SCMPro June 2015 by Jayaram Nair

P R O F E S S I O N A L

10th June 2015 | Volume 1- No.3 | Rs.200

FROM PC TO SUPPLY CHAIN OF THINGS GURU SPEAK

SME CORNER

LSP CURTAIN RAISER

Dealing with Demand volatility

SCMPro_Pg_1.indd 30

My Pocket ,Your Pocket or Their Pocket

Announcing India's Premier LSP Summit and Awards

18-Jun-15 4:05:36 PM

Announcing India’s Only Thought Leadership Seminar on Supply Chain

2nd India Supply Chain Strategy Summit 2015 Inviting senior supply chain management professionals to participate and explore the possibility of

“Building Supply Chain Alignment in the New Networked World”

And listen to an Internationally acclaimed set of speakers (Invited) • Prof. Sunil Chopra -IBM Distinguished Professor of Operations Management at Kellogg School of Management, USA • Prof. Martin Christopher, Emeritus Professor of Marketing & Logistics at Cranfield School of Management, Cranfield University • John Gattorna – Gattorna Alignment Pty Ltd. Australia • Dr. George Ioannou - Professor of Production & Operations Management at the Athens University of Economics and Business.

Conference Partners:

Conference Fee: Rs. 15,000/- Plus Taxes

/ISCM.net /iscm_info /institute-of-supply-chain-management-iscm-

For Enquires: info@iscmindia.net, Ph.: 022 60020156/ 57/ 59 www.iscmindia.net

Strategy Summit.indd 1

18-Jun-15 5:22:25 PM

Editorial Rain Dampener on Growth? The prognosis looks grim – for a second year in running, we are expecting poor monsoon. For a country that has aspirations of becoming a global leader, we are still hamstrung by monsoons! One more poor monsoon season, and the vaunted growth could fizzle out. And that is the danger we are in. The only way out of our dependence on monsoon is to exit the dependence on agriculture. As Make in India The structural gathers pace, and as people shift from agriculture to imbalances that manufacturing, we will make the transition to a stable face us cannot growth path.

be resolved with short term measures. Hope the government stays true to the course.

The signs all around are not encouraging. India is one bright spot in the general slowdown across the developing world. The World Bank has warned of a return to developing world led growth model. This is music to India – the success of Make in India needs a strong developed world, dependent on imports from India. When monsoons fail, the developed world is ready to buy from us. The question is – are we ready? Let us, supply chain professionals make it our mission to ensure what gets made in India reaches the customer in even the remotest part of the world. And may we be rid of the dependence on rains. Happy Reading!

GIRISH V S

Editor girish.vs@scmp.in

SCMPro_Pg_3.indd 2

Managing Director Rakesh Singh rakesh.singh@scmp.in Executive Publisher Jayaram Nair Jayaram.nair@scmp.in Mobile:9821732929 Editor Girish V S girish.vs@scmp.in Research Editor Piyush Shah Piyush.shah@scmp.in Graphic Designer Sidhi Jadhav sidhi.jadhav@scmp.in Advertising Riddhi Solanki riddhi.solanki@scmp.in 022 60020157 Bhavi Shah bhavi.shah@scmp.in Administration & Subscription Sanjay Gupta sanjay.gupta@scmp.in 022 60020159 Media Group D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai 400062. INDIA. Printed and Published by Jayaram Nair on behalf of B2B Media Group. Printed at Kalakshi Printing Works, 205 Gopal House IB Patel Road Goregaon (E) Mumbai 63. And Published at D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (West), Mumbai 400062. INDIA. No part of this Publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publisher. Such written permission of the must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in the future editions. Opinions reflected in the publication are those of writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. Annual Subscription Rate: INDIA: Rs. 2000/Editorial Partner:

18-Jun-15 10:40:13 AM

content Feature

June 2015 | Volume 1 | No. 3

Lead Story From a PC to the Supply Chain of Things The role of technology in supply chain

06 SCM News

Comments on Global Supply Chain News

07 Guru Speak

Dealing with Demand Volatility

SME Corner My Pocket, Your Pocket or Their Pocket - Capital Markets and SME

28 SCM

Classroom

Incoterms

Academic Advocacy Supply Chain Integration and Information Technology Rakesh Singh & Vaidy Jayaraman

34 LSP Curtain Raiser Announcing India’s Premier LSP Summit and Awards 2015

Logistics Service Provider Summit and Awards 2015

An elite gathering of LSP community to celebrate their achievements 11th September 2015, The Orchid, Mumbai Logistics Service Providers are the unsung heroes who keep the wheels of trade moving. SCMPro wishes to recognize and celebrate the achievements of LSPs in India at a celebratory dinner on the 11th of September 2015, with a series of Awards. To make the event impactful, we have a cross section of thought leaders, consultants, Academicians and industry leaders deliberating on a few crucial issues that will decide the future of Indian LSPs. The summit will highlight the change happening in Logistics industry – driven by e-commerce and shaped by technology. We look forward to welcome you as logistics community gathers to brain storm on the way ahead.

Award Categories 1. Women in Logistics 2. Young Supply Chain Professional 3. Lifetime Contribution 4. Innovative eCom Service Provider 5. Best Express Company 6. Best Retail LSP company 7. Best Transportation 8. Best Freight Forwarders 9. Best Contract Logistics 10. Best Multi-modal logistics 11. Best Project Cargo Of the Year

12. Promise of the Future (emerging Service Providers) 13. Best Reverse Logistics Service Provider 14. Innovations in Sustainability 15. Best Use of Technology 16. Best Warehouse in Multi Product 17. Best COLD chain Warehouse 18. Best Warehouse for Agri Commodity

19. Best Material Handling Equipment Manufacturer (Storage / Reach trucks....) 20. Best LSP to work with (Based on HR Policies) 21. Leading Light – Supply Chain Academics (Institution) 22. Supply Chain Performance Improvement 23. Innovative supply chain management 24. Best Practices in Supply Chain Risk Management 25. CSR in Supply Chain

Jury Members • Dr. John Gattorna • Dr. Ioannou Georgios • Dr. loannis N. Lagoudis

• Dr. Satish Ailawadi • Girish VS

38Sponsored Feature

Experience the Future of Your Supply Chain Industry

For

Nominations and Registrations:

www.ls p-awards.com Knowledge Partner

D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai – 400062. Tel: 022 60020157/ 59 | info@iscmindia.net | www.lsp-awards.com

Human Resource 2015 A year of expectations Darryl Judd

43 4

40 Case Study

Turning Space Into Money - Mobile Racking Solutions

48SCM Update

JUNE 2015 SCMPr

SCMPro_Pg_4.indd 4

18-Jun-15 10:40:40 AM

SCM SCM News News

udents

ting St n – Get

novatio n I e m e r Ext For Free to Do It

012 hich in 2 w , m ir f est. The s now s DP t ovative b botics f irm – ha n u in P s e it t s a ro p with Increa mazon is t ms – the roach to come u A e n t e s y R S t a h Kiva, pp Kiv Por ok over nge” Wit erators, ovative a o e p t n ll o a in t r h n o C p a p t g the ith ing Sou ’s larges , reducin perate in come up w zon Pick ld s o r a e o o s m c u w A o o “ e t h h e g e t gh – ar , one of a new new ideas – th r refusin ots in w not enou in b s o a r w d e is c DP World ouble in India fo i operations has h tt on, odu och lized tha zon intr in tr lt. Amaz a state a K a u e – s r m ic f it t A ia f if r u o d o B t already as own Vic nd. udit al time w ts to build their ment of in rent. walking arou mance a e n r r e r e fo ik in r v h e o n t p G n a e e en ided atio now – th 757 perc g autom zon prov ited stud deal e a v a in h ld d k in m c e u A a ic E s o . d p E o s w a p IE to lve he ro ike bs bots had tion with bjects from she a – has p h a steep rate h o jo ia r li f c a e o r o t h s s t s s s t u a lo a o in A suc s. All th picking d place ading to believes ith good bots for tions fly tions, le elves an w o a a h r r g s d e e e e p ll k DP World h o c A t . a s t it Berlin s om alia blow to ersity of DP World the shelves bjects fr in Austr iv o g e n 2 c in U 1 n l m e p a a death u la id ic k nf tb hn f the iness co o was pic m in a tray. Tec vernmen ld applying to ing 10 o d o k G ic p e h y t and bus b e will or ith the challeng rove – it nd DP W d fast, w p a e n , h o a t t it k s n h ic e o it h o w t g il, inate gw s. Which s Counc can elim operatin s m o e e e c n w it t e o e 2 iv r n 1 it f o pet time befo uses! e nal Com be some such rat reho m the Natio o r f n from wa ectio le t l p o a r o t p e n p t e e r to g ently, s. Appar ern in increase uct t a conc o n e r a of Prod ains s hikes e g n e h l ne! Chal to Supply C India alo Recall ocess miliar pr fa a is recall ave seen Product Supply n ld. We h r a o i w s d A e ever, p The too. How eat to in develo r ia h d T In n in i tion Cha ecall some ac Growth l ricycle R a e t b S o 5 l 1 0 G ome of the Q1 2 be tion on s o n t e t e t r a a s s se t recall report dex focu y produc er worry In b t If news s d e e g s o ig , the b enges p M suppli rs believed the chall , one OE manage y a in d a o h T c . rs. When ins of supply eveloped world ufacture pply cha n u a s o m t d le ip ltiple he ain r across t s to mult nced, and if mu t upply ch fo r s t a o k p . p a s s e e r e t w u by the he nou a ho truct provid all is an have is t supplied c Asia was of its low cost s s e t . r n t ia e s c s n u A o in a p ll can s in a prod use com iciency g y the reca because s r ff network r s e e fo ie r s s it u a t n il c w c io c t of fa manufa eff icien facilities implicat he repor location dor, the ins were locating ample, t s n a x r e e h anut m v fo c r e ir e f o p n ly , F o m d p . s is sa clare e sup t cris cated e s s li d e o The rea p n h P t u m . , s o o lt t e c e ch ergic e resu get very recall du se of all uct laun higher u d e a d o ic r c n – with th p p a n s r o d a e n m f g ith few r dema hat e a com speaks o driven, w olatile custome means t ithdrawin anuts ar w e is s h (p T ie . n n s e a v e ly g p r r g a m 769 lle unch to 14 co are seein cts and rvive. Cle pply a u d u s and la d s n le o o r ) io t t p n ia 3 in io r ha 15 irm. va t su react volving by one f supply c eff icien product in d t e , e il il s li u g d p f a b n o p e n a u r v d ed a 100 b ted cars The nee a spice s f irms ha f irms ne chains. US affec ic match – ll due to g ly A in is e p . nd t ll m s p a a u r U a c t s K e s e r e S as a agil brands a arts s d p we hav le e in o e ip t a n u lt h a c u w r ly nd no Anothe ecting m f age – mer he supp chains a d layer o 1997, aff def ine t re custo e e u r d m s e d o s o n r a t a e f e b is m h ld r s unique so s. T pply e f ir the hou – create huge su f vehicle 7 l help th o e 9 il h s 9 w t n 1 , h o k y e c li a ic c d in ba mil current asset wh . As it stands to rs sold s o is the will hold a h c r w e g t s e in w t n m d c o tio affe ncy para publishe o one kn satisfac rding to st eff icie nges – n o o e g c c ll c in a a s A h . n u c s o a e hicle! is c tim built of the ve ly chain rbulent p r u e p t n u s in w e o h t grow leg of th the Asia world! reports, ross the c a s t h s nig sleeples

n World i

JUNE JUNE 2015 2015 SCM SCMPrPr

SCMPro_Pg_6.indd 6

18-Jun-15 10:50:08 AM

Dealing with Demand Volatility This paper has been produced to shed light on how supply chains throughout the consumer industry struggle to adopt a holistic approach to tackle the issue of demand volatility. Using the latest literature from industry experts and in depth interviews with 14 key executives from leading companies such as Wal-Mart, Unilever, and Carrefour , it highlights some key areas that when implemented support a best in class supply chain that drives lasting business value. This extract has been produced with permission from Gattorna Alignment Pty Ltd. The entire paper can be accessed at http://johngattorna.com/wp-content/uploads/2013/01/ Dealing-with-demand-volatility.-A-pragmatic-approach-to-the-latest-supply-chainthinking.pdf

still have vivid memories of the day I realized that my job was about to get considerably more complicated. Four years ago a particular customer called me at 16.30 “requesting” another 500 cases of a product needing to be shipped the next morning. The process of generating sales forecasts was going to be very different from this point! Looking at the current level of promotions on the High Street, it is unsurprising that demand volatility is considered by practitioners as one of the most challenging issues supply chains have to contend with. Supply Chain Market Conditions

Xavier Farrés, International Supply Chain Consultant and Associate at Gattorna Alignment

Examining the markets that supply chains operate in, we must recognize that the latest economic downturn has prompted a change in retailer and brand behavior as consumers have become ever more price sensitive. Intensity of promotional activity has increased so much that retailers and brands are frequently creating entirely new deals or changing promotion mechanics at the last minute. This is in a bid to react to competitor’s activity or to hit sales targets.

It is now common to find competing deals running in parallel at the same point-of-sale. This is creating a vicious cycle on price that is very difficult to break. Customers are continuously seeking the best deals and they are switching brands on impulse. As a result brand equity and customer loyalty are being eroded. Business community have termed this trend in behavior, ‘consumer promiscuity’. Recent data in UK (1) and China (2) is showing that consumer promiscuity is on the rise. Nonetheless, the highest growth channel, e-commerce, promotes this behavior by definition; making competing offers and brands available with a click of a button. The digital world is offering consumers more choice and better deals and this is very compelling for a large proportion of the market. The digital world offers other insights too. Long-established retailers believe that their e-commerce customers are more loyal and consequently digital sales are easier to forecast (3). Consumers value the convenience of online shopping and the delivery options that the channel offers. The purchasing experience is increasingly seen as the main reason to counterbalance price SCMPr JUNE 2015

SCMPro_Pg_7_8.indd 7

22-Jun-15 11:17:44 AM

Guru Speak attractiveness in digital purchasing decision making. The personalization and ease of experience are enabling organizations to manage some of the customer promiscuity, and even drive up customer loyalty.

functions, but in synch with them. These teams are driven by joint key performance indicators; values and leadership styles that are aligned to the different customer behaviors identified in the market.

However one thing is clear, market rules are rapidly changing. But established supply chains and their operating models have not been designed to operate under these new rules. The process of organizations responding to these new consumer requirements and rapidly adapting to them, is not an easy task.

