Article on role of IT in clinical research

https://drive.google.com/file/d/0B_Q9jy0psFsfcExnXzZWYW9oTFRmLUNEc2xNTUhjQ185R2pB/view?usp=drivesdk

Introductory presentation on 4th of August, 2016 to MBA Students of Aviation, LSC and Healthcare management

Dear MBA Student of ILAM, Galgotia University, from Aviation, healthcare and Logistics and supply chain management domain. It was indeed a pleasure to address you all to introductory session of 2016-18 batch. I am giving a link to my presentation of 4th of August,2016 for your reference.

https://drive.google.com/file/d/0B_Q9jy0psFsfZ3lxd1Z6NUtFYi1sQXN4cjJTMHdMNTZqSngw/view?usp=drivesdk

Prof. Akhil Chandra

Academic Head (Management)

ILAM, Galgotia university

Syllabuses for MBA Aviation, MBA logistics and supply chain and MBA Healthcare Management.

Welcome ILAM, Galgotia new batch, 2016 to 2018 MBA Batches. I am giving links to syllabus for MBA Aviation, MBA, logistics and Supply Chain Management , and MBA Healthcare as under.

•

MBA AVIATION

https://drive.google.com/file/d/0B_Q9jy0psFsfOTc3TEZ3Qld1ZjRrY0l6WWhNT25jR3dNYTRV/view?usp=drivesdk

MBA LOGISTICS AND SUPPLY CHAIN

https://drive.google.com/file/d/0B_Q9jy0psFsfc0hvQ1U3RXhveWRZZk5ZbmtfTmZUNk1pQUJv/view?usp=drivesdk

MBA HEALTHCARE

https://drive.google.com/file/d/0B_Q9jy0psFsfMEw4WXlhTk9kSFAzZkZoZjkyRk9IZ3FWOF9j/view?usp=drivesdk

Happy Blogging

Prof. Akhil Chandra

Supply Chain challenges to Pharma industry and hospitals

  An Article on Supply Chain challenges to Pharma industry and hospitals

Healthcare sector is one of the largest and fastest growing sectors in the world. For this phenomenal growth, the prominent key drivers and the rising challenges  are-

- Globalization and the advancement of information and communication technologies

- Patient safety and security  

- Complexities in the supply chain due to rising demands from hospitals for pharmaceutical industries.

Supply chain management techniques which have successfully been employed almost throughout the segments of Industry are employed in health care sector also to face the above challenges. Like other segments, here also these techniques have successfully been employed to match supply and demand so as to supply the material in the right quantity, at the right place t right price, right product and most important at the right time.  

Why Supply Chain approach to Pharma industry and Hospitals?

A popular notion is that supply chain concepts can be applied largely to manufacturing operations and are not applicable to service operations. But this is not true.Like every Enterprise, hospitals and health systems are equally under pressure to control their rising costs of supplies primarily locked up in inventories consisting of pharmacy, surgery, medicines and drugs and yet maintain their ultimate obligation in providing timely, efficient and effective treatments to their customers (patients). The supply chain costs represent today the second largest expenditure category of hospital’s operating expenses next to costly manpower. These costs are increasing exponentially due to –

·         Growth in usage of medication  and very expensive and very clinically sensitive devices and implants

·         Service lines such as interventional cardiology and total joint replacement surgery using high value supplies such as supplants and drug coated stunts.

·         The rise in IT budgets at healthcare institutions

·         Increased cost of drug development, production and distribution

·         Cost of  packaging and labeling requirements of Drugs

It is as such important to have a close look on supply chain management system of hospitals with an Endeavor to make it efficient, integrated and synchronized. The subject popularly known as HSCM (Hospital supply chain management system) due to its potential in saving heavy costs and in satisfying patients has gained its prime importance in healthcare industry.  Senior financial executives as such these days need to recalculate the strategic significance of the supply chain and plan accordingly

Inefficiencies in supply chain unlike in other domains of industry may result in extreme cases even into death of patients. As such apart from cost reductions, an effective supply chain is very vital to human life and its longevity. Ultimate objective of this subject is to manage materials/equipments and manpower   like doctors, nurses and other supporting staff and treat patients and transform them into a healthy person at a reasonable and optimum cost in minimum time so as to satisfy their expectations through quality treatment. Innumerable flows between suppliers and customers, both upstream and downstream, have to be considered to strike a balance.

