SCMPro October 2015

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SUPPLY CHAIN MANAGEMENT PROFESSIONAL 10th Oct 2015 | Volume 1- No.7 | Rs.200

Logistics Service Provider Summit & Awards 2015

INDUSTRY INTERFACE

ENTERPRISE FOCUS

TECH TALK

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36

40

Take a Step Back – to Take a Leap Forward

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Managing the Triad – Infrastructure, Information & Sustainability

Embedding Technology in Supply Chain

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editorial

Executive Publisher Jayaram Nair Jayaram.nair@scmp.in Mobile:9821732929 Editor Girish V S girish.vs@scmp.in Graphic Designer Sidhi Jadhav sidhi.jadhav@scmp.in

Change in the Air ndia is no n to be tradition bound e do things ust because it has been done so hange is not a er elcome idea ut as s ea to the en e t in su l chain see a slo but much needed change ha ening The oung and restless generation is illing to let go of tradition to embrace gro th at a faster ace oes this mean that our traditions ha e held us bac certainl belie e so The highl atriarchal ndian societ does not encourage the sons and daughters to question their fathers nless e learn to question e er business ractice e learn to master dissent e ill be tied to the indu rate of gro th A er all it is onl b questioning that e nd the ne Ma the s irit of this The structural questioning gain strength in ndia imbalances that

face us cannot be resolved with short term measures. Hope the government stays true to the course.

This issue e bring ou the S Summit and A ards 20 A celebration of the S in ndia The e ent sa a ards gi en to the best of the best S s An e ent ad udicated b an international anel of e academicians to remo e an hi of bias in the rocess To the e tent there e categories here the ur did not feel it t to gi e an a ard And true to our romise e did not see s onsorshi for the e ent e ho e the a ards ill become a co eted item among the S s in ndia e romise to ee the sanctit intact and es e ill not see mone for the a ards li e our editorial the are for the best oo for ard to greater artici ation ne t time around e at S M ro ish all our readers a a a

Reading

GIRISH V S

E ditor girish s scm in

usshera

Advertising Riddhi Solanki riddhi.solanki@scmp.in 022 60020157 Bhavi Shah bhavi.shah@scmp.in 022 60020159 Administration & Subscription Sanjay Gupta sanjay.gupta@scmp.in 022 60020156 Editorial Advisory Board Dr. John Gattorna Dr. Mahender Singh Dr. Rakesh Singh

Media Group D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai 400062. INDIA. Printed and Published by Jayaram Nair on behalf of B2B Media Group. Printed at Kalakshi Printing Works, 205 Gopal House IB Patel Road Goregaon (E) Mumbai 63. And Published at D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (West), Mumbai 400062. INDIA. No part of this Publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publisher. Such written permission of the must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in the future editions. Opinions reflected in the publication are those of writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. Annual Subscription Rate: INDIA: Rs. 2000/Editorial Partner:

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content Feature

Oct 2015 | Volume 1 | No. 7 Lead story -

06 SCM News

Celebrating the Achievements of the Indian Logistics Service providers

28 Human

09

Resources Merger & Acquisitions: Stacking the deck to ensure success

33 Industry

Interface Take a Step Back – to Take a Leap Forward

LSP Summit

Outsourcing - Shaping the LSP of the Future – key note by Mr. Prem Verma, CEO TMDL, at LSP Summit 2015

23 LSP Summit

Value Added Services – Cutting through the Clutter – Special Address by Milind Shahane, Director DIESL at LSP Summit 2015

Feature

Aligning supply chain strategy to deliver superior performance – by Manish Panchal, Anand Maitri and S.R.K.Dattu; TATA Strategic Management Group

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30

Embedding Technology in Supply Chain

Enterprise Focus Managing the Triad – Infrastructure, Information and Sustainability Mr. Vikram Ogale, National Supply Chain & Quality Assurance, McDonald’s India

36 4

40 Tech Talk

44 Feature The evolution of Supply Chains

48 SCM Updates

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SCM News

Digitalization of Supply Chains The world as we know it is an intricate network of supply chains and information flows, where bigger and bigger vehicles carry increasing loads across borders, relentlessly driving global trade. And as one wag put is- “geography has become history” with global suppliers, manufacturers and customers. But this nice cozy world view is set for a change. Rapid technology innovations are poised to disrupt the trade flow linked world view. Global trade, which was expanding at 6 percent per annum in 2008 has slowed to 2.4 percent. A part of this can be explained to global slow down. However, another trend persists – that of near-shoring and re-shoring. The vast Chinese global supply chain is slowly turning inward. The advent of technologies like 3-D printing will reshape much of that supply chain. If technology can enable 3-D printers to create more 3-D printers, we will see a major disruption in global trade. Robotics is set to re-place human interventions in many more areas. This takes away the labor market arbitrage in markets. Combine 3-D printing and robotics, and we will see a new paradigm in global trade – where the existing supply chains will have to be-redefined.

Immigration Crisis in EU is Disrupting Air Cargo Supply Chain The humanitarian crisis playing out in Syria and Iraq is having some unexpected fall out – it is affecting the costs of transportation across the Euro Zone. As countries close their borders to limit the surge of refugees pouring in to Europe – estimated to be around 514,000 people. One estimate from Dutch Association for Transport and Logistics claims that if controls are established at all border crossings between European countries, a delay of just one hour at a border crossing will cost the Dutch carriers alone EUR 600 million a year. The impact is already visible in the Channel Tunnel between Calais, France and Dover UK. Since Europe accounts for roughly 30 percent of air cargo movement, any delay can have a large impact on the profitability of carriers. Welcome to the new networked world!

Samsung to Build Robots Cheaper than Human Labor

Corruption Fears in Global Supply Chains A recent report by Control Risks, an independent, global risk consultancy specializing in political, integrity and security risk points out that corruption is a major issue when it comes to doing business across the globe. According to the report, a large percentage of the 824 companies surveyed have lost contracts due to corruption. The report is quite revealing – 30 percent of the respondents have avoided doing business in countries where corruption risk is perceived to be high. More worrying, 41 percent of respondents stated that they have walked out of deals they were working on due to fears of corruption. But all is not lost. According to the report, “The picture is improving: Companies from countries with tight enforcement report fewer losses than before from corrupt competitors. In 2006, 44 percent of U.S. companies said they had lost out to corrupt competitors, compared with only 24 percent in 2015. These figures are echoed for Germany and the UK. When asked whether international anti-corruption laws “improve the business environment for everyone,” 81 percent of respondents agreed.” Apparently, apart from the 13 point ease of doing business agenda, we will need to move on corruption for Make in India to succeed!

The dire predictions of the march of technology is already being rolled out. In a 6.67 billion Won project, Samsung is building a series of robots which can assemble products cheaper than the notoriously cheap Chinese labor. If this project is successful, we will see South Korea undercutting Chinese in the export market. The consumers will certainly gain. But labor will lose.

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WAREHOUSE COMPENDIUM 2015

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arehousing in ndia has been e ol ing ra idl from traditional odo ns to modern storage facilities ri en b gro th in roduction and consum tion the demand for arehousing s ace is increasing o e er the o erall gro th otential is limited b se eral challenges The arehousing om endium 20 b S M ro is a resourceful informati e handboo ith ell researched articles on arious as ects of arehousing in entor management ith high referral alue and long shelf life the arehouse om endium is a must ha e reference handboo for the sta e holders of the logistic su l chain industr Some of the ha ters in the com endium is as follo s 2

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The arehousing Scenario in ndia Role of the arehouse in the su l chain lements of arehousing strateg e arehouse technologies arehouse functions Warehouse m anag em ent issues Warehouse planning arehouse cost management

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erformance management and im ro ement The C halleng e of Warehousing istribution et or S stems P ersonnel P lanning Achie ing arehousing cellence C old C hains A g ri C om m odity Warehouses

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mp.in

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

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The First SCMPro Logistics Service Provider Summit and Awards 2015

Celebrating The

Outcome

Supply chains was traditionally focused on a few key business differentiators – Strategy, Marketing, Human resources, Finance, efficient Manufacturing Operations and above all the ever increasing thirst for profits. Supply chains were the relegated to the basement – to be suffered, but never openly acknowledged. A cost center staffed with drop outs. But how things have changed. The twin forces of globalization and the relentless pursuit of excellence has resulted in firms realizing that supply chain is not hiring a few warehouses to store goods or a few trucks to transport them. Supply chains are far more complex. Requiring specialist intervention. We have come a long way from there. Across the globe, responsible firms today embrace a third party service provider. India has been a late starter in this aspect too. Better late than never. Enter the Logistics Service Provider (LSP) – a third party, with expertise in all things related to the supply chain. Firms find it easier to outsource supply chain operations today – and reap the benefits of higher efficiency, capacity on demand and lower costs. But the LSP does not have it easy. The LSP is the backbone of economic activity of a country. As the LSP

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gains efficiency, the economic health of the corporate, and as a result the nation’s prosperity improves. And, apart from the economic nation building, this sector is active in creating employment across the country – from warehouses to trucks to rail – LSPs provide employment across the country. At SCMPro, we wanted to celebrate those LSP firms who are doing a credible and sustainable job in providing innovative solutions to the industry. We instituted the LSP Awards. The idea was to bring the successes of the individual LSP into the limelight. And we wanted to do it differently. For one – we did not seek sponsors for the awards – we did not want the awards to join the ranks of “sponsored awards.” We wanted to be independent of any pressures. And so we assembled a jury – not of service taker or service provider as there may be bias in the jury. The Jury was constituted from a panel of international supply chain faculty – academicians far removed from the country, but who are trained to identify a winner by looking at submissions. We believe that has been the deciding factor. An award where the LSP does not have to sponsor to win. An award that recognizes their achievement.

had initially planned for 30 awards, cutting across the activities of an LSP. But a few categories did not attract any nominations - activities like Reverse Logistics, CSR, Risk Management and Project Cargo. We hope we will see participation in these activities in the future. Before the evening of celebrations began, SCMPro organized a summit – where captains from the sector spoke and discussed a variety of subjects – from shaping the LSP of the Future to maximizing ROI in Warehouses. We have attempted to capture some of the excitement in the next few pages – and also bring you insights into the discussions. We hope they will inspire more of you to nominate yourselves for the award next year. We congratulate the winners. And those who did not. You competed fairly. The better firm won. We hope the SCMPro LSP Awards will be a defining moment in the LSP sector – recognizing the real achievements of the sector.

And it was a night to remember. We

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LSP Awards

SCMPro Award

Best Use of Technology Aramex India Pvt. Ltd

The requirements of the modern business mandates that the firm have complete visibility into the supply chain. This can be achieved only with the help of technology. On another plane, technology, not necessarily information technology, can improve efficiency. Supply Chain firms are often accused of not investing adequately in technology. This award seeks to celebrate the firm which has made the maximum impact with the help of technology. The award was not based on the quantum of investment, but on the impact the technology had on the LSP’s operations. Aramex vision for their IT is having technology to communicate with each other within an existing IT infrastructure with less human/IT user’s intervention which will increase speed, better collaboration, manpower sizing and reduce overall costs and continuous technology enchantment/ upgrade to support new business models, to meet the customer expectation, to increase productivity, to have high availability system.

