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SUPPLYCHAINTRIBE.COM March - April 2020 Volume 4 Issue 2 For private circulation only PERSPECTIVE Insightful learnings from sustainability crusaders who are leading the pack WHAT. WHEN. WHERE-HOUSE. The art & science behind designing and developing new age warehouses suited to meet the needs of tomorrow
PUBLISHER’S NOTE The Action doesn’t stop in Supply Chain Dear Readers, Coronavirus has taken over conversations between global supply chain managers. China accounts for approximately 27% of the world’s manufacturing output. The impact has shaken the manufacturing world. The counter-trend to the globalization of supply chains will most probably speed up. Industry 4.0 is bringing down costs of production in major economies of the world due to which the gaps in cost of producing in China vis- à-vis in-shoring is coming down. So, countries like USA and Germany could keep manufacturing back in their countries. In India, action continues on the Infrastructure front. Major large Real Estate developers are creating Grade A facilities with defined parameters using global best practices. Sustainability is also getting imbibed at the design stage itself. The gaps in understanding between the developers, landowners, policy makers and financial institutions need to be addressed for ease of land acquisitions, financial resources and optimal use of space. Given the transformational phase of our supply chains, the demand for Built-to-Suit facilities is only set to rise. Another very interesting phase in the life of a Supply Chain Head is the transformational journey to Supply Chain 4.0. Where does one start the journey from? Once the budgets get approved from the board, the actual challenges begin. Giving way to new technologies such as artificial intelligence (AI), machine learning (ML), the Internet of Things (IoT) and robotics with real-time data from current traditional models is not a smooth ride. The ground realities are very different. From data management to buy-in from vendors, suppliers, employees, etc., change management is required across the organization. Read our Roundtable section to understand how these problems can be overcome in real life. The start of 2020 has been extremely challenging globally and in India. As we progress into the next Financial Year here, here’s looking forward to getting back some stability in our economy. Charulata Bansal Publisher Charulata.bansal@celerityin.com www.supplychaintribe.com Published by Charulata Bansal on behalf of Celerity India Marketing Services Edited by: Prerna Lodaya • e-mail: prerna.lodaya@celerityin.com Designed by: Lakshminarayanan G • e-mail: lakshdesign@gmail.com Printed by: Xposures, A 210, Byculla Service Industrial Estate, D K Cross Road, Byculla, Mumbai- 400027. Logistics Partner: Blue Dart Express Limited supplychaintribe.com 3
CONTENTS March - April 2020 Volume 4 Issue 2 14 COVER STORY WHAT. WHY. WHERE-HOUSE. Demand for efficient logistics space that facilitates quick movement of goods to consumers has necessitated the design of new warehouses that are larger in size and height. But how these new age warehouses are developed in accordance to 3Ss – Safety, Security and Sustainability; will be what drives the market share of developers in the country. Our experts in the space offer their expert insights into this very critical subject that needs attention from the developers, occupiers and policy makers alike… 5 REPORT 24 Smartly Sustainable “We manage energy consumption & increase sustainability Future Proof your Supply Chain through EcoStruxure™ Power Deployment,” quips Javed As the coronavirus outbreak spreads rapidly, supply chain Ahmad, Senior Vice President – Global Supply Chain, leaders must mitigate instant disruption and plan for future Schneider Electric India. incidents, states a Gartner report… 10 ROUNDTABLE 30 Grooming In Style “While designing a product, globalization is the alpha Supply Chain 4.0 parameter; gauging the need, a product gets localization Digitization, Digitalization, Digital Transformation – all these touch, which drives through the flow of regional demands,” words are being used inter-changeably and very often. At a shares Ponraj Periswami, Head – Supply Chain at an MNC. recent Samiksha event at NITIE, expert panelists shared their experiences in implementing the same. 27 PERSPECTIVE Sustainability for Sustenance INTERVIEWS Insightful learnings from early adopters of sustainability and 6 The Era of Digital Natives how they are leading the pack… “The key pillars for supply chain growth in the coming times are most definitely going to be People,” affirms Mukta 32 RECAP Khanna, Partner & Chief Supply Chain Officer, i2V Cinergy. News and views trending globally Editor: Prerna Lodaya DISCLAIMER: This magazine is being published on the condition and understanding that the information, comments and views it contains are merely for guidance and reference and must not be taken as having the authority of, or being binding in any way on, the author, editors, publishers who do not take any responsibility whatsoever for any loss, damage or distress to any person on account of any action taken or not taken on the basis of this publication. Despite all the care taken, errors or omissions may have crept inadvertently into this publication. The publisher shall be obliged if any such error or omission is brought to her notice for possible correction in the next edition. The views expressed here are solely those of the author in his private/professional capacity and do not in any way represent the views of the publisher. All trademarks, products, pictures, copyrights, registered marks, patents, logos, holograms and names belong to the respective owners. The publication will entertain no claims on the above. No part of this publication can be reproduced or transmitted in any form or by any means, without prior permission of the publisher. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. 4 CELERITY March - April 2020
