The panel discussions at the recently held Celerity Supply Chain Awards unveiled a treasure chest of smart and workable ideas for the supply chain fraternity where not just the veterans but winners of the maiden 2019 awards also presented their success stories and smart strategies to combat Covid crisis and reset their supply chains. Our Panel Discussion on ‘Supply Chains for new Business Models’ was essentially all about implementable solutions that leading companies have adopted during the current times and offered ways to lead supply chains with a fresh perspective. After all it’s the TALENT we have in our organizations that will see us through tough times.
This is the second and final part of the Annual event Celerity Supply Chain Awards.
What do you think about this idea of resetting supply chain?
Rajat Sharma, SCM Head, Hamilton Housewares - India - The resetting in long term will be fairly transformative.
All the world’s mature supply chains had processes involving business risk management and business continuity; and yet nothing sufficed the kind of disruption that the Corona led lockdowns brought about. It is the unthinkable constraints that foster innovation and make the best case for putting up sophisticated solutions to ensure continuity of business. And it’s a great time to learn, and we saw constraints not only in the form of logistics but also dis-continuity of the consumer at the retail points, bringing along huge uncertainty on consumer behavior. In the second phase, we saw a shift in demand over the e-commerce channel, posing another challenge to the supply chain practitioners.
Thus, we have learnt, we have all agreed – to Reset our supply chains. And this is the resetting that could further lead to larger transformations in the way we store, move and make stocks available till the consumer points. It has now been rendered inevitable.
Organizations have been forced to re-think how they will ensure continuity of trade, continuity of communication, transactional systems and the resources being able to use them, of goods movement, of delivery systems, of reaching the customers and managing the returns in the events of future disruptions. These will impact asset flexibility, mobility, distribution networks, inventory positioning policies, technology for reaching, retaining and transacting with customers: the resetting in long term will be fairly transformative.
Tannistha Ganguly, Global Head – IT Delivery, Kimberly Clark - Resetting is all about learning lessons on how to make a stunning comeback from such testing times and emerge stronger than ever.
This is an unprecedented situation that we are facing globally. For me, resetting would also mean learning lessons on how to make a stunning comeback from such testing times and emerge stronger than ever. This time has certainly taught us the true value and the worth of digitization in our respective streams. Resetting our supply chains with new technologies and new ways of working, new ways of collaboration and agile working are going to be the key. Skilling and reskilling of our workforce has also become the major factor in taking the growth trajectory forward. Such times have also redefined newer ways of working and how employee engagement and involvement is the biggest factor in seeing us through. We need to be more agile towards change management.
Sourabh Raghuvanshi, Vice President & Head – Supply Chain, Lava International Ltd. - Covid times taught us the true meaning of collaboration.
During the recent times, lot many things changed which were not perceived before. If we take the example of recent post unlock scenario too, still around one third of the population was under lockdown. From the supply chain side, we faced numerous challenges with metro cities closed, however most tier II & III towns were still open. Our nodal points were shut, but there was constant demand in the hinterland of the country. We had to work out a plan to reach our customers in such scenarios taking our partners in constant connect who are ultimately our face to the consumers. We looked at setting up the temporary depots outside metros where truck movements were allowed or probably move to a tier II town. Secondly, as a practice, we generally rely on a single logistics partner who provides us end-to-end service. In the current times, we realized that we would need 2-3 logistics partners to ensure timely delivery to our customers in every part of the country. Even for a single long lane, we adopted what we called a “Relay Concept” wherein just like a baton is passed on from one player to another in a Relay race, consignments exchanged hands through multiple partners before they reached the end customer. This was the case because most of the logistics players were not able to provide service for end-to-end destinations.
Sreekanth Vancheeswaran, VP – Supply Chain Planning, Godrej Consumer Products- Resilience is the key word to reset our supply chains.
We had experienced umpteen challenges during lockdown as far as supply chain is concerned. To ensure that our consumers get our products on time, it’s important for us to be resilient. There were multiple challenges during the lockdown because of different requirements which hampered our movement of goods. Our truckers have had to face problems of even procuring foods while on the move as the roadside dhabas were closed and once you enter the cities, a completely different story would await you.
This time also taught us to help our vulnerable partners to be resilient and survive amid tough times. Plan B must be ready always. We also learned to derisk our supply chains from such unforeseen sudden shocks. Being in the FMCG industry especially in the personal wash segment, it was our call of duty that our products reached every nook & corner of the country.
Umesh Madhyan, Associate VP – Logistics, Hindustan Coca Cola Beverages - Speed of managing changes is of utmost importance today.
