Evolving Supply Chain Paradigms

Prahlad Tanwar Prahlad, Director – Transport and Logistics, KPMG, elucidates upon the role that a robust supply chain management system plays in an organisation’s performance and result.

While the importance of supply chain management as a function has been apparent in many organisations for several years now, there has been a growing emphasis on the need for existing supply chains structures to evolve and conform to emerging dynamics that businesses are experiencing, globally. Popularly summarised as VUCA: volatility, uncertainty, complexity and ambiguity. These factors are amplified across supply chains due to increasing globalisation of procurement and supply across multiple time zones, customs regimes, currencies, cultures and vendors. Robust supply chain management systems and techniques are essential to traverse these challenges and design strategies and operating models in an efficient way to achieve cost, quality, delivery, growth and sustainability objectives.

On the verge of change Several companies in India are at the helm of change with expansion and growth as fundamental priorities. In this environment, supply chains need to constantly re-align with changing production and supply patterns to meet growing market demand. From a structural perspective, the advent of GST will help create an opportunity for companies to revisit legacy supply chain models and move towards consolidated models which can drive supply chain and logistics outsourcing. Emerging trends in SCM include: Analytics in SCM: Many companies are increasingly moving towards predictive and prescriptive analytics to generate refined insights that are helpful in taking strategic boardroom decisions. A nimble SCM model helps ensure preparedness and responsiveness to deal with challenges associated with volatility, scale and diversity. It also helps companies plan their supply chains in an efficient manner to help ensure quality along with compliance, enhanced visibility, and improved planning for risk and disaster management which is typically dependent on external factors. A nimble SCM can also supports organisations to scale up by driving collaboration and responsiveness across the supply chain.

Integrated Supply Chain Planning: Supply chains are focusing on integration for process improvements, including the following: • Using real-time data for planning, instead of relying on historical data • Opting for a virtual organisational structure than a hierarchical one • Cloud-based planning systems • Predictive analytics based inputs for demand planning Innovation for efficiency: Many companies are moving towards innovative initiatives to reduce supply chain costs. Some of these include: • Procurement efficiency through optimisation of prices, consumption, sourcing and manufacturing • Design efficiency through analysis of function, cost drivers, tear-down analysis and complexity reduction for cost compression of the current design •Feature efficiency for objective evaluation of the product and service through feature analysis and optimisation. Conclusion Many Indian companies are still to achieve the scale and complexity their global peers operate on and largely still view supply chain as a cost function with limited emphasis on value generation. As we move towards scaling up businesses and organisations amidst increasing globalisation and consumerism, now is an opportune time for Indian companies to focus on supply chain management enhancements. 