Customs” was re-edited by the Chief Mentor and Director Mr. Samir J Shah. It is a book of 422 pages of over 38 chapters covering every aspect of Customs Clearance in India. The book, written in simple English, with minimal technical jargon makes it easy for a reader to deal with Indian Customs. It is a handy guide for Customs Brokers; Exporters; Importers; EXIM Consultants; Foreign Embassies; students as well as officers of the Department.

It is also a useful reference book for those attempting to appear for the Regulation 6 exam for Customs Brokers.

Mr. Rakesh Misra I.R.S., Chief Commissioner of Customs, Gujarat Zone, released the publication at an Award ceremony in Ahmedabad attended by over 300 persons from the sector.

The other book on “Port Management” authored by Mr. Mihir Das with a forward by Mr. S K Hajara Ex-Chairman cum Managing Director SCI and a preface by Mr. M A Bhaskarachar Chairman cum Managing Director Ennore Port Ltd., gives a 360 degree view covered in 606 pages. It covers all aspect from identification of land for a port till the same is fully operational.

The book is written as a ready guide for new entrants; existing professionals and new CEO's who can get all information in one place.

This book was released by Mr. R S Sondhi, Managing Director Gujarat Cooperative Milk Marketing Federation Ltd. Owners of AMUL brand at the same glittering function in Ahmedabad.

Last year JBS Academy had published a “Pocket Book of Shipping Definitions” – a compilation of over 1400 words used internationally in the shipping industry.

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LEAD STORY

The ISCM- SCMPro

Supply Chain Strategy Summit

December 2014

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LEAD STORY

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t is natural for us supply chain professionals to feel proud of our role in the economy. We keep the wheels of the economy moving. But we do it in a disorganized fashion. Few of us realize the supply chain starts with the demand planning function, passes through sourcing, moving of material – from the source to the factory, within the factory and out to the customer, and to end it, get the product back at the end of its life – the reverse supply chain.

Our Editorial partner, the Institute of Supply Chain and Management decided to address a major gap in our supply chain functions – a look at the strategic issues in the supply chain.

Existing business models used in our supply chains have far outlived their usefulness, especially with the onslaught of more demanding customers and an increasingly volatile marketplace. Essentially, it starts with the premise that supply chains are propelled by humans and human behavior inside and outside the Firm, and everything else are just enablers.

Once the target market is re-interpreted using behavioral segmentation techniques, the internal processes, IT, and organization structures can be reverse engineered to match, thereby improving alignment between the Firm and its customers.

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In this issue of SCMPro, we bring you a ringside view of the proceedings at the seminar for the benefit of those who missed it.

The seminar saw four speakers and three panels discuss issues that are of strategic import to the supply chain. Starting with Dr. John Gattorna of Gattorna Alignment Pty Ltd, Australia, who spoke about the dynamic alignment model – the supply chain of the future has to be aligned form outside in, not inside out as we normally tend to do. According to Dr. Gattorna, our supply chains need to be aligned with our customer and their buying behavior – not based on the product we sell.

This was followed by a session by Dr.Mahender Singh, CEO and Rector, Malaysia Institute of Supply Innovation, who spoke about the necessity for us to connect ourselves to the rising ASEAN story.

We invite you to browse through the excerpts from the seminar. And yes, book your seats early for the next big event – the ISCM Demand Planning Forum.

Meanwhile – happy reading.

December 2014

LEAD STORY

Designing and Operating the Supply Chain Dr. John Gattorna UTS University of Technology, Sydney

Existing business models used in enterprise supply chains have far outlived their usefulness, especially with the onslaught of more demanding customers and an increasingly volatile marketplace. There is no 'silver' bullet, but there is a new model which is increasingly being applied by major global corporations, with great success – dynamic alignment. Essentially, it starts with the premise that supply chains are propelled by humans and human behaviour inside and outside the Firm, and everything else are just enablers. Dr. Gattorna speaks about issues in designing and operating a supply chain.

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n the early nineties, a common belief was that technology is the answer to many of our problems. When I wrote my first book – The Living Supply Chains, many supply chain professionals found it difficult to believe that living and supply chains could be used in the same sentence. It has taken me a lifetime to realize that supply chains are not driven by technology, they are not driven by assets – they are driven by people making decisions along the supply chains. People

December 2014

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we call customers, there are people at the other end we call suppliers, and there are people within the businesses who are managers, and executives and the board, who are making decisions every day. Around 50 percent of the activity going on in a supply chain is about behaviour. But we just ignore it. Most companies are in denial about it.

Take the example of China. Excellence on logistics operations is almost a given there.It is time we start moving up and thinking of supply chains at

LEAD STORY the enterprise level.

In the past ten years we have seen the emergence of a new discipline called design thinking. Design thinking came from a completely different plane from supply chains. Design thinking was invented as a term by Roger Martin from Toronto. It tends to look at everything from the outside in. We need to look into the marketplace, look into our customers and try to understand fundamentally what their expectations are. We need to invest in supply chain infrastructure for the long term. And we cannot do that based on perceptions. And the market research we do are based on opinions that can change every other week. But if you look into their eyed and try to figure out what are their biases when they buy a product, then we have a solid basis for designing supply chain that will be sustainable.

Apart from that, businesses have to look internally. I believe that if we spent as much time trying to understand the internal forces of darkness inside our own businesses – we will have a smoother operations. The point is we do so much damage by what we do internally - the way we organize ourselves, the way in which we need to reinvent the organizational formats. We are paranoid about competition. In my view of businesses, competitors know very little about your business. The real damage to our business comes from our inability to understand what we are capable of, and which capabilities to develop.We have no frame of reference to check on. We do not have a view of the market place so that we can take inwards. Businesses have been guessing till date. It is expensive. And you can get away with it for a while. But you cannot get away with it now because the marketplace has become very

volatile. In India you have a choice to try new things, try new ideas. For instance, who are your genuinely collaborative customers, who really want to do business with you. You have to work with them and do joint development with them and protect them. In doing so, you protect your margins. And then move on to the next segment. I can assure you, the world of one size fit all is dead. The guess work has to stop here. We need to be more precise.

India has its own sets of challenges. You have to find answers to it yourself. You should not worry about some the challenges that the west faced. We know the answers to them. You have to just pick up some of these solutions and run with them. We need new thinking and we need to educate our leaders and we also need to look at the next level of managers to drive these changes.

For example, in the late nineties, DHL in Taiwan was losing customers. The value proposition of DHL was that “we get your goods from point A to Point B in the fastest time and we charge you a premium for that.” When we looked at the market we found that there were many customer out there who did not want that. They wanted a slower, lower cost service. DHL then re-worked its value proposition to cater to different segments. That is an example of the death of one size fit all theory.

If we extend this outside in thinking, we will find that the demand chain is a mirror image of the supply chain. We need to realize that firms can run different supply chains – someone like Zara could be running an agile supply chain when it comes to their customers, but, could at the same time be running a lean supply chain for their purchases for the same product.

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I believe that if we spent as much time trying to understand the internal forces of darkness inside our own businesses – we will have smoother operations.

If we extend this outside in thinking, we will find that the demand chain is a mirror image of the supply chain.

December 2014

LEAD STORY

Rising Asian consumerism,

APEC 2015 and supply chain complexities Dr. Mahendra Singh CEO and Rector, MISI and Director Massachutes Institute of Technology, Cambridge, USA.

Current developments in the ASEAN region are linked to supply chain strategies and how these should be adapted to possible future scenarios. Dr. Mahender Singh talks about As India Integrates with ASEAN, what are the opportunities and Challenges of doing business in ASEAN region and How Supply chain managers can adopt themselves to these challenges.

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his is an exciting time to be in Malaysia, as ASEAN is going through a very significant step change in the way they operate. The points of discussion today are what is ASEAN, what are the opportunities, how ASEAN works, not only for sourcing, but also as markets for products from India. The ASEAN Economic Community – AEC – is supposed to kick in by 2015. This is just a beginning of a long journey.

The learning from AEC reconfirms some of the ideas that were known before we looked at this new environment. The training and body of knowledge

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that is western focused is so very different. In the west there is more theory, and a structured nuance of ideas that you explore when you look at the data.

Even so, when we look at some of the theory, we realize that they do not work very well. One of the standard framework in the supply chain domain is the Marshall – Fisher paper which says that you can have a very dynamic demand pattern – like a fashion product versus you can have a very standard product. These are two different things. You should know your demand pattern and design the supply chain based on it. In one case it has to be a very

December 2014

LEAD STORY responsive supply chain and in the second case it has to be a very efficient supply chain. Logically makes perfect sense.

The reality was very different. In the end, the best answer to the question what works is– it depends.

Most often firms do not even know if it is the right question.

In many cases, the question is a question.

December 2014

This does seem to make sense. But when we look at the data to figure out what type of a company can be classified as a fashion type and what can be a soup type and what are their practices. It was found that it was mere torturing of data, because it was such an illogical construct that if the demand is shifting, firms need to have a responsive supply chain to be successful, versus a very standard soup kind of product where firms need an efficient supply chain. The reality was very different. In the end, the best answer to the question what works is – it depends. What firms should realize is that you cannot solve real life problems. They will go from one state of mind to the next. They may fix something, and break a few more.

When you look a few successful companies that can be slotted as a fashion kind of supply chain or soup kind of supply chain, they are not responsive all the time nor efficient all the time.

