CELERITY IN BUSINESS THROUGH SUPPLY CHAIN
July-August 2017 Volume 1 Issue No. 4 For private circulation only
ON THE FAST TRACK TO GLOBAL OPERATIONS Third generation scion of Liberty Shoes, Manan Bansal shares his global ambitions and their transformational journey in India.
Embracing technology is an immediate need, remarks Manish Saigal, MD, Alvarez & Marsal EXCLUSIVE
Steve Mulaik, Director, Crimson & Co., brings to you the new epoch of warehouse software LEADERSHIP
An effective supply chain is one that is energy efficient P Ravichandran, President, Danfoss Industries Pvt. Ltd.
KNOW LEDG E PART N E R
Technology, digitalization and the works Dear Readers, A restaurateur friend of mine posed an interesting question for his 30th June billing to patrons who have open tabs at the bar- should he halt service for a few minutes before midnight and settle for preGST rates for drinks consumed before mid-night and then start charging GST rates post-midnight? Well, I don’t know what he will eventually do but there does seem to be all kinds of questions and answers going around about GST rates, etc. When you do receive this magazine, a week of GST implementation would have gone by and most of the speculations would have been laid to rest. For this reason alone, we decided not to have any content on GST in this issue. Instead, we have a lot of stuff on technology. Steve Mulaik shares the various stages of evolution that a Warehouse Management System (WMS) has been through and offers a sneak peek into the new age warehouse management software. In the cover story, Manan Bansal shares their supply chain transformational journey, which has helped Liberty Shoes in saving costs to the tune of 15-20%. The interview section also highlights the various innovations and technology solutions, which have been adopted and implemented successfully by the companies and their supply chain leaders. While Manish Saigal cautions that logistics service providers have no option but to embrace technology, a leading 3PL player, Future Supply Chains, launches the game-changing Cross-Belt sortation technology with a sorting productivity of over 36 crore pieces per annum. From across the world, GE has tested autonomous drones and robotic ‘crawlers’ drones, not for delivery purposes, but for inspection of refineries, factories, railroads and other industrial equipment. While we dedicate this issue to technology, Gartner has come up with the latest supply chain trends to watch out for. Incidentally, digitalization technology has been the number one trend that stands out this year for the supply chain leaders, which includes, Internet of Things (IoT) sensors, cloud computing and advanced analytics. I hope this issue brings the fence-sitters over to the technology side and the skeptics re-considering their stance. Happy GST times and all the best for its smooth implementation in your organizations.
Charulata Bansal Publisher Charulata.email@example.com www.celerityin.com Published by Charulata Bansal on behalf of Celerity India Marketing Services Edited by: Prerna Lodaya • e-mail: firstname.lastname@example.org Designed by: DesignStyle Studios • e-mail: email@example.com Printed by: Magna Graphics (India) Limited, 101 C & D, Government Industrial Estate, Kandivli (West), Mumbai- 400067. Logistics Partner: Blue Dart Express Limited
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Vol. 1 • ISSUE 4 • JULY-AUGUST 2017
18 SHOE’CASING FOOTWEAR FANCY
Manan Bansal, Director, Liberty Shoes Ltd., shares the company’s ambitious plans to capture global markets, their supply chain transformational journey and preparedness for the post-GST era.
06 Technology – embrace or perish
Manish Saigal, MD, Alvarez & Marsal (A&M), highlights that embracing technology is no longer an option, but a reality for existing service providers.
12 Enabling technology – farm-to-fork
Ravichandran Purushothaman, President, Danfoss Industries Pvt. Ltd., shares their focus on providing energy efficient technology and solutions.
16 Supply chain megatrends
Gartner's top three trends - digitalization, adaptiveness and fostering healthy ecosystems are to watch out for.
08 Fast fashion @ your fingertips
Sukanta Das, Chief Operations Officer, abof, reveals the many innovations abof has done in its service and supply chain.
30 Beer’ing strong performance Sudip Gupta, Director – Customer Supply Chain, Carlsberg India Pvt Ltd., shares his perspectives on the dynamics of alcoholic beverages supply chain.
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22 The new epoch of warehouse software
Steve Mulaik, Director, Crimson & Co, asserts that warehouses of tomorrow need to be highly process driven rather than people driven.
27 Mobile pallet racking at rescue
Godrej Storage Solutions recently helped one of its customers achieve faster turnaround time by deploying Mobile Pallet Racking with intelligent software module.
28 Next Gen automation is here!
The recently inaugurated, cross-belt sortation technology at Future Supply Chain’s DC in MIHAN, is going to be India’s most automated first-of-its-kind ‘GST ready’ Distribution Centre.
33 Trending globally
Supply chain news & views trending around the globe.
EDITOR: Prerna Lodaya Cover image courtesy: Liberty Shoes Ltd.
EMBRACE OR PERISH
FOR LOGISTICS SERVICE PROVIDERS
We are witnessing unprecedented events in the industry, which include disruptions in regulations – GST; affordable technology – hardware, network and software; emergence of new age logistics service providers; and ever evolving customer needs. In such fast-changing global economy, the one that quickly adapts to changes and embrace technology would be the clear winner. In this new normal, embracing technology and automation is no longer an option. It’s embrace or perish reality for existing service providers, cautions Manish Saigal, MD, Alvarez & Marsal (A&M).
ools and processes for service industry are dependent on maturity and complexity of customer industry, margin pressures for customers and disruptions in the business models of the customers. Lately, logistics service providers have been challenged by disruptions and changes in the customer industry, which include emergence of B2C channel – ecommerce, omni-channel;
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changing mix of goods to be transported – more SKUs, style codes with more complex supply chain needs; scale of operations at a completely different level for contract logistics companies; and expectation of significant efficiency improvement from transportation & storage. Logistics industry has reacted to this new normal with emergence of new business models by new entrants and embracement
of new technology by forward looking incumbents. It’s clear that participants, which ignore this reality will struggle to sustain in future. Technology in logistics can broadly be classified into following categories: ● Automation in storage and handling ● Technology to procure and manage long distance movement ● Technology to streamline inbound
OUTLOOK processes for manufacturing ● Solutions to optimize last mile distribution Following is a brief outline of evolution that we are witnessing in each of these areas:
Automation in storage and handling
Business models for customer groups are increasingly becoming more predictable for customer companies – volumes, geographies, SKUs. Logistics service providers need to start planning automated storage and handling for customers if following factors are positive: Customer volumes and behavior is predictable; scale of operations is growing or seasonality is high; and contracts are expected to mature to per part/per unit pricing. Manpower cost arbitrage is increasingly reducing. Consistency of service across locations and business lines is a new expectation. Targets for pilferage reductions and errors are almost reaching zero. Also, cost of real estate (warehousing) is increasing. Under these circumstances, it becomes imperative that companies have a strategy for automation and IoT in storage and handling. These include: storage and retrieval systems; sorting – put to light, unit sorting, etc.; and packing & bundling. GST is expected to increase the kinds of services outsourced to warehouses and service providers. Lack of capability to deliver automation may not only result in margin pressures but also make service providers less favorable to win contracts.
Transportation accounts for 70% of overall logistics costs. Long distance transportation is around 50% of this cost. In terms of existing inefficiencies, this part of the chain could be ranked as highest. management solutions; and developing and participating in evolving load boards.
Technology to streamline inbound processes for manufacturing
Manufacturing has, in general, become more leaner and smarter. JIT/JIS have found relevance beyond automotive industry. Vendor development has evolved significantly for component/part manufacturing. Contract manufacturing is gaining momentum in FMCG/FMCD. At such, inbound logistics now requires capabilities beyond simple transportation and warehousing. Some of the key
Technology to procure and manage long distance transport
Transportation accounts for 70% of overall logistics costs. Long distance transportation is around 50% of this cost. In terms of existing inefficiencies, this part of the chain could be ranked as highest. Some of the existing inefficiencies in the chain are as follows: ● Vehicles run 30-40% lower than their capability in spite of better road conditions ● The dry haul proportion is high due to fragmented supplier base with significant information asymmetry ● Intermediation cost is around 5-8% of the long haul spent. Customers are expecting logistics companies to fix these issues. Availability of affordable technology has resulted in disruptions in this space. Logistics companies need to start fixing this piece in the puzzle if the following is true for them: customer contracts are integrated; contracts with customers are multi-locations and multiroutes; and intermediation is high in transportation. Available options for logistics service providers include partnering with market places/master broker networks; implementing and improving existing fleet
capabilities expected from factory gate logistics service providers are: inventory management and integration with client systems; unbundling, sorting and kitting of components; cross-docking and realtime visibility of goods; and scheduling and allocation programs for milk runs. Technology is clearly a differentiator in this business for retaining and growing margins. As most of the contracts and businesses are single user for every location, it becomes imperative that participants in this business think about investment in technology to reduce lead times for customers, resulting in cost savings; technology to innovate in-factory activities and outsourcing of the same; investment in material handling and value adding equipment; and value engineering for kitting & sorting.
Solutions to optimize last mile
The definition of last mile is expected to change and evolve in near future. Some of the capabilities that logistics service providers will be expected to demonstrate are – ● Packaging/bundling just before last mile especially after GST ● Distribution and C&F activities including inventory forecast and visibility ● Productivity improvement for B2B and B2C last mile delivery ● Flexibility and agility to offer multitemperature, multi-frequency delivery Last mile distribution involves coordination with multiple stakeholders: end customers, stores, WH operators, transport vendors and local field staff. The challenge of achieving high utilization, first time right, desired time & volume service levels and tracking performance cannot be achieved without implementation of right technology solutions. The key capabilities to be developed on the technology side are – ● Mobility solutions for last mile delivery ● CRM and customer coordination platform ● Fleet/bike/resource allocation, scheduling, performance tracking systems The next requirement of the abovementioned technologies is that there is integration required across all categories. Also, there are no off the shelf solutions available for Indian context. IT application providers have come a long way to provide multiple options for logistics companies. We are witnessing unprecedented events in the industry which include: ● Disruptions in regulations – GST ● Affordable technology – hardware, network and software ● Emergence of new age logistics service providers ● Evolving customer needs In this new normal, embracing technology and automation is no longer an option. It’s embrace or perish reality for existing service providers.
Manish Saigal leads strategy, market entry, commercial and operational diligence, and post-merger integration offerings for A&M in India. He brings more than 17 years of rich experience in strategy, operations, private equity (PE) and M&A consulting. He specializes in market entry strategy, business planning, commercial and operational diligence, integration and separation advisory and bid advisory for PPP projects. Before A&M, he spent 11 years with KPMG India, where he most recently served as Partner in their Transactions and Restructuring group.