Winner SCMPro Award

Best Material Handling Service Provider A successful LSP service also means providing end to end material handling services. This award seeks to recognize those LSPs who have elevated material handling to a fine science. With a right blend of men and machines, technology and training, TVS Logistics Ltd. has made a difference to its customer’s material handling requirements.

TVS Logistics Services Ltd.

TVS Logistics value added services include Streamlining the activities of materials handling process; Suggesting right product to right segment and the right way of handling; Identifying & eliminating the bottlenecks in materials handling operations, thus realizing cost savings for the benefit of current/ prospective customers.

Winner 10

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SCMPro Award

Best Warehouse for Agri Commodity Sohanlal Commodity Management Pvt. Ltd

Winner

This award is intended to honor the best Agri Commodity warehouse. The warehouse with the best architectural design, pleasant working environment, commercial success, quality of construction, access to public transportation, as well as attention to environmental sustainability and ensuring customer delight with a series of offering that go beyond storage and retrieval, delivering world class performance in warehouse operations, demonstrate continuous improvement and productivity utilizing the most appropriate equipment and software and a fully engaged workforce, was the winner. There were two firms who were very close as per the jury – with Sohanlal Commodity Management Pvt. Ltd inching ahead of National Bulk Handling Corporation Pvt. Ltd. The jury recommended that both the firms be honored. By adopting scientific storage techniques, SLCM has reduced storage losses from 10 percent of total storage to 0.5 percent of the value of goods stored. To ensure quality, it undertakes 28 different audit processes every month. SLCM offers complete solutions in agri commodity management.

National Bulk Handling Corporation Pvt. Ltd With high levels of integrity, process excellence and commitment to quality. NBHC has over the years brought about unprecedented liquidity to agri commodity markets and managed and mitigated risks (Quantity, Quality, Operational, Price) involved in agri commodities storage with unparalleled success. NBHC has created immense value for all customer/client segments it services — Farmers, Corporates, Traders, Processors etc. as also Banks, Commodity Exchange and Government. NBHC has worked in 23 states and has 59 offices across the country and has expertise in over 160 commodities. At the core, NBHC provides impeccable level of storage services guaranteeing quality and quantity to the depositor. NBHC handles an average of 25 Lakh MT at any given point in time across its network Pan India.

Runner Up SCMPr OCTOBER 2015

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LSP Awards

SCMPro Award

Best Consulting Services- Supply Chain Coign Consulting

The busy LSP CEOs are caught up in fighting tactical and operational fires – leaving them with little time to take a step back and look at the bigger picture. As the sector globalizes, customers are demanding world class services – which needs time to develop. Enter the consultant – firms who constantly upgrade themselves with the best practices, advocate the next best and adapt these to suit the unique business ecosystem in India. Coign designed a warehouse that was completely integrated and synchronized with processes, automation systems, the IT system and the WMS resulting in extremely smooth and error free operations. The result - 50% reduction in Expiry, 50% reduction in Stagnant SKUs at every Store, 09% increment in SKU availability across all Stores, 100% availability of products at the store at any given point in time and 100% fill rate!

Winner SCMPro Award

Best Innovative SCM IT Provider of the Year Kale has developed India’s first Cargo community platform-UPLIFT that connects the entire logistics & cargo value chain electronically using EDI based technology and built on robust Microsoft technologies that make the community system affordable even to the smallest business entity in the supply chain. It is the most neutral system as it factors the interests of all stakeholders unlike other similar offerings that are available in other advanced nations.

Kale Logistics Solutions Pvt. Ltd.

UPLIFT endeavours to unify global logistics chain on single window system that aims to streamline information flow and remove the paper from complex supply chain. The system can be utilised by businesses using three modes- a web-log in, a third party Interface & a Bureau service. This has resulted in fastest technology adoption in air cargo chain with 3.5+ million EDI transactions already executed.

Winner 12

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LSP Awards

SCMPro Award

Innovative E-Commerce Service Provider JMS Logistics and Express Pvt Ltd (WOW Express)

E-commerce is shaping the new consumer buying behavior. Today, any manufacturer can reach a customer in any part of the world. But fulfillment is the problem. WOW Express has an innovative solution to the e-commerce segment, serving the e-com supply chain. The award recognized the support provided by WOW Express to the success of the e-com marketplace – be it the B2B or B2C segment. Founded in July 2014 as JMS Logistics and Express Pvt. Ltd. The company operates under the brand name “WOW Express “. The company is a Technology Enabled Logistics Solutions Provider focused on the E-commerce industry in India. WOW Express uses technology and innovative processes at every possible steps to redefine end to end logistics, offering most reliable, time-sensitive (‘Hours sensitive’) yet economical delivery solutions to securitized products of E-commerce and Hyper-Local segment.

Winner SCMPro Award

Best Supply Chain Performance Improvement As we mature as an industry, we need to continually push the boundaries of our performance. SCMPro recognized Tikona Digital Networks Pvt. Ltd who is continually on a mission to improve their performance. They have undertaken 212 total innovative projects under lean model, 42 in FY 2013-14 & till Aug‘15 that resulted in supply chain performance improvement, has resulted in substantial cost savings or efficiency gains. Tikona developed innovative ways to reduce inventory in days, speed up the delivery to customers, reduced warehousing and transportation cost, multiple cross functional collaboration projects, unique model of Semi outsourced model of warehousing partnership. New benchmark of achieving 23 inventory turns from 16 last FY, ZERO stock discrepancy with Oracle Vs Physical at WH positive cash to cash cycle, <20 min truck TAT, Six Sigma Level on Material accounting, Zero Attrition of the team, etc.; Created high level of Supply Chain Brand within the organization with outstanding contribution towards top line & bottom line; Achieved Operation Excellence with six sigma level performance in procurement & End to End Material Handling Process.

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Tikona Digital Networks Pvt. Ltd

Winner

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SCMPro Award

Best Training Institute in Logistics (Skill Development)

JBS Academy Pvt. Ltd

Winner

If supply chains is the life blood of trade, educators are the ones who provide the trained professionals to the industry. If supply chain profession has to advance, we need a set of courses, specifically designed to meet the education needs of the industry. For the first time in India, a trade publication seeks to recognize the efforts of the education providers. JBS Academy, with its innovative curriculum, pedagogy and course walked away with the honors. And JBS is promoted by A leading CFA from Ahmedabad! JBS Academy provides world class and cutting edge technology to our apprentice. Learning is seamless and enchanting experience. JBS Academy, has the best campus specially designed for Logistics and Forwarding Education; Training, Management and Research. On site, it provides trainees with practical and industrial coaching to face tough task of providing on time and swift Logistics or related services. Technologically they use modern modes including latest software, simulators to provide life like situation while providing practical guidance and support. This in itself is truly innovative and ground breaking approach professional training.

SCMPro Award

Best Cold Chain Warehouse The SCMPro Best Cold Chain Warehousing award recognizes cold chain players who follow best practices of design, space utilization, energy efficiency, world class performance in cold chain operations, demonstrate continuous improvement and productivity utilizing the most appropriate equipment and software and a fully engaged workforce. CRYSTAL TITAN brings an easy to use cold chain solution for the Indian market. It brings in Portable Cold Storage solutions for the temperature ranges between (-) 40 Deg To (+) 30 Deg Centigrade. The Cold Stores are very User friendly with easily Openable doors and many Safety features of Internal Lights , Alarm for Mantrap , Internal Release, Strip Curtains ,Ramps and other features. The doors are built in a very easy to use by one hand so they can be used just as our fridge at home. There are Internal lights, which is operated from a switch to the right inside of the door. Beneath the light switch is the personnel alarm with a flashing beacon and siren located externally beside the refrigeration plant. 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. The new technology refrigeration ensures a constant internal temperature through out the container and with minimal power consumption. The power consumption is ideally 2 KW per hour.

Crystal Logistics Cool Chain Ltd.

Winner SCMPr OCTOBER 2015

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LSP Awards

SCMPro Award

Best System for Warehouse Automation Godrej Efacec Automation & Robotics Limited

The SCMPro Best system for warehouse automation pays a tribute to warehouse storage, and provides an opportunity to have business achievements publicly recognized. Storage is an onerous task requiring multi-talented professionals from several links in a supply chain. The award honors firms with the right technology and engineering embedded into corporate culture. It has demonstrated smart application of science and technology, and integrated it into the corporate culture, in support of business goals and societal needs. Godrej Efacec Automation & Robotics Ltd. has been the pioneer and leader in Automated Storage & Retrieval Systems in India since 1998 and we have done multiple projects for clients from varied industry segments like Pharma, Chemical, Agro-Chemical, Paints, Automotive, Paper, Textile, FMCG, Airports, Railways and Defence. Its innovative solutions have offered significant benefits to clients like Enhanced Storage Density; High Throughput; Automation Benefits; Safety and Validation.

Winner SCMPro Award

Best Supply Chain Performance Improvement This award is intended to honor the best warehouse development. A firm that has incorporated the best architectural design, pleasant working environment, commercial success, quality of construction, access to public transportation, as well as attention to environmental sustainability and has delighted its customers with a series of offering that go beyond storage and retrieval, delivering world class performance in warehouse operations, demonstrate continuous improvement and productivity utilizing the most appropriate equipment and software and a fully engaged workforce, won this award. Liladhar Pasoo leverages the latest global technological solution blending it with local compliances to efficiently execute projects. Liladhar Pasoo is a complete supply chain management company encompassing all the activities for services under one roof. Liladhar Pasoo boasts of a global presence in about 170 countries worldwide and has successfully executed many prestigious projects and general cargo movements on door-todoor basis. Liladhar Pasoo is an ISO 9000, ISO 14000 and OHSAS 18000 certified company we have specific SOP with regards to Security Measures.

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LP (India) Logistics Pvt. Ltd.

Winner

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SCMPro Award

Best Innovative Supply Chain Management BLG Parekh Logistics Ltd.

The award highlights and recognizes the innovators in supply chain industry when it comes to innovative programs, projects, and collaboration. Firms that have demonstrated excellence, innovation, and return on investment in addressing a significant supply chain challenge, were in the running for the award. Possible areas in which innovation excellence could be achieved include: • Coordinating and collaborating across the supply chain entities, internal and external • Developing ways to strengthen relationships • Orchestrating supply and demand equilibrium • Managing supply chain cycles • Innovative approaches, processes, or technologies that improve supply chain performance The Award recognizes the latest supply chain innovative products and services. The award is given in two categories: Best New Innovation and Best Innovation of an Existing Product or service.

Winner

BLG Parekh Logistics Ltd. is a joint venture of the BLG Group of Germany and Parekh Group of India. This venture provides integrated automotive solutions for end-to-end supply chain management and specializes in in-plant logistics, inboundoutbound logistics and yard management. BLG Parekh is presently providing logistics services to Tata Fiat, Ashok Leyland and VW for in-plant logistics and car yard management for BMW. Value Stream Mapping resulted in 50 percent reduction in manpower, 89 percent reduction in inventory 84 percent reduction in storage space.