One big realization that Covid brought for the entire industry is People. There’s lot of learning we gained over this period in managing people. Coke is about 135 years old. We have closely witnessed pandemics, World Wars and other such unforeseen eventualities. Owing to these, we, collectively as a company, have got first-hand experience of managing complexities and to revive and survive such shocks. Our entire strategy revolves around people. We design strategies with people at the center of it. Because of the larger footprint we have in the country and the local community whom we place so much importance helped us enable undisrupted operations amid pandemic. We had people from the local community coming to the plant and working.
We were not disrupted by the migrant movement owing to this very factor. The biggest constraint for us or for any company had been the unavailability of truckers who had gone back home. To solve this problem, we collaborated with HUL for our fixed movements. During the early days of the lockdown, only water bottle was considered as the essential product and we had excess capacity to move goods. We gave our trucks to HUL to ply the essential food items and they shared that for a month. It’s very important to have manufacturing, warehousing and the entire ecosystem closer to the community and even more important to have people from the local community working for you to manage such disruptive times. You need to be agile not in your execution but from a strategic perspective. You need to build such adaptive systems, which can be changed overnight when it comes to supply chain. In such scenarios, any amount of forecast would not help. What would steer you through is the agile system and network that you have built over the years. How quickly can you switch from the Strategy A to a Plan B is one of things that we learnt the hard way.
Vickram Srivastava, Head – Supply Chain Planning, Ipca Laboratories Ltd. - We are entering in the phase, which will be the “new normal” where rules of engagement for business will change forever.
Covid-19 is a Black Swan event – rarest of the rarest – impacting both supply and demand management, like I say, ‘We are not in the same boat, we are in the same storm!’ It is time for us to look at a new Gregorian calendar ‘before Corona (BC) and
‘After Disease (AD). That is how life has changed for all of us. Being in the generic pharma industry, we have had our share of challenges. Sensing demand has always been a big challenge. For pharma, it becomes even more complex as you have to comply with all the regulatory compliances in supplying critical life-saving drugs. Our challenges multiplied overnight as we were not able to procure from China at the start of the pandemic. This was followed by supply challenges in manufacturing and distribution.
Let me break the disruption and resurrection of supply chain into 3 phases: Phase I was when it was a complete mayhem where there was complete supply-demand disruption. We were not able to import a lot ingredients from China and exports also came to a standstill impacting both upstream and downstream. Phase 2 was when China opened, and supplies were available. With relaxation to pharma industry as an essential service provider even manufacturing resumed, although at a much lower utilization, but the demand was still volatile. Every passing day, we are just looking to survive and to grow slowly. And now we are going to entry the Phase 3 – which will be the “new normal” – rules of engagement for business will change forever.
What are the supply chain levers that you are tweaking now to deal with any future disruption?
Rajat Sharma - Moving from fixed to variable models in downturns and fixing them in the upturns has been an established strategy.
Economic downturns have been faced earlier reflecting in lowering toplines and shifting of impetus onto cost savings and strategic shifts to restricting inventory and other fixed costs to contain the working capital and ensure that the cash flow stays in green. Moving from fixed to variable spend models in downturns and fixing them in upturns has been an established strategy. What was different this time over was that the demand existed, only the customer – manufacturer connect was broken; and inventories nearer to customers were still usable, hence many organizations got back to placing inventories in the vicinity of the customer dense geographies. There were upstream challenges of availability of RM, import challenges and those of labor availability to produce more.
We are looking at it holistically to work on specific levers to be able to address such challenges without impacting P&Ls negatively:
1. Distribution Network
Flexibility, Sensitivity & Responsiveness
This will come from a rich and intelligent blend of large DCs operating on scale along with smaller FCs allowing rea
2. Freight networks
Agility and speed in cases crisis is sensed on fingertips (smaller FCs)
Long hauls – collaborative strategies at partners ends to piggy-back the mobile space
Last mile explorations – express partners, new age hyperlocal delivery mechanisms
3. High sensitivity on fingertips (nearer to customers)
Technology usage to sense not only micro-data but also macro factors
Macro-economic & socio-politic eyes
4. Upstream risk assessment
Financing & developing crisis support
Sreekanth Vancheeswaran -It is about getting the supply chain yields right.
Unfortunately, in the current circumstances, any company would not be able to forecast accurately. Till today we really do not know the actual impact of Covid on demand & supply. The biggest challenge for all of us is to demand forecast in such volatile situations.
Consumer behavior is exceedingly difficult to predict and it has become more and more important to put our ears to the ground now. Demand sensing is what we will need to focus on. The second lever that we should focus on is building transportation efficiency. It’s about getting the supply chain yields right. There are lot of inefficiencies we have built over the last six months, but yields are something that will stay forever. It’s about building visibility from the manufacturer to the consumer and getting the products to them in the shortest timeframe.
Tannistha Ganguly - Technology, digitization, and data are the key levers to drive supply chain.