REPORT Future proof your SUPPLY CHAIN As the coronavirus outbreak spreads rapidly, supply chain leaders must mitigate instant disruption and plan for future incidents, states a Gartner report… O N December 31, 2019, the guidelines or illness. Do it now World Health Organization Develop a high risk for supply chain (WHO) learned of several cases SOURCING: Travel may be restricted disruption monitoring and response of severe pneumonia in the Chinese to certain areas, limiting the ability programs for countries impacted by city of Wuhan. As global leaders and to discover, qualify and certify new the virus and potential supply chain health officials track the strain and business or programs and to transact exposure from tier I and below. If make decisions regarding containment, business. lower tier transparency is missing, start supply chain leaders need to assess building up the program and prioritize and plan for how the virus will impact LOGISTICS: Established hubs and supply discovery to get a full picture rapidly. global supply chains. The full impact of networks may experience limitations in It’s also important to assess how coronavirus on supply chains might not capacity and availability so that even customer spending might be affected. become obvious until sometime in the if materials are available, they would The next step is to make sure all next few months and beyond. be stuck elsewhere. Finding alternative inventory is within reach and outside routes and means of transportation will impacted areas and logistical hubs. The challenge of become difficult. Additionally, supply chain leaders globalization should work with their legal and HR Although the outbreak is being CONSUMERS: Consumers may be more departments to understand any financial compared to the 2003 SARS outbreak, cautious in their purchasing habits implications of not being able to China is now much more developed and due to fears about being in public and deliver supply to customers and provide integrated with the global economy, and potential exposure to the virus. Many guidance to employees located in the the country has significantly improved may turn to online sales, challenging impacted areas. its transportation networks. This means logistics networks. the supply chain implications go beyond MID-TERM ACTIONS: Do it this quarter regional concerns. Travel restrictions, Preparing supply chains for In the midterm, the focus should be shortages in labor and materials, as disruption on balancing supply and demand as well as logistical challenges through Disruptions happen. Leading supply well as building buffer stock. Assess tightened controls, and hub and border chain organizations utilize enhanced risk opportunities to diversify the supplier closures will cascade and augment the management processes. They include a ecosystem and review or create the impact much further today than it did framework to continuously measure key organization’s overall risk management 17 years ago. Indeed, the coronavirus risk indicators and to prepare scenarios approach. Work with internal outbreak has already eclipsed SARS. for controllable and foreseeable stakeholders and strategic and critical uncertainties such as compliance, labor, suppliers to establish a congruent risk How coronavirus could material, capacity and financial issues. management approach to monitor impact supply chain Epidemics and pandemics present and prepare for potential material and Though it is difficult to predict the a different scenario. The main impact manufacturing capacity shortages. exact consequences of coronavirus, is a lack of access to staff, decreased organizations might begin to see productivity and a change in public LONG-TERM ACTIONS: Do it this year impacts across the supply chain, behavior in terms of shopping practices Once the initial impacts of the crisis are including: and spending. “The full impact of mitigated, it’s all about foreseeing the coronavirus on supply chains might not next “when.” Supply chain leaders and MATERIALS: Supply shortages of become obvious until sometime in the their teams can, for example, conduct a materials or finished goods coming from next few months and beyond,” Köse scenario planning exercise and develop or routed through logistical hubs in says. “However, supply chain leaders action plans. This is the time to discover impacted areas. should take initial steps now to monitor or develop alternative sources and and prepare for the impact on their diversify value chains. LABOR: White- and blue-collar labor value chain.” may not be available due to quarantine Source: Gartner 5