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FAST FASHION @ YOUR FINGERTIPS “abof keeps customer in the centre of all decisions it takes. We continue to innovate on customer experience & merchandise. This is an ongoing process as we believe that is the only way to create a differentiated proposition,” remarks Sukanta Das, Chief Operations Officer, abof (all about fashion), an Aditya Birla Online Fashion company. Right from its inception, this e-commerce company has been offering something extraordinary and out-of-the-box proposition to its customers be it enhanced user experience or the recently launched alteration @ home service. It’s always positioning to be on top of the game with its USPs. Here’s a rundown of the exclusive interaction with Das on what it takes to win customers’ trust in such a crowded category… You have seen the India retail revolution and fashion retail revolutions from supply chain angle. How would you describe the transformation over the years? Today, the consumer has become even more demanding. Earlier it took about a year for a trend to travel and peak in India but courtesy the Internet and social media revolution, the consumer is constantly updated on what’s trending globally and they want it instantly. To match the expectation, we at abof do not have the traditional Spring Summer Autumn Winter, 4 drops a year calendar. Instead we do 12 refreshes a year. Every month has a new fashion update. The back-end supply chain system also has evolved to become a far more agile and just in time responsive system to ensure we stay on top of trends. For the new age fast fashion brands and labels, the concept forecasting to delivery calendar has moved to faster and leaner 6 months versus the traditional 13 months fulfillment cycle.
In fashion retail, it’s always the first mover advantage. How do you
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in place which allows for speed and significantly reduced lead times in identifying a product and making it live on the site for our customers.
For an e-commerce platform, it’s all about offering customers a distinct shopping experience. How is abof intending to do so?
This is all about being customer centric. abof keeps customer in the centre of all decisions it takes. We continue to innovate on customer experience & merchandise. We use technology extensively to provide best in class online shopping experience to customers. This is an ongoing process as we believe that is the only way to create a differentiated proposition.
keep that momentum going while launching newer editions?
abof has a strong buying & merchandising team that is constantly researching fads and trend-spotting. Basis the same, they come up with a trendy new collection every month. The key here is the robust system that we have been able to put
From a product standpoint, some true differentiators are – ● One touch exchange ● Free @ Home Alteration, 1st of its kind in industry and India ● Fastest ecommerce website in load time (1.8 seconds). It led to a great user experience to millennial and improved conversion rate of the website
INTERVIEW by over 60% ● High resolution graphics for clear understanding of fabric ● Virtual dressing rooms and 360° viewing - Customers can key in their vital measurements to find the right fit ● AISHA - fully automated AI-based fashion styling advisor chat-bot ● Zoom tools – Provides a closer look to all focused areas From supply chain standpoint: ● Own inventory model ensures proper quality check and same or next day dispatch from warehouse ● Fastest delivery TAT in industry ● One touch exchange ● Fastest reverse pick up and refund in 24 hours from pick up time ● At Home Alteration, 1st of its kind in industry and India From customer service standpoint: ● Any customer issue is taken up on the highest priority and resolution provided to in the shortest timeframe. ● Any service of abof rated low by customer is evaluated by CXOs and ensured that no repeat of such issues take place.
What’s the role of technology in enabling supply chain at abof?
In today’s highly competitive business environment, it is imperative for businesses to innovate new ways to streamline their supply chain and optimize productivity. At abof, IBM offers a scalable and seamless order fulfillment platform and innovative customer engagement features. Here are few examples ● With the aid of internet based software, inventory has been serialized and automated. Tracking has been enabled to capture every physical movement of goods, services ● Tight API integration with logistics service providers for selecting the best courier, pre-inform shipment, end-2-end digitalized tracking to ensure reduction of shipping errors significantly and more rapidly respond to the errors that do occur ● Self-service return and exchange functionalities have been integrated with courier partners with an aim to make value added services available in a click of a button ● Minimized data entry and screen
Sukanta is a motor driving enthusiast and loves to hit the highways every chance he gets. It’s his dream to take an international road-trip someday. In his spare time, he likes to play badminton and table tennis or indulge in the culinary arts. interactions in warehouse by automating processes ● Real-time view of inventory in movement and at-hand to internal business stakeholders, customers ● Smart and self-service business intelligence tools to track SLAs of every process in the supply chain. Further, abof continually adapts to emerging technologies to further streamline its supply chain and create an easier, cheaper, and more accurate shipping process, by arresting perennial industry specific issues like, shipping delays, shipping errors, displaying out of stock products.
How crucial has been supply chain for your business? What are the USPs of your supply chain that make you stand apart from the rest? Fashion e-commerce is built on 3 major pillars – 1) great products; 2) outstanding technology platform; and 3) nimble and state-of-the-art order fulfillment organization. Therefore, it is apparent that nimble and responsive supply chain is the key to success here.
What are the many packaging and supply chain innovations implemented by abof? On the packaging front – abof made a significant advancement by setting up packing norm by critically analyzing historical shipment data points. Emphasis has been put to align standard packaging sizes against high running categories. We have standardized weighment process of shipments for alignment in volumetric weight point of view with delivery partners. This has reduced significant manual effort and reinforced trust in partnership.
Pls share with us one of the most challenging projects managed by you at abof.
At Home Alteration – Fitment of apparel is an inherent issue that any e-commerce
Logistics leaders must take responsibility for that investment, exercise responsible and accountable stewardship, and maximize the ROI on that investment by working both ends of the equation: drive down cost and improve performance and economy. Great leaders maximize ROI by inspiring their organizations to achieve goals.
players struggle with. Customers’ experience is incomplete without it! ‘At Home Alteration’ is a service innovation and has enabled abof to provide differentiated value-added service to delight customer. We aim to ensure the alteration of apparel as per customers’ measurements post purchase. Customers have rated the service as ‘great’ more than 70% of time, with no negative feedbacks so far. The unique aspect is our On-the-spot alteration model (OSA). Most other players follow a different approach, whereby they pick up the garment from the customer, take it back to some factory for alteration and then deliver after a couple of days. We felt that this is not as convenient as it requires multiple touchpoints. In OSA, a designer will visit the customers’ location and complete the alteration on the spot. We also offer the alternative approach (common amongst other players) of PickAlter-Deliver model (PAD). In PAD, after taking customers’ measurements, the apparel will be transported to the facility where the alteration will be done, and then the altered garment would be delivered back to the customer. Post-delivery, feedback is noted by the Customer Service Team and the same is utilized for process improvement. Where OSA is not feasible for lack of infrastructure at the customer’s location, PAD can be availed.
What’s your strategy in place to take the brand growth story ahead as far as supply chain is concerned? Going ahead, we would focus on adding new Pin Codes and building further the accuracy of our service for existing as well as prospective customers. Our intent is to develop a complete, and value-added, package of services for all our customers.
You have studied specialization. How the scenario has for logistics and professionals from earlier?
logistics as do you think transformed supply chain what it was
In the earlier days, organizations were fixated in the norms dictated by traditions and conventions. Areas other than logistics were perceived to be important. Most of the organizations may have been in an evolutionary state. At that time, educational courses and programs were also not focused on integrated logistics or
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INTERVIEW distribution. They were mainly related to individual activities such as transportation and purchasing. There was little attempt to integrate and balance the activities that were in cost and/or service conflict. Hence, there was not much of an opportunity for professionals or managers to learn about the broader concepts of logistics. Over the last decade or so, supply chain management emerged with a broader scope. A contemporary view of supply chain management is to think of it as managing a set of processes where a process is a group of activities relevant to achieving a defined objective, such as filling orders. Managers are now more equipped with advanced SCM ERPs, can measure and control business specific metrics than having to check only generic metrics. This promotes coordination, integration, relationship building, and collaboration throughout the entire value chain and helps to take data driven decision faster to ensure maximization of ROI.
These days we have great examples of supply chain professional moving up the CEO ladder. What are the qualities of an SCM professional that make him fit to manage a big organization? Leadership in logistics and supply chain management is the difference between the traditional role of supply chain and distribution—that of being a necessary evil whose job is to just get the shipment out —to becoming an integral part of the management team and the strategic direction of the company. Logistics represents a large investment for most corporations, logistics leaders must take responsibility for that investment, exercise responsible and accountable stewardship, and maximize the ROI on that investment by working both ends of the equation: drive down cost and improve performance and economy. Great leaders maximize ROI by inspiring their organizations to achieve goals.
How do you see the dynamics of e-retailing going ahead? Going forward, the main aspect of this business would be determining the path to profitability and identifying how one would continue to improve margins. The main thought is to get the business to operate in a manner of profitable and sustainable growth. That will be the main challenge for all the players in this industry.
For India to become a global marketplace, how can supply chain play an enabling role? What all needs to be done to create an exceptional supply chain?
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The main aspect of this business going forward would be about the path to profitability and how does one continue to improve the margins so that the business gets to a sustainable place soon enough. That will be the main challenge for all the players in this industry. E-commerce is growing rapidly in India, but the ecommerce landscape is hugely variable with sharp divergences between tier I and tier II & III cities. As e-commerce logistics models develop, they will drive significant changes in physical distribution networks. They will give rise to a new class of logistics and distribution properties including mega e-fulfillment centres, parcel hubs and delivery centres, local ‘urban logistics’ depots for rapid order fulfillment, and returns processing centres. Retailers/e-tailers that wish to gain maximum advantages from these changes and penetrate well in the market need to understand and embrace both the dynamics as well as complexities at play in different supply chains and in different geographies. There is real momentum in this segment of the market and fantastic opportunity to continue to grow successfully provided we get things right and aren't complacent. Implementation and roll out of 3G and 4G internet broadband and mobile internet facility took care of the information and
communication technology requirements part, however, regulatory and physical infrastructure that support online purchasing should be further improved. The quality of the logistics infrastructure is highly variable. Typically, the transport infrastructure is more established around and between the major cities than elsewhere. In addition, outside of these markets, the quality of the existing warehouse buildings is relatively poor. All these issues, raise challenges for efficient online order fulfillment beyond the major cities.
Sukanta Das leads the operations function at abof, which includes warehousing, logistics, cataloguing and customer service. He joined abof in January 2015 and has since led the set-up of the overall operations model from scratch. Sukanta has over 17 years of experience in back and front-end operations, encompassing logistics, retail, media and the e-commerce industries. After completing his graduation in Commerce, Sukanta pursued a post-graduation diploma in Logistics from IISWBM, Kolkata.
