December 2014

EDITORIAL

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week back, at the ISCM supply Chain Summit in Mumbai, Aa statement by Cyrus Guzder caught my attention. He was talking about the India growth story. It set me wondering – do we as supply chain professionals really appreciate how central we are to the India growth story. The rub is – the back room boys of the great Indian story have the ability to halt our growth story. That itself should give us a sense of purpose. Think of it – there is no one item we consume which does not have a supply chain story. And every one of us are a part of that.

True, there are challenges – poor infrastructure, no co-ordination among the various stake holders, and each person in the supply chain trying to maximize their gain. The list is endless. To add to it, there is no guarantee that every shipment will reach the destination. I heard of three instances of shipment being hijacked from across the country.

Fortunately, two days later, I attended a technology summit, where continuous tracking of vehicles was a theme. Apparently, today we have the technology to track individual components of a consignment in real time. And no – the technology is not that expensive. The question we need to ask ourselves is – is it worth our while to invest in technology that will provide us the visibility, or risk losing a consignment once in a while. The argument that we have insurance which will take care of losses is stupid. Remember, the insurance firm is not going to bear your loses. It will come back to you as higher premium. Now you have higher insurance cost and loss of consignment – a double whammy.

We thank our readers who attended the first ISCM Supply Chain Strategy Summit. And do look forward to our next event – Demand Planning Forum. We will shortly come to you with more details.

In the meanwhile, happy reading. And a Merry Christmas and a Happy New Year to you.

GIRISH V S EDITOR

Will Supply Chain Derail the India Story?

December 2014

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08SCM NEWS >>

Analysis of latest Supply Chain and Logistics happenings.

28ISCM-SCMPro EXCELLENCE AWARDS >>

10LEAD STORY

30SCMPro CLASSROOM >>

32 SME CORNER >>

ISCM and SCMPro recognise the excellence and transformational efforts in the Industry.

Prof. Piyush Shah provides a simple way to apply the theory of inventory management to the everyday work scenario

In this issue of SME Corner, we examines the importance of SCM for SME’s.

In this Issue, SCMPro brings you the ring side view from ISCM SCMPro Strategy Summit held on 21st November in Mumbai. The summit was addressed by four prominent speakers and three panel discussions on issues on strategic issues in SCM in India.

36LSP FOCUS >>

In this issue of LSP Focus, SCMPro spoke to Balaji V., COO Allcargo Contract Logistics on the emerging freight scenario in India.

46ACADEMIC ADVOCACY >>

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40SME SPARK >>

44HUMAN RESOURCE >>

For the inaugural issue of SME Spark – a series of inspirational stories of SME Supply Chains firms, we bring you the story of Jeevan Rao Saheb.

Darryl Judd, COO, Logistics Executive shares his perspective on art of winning.

This research addresses current gaps in the literature by investigating the buyer–supplier integration dynamics in a global context with a focus on the antecedents and outcomes involved in the process.

October 2014

204-D, Riddhi Siddhi Complex, Off. S. V. Road, Opp. Patkar College, Goregaon (West), Mumbai 400062, INDIA.

December 2014

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pparently, India is not the only country where the big buyer bullies the SME supplier. A research by the Federation of Small Business finds that one in five A

small businesses in UK is bullied by the big companies they supply to. In July 2013, Premier Foods, a leading UK food group introduced a policy that forces it suppliers to pay upfront cash to remain as a supplier – called the “pay to stay” policy. The fallout – the company cut its supplier base from 3000 to 1230. The company feels it has done nothing wrong, and it is a valid business practice. Tesco, another major UK retailer has disclosed that it had overstated its profits by GBP 250 million, due to dodgy supply chain practices. According to the survey, trend of late payments are

rising. We, on the other hand are used to late payments – an on time payment for us is luxury. In 2011 the EU issued a directive requiring all businesses to pay their suppliers within 60 days or face interest payments on money owed. Apparently the pay to stay policy could be practiced by a quarter million firms. Countries like the UK have adopted the voluntary Prompt Payment Code, which encourages large firms to clearly state their payment terms. Till date around 1700 firms have signed the code. And apparently promptly forgotten!

lobalization opens up opportunities and challenges. G

As supply chains go global, they add layers of complexity to an already inefficient process. To stay in business, manufacturers have to come up with innovative solutions. A UK based electronics manufacturer aptly sums up the challenges. One of the basic components of any equipment is the Printed Circuit Board (PCB). Till the Earthquake, Tsunami and Nuclear disaster that hit Japan in 2011, things were fine. Now they have to worry about supplier risk. The next time around, they distributed orders to multiple vendors. Now they have to manage vendors in two countries – means setting up a new office in the second country. They normally transport the PCB via ship. This takes time. And they need to retain the flexibility to ship by air, if the shipment is delayed. Or hold higher inventory- Both of which increases costs. Supply chain managers now have to make decisions based on exposure to delays in the supply chain. However, help is at hand. Zurich Insurance uses historic examples of supply chain disruption to project possible problems on the customers supply chain. Customers can access it on-line. Time for the Indian Insurers to step up.

nlike the rest of the country, U

Diwali is turning out to be a period of high anxiety for the Indian e-commerce companies. The high voltage advertisement, jaw dropping discounts and a tech savvy population ensured that the e-commerce players raked in the orders. But the logistics industry was not up to the mark. There are hilarious complaints – an order placed on a major e-commerce player on the 11th of October was not delivered till November 6! The weakest link in the e-commerce story in India is its logistics network. India has just six dedicated cargo planes. And the trucks move at a leisurely 23 kmph. Apparently, logistics and delivery firms can service just 30 percent of India. India needs more than USD 2.5 Billion in investments in the logistics industry to service the growing e-commerce industry alone.

Next time you want to shop on-line for Diwali….do it well in advance – or get it for Christmas!

NEWS

December 2014

The Diwali Expose – Our Supply Chains Falter

One in five suppliers bullied, says UK small business lobby

Managing Supply Chain Risk

UPDATE

Om Logistics Ltd. receives award by Tata Motors

Om Logistics Ltd. received “Special Citation Of Distinction” Award and the certificate for recognition of Extraordinary Contribution, from Tata Motors, for the second time in a row, in Tata Motors Annual Suppliers Conference held at Hotel Renaissance, Mumbai, on 11-12 November 2014,

Mr Ajay Singhal, CMD, Om Logistics Ltd. said “We are sincerely grateful that our efforts have been appreciated by Tata Motors. Om is committed to deliver excellence across all verticals and this recognition serves as further motivation in our efforts towards being one of the top logistics service provider in the country. It provides recognition of our dedication to Logistics and focus on permanent improvement. Besides, it adds another positive impulse to the growth of our company in terms of service offering as well as geographical expansion. On behalf of all employees, I thank Tata Motors”.

Tata Motors awards recognize suppliers that 'continuously deliver excellence in logistics operations and superior service to their customers'. Om Logistics Ltd. is a Supply Chain Service provider supported by a state-of-the-art Logistics platform. Our company reduces the complexity of logistics while enhancing flexibility, transparency and control. We have a proven track record in developing and executing optimized end-to-end solutions, essential to improving and maintaining customer satisfaction and experience.

Om Logistics Ltd. offers best-in-class logistics solutions that meet changing needs in service, commercial, e-commerce. By putting customers in a very central position Om Logistics Ltd. is able to translate specific requirements into its daily operations. Om Logistics Ltd. is looking forward to a continued partnership as a logistics service provider to all our clients.

JBS Academy publishes 2 books – 1 on Customs Clearance and 1 on Port Management

JBS Academy – Centre for Logistics, Maritime and Management Studies – part of the 57-year-old JBS Group has published 2 books, which were dedicated to the fraternity at a function in Ahmedabad on Saturday 22nd November 2014.

A comprehensive guide to make Customs Clearance simple and increase the Domain knowledge of the reader – “Clearance thru Indian Customs” was re-edited by the Chief Mentor and Director Mr. Samir J Shah. It is a book of 422 pages of over 38 chapters covering every aspect of Customs Clearance in India. The book, written in simple English, with minimal technical jargon makes it easy for a reader to deal with Indian Customs. It is a handy guide for Customs Brokers; Exporters; Importers; EXIM Consultants; Foreign Embassies; students as well as officers of the Department. It is also a useful reference book for those attempting to appear for the Regulation 6 exam for Customs Brokers.

Mr. Rakesh Misra I.R.S., Chief Commissioner of Customs, Gujarat Zone, released the publication at an Award ceremony in Ahmedabad attended by over 300 persons from the sector.

The other book on “Port Management” authored by Mr. Mihir Das with a forward by Mr. S K Hajara Ex-Chairman cum Managing Director SCI and a preface by Mr. M A Bhaskarachar Chairman cum Managing Director Ennore Port Ltd., gives a 360 degree view covered in 606 pages. It covers all aspect from identification of land for a port till the same is fully operational. The book is written as a ready guide for new entrants; existing professionals and new CEO's who can get all information in one place.

This book was released by Mr. R S Sondhi, Managing Director Gujarat Cooperative Milk Marketing Federation Ltd. Owners of AMUL brand at the same glittering function in Ahmedabad.

Last year JBS Academy had published a “Pocket Book of Shipping Definitions” – a compilation of over 1400 words used internationally in the shipping industry.

8December 2014

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LEAD STORY

December 2014

Supply Chain Strategy Summit

The ISCM- SCMPro

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LEAD STORY

December 2014

t is natural for us supply chain professionals In this issue of SCMPro, we bring you a ringside Ito feel proud of our role in the economy. We view of the proceedings at the seminar for the keep the wheels of the economy moving. But we benefit of those who missed it.do it in a disorganized fashion. Few of us realize The seminar saw four speakers and three panels the supply chain starts with the demand discuss issues that are of strategic import to the planning function, passes through sourcing, supply chain. Starting with Dr. John Gattorna of moving of material – from the source to the Gattorna Alignment Pty Ltd, Australia, who factory, within the factory and out to the spoke about the dynamic alignment model – the customer, and to end it, get the product back at supply chain of the future has to be aligned form the end of its life – the reverse supply chain. outside in, not inside out as we normally tend to Our Editorial partner, the Institute of Supply do. According to Dr. Gattorna, our supply Chain and Management decided to address a chains need to be aligned with our customer and major gap in our supply chain functions – a look their buying behavior – not based on the at the strategic issues in the supply chain. product we sell. Existing business models used in our supply This was followed by a session by Dr.Mahender chains have far outlived their usefulness, Singh, CEO and Rector, Malaysia Institute of especially with the onslaught of more Supply Innovation, who spoke about the demanding customers and an increasingly necessity for us to connect ourselves to the rising volatile marketplace. Essentially, it starts with ASEAN story.the premise that supply chains are propelled by humans and human behavior inside and outside We invite you to browse through the excerpts the Firm, and everything else are just enablers. from the seminar. And yes, book your seats early Once the target market is re-interpreted using for the next big event – the ISCM Demand behavioral segmentation techniques, the internal Planning Forum.processes, IT, and organization structures can be

Meanwhile – happy reading.reverse engineered to match, thereby improving alignment between the Firm and its customers.