Companies using Gattorna’s design models find they can be more aligned to market requirements. Unfortunately the supply chain functions often find that senior leadership are unaware of the benefits and greater revenues that these changes can and do deliver.

“For Wal-Mart, the capability of executing supply chain changes is becoming a key competitive advantage. An efficient supply chain is fundamental to our purpose of saving people money so that they can live better. This drives us to continually find new solutions to deliver the best offer to our customers at the lowest possible price. For example, we sourced beef from the US and imported it to Japan, to sell in Seiyu stores. We managed to sell it for 50-60 yen cheaper than any of our close competitors. This helped us to increase sales in the category by 200%.” (Scott Price. CEO Wal-Mart Asia).

A good example of an organization that has engaged the senior team and implemented new supply chain models is Unilever, Asia who have created new revenue streams by amending their supply chain implementing the Dynamic alignment approach. “Under Dr Gattorna’s guidance, Unilever has found better ways of fuelling growth, reducing costs and servicing customers successfully. This initiative has now prompted Unilever to roll-out the learning obtained, globally. ”(Alfons van Woerkom, Customer Service Director, Asia AMET Russia. Unilever).

Conclusion The research in support of this paper has shown that in addition to technological and management aspects such as agility, SKU effectiveness, planning enhancements and POS data sharing, it is vitally important to develop the emotional skills needed to foster collaboration and enable an effective extended supply chain. Mastering the customer purchasing experience, especially in a multichannel environment, will become one of the most important factors in increasing customer loyalty and therefore demand stability. To do this, organizations must design their extended supply chains from the point-of-sale backward. This linked with managing the rational and emotional aspects of collaborative working, supply chain designs aligned to market behaviors, and with the support of senior leaders will be most effective at delivering cost reductions and revenue gains coincidentally

All the aspects that drive and counteract demand volatility are summarized in the following diagram:

Dr John Gattorna’s Dynamic Alignment In addition to the Boxwood model for collaboration, the work by Dr J. Gattorna allows prioritization of collaboration relationships within the supply chain. The Dynamic Alignment methodology outlined by Dr John Gattorna proposes supply chain segmentation based on customer buying behaviors as a solution to deal with demand volatility. The organizational design of each supply chain configuration is based on multifunctional teams working across the

JUNE 2015 SCMPr

SCMPro_Pg_7_8.indd 8

22-Jun-15 11:17:44 AM

From a PC to the

Supply Chain of Things

Supply chain management is still considered a cost center, a back office operation. With the result that when it comes to dividing the investment pie, supply chain does not merit significant allocation – after all it is a service offering. But as manufacturing re-located to least cost venues, when procurement moved to low cost countries, and when customers became global, firms had to re-invent their supply chains. And slowly from an odd PC, supply chain automation is moving towards the “supply chain of things” – a supply chain derivative of the “internet of things” This issue of SCMPro explores the contours of technology in supply chains.

recent conversation with a technology service provider was self-explanatory – “I am trying to get a PC into a warehouse.” A sentiment that closely matches reality when it comes to technology in supply chain. For a very long time, the focus for supply chain was cost reduction, improving inventory turns, reducing storage. In short – cuts,

cuts and more cuts. Predictably, the results did not last – the cycle had to be repeated every time, but with reducing results. Albert Einstein had once remarked Insanity is doing the same tasks over and over again and expecting different results. Supply chain was caught in the same trap. Today’s complex supply chain calls for increasing use of technology – in

real terms, it calls for a grounds up re-design of the supply chain with technology at its core and innovation as its branches. A compulsion to move from inside out to outside in thinking. The trend today is not individual pieces of technology – but rather a convergence of multiple technologies, each one leveraging on the other. A typical example is the SCMPr JUNE 2015

SCMPro_Pg_9_10.indd 9

18-Jun-15 11:00:42 AM

Lead Story nexus of Forces or SMAC – where four technologies converge to provide business disruptions.

savings of at least 40 minutes per crew per day, and up to $2.1 million in overtime.

Intermech Inc, in a white paper has listed some very interesting technology convergences that

The crux of the matter is not the technology alone – but a combination of technologies that can

The crux of the matter is not the technology alone – but a combination of technologies that can deliver far more bang for the buck have saved customers millions of dollars. A combination of GPS, wireless technology and magnetic stripe reader produced huge savings. According to the white paper “Stanley Steemer, a carpet cleaning franchise, automated route operations at two branches with mobile computers with integrated wide-area wireless connectivity, GPS and a magnetic stripe reader to process credit card payments in real time when service was completed. Dynamic dispatch enabled by the GPS and real-time two-way communication enabled Stanley Steemer to improve efficiency enough to eliminate a full-time dispatcher position at each branch. One location is saving between $300 and $700 weekly in overtime, and both branches have greatly reduced time required to complete and process paperwork.” Another example of a combination of mobile computing, printing and GPS was Mission Foods. Mission Foods is one of the world’s largest producers of tortillas. Its products are sold throughout the U.S. by independent agents operating in a directstore-delivery environment with supermarkets and retailers. Mission Foods converted from manual invoicing to creating invoices on a handheld computer and generating a copy for the customer with a mobile printer. Invoice records are sent to Mission headquarters in real-time over the wide area wireless network. The combined technologies led to

deliver far more bang for the buck. The success lies in identifying the technologies to be used. One of the avowed principles in technology is “Appropriate Technology” not latest technology or the most expensive technology, but a combination of technologies that are tried and tested and will therefore deliver the results that are expected. We have spoken about the convergence of Social media, Mobility, Analytics and Cloud computing later on in this series. We have also covered the ERP angle. The rest of the article will cover the supply chain version of the Internet of Things – the Supply Chain of Things. The Internet of Things (IoT) or the Internet of Everything (IoE) as some call it is a web of interconnected smart devices that collaborate between themselves to ensure products reach the customers at the right time, with the right quality and right price. The supply version of IoT is the SCoT – the Supply Chain of things – where each entity in the supply chain shares data about every aspect that affect a business – somewhat like human teams collaborating for greater business efficiency. Think of a situation where you pick up a shampoo from the shop display, a sensor calculates the weight difference, identifies the SKU and updates the new inventory status on a central computer. The manufacturers systems picks up

this information and feeds it into its demand planning system. A collection of such real time buys gives the manufacturer a very clear idea of the movement of stocks and hence it can plan its production. Welcome to the Supply Chain of Things. According to a Gartner report, in 1984 around a 1000 devices were connected to the internet. In 2011 that figure was 17 billion. It is estimated that by 2020 anywhere between 26 billion to 50 billion devices would be connected to the internet. This profusion of devices couples with wearable technologies will put real time information – not just data within the executive’s fingertips. This will correct one of the biggest problems we have today – end to end supply chain visibility. Another way SCoT will change supply chains is in the analytics – systems will crunch this huge flow of data and make corrective suggestions. For example, when a shipment is delayed, the SCoT will assess the priorities and choices, and will automatically trigger corrective action. As markets collapse to a “Market od One” philosophy, supply chains will need to re-invent themselves. According to a Gartner report, “For example, in an SCoT world, smart machines in asset intensive capital goods industries will have remote machines and assets engines, which will analyze real-time performance data and compare the opportunity cost of performing preemptive maintenance now versus waiting, with risk of failure, until a scheduled maintenance time. The smart machines could then decide to order maintenance preemptively to avoid, what it assesses, is very high cost of failure.” Welcome to the future of Supply Chains – SCOT.

JUNE 2015 SCMPr

SCMPro_Pg_9_10.indd 10

18-Jun-15 11:00:42 AM

Untitled-1 1

22-Jun-15 10:50:12 AM

SME LeadCorner Story

Putting Supply Chain on the Cloud Supply chain managers are buffeted by changing consumer demand and volatile business practices. These are the dangers of doing business in the new normal. But there is one aspect that has the potential to change the way supply chains are organized. And that is technology. Supply chain managers have to keep watching the evolution of technology and pick those trends that will change the way supply chains can be made cost effective and efficient. One such change is Cloud Computing. We start the technology series with a look at the impact of cloud computing on supply chains.

usiness ecosystem changes and changes in consumer behavior cannot be predicted, but need to be tracked as it has major impact on supply chains. It is widely accepted that technology is a game changer for supply chains across the globe. One technology that has caught the imagination of supply chain managers and analysts is cloud computing. One popularly accepted definition of cloud computing is “A model for delivering information technology services in which resources are retrieved from the internet through

web-based tools and applications, rather than a direct connection to a server. Data and software packages are stored in servers. However, cloud computing structure allows access to information as long as an electronic device has access to the web. This type of system allows employees to work remotely.” For many organizations, cloud is a daunting concept – from the basic mindset of wishing to own the machines where data resides to a more pervasive fear of data security, deeply entrenched beliefs prevent

firms adopting cloud. From fear of data theft to denial of services, from abuse of cloud services to insufficient due diligence, a number of threats hold a firm back form exploring cloud services. But as hardware and software costs keep adding up, and as businesses prefer to have a flexible computing environment, moving into asset light models, cloud is a serious contender for CIO attention. The supply chain of the future will be defined by three dimensions – supply chains need to connect all links in

JUNE 2015 SCMPr

SCMPro_Pg_12_13.indd 12

18-Jun-15 11:02:28 AM

the chain – suppliers, manufacturers, customers and intermediaries – in real time to exchange data seamlessly. The second dimension is the speed of response – the ability to analyze vast amounts of data and convert it into actionable information to the managers. Along with speed, the network should enable the supply chain manager to make decisions on the fly. Cloud enables firms to collect information in real time, using IoT, and using predictive analytics spot disruptions and take corrective action. Taleris, a Texas based firm offers a service - Intelligent Operations - on cloud platform, which uses tools such as performance data, prognostics recovery and planning optimization solutions to improve operational efficiency of Airlines operators. Cloud offers some immediate payoffs – for one, it is an on demand service, and the business user can demand additional capacity and start using it immediately, without having to worry about carrying inventory. The second is the cost advantage – the business will pay for the resources it uses and not for the entire inventory. The third advantage is version control – since

the application is hosted centrally and accessed across the globe the user has to make changes in one place and every one accesses the same solution – the technology version of the “single source of truth”. While cloud does offer certain benefits and cost advantages, not all applications are cloud ready. Applications where the organization derives competitive advantage and applications that involve the physical movement of goods along with information may not be the ideal candidates for cloud. Wrong choice of application move to cloud can scare the organization away from cloud forever. In a study commissioned in late 2014, SCM World provided some interesting insights into the areas where cloud computing is changing the supply chain dynamics. The report places the common supply chain solutions and activities along two dimensions – sensitivity of data sharing and the network effect. Network effect measures the necessity of information sharing across multiple stakeholders of the

supply chain. According to the report, four applications are cloud friendly – sales and operations planning, transportation management systems, spare parts management and store shelf optimization. On the other hand, demand sensing, planning, CAD and inventory optimization are least cloud friendly. (See figure below – from the report) As cloud computing progresses, we will see more applications that will move to the cloud. Any application that does not require sensitive data or where data has to be shared across a wide network is ripe for moving on to the cloud. One probable application is analytics – with the Internet of Things (IoT) gaining ground, the ability to filter and analyze the constant deluge of data for possible disruptions, and using self-healing algorithms, firms will be able to monitor and measure supply chain performance, and take corrective actions in real time. Cloud will make this complex function affordable. And that will be the biggest gain from cloud computing – it will make complex technology affordable.

SCMPr JUNE 2015

SCMPro_Pg_12_13.indd 13

18-Jun-15 11:02:28 AM

Lead Lead Story Story

ERP: New Age

Supply Chain Management by clicking, scanning, tapping & swiping… From a patchwork of applications and siloes of automation, ERP – or Enterprise Resource Planning – has come a long way. Advances in technology has shaped the new age ERP. On the business end too ERP has undergone a shift- from being a prop to enhance efficiency to an integral part of the business strategy. Users want their ERP to be mobile, agile, user friendly and universal. Ms. Shyamala Jayaraman, Senior Vice President – ERP Solution, Ramco Systems Limited takes a look at the trends in ERP.

C Ms. Shyamala Jayaraman, Senior Vice President – ERP Solution, Ramco Systems Limited

onceived decades ago as the way forward for manufacturers who sought to harness technology to better plan business operations, ERP has been used to patch up disparate systems and processes to provide an integrated information flow to an organization.

like Amazon – online to offline, e-commerce, real time delivery, and drones – the logistics and supply chain industry of the new era needs entirely new levels of speed, accuracy, efficiency and cohesion from its ERP systems and other solutions that they use for driving business.

With technological advances and the explosive growth of companies

The traditional model of patchwork for disparate systems, along with

JUNE 2015 SCMPr

SCMPro_Pg_14_15.indd 14

18-Jun-15 11:04:28 AM

the legacy roots in manufacturing, leaves these logistics and supply chain companies with a software that does not cover their operations comprehensively, creating gaps in vital functions. While a traditional ERP has tried to meet warehousing needs, integrating stacking and racking; companies are now demanding much higher levels of precision, real-time tracking and response systems, to manage the highly dynamic requirements of the modern supply chain business. The nature of modern business, thus, makes it imperative for ERP vendors, and businesses as well, to think of ERP in a totally new context. There needs to be a fundamental shift in the way in which ERP usage is viewed, from a system of records to a system of insights and action. This system must gel with the usage patterns of new generation application users, who are tuned highly into social media. This system must, at the same time, provide high-level automation of routine functions, enabling all levels of user hierarchy manage by exception and ensuring quality time for users, to focus on strategy and innovations. Logistics and technological advances such as Near-Field Communication (NFC), GPS, QR Codes, RFID tags and sensors have to be utilized and integrated with the ERP applications, in order to automate inventory transactions and maximize warehouse space and inventory. Store transactions getting completed in a jiffy, through a couple of scans of QR Codes have been in the mainstream for some time now. GPS enabled tracking of consignments and the ability to visualize real-time status through Google Maps, has brought tremendous benefits to many businesses, already. By using trend analysis through integrated data analytics, one can efficiently arrange warehouse space, ensuring high-traffic items are placed near loading doors, for quick movement.