Agarwal Packers and Movers (DRS GROUP) Agarwal Packers and Movers (DRS GROUP), pioneers in packing and shifting of household goods for over three decades, carry out more than 40,000 relocations every year-- packing and shifting of household goods of Corporate and Government employees and other customers. The Company has introduced innovative concepts for enhancing profitability and at the same time offering a superior service experience to the customers by introducing plastic crates instead of card board boxes, wooden crate packing for electronic items etc and avoid breakages; containerized home shifting etc. Pursuing the company’s policy to offer innovative services to meet the expectations of the customers, the company designed a composite container vehicle to shift the entire household goods, car, plants and pets all in one vehicle—The CHAPP Van. The customer is relieved of tension of going around to different service providers for transportation of the different items, when he chooses to move thru the CHAPP Van.

Runner Up SCMPr OCTOBER 2015

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LSP Awards

SCMPro Award

Emerging Service Provider of the Year Indelox Services Pvt. Ltd.

Winner

The leaders of today were taking baby steps a few years back. The Promise of the future award recognized the bright spark in the logistics and supply chain domain – people with fire in the belly and a dream in their eyes, people who are building a new supply chain road map. The award recognized the innovative idea and path breaking operations, and a commitment to furthering the industry as a whole. Indeox is on the journey of excellence and as said by many excellence practitioner’s, excellence is a journey not a destination, in this journey of excellence it assesses its service levels from the external agencies, is open to identification of gaps and feedback. The intent is to satisfy itself that it is moving and growin From 2009 Indelox’s Leadership team thought of repositioning itself and focusing on overall excellence rather than being satisfied with mere service quality, which helped the organization in learning many business critical aspects through various assessments of CIIExim Bank Business Excellence Award and IMC Ramakrishna Bajaj National Quality Award assessors, who carry greater industry knowledge and experience, this approach fetched Indelox CII-Exim Bank Business Excellence Award – 2013 in Small and Medium Business Category in terms of quality and excellence year on year.

Delex has always strived to provide innovative, customized supply chain solutions to its customers and has implemented number of innovative initiatives which has helped Delex customers to improve in their respective distribution and 3PL services. Introduction of PVC mother boxes for safe and secure movement of critical and high value cargo is one of the important initiatives taken by Delex. This solution has helped a number of its clients to reduce and bring down the number of cases of damages to the packages and stopped the pilferages and loss of the packages in transit.In domestic AIR door to door services we provide 98% service level. In Domestic Surface Parcel Delivery we provide 85-90% service level.

Delex Cargo India Pvt. Ltd

Winner

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SCMPro Award

Best LSP to work with (Based on HR Policies) Aramex India Pvt. Ltd

Success in supply chain depends on the quality of the human resources. Quite often, the HR angle is ignored. To inculcate a better work environment and encourage best practices in HR, SCMPro recognized and rewarded the best LSP to work with. The award was based on the HR policies followed and the working environment created. The award was for the firm that really took care of its real assets. Based on their market they defines their Business linked HR Objectives, position the way they want their Employer Brand to connect with all stakeholders – internal & external to meet the HR Objectives. This further assists them prepare for the Change Management which is a given in the dynamic business (local and global) space they operate in. Based on the above needs the firm aligns the broad as well as YOY, Talent Management strategies to focus and do action planning using our ever evolving platform of Technology while maintaining emphasis on Health, Safety and CSR.

Winner SCMPro Award

Women in Supply Chain SCMPro Women in Supply Chain Award celebrates the achievements of women in the male dominated supply chain domain. Braving multiple odds, any lady who has made it to the top, deserves to be recognized as the supply chain professional. A woman in the domain of supply chain and are a Director level and above supply chain executives at manufacturing, LSP or retail companies or a VP and above in large logistics and supply chain company, or a C-suite leaders in medium-sized logistics and supply chain company or a key leader of logistics or supply chain industry organizations were the candidates for the award. Ms. Shantha Martin is the CEO for Allcargo Logistics Limited (India)’s international subsidiary ECU Line. Ms. Shantha Martin is a science graduate and an MBA in marketing from T A Pai Management Institute, Manipal. She started her career with Reed Elsevier PLC, a British Multinational publishing house, and gathered herself the distinction of working for diverse sectors and later with the French hospitality multinational, Accor Corporate Services, as a Branch Manager before joining Allcargo. Under her leadership the NVOCC division of Allcargo Logistics Limited has won the leading Consolidator of the Year consecutively for the last 3 years and also the Logistics Company of Year 2010. Ms. Shantha Martin herself was adjudged the runner up in the Leading women CEO category of the Women Leaders of India awards organised by I -Global in 2010 & 2011. The All India Business Management Association recognised her contribution to the National Development through her field of work and conferred upon her the “Bhartiya Vikas Ratan” in Feb 2011. Ms. Martin is also the Joint Secretary in the Executive Committee of Women’s International Shipping & Trading Association (WISTA).

Allcargo Logistics Ltd

Winner

Ms. Shantha Martin

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LSP Awards

Drive India Enterprise Solutions Limited

Winner

Logistics management is an important component of companies’ profitability. Contract Logistics firms offer a more efficient way to manage logistics for firms. You have to develop a deep understanding of how different industries work in order to best manage the logistics of a variety of companies. SCMPro seeks to celebrate the achievements of contract logistics firms – for your innovation, dedication to your customer and focus on getting the work done in a cost effective manner. Skills and ability, not size is the criteria. Since its inception in 2004, DIESL has come a long way from being a captive business organization for Tata Tele Services Limited to have become India’s leading integrated contract logistics service provider. In the last three financial years DIESL has seen a massive evolution by adding two new verticals – sourcing and distribution services, and industrial and site logistics services. It also expanded its service portfolio with introduction of new offerings like consignment sales model, document management services and express logistics (in-city distribution). DIESL has ventured to capture newer sectors and has today more than 200 customers across sectors like telecom, lubes, consumer durables, FMCG, Hi-tech, engineering, retail, chemicals, pa-per, education and automobiles. DIESL launched Connect Xpress, the hub and spoke model to its in-city distribution service in April 2015. An innovation brought in for significant improvement in On Time Delivery percentage and for improving last mile connectivity, Connect Xpress is currently operative in nine cities across India. In May 2015, with the launch of DOCeNABLE, DIESL added a new service offering in its kitty – Document Management Services.

Spear Logistics Pvt. Ltd Spear is technology driven company and invested heavily in latest IT systems and technology. WMS, TMS and Dashboard are used for streamlining operational processes. SQL forms the backbone Database for WMS. CRM helps sales backbone and POMs, Company roll and Oracle Financials help corporate backdrop. Spear has been using most of the technology for over 10 years. Spear aims to be amongst top 5 contract logistics companies in India and has achieved this goal in short span. It has striven to remain at the apex of complexity in solution offering to retain technology leadership and still maintain volume growth. Spear has deliberately kept away from low value additions. It has achieved rapid growth in last 4 years from a mere 250 million INR in 2009 to a turnover of 1003 million INR in 2015; and expects to close 2016 with revenue of about 1,140 million INR.

Runner Up 20

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SCMPro Award

Best Contract Logistics TVS Logistics Services Ltd

TVS Logistics Services Limited is an ISO 9001:2008 Certified Organization, a part of the TVS Group of companies with a turnover in excess of US $6 billion, offering complete logistics solutions and specialists in Warehousing, Distribution, Transportation, In-plant logistics support to various companies across a diverse cross section of industries globally. TVS Logistics follows two basic themes for growth i.e Encirclement and Business Development. In Encirclement we grow with existing customers by offering new capabilities and growing in new territories with existing customers. Encirclement also includes providing value added services to existing customers.TVS Logistics Services Limited has set itself a goal of becoming a “Billion Dollar Company” by FY’17. Individual regions and individual business units have a corresponding goal which has been derived from the goal set for the organisation. For the achievement of the goal there are set of objectives that it has set.

Runner Up Schenker India Pvt. Ltd Schenker has been delivering 30- 35 % Year on Year on Foot Print and Top Line growth over the past three years. They have implemented domestic distribution system to provide track and trace and selected category of our dedicated vehicles are fitted GPS to provide on line visibility. They are working on packing automation & Shrink wrapping automation for selected commodities for our customers, acheving 95 percent on time delivery.Among its innovations is Supply Chain Modelling to avoid double handling for some customers.

Special Mention

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LSP Awards

SCMPro Award

Young Supply Chain Professional Tikona Digital Networks Pvt. Ltd

Winner

Mr. Amit Pandey

The SCMPro Young Supply Chain Professionals Award recognizes up-and-coming leaders in the supply chain management field for their early and substantive contributions to the industry. You could be a young professional, or from a second or third generation entrepreneur family, managing the business. Mr. Amit Pandey is Chemical Engineering B-TECH from HBTI, Kanpur and has 18+ Years of Experience in Procurement & Supply Chain Management. He has successfully implemented a unique model of LEAN Procurement & LEAN Supply Chain followed by LEAN HR & achieved unprecedented results, few highlights: Outstanding Contribution towards Tikona Achieving EBITDA break even in just 4.5 years fastest in Indian Telecom Industry. 212 Innovative projects under his leadership has resulted into unprecedented results on Cost Down and across SCM KPI’s along with handling large portfolio including Head HR, Head Admin and Project Head of 4G BWA LTE launch.New benchmark of achieving 23 inventory turns, ZERO stock discrepancy with Oracle Vs Physical at WH positive cash to cash cycle, <20 min truck TAT, Six Sigma Level on Material accounting, Zero Attrition of the team, etc. Achieved Operation Excellence with six sigma level performance in procurement and End to End Material Handling Process.

SCMPro Award

Best Supply Chain Practices -Users Now one award for the customer – the best customer. SCMPro recognizes that the LSP customer is an important part of the ecosystem. This award seeks to honor the customer who has used the best practices in their supply chain – someone who considers the LSP as an equal partner and is willing to share their expertise with the service provider.

Relaxo Footwears Ltd.

Relaxo Footwears is a Large Scale Footwear Company of India having the brands such as Sparx, Flite, Boston, Elena, School Mate, Canvas, Cazual, Hawai. The company is having production capacity of 1 Million pairs every day from their 10 manufacturing plants located in India. The company has generated extremely strong brand portfolio with an opportunity to become a dominant player at Pan-India level through a strong supply chain network. Here we are talking about total warehousing and transportation cost (in warehousing total cost including pre and post dispatch activities, total manpower, rent, loading unloading, security, safety etc. and in case of transportation – total transportation from plant to warehouse, warehouse to transporters hub and from transporter hub to customers premises). Relaxo managed to reduce the cost from 5.2% to 4.5% this year.

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Winner

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Outsourcing

Shaping the LSP of the Future

The SCMPro LSP Summit started with a key note address by Prem K Verma, CEO of TML Distribution Company Ltd. a 100 percent subsidiary of Tata Motors Ltd. In a riveting address he spoke on the challenges and the excitement of being an LSP in these demanding times. SCMPro brings you an edited excerpt.

Prem K Verma CEO, TML Distribution Company Ltd.

India is surely poised for growth and the time is ripe for logistics service providers – both in the country and from overseas to start investing in the India growth story. But I keep repeating this – we should not treat the economy as a T20 match. India will grow – but it will not happen overnight. The first observation I have is that over the next few years, the average age of the members of a gathering like this should be around 35 years – we need to encourage youth to take up a career in supply chain. Else, we have tough times ahead. We need young blood, we need new thinking, and above all, we need people who have chosen a career in supply chain right at the start of their career.

