Supply Chain is a major strategic assetET Edge
Your thoughts on the supply chain as a strategic asset for successful organizations
Essentially, the world can be viewed as one large supply chain. Consumers and producers are constantly communicating with each other, and a product goes through many hands before reaching its destination. In recent years supply chains have increased in importance across many industries, as management recognizes that the supply chain is the channel for delivery of its products to its customers. In most product-oriented companies, the total supply chain management cost (sum of costs associated with the processes to Plan, Source, Deliver, and Return) as a percentage of sales revenue ranges from 50-70%. In its entirety (including both owner production assets and supplier and distribution partner assets), for many companies, the supply chain is by far the largest asset it “owns,” and is very strategic to the company’s ability to succeed both financially and in the market.
While the supply chain is a major strategic asset, but still based on our survey it is not managed as such in some companies. The compelling change required is managing supply – not tactically but rather strategically – aiming at really making a difference in the long term advantage a company creates in the competitive playing field. Supply chain often represents the largest area of external assets and people (how the company actually does work and operates depends on it); it develops and commercializes the next generation of products (R&D, Engineering and capital projects); and it often determines the performance and quality of the product in the eyes of the customer (through inputs purchased from suppliers and internal operational outputs). These are essential roles in the creation of competitive advantage that sustains a business over the long haul.
In order to manage the supply chain as a strategic asset, it is important to step back and consider what makes up this asset. Unlike traditional assets a company fully owns, the supply chain is both a direct and an indirect asset, much broader and more complex than just its internal component. It is rightly said that in today’s’ competitive world it is not the companies but supply chain competes. Hence there is a strong need to treat Supply Chain as a Strategic Asset.
Top 5 trends that you think will keep supply chain & logistics business ahead of the curve in 2019
The state of the supply chain will evolve dramatically throughout the remainder of 2018. The supply chain managers should consider the following trends to assess their influence in their operations.
- Digitization of the Supply Chain: Digitization makes it possible to share (collaborate), process (automate), and analyze (analytics) the information. As the world becomes a more digitally-enabled community of people, things, and services, technology will be embedded in almost everything. People will leverage analytics engines, machine learning, Internet-connected sensors, and more to fundamentally boost efficiencies everywhere. Digitization will improve the speed, dynamics, and resiliency of the supply chain operations, leading to greater customer responsiveness and ultimately higher revenue.
- Supplier & Customer Visibility: A supply chain is a connected system. Any change in one part may have a ripple effect in the rest of the chain. The key is to recognize every “vibration” of the chain and sense how far it goes and make corrections, when and if, it is needed providing the right level of visibility to the stakeholders only when it is needed. One of the ways supply chains can be successful is for them to be transparent. Supply chain visibility allows trading partners to see orders and material movements from source to destination, informing stakeholders on things like schedule and quality in real-time along the way. With clear visibility, trading partners can respond more quickly to unexpected situations and manage by exception.
- Warehouse Robotics: Another future trend in the supply chain is warehouse robotics. There is a lot of media attention about warehouses that are operated by robots, with Amazon India being a prime example of a company that uses technology to become more efficient in warehouse management.
- Stronger collaboration in the supply chain process: Solid procurement practices and stronger relationships with suppliers will be considered a priority in the supply chain process. For instance, the procurement department can utilize the business data on suppliers to enhance supply chain decisions such as supplier evaluation and recommendations of the best business partners. Also, effective cooperation can help assess risks in the supply chain based on global industrial and political trends as a way to prevent or mitigate the danger of stock shortages.
- Supply Chain Integration: Today’s supply chains are a series of discreet, siloed steps involving marketing, product development, manufacturing, distribution, and eventually customers. Most of these activities have their own system and not connected. There is a need to integrate these systems to provide real-time data and analytics.
Your thoughts on technology adaption in India VS developed countries like Singapore, the US in supply chain domain
Technologies that can empower and disrupt existing Supply Chain operating models are Artificial Intelligence/Machine Learning, Advanced Analytics, IOT, Robotic Process Automation (RPA) & Blockchain.
India is reaching an inflection point in technology adoption with social, mobile, cloud and analytics driving digital disruption in the country. However, when it comes to IoT, RPA, and Blockchain, we are far behind Singapore and USA. The World Digital Competitiveness Ranking of India in 2018 was 48 while the USA leads as number 1 followed by Singapore as number 2. The objective of the digital competitiveness ranking is to assess the extent to which a country adopts and explores digital technologies leading to transformation in practices, business models and society in general.
India is likely to experience very rapid diffusion and adoption of 12 general purpose technologies and technology applications in the coming decade. The most potent of these, the mobile Internet, will likely reach 700 million to 900 million Indians by 2025. Along with cloud-based services, the automation of knowledge work, digital payments, and verifiable digital identity, the mobile Internet can provide the foundation for improving the ranking of our digital competitiveness.
What are the 3 core points that you would like to deliberate on at The ET Supply Chain & Logistics Summit on 26th June?
Three core points that I will like to deliberate are as follows
- Supply Chain Digitization
- Blockchain to Transform Supply Chain
- Risk Management
Supply chain 4.0
Industry 4.0 creates a disruption and requires companies to rethink the way they design their supply chain. Several technologies have emerged that are altering traditional ways of working.
“Supply Chain 4.0 (It can also, be called Smart Supply Chain) is the application of Industry 4.0 technologies i.e. the Internet of Things, the use of advanced robotics, and the application of advanced analytics of big data in supply chain management & place sensors in everything, create networks everywhere, automate anything, and analyze everything to significantly improve performance and customer satisfaction”
Supply Chain 4.0 is the highest maturity level, leveraging all data available for improved, faster, and more granular support of decision making. Advanced algorithms are leveraged and a broad team of data scientists works within the organization, following a clear development path towards digital mastery.
Krishan K. Batra
President & CEO
Institute for Supply Management, India
For more information about the Supply Chain Management & Logistics Summit, please visit: http://et-edge.com/conferences/scm/