ENABLING TECHNOLOGY FARM-TO-FORK
“Danfoss seeks to provide the enabling technology that sustains the farm-tofork process, ensuring food safety, freshness and hygiene all along the way,” remarks Ravichandran Purushothaman, President, Danfoss Industries Pvt. Ltd. In this exclusive interview, Ravichandran shares with us the future of cold chain infrastructure in India and how is Danfoss going to play an active role in this everevolving growth journey with energy efficiency at its core. Excerpts… Drives are an integral part of any industry vertical. How is the segment shaping up as far as the performance is concerned? Energy Efficiency in enterprises is now a boardroom topic, driving increased demand for drives. Electric motors along with variable frequency drives are extensively used in industrial, HVAC, water, F&B, and several other applications. Drives play a key role in enhancing process and energy efficiency in most industries, right from air
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handling units to conveyer belts to energy storage to chemical centrifuges to elevators & escalators. AC drives control the power supply to electric motors and typically save 15-40% of energy consumed. 40% of electrical energy consumption in the world is by electrical motors. Global electrical energy consumption could be reduced by 10% if AC drives were used in every suitable application. This spurs the global demand for variable frequency drives (VFD), which is expected
LEADERSHIP to increase at over 7% CAGR during the period 2016-2026. The scope of this segment is ever growing with a constant demand for quality driven energy-efficient technologies that Danfoss focuses on. This is a consequence of individuals as well as industries understanding their commitment towards the planet.
How complex is the supply chain and how is Danfoss managing it efficiently? Since the beginning of our operations in 1999 in India, we have transformed from being a sales company selling international products to a company that is focused on creating and customizing its technology to suit the requirements of diverse industries. It has been a pleasure to witness our steady growth and evolution into being a fullfledged facility that is facilitated by a strong R&D team with a manufacturing unit which develops products not only for India but also exports products to other countries. Earlier, 100% of our products used to be imported from other countries. However, now close to 25% of all technology products come from within India. We have created a strong ecosystem of supply base, which will contribute to increasing sourcing within India five times compared to the previous year, over the next three years. While the general trend is to import products from China, we can proudly say that Danfoss India is exporting to China. We follow a ‘One product one location strategy’ across Danfoss and revel in our global supply chain footprint and strong local sourcing expertise. Scale is also an important driver
for growth. Our success was adopting and being a pioneer in ‘mass customization strategy’.
Energy efficiency has been taking center stage these days. How is Danfoss taking a step in this direction? Individuals and industries are beginning to realize their responsibility towards the planet and reducing their carbon footprint. Rather than buying our way to carbon neutrality, we have undertaken a practical approach to show that we can reach the heights of energy efficiency and climate conservation with our own existing technology. Energy Efficiency is the core & DNA of Danfoss and we focus on doing more with less. If you take the case of some of our 4th or 5th generation products, you will find that the main differentiating factor has been energy efficiency across generations... Danfoss is a member of COP 21 and UN Global Compact. The Danfoss Climate Strategy 2030 seeks to halve the amount of energy used and CO2 emitted by 2030. This means that while we already have some of the most energy efficient factories, but we will further reduce our energy consumption by 50%, as also the CO2 emitted from the energy consumed by 50% while continuing the growth momentum. This we believe is the way we walk the talk. Even when it comes to our R&D and production facilities, we have kept energy efficiency as a key focus. We are proud to share that the Danfoss India Oragadam Campus is acknowledged as the first LEED
Platinum rated constructed manufacturing campus in India, thanks to the several green and energy efficient initiatives installed at our campus, including a 1mw solar power plant.
How can energy efficiency be brought into supply chain spectrum? An effective supply chain is one that is energy efficient. It is also a key driver for cost. Even small steps undertaken by companies can contribute to reducing their carbon footprint. Danfoss has adopted a zero waste environment philosophy, which not only contributes to a better environment but also has multi-faceted business benefits. Our deep localization in supply chain focuses on keeping the carbon footprint of our supply chain low. One example, I can quote here is from our own experience in India where we were having multiple deliveries being done to multiple clients at multiple cities. Our supply chain team worked on this and adopted a ‘Milk Run’ model, wherein our customers in different cities agreed to a fixed delivery model, with pick-up and delivery only on specific days. This not only helped bring in efficiency in our system but also reduces our costs and carbon footprints. Our customers were also delighted as they had a clear schedule of deliveries and contributed to creating a greener planet.
How do see the Indian economy dynamics shaping up with the Central Government’s recent initiatives?
Around 60% of Indian economy is consumption driven and with the growth
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LEADERSHIP UP, CLOSE & PERSONAL What’s your success mantra? Focus on planning, prioritization and execution! What’s your leadership style? Enhanced engagement & empowerment of employees Who’s your mentor? I have had several mentors over the years and they have created an open learning and sharing path for me, conducive for my continuous development. Which book have you read recently and how have you implemented those learnings in your business? The Founder’s Mentality by Chris Zook and James Allen. The 3 main ideas presented in this book – Insurgent mindset for customers, unambiguous owner’s mindset and relentless mindset to frontline are under implementation in our business. What’s your passion? Being bold and ambitious! of our services sector and urbanization, we would continue to see opportunities being created under ‘Digital and Make in India’ initiatives. As you know, 2/3rd of India is yet to be built and this offers a great opportunity for investments in infrastructure, which will in turn drive the growth of core sectors of Indian economy. In line with government’s ‘Make in India’ initiative, Danfoss also kickstarted its own version of the same with a new manufacturing campus in India. Danfoss has a three-step approach to ‘Make in India’: First – to make in India for the Indian market, second – to make in India for the rest of the world and third – to make components in India for application in global innovations. Furthermore, our promise towards Engineering Tomorrow’s India in a sustainable manner holds true by way of providing energy-efficient solutions to diverse industries. With regard to GST, I foresee transparency in the business chain, which will enable significant value creation for the Indian economy.
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How complex & challenging is it to work in India vis-à-vis other countries as Danfoss is a global brand? The Indian manufacturing sector has the potential to grow six-fold by 2025 up to $1 trillion, creating up to 90 million jobs. With the current Government’s Make in India initiative, this sector is set to grow further. The fact that India is a developing country gives us an added advantage that we are at the ‘start’ line. This gives us the opportunity to apply knowledge that has been proved successful in similar societies and also learn from their mistakes. However, there are some challenges that need to be overcome to help India leapfrog to a leadership position. Our government needs to focus on improving the ‘Ease of doing business’ and ‘Skill Development’ to help India be more competitive and supportive in our ambitions to be a ‘manufacturing powerhouse’ for the globe. However, at Danfoss we look at India as a promising land of opportunities rather than focus on its’ challenges.
Where does India stand when it comes to Danfoss Group strategy? India is an important growth region for Danfoss and we have a successful ‘Core & Clear’ strategy in place for future growth. Danfoss India is currently a 1000 crore company with strong double-digit growth. We are amongst the top five markets in
terms of profitability and within top ten in terms of overall sales across Danfoss Global. We aspire to be in the top 5 within the next 5 years and aim to reach 2000 crores by the year 2020.
What are the major initiatives & advances shaping up in cold chain industry in India? Agriculture plays a significant role in serving as a key contributor to the growth of GDP and the socio-economic sector in India. In total farm output, India is the second largest in the world. India also ranks first in the production of milk, jute and pulses, and half of the agricultural workforce is employed in forestry and fishery. All of this proves the immense potential of India's agricultural sector contributing to the economy as well as exports through the trade of food and farm produce. However,
We have created a strong ecosystem of supply base, which will contribute to increasing sourcing within India five times compared to the previous year, over the next three years. While the general trend is to import products from China, we can proudly say that Danfoss India is exporting to China.
in the present scenario, only around 10% of the food produced moves through cold chain and there are substantial food losses with varying figures, with some indicating as high as 35 to 40%! Indian farming sector is undergoing a dramatic transition through process innovation and technological advancement for enhancing the quality of our produce from farm to fork! These two drivers increase the need for a reliable supply chain logistics, which is helping to drive growth in cold chain. The safety and longevity of perishable farm produce and processed food is critical for our trade and commerce. Therefore, Danfoss seeks to provide the enabling technology that sustains the farm-to-fork process, ensuring food safety, freshness and hygiene all along the way. Furthermore, improving the socio-economic status of our farmers and earning the confidence of our customers is a milestone that we cherish the most!
You have been quite vocal about industry-academia tie-up to enhance skillsets. This stands all the more crucial when it comes to supply chain & logistics. Kindly enlighten as to how we can eradicate existing gaps. I think industry needs to engage more with universities and build a strong ecosystem for innovation. To foster the engineers of tomorrow, Danfoss has a comprehensive university engagement program that connects with student community in campuses across India. A unique partnership between industry and academia, the Danfoss university engagement initiative plays a key role in imparting industry-specific knowledge and the latest technology in climate and energy to engineering students, besides encouraging them to think innovatively. ‘Insight 360’ is another initiative whereby academicians from select engineering institutions across India are provided clear insights into the dynamics of engineering and design, latest developments in the industry, and help guide students in their research projects. Through the university engagement program, Danfoss promotes an intensive transfer of knowledge that creates awareness about its product offerings and
Danfoss India is currently a 1000 crore company with strong double-digit growth. It is amongst the top five markets in terms of profitability and within top ten in terms of overall sales across Danfoss Global. It aspires to be in the top 5 within the next 5 years and aims to reach 2000 crores by the year 2020. technology to the future generation of influencers, decision makers and users. We believe that industry and academia should work together to enhance skill sets and incidentally, the steps that government is taking along with NSDC will be of help, in this journey.
Indian economy and this works well for us at Danfoss as well. While this might require a shift in the mindsets of companies – from the way they do business, to the fact that all channels will have to be digitalized at every stage – the goal is perfection in execution to achieve transformation.
With the proposed GST rates out by the government, how do you think is it going to impact businesses?
GST on power & renewables
The GST regime will cause a tectonic shift in India’s taxation history. I foresee transparency in the business chain, which will enable significant value creation for the
GST will cause a tectonic shift in India’s taxation history. I foresee transparency in the business chain, which will enable significant value creation for the Indian economy and this works well for us at Danfoss as well. While this might require a shift in the mindset of companies – from the way they do business, to the fact that all channels will have to be digitalized at every stage – the goal is perfection in execution to achieve transformation.
When one looks GST’s impact sector-wise from the view of Danfoss, the power sector is likely to see a positive impact. This is largely because of the thermal power sector where coal has been categorized under 5% v. a previous 11.7%. Additionally, capital goods have been put under the 18% slab. This will lead to a reduction in power project development costs. However, it is important to keep in mind the adverse effects on the environment due to coal usage.
GST on manufacturing
While the ‘Make in India’ initiative was started with the intention of making India as one of the top 10 manufacturing hubs in the world, there have been several hurdles that companies face in terms of cascading taxes. However, with the introduction of GST, we believe that it will help streamline the sector, creating a cooperative synergy in the country. Some positive ways in which we see the impact being felt include reduced cost of production, supply of goods with ease where we hope to see decreased state-border checks. The other side of the coin is of course, increased compliance requirements and supply chain restructuring that might be required from the company’s side. Overall, we feel the introduction of GST will have a positive impact on the Indian economy, though at present, it looks like a white elephant to most people!
