CEO–Mindset Planning team plays a vital role by introducing new products, analysing products which other e-commerce portals are selling etc. Stage 2 comprises of SCM activities i.e. sending the order lists to the merchants, liaison with Merchants to deliver the product on agreed time frame, automated replenishment /PO system & implementation of JIT.
an even better management of the associated SCM processes. The contemporary view is that SCM is a tool for demand generation. Both views will play a crucial role but in the future SCM will emphasise on designing & operating the supply chain to enhance the revenue of the company in such a way as to maximize the contribution to profit.
What is the role of SCM in maximizing revenues in e-com?
How easy is it to scale delivery capability in India? What would be the challenges?
SCM works as a support function for any e-commerce company. Hence, the SCM helps maximising revenues by increasing customer satisfaction in the following manner:n Processing order in the least possible manner & ensuring shorter lead time from Order Place andDelivery. n Ensuring right product gets delivered to the end customer. n Optimum utilization of Inventory through Just InTime (JIT)model, Merchant maintained Inventory which helps to decrease Stock-Holding cost. n Optimum using of DC space which leads to the decrease in DC operating cost. n Minimization of Logistics cost achieving the SLA of Delivery Lead-Time.
It’s not easy to scale delivery capability in India as it’s geographically widespread. The challenges we face are:-n Last Mile delivery problem where a consignment is going to a single destination. n You can’t aggregate the consignments. n Major Logistics Service Providers (LSPs) are limited to Metro & Tier-1 cities delivery. n LSPs don’t have their own branches in the interior locations and hence work through franchisee model. This scenario leads to poor tracking of consignments & ownership. n Lack of direct connection of LSPs Distribution Centre, consignment/material handling gets increased resulting higher probability of in transit damage.
What issues keep you awake at night?
In SCM operations we can’t afford to keep anything pending in any sub-function bythe end of the day. Hence, there are 2 determinants:n There should be no pendency in any sub function by end of the day. n A process is laid down for every activity as per the business requirement with proper responsibility matrix & ensuring the process adherence. What will define the supply chain of the future?
There will be a tremendous shift in the material movement & consumption of the same by the end users in the near future. All of which will require
LSPs don’t have their own branches in the interior locations and hence work through franchisee model. This scenario leads to poor tracking of consignments & ownership.
Amazon wants to tie up with the department of posts for delivery. Have you explored this?
There are other LSPs as well who had already connected with Department of post for greater penetration & larger reach to increase sales. However those LSPs are working as facilitator rather than directly involved in distribution operation. Moreover there are certain limitations with Department of Post e.g. 1. COD order distribution is not proper 2. Tracking tool is not so advanced 3. Can be a delay in the update of AWB tracking 4. Probability of In-transit lost as theft is very high 5. Claim recovery of In-transit Damage and so on What do you think should be done to re-position supply chain management as a profit centre?
SCM can be re-positioned as a profit centre through the following ways:n Giving equal importance to SCM –Cost Reduction Model & SCM-Revenue generation strategy. n Collaboration & Coordination among the SCM sub function & channel partners. n Information sharing among channel members. n Sharing advanced technology. SCMPr
December 2013/January 2014
43
43