Posted on - Monday, July6, 2011 By TAKE Solutions


Today, supply chains are grappling with multiple challenges put forth by globalized markets, diverse operations, pricing pressures, increased customer expectations, fuel cost spikes, tightened lines of credit, shrinking supplier bases and exposure to outsourcing. To tackle these and make the supply chain more adaptive to new product launches in all its variants, companies are looking up to supply chain transformations that can help them metamorphose into the most evolved version of the existing form.


THE world is changing and so are the dynamics of the supply chain. Today, with options, such as real-time tracking, already in the hands of the end customer, manufacturers are on the lookout for newer and faster solutions that can enable them to stand out in the cutthroat competitive market full of global players and reach the customer in the blink of an eye.

With this in the background, supply chains the world over have witnessed many innovations, permutations & combinations that have worked wonders not only for the supply chains, but also the end customer. This evolution has resulted in supply chains adopting newer, more efficient and apt processes for the supply chain that suits the environment in which the company is operating ¬ ideally metamorphosing its processes into a new version altogether.


In the present day and age, supply chain transformations have become a strategic necessity for every business. S Sridharan, MD, TAKE Solutions, avers, "The world is becoming increasingly dynamic & competitive and business executives are expecting supply chains to deliver more than just efficiency. They know that there can be no improvement without sustained change. That is why they are relying on supply chain organisations to deliver innovative strategies and business models to help the company grow."

But from where does the need to transform arise? Sridharan highlights, "Rapidly changing customer needs, globalisation, evolving competitive/ regulatory environments and emerging technologies have once again put the spotlight on how supply chains power business process innovation in response to evolving business needs. These transformations drive increased profitability, greater shareholder value and more effective management of the extended enterprise."

Even 3PL service providers have jumped the bandwagon. Elaborating on this emerging trend, Sougato Shome, GM ¬ Supply Chain Management, Future Supply Chain Solutions, asserts, "Now, 3PL providers are being involved in the process of planning. Earlier, they were only involved as a transport or warehouse service provider. This trend has become a reality as companies are increasing their base in terms of global connectivity. Big multinationals that are selling across the country need a much wider network. These companies find it convenient to outsource the all-India planning to a 3PL solution provider. That is one reason why solution providers today are transforming and getting into the mode of being a one-stop solution provider."


In a supply chain, people, processes, technology and continuous improvement make all the difference. Sridharan explains, "The steps and path-to-success for any supply chain largely depend on the business and the environment that it operates in. However, the following steps hour is a completely integrated process that brings the time to market equivalent to the blink of an eye."

The environment in which the company operates also poses challenges. According to Sridharan, most supply chain transformation projects involve multiple trading partners, multiple stakeholders, multiple objectives, multiple criteria and multisite operations. The biggest risk for such a process comes in the form of uncalibrated expectations. A complete alignment of objectives and processes across multiple organisations is difficult to achieve in a short time, and is certainly not possible solely by adopting technology. Supply chain transformation is a process that requires close monitoring of results and frequent calibration of processes to drive sustainable results. Another risk for such projects comes in the form of managers facing difficulties in understanding and visualizing the effect of such projects on the way their company works and how it improves the reliability and responsiveness of their supply chains. This affects the way planning is followed through execution to result.


The focus of most transformation efforts are on value creation & efficiency gains and technology plays the role of a key enabler of supply chain agility and innovation. Sridharan comments, "Today's business models increasingly leverage collaborative supply chain environments facilitated by industry best practices and information technology. For instance, business process management technologies are enabling multi-enterprise collaboration." But here also lie difficulties. He elaborates, "The most important challenge is to learn to look at technology as a means and not as a goal. Businesses tend to adapt their processes to technology constraints mainly to preserve out-of-the-box solutions. The trick lies in recognising that businesses can benefit immensely from their own best practices. Instead of force-fitting their processes to the existing functionality offered by off-the-shelf enterprise systems, businesses should be looking for technology options that enable winning business processes."

Adopting a technology has thus become imperative in the changing global market. But the adoption of this technology is completely dependent on the new process definitions. Maheshwari asserts, "It is very important to ensure that the new process can be adhered to. Once that is done, a company can shortlist technology to support the whole transformation through integration suppliers, logistics service providers, freight forwarders, transporters, warehouses, manufacturers, marketing and sales."

Here also, it needs to be considered that different companies have different requirements and there is no technology that can completely suffice the requirements of each and every industry. Maheshwari adds, "No off-the-shelf product (technology) can be directly adopted as even in the same industry, the culture differs. In India, a lot of foreign technologies have been adopted, which disrupts the process rather than offering benefits. This happens as the culture of our country is entirely different from the business culture of the country of the products' origin."


Discussing transformations at Future Supply Chain Solutions, Sougata explains, "For us, getting into racks, warehouse management and automation has been a major change factor. Presently, we have fully racked warehouses and WMS, which has brought about a sea change in the way we function today. To bring about this change, we brainstormed on the processes, its set up, the technical teams needed to understand how the processes should be implemented, etc. It was a concerted effort towards planning the structure of the WMS and we are still working with solution providers to ascertain what would work the best."

Another example has been put forth by TAKE Solution. Sharing a case, Sridharan explains, "A top-tier global oilfield services company was able to improve days' payables outstanding and the cash conversion cycle using supplier collaboration and procure-topay automation. Their supply chain was initially characterised by material delivery delays from suppliers, late payments, unfavourable days purchases outstanding, manual processing of transactions, lack of end-to-end visibility & control of processes and high cost of operations. The supply chain transformation goal was to enable robust supplier collaboration and process measurement capabilities for procurement groups in product centres located across the globe, and to enable real-time visibility to order fulfillment and invoice processing."

He adds, "This meant that they needed to improve the efficiency and profitability of supplier relationships by automating, monitoring and controlling each step of their procurement process ¬ from requisition to payment. Using our solutions, their buyers embarked on creating a partner ecosystem that simplifies sharing of information, matching each shipment to its order, enforcing compliance with ordering and shipping policies and clearly linking receipts to invoiced items and payments."

Sharing the success of the oilfield services company, Sridharan asserts, "On the successful completion of the supply chain transformation, the company has been able to automate 89 per cent of its spend, collaborate with 800+ suppliers in real-time, realize savings of over $5 per supplier invoice, achieve invoice processing first pass accuracy yield greater than 98 per cent, eliminate redundant processes and dual data entry, improve process efficiency and cut down procurement & communication costs."

Discussing some of the successful and well-known examples of supply chain transformations, Sarma avers, "Look at Dabur India, which used to distribute affordable medicines in the beginning. Today, it has extended its supply chain. Another case is that of Dell. The company has transformed and brought the concept of extended enterprise, i.e. the direct selling concept to the customer."


Supply chain transformation initiatives seek to bring about measurable improvements related to reliability, responsiveness and costs. Further, the unseen value proposition of such transformation initiatives lies in improving visibility, accountability, transparency, flexibility and confidence believes Sridharan.

Although these transformations come with a price tag, its benefits can be accrued in the long run. Sarma affirms, "From a long-term perspective, this transformation will definitely benefit an organisation and can be shared by the customer at the end. Transformation thus, needs continuous implementation, monitoring and support." Only then can the cost benefits be transferred to the end customer and the ultimate aim to reach a leader's position be achieved.


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