H O W A G I L E I S Y O U R C O M P A N Y ISSUE 14, JULY-SEPTEMBER 2007
Five Bad Habits to Let Go Tiger on the Dragon’s Trail The Chain’s Next Frontier
Nicolas Piramal’s Neeta Sanghi Expert’s feel, in a few years India will Supply chain and finance are
talks about negative mindsets that catch up with Chinese manufactured evolving best practices together to
plague professionals goods bandwagon emerge as winners
pg 3 pg 4 pg 6
COUP TO THE TOP SPOT MESSAGE
From a local apparel MALLS,
manufacturer to ARE GOOD
The shiny façades of latest shopping
Dynamic Brand of the destinations not only symbolize the
year 2006’, Koutons India-glory story, but have also become
a cornerstone for the retail boom in
has scaled up by India. While they may have faced a lot of
exercising total control slack from people for over-development
or lack of a business model in some
over their supply chain; places; carefully planned malls are driv-
right from manufactur- ing India towards fast becoming a con-
ing to retailing This represents a great opportunity
for smaller vendors. It is also a big chal-
lenge. In order to compete with the
SAYANTANI KAR larger players, they would need to learn
and scale up at the same time. They can
ew of us spare a thought for the do this by creating operational efficien-
journey that the petite top or the cies at all levels and operational models
sassy dress might have described that complement new businesses. The
before it reaches the shop shelves age of imitation is long gone. Ones who
and catches our eye. Unknown to keep an open mind and demonstrate
us, ready-to-wear clothes reach the creativity are the ones who are more like-
stores after passing through one of the most har- ly to succeed.
rying supply chains. Fashion's fickleness, multi- As demonstrated by Koutons, where
ple hand-offs and innumerable SKUs of ready- they went against history and centralized
made garments script a supply chain that is even their operations with full supply chain
more complicated than those of giant industrial control; in an age where more than one
machinery. Here, the latter's size pales besides pundit preached decentralization. They
sheer numbers and the need for frequent have even managed to establish a mutu-
changes. And, India's vastly uneven land with ally profitable franchise business with a
poor infrastructure and even greater number of keen eye on reverse logistics. All this has
consumers only compound the challenges of the resulted in them coming out trumps.
apparel companies operating here. So, it is not only a boon for con-
That has not deterred apparel brands from sumers, but manufacturers too; and a
joining the fray to woo the Indian consumer, new opportunity in the form of foreign
who's increasingly becoming a spendthrift. One export.
D P S Kohli, Chairman, Koutons Retail India Ltd.
that particularly stands out is the "Most Dynamic As with China, this would help India
Brand of the Year 2006", as adjudged in the to improve the manufacturing base, by
LYCRA Images Fashion Awards - Koutons large number of retailers and producers, most of new stores, Sidhu and company refuse to stick to increasing domestic consumption. It
Retail India Ltd. It started out as a local apparel whom are not viable or profitable on their own. numbers that many would consider safe. Their would further help in strengthening its
maker, but burst onto the retailing scene with its What counts in India is how soon the company blueprint reads backwards. They start with the position as the new manufacturing hub,
menswear brand in 2002, eventually to become gets the critical mass and a large scale counts". number of Koutons Galleries that they would depolarizing China’s position.
"Value Retailer of the Year 2006", according to This need for scalability has led Koutons to strike want to open in the region, followed by the com- The next time you pass a new mall, just
Star Retailer-The Consumer Way. Koutons can out on paths less travelled by its peers - right from position of the stock, including how much of try and think of it as a stepping stone for
boast of an organised retail presence and a the manner in which it opens new stores, its busi- goods each might be selling. India, and not a neighbourhood menace.