Additionally, in order to forecast demand and plan inventory effectively, one can leverage multiagent based technology for real-time scheduling, Route Planning and Load Optimization and Inventory Forecasting. This will in turn increase the processing capacity, drastically, ensuring faster and smarter decisions. Also, Big data analytics using the terra bytes of data made available through Internet of Things is the other huge area both supply chain companies and the ERP vendors must focus together on. Mobility solutions are now key for any organization. Smartphones are no longer news, they are a necessity. The smartphone penetration is increasing by leaps and bounds, globally. In a business context, there is always a need to be connected to the latest information, in order to make the best decisions. Being able to manage operations via smart devices gives flexibility and places critical information within reach, allowing thorough evaluations during any situation. Overseeing and managing the supply chain by walking around is no longer impossible, it is now mandatory for

and decisions. Real-time tracking of warehouse utilization, supply chain movements and inventory status is now necessary for warehouse workers and top management to make decisions. All this being said, user-friendliness is still key to determining whether an ERP is properly utilized. If the ordinary logistics worker is unwilling or unable to use the ERP, the system will lack necessary critical information. It is just as important to have an intuitive interface that can be used by everyone from upper management to workers, on the warehouse floor. Building on the new need for analytics, ERP software should also be context-aware. As businesses grow and shrink with the market, their internal functions have to adjust, accordingly. Having this foresight can make the difference between a successful or failed implementation. As technology advances, and newer business models appear on the horizon, ERP solutions need to not only catch up and stay in tune with

While a traditional ERP has tried to meet warehousing needs, integrating stacking and racking; companies are now demanding much higher levels of precision, real-time tracking and response systems, to manage the highly dynamic requirements of the modern supply chain business. business success. Any ERP that lets a user carry out his or her day-to-day work through a mobile device – take customer orders, track statuses of an invoice, authorize a document, apply for leave – is bound to have a legion of fans in an organization. Companies need to gain a competitive edge in today’s market. Ensuring that processes run at optimum levels is not enough. An organization must be able to make accurate, instantaneous changes

the technology trends, but also be agile enough to mold themselves into the ever evolving business models, to fit the needs of the various industries they serve. No longer can traditional ERP platforms shoehorn other business segments into legacy systems. ERP must be redesigned so that it can break away from its legacy manufacturing roots and create a platform to deliver and serve the needs of many. SCMPr JUNE 2015

SCMPro_Pg_14_15.indd 15

18-Jun-15 11:04:28 AM

Lead Story

Leveraging Supply Chain Segmentation for Profitable Growth Contributed by JDA Software (www.jda.com)

anufacturing and distribution companies face an ever-widening range of customer demands as they serve increasingly diverse markets across dynamic global economies. Understanding these changing customer demands and crafting attractive value propositions to serve them is becoming increasingly critical for profitable growth and business retention. Previous onesize-fits-all supply chain strategies cannot adequately or profitably achieve this goal. Instead, companies must segment their supply chain strategies and operations to balance cost-to-serve with the value to the business for each segment. That is the recipe for today’s highperforming supply chains. The concept of segmentation is not new, however. For example, suppose you are a large food manufacturer with a significant portion of your revenue coming from Kroger or Albertson’s. Most likely you have a team and a set of strategies dedicated to each account. The value of their business to you warrants this level of service. The same costbenefit ratio would not apply for every corner food store who also

buys your products, though. You probably have a quite different supply chain strategy for those customers. This difference in strategies in serving various customer segments based on their value to your business is what supply chain segmentation is all about. But the differences between segments may not always be as dramatic as this example. A large portion of your business may be in the middle ground, such as regional grocers or convenience store chains. These may be of insufficient total value to your business to warrant dedicated teams, but large enough to require more attention than a corner store. It is often in this middle ground that companies can especially leverage automated supply chain segmentation to positively impact their growth and profitability. Supply Chain Segmentation Defined Gartner, a global research and advisory firm, describes supply chain segmentation as, “Designing and operating distinctly different end-to-end value chains (from customers to suppliers) optimized by a combination of unique

customer value, product attribute, manufacturing and supply capabilities, and business value considerations. In essence, supply chain segmentation is the dynamic alignment of customer channel demands and supply response capabilities optimized for net profitability across each segment.”1 That covers a lot of ground, so let’s break it down into simpler terms. First, you will want to group elements of your supply chain based on their value to your business. Commonly this includes: • Customers – as in the Kroger and corner store example • Products – certain products may be key for growth strategies, for the customers who order them, or for the volume of sales they generate (think of the 80/20 rule) • Channels – fulfilling direct-toconsumer orders is quite different than fulfilling orders from major retailers or B2B customers • Regions – supply chains in the BRIC countries and emerging markets are usually quite different from those in North America or Western Europe

JUNE 2015 SCMPr

SCMPro_Pg_16_18.indd 16

18-Jun-15 11:39:28 AM

will be of little value if it cannot be put into action during the execution phase. Let’s examine the main components of a segmentation strategy for our sample company.

A supply chain segment can be defined as a grouping based on one or more of the above categories, such as high-volume products sold to Walmart’s North American operations, based on their total annual value to the organization. That value may be defined by volume, revenue, profit margin, strategic importance, or any combination of these factors. The second consideration for segmentation is cost-to-serve. For example, the cost to serve a customer in Germany for a French company will be quite different than for that same company to serve a customer in India. Determining the cost-to-serve across extended supply chains requires visibility to many cost factors, such as production costs, transportation costs, distribution costs and government import/export fees. These costs may be difficult to determine, so intelligent approximations may be used. Each segment represents a unique value-to-the-organization along with the corresponding costto-serve. Offering differentiated service across these segments, profitably, is the goal of supply chain segmentation.

SUPPLY CHAIN SEGMENTATION PROCESSES While a company’s physical assets— raw materials, factory resources, finished goods inventories, warehouses, distribution centers and channels— may be the same across segments, its processes and policies for forecasting customer demand and positioning inventory can be quite different from one segment to the next. By intelligently defining these processes and policies, supply chain professionals can help drive competitive advantage and profitable growth. Let’s consider a manufacturing company that makes and sells 1,000 products globally. The company believes that 50 of those products will be critical growth drivers going forward. This U.S.- based company decides to roll out these new products to the North American market first, with expansion to other regions to follow incrementally. Thus, this segmentation strategy will be based on the intersection of product, strategic importance and region. To be successful, a segmentation strategy must flow through all areas of the business. A good segmentation plan, for example,

Since these are new products, or existing products positioned in new ways, the company cannot forecast demand based on past sales history. The segmentation approach for forecasting demand for these 50 products will require market intelligence on similar products and markets coupled with close collaboration with marketing and sales personnel who are familiar with the customer base. These new products will need to be tracked separately to monitor market acceptance, with more frequent feedback cycles relative to other products in the company’s portfolio. Deploying this segmented demand forecasting technique and performance tracking will support the company’s business strategy for focused growth. INVENTORY SEGMENTATION High inventory availability and corresponding customer service levels are critical to support rapid growth of new products. The company’s strategy to pursue market-share growth through the 50 products will require special attention to inventory policies associated with these products in the North American target market. Higher service levels require higher investments of working capital in inventory. This segmented approach to inventory planning will require an increase in service levels on these products in North America, say, to 99 percent. This may require a corresponding decrease in service levels on other products which the company is not marketing as aggressively, perhaps to 95 percent. As was the case with demand planning, inventory SCMPr JUNE 2015

SCMPro_Pg_16_18.indd 17

18-Jun-15 11:39:28 AM

Lead Story and customer service performance related to these 50 products will need to be monitored separately, in line with the companyâ&#x20AC;&#x2122;s business strategy to leverage these products for growth. MASTER PLANNING AND REPLENISHMENT Producing inventory to meet higher service levels on the strategic products may have significant impact on manufacturing and replenishment policies. Demand prioritization may need to be adjusted to increase the production priority associated with these products. If delivery lead times are a competitive differentiator, positioning these products in finished goods form (make-to-stock) closer to customers may also become a priority. While manufacturing postponement strategies, such as build to a semi-finished stage and assemble-to-order thereafter, may still make sense for some of these products, they may need to be deployed differently. As the company strives for profitable growth by leveraging these strategic products, master planning policies for production and replenishment will need to be tailored accordingly to serve this segment effectively. ALLOCATION PLANNING AND ORDER PROMISING As the company seeks market-share growth in North America from these strategic products, finished goods supply from across the companyâ&#x20AC;&#x2122;s global manufacturing network will need to be allocated more heavily towards North America to support the expected spike in sales. Thus, the company will need to adjust its allocation policies to make sure that projected supply is assigned appropriately across regions in line with its business growth strategy. With suitable allocations in place, order promising in North America should result in short lead times, even with rising demand. Conversely, unexpected demand in Europe or

Asia-Pacific would be promised longer delivery lead times because of limited supply allocations, in line with the business strategy. Strategic segmentation based allocation planning and order promising helps balance value to the business against service levels required to support corporate objectives. PLANNING FOR PROFITABLE EXECUTION Carefully laid plans for the strategic products can become pointless during execution if the cost-to- serve is too high. There are several factors to consider. First, the company will want faster cycle times, but with reasonable costs, to fulfill high priority orders on the strategic products. Warehouse slotting should be used to place the strategic products in forward pick areas so workers can access them faster with less travel. This will help reduce cycle times and costs. Second, labor management systems can reduce the effort and expense for receiving, put-away, replenishment, picking and shipping these strategic products by instituting preferred methods and standards for performing each task. The work is monitored in real time so supervisors can quickly make adjustments if work falls behind schedule. Finally, higher service levels for strategic goods may require faster replenishment. This often means smaller, more frequent shipments that raise transportation costs. Therefore, transportation expense must also be considered as part of the cost-to-serve model that is balanced against desired service levels. Careful shipment planning for the strategic products, including load consolidation, mode selection, routing and carrier selection, can significantly reduce transportation costs while ensuring high service levels.

The business strategy in this simple example was to drive profitable growth through focusing on a subset of products in one specific region. That segmented business strategy required a segmented supply chain response â&#x20AC;&#x201C; including specific adjustments to demand, inventory, master planning, replenishment, allocation, order promising, distribution, labor and transportation management processes. In doing so, even though physical resources remain the same, the end-to-end value chain for strategic products operates differently from the value chain for all other products. That is how supply chain segmentation can be leveraged for growth. Technology Enablement To be successful, segmentation strategies must ripple through all aspects of supply chain operations. This will require careful analysis, planning and monitoring to balance higher service levels with associated cost-to-serve. While conceptually appealing and intrinsically valuable, companies have often struggled to deploy supply chain segmentation strategies because underlying decision support technologies have not been readily available for end-toend value chains. That has changed with the advent of new, advanced technologies over the past few years. JDA offers advanced, integrated supply chain planning and execution technology to drive end-to-end value chains, including all supply chain processes described in this article. Together with in-line analytics for real-time analysis of disruptions and trends, and in-memory processing for speed and scalability, JDA supply chain management suites now provide everything leading companies need to profitably grow their business and create competitive advantage through intelligent supply chain segmentation. The technology is ready. It is up to you to leverage it for your growth and profitability.

JUNE 2015 SCMPr

SCMPro_Pg_16_18.indd 18

18-Jun-15 11:39:28 AM

Join India’s Premier Community of Supply Chain Professionals ISCM and SCM Pro announce the launch of India’s first exclusive community for supply chain management and logistics professionals. As a member of ISCM community, you get privileged access to: A Round Tables: Thought-provoking discussions and information on topics most relevant to supply chain managers. A A free subscription of SCMPro – a thought leadership magazine for the SCM Professional A 50% discount on Special Publications A 20% discount for ISCM’s events A Access to white papers and other research material from our faculty team and other affiliated professionals.

Who should Join? Supply Chain Professionals, Students, Academicians, Consultants, Government Officials involved with SCM and logistics can be part of this initiative. We value the efforts, knowledge and commitment of all members and encourage all to participate in these activities.

Corporate Membership: Individual Membership: A regular membership is available for a yearly fee of Rs. 5000/- only.

Come and be a part of India’s first SCM community. For more details info@iscmindia.net

SCMPro_Pg_39.indd 1

Corporate members are given multiple access to knowledge forum and publications. A regular membership is available for a yearly fee of Rs. 20,000/- only.

Initiative

26-May-15 1:02:17 PM

Lead Story

Manufacturing’s

Third Dimension

Will Transform An Industry Technology has always revolutionized industry – right from 1760, when the Industrial Revolution ushered in a transition of manufacturing from hand production to machines. Labor efficiency started to improve with technology. An outstanding example is China. China used technology brilliantly to become the factory of the world. Technology can cause major disruptions to the way we do business. Today, we are at the cusp of another disruptive technology – 3D Printing. Venkata Seshu Gulibhi of Infosys writes about the emerging technology paradigm.

f I were forced to say which technological innovation in the last few years has been more profound and lasting on the world as a whole, I would have to say 3D printing. Of course, having to choose just one innovation is an extremely difficult task because we’re living in one of the most exciting periods of technological progress ever.

Still, 3D printing is a development unlike anything else. It’s not a stretch to say that’s a gamechanger — a kind of over-the-top technology that is disrupting and improving many industries. Indeed, it’s a technology that

Venkata Seshu Gulibhi (Seshu), Associate Vice President and Senior Delivery Manager, manufacturing business unit at Infosys.

seems almost too good and too outlandish to be true. But make no mistake; 3D printing is already here and is utterly transforming the manufacturing and information technology industries. One research firm estimates that the market for 3D printing, which currently stands at annual $2 billion, could reach $12 - $ 18 billion a year by 2025. But that estimate takes into account the market for 3D printers alone. In terms of an overall industry impact, including the prototypes, machines, parts made

With this impending manufacturing boom comes a significant demand for corresponding IT services. One of the most important functions of IT vis-à-vis new 3D printing programs will be security

JUNE 2015 SCMPr

SCMPro_Pg_20_21.indd 20

18-Jun-15 11:40:56 AM

by those printers and services, 3D printing could become a $550 billion-a-year industry by 2025, according to McKinsey. Why such a mind-boggling dollar figure? Because 3D printing stands to turn the entire research & development process on its head by consolidating it into a few clicks of the mouse. Here’s what I mean: The manufacturing industry continues to follow the same product development and manufacturing cycle for new product introductions as it has for nearly a century. The same steps that an industrial plant in the 1920s had to tick off are essentially what a high-tech manufacturer must do today. They’re concerned with ideation, concept design, prototypes, pilots and mainstream manufacturing. Depending on the project, it can take several months to go through the entire cycle. What’s so great about 3D printing is that it significantly accelerates initial stages of idea to prototype and fundamentally transform the way the products are manufactured and reducing time to market. This “print-as-you-go” approach has incredibly fascinating pricing ramifications for low-volume items. We’ll see a lot more 3D printing being adopted in areas where it is more suitable and provides for a better ROI — mainly highly customized and highly complex items. On the flip side, 3D technology will allow anyone, anywhere to pitch in on a project as needed. We’ll see more crowd sourcing of design and engineering by organizations that leverage global delivery models. Those companies will own the IPs for the products they produce will only give the right to end

users in order to download and print a certain number of copies of the product. This process is not unlike the licensing models used for software products today. Also imagine what making certain products available over the Internet in the style of Open Source software can do to the improvisation and improvement of large-scale projects. At Infosys, we’re seeing 3D printing applications for just about every business and industry and across all segments of manufacturing. 3D printing is going to shorten product development time. The market for spare parts becomes a very targeted and economical one because there is no need for warehouses full of back-inventory. From a counterfeiting point of view, the printers discourage a black market of cheaply made parts by rogue parties. For instance, there will be no need to keep an

future, doctors will be able to print out customized synthetic organs and valves that fit each patient with precision. And hey, if this concept works for surgeons, I suppose it could work just as well for clothing retailers. Can you imagine visiting the shoe store only to have your feet “mapped” and a customized pair of shoes printed out within minutes? Talk about bespoke tailoring! With this impending manufacturing boom comes a significant demand for corresponding IT services. One of the most important functions of IT vis-à-vis new 3D printing programs will be security. Think of how a cyber-thief can copy stateof-the-art components without ever being near the physical plant. As such, companies will need to authenticate all the components involved in a printing project for both warranty and serialization issues.

