Supply Chain Fundamental Rethinking

ROTI stands for Return on Time Invested . I heard it from Mr. Uday Kotak. All courtesy for coining the term to him. I leverage on that term for Supply Chain application in the context of Trade Agreements. ------------- Data shows that Indian Enterprises have productivity much lesser than China or Vietnam or countries with whom India competes for global share of trade. Data like Labour cost % to GDP or measures like travel time, etc make the case very open that Indian industry has a higher cost to serve its customers. Indian Supply Chains were shielded from the impact of their lack of productivity due to government protecting them using levers at its disposal, predominantly Tariffs. With that shield used frequently, what it has done is it has built a high cost Supply Chain which is to large extent is not necessarily exposed to beyond border competition & is able to pass on the inefficiency to its customer. With BTA or FTA or even the Tariff war, it looks eminent that shield is ...

Supply Chain Professionals are working in a chaotic phase of global readjustment triggered by USA’s point of view anchored around trade deficits. For decades, Businesses in general& Supply Chains in particular have relied on ABC analysis to find priority for financial control. This short article is to decipher based on a Supply Chain this practice used. International Trade Centre data of USA trade deficits shows that USA has trade surplus with 118 countries USA has trade deficit with 99 countries. Of the 118 countries only 6 of the countries make up for 70% contribution to net trade deficit, China contributes 26 Mexico contributes 14% Vietnam contributes 9% Germany contributes 7% Canada contributes 7% Japan contributes 7% Of the total 97 HS codes only 4 contribute to 70% of the total net trade deficit Code ’85 (Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television ...) contributes 23% Code ’87 (Vehicles other than railway or tramway rolli...

The size of #GlobalFashionIndustry is almost the size of 6th or 7th largest economy of the world. China being the largest exporter while #europeanunion & #USA being the largest importers.  #IndianFashionSupplyChains with the levers available are shaping up for the #realignedglobalsupplychains in the #fashionretailindustry be it #apparels or #footwear . My understanding of the key Supply Chain issues for Indian Fashion Retail for 2023 look like, a. International customer demand - Inherent characteristic of the #FashionRetail #supplychain is long ordering cycles. While we are in August 2022, order books for global customers for Christmas and New Year shall be booked. A slowdown in developed economies (due to #higherinflation which may have resulted lowering demand) may have left excess #inventory at the retailers. These customers of Indian Retail industry Supply Chain will slow down their demand in the coming months & quarters. Due to the long lead times, Indian ...

"Elephants don't change directions very often, but when they do, it takes a lot to make them turn back again". Commodities have a lot in parallel to that. History exhibits that commodity cycles don't change very fast but when they change the direction its a multi year phenomenon with probably some hiccups on the way. Supply Chains from various industrial sectors will need to align themselves differently. The alignment & much needed adjustment with the commodity super-cycle is a function of multiple things. a. Commodity cost contribution to the overall Supply Chain cost - While many believe that Steel price increases would hurt badly, its not true for all equally. e.g. A Supply Chain analyst may believe that in case of Ship building industry the steep increases in steel prices would hurt. I was listening to the CMD of Garden Reach Ship Builders & Engineers, where he said that steel co...

An opportunity of a life time knocks only once in a life time! So when it knocks, making less than a dramatic use of the opportunity is a "Waste". Ones response to Covid-19 needs to be on those lines as a country or as an organization. Over the years, as opportunities for livelihood did rise in Urban areas, Rural population has come to Urban areas & settled down, in not so much of a great comfort but with some assurance of income. The demand on Urban infrastructure & the Supply Chain designs to meet that demand have kept increasing all the time. The World over and particularly in India, there has always been a talk about De-congesting the Urban area. In the pre-Covid-19 days this remained as an aspirational thought. There has been no great success with that thinking. The imbalances of Urban & Rural livelihood opportunities, which have been in favour of Urban, didn't create an ecosystem which makes a person leave the Urban land.  Covid-19 probably has offered t...

A predominant feature being observed during Covid-19 is ingenious solutions being worked out to tide over the situation. A lot of Supply Chains from various sectors have found temporary ways to overcome the challenges. While solutions have been undertaken as a measure to respond to Covid-19, the history of Supply Chain responses to events like that tend to indicate that Temporary responses have a tendency to stay Permanent. I wish if that is thought through by the Traditional next door retailer outlet. A case in point is consumer side of the Retail Supply Chain. The "Brick & Mortar" Supply Chain is back with the next door retail shop returning to be the primary (rather the only) place of buying stuff. In India, over the years while the "e" platforms or organized retail formats have been rolled out over the years, they have co-existed with the traditional retail shops. During Covid-19 situation this seems to be a blessing in disguise. The existence of the n...

