Supply Chain Management
A critical component in manufacturing is a robust supply chain. Advancements and improvements in supply chain are constant. A dynamic supply chain has several aspects to it, mainly in terms of technology. An average manufacturing company spends at least 1.5% of their revenue on technology that is mainly focussed on improving supply chain excellence. The four distinct areas that have been revolutionized by technological advancements are Visibility, Automation, Analytics and Collaboration.
Backend Technology Advancements
Today, a software designed to handle back-end operations is a must as the logistics arena is complex and vast-to worth a staggering US$300 billion. “Well intact, technology in the current epoch is capable of managing all operations in logistics, from quote-to-cash to exploring business opportunities. Automated process workflows, accurate market assessments based on data analytics, utilization of IoT (Internet of Things) devices for safe and efficient transit and, precise track-a-pack mechanisms are among the many advancements made in the supply chain arena,” avers Roopa Venkat, Co Founder, Mera Transport. A critical component in manufacturing is a robust supply chain. Advancements and improvements in supply chain are constant. A dynamic supply chain has several aspects to it, mainly in terms of technology. “There has been increase in the growth of the tech-enabled logistics provider. As, technology penetrate every area of the supply chain; tracking solutions, sensors and other devices fixed in cargo and vehicles provide a real-time picture of assets (of all types, not simply trucks) in the field. On the back-end, transportation management systems (TMSs) are becoming progressively sophisticated, providing comprehensive transportation management from end to end. For tying seamless TMSs together with onboard tracking platforms and inventory management, now shippers, carriers as well as receivers will look up to smart logistics providers. The main objective is to amend supply chains connecting in transit based on real-time inventory snapshot,” says Sumit Sharma, Co-founder, GoBOLT. Rahul Garg, Founder & CEO – Moglix adds, “with GST coming in, there is lot more focus on building organised supply chain. There is an increase in organised logistics across the country, increase in organised payments, and in organised distribution systems. From the perspective of technology, Cloud adoption / SAP acceptability has increased and hence one can build supply chain solutions that can be integrated to ERP but are available on cloud. Moglix is in line with these advancements, having designed its own SAAS-platform that integrates to the ERP and enables complete digital supply chain for an organisation.”
Mastering E-Commerce Logistics
Online purchases continue to consider for a progressively large portion of overall retail sales. With consumers’ expectations getting reset and in turn retailers’ delivery policies too are being reset. Retailers now have more stringent delivery deadlines as next-day and even same-day delivery are fast becoming the norms. “The e-commerce turnover only continues to grow and retailers will continue to grapple for their share. Emphasized business intelligence and in-vehicle technology will also be momentous, as retailers and their logistics providers lookout for ways to shorten the e-commerce-connected aspect that historically push costs higher, like high fuel consumption and inefficient routing which is what we have tried to overcome from this barrier by leveraging data from GPS and fuel sensors to build algorithms to optimize refuelling points, track any pilferage and select routes to gain optimum marginal benefits, and trip based allocation algorithms enable auto allocation of nearest vehicles to ensure optimum asset utilization and also minimize dry runs. Many retailers already established e-commerce delivery networks. Conquering the art of cost containment will be the next step,” says Sharma.
Supply chain technology propels the journey at each corner and every step, making the product available at the right time and in good shape when it’s needed the most. All cutting edge supply chains have three common characteristics across globe – Customer Centricity, Agility & Collaboration. A robust supply chain has the customer needs at its centre with the entire chain interconnected and interdependent to cater to this need in the most efficient and effective manner. In today’s VUCA world, supply chain’s ability to be responsive and be “ready to change” in response to changing consumer needs has become a source of competitive advantage. At Marico, we believe that, any supply chain transformation that does not solve a customer need is not sustainable in the long run. An endeavour to simplify the ordering process for our customers, challenged by our growing product portfolio and SKU list, led us to develop a simple Web based interface. This was the centre of all our subsequent changes in the planning and distribution process as mentioned earlier. Collaborative real time information sharing by our Customers starting right from the Retail orders through PDAs, to Billing data from Distributor Management System, help us plan our supplies significantly better,” says Jitendra Mahajan, Chief Supply Chain Officer, Marico Limited. Collaborative forecasting and setting up of EDI with large retailers have delivered significant improvement in Fill Rates with our retailers, placing Marico amongst the preferred vendors amongst the FMCG brands in India.