12December 2014

n the early nineties, a common belief was that we call customers, there are people at the other Itechnology is the answer to many of our end we call suppliers, and there are people within problems. When I wrote my first book – The the businesses who are managers, and executives Living Supply Chains, many supply chain and the board, who are making decisions every professionals found it difficult to believe that day. Around 50 percent of the activity going on in living and supply chains could be used in the same a supply chain is about behaviour. But we just sentence. It has taken me a lifetime to realize that ignore it. Most companies are in denial about it. supply chains are not driven by technology, they Take the example of China. Excellence on logistics are not driven by assets – they are driven by people operations is almost a given there.It is time we making decisions along the supply chains. People start moving up and thinking of supply chains at

Designing and Operating the Supply ChainDr. John Gattorna UTS University of Technology, Sydney

Existing business models used in enterprise supply chains have far outlived their usefulness,

especially with the onslaught of more demanding customers and an increasingly volatile

marketplace. There is no 'silver' bullet, but there is a new model which is increasingly being

applied by major global corporations, with great success – dynamic alignment. Essentially, it

starts with the premise that supply chains are propelled by humans and human behaviour inside

and outside the Firm, and everything else are just enablers. Dr. Gattorna speaks about issues in

designing and operating a supply chain.

LEAD STORY

13 December 2014

the enterprise level. volatile. In India you have a choice to try new things, try new ideas. For In the past ten years we have seen the instance, who are your genuinely emergence of a new discipline called collaborative customers, who really design thinking. Design thinking came want to do business with you. You have from a completely different plane from to work with them and do joint supply chains. Design thinking was development with them and protect invented as a term by Roger Martin them. In doing so, you protect your from Toronto. It tends to look at margins. And then move on to the next everything from the outside in. We segment. I can assure you, the world of need to look into the marketplace, look one size fit all is dead. The guess work into our customers and try to has to stop here. We need to be more understand fundamentally what their precise.expectations are. We need to invest in

supply chain infrastructure for the long India has its own sets of challenges. You term. And we cannot do that based on have to find answers to it yourself. You perceptions. And the market research should not worry about some the we do are based on opinions that can challenges that the west faced. We know change every other week. But if you the answers to them. You have to just look into their eyed and try to figure pick up some of these solutions and run out what are their biases when they buy with them. We need new thinking and a product, then we have a solid basis for we need to educate our leaders and we designing supply chain that will be also need to look at the next level of sustainable. managers to drive these changes.

Apart from that, businesses have to look For example, in the late nineties, DHL internally. I believe that if we spent as in Taiwan was losing customers. The much time trying to understand the value proposition of DHL was that “we internal forces of darkness inside our get your goods from point A to Point B own businesses – we will have a in the fastest time and we charge you a smoother operations. The point is we premium for that.” When we looked at do so much damage by what we do the market we found that there were internally - the way we organize many customer out there who did not ourselves, the way in which we need to want that. They wanted a slower, lower reinvent the organizational formats. We cost service. DHL then re-worked its are paranoid about competition. In my value proposition to cater to different view of businesses, competitors know segments. That is an example of the very little about your business. The real death of one size fit all theory. damage to our business comes from our If we extend this outside in thinking, inability to understand what we are we will find that the demand chain is a capable of, and which capabilities to mirror image of the supply chain. We develop.We have no frame of reference need to realize that firms can run to check on. We do not have a view of different supply chains – someone like the market place so that we can take Zara could be running an agile supply inwards. Businesses have been guessing chain when it comes to their customers, till date. It is expensive. And you can but, could at the same time be running get away with it for a while. But you a lean supply chain for their purchases cannot get away with it now because for the same product.the marketplace has become very

LEAD STORY

I believe that if we spent as much time trying to understand the internal forces of darkness inside our own businesses – we will have smoother operations.

If we extend this outside in thinking, we will find that the demand chain is a mirror image of the supply chain.

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Current developments in the ASEAN region are linked to supply chain strategies

and how these should be adapted to possible future scenarios. Dr. Mahender Singh

talks about As India Integrates with ASEAN, what are the opportunities and

Challenges of doing business in ASEAN region and How Supply chain managers

can adopt themselves to these challenges.

and supply chain complexities

his is an exciting time to be in Malaysia, as that is western focused is so very different. In the TASEAN is going through a very significant west there is more theory, and a structured nuance step change in the way they operate. The points of of ideas that you explore when you look at the data. discussion today are what is ASEAN, what are the Even so, when we look at some of the theory, we opportunities, how ASEAN works, not only for realize that they do not work very well. One of the sourcing, but also as markets for products from standard framework in the supply chain domain is India. The ASEAN Economic Community – AEC – the Marshall – Fisher paper which says that you can is supposed to kick in by 2015. This is just a have a very dynamic demand pattern – like a beginning of a long journey. fashion product versus you can have a very standard

product. These are two different things. You should The learning from AEC reconfirms some of the know your demand pattern and design the supply ideas that were known before we looked at this new chain based on it. In one case it has to be a very environment. The training and body of knowledge

Rising Asianconsumerism,

APEC 2015

Dr. Mahendra SinghCEO and Rector, MISI and Director Massachutes Institute of Technology, Cambridge, USA.

December 2014

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The reality was very different. In the end, the best answer to the question what works is– it depends.

Most often firms do not even know if it is the right question. In many cases, the question is a question.

responsive supply chain and in the more books should Jack read to catch second case it has to be a very efficient up with Mary? The Father was all supply chain. Logically makes perfect excited – after all it is numbers. But the sense. girl said – we need to ask Mary to stop

reading. This was a Russian School of This does seem to make sense. But math. It is a math question. The answer when we look at the data to figure out should be math. There are two numbers what type of a company can be – 25 and 15. We have to do something classified as a fashion type and what can with them. But that was not the be a soup type and what are their

practices. It was found that it was mere problem. The problem is that Mary is torturing of data, because it was such an reading too fast – and Jack will never be illogical construct that if the demand is able to catchup! The point is, we get shifting, firms need to have a responsive lost in data and numbers and forget supply chain to be successful, versus a what we really need to be doing.very standard soup kind of product

In ASEAN, the way people work, the where firms need an efficient supply way regulations work, the way chain. The reality was very different. In structures are there, there is a tendency the end, the best answer to the question to fit the theory to what is happening. what works is – it depends. What firms It will never work. And we can see it should realize is that you cannot solve every day – we try to optimize real life problems. They will go from everything – we come up with one state of mind to the next. They may mathematical models that will fix every fix something, and break a few more.

When you look a few successful problem. And guess what happens next? companies that can be slotted as a When the CEO looks at it he is upset- fashion kind of supply chain or soup the models are never going to work. kind of supply chain, they are not When we talk to people, look at responsive all the time nor efficient all regulations in ASEAN countries, it is of the time. a very different nature. The only way to

solve this is to ask the right questions – In ASEAN, this thought resonates. In a in the plural. Most often firms do not market like Asia, firms have to do even know if it is the right question. In something very simple – understand the many cases, the question is a question. context very well. A simple anecdote And if firms get the right answer, it should emphasize this fact. A five year becomes right or wrong! This is true of old girl was keen to learn math. Her strategy as well. There is one test for a excited father, himself an accomplished good strategy – which it works. academician decided to enroll her in a Unfortunately, firms do not know it Russian School of Math. The school ahead of time. It is only when it works wanted to test the kid to understand her someone will come and tell the firms – level of understanding. At the interview, this is your strategy. Firms cannot the child and father were sitting discover this ahead of time. The way together. The teacher asked the child – forward is – start with a framework, and two kids - Mary and Jack both started an option. And change as you go along reading books together. After an hour, and learn more about the issue. That Mary had finished Mary had read 25 should work.books jack had read 15. How many

LEAD STORY

December 2014

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As a surprise speaker, the ISCM - SCMPro supply chain strategy Summit had the

occasion to listen to Mr. Cyrus Guzder, one of the pioneers of air freight and courier

services in India. From the time when it was against the Indian laws for a private

player to deliver letter across the country, to the time he saw the flowering of the

courier business in India, Mr. Guzder had seen it all. Mr. Guzder shared his wishes

and hopes for the sector. SCMPro brings you excerpts from the talk.

The Future of Logistics

in IndiaMr. Cyrus Guzder

am reminded of my history professor, in my I will start with an experience I had when I was IUniversity. He had written several books, asked to join the Rakesh Mohan Committee on including on India. I once asked him what the Transport Development Policy, to write a white most difficult book he had ever written was. And paper on the future of Indian transportation systems he said it was the one covering the history from the and networks in India covering a 20 year period. We early civilization to the modern times for the were to look at four five year plans and then suggest Encyclopedia Britannica – in all of two pages. to the government what kind of transport networks What I am attempting here is somewhat akin to it. we would like to see in India in the next 20 years. I need to cover the macro challenges, the current The only hitch was that all of us on the committee situation in India, linkages with rest of the world, were dinosaurs. and industry segments and I have 15 minutes to do For me rural marketing was about four B's – if you it.

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If we look at the fact that the ASEAN region is interlinking itself with road networks, if we look at the fact that China will be able to truck goods into Europe in just a few years from now, we need to be thinking about linking India to those great road networks.