INTERVIEW INTERVIEW The Era of the more complex ones like digitization of supply chain, integrated planning and to the next steps in artificial intelligence Every supply chain has faced DIGITAL for innovation launch, product impacts of inaccuracy, leading to changeovers and so on. understocking of some goods that What are your views on revamping are desired, while over-building and end-to-end supply chain with stocking of some that don’t end NATIVES innovative strategies? Supply chain, as the name itself, talks about chain of activities and up selling. Innovative strategies from business consequences which are influenced to business are required for each phase so that Mukta Khanna is an accomplished professional by each other. All this while in last several years, supply chain has had the impacts of variations leading to business loss with recognized proficiency in spearheading different business models to achieve corporate multifold limitations being generated get plugged. With the current situation where majority of the companies have very little room goals. Having worked for diverse globally leading from different stages of finished goods “The key pillars for supply chain growth in the coming companies like PepsiCo, Reliance, Lafarge, Mayur, forecasting to raw material sourcing times are most definitely going to be People who are she has more than 27 years of experience driving centrally integrated supply chain, global & planning, to manufacturing to to absorb losses, and sustenance is depending procurement & operations, strategic sourcing, generating finished goods to logistics fearless to accept and adopt changes, working on the and, business; coupled with commercial, logistics, and transport and final retail. Every on revamping the supply chain with innovative EXIM, Transformation & Process Excellence, right processes, imbibing the ever-evolving technology, Automation & Digitization. She is one of the very supply chain has faced impacts of inaccuracy, leading to understocking of strategies, the key is creating optimization and few Industry women leaders in the country who while ensuring Sustainability” affirms Mukta Khanna, has unique equal business experience. She has also largely contributed in the Digital Transformation some goods that are actually desired, removing multiple buffers. Partner & Chief Supply Chain Officer, i2V Cinergy. journey for PepsiCo and Reliance. At the same while over-building and stocking of time, coaching being her passion, she has trained some of those that do not end up for more than 10000 manhours of professionals selling leading to write-offs of both organization, leading to impacts on chain, starting from demand planning undertaking change management. She is parallelly finished goods and raw materials. bargaining, etc. While all other forecasts to supply planning, manufacturing, associated with NMIMS since 2018. What have been the transformations Innovative strategies are required for impact the internal management in and logistics. Data is now truly turning over the years in the FMCG sector? each phase so that the impacts of an organization, it is the procurement into information and to decision FMCG has always been perceived as forecast vs actual variations, which are which has to communicate and rectify making tools. This is helping control one of the most demanding sectors to shelf placed ones and still lose out. • Partner with consolidators as an leading to business loss opportunity the impacts with external parties wastages at different levels and increase work with, since this is a sector which I remember many times seeing the intermediate between distributors get plugged. With the current situation and which at times also has legal responsiveness to the customer. In is directly impacted by the consumer Kurkure Namkeens kept in the highest and retailers to service low volumes where majority of the companies have implications. According to Deloitte's 1997, when world chess champion Garry moods, fan followings, reactions, shelf where I could never pick them, • Adhere to compliance norms; and very little room to absorb losses, and survey, only one-third of procurement Kasparov lost against IBM's Deep Blue loyalties, besides environmental despite they being better Namkeens • Train the staff to handle consumers sustenance is depending on revamping managers use advanced analytics and Supercomputer, he spoke that the real conditions and seasons, making it quite in taste vs the more known brands! in a personalized manner. the supply chain with innovative other modern technologies to guide challenge is not to determine who is unpredictable, forcing supply chain Besides this, challenges ranging from strategies, be it by digitization and their procurement and inventory superior — man or machine — but to managers to shift gears to alternate fast-changing technology, shifting retail What have been the supply chain technology usage, or machine learning management policies. This may possibly achieve the right combination of man plans. This sector has also now evolved formats, overabundance of consumer best practices implemented by you? or IOT, or controlling raw materials explain why inventory levels are still and machine. This insight also applies to a certain degree and there is a choice, greater focus on quality and Fortunately, I have worked in different or logistics, the key is creating climbing. The truth is that the pace of to