To ensure that the spiked demand is met effectively, supply chain managers have to take care that all the nuts and bolts of their supply chain machinery are greased and working. From being customer-centric to maintaining quality, acing timely deliveries, and much more, but all of it in the purview of the disruptions prevalent at the time – there’s a lot to be taken care of. While customers rejoice at every granted wish, the industry toils tirelessly behind the scenes. So this year, we take a look, once again, at what it takes to effectively manage supply chains during rush hour.
The festive season brings about a surge in consumer demand and creates a number of opportunities as well as challenges for businesses. In such a time of heightened customer expectations, the logistics and supply chain play a crucial role in ensuring that the movement of goods from point A to B is done in a smooth fashion.
While existing in a VUCA world, the festive season particularly demands that the supply chain operates without any major setbacks. And the key to getting that right is not only being agile and resilient but also being proactive right from the moment they start planning about this period.
Right Time, Right Price, and Right Quantity
The first and foremost step of efficient supply chains is making plans that not only include managing supply chains in the best-case scenarios but also preparing for the worst. It is critical to arrive at the best possible estimates of demand in order to ensure that supply is not hindered. Instead of considering a short-term planning approach, a long-term vision spanning at least 6 months is essential to anticipate and meet customer expectations effectively.
Let’s take a look at how supply chain experts for different product segments assess the demand at the planning stage. Sanjeev Setia (Vice President – Supply Chain, Haldirams) enlists a few factors that need to be considered while forecasting season is crucial for businesses to adequately prepare and meet customer demands during this period of increased sales. The factors to be considered here are historical data, market inputs including trends and peer strategy, the overall economic condition of the market, and inputs from suppliers/vendors.”
For someone like Piyush Agarwal (Vice President – Supply Chain, Pepperfry) new trends in home goods and furniture play an important role in driving customer preferences, apart from going through historical data. “We have to forecast the best sellers and also maintain freshness in our catalog which is a collaborative effort between category teams, merchants, supply chain, and market research teams.”
For businesses like Pepperfry, offering a mix of off-the-stock and made-to-order products, maintaining a balance between both is also very important so as to avoid stockouts as well as overstocking. “A huge catalog which has many new products and collections poses challenges that we cannot store the entire range in the warehouse and hence meticulous planning is required to arrive at productspecific inventory strategy,” he adds.
On the other hand, Ashutosh Mishra (Head of Logistics, Bisleri International) has a slightly different set of factors to be considered apart from historical data and envisaged growth while forecasting demand, including:
- Growth in per capita income of consumers
- Substitute performance, if applicable
- Constraints on infrastructure
- Factors influencing growth strategy for the company
However, he also believes that, it is critical for any organization to have the right forecasting systems in place. “How good or bad a plan is will have direct implications on its market share, in upgrading its brand value and will be key in determining profitability for the company.” He adds that demand forecasting is a multi-dimensional concept, which means that managing it should be a rather continuous journey for organizations to succeed.
It is unarguably true that there is a need for companies to also document and review the correction of errors each year in order to understand what works for them and what does not. Additionally, macroeconomic factors also play a major role in deciding the overall demand since they affect the purchasing power of the customer.
Ensuring raw material supply, at the right price:
The next item in the order of things relates to the procurement function. Supply chain managers need to ensure an uninterrupted supply of raw materials or products during peak demand. It is critical to leverage the increased sales opportunities and meet customer demand.
Kartik Shah (Regional Manager (APAC) – Logistics, Sennheiser) shares an anecdote stressing the importance of diversifying the raw material sources, “Sennheiser had great learnings with COVID-19, which taught us to have a strong partner at one end and simultaneously having owned supplies of raw material. The industry we play in is having majority products where we need chips & semiconductors. We have created our in house supplies of raw material and have developed a strong diverse base with existing suppliers and also developed new partners to have flowless supplies.”
Mr Setia highlights that to make sure that resources are always available, it is imperative to maintain strong and cooperative ties with important suppliers as supply obligations are made more secure by long-term contracts or agreements.
To ensure proper coordination between suppliers, carriers, and internal teams for a seamless supply chain, it is essential to establish clear roles and responsibilities, foster open communication, and regularly share updates and information. Define key performance indicators (KPIs) to measure performance and conduct regular reviews to identify areas for improvement. Create cross-functional teams that include representatives from various departments to address challenges and drive continuous improvements in the supply chain process,” adds Mani Bhushan (Chief Business Officer, Ekart).
“As unglamorous as it may sound, it all boils down to proper communication and coordination between the teams. Establish clear and efficient communication channels between all stakeholders involved in the supply chain, and move to more real-time communication modes of text/chat closer to the time of execution. For proactive problem solving, conduct regular meetings and performance reviews with suppliers, carriers, and internal teams to discuss progress, address issues, and identify opportunities for optimization.” – Aashutosh Taparia (Regional Business Head, BigBasket)
A key aspect of achieving seamless integration lies in consolidating information from vendors, carriers, and partners. This ensures everyone has the right information at all times and decision-making is quick and effective. Understanding the correct metrics to be measured and clear alignment of goals helps to set the right expectations for everyone. – Abhinav Singh, Vice President – Customer Fulfilment, Supply Chain & Amazon Transportation Services, Amazon India
“Have multiple pickups and drop-offs to maintain a steady flow and avoid bottlenecks at the warehouse and sortation centers. Also, consider various time windows to spread the demand, which can help reduce empty return trips and improve overall logistics efficiency.” – Amit Sharma (Vice President Operations, Xpressbees)
“Route planning is to be governed by the principle of either fast delivery or cost efficiency. If we want a faster solution then we can use any size of vehicle which can be served from the fulfilment center. Ideally, its good to have agreements with 3PLs on vehicle placement well in advance.” – Vivek Nayan Kumar (Assistant Vice President, Reliance Retail)
This is an abridged version of the Cover Story which was published in the August issue of the Logistics Insider magazine. To read the complete story, click here.