What’s your growth strategy ahead?
Staying closer to customers, understanding their needs better and thereby creating innovative solutions will be our growth strategy. Our aspiration is to reach 2000 crores by the year 2020. We expect this to be met with both organic and inorganic growth. We will be leveraging on the three key mega trends in India, capable of driving growth across our entire product portfolio: Urbanization, Cold Chain, Power and Energy. Across the Danfoss globe, we are on a digitalization journey and our customer service solutions are also being revamped through an integrated approach to deliver more with less!
CELERITY • July 2017 | 15
SUPPLY CHAIN MEGATRENDS The year 2016 has had its own share of supply chain challenges, be it BREXIT, US slowdown or Chinese economy witnessing a sluggishness, things have moved beyond in 2017. Today global companies are far more prepared to deal with any internal or external unforeseen situation on the back of these three megatrends. Digitalization, adaptiveness and fostering healthy ecosystems will go a long way for any organization to emerge victorious in tough times, predicts Gartner.
eflecting on 2016, the global economy marked another mixed year, with meager growth in the US and Europe, continued deceleration of the Chinese economy and decline in other major markets, such as Brazil. In 2016, nearly 60% of CEOs listed growth as a top priority, pursuing this goal organically and through merger and acquisition (M&A). Today's world is a much different place than just 12 months ago. A general trend toward protectionism, as evidenced by Brexit and the policies of the current US administration, has caused some companies to shift supply network design decisions and create contingency plans in
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anticipation of new trade policies. Three key trends stand out this year for the supply chain leaders that are accelerating their capabilities, separating them further from the rest of the pack. These are:
Digitalization of supply chain
We have seen a massive shift in companies
creating digital connections within and across their supply chain operations over the past few years. Leading companies view digitalization as an opportunity not only to provide agile support for existing products, but also to reduce time to market for new ones. Some of the most disruptive and impactful technologies we see leaders adopting include solutions
In addition to flexible business process design and management, adaptive organizations take a bimodal approach to addressing new customer and business requirements.
INSIGHT combining Internet of Things (IoT) sensors, cloud computing and advanced analytics. Simulation and optimization capabilities have moved into the mainstream, and now cognitive computing capabilities, including machine learning, are in the labs of the most advanced supply chains. This broad category of innovations also covers advanced automation in the form of robotics, self and remote-guided vehicles, virtual and augmented reality, 3D printing and supply chain sharing platforms for resources such as warehouse space and last-mile delivery services. Some leading high-tech and industrial companies have built ‘lights out’ manufacturing plants where everything from materials handling to production flow and quality management is automated in sequence through the delivery of finished goods to a warehouse. Overall, in the past five years, there has been a tripledigit explosion of growth in the use of industrial robots in manufacturing and warehouse environments particularly in North America, Europe and Asia. Beyond factory, warehouse and customer points of sale and use, sensors and tracking technology have, likewise, become the foundation of digital logistics networks. This type of visibility, when combined with alert management allows suppliers, partners and customers to better manage the risks and performance of shipments flowing between their locations. The digital pieces of the supply chain puzzle are coming together in a way that will enable more holistic, real-time management of the entire ecosystem.
Adaptive organizations capabilities
Interrelated with digitalized supply chains is the ability of companies to be more adaptive to changes in their value chains. More specifically, leaders are creating adaptive organizations and capabilities to survive and win independent of future supply-related constraints or customer needs. In terms of organizational structure, the largest difference between more and less mature supply chain organizations is typically a broader span of control that includes strong relationships with functions such as customer service and product development, in addition to traditional planning, sourcing, manufacturing and logistics. More significant differences emerge in the scope of responsibility for functional owners and how they partner internally and externally to manage end-to-end (E2E) business process flows such as design-to-launch, requisition-to-settlement and order-tocash. Some of the more impressive supply chain organizations have created a modular supply chain service model that allows for
variants of functional capabilities to be combined into ‘plug-and-play’ segments, such as make-to-stock, configure-toorder or engineer-to-order manufacturing profiles. This approach allows them to more quickly and flexibly support different business needs and outcomes and speeds up activities such as M&A integration. In addition to flexible business process design and management, adaptive organizations take a bimodal approach to addressing new customer and business requirements. Beyond traditional operational continuous improvement efforts and transformation projects using
Developing and fostering healthy ecosystems
The leading companies realize that supply chain success hinges on the health and well-being of the critical ecosystems within and around them. Sustainability is the watchword in terms of people, planet and the partnerships formed to deliver customer solutions. The people aspect of supply chain ecosystems has many dimensions. It applies to relationships with suppliers, partners, employees and customers along the value chain. Leading supply chains spend as much time focused on ethical sourcing and supporting
Some of the more impressive supply chain organizations have created a modular supply chain service model that allows for variants of functional capabilities to be combined into ‘plug-and-play’ segments, such as maketo-stock, configure-to-order or engineer-to-order manufacturing profiles. off-the-shelf tools, these leaders fund more open innovation with venture capital type budgets and governance, they hold hackathons with self-identified innovators to rethink how they run the business and use agile project methodology for new product and business process development.
GARTNER RECOMMENDS Learn from the latest trends and innovative practices of the top global supply chains: • Build digital supply chain capabilities, internally and with partners, in areas that best meet the strategic business objectives of your company and customers. • Apply agile development techniques and a modular supply chain service approach to more quickly respond to changing supply and market conditions. • Invest in programs that ensure the ongoing health of the people, environmental and partner ecosystems your company relies on for competitive advantage.
customer well-being as they do on talent acquisition and development, for instance. Maintaining healthy people ecosystems is also highly interrelated with the digitalization of supply chains. An inflection point is coming, where we will need to more deeply explore the pros and cons of heading further down the digital path. Globally, we face unprecedented challenges, such as aging populations, and an explosion in the number of people with special needs requiring long-term care. On the positive side, advanced technologies may be the breakthrough required to solve our largest societal issues. With the rise of automation and AI, we are becoming more sophisticated and efficient in terms of how we deliver goods and services. On the other hand, if our machines need fewer human collaborators working alongside them, there will be major disruptions to how we live and support ourselves. For the time being, it is full steam ahead for the leaders pursuing these advancements. Courtesy: Gartner Inc
CELERITY • July 2017 | 17
FOOTWEAR FANCY “We have set our eyes on opening 1,000 exclusive showrooms in India and abroad, and be closer to our 1000 crore vision,” proudly asserts the third-generation scion of Liberty Shoes, Manan Bansal. Holding the position of director in the company, he believes in learning the tricks of the trade from his mentors and apply new age business practices to best serve the needs of the modern customers. In this interaction, Manan shares with us the company’s ambitious plans to capture global markets, their supply chain transformational journey and their preparedness for the post-GST era.
How do you view the dynamics of the Indian footwear industry?
India is the second largest producer of footwear globally, accounting for 13% of the global footwear production, next to China, which dominates the global footwear industry accounting for close to 67% of the market. The country produces 2.2 billion pairs of footwear annually in different categories of footwear and exports about 180 million pairs. This industry has shown its potential through its consistency in high export earnings and its ranking amongst most foreign exchange earners for the country continuously in the past several years. Indian footwear sector due to its inherent strengths has found its place
as thrust area under 'Make in India' initiative of the Central Government and showcased as the Top Priority Sector amongst the other 25 sectors chosen for ‘Make in India workshop’ chaired by Hon'ble Prime Minister of India. Footwear industry has growth potential to be a $80 billion industry by 2030, which means a CAGR of approximately 20% in the next 15 years with great potential for exports and
There are multiple measures taken to smoothen out supply chain inefficiencies. We have safeguarded our company in lot of ways when it comes to logistics.
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a huge domestic market.
Liberty has been in the business for close to 60 years. How has been the transformation from then to now?
We have completed 63 years in this business and the transformation has been huge. Till 1982, we were involved in exports only. When we started in 1954, we used to produce only two shoe pairs per day. Today we have the production of around 50,000 pairs per day, thanks to the adoption of the new age technology in the production process. We take pride in saying that our company has been the pioneer in bringing the world-class technology for footwear industry in India. To name a few, we were
COVER STORY the ones who brought PU technology as well as EVA machines for the first time in the country. We were even in exclusive contract for this technology for the first two years. We have adopted the best in class ERP & SAP tools to bring in efficiency and transparency in the system. Owing to such tech interventions, the entire value chain has been visible to each stakeholder in the company, and that offers us an edge among our counterparts. In short, integration has been the backbone of our robust performance.
Kindly enlighten us distribution and reach.
Helping us dress up the feet of the fashiondriven and quality-seeking customers in more than 25 countries, which includes major international fashion destinations like France, Italy and Germany, is our worldwide distribution network of 150 distributors, 600 exclusive showrooms and more than 6000 multi-brand outlets. We believe in offering quality with comfort and value for money. The brand with a well-known and exalted positioning in metropolitan cities, is persistently expanding in tier II and tier III towns and cities. Some of the well-known brands offered by Liberty footwear online store are Windsor, Fortune, Tiptopp, Force10, Senorita, Gliders and Footfun among others. Since inception, our reach in tier II & III cities has been our stronghold and this has just been increasing by the day. We have created product mix for tier II & III cities to further penetrate the market. After being in the market for many years, we exactly know what customers from each strata desire. When it comes to these cities, people are looking for value for money and long lasting comfortable shoes. To offer them the same, we are planning to open factory price store in those cities as those cities are heavily discounts driven.
FAST FACTS • 600 exclusive showrooms across the length and breadth of India • Present in more than 25 countries around the globe • 4,000 strong team • Number 2 in the footwear industry us a tight control on meeting our exact requirements from our partners. That’s the precise reason as to why supply chain holds crucial importance for us. Having said that, it took us years to manage complexities in our SCM operations. Let me explain this…We have six factories all around the country. In the past, we used to receive orders directly at our factories. This resulted in complexities and haphazard functioning. In the year 2011, we developed a central
reduced substantially in the long term, which is to the tune of 15 – 20%.