In terms of an overall industry impact, including the prototypes, machines, parts made by those printers and services, 3D printing could become a $550 billion-a-year industry by 2025 inventory of items and the “predictmanufacture-sell” model will be replaced with “demand-orderdesign-print.” Just think about not having to maintain an inventory of spare parts for older variants of expensive products. You can print them as needed. What industry excites me the most when discussing 3D printing? It has to be healthcare. As it stands now, medical valves and synthetic organs are standardized. Every post-op involves a family hoping that the body will accept the implant. In the not-too-distant

All of the uncertainties that have surrounded R&D projects and assembly lines will essentially cease to exist when companies properly builds out a 3D printing system in supply chain of manufacturing, as the rolling assembly line revolutionized how companies could bring products to the market that were affordable by the masses, so, too, will 3D printing usher in an entirely new era. When it comes to designing and manufacturing products with a 3D printer, the sky isn’t even the limit. SCMPr JUNE 2015

SCMPro_Pg_20_21.indd 21

18-Jun-15 11:40:56 AM

Guru Speak

SMACing the Supply Chain SMAC – the acronym for Social Networks, Mobile, Analytics and Cloud Computing – is changing the way we do business. Traditionally, entities in the supply chain relied on a huge paper trail to exchange data and collaborate. A globalized supply chain and a googleized world riding on a Linkedin network requires a radical re-look at supply chain practices. Editor of SCMPro, Girish V S takes a look at the future of supply chain in a SMAC world. Business models across the globe have undergone a paradigm shift. Firms recognized the benefits of broad basing their manufacturing and sourcing to countries that give them the best pricing advantage. Along with this, they expanded their customer base globally. But the key to success in this environment is the ability to track and trace the movement of goods, information and finance across the network. This also meant that a number of business practices changed. Gone was the archaic documentation exchange protocol – a series of printed documents exchanged multiple times across a supply network. The first innovation was EDI – where firms could electronically exchange data. Advances in communication technology helped firms seamlessly exchange data between their offices, bringing in efficiency gains.

Girish V S, Editor SCMPro

The next round was the ERP – a series of software solutions that linked offices and allowed firms to easily control their far flung business operations. The technology used was “client –Server” where individual software had to be installed in all PCs for users to access the software. And access could only be through the specific PC. As offices were opened in far flung areas, and as the

entire business ecosystem started integrating for data exchange, this technology had reached its limits. The next wave was browser based applications that used the internet browser for access – thereby allowing access from any location. The current paradigm in technology is titled SMAC – for Social media, Mobility, Analytics and Cloud – an acronym coined by Cognizant, (Gartner calls it “Nexus of Forces”) where four different technology trends are converging to disrupt the existing business models. The impact of this convergence will be far reaching – where real time data, always on accessibility, insightful analytics on an on-demand platform will shape the way customers interact, buy and experience the buying process. Firms need to gear up to meet this new normal. The power of these four forces can be understood by a simple example. A customer once walked into a store in Washington to buy a bottle of Heinz Ketchup. But it was not available. The customer tweeted that he could not buy the product. The next thing he knows, he is contacted by a representative of Heinz, and a complimentary bottle delivered to him! Customer delight anyone?

JUNE 2015 SCMPr

SCMPro_Pg_22_23.indd 22

18-Jun-15 11:44:59 AM

Social media is double edged. On the one hand, it can tell a firm a lot about the potential customer – a buyer will research on-line before the actual buy – giving firms an opportunity to reach out to the customer. On the other hand, increasingly, customers are posting their frustrations on to social media sites – most often the firm hears about the problem through the social media. Social media will accelerate the propagation of bad news. Social media allows firms to gather and disseminate information up and down the supply chain, which in turn will build transparency, trust and collaboration. Social media and mobility, when combined can offer firms four major advantages: one, it can

firm’s reputation through the blogs, tweets and presence in discussion forums. At the same time, firms can gather qualitative information about potential customers and suppliers – the payment history of the customer, the delivery capabilities of the supplier etc. It can also help the firm assess the mood of the entities in the supply chain, heading off any potential trouble. Third, it improves supply chain collaboration by enabling the voice of the customer to reach the relevant desk in the firm for product or service improvement suggestions, help collect product and service improvement ideas from non-traditional sources, from across the world; improve internal collaboration among stakeholders by providing a seamless platform

firms have to ensure supply chain traceability, sales and operations planning efficiency, collect and store demand signals from across the value chain, including social media, perform multi - level inventory optimization, and leverage data from the shop front in real time to plan and manage their production planning and distribution. Analytics can build competitive advantage – more so because of the complexity of the chain and the role supply chain can play in cost rationalization and profitability improvement. According to a survey in the US, 73 percent of the executives indicated that supply chain analytics tools are important to meeting their company goals. And with 71 percent of respondents noting that current analytics tools

Source: Gartner (December 2014) offer real time event management capabilities. Firms can send alerts on shipment status to their customer, communicate pricing changes, depending on the mode and urgency, and proactively engage with the customer during supply chain delays or disruption, including alternate modes, in consultation with the customer. Two, it can help in managing relationships. Social media cam help build a

and integrate external stakeholders across the entire value chain for greater data sharing. By far the biggest benefit would be to enable the firm to identify, tag and store information from social media into traditional databases. This will help protect the investments into ERP systems, while enabling the firm to embrace the new paradigm. The global business models call for a real time supply chain support –

need to be more predictive and go beyond providing information about prior performance. Social media, Mobile and Analytics when combined with the price efficiency of Cloud, becomes affordable even to smaller firms. But to harness the power of this convergence, firms need to go back to their business models and integrate the “nexus of forces”. As they say – let the force be with you. SCMPr JUNE 2015

SCMPro_Pg_22_23.indd 23

18-Jun-15 11:44:59 AM

SME LeadCorner Story

A Strategist’s Guide to the

Internet of Things

The digital interconnection of billions of devices is today’s most dynamic business opportunity.

Frank Burkitt

s a senior executive advisor with Strategy& based in Los Angeles. He leads the Internet of Things and digital operations services for Strategy&’s Digital Services. He was formerly the CEO and founder of ReleasePlan, a cloud-based enterprise software company. (This article was originally carried in the Strategist of …….. Reprinted with permission from Business Standard. It will be carried as a two part series. The concluding part will appear in the next issue of SCMPro.) Humanity has arrived at a critical threshold in the evolution of computing. By 2020, an estimated 50 billion devices around the

globe will be connected to the Internet. Perhaps a third of them will be computers, smartphones, tablets, and TVs. The remaining two thirds will be other kinds of “things”: sensors, actuators, and newly invented intelligent devices that monitor, control, analyze, and optimize our world. This seemingly sudden trend has been decades in the making, but is just now hitting a tipping point. The arrival of the “Internet of Things” (IoT) represents a transformative shift for the economy, similar to the introduction of the PC itself. It incorporates other major technology industry trends such as cloud computing, data analytics, and mobile communications, but goes

beyond them. Unlike earlier efforts to track and control large systems, such as radio-frequency identification (RFID), the Internet connection gives this shift almost limitless versatility. The IoT also opens a range of new business opportunities for a variety of players. These opportunities tend to fall into three broad strategic categories, each reflecting a different type of enterprise: “Enablers” that develop and implement the underlying technology “Engagers” that design, create, integrate, and deliver IoT services to customers

JUNE 2015 SCMPr

SCMPro_Pg_24_25_26.indd 24

18-Jun-15 11:46:58 AM

Things will involve getting to know customers—both consumers and businesses— more intimately, and providing new digital services and experiences to delight them. Rarely, if ever, has a single technological platform combined this much complexity, speed of development, global reach, and novelty among customers. Consider the range of interconnected systems, products, and services the IoT will enable, from simple monitoring of home temperature and security to the “quantified self ” (the tracking of personal health, diet, and exercise metrics), to fully networked factories and hospitals, to automated cities that respond to the movements and interests of thousands of people at once. Yet for all its power, the IoT is still at the early-adopter stage; in the words of innovation theorist Geoffrey Moore, it has yet to “cross the chasm” into the mainstream. It thus behooves business strategists now to figure out the role they want to play, the capabilities they will need to move forward, and the types of innovation they should pursue.

“Enhancers” that devise their own value-added services, on top of the services provided by Engagers, that are unique to the Internet of Things How will your company build value in this new `world? That will depend on the type of business you have today, the capabilities you can develop for tomorrow, and, most of all, your ability to understand the meaning of this new technology. Evolution and Opportunity At present, the Internet of Things remains a wide-open playing field for enterprises. It’s young, heterogeneous, and full of uncertainty. Estimates of potential

economic impact by 2020 (as tracked by the Postscapes information service) range from about US$2 trillion to more than $14 trillion. Companies small and large, old and new, are scrambling to stake out their territory. Expectations are high: One in every six businesses is planning to roll out an IoT-based product, and three-quarters of companies are exploring how to use the IoT to improve their internal operations and services. (See “Embedding the IoT in Your Business,” by Chris Curran) Much early work is likely to focus on boosting efficiency and cutting costs, but the greatest long-term business value of the Internet of

The IoT has its technological roots in the decades long effort to monitor and control the physical environment in which people work and play. Its most basic components are embedded devices that have existed for years: thermostats that sense ambient temperature and control heating and cooling systems, sensors that manage braking systems in automobiles, pacemakers that regulate the heart, airplane black boxes that track flight paths, and location devices that monitor the whereabouts of industrial equipment. In the past, some of these devices were wired together into more complex systems. But it wasn’t until they were provided with some intelligence, connected to the Internet, and SCMPr JUNE 2015

SCMPro_Pg_24_25_26.indd 25

18-Jun-15 11:46:59 AM

Lead Story

NO/CLOSED NETWORKS Endpoint

INTERNET OF THINGS Simple Hub

Control

Monitor

Enhanced Service

GE Software Predict and other industry platform for interconnecting analytic engines and business operation

OPTIMIZ

Adapt

Integrating Hubs

Large Scale digital city system like those under Development at MIT and Barcelona

Stand-alone GPS Navigation devices

Motion –or Light responsive alarms and control

Simple thermostats and motion sensors

Progressively snapshot and other auto insurance telematics System Smartphone Apps That use location tracking Google Nest and other internet connected system for heating, cooling, ventilation Estimate Beacon, iBecon, and other Bluetooth-enabled object identification sensor system Jawbone UP, Fitbit , and other fitness activity sensors and hub system

Apple Homekit and other protocol-based platform allowing diverse devices in a building to interconnect to one another and internet

Emerging System for setting insurance rates based on heath and driving behaviour

WeMo and other system for controlling lights and appliances through remote and mobile devices

Potential connectedcar traffic management system

BodyGuardian and other medical wearable that feed data to online diagnostic platform

Source : Strategy & (To be continued in the next issue) empowered by a new wave of technological accessibility— through cloud computing, smartphones, and the prototyping capabilities of digital fabrication—that the IoT came into being. For example, the Nest Learning Thermostat performs the fundamental function of an ordinary smart thermostat: It monitors temperature and turns heating and cooling systems on and off to maintain the programmed target. But the Nest also senses humidity, activity, and light, and its builtin intelligence “learns” how and when the user likes to adjust the temperature. It can even optimize the house’s temperature for energy efficiency. All this, together, still doesn’t make the Nest part of the IoT. But when it’s connected to a utility company or the Nest Account

(hosted by Google, Nest’s parent company) through a home Wi-Fi network, it has far greater value. That connection allows people to monitor and change the temperature from their smartphones, modify the heating schedule, and analyze their home heating activity. It also allows utility companies to offer incentives for using less power at peak times or to offer additional services. Similarly, the Jawbone UP, a personal activity monitor worn around the wrist, automatically establishes a Bluetooth connection to a smartphone running the UP app— creating what’s called a “proximity network”— and provides detailed information on exercise levels, sleep patterns, and food consumption. Through the Internet, Jawbone’s users can reach a variety of fitness and nutrition services with their UP

app, enabling them to analyze their levels of activity and overall health. For these devices and many others, the greatest potential value of the IoT lies in that connection to the Internet, and to the many integrated services offered there (see Exhibit 1). Exhibit 1: Services Available through the Internet of Things This list of IoT services is arranged on two critical dimensions. The horizontal rows (from monitor at the bottom to optimize at the top) represent the value delivered to customers, in order of complexity. The columns (from endpoints to enhanced services) represent the technologies of the IoT as described in this article, in increasing complexity from left to right. (Network and cloud services are not shown because they are not typically oriented to end-users.)