nationwide brand recall, when both are set to ness model for franchisees, to the supply chain Collective wisdom of supply chain practices
grow manifolds in the Indian market. architecture that has been put in place. Sidhu followed by the competition doesn't apply to
Such a mercurial growth, that has left many draws attention to China's success. "It is a pow- Koutons either. While others shrink away from
a competitor smarting in its wake, is based on erhouse today because its enterpreneurs built for centrally-controlled models for tackling a busi-
identifying the critical need. H.S.Sidhu, potential demand too, as a result of which they ness that is so unwieldy, Koutons has a supply PAWAN JAIN
Executive Vice President, Koutons Retail India can now sell at such low costs." Chairman & MD, Safexpress Pvt Ltd
Ltd., elaborates, "We are a nation (India) of a In keeping with this belief, when opening up Continued on Page 2
For an e-zine version for your friends and colleagues, write to us at firstname.lastname@example.org
chain that is helmed by people in the head office, should dictate the rest of your strategy". He believes
with a central distribution centre. Sidhu says, no other strategy would have fuelled their appetite for
"I (Koutons) am a manufacturer-retailer. We do more stock and growth. This enables both franchisee
everything, right from planning, manufacturing, and company to work as a team instead of harbour-
advertising, to selling, without the interference of a ing conflicting interests. It also solves another dilem-
middleman. This arms us with the ability to plan ma - that of managing personnel in the selling posi-
things and then decisively implement them. Without tions. "At such distances, hierarchy creeps in, and if it
such control, there is no plan; everything remains a were our own employees in the stores the motivation-
mere prediction with no ability to decisively imple- al levels would have taken a hit. But the incentive-
Koutons' control of the entire supply chain starts
based income and zero risk for a franchise brings
along the right dose of commitment and dynamism",
The IT system
right from the supplier. "It has been the result of our says Sidhu. Control over the pricing lets it take care
hard work over the last few years," notes Sidhu. of stock clearance through sale. furnishes the
Everything including the weave and the thread are Not just scalability, but other insights arising from
made as per Kouton's specifications. Suppliers pro-
viding such customised raw material have helped
understanding their category well have strengthened
their business too. Keeping tabs on consumers'
Koutons consolidate their plans to scale up to match
changing preferences through IT and the ability to
predict trends for the next week, and racing the with a daily
Production and the supply chain, too fall in line stocks to the stores, notwithstanding, Koutons knows
with what Sidhu calls the "command economy-style
architecture". Production of the garments is in-
that not everywhere, everyone will take to avant
garde fashion at the same time in their category -
“Retail Management is all
house, except for knitwear, which is outsourced.
Even then, Sidhu assures that the price and the about planning for the next
western men's wear. "Only 20 per cent change,"
informs Sidhu. There are no sudden skews in con-
day, next week”
design are well under Koutons' control. "The exclu-
sivity remains our's", he adds.
H S Siddhu, Executive Vice President,
sumer preferences. However, the cardinal points are
getting the right size ratio, the price points apart from and left
Whatever gets made is first stocked in the central the overall fashion that suits each location which they
distribution centre in Manesar, Gurgaon. This is the
nerve-centre of the inventory supply chain. Every
Koutons Retail, India cater to. While the size ratios will differ in the hills
and the cities, the more expensive garments may trig-
single delivery to each of the stores all over India is
directly booked from the central warehouse. Such a leftovers that determine the profitability", Sidhu
ger a keener demand in small-towns because not
many brands cater to them. Thanks to the supply every
taut co-ordination is indeed daunting, but necessary, notes, referring to the stocks that don't find favour chain these can be altered to match any major skews.
if Koutons wants to retain the power over the value with the consumer. Koutons has taken the risk upon With its customised IT systems and agile staff franchise
chain. "This is how we can tweak the volumes and itself, instead of asking the franchisee to buy the who work in a relatively flat hierarchy that keeps dis-
make changes at any of the stages," explains Sidhu.
The customised IT system furnishes the manage-
goods. It lets Koutons have full control of the stock
in these stores, be it promotions, stock composition,
putes at bay, monitoring and preparing for the week
ahead is a dynamic daily process. Koutons' pluck has
ment with a daily update of the status of stocks sold reverse logistics or clearance sale. With no pressure won it the backing of private equity firms UTI
and left behind in each and every franchise store, as on them to buy the stocks that they store, the fran- Ventures and Argonaut, worth Rs 112.6 crore.
"retail management is all about planning for the next chisees are raring to go along with Koutons' plans. Understanding its supply chain means under-
day, next week", according to Sidhu. Of course, it is not without its attendant evil - man- standing Koutons' take on the adage of a leader
Adopting the franchise route, where no store is aging frequent changes, clearing stocks and dealing doing things differently. Sidhu's unwavering insis-
owned by Koutons, might seem contrary to their with as many franchises as there are. tence that "a company today has to be better in
overall strategy. However, the consignment model But Koutons did not have much of a choice. Sidhu everything, -- product, cost, and delivery" then
empowers Koutons further. "In our trade, it is the explains, "The speed at which you want to grow becomes a lot clearer.
FIVE BAD HABITS TO LET GO
Neeta Sanghi, heading the supply chain at
Nicholas Piramal, in a conversation with
Sayantani Kar, lists five mind-sets she thinks
supply chain professionals should be wary of
eeta Sanghi, Vice President and
Supply Chain Head, Domestic
Formulation, at Nicholas Piramal
India Limited (NPIL), has been han-
dling supply chains for nearly 20
years now. Under her leadership,
NPIL became the first Indian pharma company to
use planning software such as Factory Planner and
Demand Manager for shop floor scheduling and
sales forecasting activities, respectively.
She has guided both her own and the sales team
to mould the processes around these softwares, so
that NPIL can now boast of the most accurate fore-
casts in the Indian pharma industry.
With experience in all aspects of supply chain,
Sanghi shares with us what she thinks are the five
attitude-traps that supply chain (SC) professionals
fall for and how to avoid them.
I. Stuck in silos
SC professionals tend to work in silos, concentrat-
ing only on their area of performance.