How do you manage complexities arising in supply chain? SAP has been a boon for us to eradicate complexities from the system. All our stores and customers are on RetailPRO. To harness maximum benefits, we have integrated the two processes – SAP & RetailPRO. We have created buffers for each customer. Whenever a particular distributor sells an X amount of that particular SKU, that X number of order will automatically get generated at our plant for production. The factory will only work on that number of pairs for dispatch. In that way, our inventory is also controlled substantially. Earlier we used to dispatch a preselected carton to our distributors, irrespective of the demand generated. The particular store used to get invested into a
With more than 10 footwear brands in its pocket, Liberty is one of the major footwear manufacturers or stores in India. Liberty shoes has a considerable presence in around 25 countries including Italy and France, which are known for being the fashion capital of the world. Currently, it has 600 exclusive showrooms, presence in 6000 multi-brand outlets, turnover exceeding 500 crores and aggressive plans of expansion with 100 stores per financial year. warehouse, where we receive demand and the entire consignment gets stored there from all the factories. As soon as the demand is generated at the warehouse, it gets dispatched. This proposition has really given us an edge to reach our customers faster. Additionally, we have also been able to reduce the lead time of the package. The production process has also become quite seamless, which has resulted in uniformity in the entire process. The operational gains have been quite satisfactory and the costing has
particular category which they probably don’t need. But now, if that particular store requirement is only two pairs, we will send them only two pairs along with different articles in one box rather than just dispatching the same product in different sizes. This way they are getting what the demand is and the inventory is also optimized in a big way. Now, we don’t forecast. Our entire planning is demand based. Sometime back, in order to bring in efficiency into our entire process, we adopted ‘theory
How crucial is the supply chain for your business and how have you been managing it? Supply chain has been an integral part of our entire value chain. Let me give you instance…If a customer visits our store and asks for a particular pair of shoes be it sizing or pattern, due to any reason, the size is not available at that store, we consider it as a lost sale. To avoid such a loss in sale, we have brought down number of shipping days from 20 to 6 days from the extreme most corner of the country to any store where the demand has been generated. This has been made possible by our vendors in the 3PL space and the robust processes in streamlining SCM operations. We have also made sure that if our products don’t reach on time, we penalize them. This offers
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COVER STORY UP, CLOSE & PERSONAL Your mentor in life My father Mr. Shammi Bansal has been my mentor in life. Success, according to you Success, according to me, is to always keep a positive approach. Always talk and think about solutions to an issue and not problems. How is it to carry on the legacy? The legacy can be carried forward by always making sure the company’s culture, principles and foundation are intact with a mix and addition of new innovations and technology. What’s your passion? The passion what drives me everyday is my family. My family is the one which motivates me to strive and be a go getter. Their support is my strength and my biggest asset personally & professionally. of constraints’ (TOC) in our system. As soon as the demand for an article is generated, we make sure the same gets into production. As soon as we get the trend about the most selling article, we replenish the same product in a week’s time to cash in on demand. Our system generates demand pattern and accordingly the entire production process works. This way we start increasing the production numbers of a particular article based on the demand. This entire process has shaped and streamlined our supply chain process in a big way.
Till the time, you have that confidence in the product you are offering in the market, it is not that difficult to establish your base. Yes, challenges are there in terms of price points and competition, but I believe if there are no hurdles then there is no gain and change. Kindly share insights into your supply chain transformation journey Before we got the theory of constraints (TOC) into play, our six manufacturing units were dispatching goods panIndia. That increased our lead times. We didn’t have organized logistics players as our partners, so there were lots of inefficiencies in the value chain. Our inventory control used to be erratic. Our processes were not integrated well. After following this concept, we introspected on all our systems and processes, discarded what was not needed and brought forth new additions to optimize our operations. Among the many initiatives taken, we first worked on our packaging. We moved to rack packaging than carton packing. Secondly, now a logistics person can generate demand at the production end based on the demand generated by the distributor/dealer to avoid any unwanted production. We are now able to control raw material inventory at our factories.
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Today we only receive the raw materials based on the production numbers. We only keep 20,000 SKUs in our system. Suppose, if we have new product additions of 1500 number, we reduce 1500 existing units to make space for the new ones. To further streamline the process, we have advisory committee meetings including directors, merchandisers, etc., who meet on a regular basis to analyze the impact of the process and discuss as to what best can be done to further expanding the reach and reduce time to market to be able to cater to as many customers as possible. Working together with our distributors has really benefited us in reaching closer to customers and catering to their specific needs in the shortest possible time.
How do you manage a strong relationship with your dealers and distributors? We listen to their issues and concerns.
COVER STORY Strategies to harness post-GST benefits We are extremely bullish about the post-GST era as it will offer a level playing field to organized players. Additionally, it will bring in lot of uniformity in the way businesses are being run today. With shoe industry, being 85% unorganized, one can imagine the impact GST will bring in. It will stop tax evasion, and organized players will be able to compete with unorganized players to survive & succeed in the market. As we have been following the same business practices that the GST is going to bring in, we don’t see any change in business proposition for our company. In true sense, we are GST ready. It will aid us in penetrating into deeper pockets of the country and expand our business horizons. We believe that if you are not a good listener, you have lost half the battle. We appoint teams from our company to cater to assigned dealers and iron out their concerns. This way we are not following a long chain, the problem gets sorted immediately. We have to take their suggestions as they are the ones who are out in the market and they come to us with ideas to enhance our reach. We keep on upgrading our product range based on their suggestions.
What are the prerequisites for selecting a logistics partner?
We first pilot test the project with the 3PL company. If they can deliver the result that we are seeking, they become our preferred partners. We analyze all the trends such as tracking goods, pilferages, delivery times, so on & so forth before finalizing the contract. We have fixed rates with logistics partners pan-India. We keep our logistics partners in competition with each other and keep shuffling our partners to get the best pricing & best services. Each and every concerned stakeholder works on his respective timelines to make sure that the goods reach to the consumers on time.
What are the crucial learnings you are gaining from your mentors who also happen to be your family members? How do you plan to take the growth trajectory ahead? Our elders have been very patient and supportive in guiding us and believing in us to invest in latest technologies and management tools to take the company forward. They have taught us to inculcate new ideas into the business keeping intact our company culture and vision. The way I see it, my generation in our company is already on a path to take the company forward with latest trends & tools needed in our industry.
How easy is it for new age entrepreneurs to set up base and expand in such a dynamic market?
Till the time, you have that confidence in the product you are offering in the market, it is not that difficult. Yes, challenges are there in terms of price points and
competition, but I believe if there are no hurdles then there is no gain and change. One has to be honest and hard working on what we are trying to achieve. We have to set our goals clear and not compromise on the quality, value and comfort, which our product should offer to our customers.
How poised are you towards omnichannel retailing? Do you opt for different strategies for both the models?
Online retail has emerged as a popular medium for shopping specifically women's and sports footwear. Looking at the immense growth potential, we have also taken the omni-channel route. We have tied up with Amazon, Flipkart, Jabong, etc., apart from having our own portal. We are generating around 10-15 crore from e-commerce channels. We have a completely different strategy and model to survive in this discounting era on online marketplaces. There are limited products which are sold through e-commerce. We segregate those products and that’s how we even go ahead towards striking a deal with online marketplaces. When it’s about online channels, you have to come to a win-win situation with online retail channels, else no one will be able to survive. The exclusive range of products available online are often available at a discount prices which makes online retail a lucrative channel of sale for footwear. Furthermore, increasing demand for
Footwear industry has growth potential to be a $80 billion industry by 2030, which means a CAGR of approximately 20% in the next 15 years with great potential for exports and a huge domestic market.
innovation in design and technology of footwear products is likely to create a growth opportunity for the global footwear market.
What according to you are the aspects that would aid in developing a foolproof supply chain network in India? Having technology tools such as ERP, SAP, RetailPro, always aid in efficiency enhancement and are gamechangers in true sense but at the same time we have to invest in our employees as well. We have to keep upgrading their skillsets so that they can learn on the job else it will just be a mundane work for them. In order to do so, we have in-house training centre at our factory. We firmly believe these initiatives can take any company to greater heights going ahead.
What are your growth plans? Where would you like to see Liberty five years down the line?
Our growth plan for the next five years is to become a 1000 crore company with increasing 100 stores every year and being aggressive in our distribution network. We have various plans to increase our reach abroad by opening stores around the globe. We as a company have also been focusing a lot on government and institutional sales and in the next 5 years, we would like to see ourselves supplying good quality and standards products to most reputed organizations.
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THE NEW EPOCH OF
Warehouses of tomorrow need to be highly process driven rather than people driven. Unlike what used to apply two decades back, industries have transformed and what warehouses must do now has changed. This has radically altered the vision of what warehouse software must do. Steve Mulaik, Director, Crimson & Co, through this very informative analysis highlights the new alternatives and how they can be used to up a firm's profitability quotient.
s a company grows, so must its warehouse. As a warehouse expands and the activity inside increases, the efficiency envelope of the operation depends less on proper management and more on the software used to operate the site. This is not to propose that bad management cannot wreck a warehouse; it can, but it has been proven time and again that the warehouses that perform better than
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average have better software than average. This may be even more true today than it was 20 years ago. This is an important point for logistics executives because for the first time in my 30 years’ career helping companies select & install warehouse software, there are some new choices. I don’t mean there are new WMS packages or vendors. I mean there are new types of warehouse software beyond the classic WMS
package that companies typically install. I use this term ‘new type’ because this software is architected quite differently and it provides additional benefits that the classical WMS products will be hardpressed to duplicate. Is this hype? I don’t think so. What we are seeing in the marketplace is the established players of the classic WMS products slowly losing market share in arenas they used to win regularly.
A site that uses a WES
Why? It’s due to these new entries that offer new value propositions. If your company is looking to upgrade its software or purchase new software for the warehouse, I recommend you look beyond the regular suspects. To understand what is different, we must first explain the warehouse software market up until 3 or 4 years ago. Up until about 1998, most warehouse management packages weren’t packages. They were a conglomeration of code snippets from past projects that vendors would take ‘off the shelf’ and glue together to meet the specific needs of a customer. This meant each customer ran a little different code set making upgrades impossible and it was a lot of work to transfer functionality from one customer to the next. Projects were thus expensive. It was very difficult for smaller companies to purchase warehouse software. Big companies spent huge sums implementing these systems.
Partying in 1999
At the start of the new millennium,
customers were designed with the idea that a) they would be rolled into the base code for future customers to activate and b) they wouldn’t impact existing customers who did not need the functionality. Finally, the vendors created points in their code where they Classic WMS packages tell operators where to put or get product.
the market changed. The functionality offered didn’t generally change but the architecture of the products did. The ‘shelfware approach’ was replaced by the ‘package approach’ and WMS products started getting designed so that most features and functions were selectable via switches in the software. They also became rule-based; an expert could configure rules that would control the decision logic that the software used to make decisions that warehouse workers formerly made such as where to put something upon receipt or how to pick an order. Of even greater importance, generic-modifications needed by
Lots of smaller vendors entered into the market to cater to this segment and the larger software companies constructed products aimed exclusively at smaller companies. This was perfectly timed as the Internet-craze created lots of small firms who needed such software. CELERITY • July 2017 | 23
FOCUS thought customer-specific mods might be common to allow customers the best of both worlds, i.e., they could modify the code but still stay on the upgrade path. This was a bonanza for small companies. It dropped the price of these systems dramatically. Lots of smaller vendors entered into the market to cater to this segment and the larger software companies constructed products aimed exclusively at smaller companies. This was perfectly timed as the Internet-craze created lots of small firms who needed such software. Third party warehousing also grew as a result, because now these firms could offer sophisticated warehousing to their customers without having to spend a fortune gluing-together WMS software for each new customer; they could just configure their existing software to the flows needed by each new customer. Also, because many of the larger, generic modifications to these packages were getting back into the base code, the functionality offered in these packages to new customers got a little better each year.
