Full mag oct 2014

SCM WORLD GURU SPEAK CEO SPEAK ACADEMIC ADVOCACY HUMAN RESOURCE October 2014

Vol. 2- No. 7 Rs. 150

Port Thrust – Powering India’s Trade Lead Story

Perspective in SCM Education page no. 22

EDITORIAL

The Season of Hyperbole I

GIRISH V S EXECUTIVE EDITOR

t has been a series of diplomatic ups for India. The Japanese rolled out the red carpet for our Prime Minister. And offered USD 35 billion in projects and aid to India. Among them is the Rs. 30,000 crore funding for the dedicated freight corridor between Mumbai and Delhi. And not to forget the shinkasen. It was the turn of the Chinese next. Not to be out done, they offered to develop two smart cities in India. And their high speed rail technology. In between we had the Australians offer us uranium.

And then came the mother of all visits – the US visit by Prime Minister. Going by the media coverage in India, one would believe it was the event of the decade. Unfortunately, it failed to make any waves in the mainstream press in the US. This does not in any way diminish the Prime Minister's appeal. For the first time an Indian Prime Minister was accorded a hero's welcome. What amazed me was the fact that he was on a nine day fast! And at no time did his voice falter or crack. What energy.

On another note, we hit a bulls eye with our Mars Mission – full kudos to our scientists for doing what the others struggled to achieve. There is a streak of integrity and efficiency among our scientific community. I would like to offer them a far more complex challenge – move a container from JNPT to Mumbai in one day (a distance of about 50 KM!) To top it, international rating agency S&P has upgraded India's outlook to stable from negative – on the basis of the promise by one man – Prime Minister. So far so good.

On a sobering note – the first shoots of trouble have appeared in Europe – Germany's industrial output plunged by 4 percent – and experts are talking about a recession in Germany. Will it mean a fresh round of volatility? We are not sure. Troubled times are ahead of us.

Happy Reading

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October 2014

CONTENTS OCTOBER 2014 October 2014

08 SCM NEWS >>

18 CEO SPEAK >>

Analysis of latest Supply Chain and Logistics happenings from around the globe

Naresh Kumar, Chairman JNPT, speaks about all things connected to ports and its development in a candid chat with the editor.

10 SCM WORLD >>

30 SME CORNER >>

Dr. Rakesh Singh on his column looks at the need for Supply Chain integration.

SCMPro profiles the journey of Relaxo Footwear from SME to more than a 1000 crore company today.

13 GURU SPEAK >> SCMPro continues to bring Dr. John Gattorna's works to Indian professionals.

22 LEAD STORY SCMPro highlights Supply Chain education in India –why there is a necessity to prepare the army of skilled professionals and how can we collectively achieve the same.

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34 EVENT >>

Great Lake Institute in association with ISCM organised a seminar to create a roadmap for transformation of Supply Chain for competitive advantage.

38 3PL >> Three young supply chain professionals take a look at current scenario of 3PL Industry in India.

41 INTERFACE >> An Interface with Dr. Ioannis Lagoudisand Dr. Albert Tan on talent crunch faced by Industry around the globe.

44 ACADEMIC ADVOCACY >> This paper revisits some established network measures and compares their predictions with a new methodology for detecting bottlenecks.

47 HUMAN RESOURCE >> Darryl Judd and Carmel Perales discusses the positives and pitfalls of telecommuting

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October 2014

NEWS

Woolworths is to roll out a supply chain overhaul Woolworths, Australia's largest retailer is preparing to roll out a $1 billion supply chain overhaul, Mercury II, which will slash the cost of transporting groceries and general merchandise across the country, delivering productivity gains similar to those of the Mercury I program almost 10 years ago, according to a report in Sydney Morning Herald. It is reported that Woolworths is planning to use the information it has gathered about its customers shopping habits, using their credit and loyalty card data. The goal - to tap into cross sell and up sell opportunities in all formats of stores. In addition, Woolworths is planning to roll out its merchandise system - Galaxy, helping it reduce costs further and improving its optimize its inventory across its warehouses.

Credit Suisse analyst Grant Saligari believes "Supply chain and big data development is likely to enable Woolworths to simultaneously increase technology and scale advantages in food and to leverage its scale in food into a competitive advantage in non-food."

Can greater productivity be achieved inwarehouses, while saving space?

With ever increasing land prices and high investments that go into building warehouses, the need for infrastructure offering greater productivity while saving space is paramount.

Managing your inventory in limited warehouse space can be a daunting task, especially when the challenges of systematic organization have not been met. Armes Maini offers Vertimag速, a fully automated modular vertical storage solution. Vertimag速 gives total control on inventory storage and access, optimizes resource function, reduces loss and enhances your work-flow.

Food Supply Chain is a major challenge even in developed countries like the US. In the annual Sustainable Agriculture & Food Systems Funders forum in Denver, fixing the food supply chain was a continuing theme. The deliberations revealed that to deliver wholesome, healthy food to all citizens, and simultaneously ensuring that food producers are able to make a decent living, the US needs to develop new models and alternatives across the entire supply chain. Even in the US, dwindling agricultural land, lesser numbers of farmers, lack of access to production facilities and missing distribution links between consumer areas and the farms - are some of the challenges that beg a new approach for solutions.

Various successful models were discussed at the conference. Some of the common threads across these models were: Innovative farm funding, Commitment to innovate and also share the knowledge gained through these innovations, attention to both the consumers and producers needs and developing insights into food system breakdowns - right down to the regional level.

Clearly, India could do well to learn from this.

Features Choice of various tray sizes and loads per tray suiting your needs.

Scalable, upgradable.

Can be integrated with any ERP system for real-time inventory In-built intelligence to maximize storage Provision for multi-user applications

Vertimag works on goods to man principle. It is an ideal solution for handling materials of every size, weight and dimensions. It has considerable vertical extension and as an option is designed to have more than one work station on the same machine.

October 2014

Fixing the Food System from the Base of the Supply Chain

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Benefits Optimization of space utility, timing, work cycles, human resources, production & storage needs & department synergies Automated operations Check on stock pilferage Higher throughput

SCM WORLD

GURU SPEAK

CEO SPEAK

ACADEMIC ADVOCACY

HUMAN RESOURCE

Supply Chain Integration Supply chains evolved over a period of time – each time in response to a specific challenge. Over a period of time they came to resemble a patch work of departments and players who had little visibility beyond a very narrow perimeter. As firms evolved, and as supply chains moved to the centre of the organizational attention, there is a need for firms to take a hard look at their existing patch work. They need to align their supply chains so that the firm can meet its long term goals. Dr. Rakesh Singh looks at the need for supply chain integration.

An increasing number of companies are beginning to look at their operations in terms of a pipeline that manages the flow of materials from the source to the ultimate consumer

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

October 2014

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ndian firms have realised that adopting supply-chain as a strategic competitive advantage tool has early payoffs. But it is unfortunate that much of this effort is not effectively directed or fully understood. The result is a growing gap between firms that truly understand and implement the concept of effective, forward-looking supply chain management and those that simply follow the trend, and withdraw after initials gains.

To add to it, disruptive technologies have altered the supply chain landscape in a big way. The Internet of things which can help firm collect real data and further increase visibility and traceability. 3D printing which is expected to improve accuracy, lower concept to product cycle time and increase flexibility is going to transform the supply chain further and force the firms to become more agile and responsive. I believe that this is next

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stage of evolution of supply chain and as in past firms which learn to align organisational architecture to the requirement post these disruptive technology are like in the past going to be the winners.

Among firms that do better, information technology plays an important role. They realise that early efforts cannot be maximised without the technology that accurately links supply with demand. But this is not as easy a process as it sounds. If the supply chain really is the mechanism of fulfilling demand, then an uninhibited flow of information across the supply chain is mandatory.

Why then do firms fail to capitalise on the use of information technologies?

What inhibits this seamless flow of information across the supply-chain?

What lessons can be taken from those firms that have been able to use IT successfully to add value and create a

SCM WORLD sustainable value chain?

manufacturing as well as the supply chain. This will only happen if each department has the overall business objectives of the company in mind, rather than its own performance.

Optimisation requires reliable electronic data interchange across the entire system; a single bottleneck impeding information transfer puts the entire network at a disadvantage. When firms begin to consolidate their early efforts on the supply chain, they begin to realise that there are several limitations and constraints present in the organisation. What are these limitations?

Which means that cross-functional trust and faith are necessary. But often, there is a lack of trust among these departments. Finally, even though departments do better individually, business suffers.

Here is a case in point: In an agro-chemical firm for which I did a study of its supply chain, I found that there was a complete absence of this trust between functional areas. The supply chain department was insensitive to the demand of the sales force for a product and went on feeding wrong information about the availability of the product. The sales force went ahead promoting the product. When its supply was outsourced from a European country it was clear that there was shortage of this chemical worldwide.

An increasing number of companies are beginning to look at their operations in terms of a pipeline that manages the flow of materials from the source to the ultimate consumer.

Though not entirely new, the pipeline idea is perceived as an analytical concept that transcends the internal political boundary of the firm and achieves a quantum leap in functional integration and operational effectiveness. The question is, does this truly happen?

Most businesses throughout the world organise their people and manage their activities through functional groupings -- sales, marketing, manufacturing, finance, distribution, and so forth. A primary goal of this function is to develop an efficient way to execute their work. The people in these functions become experts and seek to achieve superior performance in their functions. Today, this is termed as functional excellence.

The net result was wastage of money, time, and loss of market. What was surprising here was that this very chemical was available in another region where demand for the product had declined the previous season. The trust and sharing of information would have increased the velocity of product movement, and would have reduced inventory in one place and shortages in another.

Therefore, companies that organise for functional integration will almost certainly outperform those that organise for functional excellence. But how should a company bring about this functional integration? There is no silver bullet answer for ways to achieve functional integration. Rather, one must address all aspect of a company's operations, as follows:

Functional excellence is typically measured by higher sales, lower transportation costs, lower inventories, or better control of operations.

But these pursuits for functional excellence have become the biggest hurdle for the firms to move to more advanced levels of supply chain gains. Functional excellence was all right when demand was certain and the customer lived in the sellers ' market. As markets became dynamic, characterised by demand uncertainty, significant seasonality, short product life cycles, or high competitive intensity, functional excellence was a hurdle.

1. Manage the process, not the function.

2. Align measurement systems with overall goals.

3. Use integrating mechanisms such as the sales and operations planning meeting, cross-functional teams and the team problem solving approaches.

These practices of business excellence have created invisible walls within the political boundaries. Each department tries to compete with the other -- the internal competition leads to a situation of one-upmanship. This affects the flow of information and material through the organisation. In a volatile and dynamic environment, the need of the hour is to manage demand by planning supply to reduce inventory, both inbound and outbound.

Work to develop a culture that encourages teaming and cross-functional collaboration. This can be accomplished through a variety of initiatives including mission/value statements, recognition of teaming efforts, and designing career paths to involve multi-functional assignments.

All these will lead to creating useful information technology architecture. Firms, which have done this first, have been successful in integrating information technology with their organisational design and hence reap value and dictate the industry structure.