Supply Chain of Hospitals

Supply Chain ( also can be characterized as value Chain) of hospitals integrates suppliers, transport and warehouses and hospital services (including outpatient, emergency, in-patient, laboratory, radiology, stores and purchase, food, laundry and medicines /equipments) so as to serve the patients by optimum utilization of resources. The resources in terms of materials/medicines used in the hospital can be classified majorly based on their applications such as diagnostic, Surgical, Therapeutic, Bedside, Service, Engineering, Housekeeping and ICT.To substantially reduce supply-related costs, a hospital must develop a fully integrated enterprise wide supply chain in which all processes as mentioned above  are coordinated and supported by state-of-the-art technology. A pertinent question which should be asked to hospitals is whether your organization delivers  the right product to the right place at the right time and for the right price? If not then situation demands for a thorough check up of your processes and give your hospitals a treatment of ‘Supply Chain Management’.

How Improvements in supply chain in healthcare sector can be affected?

Basically the process improvement opportunities exist in five key areas: (1) contingency plans (2) supply chain integrity; (3) Demand pull model (4) Cutting down on too many intermediate partners (5) value visibility.
Contingency plans
As the supply chain involves factories producing medicines and diagnostic equipments, temperature controlled warehouses and distribution facilities to keep the material flow in order, what happens if a factory producing life saving medicine gets destroyed or the distribution facilities disruptions hamper the product flow endangering human life?   The most effective action is to develop systematic contingency plans, including factors like alternative production sites, manufacturing flexibility, factory-direct shipping capabilities, offsite backup distribution center capacity, and critical safety stocks.
Supply chain integrity

Quality assurance, such as lot integrity and tracking, is a crucial healthcare supply chain function. It ensures that patients receive safe therapies, and that problems are contained and minimized. New technologies, such as radio frequency identification (RFID), offer the prospect of ensuring supply chain integrity. Through automatic identification, traceability and visibility tools, healthcare companies are given the opportunity to make the Healthcare supply chain more efficient and accurate, and thus safer by:

·         Reducing medication errors

·         Making counterfeiting more difficult

·         Enabling efficient and effective traceability

·         Decreasing the production and supply chain cost

It is important here to mention here that revolutionary technology of  RFID  can greatly contribute to the healthcare and pharmaceutical  industry with Wi-Fi and voice over IP (VoIP), creating a single information system providing visibility throughout the supply chain. It track patients and hospital assets, improve patient safety, play a role in running clinical trials of drugs, manage critical care assets and hospital equipment, reduce counterfeiting of pharmaceutical products, reduce medical errors, and cut costs, thereby improving efficiency.

As a futuristic technology I would like to mention  that in future unmanned flying vehicles as drones through aerial route  would provide speedy delivery of crtical items like blood, medicines appliances to the hospitals enabled by the pharmaceutical firms. This would improve to fulfill the critical demands posed by hospitals on pharma industry towards patient life safety enabling doctors in performing critical operations in the operation theater. 