A second observation is about collaboration – as an industry, we have been talking about it, but we have made very little progress. We are aware of the benefits of collaboration, but are reluctant to collaborate! The third observation I have is on outsourcing. 3PL and 4PL services are outsourcing parts of your supply chain to people more competent to handle it. Personally, I am a huge proponent of outsourcing. A number of questions trouble us when we talk of outsourcing – will the LSP add value, or will they just improve the transportation efficiency or TATs? Another factor that crops up is – should we go in for a bigger player? It is believed that bigger players will have higher overheads and hence will be expensive. Economies of scale are ignored. A third challenge is the confidentiality paradox – is it ok for the service taker to share complete details with the LSP? I believe that unless users trust the LSP with complete data, outsourcing will not work. The other nagging worries are – will the LSP provide complete solutions and will

outsourcing compromise quality of service. There is a belief among user that as long as they are in control, quality can be implemented. I am, not for a moment, suggesting that outsourcing is without its challenges. The critical aspect is, for outsourcing to work, you have to treat the LSP as a business partner. If not, you are not engaging a 3PL service provider, but hiring some warm bodies. We need to respect the service provider. Users need to give up the notion that they know logistics services better than the 3PL player. Another critical element is transparency – both the service taker and the provider should be honest and transparent about their product and services. Failing which, LSPs will continue to remain stuck at the lower levels of service. To create a vibrant LSP sector, both the service taker and the provider need to recognize a true business partner in the other.

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LSP Summit

Value Added Services Cutting through the Clutter

As 3PL services become pervasive, LSPs will have to find new ways to keep customers happy and hooked on. The time is ripe for LSPs to focus on value added services – both to keep the customers engaged and the bottom line healthy. Mr. Milind Shahane Director DIESL spoke on the salience of VAS. We bring you the highlights.

Milind Shahane Director DIESL

Two forces are shaping the logistics services – increasing complexity and a host of me too services, creating a clutter in the service takers mind. As service providers, we need to be competitive in our services and gain the customers mindshare, to grow profitably. We need to retain our customers, we need to grow and find new customers. At the same time, we have to balance the pressure from the customers in terms of efficiency and cost and pressure from competition which is driving margins down. This is a day in the logistics service provider’s life.

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The question is – how do we look at it differently? Is there a differentiator? Can we somehow cut the clutter around the services? I believe value added services is the way to cut the clutter. VAS is not new. VAS exists everywhere. I remember, there was a time when AMC’s were offered as a VAS to customers as a differentiator. Today, AMC has become a basic service. This is a natural progression – forcing you to look at the next VAS. And yet more fortunately, we can still come up with VAS offerings. And fortunately for us, customers are on the lookout for end-to-end services, or bringing in better efficiencies to their supply chain. Remember, most of the times, when we offer a VAS, we are not throwing it in for free. We are doing it to establish our differentiators. The much vaunted 4PL services is a VAS extension of 3PL services, where

we provide a few more services beside the core 3PL offerings. Each activity of a 3PL – from warehousing, in-plant logistics, transportation, last mile delivery – all of them offer ample scope for VAS. From the customer perspective, availing a VAS from their 3PL is far easier than getting it from a different entity. For an existing service provider, it is an incremental cost. The advantages to a customer could be lower costs, rotating capital, better integration across services, reducing cycle time, minimizing touch points, reducing risk of damages. These are tailor made services sitting on top of core services. As LSPs offer more VAS, they evolve into strategic partners, where the completeness of the service offering and the value addition will set up a non-fund barrier to migration to a different service provider.

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Master Class 22nd January 2016

Masterclass Objectives:

Master Class Leader and Key Note Speaker

Dr. Mahender Singh

Dr. Mahender Singh is Executive Director - MIT Global SCALE Network in Asia at Massachusetts Institute of Technology (MIT), He has over two decades of professional career spanning roles, functions and industries, working globally alongside amazing people to create value and learn. He is constantly looking for new ideas to solve problems through experimentation, but remain data driven in decision-making.

dentif and o ercome the to internal challenges im eding the de elo ment of an e ecti e su l chain ris management strateg nderstand the categories of global su l chain management ris challenges ith a s to identif and address those ris s tili e a e ste frame or to address the management and mitigation of su l chain ris s

“Creating a Resilient Enterprise - Managing Risks in Supply Chain“ The number one source of risks in a firm is the supply chain. Disruptions and delays are routine. If your organization depends on a supply chain for survival and growth, you need to attend this program. Anyone directly or indirectly in involved in the supply chain within an organization is continually at risk for some type of disaster or interruption – that causes at a minimum of lost time and money and at worst, closure of business. Loss from inadequate Risk management is ill defined and not considered directly a part of SCM activities. This is sort of strange because many of the risks and disruptions happen in the business due to SCM decisions. Supply Chain risk ca be delineated along Operational, Tactical and Strategic boundaries. The Masterclass shows you how to look at supply chain from risk perspective. Dr. Singh has done a few studies to understand the risk in large US companies using Discrete Simulation technique which was quite revealing. The Masterclass will provide some of the ways you can start your journey in this

Our Partners

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Media Partner

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Building Supply Chain Alignment in a New Network World

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Who should attend? ndia s most im ortant gathering of su l chain leaders including s and senior su l chain rofessionals from sourcing istribution Trans ortation lanning emand Management Su lier Relations ualit and Regulations

Supply Chain Strategy Summit 2016

Summit 2016 23rd January 2016

The orld is an increasingl net or ed lace f su l chains ere com le in the old orld the ne emerging global ecos stem has e onentiall increased the com le it of our su l chains Toda a disturbance in one countr can quic l send ri les through our su l chains The 2nd S M Su l hain Strateg Summit 20 e lores this emerging aradigm A carefull selected s ea er collegiate ill lead the discussions on na igating the changed ecos stem

Summit Agenda o e ote Address uilding Su l hain Alignment in a igital orld o anel hallenge of lobali ation harting our ro th ath o omen in Su l hain rea ing the ortress o eo olitical namics and hallenges to ogistics o am aign Su l hain o esign lements of a arehouse in a et or ed orld o anel lanning for the nforeseen o ing ith isru tions o anel Ma e in ndia iecing the igsa o Aligning our Su l hain to o om of ramid Realities

Fee Structure

ee or Master lass Rs 20 000 Ta Summit ee Rs 000 Ta ee for Master class Summit Rs 0 000 Ta

For Further Information, Please visit www.iscmindia.net Contact Details: Riddhi Solanki: riddhi.solanki@scmp.in Bhavi Shah: bhavi.shah@scmp.in D-204, Riddhi Siddhi Complex, Off. S V Road, Prem Nagar, Goregaon (W), Mumbai.-400 062. Ph.: 022 60020157/59, info@iscmindia.net SCMPr OCTOBER 2015

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Human Resources

Merger & Acquisitions:

Stacking the deck to ensure success

The age of consolidation has dawned – firms try to merge with or takeover others in a bid to gain quick market share, size or product range. The due diligence extends to finance, operations, products, marketing, customer base and even sourcing base. But rarely extends to the HR function. Firms seem to forget that it is the people who will drive business – and therefore attention must be focused on HR to ensure success in M&A deals. Darryl Judd, COO of Logistics Executive writes on the human angle in M&A.

Darryl Judd COO of Logistics Executive

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It all starts on day one: Emphasising the importance of planning and execution in executing an M&A integration.

saving money by removing duplicate departments. Some companies even use acquisitions as an alternative to the normal hiring process1.

When most people think of mergers and acquisitions (M&A), they think of companies selling and buying each other in order to facilitate an enterprise growing rapidly in its sector. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas an acquisition occurs when one company takes over another and completely establishes itself as the new owner.

A strong human resources strategy with consideration to the key pinnacles of leadership, organizational design, talent retention strategies, communication and cultural alignment need to be formulated

It may be more accurate, on a deeper level, to describe M&A as a human resources exercise through company restructuring in order to create a better growth or value effect. Companies in the same industry often find that combining creates synergies and increases market share. Examples of ways in which companies use M&A to achieve their Human Resources targets include the economies of scale achieved by

Despite the goal of performance improvement, results from mergers and acquisitions (M&A) are often disappointing compared with results

1 “Start-Ups Get Snapped Up for Their Talent”. Wall Street Journal. Retrieved 9 January 2014

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predicted or expected. The reason for this is often that the Human factor has not taken a large enough emphasis. This is reinforced by a recent Mckinsey report that found that executive management strategies fail when: ● They don’t plan and execute a thought for end and integration process ● They don’t put the right leadership in placeThey don’t hone the skills needed to realise fully even the most obvious value from the merger ● Success requires deeper stronger integration skills and intense management commitment. This balanced with an integration approach that is flexible enough to allow leadership to pursue sources of transformational and combinational value ● Rigorous analysis and integration management Based on this analysis it is fair to say that investment in the People integration side of an M&A exercise is critical. Success depends on aligning the people, organizational and cultural assets of the new entity. Once a deal is sealed, nothing is more important to a successful outcome than effectively managing these “soft” issues. Finessing issues such as workforce management and cultural integration will avoid uncertainty, loss of productivity, talent loss and other factors that could jeopardise success. The first thing to do to achieve this is to develop a comprehensive research framework that bridges different perspectives and promotes an understanding of factors underlying M&A performance in business research and scholarship2. Management must make a conscious effort to bring new joiners along and the culture they create is as important as the financial elements

in making the deal successful There is a greater need therefore to position Human Resources as a strategic due diligence partner The involvement of HR (Human Resources) as a strategic and due diligence partner can be of enormous advantage in facilitating this process but only if they possess specific understanding and tools that are unique to the M&A environment. Members of the HR team should possess the following behaviours and capabilities– collaborative team player; proactive; analytical and detail oriented; ability to work in an ambiguous environment; ability to work under pressure of time constraints; conflicting priorities and agendas; broad knowledge of HR; strong communication skills. They need to have prior experience that will prepare them for an M&A activity. Examples of how this can be evidenced in their employment experience at the selection stage is as follows: Leadership of a functional area that is impacted by M&A activity Project management for an enterprise-wide strategic initiatives Ownership of profit and loss or budget Membership of an international and cross functional project team Alternatively, being an employee of an acquired or spun-off organisation. A strategic HR approach can take the lead in activities that will ensure a smooth integration. By channelling the skills of enthusiastic employees, merging the intellectual capital of both organisations and streamlining the way the new business operates so it can rapidly overcome hurdles and maximise synergies. Examples of a top down of approach that a HR leadership can activate in times of a merger include: Mobilising Integration planning around value and events.

Identifying and prioritising Day One business critical events that relate to value. Review the transaction strategy and identify operational priorities. Conduct “truth testing” vertical workshops that focus on maximising value events. Analyse people, processes and technology critical to each value event. Another aspect that can create problems in a merger involves branding. The factors influencing brand decisions in a merger or acquisition transaction can range from ego, political to tactical. Employee Branding for the new entity will need to be carefully considered as an integral part of the talent retention and acquisition process. In conclusion, success or failure all starts at the beginning, on day one. To survive the challenges of postmerger integration it is imperative that due thought and considerations are given to the critical junctions of the new business that are at the heart of its activity: its people. A strong human resources strategy with consideration to the key pinnacles of leadership, organisational design, talent retention strategies, communication and cultural alignment need to be formulated. This process needs to start right from the beginning of the M&A process and well formulated by its legal conclusion, so that it is ready for rolled out cohesively from day one. As straightforward and logical as these considerations may sound, in the frenzy of activity that usually follows a merger announcement, even simple things can be difficult to remember and execute. Clearly however, history has shown us that the companies that focus on these issues are the ones that have the most success. A timing reminder in this period of industry consolidation!.