There is a need to share the information that each department has. For instance, the marketing and sales department needs to pass on its knowledge to purchase and

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October 2014

GURU SPEAK John Gattorna is one of the few people who have been continuously engaged in the evolution of supply chain thinking, from the early days of 'physical distribution management' (1975), through 'logistics management' (1980s/1990s), to the current 'supply chain management' era. John Gattorna has spent a lifetime working in and around enterprise supply chains, in many different capacities– line executive, researcher, consultant/adviser, teacher, mentor and author. He is passionate about the subject – some might say obsessive.

You can meet Dr. Gattorna on the 20th and 21st

Dynamic Supply Chains

November in Mumbai.

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n the late 1980s, John became disenchanted with the lack of conceptual depth in the 'logistics' field; and as it turned out this did not improve much as logistics thinking morphed into 'supply chains' in the 1990s. So he started to search for a new model/framework that would better inform the design and operation of enterprise supply chains, seeking to satisfy customers and consumers, at the appropriate cost-to-serve. And he found it in dynamic alignment.

For the last two decades John has been working with major blue chip corporations around the world to take his new model from the conceptual stage to a finer level of granularity; companies such as Dell; Unilever; Teys Australia; and Schneider Electric. It has been a complex task , involving learning about, and combining, several disparate disciplines – consumer/customer behavior; internal cultural capability of the enterprise; leadership styles; and of course the operational aspects of corporate logistics networks and supply chains. The unique quality about John's perspective is that he presents a multi-

John Gattorna

disciplinary whole-of-business approach to the design and management of enterprise supply chains, and this requires an eclectic mindset.

The Dynamic Alignment Framework Supply Chain Management, and its forerunner, Logistics Management, have suffered over the decades because of their lack of a strong conceptual under-pinning. This is one of the reasons why the search for the so-called 'fully integrated supply chain model' has been such a wild goose chase. It is impossible to achieve with the few building blocks we started with in the 1990s.

So it was in 1989 that Dr. Gattorna began the search for the 'Holy Grail', and found it in Dynamic Alignment model (previously called Strategic Alignment model).This model is a whole-of-business model that necessarily involves all the functions of the Firm in delivering products and services to customers. Indeed, it is more

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of a philosophy that requires all functions to contribute to this task, even though many of the actual specialist tasks are undertaken by the Supply Chain function.

In developing the new Dynamic Alignment model, Dr. Gattorna was able to do away with the outmoded 'one-size-fits-all model that had pervaded management thinking up until the turn of the century, and replace it with a multiple-supply chain model that is better equipped to cope with the volatile and changing operating environment that we now have to deal with. He has since reverse-engineered the alignment model to include the supply-side, so that the procurement function is now more integrally linked to the front-end of the business, and acts more in concert with it. In effect he has re-designed the way the Firm works, and in the process been able to break this down into the constituent parts which are the different supply chains configurations running through the enterprise, with all parties engagedcustomers/consumers; suppliers; and internal personnel.

October 2014

SCM WORLD

GURU SPEAK

CEO SPEAK

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HUMAN RESOURCE

Challenges of global fast fashion supply chains (Part II) Dr John Gattorna is an acknowledged 'thought leader' on the global supply chain scene. For over two decades he has researched, consulted, and worked in various capacities in and around enterprise supply chains. This article is a part of the chapters about global fashion retail. In this article, a continuation from the previous issue, he examines the challenges of supply chain management for global fashion brands. ISCM and SCMPro are bringing Dr. Gattorna to India for a master class. This article introduces Dr. Gattorna's works to Indian supply chain professionals.

Sourcing and manufacturing lead times We have already discussed in this global fashion retail series about network design and inventory location in Chapter 1 and stores replenishment in Chapter 2. In this chapter we want to take a more upstream view to discuss about sourcing and manufacturing lead times. In this particular area, there are two key aspects being debated within the industry. The first is the question of sourcing location.

Dr. John Gattorna UTS University of Technology, Sydney

October 2014

Sourcing far away ensures cheaper costs but often entails visibility and traceability challenges, whereas, sourcing closer to key markets guarantees a faster response but with higher costs and capacity constraints. The second key debate is whether to buy fabrics in order to react faster to market changes, or buy finished products to avoid the capital and obsolescence costs that holding

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fabrics in stock often creates.

Nonetheless, in the opinion of Berta Escudero, the CSCO of GrupoCortefiel, the best supply chains in the industry have managed to find the right balance between all the options, in order to more effectively meet the requirements of their respective business models.

In any case, accelerating the responsiveness of key suppliers in order to react faster to market changes is a definite priority for most companies and is seen as a clear competitive advantage.

The behavioral supply chain design configuration developed by John Gattorna, provides useful insights into how this particular goal might be achieved.

A good example of this kind of thinking could be heard in the words of Nick Cullen, the Group Supply Chain Director of Clarks: “Our business is

GURU SPEAK complex. We have multiple markets, channels and points of supply around the world and we're continually refreshing our range as we're in the fashion business. Whichever way you look at it we need value chains with different characteristics. We attempted to force a one-size-fits-all approach and trim around the edges for different needs. It became clear that we need a small number of different value chains to beboth efficient and effective. Currently we are part way through implementing value chains where each one has a different balance between cost, service, flexibility and agility for particular customer and consumer channels. The key factor that will make this a success is that it is a business wide transformation to create value chains, and it unites the business around a common purpose” Additionally, it has been acknowledged in conversations that the refinement of certain emotional skills may enable key supply chain personnel to successfully manage their relationships with business partners. The right combination of this factor with the former one explained above, could largely determine whether the pursuit of improved responsiveness and integration of the supplier base will be successful.

Interestingly, the Swiss watch industry offers relevant insights into this particular issue. The precision of machines and high-end design for which the industry is renowned, require very complex supply chains and strong relationships with business partners, i.e., taking both a downstream approach to maintain awareness of market developments and ensure accurate forecasts, and an upstream view to guarantee the supplier base is engaged and agile enough to satisfactorily react as needed. Once more, it is size which can greatly determine agility. Larger companies often have in-house manufacturing capabilities, increasing their ability to react quickly. In addition, their purchasing power gives them more leverage over suppliers.

To increase agility, some companies may need to significantly transform engrained processes, systems and values embedded within their supply chains. Making these modifications will definitely require robust change management and execution capabilities. When pushing for these changes, the

implications of mark-downs and the loss of sales opportunities due to inadequate response can play a major role for building a “burning platform” for change.

From experience, in order to achieve a successful transformation of this scale, strong support from senior executive leadership is required. All stakeholders will have to alter their modus operandi and this will require assistance from the very top.

Talent development

Sourcing far away ensures cheaper costs but often entails visibility and traceability challenges, whereas, sourcing closer to key markets guarantees a faster response but with higher costs and capacity constraints

In this series on global fashion retail we have discussed about network design and inventory location, stores replenishment in and sourcing and manufacturing lead times. At the end of the series, we want to discuss about talent management, as it is a major current concern for global supply chains. The growth in emerging markets has created a higher demand for managers, and the fierce talent wars amongst companies to hire the best staff makes the situation even more complicated. Additionally, as global supply chains keep developing at a rapid pace, supply chain management has become a much deeper and broader discipline.

The increase in depth is a reflection of the more complex relationships between the functions and sophistication of the different technologies and tools in use today. The increased breadth of supply chains is due to the The increase in more global nature of business, where depth is a reflection managers are expected to work with a of the more complex wider variety of people and cultures in relationships more geographically diverse contexts. between the

functions and

This situation means that the sophistication of the understanding of cultural differences, different the flexibility needed to deal with technologies and distinctive cultures, and the capability tools in use today of building trust in different cultural settings have become genuinely essential requirements to engage employees within firms and to ensure talent is nurtured from within organizations. In the words of the CSCO of GrupoCortefiel, Berta Escudero “International companies with a multicultural workforce are

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October 2014

GURU SPEAK more aware of multicultural diversity. To be successful in global business environments you have to be very respectful with cultural differences” Interviewees have found global cultural models beneficial for a better understanding of these differences. In particular, participants found the model developed by David C. Thomas and Kerr Inkson to be useful because one can easily identify countries in the seven cultural dimensions, e.g., Spain and France in “Egalitarism”, Japan and USA in “Mastery”, China and India in “Hierarchy”, the UK in “Affective Autonomy”, and the Netherlands and Switzerland in “Intellectual Autonomy”.

Interestingly, larger companies are sometimes the most agile, and having the right mind-set, values, and organizational structures is essential for achieving such agility

One prevalent topic in conversations was that of the Chinese culture. In particular, the importance of taking the time to forge the personal relationships necessary for doing business or implementing projects in China.

In terms of increasing employees' loyalty to firms, participants have concluded from experience that providing extensive overseas training to key employees from developing economies is a practical way to increase retention rates.

They have also concluded that this practice is highly valued by those individual assigned overseas postings and a very good way of promoting company values. In some cases, Long-term overseas assignments are considered beneficial, although not very practical when there is a need to find talent in the country of origin. Finally, periodic team reports are regarded as being very important to ensure members of staff in global locations continue to nurture the values of the company. In any case, talent is not an easy topic in the global fashion industry. As Alan Higgins, the Operations Director EMEA of New Era Cap Company explains, “Global Talent doesn´t develop by itself. You have to acknowledge cultural differences, and put in place a specific program with a compelling employer proposition and a structured development plan. When you identify the people with potential, you have to put the effort in as a business”.

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Of the policies to apply in order to retain and develop key employees, ensuring responsibility, showing respect, revenue sharing schemes, and the practice of rewarding individuals (not only with monetary compensation, but also in terms of recognition) were seen as most effective. One retailer had clearly addressed this issue by determining a number of specific guidelines and with thirty per cent of leadership performance reviews being dedicated to talent development.

Conclusion The research conducted and reported in this paper has shown that global retailers usually opt for very simple network designs which enable them to quickly respond to fashion trends, whilst minimizing the detrimental impact of mark-downs in slow moving stock. Furthermore, some retailers utilize network modelling optimization technology to find the best solutions.

What became very clear was the importance of sales forecasts for enabling efficient store replenishment.

These forecasts are becoming increasingly multifunctional. Moreover, as garments change continuously to match fashion trends they are also becoming more opinion than statistic-based, although social media and customer interactions are starting to bring workable data into this process.

Interestingly, larger companies are sometimes the most agile, and having the right mind-set, values, and organizational structures is essential for achieving such agility. What is certain is that the deep transformational changes needed to achieve the required level of agility are only successful when supported by the upper-levels of organizations.

Interviewees advocated the use of global cultural models to enable better talent management.

However, specific talent retaining plans with clear leadership accountability are also deemed very important.

Finally, the management of the customer buying behavior, through the alignment of strategy, values and leadership styles as detailed in the Dynamic Alignment methodology developed by Dr John Gattorna is providing the most clues as to how the global fashion retail industry might overcome the challenges it faces.

SCM WORLD

GURU SPEAK

CEO SPEAK

ACADEMIC ADVOCACY

HUMAN RESOURCE

The Jawaharlal Nehru Port Trust (JNPT)is India's largest container port, handling around 60 percent of the country's containerized cargo. It has become a Hub Port on the west coast of India. Along the way it has become the 24th largest container port in the world – handling around 4.16 Million TEUs. (Still way behind the number 1 Shanghai Port with 33.6 Million TEUs). JNPT is planning to raise it to 10 Million TEUs by 2014-15. And along the way create infrastructure that will help it provide world class services. Mr. Naresh Kumar, Chairman JNPT, speaks about all things connected to ports and its development in a candid chat with the editor of SCMPro, Girish V S. On the future of Indian Ports and our challenges

On the FTZ near ports

A port is a part of the basic infrastructure of the country.