In ASEAN, this thought resonates. In a market like Asia, firms have to do something very simple – understand the context very well. A simple anecdote should emphasize this fact. A five year old girl was keen to learn math. Her excited father, himself an accomplished academician decided to enroll her in a Russian School of Math. The school wanted to test the kid to understand her level of understanding. At the interview, the child and father were sitting together. The teacher asked the child – two kids - Mary and Jack both started reading books together. After an hour, Mary had finished Mary had read 25 books jack had read 15. How many

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more books should Jack read to catch up with Mary? The Father was all excited – after all it is numbers. But the girl said – we need to ask Mary to stop reading. This was a Russian School of math. It is a math question. The answer should be math. There are two numbers – 25 and 15. We have to do something with them. But that was not the problem. The problem is that Mary is reading too fast – and Jack will never be able to catchup! The point is, we get lost in data and numbers and forget what we really need to be doing.

In ASEAN, the way people work, the way regulations work, the way structures are there, there is a tendency to fit the theory to what is happening.

It will never work. And we can see it every day – we try to optimize everything – we come up with mathematical models that will fix every problem. And guess what happens next?

When the CEO looks at it he is upsetthe models are never going to work.

When we talk to people, look at regulations in ASEAN countries, it is of a very different nature. The only way to solve this is to ask the right questions – in the plural. Most often firms do not even know if it is the right question. In many cases, the question is a question.

And if firms get the right answer, it becomes right or wrong! This is true of strategy as well. There is one test for a good strategy – which it works.

Unfortunately, firms do not know it ahead of time. It is only when it works someone will come and tell the firms – this is your strategy. Firms cannot discover this ahead of time. The way forward is – start with a framework, and an option. And change as you go along and learn more about the issue. That should work.

LEAD STORY

The Future of Logistics

in India Mr. Cyrus Guzder As a surprise speaker, the ISCM - SCMPro supply chain strategy Summit had the occasion to listen to Mr. Cyrus Guzder, one of the pioneers of air freight and courier services in India. From the time when it was against the Indian laws for a private player to deliver letter across the country, to the time he saw the flowering of the courier business in India, Mr. Guzder had seen it all. Mr. Guzder shared his wishes and hopes for the sector. SCMPro brings you excerpts from the talk.

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am reminded of my history professor, in my University. He had written several books, including on India. I once asked him what the most difficult book he had ever written was. And he said it was the one covering the history from the early civilization to the modern times for the Encyclopedia Britannica – in all of two pages.

What I am attempting here is somewhat akin to it.

I need to cover the macro challenges, the current situation in India, linkages with rest of the world, and industry segments and I have 15 minutes to do it.

December 2014

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I will start with an experience I had when I was asked to join the Rakesh Mohan Committee on Transport Development Policy, to write a white paper on the future of Indian transportation systems and networks in India covering a 20 year period. We were to look at four five year plans and then suggest to the government what kind of transport networks we would like to see in India in the next 20 years.

The only hitch was that all of us on the committee were dinosaurs.

For me rural marketing was about four B's – if you

LEAD STORY could get Biscuits, Bulbs, batteries and Blades, to the rural markets you were a top class distributor. And that was what Exide and Britannia were good at.

And see the change today. All we had to do was to think of networks of tomorrow – networks about which we had no inkling as to what it might look like due to changes in technology and markets. SO we worked the other way around. We said what type of growth we expect India to experience. You start at a very high aggregated level and you work backwards. So we said, in this five year plan, with a lag, we will touch an average of seven percent. You take the second five year plan; you could have an average of eight. The third five year plan could see may be 7.8 percent because you are slowing down due to high base year effect. And in the fourth plan, 6.8 percent. Now on these very modest projections, we need to project the power and energy requirements.

We said, in each five year plan we need to add around 130,000 megawatts of power. After all China adds a hundred thousand megawatts a year. India found it difficult to add 15000 megawatts last year. But we said let us aim for that. If so, what are the requirements of coal, oil and gas? If we look at the current coal production and consumption, we were hard pressed to produce enough coal for current consumption. (this was before the coal bock allocations were cancelled) This means we have to import coal. And we also looked at gas and has prices. We came to three conclusions – we cannot transport coal from the mines to the power plants because there is no rail capacity to transport coal across the country in a cost effective way. The next question was, can we put the power plants close to the coal and then transmit the power. Yes we can. But the coal available in India is of such poor

quality, that we need to wash it before we can use it. And there are not enough washers for this. So we freeze that and look to import coal. But the ports in India cannot handle these volumes.

So we looked at gas. The best way to transport gas is through pipe lines. So we worked backwards from there. You will see that the single largest bottleneck for India is transportation and logistics. I had always believed that there is nothing in the civilized world we enjoy which does not have a logistics story behind it. The tea you drink, the clothes you wear everything had a logistics story. When I stared to see that this miracle of logistics is hitting a terrible speed breaker. This is something that should cause a concern to all of us as we think through, what is the capability we need to develop if have to meet the requirements of tomorrow.

If I were to look at the macro picture – just the task of managing sourcing and distribution within India – is a colossal challenge. On the other hand there are some very exciting things happening.

Rakesh Mohan insisted we look at roads into and out of India. You can take roads into ASEAN and China through the north east. If we look at the fact that the ASEAN region is interlinking itself with road networks, if we look at the fact that China will be able to truck goods into Europe in just a few years from now, we need to be thinking about linking India to those great road networks. And these are the great markets that lie towards our North East and our West which at this moment we do not consider. These ASEAN nations will not give up their sovereignty, but they will ensure peace across borders. Add to it, our sea and air freight too are not up to the mark.

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For me rural marketing was about four B's– if you could get Biscuits, Bulbs, batteries and Blades, to the rural markets you were a top class distributor.

If we look at the fact that the ASEAN region is interlinking itself with road networks, if we look at the fact that China will be able to truck goods into Europe in just a few years from now, we need to be thinking about linking India to those great road networks.

December 2014

CONSTRAINT

SME CORNER

FOCUS

HUMAN RESOURCE

ACADEMIC ADVOCACY

Supply chain constraints at the last mile:

Reaching India's Villages Dr. Rakesh Singh Visiting Professor of supply chain strategy and economics, Great Lakes, Chennai and Chairman, Institute of Supply Chain Management, Mumbai, Managing Editor, SCMPro

Firms today are recognizing the power of rural India – with urban markets more or less saturated, the next driver of growth will be the rural markets. However, the rural markets are not easy to reach, let alone service. Firms need to understand the real constraints at the last mile if they have to sell there. Dr. Rakesh Singh, Distinguished Visiting Professor of Supply chain Strategy, Great Lakes Institute of Management, Chennai India, and Chairman ISCM gives a perspective on the last mile challenge.

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ural markets are the flavor today. As firms try to enter the rural markets, the first thing they need to realize is that the supply chain is the marketing. They are not two different functions.

To be successful in rural markets, we need to take a systems view of the firm. It is commonly believed that rural markets are a blue ocean – where firms have not ventured into; has a great potential and hence all companies want to go there. How do firms reach this conclusion? Most companies look at some macro data to arrive at this conclusion. The major macro data we look at

December 2014

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is that 56.3 percent of the nation's consumption comes from the rural markets. What we miss in this statistic is the rural penetration. The real question is, are we really reaching the rural villages? Are we covering the last mile? In my case it is reaching a village that is remote from the Tier 2 and Tier 3 towns. There is an experiment that is really interesting. It ran for ten years – it is called as Hariyali Kisan Bazar. It was a rural retail experiment which was taught as a Harvard Business School case study. It was touted as an amazing case study to tackle the problems of

LEAD STORY rural India. It expanded from 20 villages to over 4000 villages over ten years. And suddenly, I read that this experiment is closing down. These rural centers, over a period of time were transformed into fuel retailing outlets. They turned from a rural retail hub, a consumer hub, an agri-retail hub into just retail. The fundamental question this raises is – why is it so difficult to do business in India's villages. According to the company release, three consecutive years of drought led to the closure.

Primarily India is a very different market. We need to understand that we are trying to serve a low price point market with a high price point framework and strategy. And that is where the conflict actually arises. Again when we look at the ITC e-Choupal, it is amazing to see that a company has come out with a great strategy to reach the rural market. This was touted as the solution to the rural market problem. There are three ways to serve a market – you go the knowledge route by becoming a portal, or you become a market maker, by enabling transactions, or you become a product and service provider. ITC e-choupal was conceived as an information and knowledge disseminator by providing real time price information across mandis, weather information and best agricultural practices. They also enabled virtual aggregation of demand and supply by aggregating buyers and sellers reducing the aggregate cost, making the chain more competitive as well as allowing retailing of agri inputs and other products and services serving as a gateway to the rural market – combining all three models into one.

What then is supply chain to rural India – we do not have a holistic understanding of this, as we look at it through our own biases. There is the rural to urban supply chain, where everyone wants to reach the rural market, for which we have a strategy. Unfortunately, the strategy cannot be complete as we do not have visibility beyond the super stockist. We have another model which starts with the farmer and comes to the processor – the farm supply chain. We do not know what this supply chain is like. It is here that firms like ITC e-choupal make a mark –

they are increasing the flow of information.

These information flows define the boundaries of the rural supply chain and brings a huge amount of visibility. To begin with they displayed the prices of all commodities across various markets. And the farmers were hugely benefitted. Available data shows us that the total costs declined by a factor of two, creating a winwin situation. This shows that information sharing and disintermediation can bring huge gains to the supply chain. This has not happened by chance. The firm had invested large amounts in setting up the infrastructure and training the employees and farmers. If we look at this as a market maker it is a brilliant effort.

Primarily India is a very different market. We need to understand that we are trying to serve a low price point market with a high price point framework and strategy.

When you source from these rural markets, you are not sure if you will get the right price, the right quantity or even the right quality. There is an inherent risk in the process. However, to make this a success, the firm needs to keep updating the contents if not in real time, at least once a day. And that becomes a problem.

We need to move beyond transactions to relationship contracts. These multiple failed models compel me to look beyond for understanding rural supply chains. I looked at various structural options that firms like Dabur, Reckitt Coleman etc. have. I looked at direct distribution vs. super stockist vs. van operations.