2 Thomas Straub (2007) “Reasons for frequent failure in Mergers and Acquisitions” SCMPr OCTOBER 2015

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Feature

Aligning

Supply Chain Strategy to Deliver Superior Performance

Intense competition in a slow economy is leading to higher service and quality requirements. To manage these demands, supply chain design for service considerations has gained importance over cost efficiencies. These changing dynamics are making firms adopt newer technologies and systems such as advanced planning, automation, big data etc. across the supply chain. While the newer technologies help in fulfilling the supply chain gaps, the key challenge for business leaders is to first redefine the value proposition and then transform their supply chain to deliver superior performance says Manish Panchal, Anand Maitri and S.R.K.Dattu of TATA Strategic Management Group.

Manish Panchal TATA Strategic Management Group

Introduction The rapid penetration of digital technologies has led to a new breed of companies that are creating businesses around the supply chain and are challenging the very existence of some traditional business models. This digital revolution is shrinking boundaries between suppliers, service providers and customers. This warrants companies across industries to re-look at their business models and transform their supply chain practices to

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Anand Maitri TATA Strategic Management Group

survive and thrive amid growing complexities. Complexity is inherent in any supply chain and is mainly visible in two different forms; demand side which occurs from the operational behavior

S.R.K.Dattu TATA Strategic Management Group

of market players and on the supply side, which is a result of connectivity of its subsystems. Figure 1: Increasing complexities in supply chains

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Demand has multiple dimensions such as customization, market expansion and specific regional needs. Sudden demand volatility is more visible today and there is a need to address it. On the other hand factors affecting the supply chain behavior on the supply side are increase in SKUs and the need for faster replenishment. The ever increasing product width coupled with reduction in life cycle is making the task of planning and scheduling

or any investment in the supply chain.

increasingly difficult. Supply chains are facing a growing need to cater to higher service levels, freshness and quality requirements. This can only be realized through intense collaboration in end to end supply chain design and adopting new technologies. While technology is becoming a key component of modern day supply chain, its adoption should be driven by the strategy of the organization and its value proposition. Companies with a service based value proposition will have a different level of technology requirement compared to companies with a focus on cost. Careful consideration of the industry and competitive position are critical factors during strategy formulation

To understand the tipping point for such investments, we analyzed the complexity of different industries and mapped it against SCM cost (Figure 2). It reveals that the supply chain requirements to support the costbased value proposition of industries like Automobile, Cement, Fertilizer and Metals etc. are very different from the supply chain requirements of service-based propositions of sectors like E-commerce, Retail, FMCG, Pharma and Auto Components etc. Companies in the top-right quadrant are embracing new technology and innovation; for example, many retail & e-commerce players have adopted RFID & big data analytics. In fact, healthcare players like Apollo Hospitals & Fortis

Adoption – new age necessity? The key question with regards to adoption of new supply chain strategies and technologies is the identification of the tipping point. This varies for different industries and firms but is often triggered by very high demand volatility, inventory obsolescence/stock-out scenarios, complexity of operations.

Healthcare have adopted RFID at a few centers to speed up check-ups and improve patient flow. There are multiple solutions that are available around areas such as network optimization, inventory deployment and control, logistics route planning, scheduling etc. and companies have to choose a suitable offering based on the capability of their team and the size of their business. Figure 2: Cost vs. Complexity in supply chains

Innovations suitable in the Indian context Advanced Planning and Optimization help companies achieve a collaborative process of information sharing, joint demand forecasting and coordinated logistics planning. This helps in reducing the bullwhip effect commonly prevalent in a multi-layered supply chain. FMCG industry has been at the forefront in managing supply chain complexities. To quote one example, a major FMCG MNC company has implemented Advanced Planning Optimizers to manage its complex product portfolio and operations. It also uses advanced systems like Terra for Dynamic Inventory Classification and setting norms for each SKUs. SCMPr OCTOBER 2015

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Feature Today in India, modern warehouses which have facilities such as Warehouse Management systems comprise 9-10% of industrial warehouse space and are growing at 10% year on year. Further to this, advanced storage systems such as Automated Storage Retrieval System (AS/RS) and Warehouse Automation are being set up in the country. There are multiple examples of such systems being deployed across industries like Beverages, FMCG, E-Commerce and Auto Components

of consumer demand and volatility, offering insights into distribution voids and last mile inefficiencies. Access to POS data is also used to understand the interrelationship between deployed operating plans and sales volume and out-of stock conditions. As real-time information is made available, sourcing and planning processes can be significantly improved to reduce stock-outs and increase inventory turns.

Supply chains are facing a growing need to cater to higher service levels, freshness and quality requirements

etc. Due to automated processes, AS/RS allows optimized storage space due to high-density storage, narrower aisles, etc. apart from other benefits like reduced manpower costs, higher reliability and increased safety.

Advanced Planning and Optimization help companies achieve a collaborative process of information sharing, joint demand forecasting and coordinated logistics planning

industry practices and the firm’s capability gaps in SCM, companies should pursue supply chain reconfiguration to be future ready (Fig 3).

Other technologies like RFID and Track and Trace coupled with Internet of Things (IOT) are going to significantly alter how the supply chain operates. These solutions will allow enhanced competitiveness by connecting people, processes, data, and things via devices and sensors. For example, RFID ensures that goods are available in the right place with zero errors making the supply chain efficient and reliable. Companies in E-commerce, FMCG and Pharma are increasingly challenged by shortened planning cycles and tighter lead times. To improve the forecast accuracy they are turning to Point of Sale (POS) data and big data analytics. These tools are offering excellent visibility

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The Way Forward A company would need to take a structured approach to address these challenges. Many companies have already recognized the importance of supply chain redesign and have initiated steps to address their problem areas in right earnest. After having helped multiple clients across sectors, we suggest a three step approach for reconfiguring an endto-end supply chain. In the first step, firm strategy should be translated

into SCM objectives. In the second step, SCM gap analysis should be done to understand the firm’s present strengths, weaknesses and capability gaps. Having understood

Figure 3: Roadmap for supply chain reconfiguration

As shown, the supply chain requirements to support a pricebased value proposition are very different from those that are service-based. Hence, it is absolutely necessary for a firm to understand customer needs, map the competitive landscape and define clearly the basis on which it will compete: cost, service, product innovation etc. This can then be translated into service parameters and objectives for the supply chain leading to creating the required capabilities. Such a reconfigured supply chain, executed competently, can deliver an immediate performance improvement and, over the long term, a sustainable competitive advantage to the firm.

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Take a Step Back to Take a Leap Forward On the state of the industry If we look at the last three years, the warehouse infrastructure is growing – the capacity addition has jumped from around 2 to 3 million sq. ft. per annum to around 6 million sq. ft. per annum. Two encouraging trends are visible in the warehouse space – first firms are shunning the erstwhile low tech godowns. Second – developers are now interested in building better quality warehouses. Warehouses are being seen as a serious proposition. It is coming out of the closet to a key aspect of business. This is partly due to the e-commerce players for whom the warehouse is the factory. The modernization of warehouses in India is happening in phases. The first phase is modernization of the box – or the building. We are constructing better quality of building, with care taken to provide a more employee friendly ambience. A departure from the older generation warehouses, where the ambient temperature was very high, sapping worker efficiency. There is a keen focus on safety and fire protection systems. And of course, IT infrastructure is now embedded in every aspect of the warehouse. When you look at a warehouse, two aspects are important – one is a place to store, and the other, a place to move goods inside the warehouse – from the receiving dock to storage area and storage area to shipping dock. Now you need material handling equipment to move goods

The overall perimeter is now looking much nicer, nearing what you see in the western world. and storage racks to store. The earliest storage medium was slotted angles – a rudimentary way, without any science behind it. In the last three to five years there is an acceptance of a structured storage system which is

S A Mohan CEO Maini Materials Movement Pvt. Ltd.

Industry Interface is a column where SCMPro talks to captains of the industry on a wide variety of topics – but in some way linked to supply chains. As warehouses integrate into the front line business processes of firms, it calls for a re-evaluation. A re-evaluation of technology, processes and the drivers of warehousing business. In this edition of Industry Interface, the Group Editor of SCMPro, Girish V S speaks to S A Mohan, CEO of Maini Materials Movement Pvt. Ltd on technology in materials movement. We bring you excerpts from the interaction. OCTOBER 2015 2015 SCM SCMPrPr OCTOBER

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Industry Interface

more scientific – which is more load based, more commodity based. Storage, dwell time and retrieval are considered important now. As a result of which, organized players are able to come in and offer their services and solutions. This is the first level transformation. Let us consider this as our baseline and look at the next wave underway. The next phase is utilization of the space – how can the entire cube be used. Earlier warehouses would be of eight meters height. This year alone, most warehouses coming up have a height of 15 meters in the center and 13 meters on the eaves. There is a significant jump in the space available. The current thinking is, if by investing 20 percent more today to raise the height by 4 to 5 meters, do it and reap the benefits throughout the lifetime. Now the storage height has reached 11 meters. As the warehouses become bigger, it calls for a completely different kind of material handling solutions. We need equipment which can store and retrieve products from that height. You now need to bump up the technology. The cube has become taller and the specialized equipment to use the space is available – and users are now thinking of using the space to the maximum. We are now beginning to solve the problem of utilization. Because better the utilization, lower the cost. We are hearing people say that even if the capital cost has quadrupled, the throughput – on just the density of usage - has increased, that the payback now works out better. People are now

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making the decision to go up to 11 meters and invest in a 25 lakh equipment versus a six meter height and a 4 lakh equipment. We have jumped threefold in terms of storage capacity – which is good for the sector. Technology has moved for a nice to have to a necessity, from a cost center to an enabler, increasing the return on investment. And as increasing amounts of capital get committed, you will see the next level of upgrade.