supply chain operations. The fact method to the madness, which is now price, and a tough economic climate industry types and sectors be it optimization and removing multiple business is such that few organizations is that people and their experience helping the organizations get into a also tend to add complexities in the manufacturing or services and at each buffers. can succeed if they persist with manual and sound judgment are necessary to certain degree of predictability. Also, supply chain, if not given due attention one of them I have had the opportunity and legacy inventory optimization make the right decisions, but at the there are more qualified people in at the right time. The challenges are to contribute, starting with ISO 9000 What are the procurement obstacles practices. However, procurement has same time, understanding how supply supply chain, who are taught subjects leading to dropping profit margins, systems in my first organization, for procurement professionals in now started gaining importance within chain software can complement and like forecasting and planning, for operational complexities, ever-changing supporting TQM, and using Lean Six the country? What is the impact of the organizations and also gaining extend human abilities, will improve coming times, new developments regulatory compliances, disassociated Sigma concepts in creating process procurement on supply chain? technological support. performance and achieve maximum such as artificial intelligence, machine omni-channel integration, etc. To deal excellence. I have largely worked on Procurement is a critical aspect of profitability. The right combination of learning are now coming in the supply with these challenges, in the coming digital transformations and automation supply chain, and so is inbound How is technology evolving for the technology and human brain power chain of FMCG too, making them times, retailers are expected to be in supply chain for creation of direct supply chain. Being the last leg of continuous growth of supply chain in leads to the most informed decisions predictable to a reasonable degree. undertaking the following steps: decision tools. But, I have also worked supply chain in terms of receiving the country? and best results. • Invest in faster and more convenient from the basics. My journey, both in forecast, and the first leg for supply to Technology is the key impactor in How complex is the retail supply ways to tackle final-mile delivery in Reliance and PepsiCo, fortunately gave ensure that goods get manufactured, the supply chain. Organizations, In times of Omni-channel markets, chain? What are the challenges and 2020 plus me scope to build from scratch, hence procurement professionals face multiple about 15-20 years back in India, were the pressure is huge on SCM how to deal with them? • Select future-compatible technology, pushing me to work on fundamentals pressures, which include pressures getting into SAP and the journey for professionals. What are those and Retail supply chains are complex which seamlessly integrates with and creating industry suiting processes from the marketing teams to deliver technology adoption had started. how to best manage them? because here the consumer expectations self, vendor and customer tech base, like working on TCO concepts in even if their forecasts were quite The cultural change was critical at Omni-channel markets have a common actually meet the availability. enhancing presence in the virtual procurement, capex-opex tradeoffs, wrong, external global risks, changing that stage because teams were used issue which is “Inventory- OVER Consumers are flooded with far world process streamlining, ensuring ethical customer preferences, pressures to to mammoth manual workings. Last OR UNDER”. There are two types of more relative choices; hence all good • Create omni-channel inventory sourcing, working capital improvement, bring cost productivity year on year, couple of years have seen remarkable approaches different organizations are products have competition from better pools cost optimization, and then build upon manage crisis, financial risks of the developments in all the facets of supply taking for it- 6 CELERITY March - April 2020 supplychaintribe.com 7
INTERVIEW INTERVIEW In 1997, when world chess champion Garry Kasparov lost often ends up being paid less and being making working scenarios better for all, always be ready with more than one subjected to side remarks like “Madam especially women. backup plan, and the planning needs to against IBM’s Deep Blue Supercomputer, he spoke that ko toh kaam ki zaroorat nahi hogi, her be adverse consequential planning too. the real challenge is not to determine who is superior — husband is there after all”. There is still a lot that needs to be done, and it is very How do you foresee supply chain landscape going ahead? What are However, if unable to handle, for an unforeseen supply chain solution, the man or machine — but to achieve the right combination important that senior leaders of the the major developments? biggest tool is transparency, confession of man and machine. This insight also applies to supply industry start working towards it. The ratio of women to men in supply chain The coming era is surely going to be the era of Digital Natives who are the first of the issue, intent to