Demand Pull Model
Healthcare supply chains need to move toward an integrated "demand-pull" model, so that manufacturers have much earlier visibility into actual consumption. In many other industries, this integrated supply chain system has enabled the participants to align production and distribution much more closely with actual demand. All the channel participants can see and understand what they need to do individually and together in order to successfully lower costs and increase service levels. Healthcare supply chains would free up tremendous amounts of valuable resources by adopting this channel model; important elements, such as ICT and process control systems to provide real-time information at point of patient infusion/injection, are now being put in place.
Cut down too many intermediate partners
 The prospect of disintermediation, moving product directly from manufacturers to providers, is growing stronger in healthcare supply chains. This process offers important economic benefits. But it is only appropriate in certain situations, and it requires that manufacturers and providers develop new expertise and trust. To give a successful example from other segment of industry, Wal-Mart and Proctor and Gamble built a strong and sustainable relationship between them and the rewards were in terms of win-win situation for both of them to become world leaders in their respective areas.
Value Creation by individual partners
At present health care supply chains are fragmented and the current pricing structures and channel policies reinforce the inefficiency of this fragmented sector. Distributors negotiate volume discounts from manufacturers, and offer discounts to providers. What is important is to have trust in each partner and work towards common goal of value creation, which is the precondition for major improvements in supply chain efficiency. In well-functioning supply chains, each participant has an important role in creating unique, visible value as product flows from source to consumption. Instead of competing within the value chain, one supply chain of the hospital should compete with another value chain of the hospitals for sustainability, survival and competitive advantage..
Conclusion
Supply Chain Management in other industries has got its due recognition and this subject now is considered to be a  board level topic to solve intricate and new challenges rising in this critical segment. Now conditions are right for another round of major healthcare supply chain improvements due to  pressure on management to reduce costs and increase efficiency and have a customer responsive approach. This has happened especially after hospital chains of multinationals have arrived in India. Healthcare budgets are very tight, supply chains have critical vulnerabilities, and providers have significant opportunities for much-needed process improvements. The supply chain as such should be part of the enterprise strategic plan, incorporated across all components and service lines of hospitals. A hospital's or health system's strategic plan should include supply chain management as a key strategy for maintaining fiscal goals, improving quality and satisfaction levels, and addressing industry trends and developments. There is a tremendous scope of applying IT, telecommunication techniques and Automation in hospitals. The mantra is to concentrate on improving efficiency, quality, and responsiveness to patients and apply innovative methods of supply chain coupled with technology to achieve the end goals.

Written by Professor Akhil Chandra

Emerging trends in supply chain management

Emerging trends in supply chain management and its impact on the Industry

The fierce and cut throat competition after globalization among the industry players and availability of  IT and process automation technology applications  to the industry has made topic of supply chain management most relevant to the industry as never before. Supply chain management is now a board level topic for the corporates as it directly impacts their bottom-line and a better managed supply chain for a company is a competitive advantage to them. Needless to say that it is a key to their long term sustenance. It is as such important to have a look on the rising trends in this vital area and its crucial impact on the modern business so that industries realign their process and maximize their revenues and ultimately their  profits. I am as such summarizing few bullet points so as to give a summary to these rising trends in this most vital area.

·         Customer centric approach in the entire value chain right from suppliers to manufacturing to warehouses to Retailers. Impact on the industry is to match supply and demand resulting in lesser inventory costs resulting in increased profits and more sales due to better customer satisfaction. Example in industry are Dabur, HLL , Procter & Gamble, Maruti, Mahendra & Mahendra, Future group and Tata group etc.

·         Trend of outsourcing functions like warehousing and transportation giving rise to 3PL and 5PL service providers in the industry with focus on cost reductions and better service to customers.

·         Suppliers are treated as partners resulting in suppliers taking keen interest in supplying quality components to production units well in time taking keen interest in order processing. Impact on the industry is improvement in efficiency of production units manufacturing better quality products  with shorter delivery time.

·         Logistics in manufacturing industry is getting recognized most important function after product development as there is significant volume of goods movement both inbound ( components and material sourcing) and outbound ( product distribution ).

·         Trend is to emphasize on quality, Efficiency, speed, Innovation and responsiveness to customers by all partners impacting the availability of better products with increase in Sales volume of the industry and more market share. The new Mantra is to provide right product at the right price , at the right time and at right place.