In the last three to five years there is an acceptance of a structured storage system which is more scientific – which is more load based, more commodity based The next focus will be on the outside – we are seeing warehouses keep aside more space outside – for the trucks to come in, truck parking bays are being developed. The overall perimeter is now looking much nicer, nearing what you see in the western world. We are nowhere near the levels of automation in the west – we are seeing better storage and material handling systems that interact with each other. We are just at the beginning of the second phase. What will fuel this further is obviously the GST. All of us have been waiting for it for a long time. GST will change the warehousing

landscape – you will not need 30 warehouses across the country, but need only three. These three will be so large and geographically well positioned that you will be able to serve your customers, at a lesser cost. That will take us to base level plus one. It does not end there. You now have layers of technology. Those layers of technology that come above that are all driven by the scalability of business – the scalability you wish to see over the next five years, and how much of that box you want to utilize. Because, even within the box you can keep enhancing your speed and density. For example, if your dwell times reduce to half, then you will need a different type of system. At Maini we are looking at standard storage systems with some elements of automation. We are looking at taking a small area – say 5 by 4 meters – 20 square meters – and you can store 60 tons, in a fully automated way, where you can pick, pack and ship, with full password control in a sealed box by one person. Imagine, if you have 100000 square feet, the amount you can store. And what that warehouse can look. With such structures 20 people can deal with 1200 tons of products. This is the third phase, when you can actually look at making processes within the box efficient, and further reduce costs. A time will come when labor arbitrage will not be the deciding factor – yes we will need people, but labor will not be an arbitrage going forward. There are different set of drivers we need to look at for automation. As the size of the goods shrink and

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the units that are being shipped to a customer is also becoming smaller – say I am willing to ship a pencil to you – and when we are willing to deal with such small size of packages, we need to make sure that there is no pilferage. The driver for automation in this case is different. You may not have a direct relationship between the capital cost and the cost of goods stored in it. You are more concerned with the overall levels of pilferage, returns and image in front of the customer – the intangible losses that you could incur, and will have to spend a lot to recover.

We are now seeing goods-to-man – where the product is brought to the man, using some bit of technology As we progress, we will see automation in the pick process.

Traditionally we have had the manto-goods process – the man goes to the product and picks it. We are now seeing goods-to-man – where the product is brought to the man, using some bit of technology. When goods come to man, someone has to call for it in some automated manner. Which means there need to be built in authorizations. For example, if the product I have to pick is a pressure cooker, and I try to pick a phone – the system will not allow it as I am not authorized to pick that product. This can reduce frauds in picking to a large extent. The box technology we spoke about earlier is one such example. As you issue a pick list on the WMS, it in turn interfaces with the machine software. When the guy comes in and keys in his password, the machine will bring the product indicated in the pick list, not anything else. And as he is picking it up, a barcode reader will read it, and will post it. And if you pick a wrong product, alerts can go off. These are some

of the largely fail proof systems available in the market today. Another driver of technology in warehousing is the business model itself. As more and more firms run their front office on technology platforms, there is a pressure to run the back office too on technology platforms. Because the back office is where the cash is sitting. If firms do not handle these two together, they will face problems. Most firms are still looking at traditional storage systems. I believe, investors should be looking at the next level of systems. And if firms believe that over the next three years they will need better systems, they need to incorporate it into their approach now. The question is should I invest now, based on my business scalability, or I keep doing and undoing along the way. That is why we need to step back and look at it. We need to take a step back to take that leap forward.

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Enterprise Focus

In this issue of Enterprise Focus, we bring you an interaction with Mr. Vikram Ogale, Director - National Supply Chain & Quality Assurance, McDonald’s India., on their supply chain practices.

Managing the Triad Infrastructure, Information and Sustainability A country like India cannot have one size fit all kind of supply chain. How is your supply chain structured? Our supply chain operation process started six years before the debut of our first restaurant in 1996 in India. We have partnered with local suppliers and farmers in order to set up our unique cold chain infrastructure. Today, our suppliers are an integral part of the McDonald’s system. We work with several suppliers across India to source products. For example, we source our Veg. & Chicken patties from Vista, our potato products are sourced from McCain while our buns are sourced from Mrs. Bectors. Radhakrishna Foodland is our logistic and distribution partner. Mr. Vikram Ogale Director - National Supply Chain & Quality Assurance, McDonald’s India.

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Our suppliers are HACCP certified, ensuring highest level of quality.

They possess a strong McDonald’s commitment and dedication to satisfying customers by supplying them the highest quality products. They work cohesively to ensure that the final product reaches the customer consistently each time and every time. At their level, every care is taken to guard against any interruptions in the cold chain. The supply chain begins at the grass root level, with the suppliers receiving the fresh produce from the farmers. The crop is then processed and dispatched to the distribution centers in special temperature controlled trucks, which ensures that the quality of the items is not compromised. These items are stored in rooms with different temperature zones and are finally dispatched to the McDonald’s restaurants on the basis of their requirements.

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How do you manage a supply change in times of volatility? What factors do you constantly evaluate? Food inflation does create pressure on business due to raw material price increases. However, to some extent we are able to offset the cost pressures because of the long term contracts that we have with our suppliers’ right through the supply chain. Our suppliers from farmers onwards are assured of better prices through the year and do not react to seasonal changes in prices. That said, we also meet long term trends in food prices by cost saving initiatives, selective price increases and better product mix. Given the prospects of long term food inflation, we are also working with our suppliers to enhance capacity with a five-year horizon in order to provide for market cushions in order to soften the price impact on key inputs. India does not have the infrastructure that is available in developed countries – how have you tweaked your supply chain to take care of this? McDonald’s started developing the cold chain infrastructure in the country as it was non-existent 20 years ago. The supply chain operation process started six years before the debut of our first restaurant in 1996 in India. McDonald’s along with its suppliers invested over $200 million to set up its supply and cold chain infrastructure in India to ensure sustainable sourcing for its expanding business. The requirements of a QSR player varies vis-à-vis the normal cold chain which needs the products to be maintained a single temperature. We have different requirements which we have created over the years such as multi-temperature facility and transportation because of the varied temperature zones that we manage.

McDonald’s interacted with agronomists to demonstrate best practices and empowered farmers with know-how, technology and the introduction of new varieties of produce like Shepody potato and lettuce. Initially, lettuce supplies in the summer and monsoon months used to be a huge challenge and lettuce growing was restricted to a few regions of the country like Ooty and Pune, but with their expertise in the area of agriculture, our suppliers Vista, have been able to develop lettuce growers across the country, which ensures a year round supply of excellent quality lettuce. In 1991, McDonald’s was looking for a particular variety of potato for manufacturing its world famous French fries. McDonald’s therefore partnered with McCain Foods Pvt. Ltd. to work with farmers in Gujarat and interact with agronomists and field assistants to demonstrate the best practices – right from better agronomy techniques like irrigation system, sowing seed treatments, planting methods, fertilizer application programs to better storage methods for the produce. You have to ensure superior value proposition to your customers and also a responsive supply chain to your franchisees. McDonald’s is synonymous with offering great value for money to customers while ensuring that the food served is of the highest quality. Customers are drawn by our value proposition of our brand which is enabled by the backward efficacies of our supply chain. This helps us ensure that we offer competitively priced, good food at great value. We have long term associations with our suppliers, since the inception of our brand in India. Thus, it has strengthened the brand offering by leveraging economies that help minimize costs while maximizing value to customers.

How do you use technology in your supply chain? How does it change the supply chain strategy? Over the last few years, technology has contributed in significantly enlarging the shelf life of produce. We use single and multi-temperature controlled trucks, to maintain the integrity of our products during the process of transportation. These trucks are also GPS enabled, which helps in monitoring their location during transit and flagging off any delay to the system. We also use traceability systems to track temperatures & location of any product being supplied in real time and with complete accuracy. We use technology to forecast consumption patterns at our restaurant. This helps in ensuring that our restaurants are adequately stocked in order to meet demands. Our logistic partners have deployed the ERP Software to bring in efficiency, speed and accuracy into the system. Technology has therefore simplified several processes in our supply chain management. What key supply chain metrics do you track? We track the following key metrics: ● For our restaurant service levels we track supply service levels in the form on “On Time In Full” ● We track the inventory levels and safety stocks at our distribution centers ● We track long term capacities and capacity utilization for our key suppliers ● In order to monitor cost and inflation, we track commodity inflation, transportation route optimization, etc. Improving food freshness at your outlet is a complex challenge. What innovations have you brought in to ensure this? In order to ensure freshness and consistency in the taste of food at McDonalds, it is critical that we SCMPr OCTOBER 2015

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Enterprise Focus preserve our products at the right temperature throughout the stages of procurement and transportation to our distribution center and then to our restaurants. Once our suppliers receive produce from our farmers, they process and dispatch them to the distribution centers in special temperature controlled trucks, which ensures that the quality of the items is not compromised. These items are stored in rooms with different temperature zones and are finally dispatched to the McDonald’s restaurants on the basis of their requirements. Our logistic partners therefore use temperature controlled storage facilities as well as multi & single temperature trucks for transporting our varied products. This maintains the integrity of our cold chain. Furthermore, McDonald’s uses traceability systems to record the movement of each ingredient that goes into making products. Products can be traced back along each step of the production and transportation process to their point of origin. Using traceability systems. McDonald’s can track the temperature and location of any product being supplied to a restaurant anywhere in India, in real time and with complete accuracy. It helps in taking immediate preventative action if the temperature of the produce rises beyond preset parameters. With the traceability system firmly in place, customer can receive complete transparency and be rest assured about the freshness and quality of food at McDonald’s. How would you define the relationship with your suppliers? What guides this relationship? McDonald’s supply chain is based on three legged stool where the suppliers, the company and the franchisees are equal partners in the entire journey. Over the years, we have worked closely with local suppliers and farmers and formed partnerships based on trust and

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the mutual desire to grow. We have empowered agronomists and farmers by sharing best practices, technology and the help them in the introduction of new varieties of produce. This has tremendously benefitted our agricultural suppliers as they are now employing the most current farming practices – resulting in better crop patterns, greater yields, higher farm income and increased jobs within the rural farming sector. Food retail is all about location – how do you evaluate if a location will succeed? It is imperative that food chains broaden their accessibility to consumers and offer on the go convenience through formats such as Drive-Thrus, etc. We, at McDonald’s focus on improving presence by operating in food courts, malls and high street retail in addition to our free standing drive thru restaurants. Furthermore, McDonald’s has adapted a clustered approach to growth wherein, we plant a nucleus in a major city like Bangalore or Mumbai and thereafter grow in a concentric manner to encompass larger territories including Tier II & III cities that fall adjacent to larger metropolitan hubs. Today, annual spending of middle class homes on eating out increased in the last two years especially across India’s tier-II and III cities where it has increased by Rs 2,500 to Rs 5,200. About 30% of people eat out more than twice a week. While frequency of eating out is similar in metros, mini metros and Tier I cities, consumers from Tier I cities spend higher amounts on unorganized formats. These markets today are witnessing a huge shift in lifestyles and purchasing power, customers are more discerning and look to new experiences and we hope to expand our reach and remain accessible to them. “Zero Waste” is a concept that is gaining currency in supply chain

management – what are your efforts on zero waste? The “Zero Waste” concept is designed to encourage brands in minimizing wastage and working towards the goal of generating zero waste. Our suppliers have implemented technology in order to maintain the integrity of our produce during storage and transportation. This endeavor has enabled us to increase the shelf life of our products and cut down on operational wastage. We will continue our efforts in this regard. What is your expansion plans for McDonalds over the next couple of years? Currently, we have a network of 375 restaurants across the country while serving over 325 million customers annually. Westlife Development Limited (WDL), through its subsidiary Hardcastle Restaurants Pvt. Ltd. (HRPL operates a chain of McDonald’s restaurants in West and South India. At present, Westlife Development operates 213 McDonald’s restaurants (As of 30 June, 2015) through HRPL across 26 cities. We will continue to increase our retail footprint and fortify our presence in both existing and new markets (60:40) and 80% of our capital will be deployed into building more restaurants. We plan to invest Rs 700-750 crores in and establish 175 to 250 new restaurants in the next 3-5 years. We have aggressively expanded our coffee business and added over 8 McCafés (As of 30 June, 2015), taking the total count to over 45 McCafés across West and South India. We plan to open 50-75 McCafé’s by December 2015 and double the base in the next 12-18 months with capital investments of Rs.30-35 lakhs per McCafé 12. How do you minimize pilferage in your supply chains? Trust is a key factor and we ensure

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that our term relationships with our suppliers are built on trust. This trust is built over years through demonstrated stringent control processes and integrity – our suppliers are required to have very strong control procedures and processes to ensure integrity at all stages. This is auditable by McDonald’s and we do periodic checks to ensure processes are in place. This helps in minimizing pilferage.

community by working with local businesses, which grew in sync with our brand. We have created jobs in the rural farming sector. Due to the support and infrastructure provided by McDonald’s our suppliers today are employing current farming techniques that in turn benefits their produce.