rectify, seeking help, and actions to supplement that chain operations. The fact is that people and their experience and sound are still less than 15% at senior CXO generation born and brought up in the the issue is fixed at the earliest in all judgment are necessary to make the right decisions, but at the same levels, and at various places even lesser. Internet era. This will lead to a major honesty. Let’s face it, problems will expectation and emphasis on using come, however if one is honest with time, understanding how supply chain software can complement and What would be your advice to technology as a given base of supply the stakeholders, generally support and next gen supply chain managers to chain. Like many other functions that time will be given to amend, and the extend human abilities, will improve performance and achieve maximum achieve the unprecedented? are getting outsourced, even supply situation will pass. profitability. No one can achieve the unprecedented if they do not have the skillset, chain is expected to move in that direction with a backing of technologies What are the changes we are about willingness to slog, faith in themselves like the IoT, Robotics, etc. Supply chain to witness in times to come? • Serving omni-channel needs by is the most helpful method, which can challenging work in 26 plants. However, and the universe, and being genuine of Indirect/MRO items is also expected The “Data World” will merge with different teams like traditional help streamline inventory and create the journey will never be a cake walk. I in the purpose and making efforts for to change where 3D printing will make “Interpreting Technologies” leading to trade team, modern trade team, fulfillment on common omni-channel have had my share of feeling dejected the same. Hence, if you wish to wear more inroads and supply chain will – in-your-home targeted & focused e-commerce team, etc. depots rather than separate inventory and humiliated as I have had for the gown and crown, be ready to make involve transmission of CAD/CAM files marketing, reduction of system waste, • Omni-channel needs being serviced for e-commerce, modern trade and celebrations and acknowledgements, but the effort into the areas where others rather than products. IoT will impact and adaptive distribution. All these will from common inventory traditional trade. Not just that, it can I am thankful for the faith showered in are less comfortable. I often advise the ordering cycles and clustering too, have an impact on the social thread, also help fulfill demand gaps in various me. young women professionals to think where goods will start talking to each improving lifestyles and increasing Both scenarios are driving different regions. about entering logistics, transport and other. The trends, such as a customer work life cohesiveness. However, the types of pressures on supply chain What have been your learnings warehouse if one needs to taste success getting reminders on his reordering skillset needs will be ever changing, professionals. While in the former case, What are the key pillars of supply during this journey? in supply chain, and not treat them as needs based on earlier purchase date, which will need to be integrated with there is always a stress of under or over chain growth in the country? Being updated with the latest and fields not good enough for women. Also, have already started. the education system, else it will inventory due to demand variability and The key pillars for supply chain growth foreseeing the issues ahead is an today’s scenarios are quite different start creating a bigger “intelligence prioritization given by the organization in the coming times are most definitely important step to handle crisis. from what they were a decade back, Please share with us a retail supply obsolescence”! to service. On the other hand, in going to be People, Technology, Process It is very important for a supply and I must say that now they are better chain manager’s quick fix solution to the latter type, there are challenges and Sustainability, combined with the chain professional to develop this for women. I call Technology becoming an unforeseen supply chain issue… to service, lack of understanding of approach and fearlessness to adopt power. Success only comes with an the first partner today (jokingly!), and Ideally, a supply chain person should types of customers and storages. Also, changes, and the new…or to say… “The entrepreneurial behavior and belief. the need for organizations being not key pillars for supply chain growth in Willingness to take challenges and being just digitally literate but embracing the coming times are most definitely fearless in taking initiative is equally technologies and knowing them in time going to be People who are fearless to important. is important. With changing market accept and adopt changes to reach a dynamics, it’s important that SCM new, working on the right processes, How embracing is the supply chain professionals upgrade skills in time. imbibing the ever-evolving technology, fraternity now for women? while ensuring Sustainability”. Supply chain fraternity is becoming How can next level inventory more inclusive for women now, right optimization achieve successful Omni You have been one of the few women from a level of a “night shift in-charge” Channel fulfillment? supply