·         New trend in supply chain management is to insist on VISIBILITY from end to end in entire value chain. This is made possible through introduction of information and communication technology with help of ERP, RFID, GPS, EDI, VMI (vendor managed inventory) technologies through internet. Industries are embracing ICT technology with ERP software modules like WMS,TMS,CRM,SRM and CRM

·         With impact on visibility, 3PL service providers are embracing ICT (Information and communication technology)  offering tracing and tracking capabilities monitoring carrier’s performance in terms of carrier’s pick ups and deliveries.

·         3PL service providers are becoming flexible in accommodating emergency and contingency requirements of manufacturing companies.

·         Rise of Cold chain management for agricultural and horticulture products which are perishable and temperature sensitive impacting emergence of new industries in FMCG sector.

·         Supply chain management concepts are equally applied to service industry just like manufacturing in areas of healthcare, hospitality, tourism and food chains impacting the industry with better customer care giving rise to focus on customer relationship management. 

·         Rising trend of green supply chain management to create environmental friendly products by industries right from inception of product up to its consumption.

·         Rise of ‘Big Data’ collected through information technology in terms of large text and picture files, video clips and transactional data of customer giving rise to predictive techniques about customer behavior helping companies to cover up their lost sales and maximizing capacity utilization of their process.

·         Innovation is being emphasized giving rise to Industry-Academia interfacing to create better product developments and trained manpower.

·         Manufacturing companies are changing the culture of ‘push sales’ to ‘pull based production and supply systems with emerging trends of SCM.

·         Introduction of Just in Time and  KANBAN technique for pull based procurement

·         E-Tracking of transportation vehicles on Google maps.

·         Introduction of lean manufacturing environment with a total quality management approach throughout the production unit.

·         Industries are changing their culture in different departments of manufacturing from ‘my department’ to ‘our customer’ approach.

·         With focus on supply chain management industries are integrating all relevant departments under one banner.    

·         Industries are embracing ‘change management’ involving changes in measure of performance, planning process, execution process, ERP, MIS and communication systems.

·         Industries are focusing on reduction of costs and product manufacturing   time with increase in Sales and higher profits due to cost reductions through new trends in supply chain management.

Written By

Professor Akhil Chandra

Consultant Logistics and supply chain management,

Institute of Logistics and Aviation Management

ICRI, Okhla Phase II,New Delhi 

Effect of GST(Goods and service tax) on warehousing

When one looks back the past years , there are good times and bad times both. We still cannot forget that India had reached GDP growth rate of nine per cent few years back which  gives certainly a confidence to Indians  that nine per cent growth rate and beyond  is an achievable target. Unfortunately this story of growth was spoilt by systemic  corruption and too much subsidy distribution during UPA II regime.  Success story of allowing FDI in Automobile sector and Telecommunication and partially in other areas coupled with liberalization during the last decade brought foreign competition in India and consumers in the country had a taste of quality products. This rightly raised the demand for quality products.  During this churning period many domestic companies perished because they  could not face the foreign challenge and unfortunately Government at that time  too did not do much to encourage manufacturers from supply side. Manufacturing remained mere fifteen per cent of GDP. The last year was really tough for the country and Indian industry.  GDP growth started dwindling below five per cent and current account deficit started moving up with dollar exchange rate to Indian rupee touching even to seventy making things really difficult.

For looking ahead with a positive outlook and hope,  last six months of stable government of Modi  have certainly given reason for the  optimism and with rising Sensex , it is evident that investors both foreign and Indian have welcomed the steps taken by new regime and market sentiments are now  high .

Still much more needs to be done. The country is lucky too as Year 2015 is a year where fortunately inflation is at its lowest thanks to the sharp decrease of oil prices globally and the GDP growth once again is on the upward trend reaching now beyond 5.2 per cent.  People expectations are now high in the year ahead and growth model of Modi government have many takers in the new environment of hope and optimism prevalent in the corporate sector and among all the participants.