The supply chain is a dynamic process. Products always keep moving as raw materials, finished goods or under development processes. It has to shift stages from machine to machine and from department to department. Therefore, efficient material handling is crucial as it ensures quality, good condition and safe movement of goods. “Failing to do so can incur losses in the form of warehouse accidents and worker’s compensation lawsuits, increased distribution and storage times, and redundant work models. Enterprises are adopting automated material handling systems that reduce human errors and labour expenses. Logistics, on the other hand, are deploying IoT devices to monitor and execute safe material handling, from the source of origin to the delivery point,” avers Venkat. Material handling does not create value; production does. Every minute spent moving, sorting, preparing or storing material results in lost productivity. “In my opinion, the best way to increase employee productivity, effectiveness and quality controls, safety level, productive capacity level, efficiency in receipt, storage and dispatch proper material handling requires a lot of pre-planning which should begin with a systematic analysis of the nature of the handling problems at hand and reduce handling cost, space cost, damage for poor handling, labour cost, fatigue and production waiting time on one hand, material handling is the solution for all,” says Sharma.
Material handling, both warehousing as well as transportation is undergoing a significant transformation, especially in India, with technology making a significant impact on the way transportation and warehousing is managed and the impact of statutory changes like GST. Technology has not only helped the logistics suppliers to come up with innovative solutions to customers problems but also have successfully improved efficiency and impacted the lives of some critical stakeholders like drivers. “It has also helped increase visibility of vehicle movements thereby identifying various opportunities of collaboration between customers and vehicle owners. Technology will play a major role in integrating the immensely fragmented logistics industry, particularly the road transport. In the medium term GST along with infrastructure development will play a major role in redefining the Logistics and Warehousing network for many organizations. The same would again be a significant source of value creation,” says Mahajan. There is no doubt that material handling is crucial for any manufacturer. Even a small error can result in a huge loss for the organization. “For example, for a bike manufacturer, it is imperative for him to know when to start the manufacturing process and when the product moves out of the warehouse. In case of any discrepancies, it can lead to the finished product turning into a non-moving liability instead of being an asset. This in turn directly affects revenue and thus businesses end up paying dearly for such errors,” explains Naval Sabharwal, Global Head – Logistics & Supply Chain, Ramco Systems.
Supply chains are moving closer to the customer and facilities are being closer to major urban areas and e-commerce is the buzzword today. Increasingly, supply chains are getting integrated real time – from Order / Offtake at retail to replenishment and planning. Supply chains that stand apart are the ones that successfully use the information at each stage to respond and influence material and finance movement across the chain. “The cost of transportation for low value items/low margin items is detrimental to the bottom-line. If a very low value item priced at Rs. 6 per kg has to be transported to Jammu and the cost of transportation comes to Rs6.50, the cost of sales becomes unviable. In order to circumvent such situational disadvantage, what most businesses do to improve their bottom lines is that they either move to an area where suppliers and customers are located or they move to two or three different locations. We have therefore, established regional manufacturing locations in Dadra, Vapi, Jammu and Barotiwala in HP. All these factories cater to local demand and they also have some local suppliers to service our requirement of raw materials and packing materials. It is very cost ineffective to transport anything from Mumbai or Gujarat especially in case of low value items. Consequently, many enterprises have their businesses set up in closer proximity to both – their supply sources and their customers in order to avail better contribution on sales,” explains Harnish Juthani, President Procurement, Grauer & Weil (India) Limited.
Logistics enterprises are leaping into the next step in supply chain revolution, particularly around trucking. Machine learning and behavioural analytics are bringing transformational changes to road cargo systems, facilitating safe transportation of goods through roads and highways. “Close monitoring of raw material prices, hands-on on a daily basis or a very short periodical basis is absolutely essential. For large volume procurement, extensive reliance on strong ERP systems becomes a necessity for prompt alerts for corrective and controlling activities which make inventory available on time and prevents fund lock-up in excessive inventories. Now, with the advent of user – friendly ERP systems, even smaller organizations can avail of its myriad benefits,” opines Juthani. IoT devices that alert drivers of a sleepy instance to guiding through secure and risk-free routes are the new talk of the town. Logistics entities should embrace technology and implement it at each of their workflow processes, and in turn, it will promise safer journeys, on-time delivery, and profitable business in the days to come and beyond.
This story appeared in the Sep-17 issue of Manufacturing Today here: MT_September 2017_Supply Chain_Material Handling