One keep point I keep harping on is to use digitization and date to our advantage. This pandemic has brought to the fore the critical importance of data in terms of last mile connectivity and other related aspects related to inventory. Kimberly Clark is into sanitizers and other hygiene products and our demand went up unprecedently high. In that circumstance, we not only needed to know our inventories but also of our suppliers in real time. End-to-end vision is the biggest factor that we realized during such times.
Umesh Madhyan -We need big organizations to join hands to change the ecosystem.
Continuous improvement is what we are looking at HCCB. Our strategy has been on the visibility both on the manufacturing and transport side. We have made lot of investments in ensuring how much data we collect on every bottling line, every equipment and on every truck so that we can take more accurate decisions. What is the time that a Coke truck takes to load 1000 cases? The least we do is 3 minutes. This system is live in Ahmedabad and Siliguri. With this example, I would like to emphasize on the importance of palletization vs manual loading. We move about 7000 trucks per day in peak time. More than 80% of them go untouched. That’s the ecosystem we are working on since 7 years now. We started with 2% palletization and reached 80% today. We need big organizations to join hands to change the ecosystem.
Sourabh Raghuvanshi - The focus should be on enhancing technological capabilities and build more traceability into the system to see through such transitions.
We need to strike the right balance between efficiency and effectiveness. Norm is to generally work on the centralized supply chain as it gives us the economics of scale. However, during Covid times, our focus shifted on how to balance the scale benefits or efficiency benefits with business continuity and we focused on de-risking ourselves. In short to mid team, when we are working with multiple vendors and spreading our width, we need to analyze who can serve the length and breadth of the respective regional markets even with the containment challenges and have a strong and effective localized workforce. The key would be to sustain such transitions for considerable amount of time, at the same time, still command efficiencies. Companies must also build multimodal capabilities. Also, focus is on enhancing technological capabilities and build more traceability into the system to see through such transitions.
Vickram Srivastava - Build more flexibility in planning and shorten the planning horizon to be ready to capitalize on sudden demand spurts.
Four primary levers that we are looking at:
Procurement: Better visibility on vendor supply chain, try to lessen the risk by developing alternate supply channels and look at localization options to further de-risk the supply chain.
Manufacturing: Better capacity utilization and build flexibility in execution by network optimization. Also, we are working on a bio-bubble concept to keep the workforce on shop floor protected/ contained to minimize risk of spread.
Planning: Improve demand sensing and be closer to market to understand the demand changes. Build more flexibility in planning and shorten the planning horizon to be ready to capitalize on sudden demand spurts.
Logistics and distribution: Remodel the logistics and distribution plan. Look at multi-modal modes of transport and tie up closely with logistics service providers to get best availability, connectivity and pricing.
What is your view on Demand Sensing?
Rajat Sharma - Globally we will see hybrid strategies using deep sensing and forecasting/pattern superimposing to manage inventory.
Demand Sensing has always been the key in addressing economic upturns & downturns, and yet in today’s post-Covid world, it has become inevitable and imperative. The shift of consumer behavior in the period of crisis, as well as sustained shifts in buying patterns, channels, product & price preferences makes it so much more complicated to be managed by erstwhile ways. I believe forecasting will take a big hit and world over we will see hybrid strategies using deep sensing and forecasting/pattern superimposing to manage inventory and its placement, keeping various replenishment models at the base. Capabilities today are springing up in various pockets, but I also see those being non-integrated across channels and platforms, and this is another space where I see future developments.
Vickram Srivastava -The new 3Cs that will drive the supply chain – Contained, Connected and Continuous.
Demand sensing has become a buzzword lately. During Covid, we continued to face challenges in terms of demand sensing. As we are aware that lot of people stopped going to general practitioners as much as they used to, so much so that the elective surgeries have been put on hold, for us more than business reengineering, we had to work towards business continuity. In pharma, we started about the changed rules of engagements, how can MRs engage with doctors and doctors engage with patients. We started looking at managing demands in innovative ways in terms of what the New Normal could be. We realized the new 3Cs that will drive the supply chain – Contained, Connected and Continuous. The pandemic has accelerated the digital footprint across sectors.
Sourabh Raghuvanshi - We need to be more dynamic in terms of capturing demand on a regular basis.
We are looking at the geographic and demographic changes as well as product proposition. Just to give you an example, there has been mass migration from Metros such as Mumbai & Delhi to states such as Bihar, UP & Bengal. Now suddenly the market size of these migrated places has gone up. Secondly, the type of consumption has also changed as a result of this migration and product consumption patterns have changed. For us, the key challenge has been to sense this changed demand for the right products for the right places. As far as consumer electronics sector is concerned, it is being driven by three aspects currently: work from home, school from home and pent-up demand. As a result, there is increased use of consumer electronics. The demand pattern has also suddenly shifted from a small phone to a big screen smartphone, a small refrigerator to a big refrigerator, so on and so forth as majority consumers are confined to their homes and dependency & usage of consumer goods has gone up. It will take some time before equilibrium sets in. We need to be more dynamic in terms of capturing demand on a regular basis until then.