For the Logistics sector now there is lot to cheer about too. New regime has focused its all-out efforts on manufacturing sector with launch of ‘Make in India’ program coupled with efforts to improve logistics infrastructure of ports, roads and rail. This has opened new opportunities to third party logistic players in the area of inbound logistics. Needless to say that unless inbound logistics succeeds, the challenge of rendering cost effective manufacturing shall remain a distant dream and we shall not be able to meet the competition brought out by foreign products especially from our neighboring country China bringing out products with value for money approach.  The new reforms of land acquisition and labor reforms by the government of India though brought through ordinance are efforts in right direction for improving manufacturing in India.         

Further Government is quite serious about implementing goods and service tax which would be a boon for incorporating large and state of art warehouses and logistics industry as a whole.

E-Commerce is really booming with players like Flipkart, Amazon.com, Myntra , Snapdeal and many more new kids on the horizon. This is really good news for third party logistics players. State of art warehouses and transportation facilities with speed are a key for success of E-Commerce. The 3PL players have really now lot to celebrate for expansion in growth opportunities with this new development and the good news is that they are rising to the challenge.

Year 2015 is a year of optimism, faith and growth as country in this year is poised to become 2 trillion dollar economy.

Written by Prof. Akhil Chandra

Consultant ; Logistics and supply chain management

Article on Supply Chain Management and Business Logistics

      Article on Supply Chain Management and Business Logistics

INTRODUCTION

With ever increasing globalization and rising customer’s expectations, logistics and supply chain management is emerging as a definite competitive advantage for the corporate world.  This is a new weapon in hands of business organizations for reduction of logistics and manufacturing costs resulting ultimately in higher ROI, increased customer’s satisfaction and delivery of highest value to shareholders. In today’s globalized world companies have to align their business strategy with their supply chain strategy so as to survive the new cut throat competition.

Supply chain management concepts are relevant to both manufacturing and service organizations and are applicable to even entire nations. Nations are striving hard to bring down their infrastructural and logistics costs so that industries can manage their supply chains most effectively.  

In Indian context the logistics costs alone are around 13 per cent of our GDP and must be brought down to the order of ten to eleven per cent comparable to Europe and Japan. In developed countries like U.S. , the logistics costs are as low as 9 per cent.  India’s GDP has grown now to one trillion dollar and there is thus huge scope to save supply chain costs if we improve our infrastructure comprising of better Ports, roads and railways.

Historically companies tried to reduce their business operation costs under different names like Material management, physical distribution, transportation management, and logistics but each segment worked in silos and missed an integrated supply chain approach leaving a huge scope of cost reductions. Modern supply chain management concepts take a unified approach combining customers and end users, suppliers, manufacturers and intermediaries like distributers, dealers and retailers resulting in not only reducing costs but in increased sales due to a unified customer centric approach.

Scope of cost reduction is enormous and ranges from 60 to 80 per cent of a firm’s Sales income and is essential for a firm’s competitive strategy and revenue generation and involves activities like transportation, inventory maintenance, order processing, purchasing, warehousing, materials handling, packaging, customer service standards and production.

New leadership in our country led by our Prime Minister Mr. Narendra Modi as evident in the current budget is taking vital steps to focus on manufacturing and improvement of country’s infrastructure comprising of dedicated freight corridors of both rail and roads and new sea ports. As such supply chain concepts must be applied vigorously both in manufacturing and service sector so as to put back India’s growth story back to 9 percent from current 4.5 per cent of GDP growth.

Basic understanding of Logistics and supply Chain Management.

Logistics is the process / chain management of transport flow and the storage of goods and services from its origin to it consumptions. It includes both inbound & outbound movements and does not include activities such as forecasting and procurement.

Supply Chain Management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. SCM involves coordinating and integrating these flows both within and among companies with the objective of making products available when needed.

Supply chain management can be divided into 3 main flows:

·         Product flow

·         Information flow

·         Finances flow     

  

The above schematic shows the basic supply chain process divided in various stages involving inbound logistics, manufacturing logistics, supply logistics, distribution logistics and after sales logistics. The Reverse logistics flow as shown in the diagram is for the return goods which can be recycled by production units to be sent back again to the market place.