Do you have an equivalent to “Farm Forward” pioneered by McDonalds UK, in India?

There is huge investment lined up in infrastructure, which will offer a conducive environment for us. Cold chain infrastructure specifically will see a tremendous leap in times to come and companies will dramatically witness a transition phase in the way they operate their businesses. This will lead to increase in last mile connectivity. This will also change the dynamics of business for each and every

We, at McDonalds India have interacted with agronomists to share best practices and empowered farmers with know-how, technology. etc. McDonald’s India benefits other Indian businesses through local sourcing. McDonald’s has brought benefits consistently to the

Looking ahead – what are the major forces that will shape your supply chain?

sector in the market because we will be able to reach out to larger audience. Back-end integration will also play a major role going ahead. Development of agricultural infrastructure will help take the growth trajectory ahead. Another important aspect that we will observe in the years to come is with regards to sustainability. We have implemented several sustainable practices. We are constantly reinventing and reassessing our supply chain strategy and set-up to ensure sustainable sourcing. Information and data analytics will also be an important aspect in the future. We are using technology to analyze weather forecasting, weather pattern analysis that can impact crop production in our farms and will continue to leverage technology in our supply chain.

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Tech Talk

Embedding Technology

in Supply Chains

Technology is fast becoming the backbone of Supply Chain Management. From enhancing efficiencies to pruning waste, from improving visibility to providing real time information, technology helps real time supply chain management. For this issue of Tech Talk, we bring you an interaction with Mr. Sesh Parigi, Associate Vice President, Oracle SBU at KPIT Technologies. The third flow in a supply chainapart from products and money – is information. What is your assessment of the state of IT in Indian Supply Chains? Efficient supply chain is a key cornerstone for any company’s success in their business. Information technology is being leveraged by a few Indian visionaries to convert supply chains into more agile and lean engines to bring competitive advantage, however the adoption rate is still abysmal. By and large, these processes are still manual and depend on a number of disconnected systems leading to the inherent silos, inefficiencies and lack of responsiveness to changes in market conditions. What would be the technology challenges you foresee for Supply Chain services firms in India? Is it different from global challenges?

Mr. Sesh Parigi KPIT Technologies Ltd.

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Availability and affordability are the two key challenges that these firms currently face. There are still many small organizations and regions that don’t

even have access to the required connectivity to be able to hook on to the information highway. Some of the supply chain solutions, integrated systems, real time tracking solutions are still not easily available, comprehendible and come at hefty price thus leading to poor adoption. This situation is very different from the developed countries where these technologies are extensively deployed to bring benefit to businesses. How would you prioritize areas within a supply chain for IT enablement? Can you establish a road map? Demand and supply management is the single area that can bring immediate benefits to the supply chain through IT enablement. With an effective management of this area, instances of stock-outs of products that are selling

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Disadvantages

or piles of inventory of goods that are moving slow, can be largely eliminated and there is likely to be faster fulfillment of customer demand though finished goods that are stocked at the right location. Due to the complex nature of the function, involving accurate demand forecasting, real time data on demand/supply situation and complex & voluminous data processing, this is an ideal candidate for adopting IT for its betterment.

invest in IT solutions in following key areas:

● Integrate and track last mile delivery

● Integration and management of exceptions

What are the best practices you have observed across the globe?

● IT enabled warehouse for faster & seamless movement of goods across inbound & outbound transactions

● Data duplication & synchronization

● Collaboration with the extended supply chain for managing demand and supply ● Real time transactions, goods and vehicle tracking ● Data Integrations with partner systems ● Data Analytics & Decision Support systems ● Performance Management Systems ● What are the next game changers for IT in Supply Chain services? ● Disruptive technologies such as SaaS and SMAC integration

● Sophisticated planning & scheduling for better replenishment ● Connected supply chain with end to end tracking & availability of real time information for effective decision making.

How can we improve collaboration – both within and outside the firms – specifically in the Supply Chain services sector? What are the benefits? Web based portals, data integration with partner systems, real time stock and order status visibility and Social Media are tools and solutions that go long way in improving collaboration within and outside organizations. Benefits: ● Forecast accuracy improved

● Big data analysis and analytics

● Inventory turnover increased

● Forecasting to endcasting (demand management)

● In-stock fill rates rise ● Lead times reduced

● Vertical integration to virtual integration ● Network optimization

What are the advantages and disadvantages of SaaS in supply Chains?

● Drones for last mile delivery

Advantages

● Mobile and offline data availability

● Most cost effective solution

● GPS fitted trucks and use of RFID in warehouse

● Opex than Capex

● Internet of Things

● Low entry and exit barriers for the subscribing companies.

What should be the top IT priorities for a Supply Chain Service Provider?

● Standardized processes based on business best practices

Product diversity and different sales channel will drive demand for multilevel & differentiated supply chain. This will push service providers to

● Web enablement and multiple collaboration options

● Integration with common services

● Inbuilt analytics

● Increased dependency on service provider of SAAS solution ● Concerns around security and access ● Little scope of ‘extending’ solution to meet unique business requirements

● Change management Do you have any examples of how real time information has helped supply chain performance? Following examples can be cited (names of customers withheld)

There are still many small organizations and regions that don’t even have access to the required connectivity to be able to hook on to the information highway What is the impact of SMAC in supply chains? Supply chains can derive positive benefits through effective usage of SMAC. Social media can be utilized to share unstructured data, experiences, feedback and recommendations that can help with product & partner selection apart from providing additional contextual information.

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Tech Talk

Customer Global Manufacturer of Diesel Engine Turbo Chargers

Asks Adoption of standardized ERP platform

Deliverables Implementation of Oracle ERP across India operations

Streamlining production planning & control

Benefits # Production planning down from 5 hours to 1 Hour activity # Improved on-time delivery to customer by 99% # Scalable system platform with information access to other internal entities across supply chain

Manufacturer of specialty chemicals

Evaluation of information flow across SCM Correct Product costing

Product agnostic study evaluate ERP fitment while achieving consolidation on single platform for information flow across SCM Effective product costing through system while out manual intervention

Due to sheer penetration of mobile services and its extensive coverage, usage of this platform can drive the required collaboration, real time transactions and data availability on the move (or when offline) that is critical for managing supply chains efficiently. Supply chain data can be scientifically and systematically analyzed to measure performance, making informed decisions at right time and also anticipate future outcomes for course corrections/ remedial actions. All this is enabled through usage of analytics solutions. Cloud platform enables access to cost effective, web enabled and latest supply chain solutions clearing the way for these companies to focus only on their core function of managing the supply chains using the cloud solutions. Gartner predicts that by 2017, SMAC (which Gartner calls the “Nexus of Forces”) will drive more than 26% of the total enterprise software market revenue, an increase from 12% in 2012 – representing over $104 billion new revenue from this stack.

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# Consolidation of all the entities on Oracle ERP platform while enabling real time information sharing # Reduction in customer quote cycle by 60% # Improving product cost accuracy by 40%

Social media can be utilized to share unstructured data, experiences, feedback and recommendations that can help with product & partner selection apart from providing additional contextual information

considered for these solutions to have become truly operational and having started to bring benefits:

How to Measure ROI on IT Investments in Supply Chain?

● Reduction in instances of Stockouts or E&O stocks

The following factors need careful quantification and collection to be able to measure the ROI. Baselining of these factors before having made IT investments and comparing post implementation is required to quantify ROI. Realistic time horizon post implementation needs to be

● Cost of dissatisfied customer

a) Savings through process efficiency ● Improved profit margins ● Improved planning accuracy ● Reduced changeovers ● Reduction in efforts in performing manual activities ● Cost saving due to improved product and service quality ● Reduction in communication cost ● Impact of well informed and timely decisions enabled by IT b) Avoidance and reduction of crisis costs

● Cost of expediting

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Join India’s Premier Community of Supply Chain Professionals ISCM and SCM Pro announce the launch of India’s first exclusive community for supply chain management and logistics professionals. As a member of ISCM community, you get privileged access to: A

Round Tables: Thought-provoking discussions and information on topics most relevant to supply chain managers.

A

A free subscription of SCMPro – a thought leadership magazine for the SCM Professional

A

50% discount on Special Publications

A

20% discount for ISCM’s events

A

Access to white papers and other research material from our faculty team and other affiliated professionals.

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

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

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

Comunity Add.indd 1

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

Initiative

29-Sep-15 2:51:49 PM


Feature

The Evolution of Supply Chains From the time trade became a part of our human life, supply chains developed to ease the process. Since then, supply chains have evolved – from the producer decided and driven activity to a more customer centric activity. The producer still sets the agenda for supply chain discourse – but not for very long. As customers evolve, and as products proliferate, the balance will shift to the customer. And adding to the effort will be technology. Team SCMPro takes a look at the future of supply chains – or Demand Chain - as the new nomenclature suggests.

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It is interesting to see the evolution of supply chains. Four metrics usually define a supply chain – quality, cost, lead time and availability. These four metrics are not fixed. They usually change over a period of time, based on the business ecosystem. Therefore, firms need to constantly change their supply chain strategy. Starting with the early 80’s, where the philosophy was the product and the key driver for supply chain quality. Over a period of time, the philosophy changed to knowledge driven flows and the key metrics information. This is aptly summed up in a research paper - Supply Chain Migration From Lean and Functional to Agile and Customized, by Martin Christopher and Denis Towhill. Most of today’s supply chains are geared to manage efficient production in countries like China, and moving them around to customers across the globe. But as these low cost manufacturers lose their advantage and as concerns about the carbon foot print of products become more relevant, the traditional supply chains can leave firms exposed to various risks.