JUNE 2015 SCMPr

SCMPro_Pg_24_25_26.indd 26

18-Jun-15 11:46:59 AM

t on ati vit In t

isi

THE INTERNATIONAL MEETING PLACE FOR WAREHOUSING, LOGISTICS & SUPPLY CHAIN Co-located Show

P r e r e g i s t e r a t w w w. I n d i a Wa r e h o u s i n g S h o w. c o m & a v a i l b e n e f i t s

SOURCE new products and drive saleS

MEET new contacts and build network

Learn the emerging or

changing trends

Visitor Helpline No.:+91 88260 02059

india warehousing

conference 2015 01 & 02 JULY 2015, PRAGATI MAIDAN, NEW DELHI, INDIA

CONFERENCE THEME: CREATING A COMPETITIVE WAREHOUSING MARKET IN INDIA

For delegate booking contact: Janish Jafri E - janish.jafri@reedmanch.com M - +91 9999686007 www.IndiaWarehousingShow.com

Worth enough to say, IWS Iâ&#x20AC;&#x2122;ll GO! Foundation Partner

Gold Partner

VIP Partner

Supported By

To Exhibit, Contact: Akshita Kapoor | +91-9811715124 |

Media Partner

akshita.kapoor@reedmanch.com

PRE-REGISTER NOW to visit India Warehousing Show 2015

Organised By

SCM Classroom

Incoterms Incoterms or International Commercial Terms are a series of three digit standard codes published by the International Chamber of Commerce, used in trade â&#x20AC;&#x201C; both domestic and international. As a seller and buyer exchange goods and services, the responsibilities of either party need to be clearly and unambiguously understood. Incoterms defines the cost, responsibility and risk associated with the transport of goods. Incoterms are now widely accepted by trade, governments and courts. Incoterms were originally meant for cross border trade. However, with the emergence of trading blocks and customs unions, the boundaries between domestic and cross border have dimmed. For example in the European Union, goods can move freely across borders, without customs formalities. Therefore, ICC has now added even domestic trade in the Incoterms ambit. In addition, ICC has allowed electronic transmission of documents as legal, if both parties agree to it. There are eleven incoterms (reduced from the 13) that defines the responsibilities of the seller and buyer. Beginning from Ex-Works (EXW), where the seller hands over the goods at his factory gates to Delivery Duty Paid (DDP) where the seller delivers the goods to the buyer at the buyers destination. The Incoterms can be understood in a easy illustration as below.

Incoterm 2010

Loading Export Carriage Unloading of on vessel customs to port of truck in port in port of declaration export of export export

Carriage (Sea/Air) to port of import

Unloading Insurance in port of import

Loading on Carriage truck in port to place of of import destination

Import Import customs taxes clearance

EXW

Buyer

FCA

Seller

Buyer

FAS

Seller

Buyer

FOB

Seller

Buyer

CPT

Seller

Buyer

CFR(CNF)

Seller

Buyer

CIF

Seller

Buyer

CIP

Seller

Buyer/Seller Buyer/Seller Buyer

Buyer

DAT

Seller

Buyer

DAP

Seller

Buyer

DDP

Seller

JUNE 2015 SCMPr

SCMPro_Pg_28.indd 28

18-Jun-15 5:10:13 PM

WAREHOUSE COMPENDIUM 2015

arehousing in India has been evolving rapidly from traditional ‘Godowns’ to modern storage facilities. Driven by growth in production and consumption, the demand for warehousing space is increasing. However the overall growth potential is limited by several challenges. The Warehousing Compendium 2015 by SCMPro is a resourceful informative handbook with well researched articles on various aspects of warehousing & inventory management. With high referral value and long shelf life the ‘Warehouse Compendium’ is a must have reference handbook for the stake holders of the logistic & supply chain industry.Some of the Chapters in the compendium is as follows: 1. 2. 3. 4. 5. 6. 7. 8.

The Warehousing Scenario in India Role of the warehouse in the supply chain Elements of warehousing strategy New warehouse technologies Warehouse functions Warehouse management issues Warehouse planning Warehouse cost management

9. 10. 11. 12. 13. 14. 15.

Performance management and improvement The Challenge of Warehousing Distribution Network Systems Personnel Planning Achieving Warehousing Excellence Cold Chains Agri Commodity Warehouses To Advertise: ri

ddhi.solanki@sc

mp.in

To Subscribe: bhavi.shah@scmp.in

D-204, Riddhi Siddhi Complex, Off. S.V.Road, Lane Opp. Patkar College, Prem Nagar Road, Goregaon (W), Mumbai – 400062. Tel: 022 60020157/ 59 | info@iscmindia.net

Wherehouseing Add.indd 1

18-Jun-15 5:29:02 PM

SME Corner

My Pocket, Your Pocket or Their Pocket - Capital Markets and SME

In our series on issues and challenges facing SMEs in India we explored the role of financing – from the banking system and the trade channels. These are working capital financing methods or short term funding – financing for a business when it is up and running. The bigger challenge to SMEs in developing countries is the access to long term funding for expansion. SMEs are owner managed entities, most often family managed. SMEs need an alternate system for funding their expansion, that is apart from the owner’s pockets. This article explores the challenges posed by Capital Markets to SMEs. A corporate has three sources for long term funding – the owners funds (my pocket), bank financing (your pocket) and capital markets (their pockets). This article looks at the “Their Pocket” aspect of long term funding – the financial markets. Long term funding is an essential element for promoting investments and growth of the firm. In India, banks have been the preferred choice of long term funding. However, the crisis of 2008 and the added regulatory capital in the Basel III prescriptions has made bank financing very expensive. The owners pockets are fairly small when it comes to funding. However, when the capital markets are developed, they can form an alternate route for SMEs to raise capital. Large firms routinely raise capital from the overseas capital markets at very competitive rates. Even domestic funding for large corporates has moved to the commercial paper market –

something that is prohibited for an SME! SMEs have an enviable role in the economy – not just in India – where they account for 40 percent of

exports and 40 percent of organized employment. Across the world, the scenario is the same- see the

Capital Market financing is one of the policy challenges for Governments, which requires innovative institutional arrangements to deliver long term funding to SMEs 30

graph below. SMEs require funding across the business cycle – from the start up stage, to expansion and diversification. However, lack of access to competitive financing limits their growth and expansion.

An IFC and McKinsey study in 2010 estimated the funding gap of MSME and informal sector at around USD two trillion. According to a report by YES Bank, the total gap in MSME funding in India is estimated to be around USD 126 Billion. Out of this, the debt gap is approximately USD 84 Billion and equity GAP is about USD 42 Billion. Out of this the total

JUNE 2015 SCMPr

SCMPro_Pg_30_32.indd 30

18-Jun-15 12:40:42 PM

Benefits of Listing (BSE SME Platform) Easy access to Capital - BSE SME provides an avenue to raise capital through equity infusion for growth oriented SME’s. Enhanced Visibility and Prestige - The SME’s benefit by greater credibility and enhanced financial status leading to demand in the company’s shares and higher valuation of the company. Encourages Growth of SMEs - Equity financing provides growth opportunities like expansion, mergers and acquisitions thus being a cost effective and tax efficient mode. Ensures Tax Benefits - In case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term Capital Gains Tax. Enables Liquidity for Shareholders - Equity financing enables liquidity for shareholders, provides growth opportunities like expansion, mergers and acquisitions, thus being a cost effective and tax efficient mode. Equity financing through Venture Capital - Provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing their lock in period. Efficient Risk Distribution - Capital Markets ensure that the capital flows to its best uses and that riskier activities with higher payoffs are funded. Employee Incentives - Employee Stock Options ensures stronger employee commitment, participation and recruitment incentive. equity supply is only about USD 526 million. Such a financing gap cannot be met by the banking system alone. Capital Market financing is one of the policy challenges for Governments, which requires innovative institutional arrangements to deliver long term funding to SMEs. SMEs can be categorized into two segments – the proprietorships and partnerships and the low growing firms which will not and cannot access capital markets and the fast growing, fairly professional firms who will generate employment and are prime candidates to access capital markets for funding. The first hurdle to SME access to capital market is Governmental support in creating an institutional ecosystem conducive to SME funding. In India, both the

Source: International Organization of Securities Commissions

Government and the RBI are seized of the matter and the Mudra bank is a small step in this direction.

Capital Market Access and SME Across the world, SME focused trading platforms have been created. SCMPr JUNE 2015

SCMPro_Pg_30_32.indd 31

18-Jun-15 12:40:42 PM

SME Corner Alternate Investment Market (London), TSX Venture (Canada), HK GEM (Hong Kong), Mothers (Japan), Alternext (Europe) and AltX (South Africa) are a few examples. In India, both the BSE and NSE have setup SME trading platforms. Across the world, there are a number of long term financing products available to the SME. (see figure 2) They encompass equity products, debt market products, securitized assets and pooled investments. Of these securitization and pooled investments are absent from the Indian SME mindset. A simple and elegant product like factoring has not found acceptance in India. The easiest to roll out is the SME Capital market segment. A study by Oliver Wyman, a leading consulting firm finds that SME Capital markets can add up to 0.1 to 0.2 percent of the GDP every year. The NSE and BSE have in place a platform for SME listing – allowing SME firms access to Equity and Debt markets. These have met with reasonable success. The limited success of the SME capital market segment can be traced to the lack of a financing eco system in India. SMEs, by their smaller size, lack the kind of professional services that their larger counterparts enjoy. For example, SMEs will need assistance in accounting and financial reporting, legal services, stakeholder coordination and management, due diligence and prospectus writing, investment case development, IPO roadshow support and financial PR and marketing services. Innovations in SME Funding There are suggestions from study groups that SME exchanges should extend their services to such domains, providing SMEs a credible alternative. This will help the exchange in ensuring transparency in reporting – the bug bear of SME financing. Another innovation suggested is to float a pan regional SME exchange – one that brings the

SME exchanges of a few countries together, thereby increasing the ability of the SME to raise capital at a cheaper rate. This also addresses a few challenges faced by SME exchanges – the lack of investor preference. Large investors prefer dealing in large cap stocks as it helps them deploy large sums of money. A regional network of SME exchanges will provide the small investors a wider choice in investment avenues

create jobs and fuel GDP growth, which in turn will create buoyancy in taxes. Banks too can play a role in creating an enabling ecosystem. Credit brokers are one such ecosystem player. Funding Options Ltd., a UK based credit broker uses proprietary online technology to scan the alternative finance market for

Due to their small size and the fears of information asymmetry surrounding SMEs, getting the issue subscribed is a challenge and the SMEs a larger pool to attract investments from. Such experiments are underway in Europe – the Alternext, Africa and Middle East. A SAARC or Indo – ASEAN exchange would be a good development. There will be significant challenges like differing listing norms, tax, antifraud rules and currency differences. An alternate to setting up a Pan Regional exchange is setting up a virtual exchange platform – linking exchanges and creating a virtual platform for accessing capital across the region. A Virtual link is cheaper to set up and run. A third and important element in SME funding is creating the right ecosystem. This is a role the government has to play. For starters, we could setup an India SME Taskforce – on the lines of the US or the EU IPO task force, to help SMEs tap the IPO market. Due to their small size and the fears of information asymmetry surrounding SMEs, getting the issue subscribed is a challenge. The taskforce identified the amendments and changes that need to be made to ease raising capital by SMEs. Another requirement for long term SME financing is an enabling tax environment – with tax and duty breaks for investors and owners of SMEs. A vibrant SME sector can

the most suitable funding options available. Mixing sophisticated matchmaking tools, accessible expert support and practical education materials, Funding Options has helped UK SMEs to access tens of millions of pounds in vital funding. A credit broker could piggy back on a bank’s lending platform and create low cost avenues for credit. For yet another innovation, we could borrow a leaf out of the Gramin Bank of Bangladesh – collective guarantee. The SMEs could form a cooperative, where the members stand guarantee for the others in the group for adherence to norms. Members of the group could be given access to funding at lower rates. SMEs are the backbone of the economy. Interestingly, it was observed that in the US, between 2008 to 2010, SMEs grew by about 1.6 percent whereas the rest of the industry shrank by 1.5 percent. (source: Venture Impact 2007, 2008, 2009 & 2010 by IHS Global Insight) The right climate for fostering funding options to SMEs can help reduce the funding gap, and at the same time boost the country’s GDP and employment. For this to happen, banks should take the lead by collaborating with other ecosystem players like credit brokers.

JUNE 2015 SCMPr

SCMPro_Pg_30_32.indd 32

18-Jun-15 12:40:42 PM

Academic Advocacy

Supply Chain Integration and Information Technology The two main barriers faced in Supply Chain are Management of Inventory and timely delivery of goods to meet the demand of customers. Hence, performance of Supply chain is measured by the impact on inventory turnover and lead time of goods. The transparency of demand across the Supply Chain i.e. product visibility across the Supply Chain would lead to improvement of performance was the expectation set by this study. However, an important outcome of the study has been the resistance observed in the industry in implementation of technology infrastructure.

Rakesh Singh, Chairman ISCM and Distinguished Visiting Professor of Supply Chain and Strategy, Great Lakes Institute of Management, Chennai. Co - Authored with Vaidy Jayaraman, University of Miami, USA

he earliest and most pioneering work in the field of integrated supply chains was done by Forrester (1961). Over the years, numerous studies have followed on similar lines mostly on theoretical models to prove that poor Supply chain integration results in the â&#x20AC;&#x153;Bull whipâ&#x20AC;? effect or the sequential buildup of inventories right from the downstream partners to up the Supply chain. Quite the opposite happens with an integrated Supply chain. With the advent of Information technology in the form of Internet, seamless integration has become very common. The main need for IT results from the following characteristics businesses have acquired since the 90s (Liljenberg, 1996) which includes (i) customer expectations are rising, (ii) complex businesses are relying on skills and knowledge of people increasingly and (iii) power of IT lies in the heart of businesses. All these consequences require the modern businesses to stay closer

to the customer to be proactive in satisfying his needs. As planning instability grows backwards up the supply chain, controlling errors with the downstream partners becomes very important. The more integrated the flow of data between channel partners, the easier it is to balance the supply and demand across the entire network. An important trend in that direction is the use of Internet for Supply chain integration. Pre- internee, real time demand information and inventory visibility were impossible to achieve. This has changed in the Internet era and widely available web based technologies allow strong customer and supplier integration for inventory planning, demand forecasting, order scheduling and customer relationship management. The basic notion of channel design is that efficiency can be improved sharing information among agents and plan jointly rather than distinctly (Raghunathan, 2001). In terms of relationships between manufacturers

JUNE 2015 SCMPr

SCMPro_Pg_34_36.indd 34

18-Jun-15 1:27:25 PM

and distributors, in order to implement coordinating mechanisms and thus attain greater efficiency in supply chain management, the partners must share information, for a number of reasons, including the following as mentioned by Cachon and Fisher (2000). - The mechanisms allow the manufacturers to understand each customer’s specific aspects and address them in a distinct manner, adding value to the line of products - Characteristics such as segmentation of the points-of-sales and types of customers along the supply chain should be taken into account, especially in decisions to launch new products and in dealing with each store’s mix. There are five innovative technologies which have had significant impact on supply chain integration seamlessly: Electronic data interchange (EDI), personal computers, artificial intelligence, communications systems, bar codes and scanners. Greater Supply-chain visibility, as well as more accurate and timely information about supply-chain execution, allows for reduced safety stocks (thus optimizing cash-to-cash cycles and reducing inventory carrying cost) and increased on-time performance to customer commitments (thus driving additional revenue opportunities). Operating cost improves, as RFID (Radio Frequency Identification) significantly reduces the cost of cycle counting, receiving, picking and shipping.