Different companies have different departmental
structures. Manufacturing and new-product devel-
opment may be part of the supply chain in one com-
pany, while in another these may be separate.
However, I think until the product reaches the sell-
ing point, the path is one large supply chain, encom- ignored? What will be the repercussions on the sup- For example, the knowledge of fluctuating raw
passing all the business units. ply chain if it is not met? What about the strain on material prices is important for a pharma supply
Hence, SC professionals should work with other the supply chain, business loss, people motivation, chain. The prices of the drug does not fluctuate
disciplines as well and be involved with quality- rapport between sales and supply chain etc.? It takes daily, but that of the other raw materials does the
checks and promotional activities. business acumen to come up with the right answers. price of aluminium used in the foil packaging, for
It is time they looked at the business as a whole Once done, you can work on effecting the changes. instance. If the procurement and purchase depart-
rather than through the facets of just logistics, sourc- During the Chikungunya outbreak, last year, the ment share this information with those in finance
ing etc. This will allow them to identify new oppor- product supply team at NPIL decided to pump in and sales on time, the latter too can make accurate
tunities and recognise trends.
A good way to solve this is to hold cross-function-
more drugs to treat it. For this, we had to utilise our
safety stocks even as we revved up production.
plans for the future.
Finance guys only get to see the final transac-
al training will bring about an organic change in the tions. With the awareness of the price trends in the
mindsets. There should also be a business develop- III. The fear of automation market, they too will be able to predict prices and right data
ment team for all the major functions that will draw Supply chains need the efficiency that IT pro- costs. A holistic knowledge will keep them from
people from various disciplines. vides. Yet, move to automate through new software
can often trigger a road-block.
declaring bonuses when the stocks are low or the
input prices are about to spiral upwards. Similarly,
with the right
II. Stumped by exceptions
Exceptions to the supply chain's routine often
Supply chain teams often resist such changes due
to a sense of a loss of control. The most commonly
the sales teams will know what to expect in the last
mile and won’t make baseless estimates. people at the
trigger extreme reactions from SC professionals. asked question, following such measures, is "What
Some become too system focused (rigid) while oth-
ers remain too ad hoc.
will we do now?"
The team leader, then, needs to reassure her
V. Jumping the trend-wagon
The inability to buck irrelevant trends is a major
The larger the organisation, the more complex
the processes become, with a growing need to work
team that IT will only automate the mechanical
work. I tell my teams that it will perform the clock-
drawback among the senior managers. They must
learn to assess the significance of market trends.
in a systematic manner. Some companies become
replenishment-oriented, while others focus on fore-
work. They will still approve and analyse the results.
At times the installed software is complex. Only
Managing supply chains in different sectors
requires an approach specific to that business. Of all information
casts. On the other hand, there are companies where an understanding of the software enable them to the supply chain headways such as RFID, 4PL, bet-
the SC managers resolve conflict by taking each sit-
uation as it comes, without understanding the caus-
rectify errors. The complexity makes them wonder
if the software will ever be as good as the person is.
ter railway corridors, a company should ask, "What
impact will these have on our supply chain?"
es or discerning a pattern.
Supply chain professionals should intelligently
By taking care to synchronise the changed
processes and roles with the new software, a compa-
For a supply chain in the cement sector, logistics
factors such as railway networks are important, given
assess the crisis and then apply a method to the mad- ny will find the amalgamation easier. that 20 per cent of the input cost is driven by freight.
ness.. Just as rigid systems rob you of flexibility, an In contrast, for pharma it is only two per cent. For meaningful
ad hoc approach can retard with its anarchy. IV. Swamped by information us, RFID adoption is a bigger concern because spu-
Situations of extraordinary business needs may It is too easy to get swamped with all the data that rious stocks abound
crop up anywhere and anytime. For example, more flies around. One must seive out information which SC professionals often have to work their way up
stocks (than usual) may be needed somewhere. is likely to have an impact from the chunks of data the organisation, as a result they may not have devel-
However, supply chains have their lead times where that arrive from various departments, everyday. oped a business acumen. Just as the absorption of
some stocks are usually in the pipeline. This is why one crucial tenet is “sharing the right talent will help remove mind-blocks, nurturing a
This is where the professional has to take a call data with the right people at the right time", which business sense amongst SC professionals will also for-
whether it is an emergency or not. Can it be makes information exchange more meaningful. tify a supply chain against these pitfalls.
TIGER ON THE DRAGON’S TRAIL
China’s lead in exporting manufactured goods can’t be overtaken in a day. But in a few years, experts feel,
India will have got its act together to do just that
SAYANTANI KAR S.S.Nabar, Director, Videocon Industries factories worldwide. Nabar explains, "Take our fac-
Limited, one of the major exporters of white goods, tory in Italy, for example. Close to the actual TV-
ill India be able to overtake believes China's rise was helped by its neighbours, manufacturing factory, we have units producing
China in the race for the Japan and Korea. "The demand stepped up when bulkier components such as plastic cabinets, picture
world’s top manufacturer? these countries witnessed rising labour and opera- tubes and facilities for spray-painting.."