LEAD STORY

For me rural marketing was about four B's– if you could get Biscuits, Bulbs, batteries and Blades, to the rural markets you were a top class distributor.

could get Biscuits, Bulbs, batteries and quality, that we need to wash it before Blades, to the rural markets you were a we can use it. And there are not top class distributor. And that was enough washers for this. So we freeze what Exide and Britannia were good at. that and look to import coal. But the And see the change today. All we had ports in India cannot handle these to do was to think of networks of volumes.tomorrow – networks about which we So we looked at gas. The best way to had no inkling as to what it might look transport gas is through pipe lines. So like due to changes in technology and we worked backwards from there. You markets. SO we worked the other way will see that the single largest around. We said what type of growth bottleneck for India is transportation we expect India to experience. You start and logistics. I had always believed that at a very high aggregated level and you there is nothing in the civilized world work backwards. So we said, in this we enjoy which does not have a five year plan, with a lag, we will touch logistics story behind it. The tea you an average of seven percent. You take drink, the clothes you wear everything the second five year plan; you could had a logistics story. When I stared to have an average of eight. The third five see that this miracle of logistics is year plan could see may be 7.8 percent hitting a terrible speed breaker. This is because you are slowing down due to something that should cause a concern high base year effect. And in the fourth to all of us as we think through, what is plan, 6.8 percent. Now on these very the capability we need to develop if modest projections, we need to project have to meet the requirements of the power and energy requirements. tomorrow. We said, in each five year plan we need

If I were to look at the macro picture – to add around 130,000 megawatts of just the task of managing sourcing and power. After all China adds a hundred distribution within India – is a colossal thousand megawatts a year. India challenge. On the other hand there are found it difficult to add 15000 some very exciting things happening. megawatts last year. But we said let us Rakesh Mohan insisted we look at aim for that. If so, what are the roads into and out of India. You can requirements of coal, oil and gas? If we take roads into ASEAN and China look at the current coal production and through the north east. If we look at consumption, we were hard pressed to the fact that the ASEAN region is produce enough coal for current interlinking itself with road networks, consumption. (this was before the coal if we look at the fact that China will be bock allocations were cancelled) This able to truck goods into Europe in just means we have to import coal. And we a few years from now, we need to be also looked at gas and has prices. We thinking about linking India to those came to three conclusions – we cannot great road networks. And these are the transport coal from the mines to the great markets that lie towards our power plants because there is no rail North East and our West which at this capacity to transport coal across the moment we do not consider. These country in a cost effective way. The ASEAN nations will not give up their next question was, can we put the sovereignty, but they will ensure peace power plants close to the coal and then across borders. Add to it, our sea and transmit the power. Yes we can. But the air freight too are not up to the mark.coal available in India is of such poor

December 2014

20December 2014

Firms today are recognizing the power of rural India – with urban markets more or less saturated,

the next driver of growth will be the rural markets. However, the rural markets are not easy to

reach, let alone service. Firms need to understand the real constraints at the last mile if they have

to sell there. Dr. Rakesh Singh, Distinguished Visiting Professor of Supply chain Strategy, Great

Lakes Institute of Management, Chennai India, and Chairman ISCM gives a perspective on the

last mile challenge.

Supply chain constraints at the last mile:

ural markets are the flavor today. As firms is that 56.3 percent of the nation's consumption Rtry to enter the rural markets, the first thing comes from the rural markets. What we miss in they need to realize is that the supply chain is the this statistic is the rural penetration. The real marketing. They are not two different functions. question is, are we really reaching the rural To be successful in rural markets, we need to take villages? Are we covering the last mile? In my case a systems view of the firm. It is commonly it is reaching a village that is remote from the believed that rural markets are a blue ocean – Tier 2 and Tier 3 towns. There is an experiment where firms have not ventured into; has a great that is really interesting. It ran for ten years – it is potential and hence all companies want to go called as Hariyali Kisan Bazar. It was a rural retail there. How do firms reach this conclusion? Most experiment which was taught as a Harvard companies look at some macro data to arrive at Business School case study. It was touted as an this conclusion. The major macro data we look at amazing case study to tackle the problems of

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

Reaching India's Villages

HUMAN RESOURCESME CORNER FOCUSCONSTRAINT ACADEMIC ADVOCACY

December 201421

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It needs a different framework of governance, aggregation, and collaboration. We need to change our mindset.

Primarily India is a very different market. We need to understand that we are trying to serve a low price point market with a high price point framework and strategy.

rural India. It expanded from 20 villages to over they are increasing the flow of information. 4000 villages over ten years. And suddenly, I read These information flows define the boundaries that this experiment is closing down. These rural of the rural supply chain and brings a huge centers, over a period of time were transformed amount of visibility. To begin with they into fuel retailing outlets. They turned from a displayed the prices of all commodities across rural retail hub, a consumer hub, an agri-retail various markets. And the farmers were hugely hub into just retail. The fundamental question benefitted. Available data shows us that the total this raises is – why is it so difficult to do business costs declined by a factor of two, creating a win-in India's villages. According to the company win situation. This shows that information release, three consecutive years of drought led to sharing and disintermediation can bring huge the closure. gains to the supply chain. This has not

happened by chance. The firm had invested Primarily India is a very different market. We large amounts in setting up the infrastructure need to understand that we are trying to serve a and training the employees and farmers. If we low price point market with a high price point look at this as a market maker it is a brilliant framework and strategy. And that is where the effort.conflict actually arises. Again when we look at the ITC e-Choupal, it is amazing to see that a When you source from these rural markets, you company has come out with a great strategy to are not sure if you will get the right price, the reach the rural market. This was touted as the right quantity or even the right quality. There is solution to the rural market problem. There are an inherent risk in the process. However, to three ways to serve a market – you go the make this a success, the firm needs to keep knowledge route by becoming a portal, or you updating the contents if not in real time, at least become a market maker, by enabling once a day. And that becomes a problem.transactions, or you become a product and We need to move beyond transactions to service provider. ITC e-choupal was conceived as relationship contracts. These multiple failed an information and knowledge disseminator by models compel me to look beyond for providing real time price information across understanding rural supply chains. I looked at mandis, weather information and best various structural options that firms like Dabur, agricultural practices. They also enabled virtual Reckitt Coleman etc. have. I looked at direct aggregation of demand and supply by distribution vs. super stockist vs. van operations. aggregating buyers and sellers reducing the Van operations is expensive, but can be used for aggregate cost, making the chain more high value products. Super stockist have the competitive as well as allowing retailing of agri

reach and the network, but are a black box and inputs and other products and services serving as you do not have any control over them, leading a gateway to the rural market – combining all to lack of information about real customer three models into one. demand, which in turn leads to significant over

What then is supply chain to rural India – we do production – which I call as the black box bull not have a holistic understanding of this, as we whip. The direct distribution model on the look at it through our own biases. There is the other hand pushes up the man power costs. rural to urban supply chain, where everyone With all the drawbacks, the super stockist model wants to reach the rural market, for which we was found the best – because it has the reach. have a strategy. Unfortunately, the strategy The need of the hour is for various players – a cannot be complete as we do not have visibility

tractor manufacturer, a finance firm, an agri beyond the super stockist. We have another input firm, a fertilizer firm, and a seed company model which starts with the farmer and comes to can co-create an agri business center. It needs a the processor – the farm supply chain. We do not different framework of governance, aggregation, know what this supply chain is like. It is here and collaboration. We need to change our that firms like ITC e-choupal make a mark – mindset.

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Our supply Chains will be defined by the technology we choose. And as with all aspects of

business, technology has the power to increase our efficiency, and at the same time disrupt the

way we do business. From Social Media, to crowd sourcing to Internet of Things to 3D Printing, a

host of disruptive technologies are waiting in the wings. An eminent panel of supply chain

professionals, technology professionals and consultants came together to discuss the impact of

disruptive technologies in Supply Chains. SCM Pro brings you edited excerpts.

he current trend in the industry is to throw Mobile, Analytics and cloud computing, along with Ttechnology at any issues that come up – the Internet of Things is changing the paradigms of without regard to whether that technology is the supply chain. appropriate for the problem it seeks to solve. For a Mr. Arif Siddiqui set the tone of the discussions by long time IT was considered a support function – focusing on the role of technology in warehousing. to gather data and turn out MIS. Today T has The general perception about technology in moved from being a support function to being the

warehousing space is that we are trying to trade off core of operations and supply chain. We have gone human resources with automation. There is no such from a no data to a too much of data scenario. trade off in real terms. We need to identify what the Technology convergence – of Social Media, human resource can do and what technology can do

Supply Chains

Impact of Disruptive Technologies in

Panelists (From left to right):

Founder Coign Consultants

Mr. Harry Lagad

Mr. Girish V S

Mr. Mitesh Patel

Mr. Deepak Jakate

Mr. KalpeshPhatak

VP, Corporate Solutions, Toll Global Logistics Ltd.

Editor SCMPro– Moderator

Group Project Manager, Leader Internet of Things Manufacturing Consulting & System Integration Practice, Infosys

Independent Consultant

VP FIAT India Automobiles Pvt. Ltd.

Mr. Arif Siddiqui

23

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December 2014

clearly. Technology is an aid rather than a A simple application of such wearable technology replacement. We need to identify the human is in the warehouse. Technology can help a new, resource advantage versus the mechanical inexperienced picking staff to be as productive as advantage that automation can deliver. If a veteran. Indoor Positioning System will help mechanical advantage is greater than human the employee track the exact location of the part resource advantage, then replace humans with she is looking for. Or Google glass which can tell machines. Before we invest in warehouse you the part you seek is on the second aisle to the technology, we need to study the warehouse left on the third shelf, the bin on the right. And if science – generally, we do not study the science by chance the wrong part is picked, will prompt of warehouse – the layout, the configuration of you – no the next one. Life can become easy.man, material and machine flow. The discussion Kalpesh shared his views on how technology has on technology starts even before we identify the changed the business models on the factory floor. hardcore science of laying out our warehouse in It is amazing to see how customers have changed. the right manner. This has to come before we Even the ill-informed rural customer today invest in automation. speaks like a professional when it comes to the According to Harry, we need to understand who product she is buying. Technology makes it will cause the disruption – the technology or the possible for us to fine tune our supply chains to consumer. The aware consumer, who has the meet the emerging customer needs. But the ability to research and know exactly what they missing link in the piece will continue to be our need, will cause the greater disruption. We need human resource – or to put it better – our skill to understand the implication of such disruption gap. Technology can help firms in bridging this on our manufacturing, product design, supply gap. Technology can help firms manage the chains and the lot. In 2009, Nokia taught us a business environment till such time we can up-very important lesson. Nokia took its eyes off the skill talent. For example, a less skilled worker can consumer and did not realize how the consumer prepare an invoice by just scanning a barcode, will react to the touchscreen technology. They and technology does the rest.believed the consumer would prefer the key Deepak placed the disruptive technology in board to the touchscreen. And that took Nokia perspective by looking at the history of such from a 79 percent market share to closure. If changes. In the late eighties, technology was a companies have to get the consumer to buy from matter of choice. At that time, the computer was them, they need to manufacture near the kept in a temple called the computer lab, where customer – and that is where 3-D printing will you had to remove your shoes to go in. The play a major role. 3-D will change the way we question was – can we really afford technology. will buy things from the internet. Customers Many firms chose to buy IT for the sake of would want made to order products. Amazon is having it. They did not realize that the trying to match this trend. 3-D Printing is about performance of the supply chain had nothing to how firms can customize the purchase decision – do with the performance of IT. One interesting not tweak manufacturing.

application of technology was in data collection. Mitesh agrees that disruption starts with the In the eighties, firms had to collect data from the customer. But we are in an era of collaboration – remote corners of the country and the only way between man and technology. The new wave of was the now forgotten floppy disc. It took three technology innovations is in wearable technology to four days to get the floppy into the computer – the next generation PC will not sit on the desk lab, and then you realized that a few were not top – but will be on the shirt, collar or ring. We readable. There was the problem – if it takes a can have a well laid out plant; we have designed a fortnight to collect data, how can you plan for a product keeping the customer in mind. Will we week? But technology evolved and we today can then continue to manufacture using the get real time data. That has changed our supply traditional models? Or do we introduce robotics? chains.