In the days of absence of real time data, many Supply Chain decisions were probably taken late and quality of decision making could have been a challenge. So the emergence of the need for real time data which probably makes data virtually available any time and all the time. This probably is expected to improve the quality of Supply Chain decisions. I meet a lot of professionals and during the conversations what I realize is the probability of "Missing the forest for the bushes" has also increased.  I often remember the case of an Equity investor of the bygone days. He probably used to see the data of his shares only once a day that too with a delay of one day (As in the old days the share prices data used to get printed in the news papers which got delivered next day morning!). Many a times he used to refer to a delayed data set to make his purchase or sell decision. Also his precision of exact price to buy or sell never got executed. The number of touch points in the ...

While no Supply Chain professional likes Supply Chain variations, in reality Supply Chain variations is the only certain event of a Supply Chain. Supply Chain variations should be viewed positively to make the most of them. I personally believe that a system which is stable for a long time develops fragility. Over a period of time the basic immune system to handle variations gets completely eliminated hence when the variations occur, the Supply Chain system is not equipped to handle the variations. So some level of variations in Supply Chain is actually good. They keep the system well greased and oiled. Predictability kills and probably does it faster. As a Supply Chain professional if variations have occurred, I think, it gives a great chance for the professional to go back to the drawing board & redesign. e.g. If, in your Supply Chain, you never had shortages of material, it indicates a great Supply Chain for a practitioner. But for me, it represents a Supply Chain where un...

The need to offer higher variety to end customers is leading enterprises to design larger number of finished products. With customers expecting shorter conceive to commercialize times, the Design department is under continuous stress to keep the idea to commercialize life cycle to its shortest. Under those circumstances, ideally speaking, if Design department has re-utilizable knowledge assets, it is of great help. Every design doesn't need to start from scratch. This being implied in organizations, Design department has its own knowledge assets which it refers to for designing the product. What needs to be further emphasized is the integration of Supply Chain knowledge assets can be the only source for the enterprise to successfully commercialize the product over its life cycle. Else, typically what is observed is that Supply constraints in the growth stage of product create a bottleneck to achieve the full sales potential of the product. During that stage, unfortunately, the Su...

Supply Chain Practitioners appreciate the need to improve Supply Chain performance and in all probability the improvements focus on "hard" aspects of Supply Chain like Network Redesign, Technology Applications, Infrastructure development so on and so forth. Supply Chain best practices are introduced to leverage on those for enhanced Supply Chain performance. The trap here is the structure for improvements is in place, the enablers are identified and the "facilitators" of that improvement are "assumed" to deliver on those. The failure of Supply Chain improvements is not so much to do with "hard" aspects as much as it has to do with "Soft" aspects. From my experience i am penning down a few thoughts on this area. A Supply Chain practitioner landed in Supply Chain, mostly, by accident. It is not by design that a large cross-section of Indian Supply Chain professionals are in Supply Chain. By academics very few are Supply Chain qualif...

Supply Chain inherently have variations. Nothing that is of surprise or unknown to a Supply Chain practitioner. Huge amount of Supply Chain resources are committed to identify root causes of the variations with a primary objective to "dampen" the variations. I see a lot of Supply Chains professionals who dislike variations. They would like the make a detailed analysis to discover the root cause of the variation(s) leading to efforts of reducing the frequency as well as the amplitude of the variation(s). A Purchase person dislikes variations in Sales forecasts which lead to change in Procurement plans. Similarly a Production person dislikes variations in Supply Schedules. Above all the Sales person dislikes variations in Production or Logistics leading to consequences of customer relationship. Each of these links of the Supply Chain invest heavily to find ways of dampening the variations. Question really is - In an attempt to dampen variations, what has the Supply Ch...