China's location, its strategic tional costs. With their cities just hours away from However, all the electronic parts such as electron-
industrial clusters and its gov- China, they off-shored some tasks while still manu- ic tuners are still sourced from China while glass
ernment's economic policy facturing critical components that required their shells and mechanical parts such as loudspeakers are
have engineered its lead in exporting manufactured technical wizardry. As the first factories were built, exported from India.
goods. It has even swamped the market of the erst- the component bases in China grew as well, linked Technology makes it possible to manage the
while giant synonymous with manufactured goods backwards. The production capacity grew exponen- company's supply chain spanning as many as eight
— the United States. To stem the influx and reassure tially, enabling them to export the excess stocks." countries. Nabar and his team use SAP to keep track
panic-stricken domestic manufacturers, the US has Nabar thinks the lack of demand for a vital com- of the supply chain, give instructions and tackle
resorted to levying anti-dumping laws against China. ponent base is holding India back. "There is not material requirement.
Meanwhile, India, despite being regarded as the enough domestic demand for components in, say, Gokaldas Exports Limited, the leading exporter “The lack of domestic
more service-oriented and quality-adherent manu- TV manufacturing. Overall demand for components of readymade garments in India, has come up with demand for compo-
facturer, continues to trail China's prowess.. that go into TV manufacturing is roughly one-fifth an unusual practice. It has made all its suppliers nents retards a proper
It is time that India puts its manufacturing sector of that in China. The quantities don't justify an open up offices in its own head office. Dinesh
at par with the best in the world. We may well be on investment. It is cheaper to import the required Hinduja, Executive Director, Marketing and
supply base...SEZs will
our way with dedicated hubs for manufacturing and equipment with lowered import duties than manu- Production reasons, "It saves time, leads to healthy help bring in the requi-
export of auto components, leather, readymade gar- facture it here on a large scale. So we end up assem- competition among suppliers and, of course, the site infrastructure”
ments and even small cars, but it is going to be a bling TVs rather than manufacturing from scratch." 'answerability' becomes greater." S.S. Nabar, Director, Videocon
long, winding path. The lack of a proper supply base does not allow He acknowledges that their lead times are longer
Fast Track asks experts, some of who already manufacturers the convenience that short distances than that of China, losing an entire day in import-
belong to the club of world-class exporters, if there and less time provide. ing raw materials from the Far-East. In order to
are any short cuts. Nabar says manufacturers here take 20 days reduce the current turnaround time of 45 days, he
The sweeping generalisation of low labour costs longer than their Chinese counterparts to deliver. hopes to start sourcing from closer home, just as
as the reason for China's success does not hold true. This is what makes India envious of China's exten- China does from its neighbouring countries.
What counts is that China has, along its coast, entire sive and all-inclusive component parts industry. Having clocked 22 per cent growth in exports
cities dedicated to churning out single products. Nabar is hopeful that the next three to five years, over the last three years, Hinduja attributes it to fac-
Think of a city acting as a supply chain cluster and which is when 'special economic zones' (SEZs) will tors such as removal of quotas in the textile and gar-
you will realise just how enabling China's coastline come up with the much-needed infrastructure, will ments industry by the government, their infrastruc-
is for mass manufacture and export. (See box for bring a turnaround. ture revamp to meet rise in demand, good supply
more details) Videocon has carved out its clusters around its chain partners and their software programme, cus-
THE DRAGON’S NESTS
n China, there are entire towns and cities that specialise in particular industries or
industry segments. Most of these are industrial production sites with ancillary fac-
tories near the main manufacturing units.
These clusters, with numerous inter-related supply chains, capitalise on four main sup-
ply chain drivers: facilities, transportation, inventory and information. These are also
major factors that create cost-advantage for an entire economy. They can boast of lower-
ing the capital investment cost, the domestic sourcing cost, increasing the economies of
scale and facilitating government incentives.
The benefits are supply chain miracles of tremendous synergies and economies of
scale that is difficult for anyone to beat, without such an extensive infrastructure. Also,
costs of transportation and transaction are reduced, and knowledge sharing is increased.
China has taken the Japanese concept of "just-in-time" (JIT) production one step
further. The Japanese brought in JIT in the eighties to create the leanest of supply
chains. This approach had various components for production arrive from all over the
world just in time for assembly and manufacturing. Although, it did raise the cost of
transportation, it drastically reduced the need for buffer inventory and the lower inven-
tory costs offset the transport expenses.
By converting entire cities into thriving hubs for industries, China has ensured that
not only can the enterprises practise JIT but can also bear meagre costs of transporta-
tion for a lean supply chain.
