 "Flawless Supply Chain Performance Depends On CIO")
Products today seem to come in zillions of variants and often have numerous affiliated suppliers provisioning various components. Take cars for instance. While a car manufacturer makes some key components like the body and the engine, a lot else comes from auto ancillary providers – everything from tyres to plastic components to brakes to batteries and several other parts that go into a typical car.
Modern supply chain driven by IT
Most large manufacturers of products, ranging from car to shampoo makers, use supply chain management solutions to manage this critical aspect of production—because the supply chain makes a big difference to everything from cost to on-time production.
Tony Murphy, solutions head – manufacturing, Datacraft, explains, “Supply Chain Management as we know it today is driven by information. The Internet has driven connectivity across the supply chain right down to the customer”.
Challenges associated with Supply Chain Efficiency
Any manufacturing enterprise without an efficient Supply Chain Management (SCM) in place is a crippled one. And an SCM system that leverages IT provides a key competitive advantage. However, putting in place a perfect SCM system is not smooth sailing and comes with its share of challenges.
Says Mani Mulki, VP, Information Systems, Godrej Industries, “Managing the supply chain is an integral part of our business operations and it is extremely crucial to our consistent performance. The competitive edge, which Godrej Consumer Products maintains, is directly proportional to how agile our supply chain is, how well we manage it and how lean and mean it remains. The most challenging part of implementing Supply Chain Management for us was the last segment, which involved integration of our huge number of retail outlets across India”.
According to Drew Martin, SVP and CIO, Information Systems and Solutions of America, Sony Electronics, Supply Chain Management at Sony is very complicated. “What mattered for us was getting the product to the customers in time i.e. when they wanted it. A lot of Sony’s products are produced by third-party manufacturers like Flextronics, so we have to really think end-to-end when it comes to managing the supply chain as we do not control it in its entirety”.
Imperatives to good Supply Chain Management
There are certain business imperatives such as multi-sourcing practices and security initiatives, which an organisation must have in place for SCM to reach its full potential.
For Murphy, the first imperative relates to organisations managing limited resources. According to him, the CIO together with his key partners will determine which part of IT should remain within the organisation and then build it up as skill-sets and competencies that are core to the business.
Murphy further elaborates, “The second area is supply chain connectivity. India is faced with tremendous challenges because there is distributed manufacturing all over the country. The third area revolves around how we look at the supply chain from a real-time management perspective. A lot of technologies like RFID are available that make the supply chain visible in real-time”.
Continuing further he adds, “The fourth area revolves around initiatives like six sigma or lean manufacturing. Companies in India have embraced these methodologies regardless of the vertical. The fifth area is an all-embracing one, which is regarding security. Many global companies, who wish to do business with Indian manufacturers and trading partners, will insist upon compliance to international standards. This drives security to the top of every CIO’s agenda with regard to intellectual property”.
Flawless SCM depends on CIO Initiative
The onus rests with the CIO to utilise technology to the fullest and leverage it to get the best out of the process. In Murphy’s opinion, IT will basically offer a service. The CIO will be measured as per the services that he offers to his business customers.
Informs Mulki, “We are planning to give Windows-based PDAs to our field officers to help them get the required information about stocks and sales when they visit retailers. They would then come back to the distributors, who have desktops that are connected to our supply chain. The information would then be docked and passed on. We wanted to make our back-end more robust and ensure that the backend architecture services the distributors’ supply chain, suppliers and production units at a much more efficient level. Our endeavour is to connect close to 90,000 retailers”.
Lean IT – Roadmap for future
In recent times, India Inc has been an aggressive adopter of IT in the SCM space. Lean IT is preferred to a large extent and experts say that lean IT is the way ahead.
Murphy says, “India has really embraced IT in manufacturing. It has leapfrogged in many respects and a lot of the steps and the innovations that we’ve seen elsewhere in the world and in many parts of Asia have been adopted by Indian enterprises. In India, we see two tracks emerging, a parallel supply chain governed by information and the technology within the manufacturing space. Lean is the way to go”.
Godrej has now linked more than thousand distributors on its supply chain and is making them a part of its homogenous supply chain system. This initiative has helped Godrej make its supply chain very lean.
Automobiles, FMCG and Pharma: Forward-looking IT adopters
Certain verticals like the automobiles sector have been the most forward looking, and emerging verticals like FMCG and pharmaceuticals are soon catching up.
Concludes Murphy, “Many automotive companies in India have opted for a lean manufacturing process. They are adopting global technologies that embrace enterprise systems, resource planning and supply chain connectivity. They are at par with the best practices in the world. We are also seeing innovation in FMCG and Pharma. I think over time you’ll start to see more of an extended supply chain emerging. RFID will be a technology that will be deployed at various points along the supply chain. It could be used for asset tracking, asset utilisation or IT security and eventually, there will be a ubiquitous deployment of these types of solutions that offer the ability to understand what is happening in real-time”.