Sreekanth Vancheeswaran - Partnering with the right people to ensure that your goods reach your consumers is critical.
Demand sensing has two parts – the quantity that the consumer buys and secondly where is he buying from. Consumer behavior has changed with time. While we have a fair estimate on the consumption of product, it is getting very difficult to know where is the consumer buying it from. Today a Swiggy can deliver products from general trade store or kirana shop. It’s a challenge to influence our product placements at each and every retail touch point where the consumption is happening. It is about chasing the consumer on what he is thinking and continuously doing that because the consumer is looking at reducing engagement outside his home and building convenience for the family. E-commerce has leapfrogged during Covid-19. There are players who did not exist for a long period of time in terms of micro-logistics who deliver at your doorstep. These elements of distribution have changed a lot and partnering with the right people to ensure that your goods reach your consumers is critical. We are also building efficiencies in terms of cutting down variants which we feel are building inefficiencies in our system.
What is the competitive advantage that someone would be working for?
Rajat Sharma - It is this talent & learning that will make the difference in years to come – Retain the talent in Supply Chain!
While the ability to sense and adapt quickly could form the core competitive advantage, yet there are various facets to the problem and each solution presents a specific competitive advantage. Thus, broadly the capabilities to be developed would fall under similar heads:
• Technology on sensing shifts in micro or macro factors
• Flexibility / Alternates in manufacturing / sourcing as well as Distribution Networks
• Relationships & Partnerships across the value chain (upstream, downstream and the connectors – logistics and warehousing) will play a big role and hence People & talent will remain to be core assets.
I would stress more on people, as we come out of a big crisis, our people have learnt a lot of lessons and experimented already with many possibilities. It is this talent & learning that will make the difference in years to come – Retain the talent in Supply Chain!
Vickram Srivastava - Now is the time Indian pharma sector to look at the 4Ds – Discover, Design, Develop and Deliver.
Sourcing, predominantly in generic pharma space, has always been about being cost competitive, ensuring that your supply chain is never getting disrupted. Since the last 6-8 months, people have forgotten about the cost. Now we are talking about only business continuity. We started talking about the risk vs value. Now the government is also giving the much-needed push to the entire pharmaceutical sector. They are setting up pharma parks to encourage big companies to set up their bases. Surely, it is going to take time, but we are seeing the steps in the right direction. This pandemic has opened our eyes to the entire sourcing paradigm to not only be cost competitive but also having the best value and supply chain. It is also about risk. The new term we have started hearing now a days – deglobalization – localize sourcing because what happened to all the businesses the moment Covid hit us was the acute shortage of raw material sourcing as most of it was sourced from China. We now need to find avenues to source them locally and to do that, we need to have manufacturing might in the space. If we can do that, we will be de-risking our supply chain in a big way.
If you look at India, it seemed like 25 countries within a country, how can we leverage on our manufacturing strengths is what see us through in the future. The shifting sourcing paradigm needs to have innovative streaks from the word go. We really lagged innovation on drug discovery. Now is the time Indian pharma sector to look at the 4Ds – Discover, Design, Develop and Deliver. Currently, we are focusing on only two aspects – develop and delivery. But when all the four parameters are given due attention, then the landscape is going to be huge for pharma industry in India.
Sreekanth Vancheeswaran - The competitive edge has always been in the availability and product quality that we need to continuously keep enhancing to ensure we delight our customer.
The competitive advantage that we would be working for would always be about providing a greater value proposition to our customers for the money that they pay us. As supply chain executives, we have a role to play in how quickly we fulfill a customer need and on whether we deliver the promised value that the customer was expecting. Hence as supply chain, the competitive edge has always been in availability and product quality that we need to continuously keep enhancing to ensure we delight our customer.
Tannistha Ganguly - Competitive advantage through technology will see the expanse of cloud technology and advance analytics.
Companies industry wide are willing to make investments in technology. The reason probably is because you can build resilience into your system. Competitive advantage through technology will see the expanse of cloud technology and advance analytics. Technology enablement brings you the predictability through artificial intelligence.
Your advice to people wanting to invest in technology…
Umesh Madhyan - Companies must make smart choices in making technology investments.
There is a lot of myth and talk around invest in this and that because people are feeling that technology adoption will witness a big-time jump. My question is ‘Where is the Cash?’ Who will give you money in such constrained times for at least 12-18 months? One needs to be getting more selective in adopting technology and investing in going paperless by way of e-way bills, digital signature, auto-invoicing, etc. Second is how do you convert these capital models and push your OEMs to get better total cost of ownership (TCO). How do you make them transition to Build, Operate, Lease (BOL) model. You need to be smart enough in making technology investments and more so in current times.