Learning how critically essential the supply chain is to a business, companies are now forced to take a fresh look at their supply chain operations. This has and will continue to bring evolution in the industry. Now to support this evolution, deliberate discussions on the strengths & weaknesses of a supply chain, new strategies, and bringing in resilience are being held both in seminars as well as behind doors. In this Exclusive interaction with PS Easwaran, Partner, Deloitte India, we not only get to understand the perspective of the industry on the current supply chain but also understand the changes that might impact the supply chain tomorrow. Edited excerpts:
Now that the National Logistics Policy has been launched, what do you think will be some of the major supply chain shifts that the country will witness in the days to come?
Firstly, I think it will be a great enabler to all the investments that we are making as part of the National infrastructure plan, therefore it will be a significant enabler because the investments you have made in infra will have the best effects through a very effective logistics in the country. We will not be logistics-disabled going forward.
Secondly, In the medium term, it will enable the seamless movement of transport across multiple states and regions we are looking at.
Thirdly, we are looking at how to use multimodal transportation in India, which is predominantly road-focused. So, the NLP also effectively leverages the ability to do multimodal transportation.
In effect, it will fundamentally be, lower the cost to serve companies, and higher utilization of assets which are on the logistics front, therefore a more competitive India when it comes to goods and services.
I feel rather than a good to have it is the need of the hour and a must-have for a nation like India.
Apart from low cost, what are some of the key motivators for companies to reimagine the value chain of the future and consider India as a strategic destination?
When we are having conversations with companies, it’s not primarily about having low cost, it’s more about how can they make supply chains more resilient and how can we leverage India’s strength as a good manufacturing economy to give us that resilience. This is where all these policies, the NLP, production-linked incentive policy, research-linked incentive policy, state policies, and the 15 focused sectors for manufacturing and 12 of services come in, all these are fundamentally integrated and enabled by the Gati Shakti plan, the National infrastructure plan and other dimensions. In my view, these are all the enablers to ensure that companies are looking at India as a favourable location to carry business to build supply chain resilience.
One buzzword that is very popular in this industry is resilience. How supply chain issues like the Suez Canal fiasco and the semiconductor shortage can be dealt with “what-if” scenario planning, and open communication between partners and internal leaders to allow resilient operations?
While post the pandemic, everybody talks about resilience there is always a discussion in the organization about short-term Vs long terms, as primarily resilience also implies the cost. Building a resilient supply chain also sees some level of overlap in the early stages, and also organizations have to think about whether they have to absorb an additional cost. But I feel they have moved passed this. what they have started looking at from the resilient perspective is not just reacting to short-term disruptions. They are now looking at how they can proactively sense potential disruptions, and even if they are not able to sense some of these disruptions they have looked at how can they build in the flexibility within the supply chain to do that. What people are now focusing on is how they can look at building resilience as a program within the organization rather than just thinking about how they should be looking at it as a short-term mission.
Every one of us has an eye on the supply chain of the future. How do you think organizations should attempt to build a 2030-ready supply chain that moves from a linear model to a networked and integrated approach?
I think there are a few drivers for the supply chain of the future, the first one of them being the move or shift of the supply chain organization from a function focused on operational excellence to something that will drive commercial or business success for the organization. The positioning of the supply chain organization itself will be the first big change that will happen. The supply chain therefore will be an innovation hub for enterprises to remain competitive. It will go from being a recipient to being a giver of competitive advantage.
The second driver is essentially the emergence of personalization in the supply chain. I think today the personalization in supply chains is limited to consumers, but I think as we go forward, we would find this all-in compassing. Since the organization will not have a uni-dimensional organization to deal with, it will have multiple dimensions of the supply chain to deal with. Therefore, supply chain organization will be more multi-dimensional than what it is today, that will be the way they will support the business, as businesses will move a lot towards personalization. And, Personalisation of the supply chain has to support that.
The third one, a sustainable supply chain will become a norm, and a lot of it will be driven by regulations too, going forward. But I think companies would not have sustainable supply chains as differentiators but essentially it will become table stakes. So, the entire model of sourcing, locations, supplier selections, plant design, model design, and therefore the delivery will change.
These three would be the big driver, with an underline theme being how can we build a resilient supply chain.
Supply chains are responsible for a disproportionately large share of the world’s carbon emissions. What are your views about decarbonizing the supply chain? Also, what role does technology play in the effective monitoring and reporting of carbon footprint?
As I said earlier, sustainable supply chains will become the norm going forward and regulations will also aid it. In terms of technology, a sustainable supply chain will essentially mean traceability end-to-end. Therefore, the entire information and material flow has to go together for traceability, there will be a lot of investments in traceability, although today it’s not a big driver of supply chain priorities.
Another is technology on both core assets as well as tech to enable all the dimensions of material information. For eg: it will not only be about monitoring data and analysis of data. It will also be about capturing data at source and therefore traceability on how the carbon footprint has evolved and actions on how to optimize that.
The big change will be in assets as well. If you are going to commit to an enterprise with significant footprint optimization, there will be a huge impact on product design, plant design, and therefore smart manufacturing coming in within plants and therefore the entire dimension of how supply chain technologies will evolve.
I think the awareness has become significantly high. And in the last two years, the acceleration of the ESG agenda is far higher than what it was in the past four years. Even in terms of sectors, all sectors are now looking at how they can enhance their carbon footprint optimization initiatives. Some actions have been taken both at the overall strategic level right from defining the purpose and coming down to the next levels as well as looking at the sustainable perspective. I would say the action is more from the last two years, especially in India, where people have focused on sustainable supply chains and therefore are looking at how they can build the entire dimension of traceability, the capture of data, and then reporting.
Unlike yesteryears, supply chain and logistics are no longer just support functions for an organization. How do you see the role of the supply chain gaining more prominence in the future?
The supply chain will potentially be the innovation hub for the organization, if you look at it all the value addition of an organization as the product flows happens in the supply chain. Companies will be defined by how they execute and manage their supply chain rather than just the product.
The role that the supply chain will play will be of moving from the backend(operational efficiency ) to the front end (driving commercial success).
The supply chain will also not be isolated, end-to-end ownership of the company as it stands today. Primarily, organizations will largely leverage the ecosystem for many reasons like infra capabilities, technologies, etc.
What I feel is most relevant Is that the supply chain will not be around customer service but more around customer experience. I think that would be the big change that we will have. Today, we talk about service levels, days of supply, turnaround time, etc. going forward we will keep that in context as building blocks but fundamentally move towards supply chains being the drivers of customer experience, i.e., supply chain being more holistic than ever.