Scenario of new supply chains is changing fast due to the following factors.

•      Global competition

•      Well informed more powerful Customers

•      Customer Expectations

Emerging trends in supply chain management and its impact on the Industry

Some Bullet Points

·         Customer centric approach in the entire value chain right from suppliers to manufacturing to warehouses to Retailers. Impact on the industry is to match supply and demand resulting in lesser inventory costs resulting in increased profits and more sales due to better customer satisfaction. Example in industry are Dabur, HLL , Procter & Gamble, Maruti, Mahendra & Mahendra, Future group ( Kishore Biyani ) and Tatas

·         Trend of outsourcing functions like warehousing and transportation giving rise to 3PL service providers in the industry with focus on cost reductions and better service to customers.

·         Suppliers are treated as partners resulting in suppliers taking keen interest in supplying quality components to production units well in time taking keen interest in order processing. Impact on the industry is improvement in efficiency of production units manufacturing better quality products  with shorter deliveries

·         Logistics in manufacturing industry is getting recognized most important function after product development as there is significant volume of goods movement both inbound ( components and material sourcing) and outbound ( product distribution )

·         Trend is to emphasize on quality, Efficiency, speed, Innovation and responsiveness to customers by all partners impacting the availability of better products with increase in Sales volume of the industry and more market share.

·         New trend in supply chain management is to insist on VISIBILITY from end to end in entire value chain. This is made possible through introduction of information and communication technology with help of ERP, RFID, GPS, EDI, VMI (vendor managed inventory) through internet. Industries are embracing ICT technology with software modules like WMS,TMS,CRM,SRM and CRM

·         With impact on visibility, 3PL service providers are embracing ICT offering tracing and tracking capabilities monitoring carrier’s performance in carrier’s pick ups and deliveries.

·         3PL service providers are becoming flexible in accommodating emergency and contingency requirements of manufacturing companies.

·         Cold chain management for agricultural and horticulture products which are perishable and temperature sensitive impacting emergence of new industries in FMCG sector.

·         Supply chain management concepts are equally applied to service industry just like manufacturing in areas of healthcare, hospitality, tourism and food chains impacting the industry with better customer care giving rise to customer relationship management. 

·         Rising trend of green supply chain management to create environmental friendly products by industries right from inception of product to its consumption.

·         Innovation is being emphasized giving rise to Industry-Academia interfacing to create better product developments and trained manpower.

·         Manufacturing companies are changing the culture of ‘push sales’ to ‘pull based production and supply systems with emerging trends of SCM.

·         Introduction of KANBAN for pull based procurement

·         E-Tracking of transportation vehicles.

•      Shorter product life cycle 

•      New, low-cost distribution channels 

•      Internet and E-Business strategies

In supply chain management concepts, suppliers are treated as partners and all the customer’s information is shared with dealers, distributers, manufacturers, transporters and suppliers so as to provide VISIBILITY to all the stakeholders of supply chain. It must be borne in mind that it is the lack of visibility which increases risk, cost and order execution time for the company. The visibility about customer’s orders, stock inventory at all points and transportation during its various modes and

routes is made possible through heavy use of Information and communication technology involving internet, telecommunication, ERP, and process automation embedded with technologies like EDI, BAR CODE/RFID and GPS technology. This helps companies in matching the supplies affected from manufacturing units to the demand made from customer thus reducing the huge inventory costs locked up in warehouses and transportations.

Supply Chain Objectives

• Enhancing Customer Service
• Expanding Sales Revenue
• Reducing Inventory Cost
• Improving On-Time Delivery
• Reducing Order to Delivery Cycle Time
• Reducing Lead Time
• Reducing Transportation Cost
• Reducing Warehouse Cost
• Reducing/Rationalize Supplier Base
• Expanding Width/Depth of Distribution
• Having Products in Stock

Companies achieve a paradigm shift in meeting their objectives while collaborating with their supply chain partners and synchronizing their operations. Technology becomes the key enabler for innovative supply chain strategy. Supply chains are restructured and reskilled to achieve the goals. Collaborating with partners in a single supply chain also means that partners must not dispute for individual profits but participate in overall success of their supply chain.