Post independence we were constrained in our investments in infrastructure – the social sector spending pre-empted our infrastructure spending. Ports require huge investments.

However, in the past five years things have changed. At least in containerized ports we have had two or three world class ports. Our facility are on par with any port in the world in most of the KPIs. We are moving ahead – and PPP has been a blessing. We aim to be among the top 10 in the world.

There is a belief that if we have a world class port, transshipment will happen. That is not the case. A good port with deeper draft is one of the conditions for transshipment business. The older ports in India have a challenge even with the draft – most of them were built at a time big ships were not the norm. For transshipment business to come up we need a few more factors – do we have a cost efficient port operations, are we on the main line and whether we can use the port to deliver goods across the country. For example, in

October 2014

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CEO SPEAK India, foreign vessels are not allowed to enter the JNPT port with containers meant for other ports in India and distribute it from here due to our cabotage laws. These issues need to beresolved before we can aspire to be a transshipment hub. However, with the development of some of the smaller ports in the Eastern parts of India, we believe there is a scope for transshipment, at least for the domestic market.

On Cabotage rules There is a huge debate on whether we need cabotage or not.

Unfortunately everyone is focused on the cabotage policy. There is nothing wrong with the cabotage policy in India. US has its own cabotage. Entire Africa has it. The

The reason for our higher cost is because our shipping industry is not mature problem is not with cabotage.

Why cabotage is killing the exim trade in India is because the Indian flags cost structure is very high and low on efficiency. If you are a foreign vessel, and you want to bring in goods to JNPT and want to hand it over to a Indian vessel for distribution across the country, the cost is a deterrent. The cost of distribution is sometimes higher than the cost involved in bringing the container from Shanghai to JNPT. The reason for our higher cost is because our shipping industry is not mature. Our policy makers have not favored the shipping industry. Ship building is not recognized as an industry – if you are a Indian flag carrier and want to buy or build a ship, the

bank will not treat it as an industrial activity.

Finance is one problem. The other problem is with bunkering – in exim trade, bunkering is exempt from customs duty, while for domestic lines it is not. If you are an Indian flag, the man power is subject to income tax, pushing up manpower costs. In addition, if you are an Indian flag, the manning scale is very high. All these point to apathy by the policy makers towards shipping industry.

This has skewed the cost structure against the domestic shipping.

Cabotage, in these circumstances is a form of protectionism. If we could rationalize or cost structures, cabotage is not an issue. If a foreign vessel brings in containers for transshipment to other Indian ports, and the domestic rates are competitive, cabotage will not be an issue. Our attention should be focused on the cost structures of Indian vessels.The policy frameworks for domestic carriers have increased their cost structures. One part of the cost is the tariff charged by the port.

Indian port charges are higher, as compared to the other ports.

On the Port – Hinterland connectivity Another big challenge to the Indian port sector is its connectivity with the hinterland.

My port through put is 4.2 million

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TEUs in a year. And with this volume, my approach roads are choked. My own expansion plans include an addition of another 1.5 million TEUs in the next one year and another 3 million TEUs in another three years. And since these are developed by private players, the chances of delays are remote. In the next one year I will be handling 6 million TEUs, and with the current state of the roads, it is impossible. I can build a world class port infrastructure and offer world class services. But if the evacuation is not efficient, the whole effort is wasted. One issue is our modal mix – we started with 65 -35, with 35 percent of goods moving over rail corridor. This has now come down to 80-20, with the share of railways falling. With the priority given to passenger traffic, the line capacity for goods has come down to 16 trains per day from 35 trains. We have initiated the dedicated freight corridor, connecting Mumbai to Delhi. The work is proceeding smoothly, with the Prime Minister giving his blessings to the project.

During the Prime ministers visit to Japan, Japan International Cooperation Agency (JAICA) has

October 2014

CEO SPEAK committed to a loan of Rs. 30000 Crores for the project. The project is expected to be completed by 2017. This will have a capacity of 100 trains, as against 16 to 18 trains today, within 16 to 19 hours as against 35 to 40 hours today to Delhi, with double container. At the same time, we are in the process

The fundamental issue is that we built a port to decongest Mumbai city, and then went ahead and built a city around the port, leading to congestion

of expanding the four lane road to 12 lanes, including service lanes.

The surprising fact is that the exporter or importer is not worried about the port charges – he is more interested in efficient and quick service The fundamental issue is that we built a port to decongest Mumbai city, and then went ahead and built a city around the port, leading to congestion!

On financing for port activities At a micro level, financing for

October 2014

JNPT is not an issue. But for the port sector, financing is a challenge. The major route for funding is the banking system. If a port approaches a bank for funding, there are challenges – primarily due to the long term nature of the funds we require.

As on date funding is a challenge.

On detariffing To understand the debate, we need to look at the reasons why

tariffs were fixed by a central authority. The entire premise of tariff fixation is flawed, because, the only time a statutory body fixes tariffs is when it is a B2C transaction – to protect the interests of the consumer from the industrial lobby. In this case, the transaction is B2B, with the shipping sector more organized than the port sector. The consumer protection aspect is absent here. The other reason for tariff fixing is to reduce the cost of the transaction. The port cost is only three percent of the total logistics cost in exim trade.

Regulating this small cost will

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not make any impact on the total logistics cost. Third, you cannot have a situation where half of the portsare regulated and the other half not. In India, the minor ports, mostly in the private sector are not regulated, while the larger ports – mostly government owned – are. And some of the minor ports like the Mundra is not a minor port. This is a peculiar situation. For example, if DP world is operating a terminal in JNPT and Mundra, DP world is free to charge their customers a higher fee at Mundra, to make up for the shortfall at JNPT. This skews the playing field for larger ports. Fourth, nowhere has it been observed that lower port fees have resulted in a lower transportation costs to the Indian exporter or importer. On the contrary, a cursory the past five years will show that a reduction in the port charges has not resulted in any savings for the importer or exporter. As a consequence, we are protecting the foreign shipping line that is not paying any tax on their income. We need to devise a transmission mechanism to pass on the tariff reduction to the exporter or importer. The surprising fact is that the exporter or importer is not worried about the port charges – he is more interested in efficient and quick service and is willing to pay for it. By removing TAMP, we may see a higher interest by international port operators and financiers in investing in India, thereby improving the overall efficiency of the Indian Ports.

And that would be the one big game changer for Indian exporters and importers.

LEAD STORY

Why Cannot we Get the Talent we Need?

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very conversation with heads of supply chain always ends with a lament – we are not able to get the required talent! The challenges range from being able to attract the right talent to lack of required skills and knowledge. It is a well-known fact that supply chain is not a glamorous profession. That supply chain professionals do not make it to the corner office. That it is lower paid than other professions. As an example, out of an average batch size of 120 students, even good schools cannot attract 10 students to take a course in supply chain management.

We are also aware of the usual statistics. The logistics cost is 13 percent of India's GDP. We need to bring it down to single digits. To do this we need skilled resources. All these remain confined to the conference circuit. Very little change happens on the ground. For this issue of SCMPro, we decided to highlight supply chain education – the necessity to prepare an army of skilled professionals for the industry. It also ties in nicely with our name – Supply Chain Professional. For this issue the focus is on the professional – or rather the lack of it.

There are many reasons for this – the first is that there are very few B-schools who offer supply chain management as a focus area. And even if they do, we still do not have a holistic curriculum for supply chain management. Most supply chain curriculums

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are not designed to deliver the mix of skills and knowledge the industry needs. To top it, the opportunities for students to gain meaningful experience through internships rarer. Clearly, we need more institutions offering a full time program in supply chain management.

The second leg of supply chain education is the continuing education or executive education – for the working professional. Most professionals today are accidental supply chain professionals – they wandered through many departments before finally choosing supply chain as a career. Therefore, there is a need for a quality training program for these professionals. Here again, we come up with similar road blocks – lack of institutional support, very few institutions offering part time and certificate programs. The common hurdle across both these efforts are the lack of faculty!

Clearly, we are in a crisis situation. Unless the industry and academia come together, we will not be able to create the trained professionals we are in desperate need of. Unfortunately for us, we have still to see any concrete steps to bridge this gap. It is time industry and academia come together to solve this vexing issue. Small beginnings have been made.

Our Editorial Partners, ISCM and Great Lakes Institute of Management, Chennai organized a supply chain conclave. (You can read about it in our event section) It was heartening to see that out of a batch of 360 odd students; around 110 students opted for supply chain specialization. A small beginning indeed!

LEAD STORY

Perspectives in SCM Education Supply chains in India are plagued by a shortage of trained and skilled human resources. Starting from a correct perspective about the discipline, to the inability to attract young talent to take it up as a career option, supply chain education has to contend with a host of challenges and road blocks. The Supply chain professional ensures that the right product is available to the customer in the right quantity and at the right time, right place, and lowest cost. But do we have it in us to prepare the right people for this? The Editor of SCMPro provides a perspective in SCM education.

We need a set of skilled professionals who can coordinate sourcing, production, logistics and transportation, warehousing, inventory management, packaging, distribution and other functions cost effectively

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efore an exploration of the perspectives in supply chain education, an understanding of supply chain is essential. The Council of Supply Chain Management Professionals (CSCMP) provides the following definition: Supply Chain Management - "The integrated view of the supply chain has evolved over many decades. In 1960, the transportation managers and researchers have realized that transportation decisions will surely make an impact on other activities of the firm, particularly inventory management and production. The emerging concept of logistics management demonstrated that companies could trade-off functional costs."

Supply Chain Management is all about ensuring that the right product is available to the customer in the right quantity and at the right time,

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LEAD STORY right place, and lowest cost. To do this efficiently, we need a set of skilled professionals who can coordinate sourcing, production, logistics and transportation, warehousing, inventory management, packaging, distribution and other functions cost effectively. Gone are the days when the supply chain professional was tucked away in some nondescript corner of the office. Today, at least in most large firms, supply chain professionals are at the center of a complex flow of information, goods, services and finance, both within the firm and external to the firm. To stay on top this complex flow, the supply chain professional needs a completely new set of skills and capabilities. Something she is not equipped as she steps out of the college.

Supply chains have become cross functional in a big way, but the professional has not.

The Evolution of Supply Chain Management Supply Chain Management is one of the relatively new ideas in business- owing its rise to the past 30 years or so. It was often referred to as logistics. Over a period of time, as businesses began expanding globally, supply chain management too evolved, by reengineering traditional business processes into a holistic framework, enabled by developments in technology, including information systems.

The focus slowly shifted from logistics to the value chain. This rapid evolution created a skill gap among the logistics professionals. A gap between what the industries expect of a competent supply chain professional and what actually is available at present. A slew of institutions did step up to the challenge. At least in the developed world, a supply chain management graduate gets a salary on par with the more glamorous disciplines.

Supply chain management includes, but is not restricted to various functions like demand forecasting, sourcing, production planning, inventory management, intra logistics, warehousing, supply chain network design, supplier relationship management, customer relationship management, logistics and transportation, distribution and channel

management, reverse logistics, after market logistics, MRO, analytics, benchmarking etc.

And since it touches every aspect of a firm's performance, firms expect the best and brightest to join the sector.

This called for the evolution of a whole new discipline of Supply Chain Management.

