OPSESSION
Volume 2|Issue 1
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Cover Story: Go Green – the future of Supply Chain Management
Introducing the X-Ops Core Team 2015-16
Opsession
Around the world with Operations and Supply Chain Management
June Issue This is the first issue, volume two of Opsession, the X-Ops newsletter. The monthly newsletter was introduced last year by X-Ops with the intention of covering all the activities and events that took place during the span of a month
Xavier Institute of Management, Bhubaneswar Volume#2
OPSESSION
Volume 2|Issue 1
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Around the world with Operations and Supply Chain Management
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ast Africa is set to join the Global Supply Chain of Apparels Industry: The Apparels and garments industry is looking up to East African countries like Ethiopia as the new destination for sourcing textile. With manufacturing costs seeming to be a third of that of Bangladesh, it seems Asian Textile Industry needs to watch out for this challenge. However, it is yet far from reality due to the high logistics cost due to the lack of roads and railway transport. So, there still is a lot of work to be done before these African suppliers join the global supply chain for the apparels industry. Xiaomi is considering manufacturing in Brazil to offset import costs: After taking the world by storm, Chinese smartphones manufacturer Xiaomi is planning on building its first manufacturing facility outside China in Brazil with its flourishing electronics market. It is planning to use local factories and source domestically to deflect the high import taxes. But the high labour, logistics and energy cost pose a major challenge to this new development in global supply chain of Xiaomi. High End Fashion is set to go the ecommerce way: With recent popularity of e-commerce, high end fashion labels
like Fendi and Chanel are planning to go the e-commerce way by offering their products from their websites. But the spread out inventory due to the high value and low quantity merchandise may pose a problem for them and a distribution channel needs to be set up to suit them. Gartner releases the Top 25 Supply Chain Rankings with Amazon grabbing the top spot: The Gartner Rankings of Top 25 Supply Chain for 2015 was published recently and Amazon has grabbed the top spot that has been held by Apple for quite a few years now. In fact, Apple and P&G were kept out of the list this time as they have been constantly featuring in the top and have instead found a special and honorable position in the “Supply Chain Masters� category. With them out of the race, the top slots after Amazon have been occupied by McDonald’s, Unilever, Intel and Inditex (Zara) in that order. Sony and Motorala are planning to Make in India to lower logistics costs: With Make in India turning India into a lucrative business site, many companies are vying to start their production operations in India. Among them are Sony and Motorola who are planning to restart their manufacturing operations in India. While Sony India the fourth largest
contributor to global sales of Sony Corporation is eyeing to achieve a 20 percent boost in sales figure with its new move, Motorola plans to use the idle assets of the manufacturing facilities it had shut down in 2013 as part of a global cost reduction initiative of Google which held Motorola at that time. With this these companies would be joining Xiaomi and Gionee who have similar plans in the pipeline. However, unlike Xiaomi Motorola has denied the possibility of going for the Xiaomi way of flash sales, but rather continue with its sales association with Flipkart. Boeing Goes Lean the Toyota Way: Boeing is planning to introduce lean production techniques for its new 777X jetliner. Projected to be the largest twin engine jet, the 777X is due to enter service from 2020. Boeing aims to achieve significant cost reductions with this in an industry where volumes are lower and level of customization demanded by airlines is quite high. It plans to make production more repeatable and predictable to edge over its primary competitor Airbus. All this is being pioneered by its Vice President of Manufacturing and Safety, Walter Odisho who incidentally is also a veteran of Toyota.
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Your consumers will definitely not pay you a premium for ethical sourcing of your raw materials. But the price an organization may pay in the long run in terms of loss of valuable customers due to a tarnished image may be too heavy to bear. Customers won’t question the source when they use products from a
companies like Ikea and Gap have gone the extra mile to monitor their supply chain to ensure its sustainability. But that doesn’t mean a Green Supply Chain is only affordable by large business entities. Organizations can successfully adopt it if they find a way to use it as a means of increasing their profitability and lower costs. Reduced costs include cost beyond the one that organizations have to pay for violating statutory environment compliance. Recyclable and reusable packaging is quite cheaper and is actually helping organizations reduce costs. General Motors has been able to achieve cost savings to the tune of USD 12 million by switching to reusable containers and partnering with their suppliers to implement the same. Moreover there are larger unseen gains
reputed seller but with the slightest negative media coverage, they won’t hesitate in switching over to the competitor’s product immediately. No wonder
from being environmentally conscious that organizations can reap in the long run. The combined bonus of a greener
Go Green: the future of Supply Chain Management rganizations today have been striving to make their business more efficient and profitable with efficient Supply Chain Management. In the race for business excellence, many organizations have turned blindfold to the environmental impact within their supply chain. All the efforts put in by firms for being tagged environmental friendly are quite often limited to the organizational boundaries. But the question is for how long firms can ignore the impact of their supply chain partners on their business and reputation? With social media penetration rising exponentially and heightened media coverage, the consumers today are much more aware than most companies can comprehend. Moreover, in this age of ‘likes, shares and retweets’ any negative coverage can spread like wildfire and be blown out of proportions that would tarnish the image of the organization and directly impact its profitability before even they can act.