Van operations is expensive, but can be used for high value products. Super stockist have the reach and the network, but are a black box and you do not have any control over them, leading to lack of information about real customer demand, which in turn leads to significant over production – which I call as the black box bull whip. The direct distribution model on the other hand pushes up the man power costs.

With all the drawbacks, the super stockist model was found the best – because it has the reach.

It needs a different framework of governance, aggregation, and collaboration.

We need to change our mindset.

The need of the hour is for various players – a tractor manufacturer, a finance firm, an agri input firm, a fertilizer firm, and a seed company can co-create an agri business center. It needs a different framework of governance, aggregation, and collaboration. We need to change our mindset.

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December 2014

LEAD STORY

Impact of Disruptive Technologies in

Supply Chains Panelists (From left to right): Mr. Harry Lagad VP, Corporate Solutions, Toll Global Logistics Ltd.

Mr. Girish V S Editor SCMPro– Moderator

Mr. Mitesh Patel Group Project Manager, Leader Internet of Things Manufacturing Consulting & System Integration Practice, Infosys

Mr. Deepak Jakate Independent Consultant

Mr. KalpeshPhatak VP FIAT India Automobiles Pvt. Ltd.

Mr. Arif Siddiqui Founder Coign Consultants

Our supply Chains will be defined by the technology we choose. And as with all aspects of business, technology has the power to increase our efficiency, and at the same time disrupt the way we do business. From Social Media, to crowd sourcing to Internet of Things to 3D Printing, a host of disruptive technologies are waiting in the wings. An eminent panel of supply chain professionals, technology professionals and consultants came together to discuss the impact of disruptive technologies in Supply Chains. SCM Pro brings you edited excerpts.

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he current trend in the industry is to throw technology at any issues that come up – without regard to whether that technology is appropriate for the problem it seeks to solve. For a long time IT was considered a support function – to gather data and turn out MIS. Today T has moved from being a support function to being the core of operations and supply chain. We have gone from a no data to a too much of data scenario.

Technology convergence – of Social Media,

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Mobile, Analytics and cloud computing, along with the Internet of Things is changing the paradigms of the supply chain.

Mr. Arif Siddiqui set the tone of the discussions by focusing on the role of technology in warehousing.

The general perception about technology in warehousing space is that we are trying to trade off human resources with automation. There is no such trade off in real terms. We need to identify what the human resource can do and what technology can do

LEAD STORY clearly. Technology is an aid rather than a replacement. We need to identify the human resource advantage versus the mechanical advantage that automation can deliver. If mechanical advantage is greater than human resource advantage, then replace humans with machines. Before we invest in warehouse technology, we need to study the warehouse science – generally, we do not study the science of warehouse – the layout, the configuration of man, material and machine flow. The discussion on technology starts even before we identify the hardcore science of laying out our warehouse in the right manner. This has to come before we invest in automation.

According to Harry, we need to understand who will cause the disruption – the technology or the consumer. The aware consumer, who has the ability to research and know exactly what they need, will cause the greater disruption. We need to understand the implication of such disruption on our manufacturing, product design, supply chains and the lot. In 2009, Nokia taught us a very important lesson. Nokia took its eyes off the consumer and did not realize how the consumer will react to the touchscreen technology. They believed the consumer would prefer the key board to the touchscreen. And that took Nokia from a 79 percent market share to closure. If companies have to get the consumer to buy from them, they need to manufacture near the customer – and that is where 3-D printing will play a major role. 3-D will change the way we will buy things from the internet. Customers would want made to order products. Amazon is trying to match this trend. 3-D Printing is about how firms can customize the purchase decision – not tweak manufacturing.

Mitesh agrees that disruption starts with the customer. But we are in an era of collaboration – between man and technology. The new wave of technology innovations is in wearable technology – the next generation PC will not sit on the desk top – but will be on the shirt, collar or ring. We can have a well laid out plant; we have designed a product keeping the customer in mind. Will we then continue to manufacture using the traditional models? Or do we introduce robotics?

A simple application of such wearable technology is in the warehouse. Technology can help a new, inexperienced picking staff to be as productive as a veteran. Indoor Positioning System will help the employee track the exact location of the part she is looking for. Or Google glass which can tell you the part you seek is on the second aisle to the left on the third shelf, the bin on the right. And if by chance the wrong part is picked, will prompt you – no the next one. Life can become easy.

Kalpesh shared his views on how technology has changed the business models on the factory floor.

It is amazing to see how customers have changed.

Even the ill-informed rural customer today speaks like a professional when it comes to the product she is buying. Technology makes it possible for us to fine tune our supply chains to meet the emerging customer needs. But the missing link in the piece will continue to be our human resource – or to put it better – our skill gap. Technology can help firms in bridging this gap. Technology can help firms manage the business environment till such time we can upskill talent. For example, a less skilled worker can prepare an invoice by just scanning a barcode, and technology does the rest.

Deepak placed the disruptive technology in perspective by looking at the history of such changes. In the late eighties, technology was a matter of choice. At that time, the computer was kept in a temple called the computer lab, where you had to remove your shoes to go in. The question was – can we really afford technology.

Many firms chose to buy IT for the sake of having it. They did not realize that the performance of the supply chain had nothing to do with the performance of IT. One interesting application of technology was in data collection.

In the eighties, firms had to collect data from the remote corners of the country and the only way was the now forgotten floppy disc. It took three to four days to get the floppy into the computer lab, and then you realized that a few were not readable. There was the problem – if it takes a fortnight to collect data, how can you plan for a week? But technology evolved and we today can get real time data. That has changed our supply chains.

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LEAD STORY

Managing Supply Chains in

Disruptive Times Panelists (from left to right): Mr. Vijay Wadhwani Senior General Manager (SCM), Relaxo Footwears Ltd.

Mr. Kiran Rakhe Sr. General Manager SCM & Logistics, Mahindra Trucks and Buses

Dr. Rakesh Sinha COO Global Supply Chain, Godrej Consumer Products Ltd.

Mr. Sanjiv Navangul Managing Director- Janssen India, Johnson & Johnson Ltd.

Mr. S K Krishnan Vice President, Demand Chain Management, Mahindra & Mahindra Ltd., Automotive Division

For a very long time firms have been doing the same things repeatedly. But the world has changed. The way the firms work has changed, organizational structures are changing, policies have changed at very short intervals. Eminent panels of senior supply chain professionals discuss the impact these changes have in the way firms conduct their business, the challenges it throws up and the way to maintain profitability.

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isruption is a loosely understood word.

Some take it to mean supply chain disruption, some believe demand disruption, yet others mean technology disruption or policy disruption. Mr. Krishnan chose to describe it as huge, unanticipated change, where the environment becomes turbulent. The disruptions vary between organizations and within organizations. Disruptions can cause either a loss of sales or unsold inventory – both of which are

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undesirable. Supply chains have a large role in the management of these disruptions – either by stocking the components, controlling the stocks, or by reducing the supply chain cost. A few years back Mahindra implemented an e-demand chain management solution, which integrates the dealer order book system with Mahindra's systems in real time. M&M trained the dealers, and dealers were using it to place orders with it. At a point in time, the demand of two products – one a new launch, and

LEAD STORY the other an existing product, increased. It was found that while the order management was real time, the back end was responding at a weekly frequency. They found that in these two products, they were losing sales in some variants, and at the same time had excess stock in some variants. In response to this M&M undertook a project to integrate the back end of the supply chain including the supplier scheduling and daily production planning with the e-demand management system. This changed the response times to real time. This meant changes to the way in which suppliers were geared to execute the orders. M&M used dynamic buffer management, based on Theory of Constraints to achieve optimal results. This helped it tackle the demand variation in both directions.

For the pharmaceutical industry, disruption can mean the death of a patient – it can be an accident, a cardiac arrest or a stroke. That is the disruption. Everything else is reaction and response to a disruptive situation. For this industry, supply chain is all about reaching the medicine to the patient in time to save a life. For example, in a study done by a young researcher in Massachusetts, in developed nations, the average time taken by an ambulance to reach a patient suffering from cardiac arrest is between eight to 12 minutes. In India that would be a miracle.

Today drone technology is being used to reach the patient in a couple of minutes, and deliver primary palliative care.

In the pharmaceutical industry, a cold chain is a vital part of the supply chain. Global best practices demand that the manufacturer track the temperature trails till the chemist, and if there is any deviation from the required norms, the product has to be recalled from the point of deviation. This was never done in India. We assume that everything is as it should be, giving the manufacturers a false sense of satisfaction. When Jensen approached the distributors, they retorted, give us the equipment, and we will manage it. The dilemma was, we are trying to impose

conditions on a system that is trying to do the right thing. Or is it about how supply chains should behave. The response of the firm was to take over the responsibility of educating the pharma supply chain about the necessity of a cold chain. They trained the supply chain to manage a cold chain. And the problem turned on its head! The biggest learning from this was the necessity to treat the entities in the supply chain as partners, and make them understand the value of their services, there is a proverbial pot of gold at the end of it.

In the mid-eighties, supply or demand disruptions were not a frequent occurrence.

Kiran Rakhe believes firms operate in a VUCA – Volatile, Uncertain, Complex and Ambiguous – world. Because of this, the supply chain risks have grown exponentially.

Who would have imagined that floods in Thailand or tsunami in Japan would disrupt supply chains in India? Or an Occupy Wall Street movement will affect Indian supply chains? The industry needs to learn to cope with risks from a broad, yet poorly understood area, and yet ensure the business does not suffer.

Disruptions are routine – fire, flood, labor unrest, transportation failure are common.

From an incident – response framework, to a programmed response is a major leap of faith.

Every disruption also holds the ability to create a competitive advantage. After every disruption, the firm develops resilience, and over a period of time, the supply chain evolves from a rigid to a resilient one.