This shift gave rise to a new marketplace. It’s important to point out that many of the biggest vendors in 1999 disappeared because they couldn’t make the shift effectively. Furthermore, because it takes 3 or 4 programmers a year and a half to create something that ‘looks like’ a package-WMS and because most WMS companies do not speculate on new functionality but add functionality that new customers pay them to create, the traditional WMS Package marketplace became composed of three types of vendors: ● Vertical specific specialists or Tier I Been around for a long time and consequently have lots of customer driven base functionality that serve specific verticals well A larger install-base generating large annual maintenance fees permits them to spend more money on making their product work with the latest technology stack Typically, public companies or parts of public companies ● Less expensive, slightly less functionally rich Tier II firms Older but do not have as many customers as the vertical specific specialists o Reasonably good functionality o Older technology stack ● Fly-by-night firms or Tier III Three programmers working for a year and a half can create a WMS package Limited, hard-coded functionality with fewer switches
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Personalized WMS products are really at their core a data model and a software toolkit designed to build WMS packages. These vendors provide a macro-like language that may be used to construct warehouse software functionality. This language lets average programmers develop at 5 to 6 times the speed of traditional development languages used by WMS packages. Because they are new, they are typically built on the latest technology stack These firms come and go all the time. This has been the marketplace for the last 15 years. Furthermore, the floor-level functionality that is offered by this group has not been too substantially different than that offered over the last 30 years. This is about to change.
The hangover of 2012
These packages have worked great. They have worked so well that many firms ignored upgrading to newer versions of the software for as long as a decade; this was because the new functionality offered by their vendors didn’t really seem to add much value. In 2012, however, we started seeing larger companies who were forced to upgrade. The scenario developed as
follows. As the hardware these systems used became less reliable and aged out, customers were left with no alternative but to upgrade their hardware. The database companies these systems ran on top of would then refuse to support their old database running on the new hardware, and they would demand these same customers upgrade their database software too. This in turn led the WMS companies to tell these same customers that they must upgrade their WMS software to run on the newer versions of the database. It was a software revenuechain-reaction. This was less of an issue at smaller companies who hadn’t made much in the way of customer-specific modifications to their software, but at larger operations with material handling equipment and lots of people, the customer-specificmods they made years ago became a huge problem even with the user exits. Ten years is a long time when it comes to technology. To solicit new customers who were interested in the latest and greatest, the vendors had wildly changed their data models, technology stack, reporting tools, and so forth over that period. This meant to convert an existing customer to the new version was going to be a lot of work. We know of instances where these ‘upgrades’ cost nearly as much as the original installation or buying a totally new system!
The dawn of a new era
At the same time, over the last 10 years, warehousing got more complex. Warehouses who were used to simply shipping pallets or cases in and out to one channel suddenly needed different processes for retail, wholesale and ecommerce. Products could also be customized on their way out. Amazon motivated even more change by attracting large numbers of smart, creative people into this domain who thought about warehousing differently and they created more competitive pressure to rethink A personalized WMS lets customers quickly create new functionality
FOCUS The key ingredient to a true warehouse execution system, which in turn, makes their architecture quite different from WMS packages or warehouse control systems is operations research technology. how your warehouse worked. All this added up to a lot of change. Warehouses stopped fitting a static design pattern; they needed to be flexible to new ideas. Yet changing the software that controlled them was risky and expensive in the package world; you had to go back to the vendor to do it who were often resource constrained or uninterested in using resources for old business. Managing these operations to keep everyone busy and the product going out on time became much harder as well. Managers who were used to telling associate-Joe to ‘go over and work in the such and such area of the warehouse all day’ were suddenly forced to move people around multiple times a day in order to keep people busy and also meet the tight shipping schedules of these different channel customers. From our experience, it is not uncommon to find 30 to 40 per cent of the labour simply wasted in these multi-channel warehouses as a consequence. The same thing happens to a somewhat lesser degree in many mechanized warehouses as well.
Personalized warehouse software
Recently two new types of warehouse software have risen to meet these challenges. First is the Personalized WMS. At first glance, the product looks very similar to a classic WMS package. It has switches and rules that let experts deploy different functionality and business logic for a customer; however, it often
for selection projects, we learn three things. The functional gaps can be closed very quickly at installation if you get the right vendor team and you retain or hire the right people to define how it should work. More importantly following installation, the customer can enhance the software on their own, generating additional return above what a classic package would deliver and making the company much more flexible to change. Furthermore, when it comes to upgrades, upgrading the software costs virtually nothing; these products break the software revenue chain reaction. Is this for real? Yes. How does it work? It happens because these products are architected in a very different way from a classic WMS package. While they hate this comparison for marketing reasons, personalized WMS products are really at their core a data model and a software toolkit designed to build WMS packages. These vendors provide a macro-like language that may be used to construct warehouse software functionality. This language lets average programmers develop at 5 to 6 times the speed of traditional development languages used by WMS packages. When you purchase the software, the vendor gives you their WMS written in this language as a starting point. They will offer to write extensions to the base WMS product in order to provide you just what you need. During the installation, your staff usually learn the language too. (It is
When we interview existing customers for selection projects, we learn three things. The functional gaps can be closed very quickly at installation if you get the right vendor team and you retain or hire the right people to define how it should work. doesn’t have the functional depth that the vertical specialists offer especially in some verticals, so to many prospects this class of warehouse software looks initially to be disadvantaged compared to more classic packages. We have found the experience of actual customers who purchased this software, however, to be quite different. When we interview existing customers
not too complicated to learn) After the vendor leaves, you add more and more functionality on your own. When upgrade time finally arrives, customers upgrade the language not the WMS package. This keeps the database companies happy and the CFO happy. It sounds like this should be every firm’s choice, but there are some caveats. It tends to work well in companies that
have a strong commitment to innovation and process improvement. Without this, you will likely favor a vertical-specialist WMS package. You have to commit to keeping resources on staff to learn the development language so that they may continually enhance your application. It’s important to bring these people on board at the start of the project too. Furthermore, you need to complement these people with others who are creative and experienced in your vertical to help continuously uncover opportunities and close gaps. The appeal of these applications also increases if you have multiple sites that can magnify the return on your customerspecific-changes if you have just one site, the value of these systems diminishes, unless you have a large workforce at that site and the upgrade costs of a packaged WMS would be significant. Finally, there is truth in the statement, ‘Too much of a good thing is bad’. It is Picking and scanning an item's UPC
true with these systems as well. It is so easy to make changes that things can get out of hand quite quickly. You must have some structure around how changes will be done, tested, documented and deployed or you can end up with a mess like we had in the 1980s with lots of homegrown WMS software that became unsupportable. To get value out of these systems, you need an organizational as well as technical plan.
Warehouse execution system
The second new type of warehouse software is a Warehouse Execution System. This term has been one of the most misunderstood and highjacked terms in logistics in recent memory. The majority of the vendors offering a WES are simply MHE suppliers selling their old warehouse control system dressed in new clothes and extended to provide some of the outbound functionality seen in WMS packages. These products are functionally limited and usually around only to help these companies sell their core offerings of conveyors and mechanization without forcing their customers to buy an expensive WMS package from a traditional vertical specialist. This is not what we refer to as a WES.
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FOCUS The key ingredient to a true warehouse execution system, which in turn, makes their architecture quite different from WMS packages or warehouse control systems is operations research technology. The simplest way to figure out if you are dealing with a WES pretender or not is to ask them ‘How many OR PhDs or master degrees do you have on your staff?’ If you hear the sound of crickets or get blank stares, you are likely dealing with only a WCS provider.
What does the future behold?
Many people think that machines / robots will soon replace the floor workers in warehouses. However, I am beginning to think the first people to have a large portion of their jobs automated will be the frontline managers. This is especially true if warehouse execution systems catch on. These applications require you to turn over a large portion of the hour by hour direction of where people should be and what tasks they should perform to the WES. Unlike the WMS packages that more or less record what people do and help ensure the warehouse associates do it correctly, the WES does this and also chooses what work should be released & when, what work people should do and where they should work and when to move. The rationale is the 30 to 40%+ of labor that is wasted each day because you don’t have the right people at the right place with the right product at the right time. The other motivating factor is ensuring faster and more consistent response to customer orders. This is because the scheduling problem has got so complicated at many multi-channel and mechanized distribution centers that one or even a group of humans cannot decide all the tradeoffs fast enough to
Many people think that machines / robots will soon replace the floor workers in warehouses. However, I am beginning to think the first people to have a large portion of their jobs automated will be the frontline managers. This is especially true if warehouse execution systems catch on. make sure everything comes together on time at the right place. In more and more operations, the management of flow has exceeded the ability of human brains to optimize. This sounds incredible, but I recently found some academic research done on behalf of Amazon at MIT. The document suggests this is exactly what they are doing inside their sites. To address this complexity, operations research technology is used to solve the warehouse flow and scheduling problems. You will hear new terms like ‘Move Logic’ or ‘Waveless Picking’ when dealing with a WES supplier. These concepts are aimed
In more and more operations, the management of flow has exceeded the ability of human brains to optimize. This sounds incredible, but I recently found some academic research done on behalf of Amazon at MIT. The document suggests this is exactly what they are doing inside their sites.
at the heart of the issue. Algorithms are designed and somewhat customized at every site to decide when to release what work and when to move people. Some of this logic is table-driven and some of it is ‘tuned’ in code. The installation is much different from a classic WMS package as a result. The vendor has to learn a great deal more about your operation. These applications are also not for everyone. If your warehouse is simple, these make no sense. If you have verified with time studies that you run a tight ship and your orders go out on time and you are not in a ‘service war’ with competitors, then this is probably not for you as well. Like the personalized WMS, you need some upfront engineering work to decide if it is worth the investment or if the classic WMS package will do just fine. But we would encourage you to do that in 2017. For the first time in a long while, it is worth doing your homework to see if either of these new types might be suitable beyond the typical suspects. The payback could be quite significant.
Steve has over 25 years’ experience designing and implementing logistics systems for FMCG, e-commerce, and 3PL companies. While living in India for 3 years, Steve played a pivotal role in establishing Crimson's Mumbai office -serving multiple high profile Indian retail & e-commerce clients.