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treaded the path of a green supply chain with the fear of increasing the cost of sourcing their raw materials. But is green sourcing really that costly? Enhancing Profitability Green Supply Chain
through
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BRIEFLY YOUR CONSUMERS WILL DEFINITELY NOT PAY YOU A PREMIUM FOR ETHICAL SOURCING OF YOUR RAW MATERIALS. BUT THE PRICE AN ORGANIZATION MAY PAY IN THE LONG RUN MAY BE TOO HEAVY With the rising public awareness on environmental issues, it is quite imperative for organizations to map their supply chain cautiously and wisely choose their partners. Even technology giant Apple has gone to the extent of auditing its smelters and has declared that the tantalum used in their products has been ethically sourced and not from the war-torn regions of Democratic Republic of Congo where inhuman mining practices are still prevalent. But for an organization like Apple with record high profit figures, green sourcing will not be that challenging. Many organizations probably have not
OPSESSION | Volume 2 | Issue 1 footprint and better profit margins will increase the sustainability of the business by many folds. Perhaps the lack of awareness that organizations can effectively ensure cost savings by going green with their supply chain is one of the major obstacles of making Green Supply Chain a greater reality. The Go-Green Strategy Implementing a Green Supply Chain can’t obviously happen in a day. A myopic vision of the manager would rather make the Green Supply Chain highly dangerous for the organization in terms of escalating costs or compromised quality. That is something the customers definitely won’t bargain for. A firm needs a carefully evaluated strategy for going green by detailed analysis of the supply chain right from the grass root level from where the materials are sourced to every partner in the chain and the mode of transportation right up to point of distribution. Many organizations today are also taking the product disposal process under their wing. It is not just merely a sustainability gimmick but rather companies can reduce their costs considerably by effective disposal and recycling of the waste. However, a wellplanned Green Supply Chain can’t survive on its own. It needs to be perfectly aligned with the organization’s business goals and strategies for it to be
4 effective. The business objectives of reducing costs and providing superior quality products will conflict with the goals of going green if they are not properly synchronized. The Green Supply Chain strategy should be properly coordinated to actually help in improving the business process and profitability rather than just being a statutory environmental compliance. Greenwashing- A hindrance to Green Supply Chain Greenwashing refers to the marketing tactics adopted by organizations to paint a greener picture of their environmental efforts than it actually is. With rising environmental consciousness, many organizations portray inflated and at times fake or manipulated statements to the media regarding their efforts to ensure environmental compliance, when actually they do nothing of that sort. By carefully chosen advertisements, they mislead the public to build a false reputation for them. It is a major cause of concern as organizations may find it easier to do so rather than going on the long path of implementing a Green Supply Chain. In developed nations there is increased activism against greenwashing and many legal actions are in place against such organizations. But in an emerging economy like India, misleading customers is much easier and
with the lack of strong restrictions companies can easily get away with it.
BRIEFLY A FIRM NEEDS A CAREFULLY EVALUATED STRATEGY FOR GOING GREEN BY DETAILED ANALYSIS OF THE SUPPLY CHAIN RIGHT FROM THE GRASS ROOT LEVEL Despite all the hassles associated with it, companies that see Green Supply Chain as an opportunity now will definitely grow by leaps and bounds if they wisely manage and implement their strategy to gain competitive advantage with cost and quality leadership. It will not only help them build a strong environmentally conscious image but will also help in sustaining the business in the long run. With developed economies already making quite a head start with their Green Supply Chain initiatives, it needs to be seen how soon to do firms operating in emerging and developing economies follow the lead. The sooner the better, as what can be considered a plethora of opportunities now will soon be a necessity to ensure that their business remains sustainable.
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Introducing the X-Ops Core Team 2015-16 new sun is out on the horizon with a promising and bright year ahead for the denizens of XIMB with the onset of the new academic year. As students and several student bodies of XIMB get ready to jump into the bandwagon of fresh events and new endeavors, the hustle bustle around the campus keeps rising by the day. In this dawn of fresh opportunities and new beginnings, XOps the operations committee of XIMB is fully geared to take up all challenges and make the year ahead a galore of learning opportunities for the student community of XIMB. X-Ops team has planned many initiatives for the new academic session with immersion and certification courses, workshops, leadership talks, live projects and much
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more. With plans of making the flagship events like Ashwamedh, Aarohan, Nirnay, Milaap, Burnout and Opsie-V bigger and better, X-Ops is also looking forward to launch new initiatives like research projects this time. All these efforts and planning are being done at the behest of the new and vibrant Core Team of 2015-16 that looks forward to emulate and perhaps surpass the success of the previous Core Team of 2014-15 after successfully taking over the reins from them. With much pride, X-Ops brings to you the new Core Team of 2015-16
P Hanumantha Rao Prudhvi(Coordinator)
Subrat Nanda(Treasurer) Swarup Ranjan Ghadei(Deputy Coordinator) Abhineet Sudhendra Abinash Mallick Abhinaba De Amarnath Dash Rahul Agarwalla Neha Gupta Susanta Kumar Sahu Sonali Lipsa Patnaik Sribatsa Patra Shiba Sundar Behera Swayambhu Sekhar Rath The team Opsession wishes the Coordinator of X-Ops the very best to be successful in leading the new team and making all the initiatives by X-Ops really enriching for the students of XIMB.
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EDITORIAL BOARD:
Opsession Monthly
XIM, Bhubaneswar
EDITOR:
ABINASH MALLICK
DESIGN:
ABHINEET SUDHENDRA
COORD:
P H PRUDHVI