The clusters line the coastal areas of China. Even though labour is not cheap in
these areas, the companies still retain their cost advantage over manufacturers from
“By sourcing from closer home “Encouraging staggered FDIs in around the world. The logistical set-up reduces costs by 20 per cent of similar products
we can match the turn-around the retail segment will increase produced in the United States.
times of Chinese firms.” the demand for manufactured There are two main types of clusters found in the industrial network clusters on the
east coast of China :-
Dinesh Hinduja, Executive Director, goods” 1. Hub-and-spoke: The cluster is dominated by one huge company — usually the
Marketing and Production, Gokaldas Saikat Chaudhuri, Assistant Professor of large state-owned companies or the joint ventures. The hub company is supported by
Exports Limited Management, University of Pennsylvania a large number of suppliers and service providers. However, this kind of model is main-
ly restricted to the regulated and state-owned capital-intensive enterprises in sectors
such as telecom, energy, steel and chemicals.
2. The second type of clusters is what has turned China into the world's factory.
tomised to Gokaldas' requirements and aligned with India can exploit its skilled and English-speaking More prevalent, these mainly consists of private, especially small and medium enter-
the world fashion exchange, providing supply chain workforce till the infrastructure resembles that of prises (SMEs). They contribute well over one half of the nation's gross domestic prod-
visibility to the suppliers. The electronic data inter- China and other automated countries. uct and, of course, China's exports. Today, there are more than 1,000 supply clusters
face system through which the company can down- "We need to spruce our manufactured exports in for export-products, covering almost every major product category.
load style details, order sheets and all other details of order to feed over a billion people," Chaudhuri The majority of these supply clusters are located in China's most developed regions,
buyers' orders has cut down the earlier 90-day lead points out. comprising the eastern provinces of Guangdong, Fujian, Zheijiang, Jiangsu, Tianjin,
time to half of that. Supply chain alone cannot provide that boost; it apart from the metropolis of Shanghai and Beijing.
While some industries have managed to establish has to be accompanied by infrastructure that facili- The characteristics of these supply chains also vary according to different regions.
India as a serious exporter leather exports from the tates demand and also fosters an environment for For example, production clusters in the Jiangsu province mostly consist of units of for-
Chennai cluster and auto components thanks to increased production. eign firms from Taiwan. In contrast, the neighbouring Zhejiang province hosts hun-
companies such as Sundaram Clayton not every The Japanese gave JIT to the world, the Germans dreds of production clusters that are formed by domestic private companies.
SME can fund such extensive set-ups either at the engineering excellence and the Chinese cheap man- Each cluster also has its own marketing strategy. The enterprises formed with for-
places of manufacture like Videocon, or in their ufactured goods. It is time Indian companies found eign investments market their goods directly to large customers in foreign countries,
head office like Gokaldas. their niche. while the SMEs usually resort to brick-and-mortar marketplaces to reach out to both
Also, expecting that the manufacturing sector in large and small customers.
India will grow along similar lines as China is fool- Examples of clusters:
hardy. Saikat Chaudhuri, Assistant Professor of 1. About 5,000 manufacturing enterprises in the Zhili township of the Zhejiang
Management, the Wharton School, University of province produce garments exclusively for children.
Pennsylvania, says it will be difficult to replicate the 2. The famous toy cluster spanning the Guangdong Province in China, Macau and
way the Chinese government has been able to Hong Kong, is the perfect example of the secret behind China's rampant low-cost pro-
support enterprises there. duction edge.
Chaudhuri feels encouraging FDIs in the
retail sector in a staggered manner, much
like India's telecom industry's growth over
the last decade, will shore up domestic con-
sumption and increase the volume of manufactured
goods. Foreign players initially can be asked to
improve infrastructure when they
For the short term, Chaudhuri stresses that
Indian manufacturers should concentrate on skill-
sensitive industries where both design and manufac-
turing of the highest quality (but lesser volumes) are
needed, for example, high-end leather goods.
Hinduja and Nabar too echo the sentiment that
India is ahead of China in terms of perception of
the quality of the products. Moreover, while
Videocon is helped by anti-dumping duties against
Chinese companies in a few developed countries,
Gokaldas Exports is more flexible than its competi-
tors in accommodating changes in orders.
THE CHAIN’S NEXT FRONTIER
Finance and supply chain units have always had decisions to make that affected each
other. Now they are evolving best practices together, where both emerge winners
SAYANTANI KAR of Logistics and Supply Chain, Shoppers' Stop, says, audit trail. An annual reconciliation with suppliers
"There were too many surprises arising from deci- tops the collaborative efforts. This should receive a
othing in a supply chain (SC) comes sions taken independently by the two groups, which further boost when the planned electronic payments
for free. At every link, money hampered operations at both ends." A lot was to be system is rolled out.
changes hands. Supply chain man-
agers, the world over, are now get-
gained if only they joined forces.