chain leaders in the country. in the plant to a truck driver and Irrespective of whether it is a retail How has been the journey? corporate offices. However, there are or an online customer, end of the Well, the journey has been a mixed still inhibitions and assumptions about day, it is the same customer which is bag to be very honest. It has been women. While organizations talk about targeted. So, while earlier the chain very good when I expected it the least. an interest in women taking on senior was traditional trade, followed by I followed a mantra, “Never consider roles, however finally taking them and addition of modern trade, which has yourself as under or over privileged. a willingness to lend a hand to make now matured into e-commerce and Work and behave at par!” I worked in them walk the last mile where they other facets too. The consumer research international marketing, commercial are falling short is hardly there. This methods have also now evolved with and domestic sales before I entered core aspect is the most important thing to the advent of technology, leading to fields of supply chain, and I am thankful look into. As such this is a fact that all intent for an informed buy, where a to each of the companies in helping said and done, women have to work consumer researches about product and me grow and understand different a much more in profession on both options on the Internet, takes views aspects of business. Coming to supply psychological and performance levels from friends as well as reviews, visits chain & procurement, it was Reliance much more cautiously so as to gain a store for a high cost product and that gave me the opportunity and a respect and carry the image where then orders. Understanding demand free hand to prove my mettle, and I am she is taken seriously, along with her patterns using potential consumer data glad that I did, followed by PepsiCo with above-excellence performance. She still 8 CELERITY March - April 2020 supplychaintribe.com 9
ROUND TABLE ROUND TABLE Supply Chain 4.0: Technology has become the key driver in Supply Chain transformation. distinction between a Statistician, a Machine Learning expert and a Data Scientist – the OVERCOMING Statistician will talk about data, Machine Learning expert will talk about algorithms and Alibaba wants to predict what the customers the Data Scientist would be the guy who would want to buy while Amazon wants to deliver derive inspiration and tell stories from data. when the customer is thinking about the Blockchain is futuristic. It is getting clear OBSTACLES IN product. So, this is what is going to happen in that Blockchain is not a disruptive but a Artificial Intelligence. foundation technology. AI with a combination Are we prepared for 4.0? No, it is going to of IoT has a lot of potential. Some of the take more time as the technology penetration heavy manufacturing industries are already DIGITIZATION Venkatesh Seshadri, in Indian Supply Chain has just started gaining using IoT, e.g. if some of the machines are Head – Supply Chain traction. Startup Technology solutions in India idle, it triggers an alert. 3D printing has Consulting, CII Institute are extremely promising. also caught up, especially in new product of Logistics Skillsets are going to be really important in development and spare parts management. the days to come. I came across an interesting Supply Chain 4.0 has become a hot topic with little understanding of the term as well as the challenges which lie ahead when an organization starts a digital transformation process. The recent Samiksha which is a corporate panel discussion, at NITIE, dwelled upon this. Here is what the panelists had to share on the topic… With new technologies, new skill We have set up a Fashion Research Lab in sets are required. India- an innovation lab with IBM and we’re working with them to create and co-create Being a fast-fashion player, we need to a lot of solutions. We’ve in fact just launched be high on trend, we need to bring in new a product recently called Fabric.ai. The fashion to the stores much faster. We start idea is- how do you get insights when the Supply Chain 4.0 regime is very much here to stay. our design process which includes sampling designer starts designing when he gets the across multiple countries more than a year inspiration? From the inspiration, how quickly Investments in 4.0 will increase over the next decade. Recently, Pentagon awarded back. And if you are designing so far back for can he figure out if it even makes sense to go a $10 billion cloud computing deal to Microsoft in the US. These are going to trends a year later, chances are that mistakes with that inspiration? Or is there something percolate down to India also and India is at the cusp of it. So, one of the challenges will be made. The idea is how to minimize that’s been in the past from our existing is skill sets. Building skills in the areas of Machine Learning, Artificial Intelligence, Ranjan Sharma, CIO & those risks. data? Then it could also come from some Robotics, etc., is going to be rewarding. At Deloitte, we feel that skills need to be Head-SCM, Bestseller So, one of the projects that we embarked trend data which is already available in the refreshed every year to be able to stay relevant. Business graduates stepping into India on was digitizing the whole process