For a very long time firms have been doing the same things repeatedly. But the world has

changed. The way the firms work has changed, organizational structures are changing, policies

have changed at very short intervals. Eminent panels of senior supply chain professionals discuss

the impact these changes have in the way firms conduct their business, the challenges it throws

up and the way to maintain profitability.

isruption is a loosely understood word. undesirable. Supply chains have a large role in the DSome take it to mean supply chain management of these disruptions – either by stocking disruption, some believe demand disruption, yet the components, controlling the stocks, or by others mean technology disruption or policy reducing the supply chain cost. A few years back disruption. Mr. Krishnan chose to describe it as Mahindra implemented an e-demand chain huge, unanticipated change, where the management solution, which integrates the dealer environment becomes turbulent. The disruptions order book system with Mahindra's systems in real vary between organizations and within time. M&M trained the dealers, and dealers were organizations. Disruptions can cause either a loss using it to place orders with it. At a point in time, of sales or unsold inventory – both of which are the demand of two products – one a new launch, and

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December 2014

Disruptive Times

Managing Supply Chains in

Panelists (from left to right):

Vice President, Demand Chain Management, Mahindra & Mahindra Ltd., Automotive Division

Mr. Vijay Wadhwani

Mr. Kiran Rakhe

Dr. Rakesh Sinha

Mr. Sanjiv Navangul

Senior General Manager (SCM), Relaxo Footwears Ltd.

Sr. General Manager SCM & Logistics, Mahindra Trucks and Buses

COO Global Supply Chain, Godrej Consumer Products Ltd.

Managing Director- Janssen India, Johnson & Johnson Ltd.

Mr. S K Krishnan

25

LEAD STORY

December 2014

the other an existing product, increased. It conditions on a system that is trying to do was found that while the order management the right thing. Or is it about how supply was real time, the back end was responding at chains should behave. The response of the a weekly frequency. They found that in these firm was to take over the responsibility of two products, they were losing sales in some educating the pharma supply chain about the variants, and at the same time had excess necessity of a cold chain. They trained the stock in some variants. In response to this supply chain to manage a cold chain. And M&M undertook a project to integrate the the problem turned on its head! The biggest back end of the supply chain including the learning from this was the necessity to treat supplier scheduling and daily production the entities in the supply chain as partners, planning with the e-demand management and make them understand the value of their system. This changed the response times to services, there is a proverbial pot of gold at real time. This meant changes to the way in the end of it.which suppliers were geared to execute the In the mid-eighties, supply or demand orders. M&M used dynamic buffer disruptions were not a frequent occurrence. management, based on Theory of Kiran Rakhe believes firms operate in a Constraints to achieve optimal results. This VUCA – Volatile, Uncertain, Complex and helped it tackle the demand variation in both Ambiguous – world. Because of this, the directions. supply chain risks have grown exponentially. For the pharmaceutical industry, disruption Who would have imagined that floods in can mean the death of a patient – it can be an Thailand or tsunami in Japan would disrupt accident, a cardiac arrest or a stroke. That is supply chains in India? Or an Occupy Wall the disruption. Everything else is reaction Street movement will affect Indian supply and response to a disruptive situation. For chains? The industry needs to learn to cope this industry, supply chain is all about with risks from a broad, yet poorly reaching the medicine to the patient in time understood area, and yet ensure the business to save a life. For example, in a study done by does not suffer.a young researcher in Massachusetts, in Disruptions are routine – fire, flood, labor developed nations, the average time taken by unrest, transportation failure are common. an ambulance to reach a patient suffering From an incident – response framework, to a from cardiac arrest is between eight to 12 programmed response is a major leap of faith. minutes. In India that would be a miracle. Every disruption also holds the ability to Today drone technology is being used to create a competitive advantage. After every reach the patient in a couple of minutes, and disruption, the firm develops resilience, and deliver primary palliative care. over a period of time, the supply chain In the pharmaceutical industry, a cold chain evolves from a rigid to a resilient one.is a vital part of the supply chain. Global best

Vijay took an inward view, by focusing on practices demand that the manufacturer track the expectations of the firm, shortcomings of the temperature trails till the chemist, and if the supply chain and addressing them in a there is any deviation from the required holistic way. By focusing on a few parameters norms, the product has to be recalled from like the lead time for execution, customer the point of deviation. This was never done satisfaction, inventory levels, inventory in India. We assume that everything is as it classification, and try and fix the leakages. should be, giving the manufacturers a false The endeavor is to match the demand with sense of satisfaction. When Jensen supply. Supply chains in firms need to approached the distributors, they retorted, understand customer behavior, customer give us the equipment, and we will manage potential and customer location. it. The dilemma was, we are trying to impose

26December 2014

India has been a laggard when it comes to environmental concerns. We are least bothered

about deforestation, removal of mangroves, air and water pollution – the sea off the coast of our

metros are a witness to dumping of waste – even our holy rivers do not escape our propensity to

pollute. Across the developed world – where the major customers of India Inc are, Governments

and environmentalists are pushing for a higher disclosure standard for their supply chains.

Sustainability has to move from nice to speak to must have. Dr. Vaidy Jayaraman speaks about

sustainability issues in the supply chain.

he World Commission of Environment concept. We were engaging in sustainable Tand Development has defined global supply chains, but lacked the formal processes sustainability as the ability to “meet the needs of that define a modern supply chain. We were to present without compromising the ability of work with an electronics firm. This is one future generations to meet theirs.”Way industry, where the shelf life of a product is very backin1997 – 98, as a Assistant Professor in a short. A few months after launch, the product B-School in the US, I was introduced to may no longer be on the shelves. I reached out sustainable supply chain. From a business to four major electronics firms – HP, Kodak, perspective sustainability was a new term. But Xerox and IBM and asked them one question – for an Indian, who saw his parents recycle what is going to happen, when as a consumer I newspaper, bottles, and everything that had the return a product? As a consumer, I will return potential of a salvage value, it was a familiar the product for a number of reasons – it broke

Sustainable operations as supply chain strategy

Dr. Vaidy Jayaraman

LEAD STORY

27

LEAD STORY

December 2014

down, I want to upgrade, I don't like it. cartridges, auto parts, cell phones, PCs, The question I posed was, let us jet engines, tyres and circuit packs. understand the strategy of how to deal These are examples that obviously work with returns. Once we understand the well and there is a business benefit.forward supply chain, can we look at the

The key activities of a closed loop reverse supply chain? The very first supply chain are product acquisition, response I got was – what is it? And why reverse logistics, testing, sorting and do we have to deal with it? The firms grading, disposition- repair, did not want any say in a product that remanufacture and recycle – and they spent millions in developing, once distribution. Product acquisition is a big the customer no longer wanted to use it. issue. How do I motivate the consumer Issues like the prospect of repairing, to return the product? When we wish to refurbishing, extending the life of the change a mobile phone or a printer, product did not figure in the where is the motivation to either send it management discussions of the time. to the manufacturer or the distributer? The number one reason for not having Firms need to provide an incentive to to deal with post consumer returns was facilitate product acquisition.the fear that repair and reuse may result

in cannibalization, which in turn will The next issue is reverse logistics – firms reduce sales. need to think backward – where in the

supply chain can the manufacturer take The question that needs to be answered the product back. The manufacturer has is – should not firms have some control an option to bring it all the way back to over their reverse supply chain? The its factory or aggregate it at a distributor proposal I made to these firms was if I or employ a third party who will collect put together a model which integrates the items and ship them wherever it the forward and the reverse supply chain needs to be sent. HP, for example has so that it can save the firm some money

and has the added benefit of being tied up with UPS for all the returns. environment friendly, would they be UPS took a strategic decision on reverse interested? And this gave rise to the logistics and promoted a new entity discipline of sustainable supply chain or called UPS Supply Chain. When a as we called it the closed loop supply customer wishes to return a product, chain. The first response I got was that HP informs UPS, who in turn will pick the reverse supply chain is a mirror it up, take it to a central location, where image of the forward supply chain. That it will be repaired, refurbished, and got me started on why there so many return the product back to the customer. activities that exist in a reverse supply HP is not involved in the process. UPS chain that is not relevant in a forward tests, sorts and grades the used products. supply chain. But HP has been able to improve its

sustainability quotient, increasing its A closed loop supply chain is designed stakeholder value. and managed to explicitly consider the

acquisition and reverse flow of products, Sustainability can become a profitable reuse activities and the marketing and process for firms, if they manage to get distribution of the recovered products. the process right. The big takeaway is These activities must entail sufficient that waste is anything that a firm wealth creation or cost avoidance to be produces that does not give value to the attractive. Examples of closed loop firm's customers. supply chains include cameras, toner

A closed loop supply chain is designed and managed to explicitly consider the acquisition and reverse flow of products, reuse activities and the marketing and distribution of the recovered products.

Sustainability is the ability to meet the needs of present without compromising the ability of future generations to meet theirs.

28December 2014

ISCM - SCMPro Excellence AwardISCM - SCMPro Excellence Award

AWARDS

Vijay Wadhwani- Outstanding Achievement in Supply Chain Transformation

Kalpesh Pathak- Leadership in taking Supply Chain Global

Dr. Rakesh Sinha- Outstanding contribution to the practice of Supply Chain Management.

ISCM-SCMPro Excellence being given away by Dr. Rakesh Singh (Visiting Professor of supply chain strategy and economics, Great Lakes, Chennai and Chairman, Institute of Supply Chain Management, Mumbai, Managing Editor, SCMPro)

Awards

December 201429

AWARDS

Shashank Raodeo- Leadership in Supply Chain Management

Subasish Roy receiving award on behalf of Dr. Vandana Sonwaney for Excellence in Supply Chain Education.

Srinivas Sattiraju- Transformational Leadership in Supply Chain

Nimesh J. Shah on behalf of Samir J. Shah for Distinction in Supply Chain Skill Development

Going beyond common sense

The inventory tangle

The art and science of it

when they want. Add to this the order based on some simple algorithms. unreliability of our own machines and the Both cases could be expensive. “Supply Chain is nothing but common vendor deliveries. And of course we sense”, thundered a Vice President of a This is where the concept of inventory would have either hundreds of finished manufacturing company. Yes, very true. classification can be helpful. The idea of goods or raw materials. All of them sold But, as my friend Girish (the editor of this an ordering policy is to balance the cost of or sourced from different corners of the magazine) put it, so is launching a rocket stock outs versus the cost of excess world and paid in multiple currencies. to the moon – it's also common sense. All material. Material could be classified as Does this still seem simple common we need to do is find a fuel that can create ABC, XYZ or some other criteria and an sense?a thrust so that the rocket overcomes the ordering policy could be evolved for each

force of gravity and is propelled into outer category. By doing this, the entire space. How simple!! I am reading a book ordering process could be made very easy.