Michigan State University, Ohio State University, Pennsylvania State University, University of Maryland, the University of Tennessee and few other universities in the US were the first to recognize this need and stepped up to the task. India presents a different picture. Colleges in India have traditionally had very little interaction with the industry, resulting in lack of interest in starting such courses.

Traditionally, logistics, inventory management and the like were taught either as a part of the marketing or operations stream

Challenges to Supply Chain Management Education As the discipline evolved, and as firms globalized, the traditional function of logistics (remember, supply chain management was known as logistics division) was not sufficient to address the challenges faced by the firm. For example, as firms began sourcing materials from the cheapest location, locating plants where costs were low and at the same time selling across the globe, logistics and transportation transformed from a few trucks to a multi modal transport chain, with information flows embedded in it. This meant colleges needed to change teaching basic transport to multi modal, international logistics and services. New curriculum had to be developed.

Another challenge faced was the separation of supply chain from other streams. Traditionally, logistics, inventory management and the like were taught either as a part of the marketing or operations stream. Slowly it evolved into an integrative discipline, with shades of marketing (new product development, new markets, customer service) and finance (cost control and cash flow optimization) to strategy – for example Dell used core supply chain strengths as its strategy to ship its product directly to the customer, or e-commerce firms like Amazon's

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LEAD STORY

If the formal education institutions fail to produce professionals with the required skill sets, the industry has no option, but to invest time and money to develop those skills

same day delivery, again based on efficient supply chain. As it unfolded, colleges were stretched to their limits to develop relevant curriculum and frameworks to meet this changing business landscape.

A third challenge is the integration of other streams into supply chain management. For example, streams like economics, international business, marketing and information technology are now an integral part of supply chain education. As supply chain evolved as a cross functional stream, it had to live up to the academic rigor of these areas – posing a challenge to academicians seeking to push the frontiers of knowledge.

A fourth challenge, rampant in India, is the disconnect between industry and academics.

Due to a lack of exposure to real life supply chains and limited by the research and consulting opportunities from the industry, faculty went back to teaching from text books.

Quite often ignoring the disruptive technologies and innovations across a wide spectrum of sciences. For example, 3D printing is set to revolutionize aftermarket supply chains and MRO functions in ways never imagined before.

But it will be ages before our graduates learn about it!

This leads to the now familiar litany from the corporate world that B-School graduates do not the required skills for employment. The industry is to be partly blamed for this – the industry is reluctant to engage with faculty – either for research or through consulting assignments, which could form the basis of a dynamic learning process.

A fifth challenge is in the area of executive education. Executive education requires faculty who can apply the theoretical frameworks on to real life problems and create learning experiences from the collective knowledge of the class. Quite often, it gets restricted to sharing real life experiences, without any real learning outcome.

Current State of SCM Education Supply chain education is not the sole preserve

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of a few colleges. Industry associations, training institutes and publications (like your magazine SCMPro) all have a role to play. The question is – are they doing what is expected of them. From interactions with industry professionals and HR heads, there is a huge gap between what the industry is looking for and what these bodies offer. One way to evaluate the capability of an institute is by the research output from its faculty. This is one area where Indian institutions fail. In part due to the industry apathy and reluctance to share information.

If the formal education institutions fail to produce professionals with the required skill sets, the industry has no option, but to invest time and money to develop those skills in their employees – which is the realm of executive education or continuing education. Executive education can be the driver that enables professionals to develop a strategic perspective.

Fortunately, the number of institutions – both colleges and industry focused institutions offering specialized supply chain education and training is rapidly increasing. These institutions offer courses that range from short term certificate programs to long term programs.

It is necessary to distinguish between supply chain education and training. Training is the acquisition of specific skills – often directly related to the area where the person is working – example a training on customs clearance procedures. Education, on the other hand involves imparting knowledge, skills and judgment.

Supply chain education needs to be developed in accordance with the need of both local and global trends in industry. Supply chain graduates must be able to apply the knowledge of the frameworks they acquired in college to the issues thrown up in the industry.

Competency can be achieved when students are able to transform supply chain knowledge into meaningful performance that matches with the industry needs. This will help us meet the workforce demand in the supply chain industry.

LEAD STORY

Industry-B-School Interface Prof. Dr. V H Iyer Dean- WeSchool

Industry – B-School interface will help both industry and institution in the following ways: 1. Being in constant touch with industry helps faculty and through them students being current with the needs of the industry and related problems.

2. This can be input for curriculum development through the Board of Studies.

3. Industry gets a fresh relook at problems and pain areas and quite often faculties / students can help find solutions.

4. Helps B-Schools find placements for their students. Helps B-Schools to identify industry experts to come in teach in B-Schools, thereby keeping them on a constant learning mode.

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Industry assists B-Schools in the Selection Process of students and later Mentoring them to be good global managers.

6. B-School can bag consultancy assignment and quite often Management Development Programs and Executive Development Programs which can bring in much needed revenue to the institution.

Insofar as Curriculum of SCM is concerned we have made the following changes based on the Industry Institution Interface and inputs coming in from different sources.

Conventional View

Changed View

MM / SCM is a Staff Function

SCM is a competitive weapon in business

Cost is most important

Sustaining Quality and Reliability equally important

Keep your products, processes and where they are coming from a secret.

Gain Customer’s trust by revealing where your products are coming from.

Take care your interests first and the vendor will take care of his interests.

Align partners’ interests with parent organization.

No concern for environment issues.

Revamp Supply Chain Management to meet Green goals.

This is an ongoing exercise. Our curriculum is constantly changing in SCM and all other subjects as well.

enhance student learning and bringing in the application aspect of theory taught in the class.

Further through Round Tables held year after year we understand actual pain areas and how industry addresses them and we bring in these examples in the class room to

This is how we ensure relevancy of subjects or topics taught by our B-School.

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Supply Chain EducationMr. Samir Shah Partner- JBS Group of Academy

Institutional Perspective

What is the current state of SCM Education in India?

A large number of colleges and other academic institutions have started offering short term courses as well as MBA in supply chain management. That said, it is still a developing arena and it will be at least another four to five years before it stabilises.

What are the skills you believe the industry will need over the next few years?

The supply chain industry will need all the possible skills like any other industry – the only difference is that this would be a career where hours would be long and usage of software would be very high. Additionally there would be a whole set of personnel who would work on their feet. New processes are being developed and new skills will emerge as time goes by.

What are the challenges in SCM education in India?

Supply Chain education suffers from a lack of awareness, paucity of professionals who want to change over to Academics, societal acceptance leading to low student interest and lack of standards in the industry.

How can we make SCM an attractive career option to students?

A focussed industry effort is required wherein the existing players contribute in terms of money, permit visits to their place of work, participate in trade fairs/ employment fairs/ education fairs, create an awareness at +X level in this industry and make heroes out of existing SCM professionals.

Can you provide an assessment of the career opportunities for young Indians in SCM?

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How can we maintain relevance in SCM education?

By ensuring large scale industry participation in curriculum development as well as internship possibilities. We and industry practitioners need to take the lead and work on same.

How can educators make a difference to SCM in the country?

The educator's role is the biggest - educators must be in a position to inspire newer lot to follow them into a career in supply chain. The dreams that educators can sell can be made a reality by his students.

What do you expect from the industry as far as education goes?

Industry must realise that manpower will become a major issue in the coming years. Additionally it is the ability of the manpower that will decide the cutting edge of each company. Industry just come forward and undertake an active participation by funds, curriculum development, making available their senior staff for training purposes and taking in interns and mentoring the brighter of them.

Give us a brief on JBS Academy's contribution to SCM education.

JBS Academy presently has certificate and diploma programmes on various aspects of international or EXIM logistics. We are in the process of developing programmes for the Railways; Warehousing etc. Our programmes are NCVT and GCVT approved and we are presently developing long term programmes on NSQF standards to be in a position to offer entry and exit to all students at all levels as well as recognise their working experience.

The Supply Chain Success Story It is a rare occurrence, where a supply chain has contributed significantly to the growth of a firm.

For this issue of SME Corner, we feature Relaxo Footwear Ltd. A Delhi based foot wear manufacturer, whose meteoric rise can be attributed to some home grown supply chain management practices. What interested us was the growth trajectory – a 120 crore company eight years ago, is a 1200 core firm today. And they acknowledge the role of their supply chain in their growth. SCMPro profiles this journey for the SME corner. Yes, they no longer are SME's. But they can be a role model – they started off as an SME.

Vijay Wadhwani Senior General Manager (SCM) Relaxo Footwears Limited

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Relaxo Footwear is a Delhi based foot wear manufacturer, in business for the past 30 years. Over 70 percent of its market was in North India, with the rest of India contributing 30 percent. Most SMEs believe that if they can produce a quality product at an acceptable price, then growth is assured. Relaxo too shared this belief. Supply chain was an alien concept to them – they are not aware of the value addition supply chains can bring about. Relaxo had a turnover of around 120 crores, with few SKUs and two manufacturing units.

The impetus for the transformation came when the company hired a specialist supply chain manager. Eight

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years back the firm had no supply chain function. The marketing head would speak to the production head and orally communicate the requirements, which would get produced. The firm was targeting the lower middle class customer and the product was the “hawai chappals” or flip flops. The customers were spread across North India.

The practice at the time was to send a seven cft carton, whose cost was Rs. 2500 to Rs. 3000. The firm would offer a freight discount – 2 percent for customers in North India and 3 percent for the rest of the country. The freight cost for the nearby cities would be in the range of 0.2 to 0.5 percent and the firm

was offering a 2 percent discount, thereby losing money.

And for the distant places, the discount offered was 3 percent or Rs. 90, whereas the transportation cost was Rs. 200.

Another issue the firm had was that they were using a large number of transporters – whoever would deliver cheaply.

Which meant consignments would be delivered in 25 to 30 days. Which meant the sales was suffering.

The first step in establishing supply chain process began with cleaning up the transportation system. The erstwhile freight discount was withdrawn and the firm decided to supply the goods directly, using organized transport. There were fears that the 70 percent of their business, which was in the nearby areas, would be affected by the withdrawal of the freight discount. However, in the interest of long term sustainability, the firm decided to go with the suggestion. And contrary to expectations, sales soared, even though the economy was affected by the global financial crisis, Relaxo sales rose.

Over the next few years, the number of manufacturing locations rose to ten. The second challenge was warehousing. Each of these ten manufacturing locations had their own warehouse. The irony was that the customer would place an order with the central marketing office, which in turn would locate the stock from among the ten warehouses and dispatch it.

The firm decided to create a centralized warehouse. The problem was Relaxo did not have a single large warehouse.

They decided to set up three warehouses – one for each of the fast moving product line. As a nest step, Relaxo added Regional Distribution Centers. As on date Relaxo has seven RDCs. With the establishment of the RDCs

The first step in establishing supply chain process began with cleaning up the transportation system Relaxo could deliver a customer's order in two days as against the seven to ten days earlier. With a shorter time to market, sales improved.

The third area of attention was forecasting. Before the expansion plans kicked in, Relaxo was dealing with a limited number of SKUs. This has grown exponentially to over 6000 SKUs as on date. The management was clear about one thing, whatever be the forecast accuracy, and no customer should go back without the product she wants.

Prior to setting up of the supply chain function, Relaxo would have 45 days inventory, but the fulfillment was 40 percent.