A web portal of, by and for... ...all of us in supply chain & logistics ASK. DISCOVER. SHARE. START A DIALOGUE. CONNECT. For more details email- firstname.lastname@example.org 26 | CELERITY • July 2017
RACKING AT RESCUE
One of the market leaders in warehousing storage solutions, Godrej Storage Solutions, recently helped one of its customers achieve faster turnaround time and effective warehouse space utilization by deploying Mobile Pallet Racking with intelligent software module. This solution has greatly impacted the overall operational efficiency of the client. A case study…
Variety of Pallet Sizes: To conceptualize
an efficient warehouse facility with all the FG, RM and PM pallets of varied sizes and depth, with maximum space utilisation became an immense task. 100% Selectivity & Inventory Tracking: 100% selectivity for the products with accurate inventory tracking mechanism was the critical area, which needed to be addressed while designing the solution. Adaptable and Flexible Solution: There was a need of a warehouse facility with flexibility to convert into full FG Storage in the future. Return on Investment: Moreover, ROI through this facility was a key factor in designing the solution.
We proposed Mobile Pallet Racking with our intelligent software module for inventory location planning & management. ● Mobile Pallet Racking: 5000+ Pallet Locations ● Inventory Management Software
● World-class mobile pallet racking covering maximum facility footprint with rail of 86 metre length and
undercarriage of 43 metre length ● Storage up to height of 8.1 metre to fully utilize valuable vertical space ● Storage racks designed to accommodate varied width and depth of pallets of RM, FG and PM storage ● Effective layout for conversion of the entire warehouse into FG, as the business grows ● Extra 70% pallet positions conceptualized in same area when compared to Selective Pallet Racking.
The entire solution has been designed with optimum & organized material flow. ● It resulted in better turnaround time (TAT) due to reduced movement of material handling equipment. ● Offered maximum space utilization in the warehouse with the cubic space created to the tune of 1.25 lakh cubic foot. ● The solution incorporated Intelligent Software Module for location Planning & Inventory Tracking. ● Additionally, it resulted in better illumination in the warehouse for efficient operation.
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Courtesy: Godrej Storage Solutions
Our esteemed client is a renewable energy arm of a diversified group. The group has an array of market-leading businesses which employs 2000+ people. With more than 5 decade of business experience, they have manufacturing infrastructure in Africa & Asia; and sales footprint worldwide. With a vision of enabling brighter future, our client has state-of-the-art manufacturing facilities located in South India. Our client used a traditional warehouse system where pallets were stored on the ground in a block storage manner, with the storage of RM, PM and FG in different dedicated warehouse spread across the manufacturing premises. With growing business, they realized that multi-storage system in different warehouses was affecting their business and production. Turnaround time (TAT) and dispatch time increased due to inefficient tracking of pallets in line feeding area and dispatch area. With the increasing demand of goods, especially in the peak seasons, our client decided to shift to a consolidated warehouse to store all their RM, PM and FG.
NEXT GEN AUTOMATION IS HERE!
Future Group has to its credit many firsts in the retail space. With the adoption of new technology, it’s all set to transform the Indian logistics space well ahead of its counterparts. Recently inaugurated, crossbelt sortation technology at Future Supply Chain’s Distribution Centre (DC) in MIHAN, is going to be a game changer and a stepping stone, making it India’s most Automated first-of-its-kind ‘GST ready’ Distribution Centre. It aims to enhance the transportation & logistics industry while accommodating the upcoming tax reforms to help India emerge as one of the global leaders in the logistics space.
he Multi Modal and International Hub (MIHAN) based in Nagpur, recently saw high profile dignitaries as well national press descend on it after a long time. The occasion was the launch of India’s first Cross-Belt Sortation technology at Future Supply Chain’s Distribution Centre (DC), at the hands of Union Transport Minister Nitin Gadkari. This DC run by Future Supply Chain for Future Group, already boasted of a high degree of automation and technology. The Cross-Belt Sortation technology takes it to the next level. Developed by BEUMER Group – headquartered in Germany, has a Cross Belt Tray Sorter at the heart of the
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system with, ● 5 kms long conveyor system ● 42 mtr high speed Line Sorter (with a speed if 2.1 mtr per second) ● Sorting capacity of a million pieces per day for 400 destinations at a time ● Special 12 mtr high Spiral Conveyor, which is tallest in the country
This highly automated sorter offers an ideal solution to reliably and carefully direct all types of articles to their correct destination, regardless of size, shape or surface structure at an incredible sorting productivity of over 36 Crore pieces per annum (capacity enhancement by 3X) and accuracy of over 99 per cent. PV Sheshadri,
This highly automated sorter offers an ideal solution to reliably and carefully direct all types of articles to their correct destination, regardless of size, shape or surface structure at an incredible sorting productivity of over 36 Crore pieces per annum and accuracy of over 99 per cent.
GAMECHANGER CEO, Future Supply Chain Solutions Ltd., added, “This technology has a capacity of churning 3 times more throughput compared to the earlier Put-To-Light system. In our estimate, this should cater to our client requirements till 2019, in the current form of sorting logic.”
and automation, he said, “Industry outlook is very positive. Economy is moving ahead in the right direction. With GST getting rolled out as planned, overall supply chain network will undergo dramatic change. Larger boxes (Distribution Centres) will emerge and small will perish. With this, adoption of technology and automation is inevitable to support the demand. Without it, large boxes cannot be operated and managed to draw efficiencies. Therefore, I don't see cost factor as a question here. The mindset and outlook must change to adopt to business needs. I see that coming. The change in overall network strategy will justify the volume and cost. You have no choice but to adopt change. Cost will not be a detrimental factor here. Ease of doing business in a changed environment and the demand for volumes will drive technology and automation adoption. Let's adopt it. There is a limit to dependency on human factor to operate a large-scale warehouse. Technology only helps to reduce human errors and boosts accuracy to near 100%.”
Fruition of closer association
The BEUMER Group has developed individually coordinated system solutions, from individual machines to fully integrated material flow systems for Future Supply Chains. The Software Suite (on which this system runs) is based on highly modular software and issuer-friendly with customerspecific solution. It’s a classic system that provides real-time monitoring of sorting as well as picking processes and works flawlessly to provide end-to-end sortation and distribution solutions. Sheshadri further added, “This is a brilliant example of co-creation between the client and service provider. As a philosophy, we collaborate with our customers in bringing best of the best solutions to their business needs. In this case, post understanding of the customer’s need, we picked best of the technology, which is versatile, flexible and enables seamless integration with client’s systems. Suppliers were chosen from different parts of the globe. Consultants were appointed to study and substantiate our understanding and selection. Simulations approach was adopted to ensure we don't go wrong in anyway. On the client’s side, a dedicated team was aligned with us in validating and defining the process. Many changes were required in packing, improving barcode quality and its standards, aligning their suppliers to packaging standards, aligning their buying team and changing their mindset in product packaging...and much more. Overseas visits were made with the client to fine tune and validate our approach. Therefore, it was a complete coordinated effort which enabled us in successful execution.” On being asked if costs come into play in client’s hesitation to adopt technology
There is a limit to dependency on human factor to operate a large-scale warehouse. Technology only helps to reduce human errors and boosts accuracy to near 100%. Velocity at which you do business will be a differentiator going forward. There is a need to select technology and automation wisely.
Industry outlook is very positive. Economy is moving ahead in the right direction. With GST getting rolled out as planned, overall supply chain network will undergo dramatic change.
“Velocity at which you do business will be a differentiator going forward. I suggest, choose technology and automation wisely,” asserts Sheshadri.
P V Sheshadri has been associated with the 'Supply Chain' function of various industry verticals for last 26 years, and has contributed to the growth and development of these functions at various stages of its evolution. He has played significant roles in fields of warehousing, transportation, project procurement and vendor development/management. Industry verticals like Engineering, Steel, Process, Textile and Retail, are the major sectors in which Mr. Sheshadri has played key leadership role. In his corporate journey of 26 years, Mr. Sheshadri has been associated with corporate conglomerates like Lloyds Steel, Grasim Industries, Bombay Dyeing, Pantaloon Retail, Welspun Retail and Future Supply Chain Solutions Ltd. Along with hardcore process and technology orientation, people management is one of his key strengths.
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PERFORMANCE “End to end supply chain integration gives complete visibility of business to make informed decisions and help the team work better internally,” opines Sudip Gupta, Director – Customer Supply Chain, Carlsberg India Pvt Ltd. During this interview, he shares his perspectives on the dynamics of alcoholic beverages supply chain, its growing sustainable expanse and how being a difficult market to do business, India still holds a strategic position in the Carlsberg Global group growth projections. Excerpts…
How are the dynamics of alcoholic beverage industry shaping up in India? Well, the liquor industry is challenging and dealing with different state excise with different standards, it has become much more complicated. However, there are a bundle of opportunities available and we, as an, organization have been successfully trying to capitalize on the same. The supply chain nimbleness and efficiency plays a decisive role to have a competitive edge.
How complex is the supply chain for the same?
Since all activities from order processing, manufacturing, movement of stocks from source to customers, infrastructure
DID YOU KNOW? With the launch of Tuborg Green and Tuborg Strong, Carlsberg India was the first in India to introduce innovative packaging in the form of a unique pulloff cap, which does not need a bottle opener.
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INTERVIEW and capacities are governed by excise, this has led to an increase in lead time for end to end activities. Moreover, with high seasonality and with limited capacity during peak season coupled with inadequate infrastructure in few state machineries make the tasks even more challenging. There are different routes to market across states, which make standardization in process and tools more difficult. However, an interesting aspect in supply chain is managing complexities as we discover new efficiencies with innovative thinking by implementing new processes and tools.
What are the USPs that make Carlsberg consumers’ favoured alcoholic beverage? An internationally acclaimed brand, high-quality all malt beer, with a focused portfolio and innovative packaging are some of the USPs that make Carlsberg a preferred choice of the consumer.
What are unique initiatives taken by you to manage supply chain at Carlsberg? Proactive and long-term planning, development of infrastructure to meet aggressive growth and successful implementation of cross-functional S&OPs are some of the initiatives, which have helped in successfully managing the supply chain at Carlsberg India. In this highly competitive world, we focus on leading KPIs to make lagging KPIs green, which help in reducing firefighting and invest more time on developmental work. Most importantly, we believe in hiring the right talent with a positive mindset and give adequate coaching to drive supply chain objectives.
Identification of bottlenecks in end to end supply chain, instilling problem-solving mindset and focused implementation are important to avoid waste in the system. Bottlenecks keep on changing frequently because of the dynamic business and hence, the right people with correct process management skills are key to removing inefficiencies in supply chain.
management in IT plays a major role in data analytics to have transparency on data and cost to identify improvement areas as well.