We have had a series of Classroom articles – The Selfish Gene, and it makes the The idea is to use the intelligence of the on inventory management. Let's try to theory of evolution and genetics also employees to create inventory policies get a perspective on that and understand seem very simple. However, for most of rather than to create and manage how we can use the theory to go beyond us, we would neither be able to create a emergencies. common sense. An average organised rocket to the moon nor do deep research retail store could have 30,000 SKUs on its in genetics based on such sources of shelf. A medical distributor could handle common sense. To a good extent, supply chain is a more than 10,000 products. An science. And, like all sciences it has to be The often repeated and abused definition automobile plant could have more than

experimented with, laboured over and of supply chain of getting the right 10,000 raw materials. One way to handle learnt. In the early years, science is at a material at the right time and the right this complexity is to employ an army of stage where little is known with certainty place is surely simple. To start with, we buyers or materials specialists and have and even the greatest of scientists hardly know what products our each of them handle about 100 odd propound wrong theories. The great customers want, where they want and products. Another alternative could be to

SCMPro CLASSROOM

30December 2014

Supply Chain

In this issue of SCM Classroom, Prof. Piyush Shah provides a

simple way to apply the theory of inventory management to

the everyday work scenario. As he says – he is requesting

you to think about the fundamentals a little more closely.

Piyush ShahDirector ISCM, Research Editor- SCMPro

is nothing but

common sense

SCMPro CLASSROOM

December 201431

The often repeated and abused definition of supply chain of getting the right material at the right time and the right place is surely simple.

The aim is to give the practising managers a dose of theoretical principles that they probably already know, but have forgotten them along the way.

Galileo believed that the tides are caused business”, etc. Every person is different. commitment and also some level of by the sun and that the orbits of planets So, does that mean medical science can't incentive alignment among functions. are circular. Both of these theories have work? We have the theory of economics All theory implementation, need a base been proved to be wrong. But that does that is applied successfully in all the to work. Sometime firms jump the gun not make Galileo a lesser scientist or counties across the globe. There are and apply the latest buzz words without astronomy a lesser science. For that differences. But, there are similarities enough ground work. Firms implement matter, even medicine is not a perfect also. Advanced Planning software to science. Doctors make different collaborate with distributors and The month end push for sales and week diagnoses for the same symptoms and vendors. They miss out aligning the to week demand variability is observed in often have different line of treatments. purchase and the sales function. In such automobiles, pharmaceuticals, FMCG cases, the software will surely give under and durables. This push is not dependent optimised results. on the industry. For firms, irrespective of

the industry, the push is greater if the primary sale is the focus. For firms that

Well, the Classroom series of articles follow the secondary or the tertiary sales intend to add some scientific sense to the the push is much lesser. While there are common sense. These articles may not industry specific issues of discounts and solve your immediate problems. The aim returns, the larger perspective does not is to give the practising managers a dose The concept of 'science' here does not change. of theoretical principles that they mean a perfectly objective scenario. So, in

The excuse of 'difference' could come probably already know, but have the near future we may never be sure of from a lack of knowledge or also from forgotten them along the way. The the exact amount of inventory to pure laziness. In some cases, managers are principles are intended for making maintain. The meaning of 'science' is happy in not applying theoretically pol ic ies and procedures . Good that we have a basis to what we do and correct decision patterns as it allows them procedures go a long way in reducing the that we keep learning. We might have a to have someone else to blame. In the day to day problems. basis for vendor selection. So long as we example of tracking secondary or tertiary follow the pattern it is okay to be proved sales, most managers know the problem. wrong. The process can always be But, by following the primary it makes it improved with new knowledge. This easy to manipulate the sales numbers and pattern of working is science. We create a ensure incentives. hypothesis and possible way of working

.We test it in practice and then either choose to continue following it or have it

Let's go back to medical science. Malaria improved. can't be cured if the doctor diagnoses it as I suggest that you read the articles and The theory of Operations and supply influenza. Wrong diagnoses can't be force yourself to think – “If I was forced chain management can help us with the called the failure of theory. Sometimes to this in my function, how I would do initial hypothesis. The theory tells us raw material inventory is a result of it?” I'm not forcing you to apply the what the important variables are, their vendor location and not the ordering principles, just requesting you to think sensitivity on the solution and the policy. In such cases, changing ordering about them. When we actively think possible unintended consequences of the policy may not have a major impact on about using a tool, the applications decision. The real life learning could then the inventory levels. Yet, it is not that automatically emerge. Go ahead read, be used as a structured continuous ordering policies do not impact. Just that test and apply. Some principles may improvement mechanism. in this particular case, the location is the apply to you and others may not. Take major reason. what applies and write in to us. We will be Sales and Operations Planning (S&OP) happy to learn from your experience and This is a common excuse we keep hearing has not worked in many firms. This does further develop the theory of supply - “India is different”, “It can't work in our not make S&OP impractical. A good chain management. industry”, “We do it differently in our S&OP to work needs executive

The Classroom series

The right theory

My firm is different

Supply chain management has moved to the board room. There is a huge interest in supply chain

management among large corporate. But the SMEs have to yet understand the importance of

supply chain management as a key differentiator and growth driver. SME's have not grasped the

fact that a supply chain can improve quality services, achieve cost reduction and enhance

efficiency. To a large extent, this is due to the insufficient understanding about SCM. This article

examines the importance of SCM in SMEs.

32December 2014

and

Supply Chain Management

SMEs

upply chains are not just about logistics and generation capability, their survival and growth is Stransportation. They include understanding the becoming increasingly difficult. Due to their small customer's changing needs, product innovation, size and the relatively smaller bargaining power, they customer relationship management, sourcing, and are at the receiving end from the larger buyers. To supplier relationship management, in addition to the add to their problems, due to increasing transportation and logistics operations. In today's globalization and better connectivity, buyers can increasingly globalized economy, small and medium source goods from any part of the globe, giving them enterprises (SMEs) are considered to be the drivers cheaper options, possibly better products, higher of employment, exports, and a major source of services levels, more variety and better delivery dynamism, innovation and flexibility. As India's terms. This changing global purchase scenario creates young population enters the job market, the SME's additional hurdles for the SME through global will be the major player who can provide them with competition – the Indian SME has to compete with meaningful employment. They are the drivers of his Chinese counterpart in price, and the European economic development in many parts of the country. counterpart in quality. SME's are an integral part of the big enterprise's The inability of a SME to invest in R&D or supply chain providing material and services that are

technology limits their business growth. Lack of not economically or technically viable for them to investment in R&D inhibits product innovation- produce. which in turn limits the SME's ability to compete

In spite of their importance to the economic with newer players. One way out for SME's to meet wellbeing of the nation and the employment the product innovation challenge is to enter into a

December 201433

partnership with their customers. Some large manufacturers like Toyota help their suppliers with product innovation. Toyota realized that it cannot produce quality vehicles, if their suppliers are not quality conscious. Toyota set out to improve the capabilities of their supplier base by providing them with technical assistance for product development and innovation. Toyota's co-operation with SME suppliers is have the ability to manufacture it at a reasonable efficiency. solely based on business considerations, which include an They do not have formal management training and have assessment of the overall economic and technological learnt the process on the job. They depend on the large capacities of the potential supplier. buyer for their sales. This puts them at the mercy of the large

buyer. To maintain their customers, the SME has to accept the terms and conditions imposed by the buyer, including payment terms and the mode of supply. For example, the buyer may need a just in time supply. The SME does not have the supply chain capability to deliver just in time. The result, the SME ends up with the inventory and bears the inventory cost. The buyer will show a reduced inventory cost. But the inventory is still in their supply chain- the cost has been hived off to a different player. In certain cases, the buyer insists on the type and nature of the transporter. The SME owner, who is a technocrat and does not have the The other major constraint SME's face is technology. Due to requisite supply chain expertise fails to understand the cost their small size and relatively low purchasing power, the implications. And loses margins. The owner accepts this as a ability to buy the appropriate technology is limited. Buying cost of doing business. Quite often, the SME supplier does power is one of the issues that plague the SMEs. Another not have the ability to understand the nuances of a supply challenge is the lack of trained resources to use that contract drafted by a large buyer, leaving them exposed to technology. We will examine the HR issues in SME supply conditions that cannot anticipate.chains in a while. Bigger firms, especially in the developed

world would like complete visibility in their supply chain. Large buyers are now beginning to realize the symbiotic This means the ability to track and trace material flow relationship between them and their suppliers. Over a period through the entire supply network – often going down to the of time we will see greater integration of the SME supply third or fourth tier supplier. In the absence of such chain with the buyer. To the extent some large buyers are capability, they discontinue dealing with the supplier. today offering training and help to their suppliers on Therefore, apart from the manufacturing technology, SME's managing their supply chain. have to integrate technology into their supply chains too. Technology allows for faster information flow between the SME supplier and the next node in the supply chain, and Just because their scale is small, does not mean the SME does helps the transmission of the quality, cost and delivery not have to focus on its supply chain. When it comes to requirements down the chain. implementing changes in their supply chains, SME's have

some inherent advantages. They have a flat hierarchy, with a Here again, technology service providers have realized the centralized decision making. This means change is easy. potential and are working on lower cost models aimed at the Once the decision maker is convinced, it will get SME sector in the developing world. CISCO, for example implemented. A case in point is Relaxo Footwears, a Noida has launched a series of lower cost collaboration and tracking based manufacturer of footwear. Six to seven years back they tools for the SME sector in India.had a Rs. 100 crore turnover. Then they hired a full time supply chain professional who worked with them to iron out the kinks in their supply chain. This enabled them to Most SME business are family owned – either first or second respond faster to their customers, which in turn increased generation technocrats who understand the product and their sales. Last year they closed a top line of Rs. 1200 crores,

The Technology Challenge

SCM in SME

The Yoke of the Buyer

This changing global purchase scenario

creates additional hurdles for the SME

through global competition – the Indian

SME has to compete with his Chinese

counterpart in price, and the European

counterpart in quality.