Vijay took an inward view, by focusing on the expectations of the firm, shortcomings of the supply chain and addressing them in a holistic way. By focusing on a few parameters like the lead time for execution, customer satisfaction, inventory levels, inventory classification, and try and fix the leakages.

The endeavor is to match the demand with supply. Supply chains in firms need to understand customer behavior, customer potential and customer location.

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Sustainable operations as

supply chain strategy Dr. Vaidy Jayaraman India has been a laggard when it comes to environmental concerns. We are least bothered about deforestation, removal of mangroves, air and water pollution – the sea off the coast of our metros are a witness to dumping of waste – even our holy rivers do not escape our propensity to pollute. Across the developed world – where the major customers of India Inc are, Governments and environmentalists are pushing for a higher disclosure standard for their supply chains.

Sustainability has to move from nice to speak to must have. Dr. Vaidy Jayaraman speaks about sustainability issues in the supply chain.

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he World Commission of Environment and Development has defined global sustainability as the ability to “meet the needs of present without compromising the ability of future generations to meet theirs.”Way backin1997 – 98, as a Assistant Professor in a B-School in the US, I was introduced to sustainable supply chain. From a business perspective sustainability was a new term. But for an Indian, who saw his parents recycle newspaper, bottles, and everything that had the potential of a salvage value, it was a familiar

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concept. We were engaging in sustainable supply chains, but lacked the formal processes that define a modern supply chain. We were to work with an electronics firm. This is one industry, where the shelf life of a product is very short. A few months after launch, the product may no longer be on the shelves. I reached out to four major electronics firms – HP, Kodak, Xerox and IBM and asked them one question – what is going to happen, when as a consumer I return a product? As a consumer, I will return the product for a number of reasons – it broke

LEAD STORY down, I want to upgrade, I don't like it.

The question I posed was, let us understand the strategy of how to deal with returns. Once we understand the forward supply chain, can we look at the reverse supply chain? The very first response I got was – what is it? And why do we have to deal with it? The firms did not want any say in a product that they spent millions in developing, once the customer no longer wanted to use it.

Issues like the prospect of repairing, refurbishing, extending the life of the product did not figure in the management discussions of the time.

The number one reason for not having to deal with post consumer returns was the fear that repair and reuse may result in cannibalization, which in turn will reduce sales.

The question that needs to be answered is – should not firms have some control over their reverse supply chain? The proposal I made to these firms was if I put together a model which integrates the forward and the reverse supply chain so that it can save the firm some money and has the added benefit of being environment friendly, would they be interested? And this gave rise to the discipline of sustainable supply chain or as we called it the closed loop supply chain. The first response I got was that the reverse supply chain is a mirror image of the forward supply chain. That got me started on why there so many activities that exist in a reverse supply chain that is not relevant in a forward supply chain.

A closed loop supply chain is designed and managed to explicitly consider the acquisition and reverse flow of products, reuse activities and the marketing and distribution of the recovered products.

These activities must entail sufficient wealth creation or cost avoidance to be attractive. Examples of closed loop supply chains include cameras, toner

cartridges, auto parts, cell phones, PCs, jet engines, tyres and circuit packs.

These are examples that obviously work well and there is a business benefit.

The key activities of a closed loop supply chain are product acquisition, reverse logistics, testing, sorting and grading, disposition- repair, remanufacture and recycle – and distribution. Product acquisition is a big issue. How do I motivate the consumer to return the product? When we wish to change a mobile phone or a printer, where is the motivation to either send it to the manufacturer or the distributer?

Firms need to provide an incentive to facilitate product acquisition.

The next issue is reverse logistics – firms need to think backward – where in the supply chain can the manufacturer take the product back. The manufacturer has an option to bring it all the way back to its factory or aggregate it at a distributor or employ a third party who will collect the items and ship them wherever it needs to be sent. HP, for example has tied up with UPS for all the returns.

UPS took a strategic decision on reverse logistics and promoted a new entity called UPS Supply Chain. When a customer wishes to return a product, HP informs UPS, who in turn will pick it up, take it to a central location, where it will be repaired, refurbished, and return the product back to the customer.

HP is not involved in the process. UPS tests, sorts and grades the used products.

But HP has been able to improve its sustainability quotient, increasing its stakeholder value.

Sustainability can become a profitable process for firms, if they manage to get the process right. The big takeaway is that waste is anything that a firm produces that does not give value to the firm's customers.

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A closed loop supply chain is designed and managed to explicitly consider the acquisition and reverse flow of products, reuse activities and the marketing and distribution of the recovered products.

Sustainability is the ability to meet the needs of present without compromising the ability of future generations to meet theirs.

December 2014

AWARDS

ISCM - SCMPro Excellence Award

ISCM-SCMPro Excellence Awards being given away by Dr. Rakesh Singh (Visiting Professor of supply chain strategy and economics, Great Lakes, Chennai and Chairman, Institute of Supply Chain Management, Mumbai, Managing Editor, SCMPro)

Dr. Rakesh Sinha- Outstanding contribution to the practice of Supply Chain Management.

Vijay Wadhwani- Outstanding Achievement in Supply Chain Transformation

Kalpesh Pathak- Leadership in taking Supply Chain Global

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AWARDS

Shashank Raodeo- Leadership in Supply Chain Management

Nimesh J. Shah on behalf of Samir J. Shah for Distinction in Supply Chain Skill Development

Subasish Roy receiving award on behalf of Dr. Vandana Sonwaney for Excellence in Supply Chain Education.

Srinivas Sattiraju- Transformational Leadership in Supply Chain

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SCMPro CLASSROOM

Supply Chain is nothing but

common sense In this issue of SCM Classroom, Prof. Piyush Shah provides a simple way to apply the theory of inventory management to the everyday work scenario. As he says – he is requesting you to think about the fundamentals a little more closely.

Going beyond common sense “Supply Chain is nothing but common sense”, thundered a Vice President of a manufacturing company. Yes, very true.

But, as my friend Girish (the editor of this magazine) put it, so is launching a rocket to the moon – it's also common sense. All we need to do is find a fuel that can create a thrust so that the rocket overcomes the force of gravity and is propelled into outer space. How simple!! I am reading a book – The Selfish Gene, and it makes the theory of evolution and genetics also seem very simple. However, for most of us, we would neither be able to create a rocket to the moon nor do deep research in genetics based on such sources of common sense.

The often repeated and abused definition of supply chain of getting the right material at the right time and the right place is surely simple. To start with, we hardly know what products our customers want, where they want and

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when they want. Add to this the unreliability of our own machines and the vendor deliveries. And of course we would have either hundreds of finished goods or raw materials. All of them sold or sourced from different corners of the world and paid in multiple currencies.

Does this still seem simple common sense?

The inventory tangle We have had a series of Classroom articles on inventory management. Let's try to get a perspective on that and understand how we can use the theory to go beyond common sense. An average organised retail store could have 30,000 SKUs on its shelf. A medical distributor could handle more than 10,000 products. An automobile plant could have more than 10,000 raw materials. One way to handle this complexity is to employ an army of buyers or materials specialists and have each of them handle about 100 odd products. Another alternative could be to

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Piyush Shah Director ISCM, Research Editor- SCMPro

order based on some simple algorithms.

Both cases could be expensive.

This is where the concept of inventory classification can be helpful. The idea of an ordering policy is to balance the cost of stock outs versus the cost of excess material. Material could be classified as ABC, XYZ or some other criteria and an ordering policy could be evolved for each category. By doing this, the entire ordering process could be made very easy.

The idea is to use the intelligence of the employees to create inventory policies rather than to create and manage emergencies.

The art and science of it To a good extent, supply chain is a science. And, like all sciences it has to be experimented with, laboured over and learnt. In the early years, science is at a stage where little is known with certainty and even the greatest of scientists propound wrong theories. The great

SCMPro CLASSROOM Galileo believed that the tides are caused by the sun and that the orbits of planets are circular. Both of these theories have been proved to be wrong. But that does not make Galileo a lesser scientist or astronomy a lesser science. For that matter, even medicine is not a perfect science. Doctors make different diagnoses for the same symptoms and often have different line of treatments.

The often repeated and abused definition of supply chain of getting the right material at the right time and the right place is surely simple.

The concept of 'science' here does not mean a perfectly objective scenario. So, in the near future we may never be sure of the exact amount of inventory to maintain. The meaning of 'science' is that we have a basis to what we do and that we keep learning. We might have a basis for vendor selection. So long as we follow the pattern it is okay to be proved wrong. The process can always be improved with new knowledge. This pattern of working is science. We create a hypothesis and possible way of working .We test it in practice and then either choose to continue following it or have it improved.

The theory of Operations and supply chain management can help us with the initial hypothesis. The theory tells us what the important variables are, their sensitivity on the solution and the possible unintended consequences of the decision. The real life learning could then be used as a structured continuous improvement mechanism.

My firm is different This is a common excuse we keep hearing - “India is different”, “It can't work in our industry”, “We do it differently in our

business”, etc. Every person is different.

So, does that mean medical science can't work? We have the theory of economics that is applied successfully in all the counties across the globe. There are differences. But, there are similarities also.

The month end push for sales and week to week demand variability is observed in automobiles, pharmaceuticals, FMCG and durables. This push is not dependent on the industry. For firms, irrespective of the industry, the push is greater if the primary sale is the focus. For firms that follow the secondary or the tertiary sales the push is much lesser. While there are industry specific issues of discounts and returns, the larger perspective does not change.

The excuse of 'difference' could come from a lack of knowledge or also from pure laziness. In some cases, managers are happy in not applying theoretically correct decision patterns as it allows them to have someone else to blame. In the example of tracking secondary or tertiary sales, most managers know the problem.

But, by following the primary it makes it easy to manipulate the sales numbers and ensure incentives.