Method The methodology of establishing the aforementioned hypotheses is by development of a survey tool. This survey tool is in the form of a questionnaire which is administered to a set of respondents who are part of organizations and work with technologies for interaction with the

channel partners. The development of the questionnaire involved evaluation of the technologies and methodologies used in the industry for e-integration. Considering the same, a primary focus of the study was to focus on the demand visibility for channel partners. An important strategy in that direction is “Collaborative planning, forecasting and replenishment”. This was administered to a mix of respondents from Industry and academicians. The sample size for the study was thirty. Glaxo Smith Kline consumer health care and Marico Industries were two of the organizations mainly involved in this study from whose employees a major chunk of the industry related response was elicited. The exact nature of value addition through Information technology is qualitative and cannot be measured by investments made on Information technology infrastructure or types of technologies used in organizations. There have been cases where authors have mentioned about the widespread view that Information technology has made the functions difficult for execution and there has been considerable resistance to IT. It has been proven that resistance to implementation of Information technology infrastructure is a major deterrent in improving the performance of Supply chains (Frohlich, 2002). Hence, instead of using explicit values of the variables of Study, data was measured on a 5-point Likert scale from 1- Strongly

of Information technology infrastructure. This would aid in obtaining insight into the prospects of Information technology usage in organizations as the complexity of Supply chain grows. The data obtained was fed into SPSS for analysis. The final analysis was to find out if there was any impact on the third variable through a mediating variable. This was done primarily to estimate the impact of “Product visibility” on “Lead time” through the impact “Product visibility” had on “Inventory turnover. The same was carried out for the “Vice versa” case.

Results As mentioned earlier, the two main problems faced by Supply chains are demand uncertainty (Turban et al., 2004) and integration of Supply chain (Cooper et al. 1997; Burgess, 1998; Leeuw et al. 1999). The end result is the Lead time increase and inventory build-up. Product visibility was postulated as a factor to reduce the impact on Lead time and inventory turnover. The first step was to analyze the validity of responses obtained. The results considerably prove that accuracy was obtained for each of the three variables, (0.7 for Inventory turnover, 0.6 for Lead time, and 0.8 for Product visibility). There is a significant influence of “Product visibility” on “Lead time” (sig<0.05). On the other hand “Product visibility” does not have a similar impact on Inventory turnover (sig>0.05). However, there seems

The transparency of supply chain i.e. the product visibility across the supply chain would lead to improvement of the performance was the expectation set by this study disagree to 5- Strongly agree. The questions were mainly used to measure perceived benefits (in form of inventory turns and Lead time reduction) through employment

to be a relation between the Lead time and Inventory turnover. The mode of impact, reduction of Lead time, would have on Inventory turnover is not very clear. While, SCMPr JUNE 2015

SCMPro_Pg_34_36.indd 35

18-Jun-15 1:27:25 PM

Academic Advocacy there is no mention of this effect in the literature review, this may be an indirect impact of reduction of Lead time, as the number of times the inventory would be replenished may increase. To analyze the same, an analysis was carried out to investigate whether there was a significant impact on inventory turnover due to Lead time and vice versa. The program tried to analyze the impact of a variable on another through a mediating variable. The

line with the observations of certain studies done earlier. As mentioned earlier, reducing lead times has been cited as an important reason for adopting IT integration programs (Attaran, 1989; Schlie & Goldhar, 1995; McAfee, 2002). On the other hand the impact of Product Visibility on Inventory turnover is not very clear. While, the final results show that the significance values are much higher than 0.05 and hence don’t fit in the confidence interval. Consequently,

The two main problems faced by Supply chains are demand uncertainty and integration of Supply chain impact of Lead Time on Inventory turnover and vice versa is ruled out. The results show that the significance level is about 0.17 or 83% confidence interval for the case when “Inventory turnover” is used as a mediating variable and 0.09 with 91% confidence interval for “Lead time” as a mediating variable. Each of these cases doesn’t fit the required confidence interval of 95%. Hence, the next step was to analyze the impact of Product visibility on Inventory turnover and Lead time. The results show that “Product visibility” does impact Lead time as exhibited by the significance values (sig<0.05). However, the same is not observed about the “Inventory turnover” variable (sig>0.05).

Discussion The results as shown in the previous section show that Product visibility does have a performance enhancing impact. The impact it has on “Lead time” is proven by the significance values (sig<0.05 just about 0.01). However, the other result shows that there is no impact of Lead time on Inventory turnover which is evident from the significance value greater than 0.05 and lesser than the 95% confidence interval. This result is in

the improvement of demand information visibility across the Supply chain does not affect the inventory turnover of the Supply chain. The opposite has been the result of earlier studies based on mathematical models. It was shown that electronic data interchange (EDI) could reduce swings in inventory and safety stock levels. The simulation results of a study (Owens & Levary, 2002) showed that (among other improvements) the standard deviation of the stock level was reduced from 749 to 272 tons, leading to 400,000 $ annual savings. Also, the study on Bullwhip effect (Cachon & Fisher, 2000), shows that there is a considerable decrease in inventory build-up due to the visibility of demand information across the supply chain. The main feature of this study has been the mathematical modeling technique with four echelons built in the Supply chain. Similar models have been used in other studies too (Verwijmeren etal., 1996) to ascertain the performance enhancing effects of demand/ product visibility on Inventory turnover. At the same time the secondary impact of inventory turnover on Lead

time due to improvement of “Product visibility” is also ruled out, thus, eliminating any mediation effect (sig>0.05).

Conclusion The main focus of this study has been improvement of the performance of supply chain. The metrics chosen were Inventory turnover and Lead time. The transparency of supply chain i.e. the product visibility across the supply chain would lead to improvement of the performance was the expectation set by this study. The result ascertains these stated facts on the basis of responses from Industry. While, there have been widespread awareness and research in this area in US, Europe and other industrially developed nations, Asia has been growing its industries lately with reforms in the economic set up and governance. Hence, the percolation of Supply chain enhancements has taken time to set foot here. However, this study shows that certain sectors, primarily, FMCG goods industry are in the forefront in using technologies primarily Information technology to improve the Supply chain. On the other hand, the other finding has been that impact is not adequate of Information technology on Inventory turnover. While, this is in contrast to earlier studies, the same is not evident by the study, enhancement effects on inventory turnover through Information technology cannot be brushed aside. However, an important outcome of the study has been the resistance observed in the industry in implementation of technology infrastructure. Since, the study is based on survey methods, the perceptions of the respondents reflect the lack of confidence in Information technology in improving the demand visibility and hence the inventory position of Supply chain partners.

JUNE 2015 SCMPr

SCMPro_Pg_34_36.indd 36

18-Jun-15 1:27:25 PM

Rural and Agricultural Supply Chain Summit 2015 21st August 2015, The Orchid Mumbai Out of the Box Strategies for the Future

Rural markets provide a vast opportunity for corporates in India. In the past companies have been flirting with rural markets without much commitment. There are three important flows in rural markets: Urban to rural for consumables and expendables, urban to rural for agricultural inputs and rural to urban for agricultural produce. Rural and agricultural marketing suffer from infrastructure, and credit constraints. Making cost of reaching rural market high. Farmers on another hand do not find access to markets directly leading to lower realization for their products. The summit will explore the evolution of Agri retail, logistics challenges, lack of access to credit and risk management. This will provide a platform to explore a collaborative out of box rural reach and development strategy which will be a win-win solution for all stakeholders.

Agenda

Why Should You Attend?

r Challenges of Modernizing Indian Agriculture - r A Macro and Micro View r The Changing Rural Consumer r r Rural Reach and Agri Supply Chains – Strengthening the Ties r Challenges of Reaching and Communicating r with Rural Consumers r Making Agri & Rural retail successful r r Role of Rural Credit / Insurance in rural Agri Supply Chain r r Rural and Agri Logistics – Cold Chains, Ware houses and infrastructure bottlenecks r Experiments in Agri Logistics – the case of ITC e-Choupal and Tata Kisan Kendra r Dynamic Alignment – Bringing Sales, Marketing a nd Operations together r Out of the Box Strategies for rural and Agri Markets

Understand drivers and enabling framework f or reaching rural markets. Understanding the role of corporate initiatives i n rural and agricultural development. Getting abreast with logistics, credit and insurance need in rural markets Develop an understanding of the challenges in Agri and Rural Supply Chain An aggregate collaborative out of box strategy f or all players in the rural Agri markets. Follow Us Facebook Twitter LinkedIn

/ISCM.net /iscm_info /institute-of-supply-chain-management-iscm-

Initiative

To Register: www.iscm-rass.com | For more details, contact info@iscmindia.net or call 022 60020157/ 9

Sponsored Feature

Experience the Future of Your Supply Chain Industry at

India Warehousing Show 2015 Keeping in sync with its format that will see live working machinery demonstrations take place in the Indian sub-continent. India Warehousing Show is all set to open doors from 1-3 July 2015. Visitors to the three-day exhibition, the 5th edition will be treated to demonstrations of advanced warehousing equipment and solutions as well as a well conceived conference program with the theme “Creating Competitive Warehousing Market in India” “Naveen Seth, Managing Director, Reed Manch Exhibition, said: “Since the last edition of the exhibition in Delhi, the Indian sub-continent market has continued to show good internal growth and the region is still benefiting greatly from E-commerce, foreign investment and local manufacturing. The region is an important area for the supply chain industry and we are pleased to be back with new ideas and innovative programmes. The Conference programme is a superb opportunity for supply chain professionals to network with their peers and identify potential collaborations” The forecast for the Indian supply chain industry in particular is very positive; and with emerging trend of 3PL and 4PL driven by the international players has further enhanced the growth of this industry. With the CAGR 25% the demand for this dynamic market has surpassed the previous figures and one way to meet such demand is through exhibitions. This is where IWS acts as a trade interface and has thus, witnessed numerous product launches. The exhibition profile covers a comprehensive range of products and services for warehousing, material handling, storage, automation, packaging, logistics and supply chain. The Co-located event India Material Handling and Logistics Show (IMHLS) is a dedicated event on material Handling products and services. With its specialised exhibition profile, the event offers an ideal platform to form business contacts and find new partners in this dynamic market. Visitors to this exhibition will have some very strong reasons to make their presence on the show floor WORTHY! ●● Worth making contact with the key people you want to see, such as customers, prospects and suppliers. ●● Worth checking out new developments ●● Worth keeping a close eye on your competition ●● Worth getting your hands on new products, attend demonstrations and compare features and prices. ●● Worth making time to attend relevant conference session and panel discussions that ensures interaction with the industry leaders Both local and International exhibitors have recognised that IWS is the perfect platform to meet their market. The exhibitors that have joined IWS include: Being the leader in its domain the exhibition ensures to have an impressive gathering of buyers and decision maker from the entire region of the sub-continent. To achieve the high goal an extensive marketing plan is rolling in accordance to targeted gathering. The exhaustive list of attendees from the last two editions itself guarantees the solidarity of the industry towards the show. To further reinforce its objective of being an interface between seller and buyer, it enjoys the endorsements from AIDC Technology Association of India, Warehousing Development and Regulatory Authority (WDRA), The Air Cargo Agents Association of India (ACAAI), Infrastructure Industry and Logistics Federation of India (ILFI) and Indian Private Ports & Terminals Association (IPPTA).

Information on India Warehousing Show can be found at www.indiawarehousingshow.com

JUNE 2015 SCMPr

SCMPro_Pg_38.indd 38

18-Jun-15 1:31:00 PM

ADMISSION

OPEN

Executive Post Graduate Program in Supply Chain Management Eligibility criteria

Commencing on 12th July, 2015

World Class Supply Chain & Executive Education In Mumbai

Graduate with 2 years experience Diploma with 3 years experience Exceptional candidates with lesser Experience will be considered on case by case basis

11 Months Weekend Program

Focus Area

Term 1: General Management Term 2: Supply Chain Management (Foundation) Term 3: Application of Supply Chain Management (Strategy and Applications) Term 4: Strategic Supply Chain Management (Strategy Framework)

Best in the Class Faculty

Mentors Dr. Rakesh Singh Chairman, ISCM, Distinguished Professor, Great Lakes Institute

Dr. John Gattorna Global Supply Chain â&#x20AC;&#x2DC;Thought Leaderâ&#x20AC;&#x2122; and Author - Adjunct Professor, Sydney

Dr. Vaidy Jayaraman Associate Professor, University of Miami.

Dr. Mahender Singh Chief Executive Officer/Rector, Malaysia Institute for Supply Chain Innovation

Dr. Antony Paulraj Globalization Professor in Supply Chain Management at University of Southern Denmark

Dr. George Ioannou Director, School of Business, Athens University

Arif Siddiqui Director, Coign Consulting

Dr. Ioannis N Lagoudis Assistant Professor, Malaysia Institute for Supply Chain Innovation

and more...

EPGPSCM Attracts Talented Nominations From: and more...

SCMPro_Pg_2.indd 1

22-Jun-15 10:20:06 AM

LSP Awards 2015 Curtain Raiser

Announcing India’s Premier

The Supply Chain Sector is the backbone of economic activity of a country. And the Logistics Service Providers (LSP) are the wheels of the sector. As the sector gains strength, the economic health of the nation improves. However, apart from the economic nation building, this ector is active in creating sustainable market places across the country. Long before it was fashionable to speak of market places, the Indian LSP sector was living it.

LSP Summit and Awards 2015 Announcing India’s Premier LSP Summit and Awards 2015

The Reason for the Awards

As the Indian economy integrates with the global supply chains, the stakeholders – users, service providers, raw material suppliers, employees - need a platform to recognize and reward performance. The SCMPro LSP Awards covers a wide a range of service providers, creating value in the process. This is the reason the SCMPro LSP Awards seeks to recognize the outstanding achievements of the transport and infrastructure space.

The Indian economic growth story over the 15 years has been tremendous – this not withstanding the current dip in growth. It is clearly an understatement that the Logistics Service Provider has played a pivotal role in this growth. The LSP has kept the wheels of trade moving even in times of natural calamities.

The SCMPro LSP Awards will become the standard by which success is measured for the Indian transport and infrastructure sector. The annual LSP Awards are designed to identify and reward companies who have demonstrated an unparalleled ability to innovate, succeed and continually raise the bar for standards of excellence. We invite you to be a part of this award series.

Our Vision An urge for promoting quality and excellence within the Logistics Service Providers by setting up an annual series of awards aimed at promoting, recognizing and celebrating excellence and leadership among them.