Today with a 20 day inventory, the fulfillment is 70 percent- A clear gain in efficiency. Since Relaxo established a supply chain function, the expectations were very high. The supply chain was

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at the hub of a complex network connecting marketing, production, sourcing, customer and finance. As a first step a Sales and Operations Planning function was set up, under a director, to demonstrate top management commitment. The forecasting function was set.

What we realized was that forecast accuracy should not be the prime motive to run a forecast. Relaxo felt that the forecasting exercise should provide value addition to the firm. The Sales and Operations Planning meeting would be the arbitrator between the marketing, production, finance and HR functions. Relaxo realized that though they had over 6000 SKUs, all of them were not equally important. The head of supply Chain, Mr. Vijay Wadhwani did an ABC classification of the SKUs. He devised a five point classification.

Mr. Wadhwani assumed the 80:20 rule – 20 percent of the SKUs contributed to 80 percent of the sales. He proposed that there need not be any stops to these SKUs. Since they are fast moving, there should be a dedicated line for producing these products. These lines would keep producing these products without any break. For the B and C categories, a series of reorder quantities and economic batch quantities were worked out. For the D category, the replenishment process would not work, as the demand was

The supply chain was at the hub of a complex network connecting marketing, production, sourcing, customer and finance

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small and not enough to run a batch. These SKUs were manufactured in a batch that would meet four months of demand, and kept in stock.

However, these stocks would be held in the central warehouses and not the RDCs. The E category products were to be discontinued.

The Supply chain function starts with production planning and ends with outbound logistics

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The next step was to undertake a detailed analysis of the delays in the chain, the inventory levels etc. A clear communication was sent to the customers – their orders for the fast moving A category SKUs would be met immediately. In any industry, stock outs would affect only the A category products. If special attention is paid to them to ensure timely delivery, sales would improve.

Mr. Wadhwani committed a 98 percent fulfillment for these products – place the order and the goods would be dispatched.

For the rest, if the goods are in stock, they would be dispatched immediately; else, the customer would be given a definite time line for delivery.

Warehousing was the next target for attention. Relaxo set up a 200000 square feet automated warehouse. Barcodes were introduced. A warehouse management system from SAP was installed. Relaxo also focused on techniques. For example, pick lists were rationalized. SKUs with frequent picks were clubbed and picked up in bulk, and segregated later. Another issue that was addressed was productivity. It was observed that warehouse staff would come in at 9.00 AM while the

trucks would only come in by 11.00 AM. The warehouse staff would, while away, the time till the trucks comes in. The staff time was rationalized to synchronize with the truck arrival. This improved productivity and reduced overtime.

Another innovation was in transportation. Foot wear is a low weight, high volume product. If one were to hire a

At the same time Relaxo has implemented a track and trace service on all their consignment.

Relaxo is yet to integrate sourcing with supply chain function. The Supply chain function starts with production planning and ends with outbound logistics. Supply Chain Management plays a vital role in Relaxo by meeting the deadlines well from the

Steps taken by Relaxo in the past one year Opened four more Regional Distribution Centre (RDC) at Guwahati, Cuttack, Ranchi and Lucknow to cater to the demand of distance customers by way of dispatching footwear at right time and right place. Further the Company has outsourced functioning of its Central Distribution Centre (CDC) in order to improve working efficiency that is resulting higher productivity.

To keep pace with the current growth rate and future expansion of the Company in the years to come, Relaxo has built its 1.60 lacs Sqft warehouse at Bahadurgarh, Haryana with all modern apparatus, machines and latest technical facilities which shall be operational during current financial year.

Relaxo has streamlined its transporter operation through the transport module in SAP which is adding transparency and quality in the existing control system of Supply Chain Management.

12 ton truck to transport a full truck load, the weight would be in the region of four tonsclearly an underutilization of the truck capacity. The transporters were given the freedom to load a heavier load with the lighter load and rationalize the utilization.

However, quality was not compromised and damages not entertained. The cost of transportation for was reduced.

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beginning till the end. Relaxo has further improved the benchmark of working efficiency and strengthened the existing control system in Supply Chain Management in view of future growth and expansion of the Company.

Relaxo is today Asia's largest foot wear manufacturer. And profitable to boot. It produces a million pairs a day.

EVENT

Transforming Your Supply Chain

A continent sized country like India needs multiple approaches by the corporate to unlock value of their supply chains. The need of the hour is for a supply chain that can be globally integrated, demand driven and resilient. This calls for a re-think about the structure and philosophy of the supply chain. Great Lakes Institute of Management, Chennai, in association with Institute of Supply Chain Management organized a seminar that will help create a roadmap for firms who wish to transform their supply chains for competitive advantage. SCMPro brings you a synopsis of the event.

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product gains value only if it reaches the market – at the factory gate the product does not have any real value. And it is the supply chain that unlocks the value of the product as it moves from the factory to the market.

Mr. R Shankar, CEO, (India) of TVS Logistics Services Ltd. In his key note address spoke about the emerging trends in supply chains.

The first change is in sustainable supply chains – including reverse logistics and end of life logistics.

Another development that is shaking up the industry is e-

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commerce. The click and mortar models are re-defining the supply chains in the areas of last mile delivery, returns management and payment processing. E-commerce is the way the world will be buying. Alibaba, the Chinese ecommerce platform player, who recently had the world's biggest IPO owes a great deal of its success to its supply chain. It is indeed an encouraging sign that the logistics division of the late 90's is giving way to supply chains and slowly to demand chains.

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The other significant development is that supply chains are going global – to a complex, multi-tier chain spanning the globe. Add to it the trend of outsourcing manufacturing to the most efficient locations is pushing the relevance of supply chains into the strategy realm.

Another impetus to supply chain development is the changing demand from the customer – customer demand is increasingly volatile and the supply chains have to respond to this volatility.

The successful firms tend to have

EVENT robust supply chains. And as a corollary, supply chain professionals would be increasingly moving to strategic roles.

Kalpesh Pathak, Vice President, FIAT Group Automobiles India Private Limited, spoke on the skill gap in the automobile industry. FIAT had commissioned a survey on the skill gap in the automotive supply chain – and predictably, the survey revealed there is a considerable gap in what the industry needs and what is available. The balance of power has shifted from technology in the late eighties to process efficiency gains of the nineties to supply chains today. An example of how supply chains are strategic was when FIAT India was pitted against FIAT Mexico as a base for a new project. The cost of setting up the facility in Toluca, Mexico was a mere USD 30 Million as against USD 600 Million in India. However, a simple analysis of the markets for the vehicles coupled with a simple NPV analysis showed that even with a significantly higher capital outlay, India was providing a better return. The bottom line is firms are today basing their investment decision based on the total supply chain cost, not merely based on investment. Approaching this from a macro perspective, Mr. Phatak says, “India spends about 13 percent of its GDP as supply chain cost. A saving of even a couple of percentage points will free up the resources for investment in other areas, leading to a higher GDP growth. To do this we need good people to take up careers in supply chains.”

A large segment of the population – 31.16% of the population of rural. They form a large part of the Indian growth story. And the future will belong to the firm which has an effective rural supply chain. India has over 600000 villages.

Reaching them is a challenge – and in many cases not commercially viable. Mr. Pradeep Lokhande, CEO of Rural Relations – a firm which provides

marketing insights to firms who wish to tap the rural markets, provided an interesting insight into the rural markets.

If we can reach about 85000 villages – (Villages with a population of above 2000) we will be able to reach most of these villages – the smaller villages visit the larger ones to pick up their provisions. In addition, the villages in Northern India have a weekly market – with one market serving around 10 to 12 villages in and around. Only five products reach all the 600000 villages in India – but for each of them, there are a number of knock offs which are available.

The knock offs reach the last mile, but the mainstream products does not. This rural market will drive the growth of India Inc. According to Mr. Lokhande, the influencers for most of the FMCG and products involving technology is the local school teacher and through them the students. And as the rural Indian gains education and with the penetration of television and other communication mediums, rural aspirations are slowly catching up with the rest of India.

Forecasting is defined as "The use of historic data to determine the direction of future trends." Forecasting is used by companies to determine how to allocate their budgets for an upcoming period of time. This is typically based on demand for the goods and services it offers, compared to the cost of producing them.

This is easier said than done. Forecasting is both an art and a science. The tools of forecasting are well known to us. We have extensively used them in our organizations. And more often than not we have failed to accurately forecast.

Hindsight is always accurate – but businesses cannot be run on hindsight.

We need to accurately estimate the demand for our products, assess the distribution of the demand over a period of time and then plan for meeting that demand. A distinguished panel of Mr. Sashank Raodeo from Mahindra &

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The trend of outsourcing manufacturing to the most efficient locations is pushing the relevance of supply chains into the strategy realm

And as the rural Indian gains education and with the penetration of television and other communication mediums, rural aspirations are slowly catching up with the rest of India

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EVENT

But the supply chain will definitely change based on where the product is sold

Mahindra, Mr.Vijay Wadhwani from Relaxo Footwears Limited and Mr. Vasu Ramanujam of Entercoms, in a panel moderated by Dr. Rakesh Singh debated the relevance of forecasting in the Indian framework.

Every firm faces a supply demand mismatch. And this starts with the sales forecast. ShashankRoadeo believes that there are five best practices in supply chain management – Customer Relations Management, Supplier Relations Management. Operations and Logistics, Change Management and IT. Firms cannot hope to grow without a robust forecast system. Forecasting is a decision making process. Forecast has two dimensions – the product mix and the volume. If the volume level forecast is good, you do not need a mix level forecast. Mr. Vijay Wadhwani had his own take on forecasting. Forecast is not a standalone process. The business owner would like to ensure that all customer requests are fulfilled. To ensure this, firma must be able to create seamless flow of information across the functional silos. Forecasting is definitely not dead, according to Mr. Ramanujam, what has changed is that you cannot use the traditional models of forecasting anymore- Because the number of variables have increased. To get the same accuracy, firms need to get into more details. Good companies stop at the models, while great companies get into the details.

The final session focused on “Transforming the Supply Chain.” The truth about supply chains is that it has always been an accidental chain.

Corporates grew their supply chains by bits and pieces, accumulating them, fixing them and trying to create what they think is the necessity of the moment. In the aftermath of the series of natural disasters that rocked the

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supply chains across the world, firms needed to sit back and think about the type of supply chain they needed to develop. Should the supply chain be geared to meet the forecast or do we need a supply chain that is resilient and adaptive – a supply chain that can learn and adapt itself to the situation as it unfolds. Supply chains have to be responsive to the emerging business needs and customer expectations. Mr. Kalpesh Phatak, Vice President FIAL says “The manufacturing plant is not affected by where the product is sold.

The Marketing does not change the feature list based on geography. But the supply chain will definitely change based on where the product is sold. And that is at the core of ensuring you have a responsive supply chain. This means transformation is a continuous process.”

Another facet of the supply chain transformation is collaboration – no longer will one player want to own it all – the supply chain has transformed into a collaborative enterprise, going beyond what IT can achieve. Dr. Arunachalam, VPSupply Chain Business Initiatives, Proconnect Supply Chain Solutions Ltd. believes that trust is central to collaboration in the supply chain, far beyond what IT can deliver. Mr. Harry LagadVP Corporate solutions, Toll Global Logistics, says “we speak about forecasting. But a good forecast needs data and analytics. We need data at a granular level, and the power to make sense of the data. The other disruptive change will come from 3D printing.”