The right theory Let's go back to medical science. Malaria can't be cured if the doctor diagnoses it as influenza. Wrong diagnoses can't be called the failure of theory. Sometimes raw material inventory is a result of vendor location and not the ordering policy. In such cases, changing ordering policy may not have a major impact on the inventory levels. Yet, it is not that ordering policies do not impact. Just that in this particular case, the location is the major reason.

Sales and Operations Planning (S&OP) has not worked in many firms. This does not make S&OP impractical. A good S&OP to work needs executive

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commitment and also some level of incentive alignment among functions.

All theory implementation, need a base to work. Sometime firms jump the gun and apply the latest buzz words without enough ground work. Firms implement Advanced Planning software to collaborate with distributors and vendors. They miss out aligning the purchase and the sales function. In such cases, the software will surely give under optimised results.

The Classroom series Well, the Classroom series of articles intend to add some scientific sense to the common sense. These articles may not solve your immediate problems. The aim is to give the practising managers a dose of theoretical principles that they probably already know, but have forgotten them along the way. The principles are intended for making policies and procedures. Good procedures go a long way in reducing the day to day problems.

The aim is to give the practising managers a dose of theoretical principles that they probably already know, but have forgotten them along the way.

I suggest that you read the articles and force yourself to think – “If I was forced to this in my function, how I would do it?” I'm not forcing you to apply the principles, just requesting you to think about them. When we actively think about using a tool, the applications automatically emerge. Go ahead read, test and apply. Some principles may apply to you and others may not. Take what applies and write in to us. We will be happy to learn from your experience and further develop the theory of supply chain management.

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Supply Chain Management and SMEs Supply chain management has moved to the board room. There is a huge interest in supply chain management among large corporate. But the SMEs have to yet understand the importance of supply chain management as a key differentiator and growth driver. SME's have not grasped the fact that a supply chain can improve quality services, achieve cost reduction and enhance efficiency. To a large extent, this is due to the insufficient understanding about SCM. This article examines the importance of SCM in SMEs.

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upply chains are not just about logistics and transportation. They include understanding the customer's changing needs, product innovation, customer relationship management, sourcing, and supplier relationship management, in addition to the transportation and logistics operations. In today's increasingly globalized economy, small and medium enterprises (SMEs) are considered to be the drivers of employment, exports, and a major source of dynamism, innovation and flexibility. As India's young population enters the job market, the SME's will be the major player who can provide them with meaningful employment. They are the drivers of economic development in many parts of the country.

SME's are an integral part of the big enterprise's supply chain providing material and services that are not economically or technically viable for them to produce.

In spite of their importance to the economic wellbeing of the nation and the employment

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generation capability, their survival and growth is becoming increasingly difficult. Due to their small size and the relatively smaller bargaining power, they are at the receiving end from the larger buyers. To add to their problems, due to increasing globalization and better connectivity, buyers can source goods from any part of the globe, giving them cheaper options, possibly better products, higher services levels, more variety and better delivery terms. This changing global purchase scenario creates additional hurdles for the SME through global competition – the Indian SME has to compete with his Chinese counterpart in price, and the European counterpart in quality.

The inability of a SME to invest in R&D or technology limits their business growth. Lack of investment in R&D inhibits product innovationwhich in turn limits the SME's ability to compete with newer players. One way out for SME's to meet the product innovation challenge is to enter into a

partnership with their customers. Some large manufacturers like Toyota help their suppliers with product innovation. Toyota realized that it cannot produce quality vehicles, if their suppliers are not quality conscious. Toyota set out to improve the capabilities of their supplier base by providing them with technical assistance for product development and innovation. Toyota's co-operation with SME suppliers is solely based on business considerations, which include an assessment of the overall economic and technological capacities of the potential supplier.

have the ability to manufacture it at a reasonable efficiency.

They do not have formal management training and have learnt the process on the job. They depend on the large buyer for their sales. This puts them at the mercy of the large buyer. To maintain their customers, the SME has to accept the terms and conditions imposed by the buyer, including payment terms and the mode of supply. For example, the buyer may need a just in time supply. The SME does not have the supply chain capability to deliver just in time. The result, the SME ends up with the inventory and bears the inventory cost. The buyer will show a reduced inventory cost. But the inventory is still in their supply chain- the cost has been hived off to a different player. In certain cases, the buyer insists on the type and nature of the transporter. The SME owner, who is a technocrat and does not have the requisite supply chain expertise fails to understand the cost implications. And loses margins. The owner accepts this as a cost of doing business. Quite often, the SME supplier does not have the ability to understand the nuances of a supply contract drafted by a large buyer, leaving them exposed to conditions that cannot anticipate.

This changing global purchase scenario creates additional hurdles for the SME through global competition – the Indian SME has to compete with his Chinese counterpart in price, and the European counterpart in quality.

The Technology Challenge The other major constraint SME's face is technology. Due to their small size and relatively low purchasing power, the ability to buy the appropriate technology is limited. Buying power is one of the issues that plague the SMEs. Another challenge is the lack of trained resources to use that technology. We will examine the HR issues in SME supply chains in a while. Bigger firms, especially in the developed world would like complete visibility in their supply chain.

This means the ability to track and trace material flow through the entire supply network – often going down to the third or fourth tier supplier. In the absence of such capability, they discontinue dealing with the supplier.

Therefore, apart from the manufacturing technology, SME's have to integrate technology into their supply chains too.

Technology allows for faster information flow between the SME supplier and the next node in the supply chain, and helps the transmission of the quality, cost and delivery requirements down the chain.

Large buyers are now beginning to realize the symbiotic relationship between them and their suppliers. Over a period of time we will see greater integration of the SME supply chain with the buyer. To the extent some large buyers are today offering training and help to their suppliers on managing their supply chain.

SCM in SME Just because their scale is small, does not mean the SME does not have to focus on its supply chain. When it comes to implementing changes in their supply chains, SME's have some inherent advantages. They have a flat hierarchy, with a centralized decision making. This means change is easy.

Once the decision maker is convinced, it will get implemented. A case in point is Relaxo Footwears, a Noida based manufacturer of footwear. Six to seven years back they had a Rs. 100 crore turnover. Then they hired a full time supply chain professional who worked with them to iron out the kinks in their supply chain. This enabled them to respond faster to their customers, which in turn increased their sales. Last year they closed a top line of Rs. 1200 crores,

Here again, technology service providers have realized the potential and are working on lower cost models aimed at the SME sector in the developing world. CISCO, for example has launched a series of lower cost collaboration and tracking tools for the SME sector in India.

The Yoke of the Buyer Most SME business are family owned – either first or second generation technocrats who understand the product and

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The SME's growth and profitability depends on their ability to improve their productivity and quality.

offer holistic supply chain training. Supply chain is not the first choice for a large section of the graduates. To top it, SME's, by their very nature are not the choice, even if they wish to look at a career in supply chain. This deals a double blow to the SME when it comes to acquiring and using technology in their supply chains.

taking them out of the SME tag.

The SME's growth and profitability depends on their ability to improve their productivity and quality. This in turn depends on their ability to integrate with the upstream supply chain.

Mahindra & Mahindra, the Indian automotive manufacturer has realized the importance of talent in the supply chain. As a first step, they, in association with the Indian Institute of Management, Ahmedabad, have instituted the Mpower program aimed at their customers.

(They still have to take it to their suppliers) Under the Mpower program, 30 young transport entrepreneurs undergo a 14 day program at IIM Ahmedabad in various aspects of running a transport business. The aim is to professionalize the trucking industry. The entire course content was developed ground-up through participation of young transporters who shared their concerns and spelled out their knowledge needs for running their existing business through their own vision for the future.

The Enlightened Buyer Many big buyers operate under an “arm's length policy” binding their suppliers in a purely commercial transaction based on quality, price and delivery standards. The first to realize the advantage on integrating the SME suppliers into their supply chain were the Japanese. An executive form the US auto industry is on record saying that 25 percent of the cost advantage of the Japanese auto makers comes from the efficiency of their supply networks. Some big buyers are slowly realizing the critical relationship with their SME suppliers. In Philippines, the ECOP Big Enterprise Small Enterprise Quality and Productivity Improvement Program (EBESE) is PPP initiative where the big buyers enroll their SME suppliers for training on good housekeeping and process improvement practices.

Toyota was one such enterprise. In one study, where Toyota had enrolled 39 suppliers for the program, it realized that the program helped the suppliers improve their competitiveness in terms of quality and productivity and as a result, Toyota improved its competitive advantage.

Though an excellent initiative aimed at mentoring the

Firms need to realize that the elusive customer is just one part of the business.

The real force that helps them tap into the potential that the customer offers is the supplier. next generation transport industry, we need to see similar initiatives when it comes to the suppliers. Firms need to realize that the elusive customer is just one part of the business. The real force that helps them tap into the potential that the customer offers is the supplier. Most large firms have squeezed quite a bit of savings from their manufacturing process. There are a host of initiatives around such cost optimization. The next wave of cost optimization should come from the supply chain – and an important part of that supply chain is the SME. If the SME survives, we will see a resurgent economy. We will see innovations in product design and manufacturer.

What is needed is collaboration between the large buyer and their hundreds of SME partners, with an aim to increasing the supply chain surplus.

Motorola's "Five Stage Model" for supplier development: Define the Supply Universe.

Competitive Benchmarking.

Performance Tracking.

Supplier Development.

Becoming a World-Class Customer Talent Issues in the SME Supply Chain Supply chain itself is a developing field in many large corporates. It is only recently that larger corporates have started bringing their supply chains from the basement.