of industry. In the first phase we have gone live the corporate world need to understand technology and will have to get their hands sampling and bring that down to the number with internal data. This data will give us the dirty in ML coding etc., if they want a 4.0 career. This is a huge challenge we face of samples that we were creating for each capability to predict what is going to sell and as campus recruiters. Freshers need to have skills that are complementary, both on of these brands. How do we at least in the if the designer feels that there is something Akash Srivastava, technology and management. next three years bring that down by half? We that he can change and figure out the right Partner, Deloitte Touche A second challenge for senior management is to decide on how much to invest introduced a technology called 3D Designing, pattern or shade that will make sense, will the Tohmatsu India and where? Whether data should be put onto cloud first and then develop analytics which was much more collaborative across saleability get impacted? So that’s how we are or start work on pilot somewhere? As we get into the next couple of years, more the whole value chain, across our suppliers, harnessing data to bring in speed from design clarity is emerging on this. Another is availability and interpretation of data, how is and across our own design organizations. One to store. it structured and engineered? Interpretation of data should be multi-dimensional so of the other challenges also was- designers I would also like to mention that with new that one can take experiential decisions. To replicate this into a machine learning always think from their own perspective. How technologies, new skill sets are required. So, program is not an easy task. The data itself should be multi-dimensional and able do we ensure that whatever is designed is also this is my request for institutions to be able to talk to each other. Data engineering will become a very important skill. Another saleable? There might be cases where it is far to churn out talent for newer technologies. important thing is that when we talk about digital from a supply chain standpoint, ahead of the time. So, how do you identify For stable technologies like SAP, there may we talk about a warehouse executive or a trucker or an operator. Most of them when you need to make and what? Therefore, be an abundance of people, but we are going have basic schooling and so their interaction with digital needs to be made very you need to be much closer to the time when to create a differentiation with the new simple. So, to make them adopt it, the user experience must be like child’s play. the product is actually getting launched. So technologies. And for that differentiation, if The third important thing, and it is a moving goal post, are the technologies how do you reduce that cycle of design, then we are totally dependent on an IBM or anyone and the players. There are a variety of technologies out there with many players sampling and getting it on the shop floor? else, it becomes too expensive- that’s not a and deciding which technology and by whom has become a very complex decision And we are also now talking about creating model that we can sustain. We will have to to make. different buckets of products. We are looking create our own capabilities because it is not at how we can make products that could be about one-time AI solutions, the solutions designed and delivered at the stores in 60 will have to change and adapt as per new days. We’ve reached that stage as well. business challenges. 10 CELERITY March - April 2020 supplychaintribe.com 11
ROUND TABLE ROUND TABLE Data Analytics and AI. But if the clarity model. The oft repeated success story is a robust change management becomes holds true today more than ever. It is under 35 years old. is missing on why an organization that of Amazon. The fact that Amazon important. the customer who is driving the change. The availability of digital applications is doing this, it will not lead to a has been able to bring down delivery Choosing the technology or the tool Availability of information has increased combined with customer expectations successful digital transformation. Many time from two days to two hours is or the implementation partner, I believe and cost of processors have decreased. are making disruptions in every industry organizations lack the end goal clarity. remarkable. Now they are talking of a is a simpler problem to resolve. What India as a nation is poised for a reality. So, watch out, a 21-year-old I believe that this is a key challenge promise that if you are in an Amazon is critical though is being clear on the making disruptions. According to a founder of a startup might be disrupting that needs to be overcome in Supply store, and if you as a customer are on problem we are trying to solve. If at the NASSCOM study, we are slowly but your industry as we speak. Accept the Chain Digitization. Organizations which your mobile, and have placed an order, end of all this digital transformation, steadily moving up and are now in third challenge and digitally transform your are successful in digital transformation within two minutes they will deliver the you are improving the customer position in the number of technology- organization. keep the customer in mind and use ordered item