How Wal-Mart managed it.

Company like Wal-Mart applied the rules of Global supply chain Management successfully and rose to become number one company in the world after beating big Conglomerates like K-Mart and Sears in their own game. Wal-Mart chose their suppliers globally from countries like China and Far East and cut down its procurement and manufacturing costs and could sell every item cheaper than their nearest competitor. Wal-Mart carried out computerization with heavy use of ERP (Enterprise Resource planning) software throughout their value chain and shared the customer’s information liberally with their suppliers, distributors and dealers through IT networks resulting into complete transparency throughout their value chain.  The information concerning the buying behaviour of customer, purchase orders, prices and inventory flowed both way along the value chain resulting into reduction of inventory carrying costs both for finished goods and raw material. Wal-Mart could thus supply what customer exactly wanted at the right place, at the right time and at the right price.

With customer centric approach, Wal-Mart set up huge distribution centres in every city where merchandise  in cartons were received from various suppliers chosen globally shipped by sea, Air or Rail Road and trucks  and then unloaded on the network of conveyer belts installed at the distribution centres. The merchandise was redistributed despatching and transporting it once again to the various Malls located throughout the city. The history of content of the cartons was identified by RFID tags with information like country of origin, technical details of the content, source and destination, expiry dates of the goods inside and temperature to be maintained. This enabled the concerned handling staff to properly prioritize the cartons carrying perishable items or items like medicines and deliver it to Malls before the expiry date. This way they could make most of the items including FMCG goods always available on the shelves for the customers who came to Wal-Mart in huge numbers because of lower prices being offered. Wal-Mart was also ahead of their competitors in reducing the lost sales arising due to non availability of goods on the shelves.

Global supply chain management is now imitated by most of the companies in the world after the success story of Wal-Mart who starting from a small place called Bentonville, Arkansas in United States is now world’s largest company in the world with innovative approach of Sam Walton , the man behind the success of Wal-Mart.

Case of Boeing, the Aviation Conglomerate

Today the supply chain is no longer contained within countries borders, but encompasses all nations, whether they are vendors, manufacturers or customers. Boeing which is a premier  Aviation multinational manufacturing aircrafts is able to assemble the  Aircrafts in 3 days flat while outsourcing most of the parts and components from suppliers located far and wide throughput the world. It takes advantage of best of what is available in different countries in terms of best of research and development facilities, cheap labour, skill set and technology and coordinates its value chain amazingly well to maximize its production delivering aircrafts of topmost quality in an unparalleled innovative approach.

VARIOUS SUPPLY CHAIN STRATEGIES FOR COMPETITIVE ADVANTAGE

1. Inventory Strategy

This involves the following.

·         Forecasting

·         Inventory decisions supported by IT

·         Purchasing and supply scheduling decisions

·         Storage fundamentals like ABC analysis etc.

·         Storage decisions and cold chain management

2. Location strategy

This involves location decisions involving warehouses and manufacturing units vis. a vis. Suppliers and marketplace

3. Transport strategy

Here decisions like route selections and modes of transport (air,sea,rail or road) are taken with cost, time and type of product in mind.

4.Service improvement strategy

The strategy usually recognizes that revenues depend on the level of logistics service provided like through ERP systems with modules like CRM ( customer relationship management). Examples are Call centers and hospitals in service industry.

5. Postponement Strategy

Benetton used to follow the traditional way of making hosiery: dye the yarn (fixing the colour) and then knit the fabric (fixing the style) but research on customer data showed that- 

1.      Understanding customer behaviour showed that it was easier to predict style choices than colour choices.

2.      Consequently, they evolved a technology to change the production sequence for their single colour fabrics to first knit and then dye.