Now they work together at each level in the sup-
This partnership also makes global sourcing a lot
easier because "the finance team takes care of all the Supply chain
ting ready to tweak this reverse cycle ply chain. It starts right from registering a vendor. import licenses, insurance etc.," informs Nair.
of supply chain finance (SCF) to find
the next set of benchmarks. Their quest is leading
Apart from verifying the terms and conditions such
as landed costs in the contract, the finance team
The process of alignment did come with its own
set of challenges. It took successive meetings to con-
them to make friends with their finance counter-
parts, even as the latter are realising that SC does
chips in with its recommendations while the SC unit
prepares the business model and the margin
vince the teams of the benefits of working together.
With time, the supply chain engineers came to think also based on
not affect operational competency alone, but also between the cost and the MRP. Together, they like businessmen and the accountants got a hang of
financial efficiencies. finalise cash discounts and payment terms with the supply chain best practices. Nair is happy with how financial
It is not that the two disciplines were at logger- suppliers. Knowing each others’ capabilities, both they have now become "an open book, discussing
heads before, but there seldom was an effort to align
with each other. This, despite the fact that the sup-
the units commit payment cycles which they can
jointly fulfill, strengthening the trust their vendors
everything before implementing".
The finance and the supply chain departments
ply chain decisions such as where to open a new
warehouse or which supplier to source material from
have in them.
This has cemented Shopper’s Stop’s relations
can, thus, jointly work out tax advantages and risks,
win suppliers, predict trends affecting the supply Supply chain
are as much based on SC needs as they are on finan- with its 800-odd vendors. Not only do they oblige chain and the business, prevent goods from being
cial factors such as taxes.
Collaboration between the two units, then, natu-
with discounts and longer credit periods but also tag
their own products on behalf of the retail chain, sav-
stalled along the supply chain and keep tabs on sup-
pliers' financial health.
rally became the next frontier for SC innovation. It
was further pushed by other factors. Global foot-
ing time and cost.
Vendor interaction is only one of the stages at
These practises have enabled companies to hold
fewer inventories, free more working capital, avoid
prints and managing multiple trading partners, such which information is shared by the two departments. custom delays and provide suppliers with more pre-
as logistics providers and global vendors, called for There are weekly meetings which see the teams dis- dictable payments, building strong commercially- where the
shifting the focus on SCF. The US and Nordic coun- cussing budget deviations, margins achieved and optimised supplier relations.
tries like Sweden were quick to the party.
Interestingly, Indian companies, such as Shoppers'
predictions for cost escalation.
The daily co-ordination is mainly automated,
A report by the Aberdeen Group notes how bet-
ter visibility for both the departments leads to
Stop, have not trailed behind either.
It was three years back when the two teams at
making for error-free exchange of information. Nair
says, "Details such as number of SKUs, the cost of
greater cash and credit flexibilities. This is becasue
of a better understanding amongst all the stake- practices will
Shopper’s Stop began to work as a single unit for an order, the landed costs including freight and sales holders. Nair sums it up: "We don't have unpleasant
supply chain transactions. Earlier, while the supply
chain team negotiated with the suppliers, projected
tax automatically get uploaded from our ERP sys-
tems on to Oracle Finance. The finance team can
SCF is clearly where the next set of supply chain
margins and sourced globally, the finance team had trace the status of each and every SKU." What best practices will come from. It takes SC innovation
to work out the monetary roadmap that included plagues other organisations a common way of track- beyond the realm of a single discipline, to give a
payments, tax calculations etc. Devadas Nair, Head ing transactions is easily resolved by this automated company its competitive advantage.
KEEPING ENEMIES CLOSER
Competitive Intelligence makes you aware of your competitive environment and reveals how you compare with
the rest. Result: your business can now truly brace for the future
ANKITA SHARMA So, if you are convinced about the next step, and also the most important. Prioritise which competitors you A complete picture will never be
old saying: "keep your friends close, Given that companies leave a paper need to focus on - direct or indirect there as CI will vary with the avail-
taying ahead of compe- and your enemies closer", the follow- trail as they go about doing their busi- ones. The first group comprises firms able information, and decisions have
tition is imperative to the ing steps will help you analyse your ness, primary data can be gathered that offer similar services and solutions to be skilfully made from what can
success of a business. competitors' supply chains better. straight from sources such as annual for the same kind of problems. be acquired. Observing erratic press
Whether you are devis- reports, stockholder communications, Indirect competitors are difficult to releases, delivery failures and slower
ing new business strate- Acquiring the information financial press releases, speeches by identify - it could be a start-up slowly turnaround of special orders can
gies, entering new mar- Before you start looking for com- top management and even patents. eating into your market share or a also point out the competitor’s vul-
kets or exploring new technology, an petitive information, figure out what Next, data from secondary sources, company ushering in new technology. nerabilities.