The supply chains of the yore – a series of faceless people shuffling products across geographies has given way to a complex, layered, IT embedded pan organization function. Its prime focus is to identify customer need and fulfill it at the best possible way. In the process, it will continue to transform. The point is – will we be on the winning side?

3PL

3PLCurrent Scenario in India

Anurag Atwal, Ranjith Raman and Rahul Singh Great Lakes Institute of Management, Chennai

With firms locating their manufacturing at far flung locations, their supply chains become complex and layered. This creates challenges to the firm that is used to simple supply chains.

Corresponding to the increase in complexity of the supply chains, 3PL or Third-party logistics is gaining importance. An increasing number of corporations across the world are outsourcing their logistics activities to 3PL or logistics service providers. Three young supply chain professionals take a look at the 3PL scene in India.

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We are still plagued by the problems of congestion on roads, increased dwell time in ports and longer transit times

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ogistics is an important part of every economy. Logistics industry worldwide is experiencing an explosive growth.

Emerging market like India is going to play a central role in this growth. In just over a decade, India's GDP has nearly doubled to 1.8 Trillion USD. However, logistics services in India have not developed at the same pace. We are still plagued by the problems of congestion on roads, increased dwell time in ports and longer transit times.

Even though we spend around 14% of our GDP on logistics, the service provided is nowhere comparable to the developed countries that spend just about 8-9 % of their GDP. No wonder that India's rank on World Bank's Logistics Performance Index has gone down from 39 in 2007 to 54 in 2014.

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Logistics as % of GDP 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00%

The major costs incurred by Indian Business sectors in Logistics are in the areas of Inbound/Outbound Transportation, Inventory Holding, Warehousing and packaging. According to a report by Armstrong associates, China and India are expected to be the fastest growing regions in terms of logistics spend by 2015. This growth reflects a number of factors including a strong economic growth, rising

3PL investment, rapidly evolving regulatory policies, mega infrastructure projects and encouraging demographics. Consequently, better strategies and path-breaking ideas are being sought by Indian firms in order to encash this opportunity. If we can bring down our spending on logistics, we can save enough money which can later be used for reducing the prices of our goods, in-turn making them competitive in the global market. Thus, in this article, we will provide a perspective on these issues, and describe some interesting initiatives that Indian firms can take to increase profitability through excellence in Logistics management.

One of the key initiatives that can be taken, which is also the latest buzzwords in Indian logistics market is the use of Third party logistics also known as 3PL. The main concept of 3PL is the outsourcing of transportation, warehousing, packaging and other logistics related activities which were originally performed in-house to a 3PL service provider. This is a relatively new concept in the Indian logistics sector, though it has been extensively used in the developed countries for some time now. The table below shows the data for the total freight movement in India and revenues earned by 3PL providers in India compared to their counterparts in other major countries:

3PL Revenues* (in Billion Dollars)

functions which results in inefficiency and reduced profitability.

Freight Data In India Mode of Transport Tonnage Carried

ÂŤ In India, 3PL is gaining importance at a very slow pace. This can be attributed to reasons ranging from government policies, to inefficiency in 3PL, to lack of awareness about the services that 3PL can offer, to lack of credibility, are to name a few. Let us look at some of the Challenges faced in the implementation of 3PL in India: 1. Warehousing- Infrastructure is one of the most important components of the warehousing sector. An efficient warehousing operation hinges critically on high-quality supporting infrastructure that includes a good national highway network, interstate roads and congestion-free city roads. The total share of organized warehousing space is less than eight percent of the total warehousing space in India. The industry is dominated by small players with small capacities, not well linked with national highway network and interstate roads. The warehousing capacity available in India, in public, cooperative and private sector is about 108.75 million MTs, the details are as follows: Name of the Organisation/ Sector

The figures below show that there is very little contribution of 3pl providers to Indian Logistics even though a huge market exists in this country. The roadways by itself account for 60 % of the logistics!

Thus, we can safely say that companies should outsource their non-core activities to experienced 3pl provider firms who can provide complete supply chain solutions with their sophisticated IT capabilities, state of the art transportation and warehousing facilities. Firms should direct their focus only on activities which fall under their core competencies, rather than spreading their wings in

Name of the Organisation/ Sector storage (Capacity in million tonnes MTs)

Food Corporation of India (FCI) Central Warehousing Corporation (CWC) State Warehousing Corporations (SWC) State Civil Supplies Departments Cooperative Sector Private Sector 108.75

Total

Source: Annual Report of WDRA,2012

2. The Indian Transportation Environment: Country

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Roadways Roadways Rank in km

Railways Rank

Railways in km

Waterways Rank

Waterways in km

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3PL An efficient warehousing operation hinges critically on high-quality supporting infrastructure that includes a good national highway network, interstate roads and congestion-free city roads The Table above shows roadway, railway and waterway rank and number of kilometers of India, in comparison to other countries. Even though India ranks '2' in the overall road network length, the express and national highways account for only 1.6% of the total road length. Overall, the quality of roads is very poor, resulting in slow transport speeds, increased wear and tear of vehicles and high accident rates. The Indian Railway network is the third largest railroad systems in the world. However, the total cost of using the rail network is high due to handling requirements and the time and cost of arranging pick-up and drop of consignment to and from railway facilities. This results in a major reduction in freight speed, which are major concerns for the logisticians in the country. As far as water transport is concerned, the average size of the Indian ports is much smaller than prevailing sizes internationally. Also, most Indian sea ports are inefficient in loading and unloading operations. The result is that ships are stuck for longer time here, which increases the cost for the shipper by as much as 10-20 percent.

All these factors affecting the Indian transportation environment greatly affects the costs and lead time of logistics. Thus, companies can reduce logistics cost by using 3PL service providers who can provide solutions with their expert services.

« Now, let's look at some of the conventional problems that a 3PL provider and the companies employing these 3PL players face. Firstly, they encounter the entry level barriers. India

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ranks 133 on overall ease of doing business scale. Similar numbers for China & Brazil are 89 & 129. Few of the procedural barriers which can be faced are – FDI Regulations, Dealing with Construction permits, employing workers, registering property, getting credit, Paying taxes & Exiting a business. The ways in which foreign players can enter India are through M&A, JV, Wholly owned subsidiaries, Representative office, Project office & Branch office. Best out of these could be JV or opening offices here.

Secondly, the problems seen by 3pl user are that of credibility and safety. In recent times many small players have emerged, which has led to further fragmentation of the logistics sector.

The following graph shows the breakup of Truck ownership in India:

Medium fleet operator (6-20 trucks) 15% Small fleet operator (1-5 trucks) 74% Large fleet operator (more than 20 trucks) 11%

Source: CRISIL Research- Roads and highways Annua;l review (2009)

Here, India has a huge scope of improvement in the way of improving the efficiency of handling logistics. The problem of fragmentation and credibility can be improved by bringing in more 3PL players.

But, the advantages of 3pl that the current user tends to overlook can prove really beneficial in the long run.

Advantages like, no expertise needed in this domain(hence no deviation from the core business), no capital cost required, no maintenance of assets,

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switching to better players allowed, end-to-end service provided, and there is absolutely no exit cost in case one plans to roll down the shutters for the current business. And as and when the entry of large players rises, the problem of credibility and safety can also be mitigated to a large extent.

Government has taken many steps in the direction of improving the infrastructure of the country, which in turn has led to an improvement in the current scenario of logistics in India.

The completion of the Golden Quadrilateral, the North-south-eastwest corridor in the final phases of completion, the ongoing work on eastern and western rail freight corridors have taken the country a notch higher. However, the new GST laws, the Jal Marg Vikasproject (national waterways-1) on Ganga, the Tuticorin harbor project, the

The advantages of 3pl that the current user tends to overlook can prove really beneficial in the long run development of SEZ's at Kandla and Jawaharlal Nehru Port trust, Navi Mumbai, the upcoming port projects

by Adani, Pipapav and Esssar, the setting up of new smart cities, and the upcoming industrial clusters in Rajasthan, Madhya Pradesh, Orissa and Andhra Pradesh will take the countries logistics further-up. The present government has brought in a ray of hope, which will help in improving the present scenario of the companies in India. With development of new project will arise a need for a better, improved and efficient logistics system. But one question that lingers is, “Will India be ready to handle the increased load with its present infrastructure??” Only time will tell.

INTERFACE

The Challenges of Supply Chain Talent Management An interview with Dr. loannis Lagoudis & Dr. Albert Tan The search for talent is not restricted to India alone. Across the globe, supply chain talent is in short supply (No pun intended). We wrap up our series on Supply Chain Education with a interview with Dr. Loannis Lagoudis and Dr. Albert Tan from the Malaysia Institute for Supply Chain Innovation.

What do you find most challenging about Supply chain management?

How is supply chain relevant to your work today?

Dr. Ioannis Lagoudis: One of the biggest challenges is the fact that one need to coordinate numerous activities, which span around the globe and are exposed to high variability and uncertainty. Coming from a transportation background I can reassure you that the “simple� process of moving goods globally is exposed to significant variability stemming from adverse weather conditions, breakdowns to strikes etc.

Overcoming all these uncertainties is a great challenge and not always straight forward.

Dr. Albert Tan: Managing suppliers and customers is the most challenging task as compared to managing resources within an organization due to differences in objectives and expectations between them and the organization. Mutual trust takes a long time to build especially in Asia and thus additional controls are built to ensure quality service and products.

Additional layers for check and balances are built at the interface between the supply chain members, resulting in additional costs and unnecessary delays.

Dr. Ioannis Lagoudis: At research level we have number of supply chain initiatives, which relate to different supply chains. Here in Malaysia and in the wider ASEAN region we have identified a number of problems, which relate to niche supply chains such as Halal, Dangerous Goods, and Cold etc. With the cooperation of our industry partners we try to solve a number of problems that relate to supply chain operations and we try to minimize the level of complexity and uncertainty involved.

Dr. Albert Tan: Supply chain is not limited to goods only and can be applicable to service supply chain. I am involved in a number of researches on service outsourcing and it helps me to understand the importance of drafting a contract that is able to protect the consumer in the event of dispute. MISI has outsourced a number of services to vendor and these service supply chains are critical to ensure we are able to deliver consistent and reliable services to our students and customers.

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Apart from the financial incentives probably, most important when attracting new talent is that the job should offer challenges and significant opportunities for evolution within the company

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INTERFACE What are the supply chain challenges/concerns in a multinational corporation?

Dr. Ioannis Lagoudis: (Supply-demand disruptions? Low profit?) I am not really sure from where one should begin. The fact that modern multinational supply chain strategies practically mean global presence and operations one can understand the level of complexity at all levels from top and bottom. I could list just a few among the many being cultural, production, FX, transportation, quality, financial etc.

Dr. Albert Tan: With economic uncertainty in Europe and the USA, it is a key concern for MNC to ensure business sustainability.

These MNCs are evaluating various options to expand their market overseas to increase their revenues and to reduce their supply chain costs to maintain their profit margins.

Where there is a short supply of talented workforce in the country, how does an organization acquire key talent?

Dr. Ioannis Lagoudis: I would start by saying that there is a lack of SCM talent globally with ASIA lagging behind I could say. Acquisition of such talent is one of the biggest challenges that Global HR Heads are facing at the moment. I guess that one the key sources of finding this talent is via academia. MISI being under the MIT-SCALE network offers great opportunities for companies to that extent.