The fundamental issue for supply chain management is the lack of trained manpower – there are a very few BSchools who teach supply chain as a part of their curriculum. And there are fewer training institutes that

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CONSTRAINT

SME CORNER

FOCUS

HUMAN RESOURCE

ACADEMIC ADVOCACY

Riding On

Success The numbers are slowly turning cheerful. After three years of low growth India is poised for a pickup in growth. But these three years have seen fleet reductions and driver scarcity, leading to a reduction in freight capacity. We are caught in a pincer – rising demand on the one hand and falling capacity to execute. The freight forwarding industry has its task cut out for it. SCMPro spoke to Balaji. V, Chief Operating Officer – Allcargo Contract Logistics on the emerging freight scenario in India.

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V Balaji Chief Operating Officer Allcargo Contract Logistics

December 2014

ogistics trends have shown a structural shift from air freight to sea freight, air freight is often used for high value and low volume shipments. According to the latest cost and supply demands, companies are trying to find other and cheaper ways to transport their goods. As the shipment cost of sea freight is usually lower than the air freight, sea freight has naturally become a popular alternative. Companies are investing heavily in systems that enhance forecasting capabilities, better visibility to inventory, inventory management systems and enhanced supplier / customer integration. These systems are allowing companies to reduce the urgent requirements, consolidate shipments and thereby optimize on the cost of transportation.

Environmental awareness and sustainability pressure has become a topic

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of increasing importance around the world. Green issues are now a significant part of many companies' logistics strategy and more customers are interested in alternatives, more eco-friendly transportation options. New regulations are also coming from the governments that put higher demands on the industry. It will not be long before companies begin with “Carbon Mapping”, “Carbon Credits” and make use of alternative energy sources to reduce carbon consumption and operate in a sustainable environment.

New technology solutions such as smart phone apps erase boundaries between the office and the road; it is easier to deliver shipments while managing schedules, routes, and hazards on the go. Smartphone apps can provide real-time information about cargo status, help make more

LSP FOCUS accurate decisions and respond to customer needs with the most current information. 3-D printing is another area of technology that will be suitable for supply chain solutions, more so in the area of packaging and packing solutions, space optimization and enhancing new product development's time to market Due to Increasingly specialized logistics solutions companies are outsourcing some of their activities in terms of supply chain management and logistics. By entrusting their logistics affairs to other companies they can pay more attention to their core business.

This means that more logistics solutions providers are specializing in certain sectors.

Different sectors have different demands and are looking to outsource more and more, not only in terms of basic transportation but also other activities, like distribution on even product assembling.

How has Allcargo evolved as an Integrated Logistics Provider?

As part of Avvashya Group, Allcargo is one of India's largest logistics company in the private sector, listed on BSE & NSE. As a pioneer and a multinational leader in integrated logistics Allcargo has presence in over 90 countries, with over 200 offices globally and over 8500 team members.

Allcargo is today a truly largest integrated global supply chain logistics provider with the key objective to grow on the

customer and share holder's value. From a humble beginning we have evolved into all facets of Logistics space.

Allcargo is the pioneer in integrated logistics in India, with expertise in NVOCC (LCL & FCL), CFS & ICD, Project Logistics, Equipment Hiring, Coastal Shipping and Contract Logistics services.

Specific to NVOCC, Allcargo's wholly owned subsidiary ECULINE is one of the world's largest LCL service providers.

In India, we are one of the largest CFS & ICD operators.

We presently operate 4 CFSs and 2 ICDs across the country.

Our CFSs are located at JNPT (2), Chennai (1), Mundra (1) and ICDs at Dadri (1) & Indore-Kheda (1), with overall capacity to process 500,000 TEUs annually. We own over 1000+ world class equipments, which includes over 300 trailers which are servicing our customers for their end-to-end logistics needs. In coastal shipping we are one of the largest and we own 3 general cargo vessels. Allcargo also has strategically located warehouses at Goa, Pithampur (near Indoor) Hosur (in Tamil Nadu), Chennai, Gurgoan (near Delhi), Bangalore, Ahmedabad and Bhiwandi (near Mumbai) and specializes in Contract Logistics, I2M, Line feeding , VAS , to name a few 3PL & Warehousing services.

As an IATA certified multimodal transport operator, we are experts in seamlessly knitting various modalities together. Our transportation

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solutions include FCL/LCL cargo, ocean, air, rail/road movement for export and import shipments.

We offer seamless transportation solutions through a single point of contact. This effectively means that you need to only contact the nearest Allcargo Logistics Ltd. office and we will have your shipment picked up from your doorstep, undertake all documentation formalities and deliver the goods to the final destination – keeping you informed on the status at all times. As pioneers of Multi City Consolidation (MCC) service in the country, we leverage the strength of having a large customer base to transport container loads from the ICDs to the gateway ports, where the containers and shipments are reworked to be delivered to the final destination.

On a similar model, we have made import MCC a unique selling proposition for our import services. Cargo meant for an inland destination from various origins across the globe is consolidated at the gateway ports into a single container and transported to the hinterland destination via rail or road.

Apart from offering comprehensive transportation and global logistics solutions, we are constantly in the process of adding a host of services to our existing portfolio so we can serve better across the entire spectrum of your logistic requirements.

Logistics trends have shown a structural shift from air freight to sea freight, air freight is often used for high value and low volume shipments.

Over the next two decades, country's middle class will grow from about 5% of the population to more than 40% and create the world's fifth largest consumer market.

December 2014

LSP FOCUS What trajectory do you see for an Indian firm in the global logistics space?

There are many factors which largely favour an Indian firm in the global logistics space

namely: 1) The Indian Logistics industry is evolving: There are regulatory reforms on the anvil, followed by port development and road/ railways infrastructure. This will definitely drive growth and will improve overall efficiency of Indian Supply Chain.

4PL is an integrator which assembles technology, capital and resources of its own organisation and other organisations to design, build and run supply chains.

December 2014

2) Indian Middle Class: Over the next two decades, country's middle class will grow from about 5% of the population to more than 40% and create the world's fifth largest consumer market. This gives raise to the disposable income. India's population is not just growing but that two-third of its population is under the age of 35.

India will not just eclipse China with its youth population, its middle class growing at a faster rate than expected. In 2007 Middle class made up just 50 million and

was estimated to grow to 250 million by 2020 and projected to be over 500 million by 2025.

3) Make In India: A major new national program.

Designed to facilitate investment. Foster innovation.

Enhance skill development.

Protect intellectual property.

And build best-in-class manufacturing infrastructure.

There's never been a better time to make in India. The campaign, 'Make in India' is aimed at making India a manufacturing hub and economic transformation in India while eliminating the unnecessary laws and regulations, making bureaucratic processes easier and shorter, and make

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government more transparent, responsive and accountable.

World's largest democracy is soon going to be much more populous than China and Japan. When people talk about untapped potential, India is a wealth of opportunity waiting to be seized. Not since the Second World War reconstruction period has any country seen this kind of wealth expansion in a population. With India becoming a manufacturing hub movement into and out of India will increase substantially.

This will fuel the growth of large Indian integrated logistics company to support global logistics supply. This needs a better logistic solution and

service across the globe. As an integrated logistics company Allcargo has all the services available across the globe in one roof. We have CFS and ICD's across the country and warehouse across the globe, with most effective modes of movement which makes optimum utilization of costal lines , railways etc. India will not only be a global manufacturing hub but will also be a considerable growth

LSP FOCUS in self consumption.

4PL is replacing 3PL. Can you help us understand its role in the future logistics and Services evolving around this concept?

I view 3PL as a traditional model, that is been around, where the parent company is some sort of transport company , forwarder, warehouse and its core business has expanded out into doing additional services for its customers. But the primary intent is always to bring business to the mother company.

3PL has now adequately moved to 4PL. 4PL is a standalone supply chain service 4PL has both the strategic and tactical view point, which the 3PL does not have. If the requirements of the company are more complex then the company need to look hard at 4PL. 4PL is an integrator which assembles technology, capital and resources of its own organisation and other organisations to design, build and run supply chains. 4PL delivers the comprehensive supply chain

solution which delivers value through the ability to have an impact on the entire supply chain .4PL will integrate the client's supply chain activities and supporting technologies across these "best of breed" service providers with the capabilities of its own organization.

It identifies what nodes and networks should look like and who should manage them, then establishes the processes and governance for each supply chain node.

Services

Actors Cargo Owners Carriers Logistics service provider

1PL 2PL 3PL

Transportation Logistics Supply Chain Management

Lead logistics providers & consultants Supply Chain Integration

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Manufacturing, Retailing

SME SPARK

Creating a World Class

Service Organization The SME segment in India is rife with examples of people who have built businesses – sometime large businesses through sheer grit and determination. There are a number of platforms where they are facilitated. But there are no such platforms for the SME Supply chain firms. SCMPro has interacted with a host of SME players who have managed to build credible enterprises in supply chain. With this issue, we are bringing you a new series – The “SME Spark” – a series of inspirational stories of SME Supply Chain firms. For the inaugural series we bring you the story of Jeevan Rao Saheb of Indelox Services Pvt. Ltd.

J

eevan Rao Sahib, floated Indelox Services Pvt. Ltd in 2000 after having worked in the automotive, electronic engineering and leather garments/goods manufacturing sectors, and finally at a customs broking and forwarding company. Indelox was promoted to offer high quality services as an outsourced supply chain service provider. Indelox Services Private Limited is a privately held supply chain management company established in 2000.

Headquartered in Bangalore, Indelox focuses on international trade and provides services for organizations to efficiently operate and manage manufacturing and services supply chains. Today, Indelox is an INR 200+ million organization, with

December 2014

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175 people serving more than 100 multinational and domestic organizations of varied sizes in India and globally. They have strategic bases in Chennai, Delhi and Hyderabad. Increasing market share in these regions is the near future endeavor.

The Early Years Jeevan had a constrained childhood. As a young boy of 13 years, he was assisting a local shop keeper to make purchase of Bread and Cigarettes from wholesale vendor after his school in the evening and distributing newspaper in the morning, while dreaming of growing up to be someone of stature.