understanding of your competitor's kind of information is relevant to especially the internet, comes into Look out for choke points in the
moves can make a ton of difference to you and chase that. Will it be useful play. Newspapers, business magazines, competitor's supply chain, delivery time, Conducting the Analysis
your profits. to know if your competitors' supply analysts, expert opinion and blogs also product shelf-life and sophistication of A number of analytical tools and
Competitive Intelligence (CI) or chain is more cost efficient or deliv- help indicate the competitors' position. the supply chain software they use. models are available to execute the
decision-making based on understand- er faster? strategies based on CI. Tools such as
ing the competitive environment is a Once you know what you are look- Single out key competitors Deducing from an incom- Balanced Scorecard are a good exam-
necessary and proven ethical business ing for, gathering information is the and vulnerabilities plete picture ple of a proven and helpful analytical
discipline that can give your business tool. A simple SWOT (strengths,
the edge. weaknesses, opportunities, and threats)
When applied to the supply chain, analysis also helps. A tool will help you
CI is the art of acquiring, presenting, reach your conclusions quicker.
analysing and refining knowledge CI offers a successful strategy based
about rival supply chains and then on your understanding of the com-
reaching actionable conclusions about petitor's soul its market assumptions,
improving your own, according to the decision-making process, risk analysis
Society for Competitive Intelligence and potentially irrational reactions to
Professionals. sudden changes. A new CEO, a merg-
This will let you know if you are er, a public relations catastrophe, law-
competing well or are in for a rude suits, unexpected write-offs of plants
shock. and equipment, or even a rumour can
Further, it helps you improve shake up the industry and help
your supply chain and heighten you make your moves.
barriers to competitive One cannot predict the
inroads. Key areas that future, but one can evalu-
should be investigated ate the past and analyse
include lead time, vendor trends to forecast the
response time and accuracy future. CI's real contribu-
of delivery information. tion is in equipping man-
Michael Porter, in his book, agers with the knowledge to
Competitive Strategy, identi- learn what the competitor
fies threats from new will do and not what the
entrants, existing rivals, competitor has already done.
buyers negotiating for a In India CI has existed as a
lower price, suppliers negoti- function within the market
ating for a higher price and research department, but
substitute products with similar now it has started playing a
or disruptive solutions. With CI, vital role and has gained
identification of threats prominence. Companies
becomes easier and you can with CI programs have
leverage the knowledge you better knowledge of
gather into successful strate- their markets, better
gies and operation tactics. cross-functional relation-
Ultimately, you gain competi- ship between their business
tive advantage because CI makes units and a greater ability to
your business more flexible to adapt develop proactive competitive
to changes in the market conditions. strategies.
HARRY POTTER CAME IN HOGWARTS EXPRESS OR SAFEXPRESS?
Actually, both. raphy. More than some magicking was loaded into Safexpress’ weatherproof, at 300 locations simultaneously. Mr. Pawan Jain, CMD of Safexpress,
When Hogwarts Express started its required to achieve this almost unat- Global Positioning System-enabled The project was executed at par, or says, “We have been managing the
eventful and historic journey to thou- tainable feat. vehicles which travelled across India at better than international standards, supply chain of Harry Potter books
sands of Indian homes for the last time, The first part saw Hogwarts Express break-neck speeds. despite the distribution complexities for many years now. This coupled
it had a mammoth target. It was to transform into Safexpress. The cargo of Right at the stroke of midnight in and a total distance of 1 million kms in with our supply chain expertise of man-
reach out simultaneously to 300 loca- 2.5 Lakh books of ‘Harry Potter & the London, Potter-magic unfolded in India India. Even the distribution in Potter- aging 98.78% on-time deliveries has
tions on Potter-Day after covering 1 Deathly Hallows’ was then broken into as well. At 5.30 am on the morning of country, UK, could not claim such a helped us in achieving this almost-
million kms across the vast Indian geog- 300 smaller consignments. These were July 21st, the books hit the bookshelves blemish-free record. impossible feat.”
SAYANTANI KAR Nirankari. But there is no room for
panic when a job is at hand. In-house
he crusade for the cricket guarantee engineers are the trump-
World Cup just ended in cards of the team as “there is no tech-
the Caribbean Islands. nical snag that these wiards can't diag-
Most of us were catching nose and fix," according to Nirankari.
the Calypso carnival on The eclectic team also includes two
TV, for whatever it was people from the equipment vendor for
worth, after Team India's early exit. Be rigging and de-rigging, technicians for
it the wicket-keeper's pep-talk near the graphics, sound and video mixing,
stumps or a bird's eye view of the sta- commentators and the director.
dium, the cameras were bringing Ideally, the team needs to reach the
home the excitement from every pos- stadium a day before the match to fin-
sible angle. ish the rigging and a half day to de-rig
For all this game play on the emer- after the match before getting on the
ald fields, before each match lies the road for the next venue.