Dr. Albert Tan: Some organizations have sponsored some of their nonsupply chain staffs to do a conversion program to become supply chain executives while others have offer scholarships for full time students in supply chain management.

The outline for job market in supply chain management is promising as there is still a shortage of these professionals in Asia

Are they any strategies in retaining talents?

Dr. Ioannis Lagoudis: Offering new challenges to employees along with showing them that they can climb the “ladder of hierarchy”. The offering of continuous education opportunities to employees is also a strategy that works. Financial incentives should not be excluded……

Dr. Albert Tan: Supply chain professionals are given ample opportunities to work in different capacities to understand the entire supply chain- from sourcing to planning to distribution and transportation. These scopes will allow them to widen their knowledge and later expand their portfolio or role to manage their internal staffs.

What is the overall outlook for the market in this region?

Dr. Ioannis Lagoudis: Asia is the place to be. The prospects in Asia probably far better compared to the rest of the world today and for many years to come. The opening of new markets and political developments such as the ASEAN community offer significant opportunities for those who want to stay in the area.

Dr. Albert Tan: The outline for job market in supply chain management is promising as there is still a shortage of these professionals in Asia. Some of the existing supply chain professionals are not trained in this field while other companies are outsourcing parts of the supply chain due to a lack of expertise in their organizations. In fact, more organizations are seeing the important role of supply chain management to integrate the different functions in order to deliver reliable services to their customers.

What are some strategies to attract new pool of talent to supply chain management? (To the company and the industry) Dr. Ioannis Lagoudis: My understanding is that apart from the financial incentives probably, most important when attracting new talent is that the job should offer challenges and significant opportunities for evolution within the company. Our experience shows that applicants weight the latter two variables more Dr. Albert Tan: Some organizations have management trainee program to attract them into their companies with potential for them to accelerate the career development. Others have promised

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new comers exciting roles and responsibilities to prove their capabilities before sending them overseas to start new operations. At the industry level, supply chain management should be positioned not as sweatshop job but as a professional job with strong emphasize on analytical and soft skills.

The complete interview can be found at http://www.misi.edu.my/publications/the-challenges-of-supply-chaintalent-management/

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SCM WORLD

GURU SPEAK

CEO SPEAK

ACADEMIC ADVOCACY

HUMAN RESOURCE

Bottleneck identification in supply chain networks In supply chain risk management, it is essential to identify firms that induce high losses due to supply chain disruptions in a focal firm or the supply chain network as a whole (bottlenecks). The supply chain networks are a complex system of firms and their suppliers. This paper revisits some established network measures and compares their predictions with a new methodology for detecting bottlenecks. In this bottom-up approach, production disruptions on the firm level are modelled with stochastic point processes, and a mechanism for the propagation of losses through the network is defined. The individual firms' emerging loss contributions to the total losses of the focal firm provide an alternative risk-adjusted measure. The methodology and findings enable more informed and transparent decisions to be made for optimal supply chain network design. upply Chain Networks (SCNs) are becoming larger and more densely interconnected, which increases the inherent complexity and uncertainty of production. The pressure of increasing competition and the possibilities of globalised markets have driven firms to outsource manufacturing globally to reduce inventories or The correct assessment economise the supply base. Although production of the firm's risk processes are becoming more efficient, for example, exposure embedded in through technological advances (Brynjolfsson and the actual network Hitt 2000), the complexity of these networks makes it difficult to predict losses due to design is still a highly production breakdowns in the supply chain. On debated issue and the other hand, many of the lean initiatives dynamic capabilities undertaken by manufacturers (e.g.in the perspective, limitations automotive industry) in the last two decades have exists striven to simplify supply network structures and reduce both the number of stages (also called 'tiers') and the number of entities at each stage. Indeed, much of the evident risk involves reduced diversification, albeit with a simplified structure. The correct assessment of the firm's risk exposure embedded in the actual network design is still a highly

S

The complete paper can be found at: International Journal of Production Research, Vol. 51, No. 5, 1 March 2013, 1477–1490 Kamil J. Mizgiera and Stephan M. WagnerDepartment of Management, Technology and Economics, Swiss Federal Institute of Technology Zurich, Weinbergstrasse 56/58, CH-8092 Zurich, Switzerland; Matthias P. Juttner- Swiss Finance Institute and University of Zurich, Plattenstrasse 14, CH-8032 Zurich, Switzerland

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debated issue. Due to insufficient knowledge regarding the impact or correlation of hazard events and the dispersion of losses through the network, it is unclear whether certain network structures are more resilient or more susceptible to supply chain disruptions in single or multiple nodes in the SCN (Wagner and Neshat 2010). In particular, it is essential that focal firms identify their high-risk suppliers. Supply chain risk managers are then able to reconfigure the network structure or improve resilience by introducing additional inventories to mitigate or prevent contagious effects.

This research compares a set of measures for the identification of bottlenecks in SCNs. First, it revisits some established measures from social network theory, e.g., degree centrality or betweenness, and analyses them in the SCN context.

Second, it introduces a new methodology for an efficient and accurate detection of firms in a SCN that potentially generate high losses for a focal firm in the case of a disruption. It uses a simple bottomup approach, in which supply chain disruptions are modelled at the firm level with stochastic point processes. A mechanism for loss propagation through the network is defined. It determines via Monte Carlo (MC) simulation the aggregate loss distribution for the focal firm. The loss contribution of the individual firms and hazard events to total losses for the focal firm provides, then, a riskadjusted measure. These measures aim to condense the complex informational content of a given network topology. However, it is crucial to the interpretation to consider the nature of the network connections. In SCNs, these connections occur on different interaction levels, including information channels, the flow of physical goods or, in this case, the loss dispersion induced by supply chain disruptions. It interprets and compares the results of these measures in the context of loss dispersion. The findings support the need for an accurate methodology to identify firms in the SCN that greatly impact the losses of the focal firm.

Supply chain network structure A SCN is a complex system of interconnected firms.

The SCN under consideration consists of N agents – divided into suppliers, focal firms and customers – who operate on different stages in the SCN. The

authors are interested in the stage of the focal firms, and calculate the loss distribution of a focal firm that arises from disruptions downstream in its supply chain (flow of production).

A sample supply chain network with two stages of suppliers

A disruption in the production process of firm S11 (S13) can induce a 70% (10%) reduction of the delivery volume of F01. On the other hand, for S11, all the necessary components are sourced from supplier S21, and for S12, components are sourced 80%, 20% from supplier S21, S22 respectively. The total disruption is assumed as indirect costs of 100%.

Discussion and implications From the results, it can be inferred that each of the measures presented in this article has both advantages and limitations, as summarised in the Table. Simple network theory-based measures can be helpful in obtaining first indications regarding possible bottleneck identification, but these are definitely not conclusive. The more advanced concepts, such as radiality, are capable of including the entire network structure and following complete geodesic paths. Therefore, they contain more information about the global network design. They are also superior in terms of computational efficiency, as they do not require heavy numerical calculations. The main drawback of these methods is that they do not capture the dynamic properties of the supply chain disruptions and their propagation across the network. The authors approach adds the most value, as it correctly captures the risk exposure to different hazards and includes the topological features of the SCN. Naturally, these improvements come at a cost. The performance of the method depends on the complexity of the network and the number of hazard events that must be included in the MC simulation. As it is assumed that waiting times between successive disruptions are exponentially distributed, the running time of the

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After considering all these factors, combining this proposed method with the network measures will achieve accurate bottleneck identification to support supply chain risk management decisions

algorithm depends heavily on the quality and efficiency of the random number generators.

Moreover, because the algorithms used to sort the graphs depend on the number of nodes and edges in the network, the time complexity of the algorithms will increase with the size of the network. After considering all these factors, combining this proposed method with the network measures will achieve accurate bottleneck identification to support supply chain risk management decisions.

Centrality Measure

Conceptual definition

Advantages

Disadvantages

Out-degree Centrality

The supplier is critical when it is connected to a large number of other suppliers

Easy to compute, can be used as a first measure of suppliers's criticality

Measures only the impact on the directly connected firms

Betweeness centrality

The supplier is critical when it lies between many other suppliers

Includes the whole network structure and business

Raw material providers are not penalised even if critical due to their position in the network

Weighted betweenness centrality

The Supplier is critical when it lies between many other suppliers

Includes the whole network structure and business weightings

Raw material providers are not penalised even if criitical due to their position in the network

Radiality

The supplier is critical when its reachability to other suppliers is high

Includes the whole network structure

Raw material providrs are penalised even if not critical due to their position in the network

Loss contribution approach

The supplier is critical when it generates the highest expected losses

Includes the whole network structure and all parameters of disruption risk

Computational complexity and high data requirements

This study has several practical implications. First, the direct consequence of the presented comparison between the established network measures and the proposed loss contribution approach is the careful use of all measures. In particular, the data requirements for the established network measures are relatively low, and efficient algorithms already exist, which lends a great advantage to our new approach. Firms are tempted to apply these approximate and sometimes misleading indicators. Managers must always be aware of the respective purposes of each measure and operate with a set of different measures.

Second, the implementation of the appropriate approach necessitates the establishment of a detailed loss database. Therefore, guidelines for reporting and documenting losses from supply chain disruptions within the SCN (also across different firms) are required. The firm requires sufficient data about hazard events, respective frequencies, recovery times and corresponding

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Third, the new method provides operations and supply chain managers with an efficient tool for the quantification of losses due to supply chain disruptions from single suppliers, both in isolation

Summary of measures for bottleneck identification.

Practical Implications

Using a stepwise comparison of purchasing volumes sourced from each supplier, supply chain managers can optimise the risk exposure of the entire SCN

losses to calibrate the model. The fulfilment of this requirement is certainly ambitious. The documentation and analysis of such a loss database is very helpful for sensibilising the workforce regarding inherent risks in the SCN and optimising production and supply chain operations.

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and when embedded in the network structure.

They can both identify the most critical suppliers and estimate the potential impact of disruptions in absolute terms. These evaluations may have two consequences. On one hand, managers may monitor these firms accurately to avoid the negative impacts caused by disruptions. They learn more about their business model, the risks of their suppliers' operations and locations and potentially have the ability to change some of the parameters.

On the other hand, the quantification of losses based on the model input parameters allows managers to study the impact of reconfigured networks. The model can, therefore, be developed further, allowing for the automatisation and optimisation of risk-weighted allocations of purchasing volume. Using a stepwise comparison of purchasing volumes sourced from each supplier, supply chain managers can optimise the risk exposure of the entire SCN. A comparative statistical analysis for all the input variables may also be helpful in identifying both important nodes and their risk exposure.

SCM WORLD

GURU SPEAK

CEO SPEAK

ACADEMIC ADVOCACY

HUMAN RESOURCE

Flexing up the workplace The potential positives and the pitfalls of telecommuting “Flexible Work Practices”, “Working from Home” or “Telecommuting”, whatever you call it, the concept of working remotely from home, a coffee shop down the road, basically anywhere outside of a traditional office environment still garners a lot of bluster and controversy. Yet the concept, which was first introduced in the workforce over 30 years ago seems to have been largely embraced with “one in five workers around the globe, particularly employees in the Middle East, Latin America and Asia, telecommute frequently and nearly 10 percent work from home every day" according to a Reuters poll. Darryl Judd and Carmel Perales bring you a perspective.