3.      This enabled the supply chain to be aligned with the market behaviour choice.

6. Delayed Differentiation strategy

•         By acquiring a technology that enabled mixing of colors and base paints to get the appropriate shade in a few minutes, Asian Paints obtained a competitive edge by delaying their differentiation resulting in Retail inventory costs coming down  while at the same time, product availability going up.

Supply chain management helps environment (Green supply chain)

Further all over the world there is a growing realization of making world green by avoiding the harmful effects on the environment due to pollution caused on air, water and soil during process of extraction, manufacturing operation, physical distribution and logistics by sea, air, road and rail  and consumption of the end product by consumers. Multinationals all over the world are focussing on Green supply chain management involving negotiating policies with suppliers and customers resulting in better alignment of business processes and principles so as to improve the environment and ecology. Wal-Mart, world’s largest Retailer enforces his suppliers to follow green supply chain policies making it mandatory on his suppliers to revaluate the material content and adopt environmental practices so much so that it refuses to do business with defaulters who do not follow green practices and environmental management systems. Green supply chain management mitigates risks and speeds up innovations. Recently Chinese toys were banned by America including other countries as they were found hazardous to children due to harmful ingredients used in making of the toys. Such risks could have been avoided had the Chinese toy manufacturers studied closely the product life cycle management up to the stage of consumption. In global supply chain management, companies as such can ill afford to ignore green supply chain.

Importance of Infrastructure

Infrastructure in terms of good port facilities both for sea and air route, mobility on roads and good telecommunication infrastructure plays a vital role in handling global supply chain. Wal-Mart used Satellite communication very effectively in terms of VSATs installed in every store in reaching their Chinese and Taiwanese suppliers sharing the information such as inventory, customer’s buying behaviour and Sales data. Apart from that they used ERP software with modules like warehouse management system, transport management system, supplier relationship management and customer relationship management system to name a few. They forced their suppliers to adopt EDI

 (Electronic data Interchange) saving on time and improving responsiveness to the customer’s needs. 

Indian Scenario

Indian business conglomerates are now expanding their operations beyond the frontier of the nation and many like Tatas, Reliance and Bharti Group have taken over foreign companies. In this background of   Indian expansion of trade in foreign countries,  supply Chain Management shall play a very vital role towards long term sustenance and growth of Indian business.

Some of the successful companies who have applied supply chain management successfully are as under.

Automotive - Telco, Mahindra & Mahindra, Maruti

Chemicals - Asian Paints, Apollo tyres , Reliance

Apparel - Madura Coats, Reliance

Food - Cadbury, Parle, Amul Products, HLL

Consumer durables - HLL, P & G

Construction - L & T

Pharmaceutical - Ranbaxy, Glaxo

Electromechanical – Kirloskar,  L & T

Tooling - HMT, Widia, Mico

PC/ Computer - IBM, WIPRO, HCL, Intel

 As the global supply chain becomes more complex with every passing year, companies must adapt to this change and incorporate them into their supply chain strategies. This change could mean using vendors from developing nations or exporting goods to new markets. Companies that have traditionally operated within national or regional trading groups may feel ill-equipped to extend their supply chain. Such closed door operations without knowing what is happening elsewhere in the world can be fatal and even shall be detrimental to their survival if they are unable to select and manage a foreign vendor or not knowing how to sell items in a new country. On the infrastructure front in India so much is happening with improvement of airports at Delhi, Mumbai and Bangalore and Aviation cargo hub at Nagpur and privatisation of sea ports like Mundra  and Tuticorin ports and  dedicated Rail networks for freight. Telecommunication infrastructure with Wi-Max and 3 G facilities in the country shall improve the connectivity and solve last mile problems for Logistics 3 PL Companies giving impetus to international connectivity as well. Indian Companies are now more receptive to ERP implementation with companies like SAP, Oracle and the home grown software companies. Time ahead is interesting to watch in India as Indian companies are bound to join international supply chain Conglomerates.  

Written By.

Prof. Akhil Chandra