mammoth task of making the stadium However, every day does not turn
ready for a live telecast. In less than out to be an ideal one. Day and night
half a day, the cameras, microphones matches are often nail-biters for the
and other video production equipment telecaster team because the time to de-
have to be installed in and around the rig and rush to the next city gets meas-
field, connected to a control room, ured in minutes.
choc-a-bloc with audio-video gadgets, One such edgy situation happened
somewhere in the gallery. during the recent Asia Cup for
When done, the equipment, weigh- women, which had two matches
ing around 13 tonnes, has to be port- scheduled for Delhi and Jaipur. “Only
ed around cities, often the very next this time, the two were slated on con-
day. It doesn’t help that most of the secutive days," recalls Nirankari.
fragile cameras, mixers and recording The first match, held in Delhi, got
devices, hired for crores of rupees, over only by 6 pm and left them with
demand a gloved handling. just two hours for de-rigging and an
This is one jittery challenge that overnight journey ahead. "We reached
sends the usual tenets of logistics for a Jaipur by road in the wee hours, head-
six. Yet, this is what the production ed straight for the stadium at 2 am,
team at Nimbus Communications and were all-set by 9 am, right before
Limited, which is covering cricket the match started", informs Nirankari.
matches, following a contract with the The crew, of course, had to go without
Board of Control for Cricket in India, sleep for over a day.
have to do for the next four years. At times, it is sheer luck that keeps
There is no guaranteed routine of
the regular workplace. Anything can
go wrong from equipment malfunc-
tion in the stadium to delays on the
RIDING THE CRICKET them in-step with the cricket teams. "A
match in Vizag [Vishakhapatnam]
had gotten us worried because of the
place's fickle weather and the conse-
road with the match-date drawing
near like a ticking time-bomb. A crick-
et match, after all, won't wait for the
JUGGERNAUT quent landing problems." A miracu-
lous clear weather saved them from
another 800 kms of road journey from
Hyderabad to Vizag.
Taljit Nirankari, Production The run-up to a cricket-match telecast is a nail-biter. The gump- It is as much about foresight and
Controller, Nimbus Communications planning, as it is about ingenuity and
Limited, lets us in on the madness.
tion of a few people brings the footage to your living rooms luck. The safeguards such as advance
For a cricket match, the crew has to schedules, leeway of a couple of days
race ahead of the travelling players Ahmedabad. The crew and the equip- up the control room to beam the bring home every detail. The monitors for travel and back-ups of basic equip-
and are the last ones to leave the ment then have to hit the road to reach match to our drawing rooms. and the video production equipment ment may well get dashed since every
grounds after the match is over, even the spot. Before setting shop, a quick check follow suit. match can pose a different challenge,
when the matches are scheduled back Road conditions, which necessitate tells them how far apart are the control The testing of the installed equip- much like the sport itself.
to back in a series. (And you thought special travel cases and shock-absorb- room, the commentary box and the ment can turn out to be a cliff-hanger Nirankari reassures that even with
only the players kept a hectic routine?) ing container trucks, are not the only third and fourth umpire's chambers, precursor to the match. The check for a few equipments out of action, the
The IL-76 Nimbus uses to cover speed-breakers. Road taxes and inter- the weather conditions etc. which gets inputs from the cameras precede the show can still go on without the audi-
international cricket makes for a fast state permissions are major chores that them started. A huge stadium such as "satellite check"— that tests the ence noticing anything amiss, thanks
air-transport. It not only seats the a 3PL partner helps them out with. the Eden Gardens in Kolkata, will uplinking to the satellite. to the expertise of the specialists on-
entire team but all the unwieldy and They literally take a huge load off the need kilometres of wire and rain If the rigging had started at around board. Their only respite from the
fragile equipment as well. production team by arranging permis- clouds on the horizon would mean eight in the morning, the satellite unrelenting schedules—the monsoon
Yet, flying is not always breezy sions and clearing taxes in time. extra covers to prevent water seeping check can be done by three in the months when cricket is not played.
thanks to venues with airports Except for the inaugural matches, into the cable joints. afternoon."With less than half a day to Otherwise, their relentless focus
unequipped to handle such a large the team doesn’t get much time to As many as 25 cameras, right from go, we might realise that we have lost keeps the process, with such a low
cargo plane. For a match in Rajkot, for install their paraphernalia. All they the ones at the stumps to the highest the link with the channel or there's no margin of error, from turning into
example, the plane lands at have is a day to wire a stadium and set point in the stadium are installed to feed from one of the cameras," says a disaster.
Fast Track is a quarterly magazine on management, with a special emphasis on supply-chain issues, brought to you by Safexpress Private Ltd. The
magazine is committed to promoting business agility. Fast Track reaches out to CEOs, finance heads and logistics heads of companies. We would be
A MINDWORKS MEDIA PRODUCT FOR SAFEXPRESS PVT. LTD.
happy to take on-board issues related to supply-chain that you might be facing.