I

t is fairly easy to see how this success has come about. On one hand, telecommuting has enabled employers to overcome many challenges which have enabled them to employ a more diverse workforce such as challenges of geographical distances, and working mothers. Of course many employees have embraced the freedom and balance that the concept engenders.

On the other hand, there seems a new wave of thinking led Marissa Mayer who caused quite a stir when, as one of her first gesture as new CEO at Yahoo in 2013, she axed the company's telecommuting policy for most of its employees. Mayer, along with many other executives since argue that eliminating telecommuting aids

creativity and cohesiveness amongst staff. There was a huge media flap at the time with many articles written about how she was setting work practices backwards and that Yahoo staff would be leaving left, right and centre. Yet Yahoo still remains one of the most sought after employers globally.

So what are the pros and cons? It is worth kicking around the concept to see how different companies have faired with their treatment of this controversial policy.

In a recent article written by Megan Lavey-Heaton for The Guardian, in the US, “on a nationwide scale, increasing the number of telecommuters could

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Carmel Perales GM South East Asia, Logistics Executive

Darryl Judd COO, Logistics Executive darrylj@logisticsexecutve.com

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HUMAN RESOURCE save nearly 289m barrels of oil and 52.8m metric tons of greenhouse gases annually. That, according to a study from the Telework Research Network in 2010, is the The need to equivalent of $23.1bn in attract and retain oil savings and the talents was the equivalent of taking key motivating 10m cars off the road.

When Sun factor which led Microsystems took a to the decision to introduce flexible look at its telecommuting work practices program, the company found that it avoided $64m per year in real estate costs, $2.5m on the electricity bill and employees saved an average of $2,335 per year in telecommuting costs.”

On a research conducted by Towers Perrin (now Towers Watson), on behalf of Singapore's Ministry of Manpower, a publication about Work Life Harmony titled “Flexible Work Arrangements”, reveals both local and international MNCs who are engaged in In fact, its office flexible work is designed such arrangements. Example that there are no of which is Immunex fixed seats for Corporation, a the employees. biotechnology company; 60% - 70% of the NTUC Income Insurance Co-operative seats are Limited; Unigard occupied daily Insurance Group; Matsushita Kotobuki Electronics Industries of America, Inc; and some companies engaged in telecommuting such as IBM Canada, Nortel, Norsk Hydro, and Procter and Gamble.

In the Ministry of Manpower Singapore publication on “Flexible Work Arrangements,” a

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case study was conducted at Norsk Hydro, a multi-billion company and one of Norway's largest companies specialising in oil production, supply of fertilizers worldwide, and the provision of gas and electrical power. In this study, “the need to attract and retain talents was the key motivating factor which led to the decision to introduce flexible work practices.

Competition for talents is increasing in Norway because of a small population base. The company is vying with traditional competitors as well as Internet start-ups and management consultancy firms. The company introduced flexi-work under the auspices of a project called Hydroflex in 1998. Under the scheme, employees have the choice of working at the office or from home. To create the home office, the company gave each employee computer equipment, ISDN line and US$2,000 to purchase furniture. Working hours is full-time, approximately 37.5 hours per week, but flexible.

Employees work when and where they want to, depending on the nature of work, deadlines and productivity goals, etc. They have the option to work at home two days a week. Although some employees were initially doubtful about the scheme, most are now supportive. Many feel that they are more productive as the focus now is on their results and output, rather than where and when they are working. They are also able to take advantage of the flexibility to fulfil their family responsibilities.”

In the similar publication, Procter and Gamble, one of the global

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giants in consumer products “has been the driving force behind the introduction of flexible work arrangements was to nurture a motivated and engaged workforce, and at the same time improve cost efficiency. Under the “Work from Home” program, employees are allowed to opt for this scheme if the nature of their work permits. For a better worklife balance, the company actively encourages its employees to take up this scheme. In fact, its office is designed such that there are no fixed seats for the employees. 60% - 70% of the seats are occupied daily. Procter and Gamble drew up a clear workplan and communicated its expectation to its employees. Besides providing a dedicated phone line meant for office work, it also installed chat software in the employees' laptop so as to enable them to stay in touch with each other. Employees are also reimbursed for the purchase of ergonomically designed chairs. Procter and Gamble reported an increase in productivity as a result of a more satisfied and motivated workforce. Savings from reduction in office space were passed on to it customer without lowering the quality standards of its products. For the successful implementation of flexi-work, the company stressed that it is important to communicate the policies clearly and explain their rationale in a clear and transparent manner. Secondly, it is useful to pilot the scheme on a group of employees to showcase the success of the programmes. It would be easier to generate employee support if they could see tangible evidence of success.”

HUMAN RESOURCE Based on these examples there are considerable gains to be made in adopting a policy that was tailored for your company needs.

has clear benefits, it is very important to implement the policy in a way that allows employees to make the most of it.

This brings us back to our Yahoo example and Marissa Mayer's decision which though deemed outrageous to many, actually garnered a lot of support in some executive circles. In a radio interview, Michael Bloomberg commented that “telecommuting is one of the dumber ideas I've ever heard.” Mayer has since elaborated that her idea was to get people to start talking to each other, to collaborate more so they could foster creativity and the best way to do this is to get people together, to have face to face discussions.

“The results of a WFH experiment at Ctrip, a 16,000-employee, NASDAQ-listed Chinese travel agency. Call center employees who volunteered to WFH were randomly assigned either to work from home or in the office for 9 months. Home working led to a 13% performance increase, of which 9% was from working more minutes per shift (fewer breaks and sick days) and 4% from more calls per minute (attributed to a quieter and more convenient working environment). Home workers also reported improved work satisfaction and their attrition rate halved, but their promotion rate conditional on performance fell. Due to the success of the experiment, Ctrip rolled out the option to WFH to the whole firm and allowed the experimental employees to reselect between the home and office. Interestingly, over half of them switched, which led to the gains from WFH almost doubling to 22%. This highlights the benefits of learning and selection effects when adopting modern management practices like WFH”.

Another issue of note is that, while working from home has been embraced by C-level executives and by the lower ranks, it is still thought of with some suspicion amongst middle managers. They argued that whilst flexible work arrangements provide benefits, there are some key issues arising such as trust and supervision, communication between staff who work at varying times or achieving fairness for all staff etc.

Though we have the technology to make telecommuting a success, what Mayer is pointing out is that we still require the right team of people or individuals to make it work. It could also be argued that her lack of communication at the time also exacerbated the issue.

Perhaps you need to have more than just a good telecommuting policy.

Perhaps it is about how that policy is put into practice. A recent study by Stanford University, found that even though working from home (WFH)

So ultimately, everyone would have to agree that this is quite a complex subject. It has vast benefits if used wisely. Ultimately an extremely useful tool in the competitive arsenal of most companies if used with consultation and precision tailoring. Particularly, in Supply Chain and Logistics where time is of the essence and availability of

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individuals at a prescribed schedule is necessary especially for projects requiring team synergy and flexibility within a globally expanding market were staff are limited and the dynamics are forever changing.

In order to assess the individual and company value some companies ask for employee inputs. At Cornell University's HR website on Your Life at Cornell, where flexible work arrangements are supported, came up some of the Employees need c o n s i d e r a t i o n s w h e n to set in detail contemplating flexible work their goal, work arrangements. Employees assignments, need to set in detail their metrics and goal, work assignments, other issues that metrics and other issues that may require consideration or may require change in the future. consideration or Employees need to know the change in the r e q u i r e m e n t s o f t h e future department manager or director and the impact of such flexible work arrangement to colleagues and customer needs.

Ultimately, the key to make this endeavour is to set clear guidelines and policies which are communicated effectively to employees. Reliable tracker of hours worked are some of the tools to effectively manage employees on flexible work schedule. Visibility and transparency on activities and outcomes are critical and should be measurable.

Given above pros and cons on flexible work arrangements, my question is, are we prepared to lose our high performing people or should we begin working on setting structures and guidelines and slowly embrace the benefits on increased productivity and retaining valuable employees?

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PRODUCT Eco Friendly equipment and the drive towards sustainability at airports Sustainability has now become just as important as any other field of business. Airports can no longer keep sustainability off their main agenda and need to adapt to real time sustainable measures. Attempts to reduce aviation carbon emissions have been talked about for long. However, non-air borne emissions such as those generated by ground operations make up for relatively large part of total aviation related emissions.

Ground handling agencies selected by AAI have been asked to use battery operated vehicles, replacing diesel run tractors & buses (extract from The Hindu, dated 1st April' 2011).

Airports realized that there are plethora of benefits on practicing sustainable measures and going green.

These include low carbon footprint, noiseless operations, increased productivity, resource efficiency, decreased waste, environmental norms compliance among a host of others.

Comparing well-to-wheel greenhouse gas emissions and fuel costs for a selection of common conventional and electric drive vehicles:

Vehicle

Indigenous efforts by Domestic Industry In Bangalore, Maini Materials Movement Pvt. Ltd., the fore-runners in eco-friendly MHE & passenger movement solutions have recognized the above requirement and designed products for the Aerospace sector. The company offers eco-friendly electric platforms for various airport support vehicles like tow tugs, customized requirements for military and commercial aviation operations etc.

The electric platforms not only reduce the carbon-footprints but also bring in associated advantage of reducing back end administration. These specially designed indigenous platforms will fit into the military aviation applications also.

The way forward: Green ground handling Switching over to electric solutions for ground handling holds immense scope for improvement in conserving energy, fuel & reducing CO2 emissions.

Electrification of ground support equipment and vehicles inside airports has been recognized as solution for greener & cleaner airports. Green initiatives not only create a sustainable airport on environmental aspects, but also on economic aspects.

Electric ground handling solutions optimally prepare airports & airlines for an economically successful and green future.

Crystal Titan Cold Chain Solution- An easy to use Cold Chain solutions available on Rentals Crystal Logistic Cool Chain Ltd and Titan Containers, UK with more then 50 yrs into the business joins hands together to bring in one of the most sought after needs of the cold chain industry CRYSTAL TITAN brings in an easy to use cold chain solution for the Indian market. Its brings in 27 years of Portable Cold Storage solutions for the temperature ranges between (-) 40 Deg To (+) 30 Deg Centigrade. The new range of products are called the ArcticStore and Super ArcticStore.

The user friendly Cold Stores with easy to operate t doors and many Safety features of Internal

Lights , Alarm for Mantrap , Internal Release, Strip Curtains and Ramps etc. Flat, easy to clean, non slip aluminum flooring and food grade stainless steel interior lining ensure you can Maintain 100% hygienic conditions at all times.

Standard operating range is -40°C to +30°C. Specific ultra cold models also available for -60°C application and the heater stores upto +60°C .

Primarily for transport both 20' and 40' (hi cube) refrigerated containers are available. Suitable for domestic rail, road and sea transport as well as for International applications.

Available Size Arctic Store

Available as 10’, 20’and 40’ there are sizes to suit all requirements.

Superstores.

New Technology refigeration ensures a constant internal temperature through out the container and with minimal power consumption

Arctic Superstore

Starting with 58m2 (4600 +CFT) and increasing with 29m2 per unit with no limit on size of the installation

Offer opportunities to create on site cold storage capacity.

There are host of flight safety features designed and incorporated into the electric platform making it ideal for use in aviation sector. These features are designed to be adaptable for use in a given set of aviation applications. The products are also designed to comply with the safety requirements for use in the aviation environment.

October 2014

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