But this only reflects one part of the story This growth has left us with nagging worries – globally integrating markets, volatile commodity prices, rapid urbanisation (roughly 40 percent of India will live in cities by 2030), poor infrastructure, continuing resource shortage and the constant threat of natural disasters. What does it take to address this? How can the Supply chain sector in general and LSP in particular contribute to make this growth sustainable and turn challenges into opportunities?

JUNE 2015 SCMPr

SCMPro_Pg_40_42.indd 40

18-Jun-15 1:41:56 PM

Objectives It calls for a clear commitment to agile supply chains, protection of the environment, sustainable development and 24x7 hyper connected, follow the sun supply chains – a constant theme of discussion today in all forums across the World! Your magazine - SCMPro - a media community of the Supply Chain sector wishes to celebrate the achievements of the LSP by instituting a series of awards exclusively for the LSP ecosystem – from transporters, warehouses, material handling equipment makers, service providers, tireless professionals and the institutions that shape the next generation supply chain professionals. We invite you to support this celebration. We wish to move LSP beyond the mundane requirements of moving products from point A to point B, to become a catalyst in the nation’s growth. The SCMPro LSP Awards celebrates and honours the Indian Logistics Service provider firms embodying the principles of business excellence in their business philosophy and operations.

-Encourage and motivate adoption of best practices -Become role models for others to emulate. -Encourage employees to stay committed to SCM. -Create strategies for improvement in operations standards. -Recognize outstanding contribution to SCM Sector.

About the Awards The logistics service provider organizations stand to gain immensely from greater levels of sustainability and accountability; more efficient use of resources; superior workplace standards and practices; increase in productivity; higher levels of trust & transparency; and enriched social dialogue. The SCMPro Logistics Service Provider Awards 2015 aims to celebrate the successes of Indian logistics sector players and in the process reward their sustainability strategy, performance and goals. It also aims to inspire comprehensive exchange of ideas and best practices in India and to identify models for service excellence. The SCMPro LSP Awards will be a defining moment in the LSP sector – recognizing the real acheivements of the sector.

Coinciding with the awards night, SCMPro, in association with ISCM is organizing a power summit. The first edition of SCMPro Logistics Service Provider summit will highlight Why the Awards the change happening in Logistics industry. The industry The SCMPro LSP awards seek to acknowledge is driven by the growth of e-Commerce and Technology organizations for successful demonstration of permeation into operations of Logistics providers. their commitment to excellence in all aspects of This year LSP Summit is structured in such a way to provide you, the logistics executive, with an glimpse at the their operations, provide a platform to showcase innovative business practices and create an avenue for leaders in the Industry, who are taking this revolution by benchmarking their achievements against their peers. the horns and implementing cutting edge thinking, those This is an opportunity to promote maturity in business that are challenging the traditional ideas of logistics. The summit has a mixture of presenter from thought – leaders, practices through a healthy competition among industry peers. consultants, Academicians to the industry leaders. The summit will also recognise the leaders and the best 3Pl companies under respective domain.

What the award reflects

Come join us to identify the answers to our challenges of elevating supply chain to industry status, adoption of successful best practices / approaches from the leaders of our community, employees, regulators and become more integrated competitive, dynamic, resilient and more importantly INCLUSIVE!

� Reflects your commitment to excellence in service. � Enhances corporate brand, status and image. � Boosts the morale of employees and stakeholders. � Motivates management and staff to excel. � Helps develop your clientele. � Inspires people to greater achievements � Celebrates your success. SCMPr JUNE 2015

SCMPro_Pg_40_42.indd 41

18-Jun-15 1:41:56 PM

LSP Awards 2015 Curtain Raiser

Award categories

The Jury

SCMPro wishes to celebrate the achievements of the Indian LSP Sector in 25 award categories. Organizations are welcome to apply under as many categories as they wish.

The sanctity of any award rests on two factors – the knowledge partner who vets the process and ensures that it is fair and free from any bias and the jury who select the winners. To ensure the award process matches up with the best practices across the world and to ensure that we reward the right firms, SCMPro has the services of the Institute of Supply Chain Management – a Mumbai based premier supply chain education, research and consulting organization.

1. Women in Logistics 2. Young Supply Chain Professional 3. Lifetime Contribution 4. Innovative eCom Service Provider 5. Best Express Company 6. Best Retail LSP company 7. Best Use of Technology 8. Promise of the Future (emerging Service Providers) 9. Best Reverse Logistics Service Provider 10. Innovations in Sustainability 11. Best Warehouse in Multi Product 12. Best COLD chain Warehouse 13. Best Warehouse for Agri Commodity 14. Best Material Handling Equipment

Why Nominate

Manufacturer (Storage / Reach trucks....) 15. Best Transportation 16. Best Freight Forwarders 17. Best Contract Logistics 18. Best Multi-modal logistics 19. Best Project Cargo Of the Year 20. Best LSP to work with (Based on HR Policies) 21. Leading Light – Supply Chain Academics (Institution) 22. Supply Chain Performance Improvement Awards 23. Innovative supply chain management Award (Based on Network Design) 24. Best Practices in Supply Chain Risk Management 25. NGO in Supply Chain

The prestige of the award rests on the independence and integrity of the honourable members of the jury who decide the awards. We at SCMPro firmly believe that the best way to conduct a jury meet is to provide complete autonomy to the members of the jury. In fact, your nominations will not be accessible to us – they will be evaluated by the jury. We will only provide the background support to the jury. The honourable members of the jury are: 1. Dr. John Gattorna - Executive Chairman of a Sydneybased specialist advisory business, Gattorna Alignment Pty Ltd, and one of the most respected supply chain ‘thought leaders’ in the world. 2. Dr. Ioannou Georgios - Professor of Production & Operations Management at the Athens University of Economics and Business. He is the Director of the MBA International Program, and Head of the Operations & ERP Systems Center within the Management Science Laboratory 3. Dr. loannis N. Lagoudis - Assistant Professor, specializing in transportation logistics and supply chain management, Malaysia Institute for Supply Chain Innovation and Director of Applied Research, Malaysia Institute for Supply Chain Innovation 4. Dr. Satish Ailawadi – Director, Institute of Management Technology, IMT-Hyderabad Campus 5. Girish VS – Editor SCMPro

The SCMPro LSP Awards 2015 is a non-monetary award. The First place award winners and runners-ups will receive: � An artistic award memento and citation � Coverage on SCMPro magazine and website (with a link to the winner’s website) � Opportunity to present in conferences, workshops, and networking events organized by ISCM and SCMPro � Print and Online media exposure through Press Releases by our partners

Nomination Guidelines The nomination forms and relevant documents are being put together by us and will be mailed to the firms in the LSP Sector. The nomination is open to all LSPs operating in India. Even if you have not received an invite, please do reach out to us and we will send you the nominations forms. • •

• • • •

Each nomination has a processing fee of Rs. 25,000/- Primarily to meet the expenses of the jury meet. A firm can apply in multiple categories, by paying the requisite fees. Please use a separate form for each award category, if you are applying under more than one category. The form is available on our website. If you are comfortable with on-line forms, you can file your nominations on-line at our website and upload all attachments under the links provided. Self-nominations are accepted Nomination forms and materials submitted will NOT be returned. Nomination information will be verified and excerpts may be used for pre event publicity purposes Nomination is open to all organizations in the LSP business The decisions of the Organizing Committee and Jury Panel are final. By nominating or accepting a nomination, the organization agrees to abide by the decision of the Organizing Committee and Jury Panel.

JUNE 2015 SCMPr

SCMPro_Pg_40_42.indd 42

18-Jun-15 1:41:57 PM

2015 -

A year of

Expectations

In the April issue of SCMPro, we had carried the first part of an article by Darryl Judd and Sheila Naravane from Logistics Executive, on the India Salary Survey with the same title. We now bring you the second part of the article. We will round it up with part three in our next issue. Hiring already on the up Logistics Executive Groupâ&#x20AC;&#x2122;s 2015 India Salary Guide and its recent annual Employment market survey both found positive signs in the job market with hiring rebounding strongly and planned job hire to be significantly up on 2013 and 2014.

Darryl Judd, Global Chief Operating Officer, Logistics Executive Group, Sheila Naravane, Executive Director, Logistics Executive Group India

A report recently released by job portal naukri.com underlined this view with 62% recruiters and 89% consultants expecting the creation of new jobs in the first half of 2015 itself. In terms of the level, hiring at

middle and senior levels will get a major boost. Most jobs are expected to be created for people with 4-8 years of work experience followed by people with 1-3 years of work experience the Nakuri report found. And itâ&#x20AC;&#x2122;s not just Nakuri who has evidenced signs of increased hiring demands. Monster employment index, the job employment index of job portal Monster.com registered a 19% year on year growth, with 16 of the 27 industry sectors monitored by the index registering positive year on year growth. Topping the list with a SCMPr JUNE 2015

SCMPro_Pg_43_45.indd 43

18-Jun-15 1:42:52 PM

Human Resources robust 35%+ year on year growth Logistics, BFSI and production and manufacturing sectors. Compared to 2014, it is clear that the job market is about to heat up. All of which is good for those seeking employment, but for employers this may have a significant impact – wage inflation as the demand for good talent strips out supply. The results of Logistics Executive Group’s annual India salary guide found that companies are expected to reward and retain employees with an average 10-12% salary hike for their key talent. Many experts believe this could be as much as 30% by the time the appraisal season rolls around. As the Indian domestic economy veers towards steady growth and investment there has also been an upturn in the US economy. As a result, further support of the services sector is required to meet the massive demand for talent and companies need to go the extra distance to offer top-up benefits in order to contain attrition. The overall appraisal of this cycle, is the expectation that industry on average will see an increase of around 10-12% wherein the ‘top performer’ will get a 15-20% hike, the ‘performer’ a 10-15% and ‘above average’ 6-10% increase in salary. With the e-commerce and mobility sectors booming this means the expected hikes in these industries will be 15-25% while for most others it will be slightly muted. For sectors like manufacturing and automotive, it may be very low (7%), although specialist roles within the supply chain will continue to command a premium. FMCG and consumer-oriented industries will witness some wage pressures in the range of a 10-15% increase as demand increases, particularly in key management or specialty type roles.

Job scenario in 2015 is set to ring in ‘acche din’ and the overall business sentiment continues to be positive. Companies are carrying over this positive outlook to 2015 for hiring and salary hikes. Year 2015 could be most positive in the past few years and India could be the most optimistic countries in hiring.

and fast-track programmes for hi–potential staffers are fast gaining prominence. The recent Aon Hewitt Salary Increase Survey 2015 found that out of the over 500 organizations surveyed, 76% indicated an increase in their ‘benefits budget’ in order to reduce attrition.

Separate Retention Plans for Top Talent

In addition to topping up benefits, the Logistics Executive Group survey highlighted that employee engagement plays a key role in retention. Ensuring employees remain loyal, proactive and engaged is an important factor, which cannot be overlooked, if we are to achieve a return on investments made into skill based training programs and develop ‘home-grown’ talent.

However, it’s not all good news. There still remains a significant shortage of both talent and skills required to meet the market demand. Recent data shows more than 50 percent of global employers are currently reporting talent shortages. And crucially, they say the shortages significantly impact their ability to meet their client needs. The government’s skills initiative will kick start a process but it is a focus on investment in training, and most importantly retention strategies that will have the largest impact over time. And it seems a number ball is rolling. According to the latest Logistics Executive Group Survey 2015, organizations are putting in place separate retention plans and policies to keep their top talent. Analysts say there’s a catch that money is not the only retention factor and that the “scope of work” is also a big driver. According to Sheila Naravane, Executive Director India for advisory and search firm Logistics Executive Group “Appraisals - good or bad will be a big motivator for movement this year with employees weighing up the challenge of change, based on factors like the work culture, and will likely move to a significantly more attractive environment than more conventional organizations”. And while the use of rewards as a retention tool continues to flow to ring-fence top talent, programmes around leadership opportunities and coaching, overseas assignments

Employee engagement is the vital link to successful organizations for providing an emotional connection between employees and their organization. This emotional connection leads to improved performance (both individually and company), increased productivity, better staff retention, improved customer service and greater staff loyalty. Organizations looking to take control of future talent in-flows and control over wage inflation as a direct result of increasing talent demands will need to focus on the retention of employees and refinement of their career development programs and skills training. By focusing on these key HR elements companies will ensure they are equipped to grow and maintain market positions. Candidate job search behavior is changing Technology has changed the way active candidates look for jobs. They have literally dozens of channels including job boards, company career sites, social media, and increasingly, search engine job searches. So the best talent will know their

JUNE 2015 SCMPr

SCMPro_Pg_43_45.indd 44

18-Jun-15 1:42:52 PM

worth. But, they will also know how complex the job search has become, how time consuming. Passive candidates in particularly look to understand market opportunities and seek out career guidance from specialist long before they go to market seeking a new job. It’s one of the key reasons why passive candidates continue to engage search firms like Logistics Executive Group, avoiding an invasion of privacy through these channels, discretely exploring a move or simply building relationships, well before they consider a career change. In-House recruiters may reduce the agency spend, but what about ‘quality of Hires’ and the effect of slowing down the business activity? Add to this the time taken to hire may be much more thereby impacting the business growth and last the employer brand may be at stake due to candidate experience in the hiring process and the delays in making right choices. Partnering with specialist organizations like Logistics Executive Group as example helps overcome many of these hurdles. By drawing on the sector expertise,

experience and most importantly the connections with industry networks, clients are able to tap into unknown resources and the passive talent pool combining to ensure a quicker process at short notice without affecting the quality. “That’s where we come in,” says Sheila Naravane. “Sourcing right candidates, scheduling their interviews, final selection from short listed candidates, Titles, CTC negotiations, Date of Joining, OnBoarding and feedback within a month if the candidate and employer is happy to be working together to achieve their goals” “We have access to unique talent,” says Naravane. “Those who may not be available in market and presently doing very well in their existing organization. However, they may be looking for a change for various reasons. This keep us one-step ahead in quickly providing what the organizations are really looking for. Whilst in-house or technology recruitment solutions may give some relief, but as we understand ‘talent is not an online commodity’ and such companies may be high on technology but have no touch to

talent pool. We bring right talent to the hiring table within short timeframes”. HR must be more progressive. It needs to get out and in amongst the business operations, providing collaborative solutions to business issues. It needs to draw in specialised vendors who can inject the DNA required to compete for the best talent, to offer the most effective training, to provide services that free up HR resources and commit to ensure that the business leaders can get the most out of its employees. It needs to sit front and centre at the executive table, along side supply chain, finance, operations and other business centers that are not centers of profit for the organization. There is no silver bullet that will remove the talent crunch that is expected when the boom comes calling. However the development of a clearly defined attraction strategy, selecting the right recruitment and training partners and investing in programs that support retention will go a long way to ensure the organization is better positioned to grab that opportunity. SCMPr JUNE 2015

SCMPro_Pg_43_45.indd 45

18-Jun-15 1:42:54 PM

Guru CaseSpeak Study

Turning Space

Into Money - Mobile Racking Solutions The cost of building a cold store is about three times that of an ambient store which depends upon the degrees of temperature required for the storage of particular types of products. The second considerable cost is the cost of running the store (the colder it needs to be, the more costly). In order to optimize the operation costs, the Volume V/S Space equation needs to be balanced in a scientific manner. This case study by SSI Schaefer shows how these twin objectives can be met.