The dream spurred him to start a business. But the

SME SPARK

Having commenced the journey as an entrepreneur he has taken it further on the path of Excellence and has kept the growth consistent and provided the guidance that sets apart his organization from others in the field. He insists that for an organization to survive for a long term is to set tough goals. Indelox has since 2006 been working on the excellence program based on EFQM and Malcom Baldridge models, this has reaped rich rewards.

Receiving Asia-Pacific Entrepreneur Award 2012

early venture failed. After the failure of his business at the age of 25, Jeevan took up employment, but never gave up his dream to be an entrepreneur. Jeevan rose to the position of CEO of his firm. Fourteen years later, the itch to create an enterprise made him quit a job of CEO and provide opportunity to people who have a dream to share and created an enterprise to fulfill this aspiration. This was the genesis of Indelox.

From Bangalore, where Indelox has its headquarters, the company has now spread to Delhi and other key locations.

In its short span, Indelox has managed to gain customers who are among the top three in the world. To keep pace with the growth in customers, Indelox has added professionals who are the backbone of a supply chain service provider. The first year turnover was just under a million and today it is more than 200 million INR.

From its humble origins, Indelox today is a 200 million INR Organization earned only from services. A dozen staff in 2000 today has grown to 175 people in direct employment and indirectly another 100. Indelox serves more than 100 Organization of all sizes and varied Industry from across the globe and India. Jeevan has made his mark and has been recognized as man who loves perfection and strives for quality in every aspect of life. Jeevan took the risk of not only quitting a comfortable job but also ensured that the people employed can earn modestly and make their living happily. He has made continuous effort to take the organization on the path of Excellence and has been recognized by Leading Business Organization of India.

Partnership and association with few overseas partners from Singapore, USA, Japan and others, has increased the reach and the capability of the organization. Plans are also on the anvil to set up overseas offices so that footprint increases.

Jeevan is a perfectionist and goes is passionate enough to convey his belief to people and customers which is the reason customers believe that they are in safe hands. He believes that everyone has born qualities that are equal and only that the focus differs over years. Being an SME it has not deterred him to implement quality and excellence initiatives that are taking the company to greater heights.

Jeevan looks at the small picture and exceeds expectations every time. Jeevan firmly believes everyone has the required skill and talent, but they need to understand that nothing is beyond achieving. He lives and works with these, inspiring simple words that he prescribes.

After the failure of his business at the age of 25, Jeevan took up employment, but never gave up his dream to be an entrepreneur.

Jeevan believes in leveraging technology at Indelox. His Operations are supported with Microsoft ERP- something rare for SME in services to have adopted. Indelox provides organization with services at every level of function, moving cross border, procuring, storing duty free, in plant logistics, Sales Operation, Distribution, Post sales, Asset Recovery and not to forget Trading across Border.

Jeevan is the founder and Managing Director of Indelox Service Pvt Ltd overseeing the progress and directing the goals to be achieved now and for the future. He desires that the company he brought into existence sustains and survives for years to come on its values of fairness and wellbeing of the society. A robust Value based behaviour and PMS is driving this enterprise to new heights.

The world has recognized Indelox's achievement. Indelox has many first to its credit - Indelox was awarded with CII

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December 2014

SME SPARK

which are not core to the organization, this insight was due to his 2 decades of working experience.

Silver Certificate WAREX CII certification for warehouse facility

EXIM BANK BUSINESS EXCELLENCE PRIZE IN 2013 in SME category is the only company so far, from Supply Chain Industry to have won the award. It is the first company certified as AEO by Indian Customs in warehouse Category, has been awarded CII WAREX Silver certificate, ISMS 27001 to protect Data, Information, IT Network, again a unique one in Supply Chain and as an SME Leading SME 2013 by DUN & BRADSTREET.

Indelox's success was not without its share of problems.

Multiple role playing as an entrepreneur is challenge that everyone including me had to endure, being first generation entrepreneur understanding the Fund raising process, competence/ capacity building and shaping organization building ability was a challenge. Close associates walking out without reason and commitment, staff jumping fence, which is global phenomena has also been a challenge for retention of knowledge and skill.

Jeevan would like to see Indelox grow further as an organization which is synonymous with knowledge, quality service, compliant under all regulations of the land and provides fair returns to every one of the stake holders.

We strive to be differentiated not on price but on quality of service and the secret lies in delivering consistently, delivering promises.

People in Indelox are a great lot who are coping up with standards that are set high to differentiate themselves at workplace and in competition.

People in Idelox are a great lot who are coping up with standards that are set high to differentiate themselves at workplace and in competition. I am very fortunate to have a passionate crowd around me.

The High point or Indelox was when a global giant awarded it the contract for managing their India Trading Business a decade back which catapulted Indelox into a solution provider with high potential to meet large scale operation demands. And there were instances when we had to shake hands with a customer of more than a decade, who resorted to restrictive policy which stifled our expansion plan.

Credit for all that I and Indelox have achieved is due to the team. The dream is to set up facility of its own which will represent the Indelox competence.

The vision for Indelox when Jeevan started was that the enterprise created has to enable Business Success for organization in commercial function when it is outsourced. Further there are dearth of service providers who offer a solution to manage commercial activities.

Indelox developed this vision during the liberalization of the economy. Jeevan was watching the liberalization period maturing and new venture possibility which can assist at a matured level outsourcing many functional areas

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The initial years of Indelox was a struggle, with no help forthcoming from any quarter. But in the past couple of years Jeevan attended at IIMB NSRCEL, participation in CII Institute of Quality and IMC Business Excellence program which gave him a great impetus to the efforts to find clarity and direction to elevate understanding and competence.

Indelox is still a work in progress. The dream to create a truly world class facility that can cater to multiple Industry sectors in high technology areas is still to be achieved. Though, the foundation of such a growth has been laid years back. Indelox will gradually grow. It aims to show case Indian capability on par with global practice.

The dream is to develop Indelox as a class niche organization in the Supply Chain services.

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CONSTRAINT

SME CORNER

FOCUS

HUMAN RESOURCE

ACADEMIC ADVOCACY

The Art of

Winning “Discouragement and failure are two of the surest stepping stones to success.”

-Dale Carnegie Apply, Apply – No Reply. This adage is true for as long as there have been job aspirants. Quite often, we seem sure of our candidature. But somehow, we seem to be over looked for the job. The unfortunate part of the job search process is the secrecy that surrounds it – very rarely does the firm share the real reasons for not selecting a candidate. However, there is a method to come out a winner. Darryl Judd, COO, Logistics Executive shares his perspective on how you can get that job!

U

ncertainty is an aspect I find as difficult to manage as anyone else but thanks to a career in International Motorsport, I have also learnt how to handle the ups and downs with a lot of resilience and an eye on the end game. Experience has taught me how to not only manage the disappointment of defeat, but how to use this, to find the valuable lessons and experiences.

Darryl Judd COO, Logistics Executive darrylj@logisticsexecutve.com

December 2014

Take the recruitment process. Based on the law of averages, it often takes several failures and many attempts before you land a new job. In the words of Thomas Edison, the great inventor: “I have not failed. I've just found 10,000 ways that won't work.”

Success rarely comes overnight.

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It is therefore hard for candidates, particularly those who are very talented and accomplished, to accept that they were not successful in gaining an interview or job. Unfortunately candidates will often remonstrate “why did I not get the interview, I have all the attributes you are looking for?”

Unfortunately, most of the time this is countered with less than satisfactory responses, such as “sorry there was someone else who met the requirements better' due to the nefarious subjectiveness and confidentiality requirements of the recruitment process, it is hard to give candidates the satisfyingly adequate explanations they deserve. This leads to a lot of discouragement amongst candidates.

HUMAN RESOURCE So what can you do minimise subjectivity and ensure you maximise your chances at getting past first cut?

The first thing to do is apply realism. The first place to look to find out whether a candidate will make the first cut or not is the job ad. The first place to start is an honest self-assessment. Do you really have all the attributes? Even if you do, how do you think you will rate against the other candidates you will be up against? This is a very important first step. A thorough understanding of your strengths and weaknesses will give you the insight to understand how to best position yourself. For example, if the role is based in another country and they are looking for a local person, you might as well address this up front if you do not meet this critical requirement. By doing so you give yourself the chance to counter the concerns of the Employer, before they dismiss your application outright. For example, you could say, “I do not live in country, however I have spent a lot of time working for a multinational company and in a multicultural environment. I am also willing to pay for all my relocation costs”. These sorts of strategies will keep you in the running.

The next step is to really read the job ad and understand as much as possible what is required.

Make sure that all points are neatly and easily addressed. Use a simple layout, metrics such as figures and facts that validate your assertions and simple language. For example, a general statement like “I am good at fishing” is entirely open to conjecture without the added evidence like “In the last 3 years I have consistently caught 8 brim and 3 salmon a day in my current job as a fisherman for XYZ Company.

Personalise your application and by doing so subtly open the door for a continued relationship.

Once you have a polished and concisely tailored resume, and it addresses all the requirements of the ad, then personalize it with a photo. Reference your LinkedIn profile in your covering letter and invite the receiver to connect with you. Use professional language at all times. For example, “please note my LinkedIn address under my signoff and feel free to connect with me online. Include a photo in your resume, preferably your LinkedIn

photo. This is a great way to immediately make an impression. By inviting a LinkedIn connection, you will also establish the grounds for continued contact with the Employer, regardless of the outcome. Of course, it is important to maintain professionalism throughout this exchange. A photo is a powerful way of communicating. It can tell people a lot about you “a thousand words” as they say, so its important that if you want to give the impression of a good office worker, your photo on does not show you dressed in your favorite fishing outfit, no matter how much you love the sport – save that for facebook! Of course, this brings me to your online persona. Do not underestimate the power of the Internet or think that Employers will not investigate you online.