FY 18 has been a year so far, where each quarter results have been shifting the pendulum for Supply Chains in India. From emerging growth prospects to policy changes impacting demand its been a period of time where Supply Chains have not had a consistent image of market. Q1 FY 18 was impacted due to roll out of GST. (Day 1 of Q2 - 1st July). Channel partners had to go light with Q1 end inventory hence most of the organisations experienced a lesser channel partner demand in Q1. While the retailers recorded one of the highest June sales, contrast was the case for Manufacturers of the products. Q2 FY 18 was attributed to GST implementation issues. The lack of awareness of the systems & other teething problems. Organisations still found a way to encash with  festive season and e-tailers having one of the best times with discount sales. Some celebrated with rural demand for 2 wheelers, tractors recording higher sales indicating good rural demand. Confuses with other data ...

For many of us associated with Supply Chains in India, it is an interesting period of time. There is a realization that environment is shaping up to offer opportunities but Supply Chain Practices are a step out. It can be a late realization of an opportunity or simply an sub-optimal network or a Supplier relationship which is surrounded with uncertainty.  One of the step out is "Technology" adoption and adaption.  My work across many clients makes me realize that Technology applications are evolving in Supply Chains of India. Either it is a natural journey of the organization which has had technology support its back bone of Supply Chain over years hence the applications are seen in practice & utilized for better decision making. But for many, an ERP, is the highest level of an integrated IT implementation. For these Supply Chains of India the sudden advent & need to implement array of Supply Chain applications is like awakening to a frenzy of wind followed ...

Indian Supply Chains had one of the most demanding year. CY 2017. Its been a year which needed nimble footed Supply Chains, it also needed Supply Chains which needed to appreciate that disruptions to Supply Chain don't only mean natural disruptions and it also meant that transitions to new way of working needs to evolve much faster than your own comfort. The year began with after effects of Demonetization.One of my agricultural industry clients which deals with Live Chicken had to face the challenges where the chicken is ready to be sold but the system couldn't have enough money to buy. Sales prices eroded and profits turned into losses in a matter of weeks. After effects of demonetization on FMCG/FMCD Supply Chain was drop in demand for a period which in 2017 eventually would go back. Many other examples can be quoted on Demonetization effect on Supply Chains in 2017. Automobile Sector Supply Chains of India had to also see a year where the shift from BS III to BS IV...

I really liked the case of Nokia Networks on all that is has done to make it Supply Chain Stronger. I hope you too enjoy the read. http://www.mckinsey.com/insights/operations/how_three_external_challenges_made_nokias_supply_chain_stronger

You may like to visit the link below to peruse my latest article in the July 2013 issue of Industry 2.0 The article is on  Page 8 & 9 http://issuu.com/industry2.0/docs/industry2.0-vol-12-issue-11-july-20/11?e=1516193/4278237 Please do let me know your views & comments!

My article; ‘ Adopting to the Era of Stretched out Payments’ is part of the attached May 2013 issue of Industry 2.0. You may like to click the link below to read the same  (Page 12)   http://www.industry20.com/detail/magazine/7312 Happy reading!

Enabling Trade: Valuing Growth Opportunities ( a new report released by the World Economic Forum in collaboration with Bain & Company and the World Bank) finds that if all countries reduce supply chain barriers halfway to global best practice, global GDP could increase by 4.7% and world trade by 14.5%, far outweighing the benefits from the elimination of all import tariffs.   Some examples from the 18 country and sector case studies in the report include the following: In Brazil, managing customs paperwork for exports of agricultural commodities can take 12 times longer than in the European Union (a full day versus a couple of hours). Poor quality infrastructure services can increase the input material costs of consumer goods by up to 200% in certain African countries. Obtaining licenses and lack of coordination among regulatory agencies in the US lead to delays in up to 30% of chemical shipments for one company – each late shipment costs US$ 60,000 per...

In the world of business today, Cash, more than anytime else in the history, is the King. The state of flux of demand, the uncertainty of economy & it's performance, increased stress on asset utilization & risks associated with global trade have resulted in an increased stress on the Supply Chain. It looks logical that the largest cost contributor to the organizational costs will have to lead the initiative to preserve 'Cash'. The improved Cash flow i.e. Working Capital Cycle naturally improves the position of your company where now you need to borrow less money, return some cash to shareholders etc. The Cash Flow Cycle of a business is pretty straight forward - you have accounts receivables (money that is to come into the business), accounts payable (money that you owe) & Inventory (money locked in the system). It is fairly obvious that the Cash is easy to be released into the business if the company works on reducing the days receivables outstanding ...