34December 2014

offer holistic supply chain training. Supply chain is not the first choice for a large section of the graduates. To top it, SME's, by their very nature are not the choice, even if taking them out of the SME tag. they wish to look at a career in supply chain. This deals a

The SME's growth and profitability depends on their double blow to the SME when it comes to acquiring and ability to improve their productivity and quality. This in using technology in their supply chains.turn depends on their ability to integrate with the

Mahindra & Mahindra, the Indian automotive upstream supply chain. manufacturer has realized the importance of talent in the supply chain. As a first step, they, in association with the Indian Institute of Management, Ahmedabad, have Many big buyers operate under an “arm's length policy” instituted the Mpower program aimed at their customers. binding their suppliers in a purely commercial transaction (They still have to take it to their suppliers) Under the based on quality, price and delivery standards. The first to Mpower program, 30 young transport entrepreneurs realize the advantage on integrating the SME suppliers undergo a 14 day program at IIM Ahmedabad in various into their supply chain were the Japanese. An executive aspects of running a transport business. The aim is to form the US auto industry is on record saying that 25 professionalize the trucking industry. The entire course percent of the cost advantage of the Japanese auto makers content was developed ground-up through participation comes from the efficiency of their supply networks. Some of young transporters who shared their concerns and big buyers are slowly realizing the critical relationship with spelled out their knowledge needs for running their their SME suppliers. In Philippines, the ECOP Big existing business through their own vision for the future. Enterprise Small Enterprise Quality and Productivity

Improvement Program (EBESE) is PPP initiative where Though an excellent initiative aimed at mentoring the the big buyers enroll their SME suppliers for training on good housekeeping and process improvement practices. Toyota was one such enterprise. In one study, where Toyota had enrolled 39 suppliers for the program, it realized that the program helped the suppliers improve their competitiveness in terms of quality and productivity and as a result, Toyota improved its competitive advantage.

next generation transport industry, we need to see similar initiatives when it comes to the suppliers. Firms need to realize that the elusive customer is just one part of the business. The real force that helps them tap into the potential that the customer offers is the supplier. Most large firms have squeezed quite a bit of savings from their manufacturing process. There are a host of initiatives around such cost optimization. The next wave of cost optimization should come from the supply chain – and an important part of that supply chain is the SME. If the Supply chain itself is a developing field in many large

corporates. It is only recently that larger corporates have SME survives, we will see a resurgent economy. We will started bringing their supply chains from the basement. see innovations in product design and manufacturer. The fundamental issue for supply chain management is What is needed is collaboration between the large buyer the lack of trained manpower – there are a very few B- and their hundreds of SME partners, with an aim to Schools who teach supply chain as a part of their increasing the supply chain surplus.curriculum. And there are fewer training institutes that

The Enlightened Buyer

Talent Issues in the SME Supply Chain

The SME's growth and profitability

depends on their ability to improve their

productivity and quality.

Firms need to realize that the elusive

customer is just one part of the business.

The real force that helps them tap into the

potential that the customer offers is the

supplier.

Motorola's "Five Stage Model" for supplier development:

Define the Supply Universe.

Competitive Benchmarking.

Performance Tracking.

Supplier Development.

Becoming a World-Class Customer

ogistics trends have shown a structural of increasing importance around the Lshift from air freight to sea freight, air world. Green issues are now a significant freight is often used for high value and low part of many companies' logistics strategy volume shipments. According to the latest and more customers are interested in cost and supply demands, companies are alternatives, more eco-friendly trying to find other and cheaper ways to transportation options. New regulations transport their goods. As the shipment are also coming from the governments that cost of sea freight is usually lower than the put higher demands on the industry. It air freight, sea freight has naturally become will not be long before companies begin a popular alternative. Companies are with “Carbon Mapping”, “Carbon investing heavily in systems that enhance Credits” and make use of alternative forecasting capabilities, better visibility to energy sources to reduce carbon inventory, inventory management systems consumption and operate in a sustainable and enhanced supplier / customer environment.integration. These systems are allowing New technology solutions such as smart companies to reduce the urgent phone apps erase boundaries between the requirements, consolidate shipments and office and the road; it is easier to deliver thereby optimize on the cost of

shipments while managing schedules, transportation. routes, and hazards on the go. Smartphone Environmental awareness and apps can provide real-time information sustainability pressure has become a topic about cargo status, help make more

The numbers are slowly turning cheerful. After three years of low growth India is poised for a

pickup in growth. But these three years have seen fleet reductions and driver scarcity, leading to

a reduction in freight capacity. We are caught in a pincer – rising demand on the one hand and

falling capacity to execute. The freight forwarding industry has its task cut out for it. SCMPro spoke

to Balaji. V, Chief Operating Officer – Allcargo Contract Logistics on the emerging freight scenario

in India.

36December 2014

V BalajiChief Operating OfficerAllcargo Contract Logistics

Riding On Success

HUMAN RESOURCESME CORNER FOCUSCONSTRAINT ACADEMIC ADVOCACY

December 201437

Logistics trends have shown a structural shift from air freight to sea freight, air freight is often used for high value and low volume shipments.

LSP FOCUS

accurate decisions and respond customer and share holder's solutions include FCL/LCL to customer needs with the value. From a humble cargo, ocean, air, rail/road most current information. 3-D beginning we have evolved into movement for export and printing is another area of all facets of Logistics space. import shipments.technology that will be suitable Allcargo is the pioneer in We offer seamless for supply chain solutions, integrated logistics in India, transportation solutions more so in the area of with expertise in NVOCC through a single point of packaging and packing (LCL & FCL), CFS & ICD, contact. This effectively means solutions, space optimization Project Logistics, Equipment that you need to only contact and enhancing new product Hiring, Coastal Shipping and the nearest Allcargo Logistics development's time to market Contract Logistics services. Ltd. office and we will have Specific to NVOCC, Allcargo's Due to Increasingly specialized your shipment picked up from wholly owned subsidiary ECU-logistics solutions companies your doorstep, undertake all LINE is one of the world's are outsourcing some of their documentation formalities and largest LCL service providers. activities in terms of supply deliver the goods to the final In India, we are one of the chain management and destination – keeping you largest CFS & ICD operators. logistics. By entrusting their informed on the status at all We presently operate 4 CFSs logistics affairs to other times. As pioneers of Multi City and 2 ICDs across the country. companies they can pay more Consolidation (MCC) service Our CFSs are located at JNPT attention to their core business. in the country, we leverage the (2), Chennai (1), Mundra (1) This means that more logistics strength of having a large and ICDs at Dadri (1) & solutions providers are customer base to transport Indore-Kheda (1), with overall specializing in certain sectors. container loads from the ICDs capacity to process 500,000 Different sectors have different to the gateway ports, where the TEUs annually. We own over demands and are looking to containers and shipments are 1000+ world class equipments, outsource more and more, not reworked to be delivered to the which includes over 300 trailers only in terms of basic final destination.which are servicing our transportation but also other customers for their end-to-end On a similar model, we have activities, like distribution on logistics needs. In coastal made import MCC a unique even product assembling. shipping we are one of the selling proposition for our

largest and we own 3 general import services. Cargo meant cargo vessels. Allcargo also has for an inland destination from strategically located warehouses various origins across the globe at Goa, Pithampur (near is consolidated at the gateway

As part of Avvashya Group, Indoor) Hosur (in Tamil ports into a single container Allcargo is one of India's largest Nadu), Chennai, Gurgoan and transported to the logistics company in the private (near Delhi), Bangalore, hinterland destination via rail sector, listed on BSE & NSE. Ahmedabad and Bhiwandi or road.As a pioneer and a (near Mumbai) and specializes

Apart from offering multinational leader in in Contract Logistics, I2M, comprehensive transportation integrated logistics Allcargo has Line feeding , VAS , to name a and global logistics solutions, presence in over 90 countries, few 3PL & Warehousing we are constantly in the process with over 200 offices globally services. of adding a host of services to and over 8500 team members. As an IATA certified multi- our existing portfolio so we can Allcargo is today a truly largest modal transport operator, we serve better across the entire integrated global supply chain are experts in seamlessly spectrum of your logistic logistics provider with the key knitting various modalities requirements.objective to grow on the together. Our transportation

How has Allcargo evolved as an Integrated Logistics Provider?

Over the next two decades, country's middle class will grow from about 5% of the population to more than 40% and create the world's fifth largest consumer market.

38December 2014

What trajectory do you see for an Indian firm in the global logistics space?

was estimated to grow to 250 government more transparent, million by 2020 and projected responsive and accountable. to be over 500 million by World's largest democracy is 2025. soon going to be much more There are many factors which

populous than China and largely favour an Indian firm in 3) Make In India: A major Japan. When people talk about the global logistics space new national program. untapped potential, India is a wealth of opportunity waiting to be seized. Not since the Second World War reconstruction period has any country seen this kind of wealth expansion in a population. With India becoming a manufacturing hub movement into and out of India will increase substantially. This will fuel the growth of large Indian integrated logistics company to support global

namely: Designed to facilitate logistics supply. This needs a investment. Foster innovation. better logistic solution and 1) The Indian Logistics Enhance skill development. industry is evolving: There are

regulatory reforms on the anvil, followed by port development and road/ railways infrastructure. This will definitely drive growth and will improve overall efficiency of Indian Supply Chain.

2) Indian Middle Class: Over the next two decades, country's middle class will grow from about 5% of the population to more than 40% and create the Protect intellectual property. service across the globe. As an world's fifth largest consumer And build best-in-class integrated logistics company market. This gives raise to the manufacturing infrastructure. Allcargo has all the services disposable income. India's There's never been a better available across the globe in population is not just growing time to make in India. The one roof. We have CFS and but that two-third of its campaign, 'Make in India' is ICD's across the country and population is under the age of aimed at making India a warehouse across the globe, 35. manufacturing hub and with most effective modes of

economic transformation in movement which makes India will not just eclipse India while eliminating the optimum utilization of costal China with its youth unnecessary laws and lines , railways etc. India will population, its middle class regulations, making not only be a global growing at a faster rate than bureaucratic processes easier manufacturing hub but will expected. In 2007 Middle class and shorter, and make also be a considerable growth made up just 50 million and

4PL is an integrator which assembles technology, capital and resources of its own organisation and other organisations to design, build and run supply chains.

LSP FOCUS

39

in self consumption. solution which delivers value through the ability to have an impact on the entire supply chain .4PL will integrate the client's supply chain activities and supporting technologies across these "best of breed" service providers with the capabilities of its own organization.I view 3PL as a traditional model, that is been

around, where the parent company is some sort of It identifies what nodes and networks should look transport company , forwarder, warehouse and its like and who should manage them, then establishes core business has expanded out into doing the processes and governance for each supply chain additional services for its customers. But the primary node.intent is always to bring business to the mother company.

3PL has now adequately moved to 4PL. 4PL is a standalone supply chain service 4PL has both the strategic and tactical view point, which the 3PL does not have. If the requirements of the company are more complex then the company need to look hard at 4PL.

4PL is an integrator which assembles technology, capital and resources of its own organisation and other organisations to design, build and run supply chains. 4PL delivers the comprehensive supply chain

4PL is replacing 3PL. Can you help us understand its role in the future logistics and Services evolving around this concept?