As we do not invest in R&D, most of the innovations we see are borrowed from the west One trend that has forced change in the supply chain is the proliferation of products and variations. This has forced firms to align their processes with their customer’s needs. An example of this is the automobile industry – from a time when we had three models of cars to today – when the numbers are upwards of

Some are breaking up their supply chains into smaller, more responsive units. The belief is that a smaller nimbler supply chain can weather demand changes quicker

100. This has changed the way auto manufacturers look at customers. Remember the time when the waiting list for a Premier Padmini was upwards of a year! The sheer number of models and variations has moved the customer from the end point of the supply chain to the center of the value chain. There are quite a few interesting examples littered in the annals of supply chain evolution. One such narrative is the Dell Vs. HP supply chain strategy. Both were selling similar products – but HP decided to adopt a push strategy for its products, while Dell chose the Pull strategy. Their approaches differed in the point at which the push-pull boundary was. This was a paradigm shift in supply chains. Dell managed to clock an amazing growth. One major issue in supply chain is the limited visibility of customer demand. Because of this lack of visibility, and the fact that there were multiple levels- between the factory and the final customer - where inventory was aggregated, supply chains were driven by the producer. As customer demand

Evolution Stage

Time Period

Philosophy

Key Driver

Key Performance Metric

I

Early 1980s

Product driven

Quality

Inventory turns Production cost

II

Late 1980s

Volume driven

Cost

Throughput Production capacity

III

Early 1990s

IV

Late 1990s

Market driven

Customer driven

Product availability

Market share

Lead time

Customer satisfaction

Order fill rate

Value added Response time

V

Early twenty-first century

Knowledge driven

Information

Real-time communication Business intelligence

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Feature moves up the supply chain, the pull factor takes over. Supply chains are undergoing a drastic change – for one, people are referring to it as demand chain – implying the pull from the customer, as opposed to the push from producer. This means that the final customer demand is travelling farther upstream – sometimes right up to the producer. This is visible in supply chains of garment manufacturers. This calls for a different orientation of the supply chain. And as customer preferences evolve, we will see a time when the customer will be able to specify her requirement right till the moment of shipping.

Over a period of time, the philosophy changed to knowledge driven flows and the key metrics information Across the globe, the primacy of the supply chain is now recognized. In the words of Jim Owens, former chairman and CEO of Caterpillar, “…the competitor that’s best at managing the supply chain is probably going be the most successful competitor over time. It’s a condition of success.” This is easier said than done. The supply chains of most international firms are not capable of successfully meeting the demands of the volatile business ecosystem. A worrying aspect in India is the lack of R&D within the supply chains. As we do not invest in R&D, most of the innovations we see are borrowed from the west. As we evolve, we will see higher funding for R&D activities within the supply chain in India. An example is the automotive supply chain – we are seeing considerable

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R&D activity across the supply chain. Honda, for example has standardized the parts of its products so that a shift in production from Civic to Accord can be easily accommodated. We will see such efforts across the chain. The increase in efficiency, effectiveness and flexibility of the supply chain process will be the leverage for optimization. Collaboration, optimization and connectivity will be the defining features of the supply chain of the future. This will mean increasing adoption of information technology in supply chains. IT can help supply chains become agile and lean. What will be the shape of the supply chain of the future? What trends will define these supply or demand chains. We can be sure of one thing – customer demand is increasingly uncertain and supply chains are increasingly complex. Today, more than ever, firms are at risk of deciding crucial strategies that can be derailed due to forces beyond their control. The financial crisis of 2008 had some interesting fallout on supply chains – they changed the global trade flows. Currency values and capital movement. To cope with these trends, some supply chain owners are adapting some novel methods. Some are breaking up their supply chains into smaller, more responsive units. The belief is that a smaller nimbler supply chain can weather demand changes quicker. But, this in turn requires a higher degree of collaboration, information sharing and synchronization. Another strategy is to change the manufacturing footprint – we are seeing a trend towards near shoring and re-shoring. Again a result of the financial crisis changing the cost of production. A typical example is the Indian footwear manufacturer Relaxo Footwears. The company used to manufacture its range of products in batches across ten production

centers. Their new supply chain head Vijay Wadwhani took a look at the practices and suggested they make some changes. The firm was either facing stock outs of its fastest moving SKUs or having excess stock of the slow moving SKUs. The lead time for fulfillment was uncertain. Mr. Wadhwani made a few changes – he split the supply chain into three components. The fastest moving SKUs, with relatively stable demand were allotted dedicated production centers – assuring ready availability. For the SKUs which had an uncertain, yet strong demand, they introduced batch runs with fixed delivery turns. And for the slow moving SKUs, the dealers were assured delivery, but based on longer, but committed lead times. Not only did they change the production centers, they also changed the planning process. The fast moving SKUs were manufactured on fixed production plans, with a stable demand outlook. The slow moving products were made to order, based on the dealer demand. Together, its changes to production location and planning functions increased availability and increased sales. The firm expects to close this financial year with Rs. 1400 crores turnover. Splintering a supply chain may sound complex – but as the Relaxo example shows, this approach allows companies to reduce complexity helps them increase the operational efficiency of their assets and at the same time, the increased visibility helps managers to use productivity tools more effectively. To pull it off, Relaxo integrated all operational heads into their S&OP sessions, so that everyone was on the same page. Clearly, supply chains will become smaller, interlinked, and more transparent. Gearing up for this can be a challenge to many tradition bound firms.

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SCM Updates

SLCM Central Laboratory gets accredited by NABL with reputed ISO/IEC 17025:2005 Certification The Central Laboratory of Sohan Lal Commodity Management (SLCM) Pvt. Ltd. gets accredited with ISO/IEC 17025: 2005 by the prestigious NABL. The test results and measurement data produced by NABL accredited laboratories are acceptable amongst 64 economies. With this, all the tests & data certified by SLCM Central Laboratory are acceptable globally in 64 nations of the world. It addresses the biggest challenge of the sector to test, monitor & maintain the quality of the commodities during the storage period. It certifies that the Group has fully fledged Quality Control Laboratory which follows International Practices and incorporates the most modern testing equipment to perform the stringent quality analytical tests prescribed by different national and International standards. SLCM Group’s state-ofthe-art laboratory is based at Corporate Headquarters in New Delhi with advanced infrastructure and procedures to support stringent Quality Management Systems. The Laboratory has latest analytical instruments and quality control systems to ensure consistent quality of the products. There is regular validation of processes, testing methods, as well as periodic calibration of all instruments, to guarantee product output of consistent top quality.

FedEx Pledges $1 Million in Aid to Support Migrant and Refugee Humanitarian Crisis FedEx Corp. has committed approximately $1 million in cash and transportation support to deliver emergency supplies and critical medical aid to the thousands of migrants and refugees escaping conflicts, and provide on-going assistance to both the people and the local communities affected by the crisis. “Humanitarian relief has been in our DNA for decades, and FedEx understands how such a crisis can dramatically alters lives and communities,” said David Ross, regional president of FedEx Express Middle East, Indian Subcontinent and Africa. “Working together with international relief organizations, we are utilizing our global transportation network and resources to assist the affected people, to improve their quality of life.” Time is of the essence when it comes to providing help and FedEx is mobilizing its humanitarian relief program through a donation of $1 million to the International Federation of Red Cross and Red Crescent Societies (IFRC). The company will also use existing relationships with international organizations, including Direct Relief and Heart to Heart International, working closely with local partners in the most affected countries.

At SLCM (Analytical central Laboratory), we use the latest methods and technologies, to identifying risk factors, improve quality, efficiency and add value to the market. NABL has recognized our testing facility by conducting two days onsite Audit and verifying the analytical capabilities of the technical team. NABL has granted accreditation to SLCM Analytical Central Laboratory in the field of chemical testing as per the requirement of ISO/IEC-17025-2005 on 16th September, 2015.

National Accreditation Board for Testing and Calibration Laboratories (NABL) is an autonomous body under the aegis of Department of Science & Technology, Government of India. The globalization of Indian economy and the liberalization policies initiated by the Government in reducing trade barriers and providing greater thrust to exports makes it imperative for Accredited Laboratories to be at international level of competence. ISO: 17025; 2005 is the single most important standard for calibration and testing laboratories around the world. This accreditation assists the Indian industries to enhance the quality and reliability of Indian goods in the domestic market and exports, thereby, catalyses the growth of Indian economy. SLCM Group has proven to be a thought leader to the industry by leading the path in Scientific Warehousing Practices & our NBFC division “Kissandhan” & a recent accolade validated the fact aptly. The Group was recently felicitated with Outstanding Contribution in the Agri Warehousing Sector during ET Krishi Vikas Summit 2015. While receiving the award, SLCM Group CEO - Mr. Sandeep Sabharwal said, “This award is validation of our consistent efforts in redefining the agri logistics sector. I am glad that we are looked upon as a Thought Leader by setting the path with Corporate Governance Practices followed at par within the Group.” The Award ceremony took place in the Le Meridian Hotel of New Delhi amongst various stakeholders including Farmers, Political Leaders, Policy Makers, Industry Players, Commodity Exchanges, etc.

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SCM Updates

Broekman Breakbulk Terminal puts renovated Offshore & Heavy Lift Centre into operation

The fully modernised Offshore & Heavy Lift Centre at the Broekman Breakbulk Terminal on the Waalhaven in Rotterdam officially became operational today. In addition to a massive renovation, the Centre on the former RDM site has been expanded to cover 16,000 square metres. Broekman now has at its disposal four modernised high halls equipped with overhead travelling cranes with a hoisting capacity of between 75 and 700 tonnes. The overhaul of the Centre was performed in cooperation with the Port of Rotterdam Authority. In addition to storage facilities, it is possible to assemble, modify and pack all types of heavy and complex cargo in the four halls. “The energy and offshore industry is increasingly demanding space for assembly right on the water”, according to Raymond Riemen, CEO of Broekman Logistics. “This avoids having to transfer cargo again for shipment to the factory, which saves more costs.” Joint investment The overhaul of the Centre was performed in cooperation with the Port of Rotterdam Authority. “In the breakbulk sector we focus on heavy lift and project cargo. This Broekman Centre will really boost the possibilities for this in the port of Rotterdam”, says Emile Hoogsteden, director of Containers, Breakbulk and Logistics at the Port of Rotterdam Authority. “There are good opportunities for the future in these fields, certainly in offshore.” The Port of Rotterdam Authority invested over €15 million in this project. Deepsea quay At the Offshore & Heavy Lift Centre, Broekman also has a modern deepsea quay at its disposal. This was specially designed for all types of heavy and complex cargo. With a length of 300 metres and a depth of 10.5 metres, it can handle cargo of up to 1,800 tonnes per loading unit. The quay has an outdoor storage capacity of 10,000 cubic metres and a warehouse with a storage capacity of 4,000 square metres.

DB SCHENKER in India launches its first CSR initiative for 2015 in India To provide skill development for underprivileged youth

DB Schenker in India has launched its first CSR program for 2015 in Bangalore for skill development of underprivileged youth in the city. The program was conducted in association with SAMA Foundation (non-government organizations) which works for welfare of the deprived people in the area. The objective of the program was ‘Learn and Earn’. The idea behind the same was to provide these youths the knowledge & skills about computers, retail and basic management so that they could earn their living. A total 40 students were enrolled for the first batch of the program. In all 120 students will be trained in three batches throughout the year. Commenting on the initiative, Ms. Renu Bohra, Director, Human Resource (HR), Schenker India Private Limited “This is a small contribution towards our responsibility to society. We feel happy working with the underprivileged youth of India towards building self-reliance and creating livelihood opportunities. Additionally we will help these youth find job opportunities in leading retail companies (check with Nitin if we can mention the co names on record) where there is requirement for data entry operators and sales representatives. As an organization, Schenker India is highly committed to society by supporting social projects on children, youth and sustainable environment for our bright future.” Few renowned locals and social worker Ms. Vineeta also supported the program who were invited as chief guests during the program. At the end DB Schenker team provided all the students with complimentary bags.

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