Kindly highlight sustainable paradigms achieved by Carlsberg.
Sustainability is central to the Carlsberg Group’s purpose ‘to brew for a better today and tomorrow’. Giving you India specific insights on the initiatives, four sites in India have advanced wastewater recycling technology systems and two more are in the pipeline. In 2016, we
installed multi-effect evaporators at these sites to remove salt from waste water. Advanced water recycling enables up to 30% of water to be reused as service water, while the remainder is discharged safely to soil to irrigate land at our sites. There is zero liquid discharge beyond the brewery. In India, we installed three rooftop solar systems with a combined peak capacity of around 1 MW to supply 10% of the site’s total power demand. In 2017, we will assess their performance and subsequently design a solar programme across India based on our findings. Renewable energy in the
How can the inefficiencies in the supply chain be removed? I believe identification of bottlenecks in end to end supply chain, instilling problem-solving mindset and focused implementation are important to avoid waste in the system. Bottlenecks keep on changing frequently because of the dynamic business and hence, the right people with correct process management skills are key to removing inefficiencies in supply chain. Integration of data
Carlsberg India became the #3 player in the Indian beer market within 6 years of operations and continues to hold the position to date. To add to this, Tuborg is the #2 beer brand and the #1 international beer brand in the country. CELERITY • May 2017 | 31
INTERVIEW form of biogas, biomass and renewable electricity provides as much as 70% during peak of the power needs of five sites in India and two in China.
TOWARDS SUSTAINABILITY One step closer to enhancing its sustainable expanse, Carlsberg Group developed a new design of the beer bottle with the help of Carlsberg Circular Community as well as CP+B Copenhagen and Kilo, a Danish industrial design studio. “The new bottle is a great milestone in the project, as having a physical prototype makes it easier for us to explain the new packaging format to consumers and colleagues. I think the new bottle looks great and shows how we can use innovation and design to help shape products for a better tomorrow,” says Simon Boas Hoffmeyer, Sustainability Director.
Pls share with us one of the most challenging projects managed by you at Carlsberg.
Implementation of S&OP wheel and making it sustainable week after week and month after month, thereby instilling cross functional alignment to have timebound action to help business achieve its goal has been one of the most satisfying projects at Carlsberg India. Post implementation of this project, we as a team, spend more time in aligning and delivering across our business metrics.
Supply chain integration is one of the key principles you follow. How has it helped the business grow? End to end supply chain integration gives complete visibility of business to make informed decisions and help the team work better internally. It also helps in aligning cross-functional teams to achieve business goals. The integration has helped significantly in reducing waste. It further improves nimbleness and speed to market.
You have a widespread presence across the globe. How different and difficult is the Indian market? The Indian market is quite different and challenging from other markets globally
The Green Fiber Bottle will be a landmark in sustainable innovation. Its fibers will come from responsibly managed sources, with trees replanted at the same rate that they are harvested. While the bottle will degrade into environmentally non-harmful materials if discarded randomly, the intention is that it will form part of a proper waste management system, just like today’s bottles and cans. The three-year project is supported by Innovation Fund Denmark and the Technical University of Denmark. The Green Fiber Bottle is scheduled to be test-launched in a pilot market in 2018.
how are you preparing for the postGST era?
because of it being a state subject and a highly regulated industry. Multiple taxes, frequent policy changes, rising input costs and no differential tax basis alcohol content are some of the challenges. Saying this, India is still a big opportunity for the industry given the changing social and demographic landscape. Additionally, the beer per capita consumption globally is far more than in India, however, appreciation for beer (a low alcohol content beverage) is growing here.
Alcoholic beverages are not in the purview of GST as of now.
Sudip Gupta is a supply chain professional with 23 years of experience having national exposure in FMCG in Demand & Supply Planning in several categories, Warehousing, Logistics and Customer Service with 3 years of experience in Technical. He holds a B. Tech degree in Dairy Technology from National Dairy Research Institute, Karnal.
With GST coming into action, how different will be growth dynamics?
GARTNER SUPPLY CHAIN TOP 25 FOR 2017 Gartner, Inc. has released the findings from its annual Supply Chain Top 25, identifying supply chain leaders and highlighting their best practices. Stan Aronow, research vice president at Gartner, said, “A general trend toward protectionism, as evidenced by Brexit and the policies of the current US administration, has caused some companies to shift supply network design decisions and create contingency plans in anticipation of new trade policies. Continued investment in innovative supply chain capabilities will be required to meet this changing landscape.” Unilever topped the ranking for the second consecutive year. Nokia rejoined the list after a seven-year hiatus and Diageo made it for the first time. Perennial supply chain leader Amazon joined Apple and P&G in qualifying for the "Masters" category, which Gartner introduced in 2015 to recognize sustained leadership over the last 10 years.
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Cisco Systems 5
Johnson & Johnson 14
Coca Cola Company 15
Schneider Electric 18
Wal-Mart Stores 19
HP Inc. 20
Lenovo Samsung Electronics
H&M backs fabric made from cow manure
&M has pledged to use 100% recycled or sustainably sourced materials by 2030 in its latest sustainability report. The retailer also said it aimed to become climate positive throughout its entire value chain by 2040 – saving more greenhouse emissions through various initiatives than are used in its entire value chain. Among the highlights in the report was the company’s commitment to switch to 100% renewable electricity. Already 96% of electricity used by the company comes from renewable sources. H&M also aims to collect 25,000 tons of textiles annually by 2020 as part of a garment collection initiative. Since the initiative was launched in 2013 the company has already collected 39,000 tons of unwanted textiles. Already the biggest user of cotton certified by the Better Cotton Initiative, the company said it was also one of the biggest users of organic cotton, recycled polyester and lyocell, a botanical fibre extracted from wood. Currently, 43% of total cotton comes from sustainable sources, but the goal is to use, only sustainable cotton by 2020. In 2016 26% of all materials were from recycled or sustainable sources.
H&M has launched a research project with the Ellen MacArthur Foundation and the Stockholm Resilience Centre at Stockholm University to investigate circular systems for producing and using textiles. H&M Foundation’s annual innovation challenge, the Global Change Award has granted five teams a total of €1m. The overall winner was grape leather, which uses leftovers from
winemaking such as grape skins and stalks to create a new type of vegetable leather. The first runner up was a production process for nylon that only uses water, plant waste and solar energy. The foundation described this as a conceptual idea and said the next step would focus on developing a prototype. Other winning ideas included fabric made out of cow manure.
GE begins testing drones for inspection purposes
eneral Electric Co has begun testing autonomous drones and robotic ‘crawlers’ to inspect refineries, factories, railroads and other industrial equipment with an eye on capturing a bigger slice of the $40 billion companies around the globe spend annually on inspections. In trials with customers, aerial drones and robots are able to move around and inside remote or dangerous facilities while photographing corrosion or taking temperature, vibration or gas readings that can be analyzed by computer algorithms and artificial intelligence. GE is expected to announce the new business, which is focused on the oil and gas, transportation and power sectors soon. Companies spend about $40 billion annually inspecting plants and equipment within the oil and gas, transportation and power generation sectors. While robots will not replace humans, but will extend their reach and lower costs.
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Wal-Mart wants suppliers to eliminate a gigaton of greenhouse gases by 2030
al-Mart Stores Inc., long known for squeezing its suppliers on prices, is now pressuring companies including Unilever and Colgate-Palmolive Co. to help them remove a billion metric tons of greenhouse gas emissions from its supply chain by 2030. The retailer’s target—which it’s calling Project Gigaton—equates to taking 211 million passenger vehicles off the road for an entire year, according to a statement from the company. As part of the goal, Wal-Mart will also look to reduce emissions in its own operations by 18 percent by 2025. The bulk of the reduction will come from suppliers including General Mills Inc., Campbell Soup Co., and Unilever, since they need their top suppliers to take more action. Wal-Mart has long been known for browbeating suppliers to lower the cost of everything from toilet paper to tires. Now it’s employing similar means of persuasion to carbon emissions, with the added incentive that vendors can save money themselves by, say, reducing the amount of packaging for a bottle of shampoo. The 1 billion-metric-ton, or 1-gigaton,
target represents a significant step up from Wal-Mart’s previous goal to eliminate 20 million metric tons of emissions by the end of 2015, which it surpassed. The retailer boosted its broader sustainability targets last November, saying it would get half its power from renewable sources by 2025, up from 25%. Wal-Mart has identified six areas where suppliers can focus their clean energy efforts: agriculture, waste, packaging, deforestation, and product use and design. To make sure everyone is meeting those goals, Wal-Mart is working with nongovernmental organizations including the World Wildlife Fund and the Environmental Defense Fund to help suppliers track their progress.
Looking at supply chains as sales drivers, not cost drivers
didas is the leading sports’ shoe brand in Russia with more than 1,200 stores. As part of its customer centric strategy, Adidas has implemented an omni channel strategy, allowing people to buy in a number of ways (online or in-store) any product that is available anywhere in Russia (whether in an Adidas shop, distribution center or warehouse), and for it to be delivered in any way (at home, at the store or at a pick-up point). This is possible thanks to the use of RFID identification chips, ‘ship from store’ tools, a digital ‘click and collect’ solution and ‘endless aisle’ technology. Their trial of ‘click and collect’ in Moscow was a huge success with orders reaching 1,000 per week. Similarly, other supply chain initiatives like ship from store, where goods ordered online are delivered from a store, not a distribution center, and endless aisle, in which customers can order products no longer in stock in their local store but is available in another store in another part of the country, have substantially increased sales and, therefore, profits. For Adidas Russia, the supply chain is no longer about reducing costs. It is, more importantly, about increasing sales. All of this is possible thanks to the technology being used in the supply chain. Most of these technologies belong to Industry 4.0, a high-tech strategy promoting the computerization of manufacturing. Adidas applies these technologies to the supply chain rather than just to manufacturing.
DISCLAIMER: This magazine is being published on the condition and understanding that the information, comments and views it contains are merely for guidance and reference and must not be taken as having the authority of, or being binding in any way on, the author, editors, publishers who do not take any responsibility whatsoever for any loss, damage or distress to any person on account of any action taken or not taken on the basis of this publication. Despite all the care taken, errors or omissions may have crept inadvertently into this publication. The publisher shall be obliged if any such error or omission is brought to her notice for possible correction in the next edition. All trademarks, products, pictures, copyrights, registered marks, patents, logos, holograms and names belong to the respective owners. The publication will entertain no claims on the above. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. The views expressed here are solely those of the author in his private/professional capacity and do not in any way represent the views of the publisher. No part of this publication can be reproduced or transmitted in any form or by any means, without prior permission of the publisher.
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Published on Jul 11, 2017
Celerity means velocity and the Celerity supply chain magazine aims to promote how use of logistics best practices brings speed in business...