Please ensure your LinkedIn profile is up to date and a true reflection of your professional aptitude and experience.

As disappointing as it may be if the outcome is negative, make sure that every time you lodge an application for a job that you find a saver – something to take away with you that will not render your effort fruitless. Either learn something or make a connection that extends your network.

There is no harm in following up with a recruitment agency or prospective employer for some feedback. A good result is not judged by whether or not you get that job but by smaller triumphs that add up and will set your course for long-term success. Patience and perseverance are words we often heard at school but ring so true (as dissatisfying as that may be) today. If you gain some insight or intelligence about yourself or the job market you are trying to make your mark on, then your attempt has been successful. Accept an unfavorable result graciously. I must emphasise that word in bold and capitals GRACIOUSLY. Sometimes the way you carry yourself in defeat will leave a stronger impression and tell a good deal more about your character than a success. This will ensure you will be remembered as a person who has resilience and a sense of professionalism. These attributes that will keep you front of mind should another opportunity comes along.

Based on the law of averages, it often takes several failures and many attempts before you land a new job.

Reference your LinkedIn profile in your covering letter and invite the receiver to connect with you.

In this way you will build your reputation, expanding your professional profile, and eventually creating the career success that you deserve. Go catch that fish!

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December 2014

CONSTRAINT

SME CORNER

FOCUS

HUMAN RESOURCE

ACADEMIC ADVOCACY

Global supply chains are growing rapidly, and the ability to manage cross border logistics operations has become a necessity to maintain

a

competitive

advantage in a dynamic environment. This research addresses current gaps in the literature by investigating the buyer–supplier integration dynamics in a global context with a focus on the antecedents and outcomes involved in the process.

Empirical data from 320 U.S.

A Global Analysis of Orientation, Coordination and Flexibility in

that source from overseas was collected and used to test the framework. SCMPro brings you extracts.

D

Supply Chains Ayman Omar: Kogod School of Business, American University, Beth Davis-Sramek: University of Louisville Matthew B. Myers: University of Tennessee John T. Mentzer: University of Tennessee.

The original paper can be accessed at Journal of Business Logistics, 2012, 33(2): 128–144.

December 2014

based manufacturing companies

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ynamic changes in manufacturing and supply strategies and increased levels of global competition have broughtabout increased strategic attention to an integrated supply chain. Reflected by how much activities in onecompany are synchronized with the activities of its suppliers or customers, supply chain integration has become a strategic lever for performance improvement, and firms are increasingly emphasizing continuity and a ''seamless'' end-to-end pipeline. Successful integration allows firms to link their internal processes to external suppliers and customers, creating competitive advantage through leveraging interwoven activities and processes that cannot be easily replicated.

This study contributes to the significant and

growing body of global supply chain research examining the integration – performance link in several ways. Theoretically, this research examines global supplier integration (GSI) antecedents and outcomes and builds a corresponding theoretical model using strategic management theory

through the relational view of competitive advantage. The central thesis of this theory is that firms in a supply chain can develop relationships that result in inter-organizational processes which allow them to systematically identify valuable know-how and then integrate it across organizational boundaries.

Unlike other theories of competitive advantage, the relational view considers strategic relationships in the analysis and consistent with this view, we examine a specific relationship between a manufacturer and one of

itskey global suppliers.

Hence, strategic resources lie beyond the boundaries of the firms, and competitiveadvantage stems from competing as an integral part of a supply chain and no longer as individual firms.

opportunities for firms engaged in the global business environment. Since effective supplier integration will be a key factor for firm survival, further extension in a global context will be critical for future firm success and performance gains.

Because supply chain integration can encompass many links in the supply

While there has been a tendency to focus on supplier

chain, we narrow the scope of our research to GSI, and we examine this phenomenon through the lens of the relational view. Integration of suppliers with internal business processes requires a set of skills that extend beyond mere order placement to managing supply bases and combining resources with key suppliers. Further, addressing GSI (where at least one member is located cross border) has become particularly germane as the changing landscape and increasing level of globalization creates new

integration activities in new product development, there is a lack of research in other contexts and also in examining supplier integration antecedents. We address this gap by examining how collaboration and the management of product and information flows through operational coordination foster GSI. Further, there is a contention that integration involves a firm's disposition to integrate with suppliers, and this stems from cultural and attitudinal factors that result in fairly consistent behavior. Thus, to

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While there has been a tendency to focus on supplier integration activities in new product development, there is a lack of research in other contexts and also in examining supplier integration antecedents

December 2014

operationalize the activities and processes that facilitate structural integration, firms must develop a managerial philosophy that becomes a key element of strategy, enabling firms to see the implications and importance of an integrated approach to the supply chain. Therefore, we build on more recent supply chain research and suggest that supply chain orientation (SCO) is a critical antecedent of GSI. With recent calls to provide more empirical evidence of the relative and respective contributions of strategic supplier integration, our extension of this growing body of research leads to the theoretical model shown in Figure. We expect that GSI will positively influence supplier flexibility, which in turn will impact logistics efficiency and logistics effectiveness, and both then impact overall firm performance. Finally, we hypothesizethat cultural distance (CD) between a buyer and an overseas supplier will negatively impact the relationship between SCO and both collaboration and operational coordination efforts.In sum, the theoretical contribution resides in illustrating a comprehensive picture of supplier integration in a global context, which incorporates the impact to both the supplier through flexibility and to the manufacturer through increased logistics and financial performance.

Implications for Managers

Therefore, supply chain management strategies must interconnect what a company ''thinks'' or ''should do'' with what a company ''does'' to facilitate the physical flows

December 2014

The study supports the contention that integration results from both informal behaviors residing in the willingness to share information and knowledge with suppliers through collaboration, and also in the operational decisions that facilitate product flow and movement through operational coordination. Therefore, supply chain management strategies must interconnect what a company ''thinks'' or ''should do'' with what a company ''does'' to facilitate the physical flows as well as the associated service, information, and financial flows. This would be especially

48

critical in a global environment where risk and rewards lead to significant consequences (good or bad) and as firms take advantage of international economies of scale, scope, learn from different foreign markets, and identify location specific advantages to exploit cost differentials in factors of production or the limited availability of resources.

As the Figure indicates, this research also examined the performance implications of GSI. Our contention is that GSI should enable the manufacturer to increase performance through first impacting the supplier's flexibility. In an environment where demand is changing rapidly, industry characteristics are evolving quickly, and companies are facing new challenges every day, flexibility becomes critical, allowing suppliers to make changes or adjustments with a minimum amount of time and resources. In increasingly dynamic environments, this research provides empirical support that manufacturing firms can experience a higher level flexibility from their overseas suppliers by integrating their supply chain processes. Thus, firms that value flexibility in their operations can adjust their process integration levels to attain the required level of flexibility.

When a supplier can respond to both macro and micro environmental changes, the manufacturer benefits through more logistics efficiency and effectiveness.

Through greater supplier flexibility, manufacturers can then focus on utilizing resources to reduce costs and to focus on enhancing effectiveness through more consistent delivery, a reduction in stock outs, and less damage and errors. These mediation performance effects also provide more understanding about the role of integration in enhancing firm performance.

Both logistics efficiency and effectiveness had a positive impact on firm performance.

Therefore, we find more evidence of the importance of these intermediate performance outcomes as ''routes'' to firm

performance, where integration is critical in this ''chain of events''.

Another managerial contribution relates to the nature of SCO within the firm. SCO is referred to as a ''mindset'' a ''philosophy,'' and an ''organizational culture''. Conceptually, this is consistent with an overall orientation of a firm with all of its supply chain counterparts. While the concept does represent a philosophy that a company adopts to manage its supply chain, this does not necessarily mean that the company uses this orientation with all of its suppliers and /or customers.

Companies may apply the 80–20 rule or other methods to segment and identify the important and critical suppliers and /or customers and implement this orientation accordingly.

An example of this would be when a company has a partnership and strategic relationship with one supplier while dealing with others on a transactional/arms-length basis. Doing business with a ''key'' supplier may also mean frequent transactions yet the structure and governance of a transactional (rather than relational) orientation. So despite the fact that SCO relates to a firm's mindset, this mindset could be directed to one segment of the company's supply chain.

The lack of findings regarding the influence of national cultural characteristics in this research may indicate that in a B2B context, more emphasis should be placed on the compatibility and similarity of corporate cultures as opposed to national culture. Supply chain managers involved in global operations may be able to engage better and establish better integration structures with global suppliers or vendors with similar corporate cultures.

Conclusions The study involved the weaknesses associated with cross-sectional surveys, using a single informant per firm to collect perceptual data, and it is also marked with the constraints of the depth of information a survey can capture. One drawback of using a cross-sectional survey is that investigation of supply chain behavioral dimensions across global players is limited to a point-in-time assessment. Future research should be directed toward longitudinal studies that can capture those behavioral elements, in the context of global operations, over an extended period of time. This could paint a clearer picture on the effects of behavioral elements on global supply chain operations and its performance implications.

Perceptual versus actual behavioral data were used to test the hypotheses.

Informants reported perceptions of their experiences working with providers.

While we mitigated potential bias in the accuracy of the responses by qualifying informants and asking them about their level of their confidence in their answers, perceptual data are still dependent upon respondents' ability and willingness to mentally retrieve and accurately report on their mental evaluation. Future research would benefit from obtaining company data that track coordination mechanisms set in place, collaboration efforts that are documented, or other relevant data.

Finally, we assessed perceptions of the relationship from only the manufacturer's frame of reference, and we examined supplier flexibility through manufacturer's observation as well. The next step to investigate this theory would be to include the supplier's assessment of the relationship, thereby examining dyadic data to increase our understanding of the relationship.

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One drawback of using a crosssectional survey is that investigation of supply chain behavioral dimensions across global players is limited to a point-in-

December 2014