The Background Royale Marine Impex Pvt Ltd. Known for quality marine exports was established in the year 2011 with a team of qualified engineers and professionals at the aquaculture surrounding areas of Bapatla, Andhra Pradesh. They are a professional sea food processing company with their own two state of the art production lines which allows them to guarantee a wide and varied range of products. The plant is well equipped with machines and solutions meeting the FAO standards, EU norms, USFDA norms. Their core business activities includes Procurement of quality farm-reared shrimps, processing of procured shrimps based on customer requirements, meeting quality control and Food Safety requirements, packaging as per international market requirements. The Problem

Mr Suunil Dabral, (Country Manager), Schaefer Systems International Pvt Ltd

Food exports is a very sensitive trade. Developed nations have very stringent norms when it comes to food products. Apart from the stringent norms for bacteria and other contaminants, there is a huge emphasis on correct storage and transportation too. Throughout its journey from the factory to fork,

the product has to be stored at the right temperature. Every processor has its own system for ensuring food protection, which includes food safety (protecting food from accidental contamination) and food defense (guarding food from intentional contamination). There are detailed guidelines on how to transport, store and handle food products across the supply chain. Best-in-class processing firms go to great lengths and expense to protect the products they deliver. Any failure will mean rejection of the entire batch, punitive damages and possible blacklisting. The recent story of a few major food products exports to USA are an indicator of the possible fall out. Processors prefer to avoid an incident, rather than risk a rejection. Most nations have detailed guidelines on the best practices for exports to their countries. Ad they can be summarized in these words â&#x20AC;&#x201C; Invest in cold chains. The operative part of the best practices in food transport includes cold stores with temperature zones, reefer trucks, and refrigera ted docks. It is expensive to build and operate a cold store. To break even, the cold store has to maximize the utilization of space.

JUNE 2015 SCMPr

SCMPro_Pg_46_47.indd 46

18-Jun-15 1:43:15 PM

The constraints faced by Royale Marine Impex High Monthly rental paid to 3PL Ground storage of pallets Difficulty in storage and retrieval Space wastage. Royale Marine Impex was faced with a choice – risk rejection of consignment due to improper storage of products or invest in a state of the art cold store. The Solution With an objective to provide high quality and sustainably produced marine-based products to their domestic as well as international customers in a socially and environmentally responsible manner, Royale Marine Impex Pvt Ltd felt the need to have their own cold storage with a safe warehouse solution. Their focus was on having a warehouse solution with stringent standards and innovation which would help them to meet the increasing requirements of their customers and stock more in a comparatively lesser area. Initially they followed ground storage with a 3PL on a monthly rental. With increasing demand they felt the need to store more systematically so that storage and retrieval can be faster. With this need, they decided to build their own

cold storage with a state-of the art racking solution. Their objective was to have 100% selectivity, maximum space storage, and semi-automated solution developed especially for cold stores. The Project Objectives Maximum space utilization 100% selectivity Easy storage and retrieval Complete traceability of pallets Efficient Storage Solution Mobile Racking emerged as the best solution which fits their kind of business model. As compared to the normal Selective Pallet Racking, Mobile Racking saves 40% space. The aisle space for MHE movement left between every rack in case of SPR is not applicable for Mobile Racking. Mobile racking needs only two aisles (one front aisle and one between racks). With mobile racking Royal Impex can store more and reduce investment on 3PL as well as building a smaller cold storage to store pallets as per requirement. Royal Impex chose SSI Schaefer as their partner for building a best in class cold store. The Mobile Racking System from SSI Schaefer is an ideal storage solution for more space in

less surface area. With installation of Mobile Racking, 80% of warehouse floor space is utilized, with just two aisles: Picking Aisle and Cross Aisle. SSI Schaefer mobile racking system can be operated by remote control. By pressing a button on the remote control unit, any aisle can be opened by choosing the corresponding radio frequency. At the same time, the travel paths of the mobile racks and the forklifts are coordinated without any delay. Whole rows of rack are moved forward together, eliminating aisles. Special features integrated into this system include the picking function, allowing the customer to concurrently open two or more aisles and enable picking for orders, as well as automatic lighting via the system’s control panel which switches the roof lights on for the active aisle only, while all other lights are kept off. This results in considerable cost savings on what is today arguably the most expensive running cost in this country, electricity. The proof of the pudding is in the eating – so the adage goes. Mr. Vijay Kumar (Director) of Royal Impex says “Our experience with SSI Schaefer has been a wonderful experience and we are definitely satisfied with their product and service. We definitely recommend their product and service to our related trade professionals”

Warehouse Comparison Particulars

Selective Pallet Racking in conventional configuration

Mobile Racking to gain in area utilization

Mobile Racking System for increased storage capacity

Total Area used

625 m²

353 m²

625 m²

Proportion for Racking

223 m²

463 m²

Proportion for Aisles

402 m²

130 m²

162 m²

Floor space utilization

36%

63%

74%

Pallet Locations

1,152

2,304*

*Mobile racking system offers double storage capacity as compared to Selective racking system with multiple aisles.

SCMPr JUNE 2015

SCMPro_Pg_46_47.indd 47

18-Jun-15 1:43:15 PM

SCM SCM Updates Updates

Panalpina acquires its long-time Egyptian agent Afifi

Jal Marg Yojnainitiative of new 101 inland waterways in addition to the five existing national waterways

Switzerland-based supply chain solutions provider Panalpina is to acquire its Egyptian agent Afifi, a highly respected family-owned company specializing in freight forwarding, customs clearance and logistics. The move is an important step in Panalpina’s continued strategic expansion in growth economies, in particular in the Middle East and Africa. Afifi has been Panalpina’s agent in Egypt for the last 20 years. “Egypt has a lot of potential for us,” says Peter Triebel, Panalpina’s regional CEO for the Middle East, Africa and “Development of the Jal Marg CIS. “By uniting with our long-standing partner Afifi, we will Yojna in addition to the existing increase our foothold in this attractive market and lay a strong national water ways will revive the foundation for growth. Afifi has a solid customer base in shipping industry. We have seen the Egypt, as well as a strong track record and reputation in local success of inland waterways in large customs brokerage and projects work.” geographies of US, Europe and China; Since 1995 Panalpina has counted on Afifi as its agent in and if the same can be replicated Egypt for ocean freight, air freight and projects services. “After in India, it would give a boost to our 20 years of successful cooperation, we are excited to become economy. a full member of the Panalpina family and part of a truly global Theoretically cargo from Delhi can network,” says Mohamed Afifi, Jr., designated managing be moved to Guhuwati by using the director for Panalpina in Egypt. “The acquisition will not only inland waterways. The government allow us to substantially increase business in our home market needs to drive such initiatives in the but also across borders, as we will now be able to offer true top gear as waterways will cost half end-to-end solutions to our international customers.” of railways and one-third of road Afifi was established in 1936 in Cairo by Mohamed Afifi, Sr., and transportation. today employs around 150 staff in offices in Cairo, Alexandria The key to success of this and Suez / Sokhna. It also operates in Port Said East and West project would be the seamless through a long-term subcontractor. Afifi will be fully integrated integration with the road and into Panalpina. The two companies reached a respective rail network. Development agreement on May 28, 2015, under which Panalpina will acquire of industrial corridors along 100 percent of Afifi, subject to conditions. the inland waterways is also Panalpina’s push in Egypt marks the latest milestone in the crucial. This will lead to savings company’s strategic expansion in emerging economies. “Egypt has a in the logistics cost and will large population and a sizeable middle class, in addition to being the bring down the overall cost of regional base for numerous international companies,” Triebel explains. operations. “Now political reforms are under way to strengthen the economy and improve the investment climate. Add a freight forwarding market that The word “Rhenus” is derived is very fragmented, and we have ample opportunity for growth.” from river Rhine. Rhenus While all major industries are represented in the country, Panalpina began its business 103 sees the greatest growth potential in the oil and gas, capital years back on the waters of projects, telecom, automotive and healthcare sectors. The theRhine. Today, Rhenus is government has stepped up efforts to encourage the exploration of one of the largest operators oil and gas, in particular in the Nile delta. Egypt, with a population on River Rhine in Europe. We of almost 90 million people, is the largest non-OPEC oil producer understand and believe that in Africa and the second-largest dry natural gas producer on the inland waterways have a great continent. potential; we have seen the same in Europe and are sure of Egypt also plans to build an international industrial and its success in India if implemented logistics hub near the Suez Canal in conjunction with the and executed well.” current scheme to dig a second canal that will facilitate two-way traffic of larger ships.

48 48

JUNE JUNE 2015 2015 SCMPr

SCMPro_Pg_48_50.indd 48

22-Jun-15 10:23:20 AM

r u o ! Y w t o e N G n o i t p i r c s b u S

P R O F E S S I O N A L

10th May 2015 | Volume 1- No.2 | Rs.200

Make in India FEATURE

P R O F E S S I O N A L

10th June 2015 | Volume 1- No.3 | Rs.200

FROM PC TO SUPPLY CHAIN OF THINGS GURU SPEAK

SME CORNER

LSP CURTAIN RAISER

Dealing with Demand volatility

My Pocket ,Your Pocket or Their Pocket

SCMPro_Pg_1.indd 30

Announcing India's Premier LSP Summit and Awards

LSP FOCUS

Supply Chain Metrics - The Next Generation

Modernizing Farm to Fork Supply Chain in India

INDUSTRY INTERFACE Hi-Tech Logistics

SCMPro, India’s only Enterprise monthly magazine for Supply Chain Professionals from Service Users and Enterprise Service Providers. The magazine contains specialist articles, news and information designed to update the readers on the developments in supply chain industry. Specialized articles are contributed by the Industry leaders and Academicians. Besides, there are other updates published to keep the readers keep pace with the Industry. Published every month, the magazine is distributed to the readers through courier. Currently the print copy of the issue is available only for readers based in India. Cover Price Rs.200/-

18-Jun-15 4:05:36 PM

One year Subscription Rs. 2,000/- Two years Subscription Rs.3,000/Name:

Designation:

Company Name:

Industry:

Address: City: State:

PIN Code:

Country:

Tel:

Mobile

Email:

DD/ Cheque No.:

Bank:

Dated:

For `

Your DD/ Cheque should be drawn in favour of “B2B Media Group” Subscription form alongwith your payment should be sent to: 204-D, Riddhi Siddhi Complex, Off. S. V. Road, Opp. Patkar College, Goregaon (West), Mumbai 400062. Tel.: + 91 22 6002 0157/159 Email: sanjay.gupta@scmp.in

SCMPro_Pg_48_50.indd 49

22-Jun-15 10:23:25 AM

SCM Updates

Agility Launches Photo Competition to Reflect Modern Africa Agility (http://www.agility.com/africa), one of the world’s leading providers of integrated logistics, today launches a global photo competition to highlight the success of emerging Africa and reflect its increasing progress. The competition seeks to highlight the often unreported side of a continent of many contrasts. It calls for photographers to capture an Africa booming with tech-savvy, youthful consumers, fast-paced urbanization, and enormous long-term economic prospects. “Much of the world’s perception of Africa is outdated,” said Geoffrey White, CEO of Agility Africa. “Today, seven out of 10 of the world’s fastest growing economies are in Africa. This photo competition is intended to highlight a dynamic market with opportunity. Too frequently, the world reports only the bad news from the Continent, when there is so much that is impressive that Africa can be proud of. We hope this photo competition will demonstrate some of the positives revealing the real progress and development that Africa is making.” Agility is investing in Africa and is committed to building new logistics capacity, infrastructure and

access for businesses and consumers across the Continent. The company’s strategy also includes a strong social and environmental program, focused on education, training and health. “The photo competition is an engaging way to encourage amateur and professional photographers to present modern, fast-changing Africa through images that show its successes,” White said. “We want to capture images reflecting the robust modernization happening every day, from sustainable farming to manufacturing to oil and gas production. We hope, as a result, perceptions of Africa will become more balanced, and they will come to see Africa as a significant contributor to the world economy.” The competition, open to amateur and professional photographers, will take place from June 1 – September 1, 2015. Agility will award a $2,000 cash prize to the winner of each category, as well as a $4,000 grand cash prize to the photographer who shoots the overall winning image that best captures the development and growth across Africa. The winning photographs will be shown on a CNBC Africa telecast and published in Forbes Africa.

Maini Materials Movement bags CII - SCALE Awards 2015 Maini Materials Movement Pvt. Ltd (A Maini Group company), a leading brand in material-movement and in-campus electric mobility solutions wins the prestigious National Award for Supply Chain And Logistics Excellence (SCALE) 2015, held on 21st and 22nd May in Chennai. Organized by The Confederation of Indian Industry (CII) – Institute of logistics, Maini Materials Movement was conferred in the “Support Services for Logistics” category. The award was received by S A Mohan, CEO, Maini Materials Movement and Rahul Sagar, AGM-Marketing, Maini Materials Movement. Commenting on the awards, Mr. Mohan said, - We promise to provide “Best-in-class material movement solutions that ensure optimal resource utilization and high uptime for complete peace of mind”. With India getting ready for next phase of economic reforms with progressive government in place and warehousing & logistics industry setting up for a boom , our customers see us as as their preferred partner for intralogistics solutions.

JUNE 2015 SCMPr

SCMPro_Pg_48_50.indd 50

22-Jun-15 10:23:34 AM

Logistics Service Provider Summit and Awards 2015

Jury Members •• Dr. John Gattorna •• Dr. Ioannou Georgios •• Dr. loannis N. Lagoudis

•• Dr. Satish Ailawadi •• Dr. Vaidy Jayaraman •• Girish VS

For

Nominations and Registrations:

www.ls p-awards.com Knowledge Partner

D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai – 400062. Tel: 022 60020157/ 59 | info@iscmindia.net | www.lsp-awards.com

LSP Award Add.indd 1

22-Jun-15 10:25:32 AM