1PL

2PL

3PL

Actors

Cargo Owners Manufacturing, Retailing

Carriers Transportation

Logistics serviceprovider

Logistics

Lead logistics providers& consultants

Supply Chain Management

Supply Chain Integration

Services

LSP FOCUS

eevan Rao Sahib, floated Indelox Services Pvt. Ltd 175 people serving more than 100 multinational and Jin 2000 after having worked in the automotive, domestic organizations of varied sizes in India and electronic engineering and leather garments/goods globally. They have strategic bases in Chennai, Delhi manufacturing sectors, and finally at a customs and Hyderabad. Increasing market share in these broking and forwarding company. Indelox was regions is the near future endeavor.promoted to offer high quality services as an outsourced supply chain service provider. Indelox Services Private Limited is a privately held supply Jeevan had a constrained childhood. As a young boy chain management company established in 2000. of 13 years, he was assisting a local shop keeper to Headquartered in Bangalore, Indelox focuses on make purchase of Bread and Cigarettes from international trade and provides services for wholesale vendor after his school in the evening and organizations to efficiently operate and manage distributing newspaper in the morning, while manufacturing and services supply chains. Today, dreaming of growing up to be someone of stature. Indelox is an INR 200+ million organization, with The dream spurred him to start a business. But the

The Early Years

Creating a World Class Service Organization

The SME segment in India is rife with examples of people who have built businesses –

sometime large businesses through sheer grit and determination. There are a

number of platforms where they are facilitated. But there are no such platforms for

the SME Supply chain firms. SCMPro has interacted with a host of SME players who

have managed to build credible enterprises in supply chain. With this issue, we are

bringing you a new series – The “SME Spark” – a series of inspirational stories of SME

Supply Chain firms. For the inaugural series we bring you the story of Jeevan Rao

Saheb of Indelox Services Pvt. Ltd.

40December 2014

SME SPARK

December 201441

SME SPARK

Having commenced the journey as an entrepreneur he has taken it further on the path of Excellence and has kept the growth consistent and provided the guidance that sets apart his organization from others in the field. He insists that for an organization to survive for a long term is to set tough goals. Indelox has since 2006 been working on the excellence program based on EFQM and Malcom Baldridge models, this has reaped rich rewards.

early venture failed. After the failure of his business at the From Bangalore, where Indelox has its headquarters, the age of 25, Jeevan took up employment, but never gave up company has now spread to Delhi and other key locations. his dream to be an entrepreneur. Jeevan rose to the position In its short span, Indelox has managed to gain customers of CEO of his firm. Fourteen years later, the itch to create who are among the top three in the world. To keep pace an enterprise made him quit a job of CEO and provide with the growth in customers, Indelox has added opportunity to people who have a dream to share and professionals who are the backbone of a supply chain service created an enterprise to fulfill this aspiration. This was the provider. The first year turnover was just under a million genesis of Indelox. and today it is more than 200 million INR.

From its humble origins, Indelox today is a 200 million Partnership and association with few overseas partners from INR Organization earned only from services. A dozen staff Singapore, USA, Japan and others, has increased the reach in 2000 today has grown to 175 people in direct and the capability of the organization. Plans are also on the employment and indirectly another 100. Indelox serves anvil to set up overseas offices so that footprint increases. more than 100 Organization of all sizes and varied Industry

Jeevan is a perfectionist and goes is passionate enough to from across the globe and India. Jeevan has made his mark convey his belief to people and customers which is the and has been recognized as man who loves perfection and reason customers believe that they are in safe hands. He strives for quality in every aspect of life. Jeevan took the risk believes that everyone has born qualities that are equal and of not only quitting a comfortable job but also ensured that only that the focus differs over years. Being an SME it has the people employed can earn modestly and make their not deterred him to implement quality and excellence living happily. He has made continuous effort to take the initiatives that are taking the company to greater heights. organization on the path of Excellence and has been Jeevan looks at the small picture and exceeds expectations recognized by Leading Business Organization of India.every time. Jeevan firmly believes everyone has the required skill and talent, but they need to understand that nothing is beyond achieving. He lives and works with these, inspiring simple words that he prescribes.

Jeevan believes in leveraging technology at Indelox. His Operations are supported with Microsoft ERP- something

Jeevan is the founder and Managing Director of Indelox rare for SME in services to have adopted. Indelox provides Service Pvt Ltd overseeing the progress and directing the organization with services at every level of function, moving goals to be achieved now and for the future. He desires that cross border, procuring, storing duty free, in plant logistics, the company he brought into existence sustains and survives Sales Operation, Distribution, Post sales, Asset Recovery for years to come on its values of fairness and wellbeing of and not to forget Trading across Border. the society. A robust Value based behaviour and PMS is

The world has recognized Indelox's achievement. Indelox driving this enterprise to new heights.has many first to its credit - Indelox was awarded with CII

After the failure of his business at the age of 25, Jeevan took up employment, but never gave up his dream to be an entrepreneur.

Receiving Asia-Pacific Entrepreneur Award 2012

42December 2014

SME SPARK

which are not core to the organization, this insight was due to his 2 decades of working experience.

The initial years of Indelox was a struggle, with no help forthcoming from any quarter. But in the past couple of years Jeevan attended at IIMB NSRCEL, participation in CII Institute of Quality and IMC Business Excellence program which gave him a great impetus to the efforts to find clarity and direction to elevate understanding and EXIM BANK BUSINESS EXCELLENCE PRIZE IN competence.2013 in SME category is the only company so far, from

Supply Chain Industry to have won the award. It is the Indelox's success was not without its share of problems. first company certified as AEO by Indian Customs in Multiple role playing as an entrepreneur is challenge that warehouse Category, has been awarded CII WAREX everyone including me had to endure, being first Silver certificate, ISMS 27001 to protect Data, generation entrepreneur understanding the Fund raising Information, IT Network, again a unique one in Supply process, competence/ capacity building and shaping Chain and as an SME Leading SME 2013 by DUN & organization building ability was a challenge. Close BRADSTREET. associates walking out without reason and commitment,

staff jumping fence, which is global phenomena has also Jeevan would like to see Indelox grow further as an been a challenge for retention of knowledge and skill.organization which is synonymous with knowledge,

quality service, compliant under all regulations of the land and provides fair returns to every one of the stake holders. We strive to be differentiated not on price but on quality of service and the secret lies in delivering consistently, delivering promises.

People in Idelox are a great lot who are coping up with The High point or Indelox was when a global giant standards that are set high to differentiate themselves at awarded it the contract for managing their India Trading workplace and in competition. I am very fortunate to Business a decade back which catapulted Indelox into a have a passionate crowd around me. solution provider with high potential to meet large scale

operation demands. And there were instances when we Credit for all that I and Indelox have achieved is due to had to shake hands with a customer of more than a the team. The dream is to set up facility of its own which decade, who resorted to restrictive policy which stifled our will represent the Indelox competence. expansion plan.

The vision for Indelox when Jeevan started was that the Indelox is still a work in progress. The dream to create a enterprise created has to enable Business Success for truly world class facility that can cater to multiple organization in commercial function when it is Industry sectors in high technology areas is still to be outsourced. Further there are dearth of service providers achieved. Though, the foundation of such a growth has who offer a solution to manage commercial activities. been laid years back. Indelox will gradually grow. It aims Indelox developed this vision during the liberalization of to show case Indian capability on par with global practice. the economy. Jeevan was watching the liberalization The dream is to develop Indelox as a class niche period maturing and new venture possibility which can organization in the Supply Chain services.assist at a matured level outsourcing many functional areas

Silver Certificate WAREX CII certification for warehouse facility

People in Indelox are a great lot who are coping up with standards that are set high to differentiate themselves at workplace and in competition.

Apply, Apply – No Reply. This adage is true for as long as there have been job aspirants. Quite

often, we seem sure of our candidature. But somehow, we seem to be over looked for the job. The

unfortunate part of the job search process is the secrecy that surrounds it – very rarely does the

firm share the real reasons for not selecting a candidate. However, there is a method to come out

a winner. Darryl Judd, COO, Logistics Executive shares his perspective on how you can get that

job!

Darryl JuddCOO, Logistics Executivedarrylj@logisticsexecutve.com

44

The Art of

ncertainty is an aspect I find as It is therefore hard for candidates, Udifficult to manage as anyone particularly those who are very talented else but thanks to a career in and accomplished, to accept that they International Motorsport, I have also were not successful in gaining an learnt how to handle the ups and interview or job. Unfortunately downs with a lot of resilience and an candidates will often remonstrate “why eye on the end game. Experience has did I not get the interview, I have all taught me how to not only manage the the attributes you are looking for?” disappointment of defeat, but how to Unfortunately, most of the time this is use this, to find the valuable lessons countered with less than satisfactory and experiences. responses, such as “sorry there was

someone else who met the Take the recruitment process. Based requirements better' due to the on the law of averages, it often takes nefarious subjectiveness and several failures and many attempts confidentiality requirements of the before you land a new job. In the words of Thomas Edison, the great inventor: “I have not failed. I've just found 10,000 ways that won't work.” Success rarely comes overnight.

recruitment process, it is hard to give candidates the satisfyingly adequate explanations they deserve. This leads to a lot of discouragement amongst candidates.

Winning “Discouragement and failure are two of the surest stepping stones to success.”

-Dale Carnegie

HUMAN RESOURCESME CORNER FOCUSCONSTRAINT ACADEMIC ADVOCACY

December 2014

So what can you do minimise subjectivity and photo. This is a great way to immediately make an ensure you maximise your chances at getting past impression. By inviting a LinkedIn connection, first cut? you will also establish the grounds for continued

contact with the Employer, regardless of the The first thing to do is apply realism. The first outcome. Of course, it is important to maintain place to look to find out whether a candidate will professionalism throughout this exchange. A make the first cut or not is the job ad. The first photo is a powerful way of communicating. It can place to start is an honest self-assessment. Do you tell people a lot about you “a thousand words” as really have all the attributes? Even if you do, how they say, so its important that if you want to give do you think you will rate against the other the impression of a good office worker, your photo candidates you will be up against? This is a very on does not show you dressed in your favorite important first step. A thorough understanding of fishing outfit, no matter how much you love the your strengths and weaknesses will give you the sport – save that for facebook! Of course, this insight to understand how to best position brings me to your online persona. Do not yourself. For example, if the role is based in underestimate the power of the Internet or think another country and they are looking for a local that Employers will not investigate you online. person, you might as well address this up front if Please ensure your LinkedIn profile is up to date you do not meet this critical requirement. By and a true reflection of your professional aptitude doing so you give yourself the chance to counter and experience. the concerns of the Employer, before they dismiss

As disappointing as it may be if the outcome is your application outright. For example, you could negative, make sure that every time you lodge an say, “I do not live in country, however I have spent application for a job that you find a saver – a lot of time working for a multinational company something to take away with you that will not and in a multicultural environment. I am also render your effort fruitless. Either learn something

willing to pay for all my relocation costs”. These or make a connection that extends your network. sorts of strategies will keep you in the running. There is no harm in following up with a The next step is to really read the job ad and recruitment agency or prospective employer for understand as much as possible what is required. some feedback. A good result is not judged by Make sure that all points are neatly and easily whether or not you get that job but by smaller addressed. Use a simple layout, metrics such as triumphs that add up and will set your course for figures and facts that validate your assertions and long-term success. Patience and perseverance are simple language. For example, a general statement words we often heard at school but ring so true (as like “I am good at fishing” is entirely open to dissatisfying as that may be) today. If you gain conjecture without the added evidence like “In the some insight or intelligence about yourself or the

job market you are trying to make your mark on, last 3 years I have consistently caught 8 brim and 3 then your attempt has been successful. Accept an salmon a day in my current job as a fisherman for unfavorable result graciously. I must emphasise XYZ Company. that word in bold and capitals GRACIOUSLY.

Personalise your application and by doing so subtly Sometimes the way you carry yourself in defeat will open the door for a continued relationship. leave a stronger impression and tell a good deal

more about your character than a success. This will Once you have a polished and concisely tailored ensure you will be remembered as a person who resume, and it addresses all the requirements of the has resilience and a sense of professionalism. These ad, then personalize it with a photo. Reference attributes that will keep you front of mind should your LinkedIn profile in your covering letter and another opportunity comes along. invite the receiver to connect with you. Use

professional language at all times. For example, In this way you will build your reputation, “please note my LinkedIn address under my signoff expanding your professional profile, and eventually and feel free to connect with me online. Include a creating the career success that you deserve. Go photo in your resume, preferably your LinkedIn catch that fish!

Reference your

LinkedIn

profile in your

covering letter

and invite the

receiver to

connect with

you.

Based on the

law of

averages, it

often takes

several

failures and

many attempts

before you

land a new job.

45 December 2014

HUMAN RESOURCE

46

ynamic changes in manufacturing and Dsupply strategies and increased levels of global competition have broughtabout increased strategic attention to an integrated supply chain. Reflected by how much activities in onecompany are synchronized with the activities of its suppliers or customers, supply chain integration has become a strategic lever for performance improvement, and firms are increasingly emphasizing continuity and a ''seamless'' end-to-end pipeline. Successful integration allows firms to link their internal processes to external suppliers and customers, creating competitive advantage through leveraging interwoven activities and processes that cannot be easily replicated.

This study contributes to the significant and

Global supply chains are growing

rapidly, and the ability to manage

cross border logistics operations

has become a necessity to

m a i n t a i n a c o m p e t i t i v e

advantage in a dynamic

environment. This research

addresses current gaps in the

literature by investigating the

buyer–suppl ie r in tegrat ion

dynamics in a global context with

a focus on the antecedents and

outcomes involved in the process.

Empirical data from 320 U.S.

based manufacturing companies

that source from overseas was

collected and used to test the

framework. SCMPro brings you

extracts.

A Global Analysis of Orientation, Coordination and Flexibility in

HUMAN RESOURCESME CORNER FOCUSCONSTRAINT ACADEMIC ADVOCACY

Supply Chains

Ayman Omar: Kogod School of Business, American University, Beth Davis-Sramek: University of LouisvilleMatthew B. Myers: University of TennesseeJohn T. Mentzer: University of Tennessee. The original paper can be accessed at Journal of Business Logistics, 2012, 33(2): 128–144.

December 2014

47

growing body of global itskey global suppliers. opportunities for firms supply chain research Hence, strategic resources lie engaged in the global business examining the integration – beyond the boundaries of the environment. Since effective performance link in several firms, and supplier integration will be a ways. Theoretically, this competitiveadvantage stems key factor for firm survival, research examines global from competing as an integral further extension in a global supplier integration (GSI) part of a supply chain and no context will be critical for antecedents and outcomes longer as individual firms. future firm success and and builds a corresponding performance gains.Because supply chain theoretical model using integration can encompass While there has been a strategic management theory many links in the supply tendency to focus on supplier

through the relational view of chain, we narrow the scope of integration activities in new competitive advantage. The our research to GSI, and we product development, there is central thesis of this theory is examine this phenomenon a lack of research in other that firms in a supply chain through the lens of the contexts and also in can develop relationships that relational view. Integration of examining supplier result in inter-organizational suppliers with internal integration antecedents. We processes which allow them to business processes requires a address this gap by examining systematically identify set of skills that extend how collaboration and the valuable know-how and then beyond mere order placement management of product and integrate it across to managing supply bases and information flows through organizational boundaries. combining resources with key operational coordination Unlike other theories of suppliers. Further, addressing foster GSI. Further, there is a competitive advantage, the GSI (where at least one contention that integration relational view considers member is located cross involves a firm's disposition strategic relationships in the border) has become to integrate with suppliers, analysis and consistent with particularly germane as the and this stems from cultural this view, we examine a changing landscape and and attitudinal factors that specific relationship between increasing level of result in fairly consistent a manufacturer and one of globalization creates new behavior. Thus, to

While there has been a tendency to focus on supplier integration activities in new product development, there is a lack of research in other contexts and also in examining supplier integration antecedents

December 2014

48

Therefore, supply chain management strategies must interconnect what a company ''thinks'' or ''should do'' with what a company ''does'' to facilitate the physical flows

operationalize the activities and processes that facilitate structural integration, firms must develop a managerial philosophy that becomes a key element of strategy, enabling firms to see the implications and importance of an integrated approach to the supply chain. Therefore, we build on more recent supply chain research and suggest that supply chain orientation (SCO) is a critical

critical in a global environment where risk and rewards lead to significant consequences (good or bad) and as firms take advantage of international economies of scale, scope, learn from different foreign markets, and identify location specific advantages to exploit cost differentials in factors of production or the limited availability of resources.

antecedent of GSI. As the Figure indicates, this research also With recent calls to provide more empirical examined the performance implications of evidence of the relative and respective GSI. Our contention is that GSI should contributions of strategic supplier enable the manufacturer to increase integration, our extension of this growing performance through first impacting the body of research leads to the theoretical supplier's flexibility. In an environment model shown in Figure. We expect that where demand is changing rapidly, industry GSI will positively influence supplier characteristics are evolving quickly, and flexibility, which in turn will impact companies are facing new challenges every logistics efficiency and logistics day, flexibility becomes critical, allowing effectiveness, and both then impact overall suppliers to make changes or adjustments firm performance. Finally, we with a minimum amount of time and hypothesizethat cultural distance (CD) resources. In increasingly dynamic between a buyer and an overseas supplier environments, this research provides will negatively impact the relationship empirical support that manufacturing firms between SCO and both collaboration and can experience a higher level flexibility operational coordination efforts.In sum, from their overseas suppliers by integrating the theoretical contribution resides in their supply chain processes. Thus, firms illustrating a comprehensive picture of that value flexibility in their operations can supplier integration in a global context, adjust their process integration levels to which incorporates the impact to both the attain the required level of flexibility.supplier through flexibility and to the When a supplier can respond to both manufacturer through increased logistics macro and micro environmental changes, and financial performance.

the manufacturer benefits throughImplications for Managers more logistics efficiency and effectiveness. The study supports the contention that Through greater supplier flexibility, integration results from both informal manufacturers can then focus on utilizing behaviors residing in the willingness to resources to reduce costs and to focus on share information and knowledge with enhancing effectiveness through more suppliers through collaboration, and also in consistent delivery, a reduction in stock the operational decisions that facilitate outs, and less damage and errors. These product flow and movement through mediation performance effects also provide operational coordination. Therefore, supply more understanding about the role of chain management strategies must integration in enhancing firm performance. interconnect what a company ''thinks'' or Both logistics efficiency and effectiveness ''should do'' with what a company ''does'' had a positive impact on firm performance. to facilitate the physical flows as well as the Therefore, we find more evidence of the associated service, information, and importance of these intermediate financial flows. This would be especially performance outcomes as ''routes'' to firm

December 2014

49

One drawback of using a cross-sectional survey is that investigation of supply chain behavioral dimensions across global players is limited to a point-in-

performance, where integration is critical in this ''chain of events''. The study involved the weaknesses

associated with cross-sectional surveys, Another managerial contribution using a single informant per firm to relates to the nature of SCO within the collect perceptual data, and it is also firm. SCO is referred to as a ''mindset'' marked with the constraints of the depth a ''philosophy,'' and an ''organizational of information a survey can capture. One culture''. Conceptually, this is drawback of using a cross-sectional survey consistent with an overall orientation is that investigation of supply chain of a firm with all of its supply chain behavioral dimensions across global counterparts. While the concept does players is limited to a point-in-time represent a philosophy that a company assessment. Future research should be adopts to manage its supply chain, this directed toward longitudinal studies that does not necessarily mean that the can capture those behavioral elements, in company uses this orientation with all the context of global operations, over an of its suppliers and / or customers. extended period of time. This could paint Companies may apply the 80–20 rule a clearer picture on the effects of or other methods to segment and behavioral elements on global supply identify the important and critical chain operations and its performance suppliers and / or customers and implications.implement this orientation accordingly.

An example of this would be when a Perceptual versus actual behavioral data company has a partnership and were used to test the hypotheses. strategic relationship with one supplier Informants reported perceptions of their while dealing with others on a experiences working with providers. transactional/arms-length basis. Doing While we mitigated potential bias in the business with a ''key'' supplier may also accuracy of the responses by qualifying mean frequent transactions yet the informants and asking them about their structure and governance of a level of their confidence in their answers, transactional (rather than relational) perceptual data are still dependent upon orientation. So despite the fact that respondents' ability and willingness to SCO relates to a firm's mindset, this mentally retrieve and accurately report on mindset could be directed to one their mental evaluation. Future research segment of the company's supply would benefit from obtaining company chain. data that track coordination mechanisms

set in place, collaboration efforts that are The lack of findings regarding the documented, or other relevant data. influence of national cultural Finally, we assessed perceptions of the characteristics in this research may

indicate that in a B2B context, more relationship from only the manufacturer's emphasis should be placed on the frame of reference, and we examined compatibility and similarity of supplier flexibility through manufacturer's corporate cultures as opposed to observation as well. The next step to national culture. Supply chain investigate this theory would be to managers involved in global operations include the supplier's assessment of the may be able to engage better and relationship, thereby examining dyadic establish better integration structures data to increase our understanding of the with global suppliers or vendors with relationship.similar corporate cultures.

Conclusions

December 2014