to you in that store – this experience, then I think the effort and based start-ups worldwide. India is technology to serve the end customer. is truly all about digital transformation. pain to go through this exercise is worth also the youngest start-up nation in Raghavan Santhanam, Senior If you look at how supply chains In terms of challenges, one can look it. “Customer is King” an old saying the world and 72% of the founders are Consultant, Stratadigm are being disrupted in every industry at it from the Organization, People, (Banking, Retail readily come to mind) Process and Technology prism. One of Accept the challenge and whether an organization should digitally the biggest challenges I think is getting digitally transform your transform itself, is now no more a funding in an organization for these organization. question. What the organizations projects. There are many departments Change management is the transparent barricade, splitting the shark should be focusing more is on the within an Organization vying for funds most challenging problem we and the small fish. What the shark does When the word Digitization is used, pace and speed of innovation to and SCM needs to build a robust face in today’s organization. is it keeps hitting the strong barricade. we need to make a clear distinction solve specific use case scenarios. IOT alliance of end using departments It keeps thinking it can reach the fish between what is Digitization, (Internet of things), Analytics and to get the funds or ally with other Digital transformation starts from data. 1. but fails multiple times. After months, Digitalization and Digital Artificial intelligence are drivers that are transformation projects. Benefits Organisations get the customer data from they take out the barrier and put in a Transformation. People use these words spawning new applications impacting related to risk mitigation of these the from the Amazons and Flipkarts. 2. Then barrier made up of thin transparent film. interchangeably, but each of these are the future of supply chain. There are projects cannot be ignored and can be supply chain operation generates a lot of But by this time, the shark thinks it different. several digital opportunities that are used to overcome challenges in funding. data- from suppliers, suppliers’ suppliers, cannot go through the barrier and never Simply put Digitization is converting enabling transformations in every node Organizations sometimes tend to logistics partners, external manufacturing attempts to. The same way organizational analog information to the digital (Develop, Plan, Source, Make, Deliver, have a very myopic view and they want partners etc. 3. The data generated by the barriers are man-made. There is little form e.g. Converting handwritten Support) of the supply chain today. results quickly. So, breaking the digital Murugan Pugalenthi, Employees through the information systems collaboration between departments or typewritten text into digital form For example, in case of transformation project into phases Director- Global Planning of your own organization- your ERP systems, because of the organizational barriers is an example of Digitization. For development of a product, previously and prioritizing low hanging fruits / Excellence, Johnson & legacy systems- you transact millions of and this is a big challenge I face every instance, in an organization that has you used to stop a manufacturing line, smaller projects first thereby delivering Johnson records in a day. 4. Data generated by IoT- day. This makes such programs very 2,000 Vendor Partners, every time the to get a new product or sample done. immediate results might be the smarter manufacturing lines, trucks, RFID, etc. Can expensive. This is a big gap when you are Supply Chain Operations team wants to You needed a minimum run. Now you way to go about the exercise. we capture all of the data and use it for the getting into any big digital transformation enroll a vendor partner into their eco have 3D printing, a process of building Another practical challenge that betterment of the organization? All this data project. Proving ROI of this sort of system, the vendor is asked to provide an object one thin layer at a time. It needs to be overcome is legacy. if needs to be put to intelligent use. I have investment is also very difficult. a certificate of registration and other is fundamentally additive in nature. you are an organization, which is a a simple analogy; we can eat simple bread - This is a story about Guruji who teaches documents for verification purposes. Many organizations have used crowd hundred years old, you have different or choose from the 150 odd varieties in a his students in a Gurukul. One day, There are lot of mechanisms like (EDI) sourcing of ideas to develop a product. legacy systems for transactions. The Sandwich shop. Your own bread is your own when he came to the class, he found Electronic Data Interchange to convert In planning: demand analytics, In question is, ‘How do you make them enterprise data, but it is not going to give a cat playing around which was really that paper information into digital. So, Sourcing: smart scheduling, In Making: interconnected?’ One cannot suddenly you that much of value. A lot of companies distracting. He asked a student to tie the in essence, it’s the information you’re exoskeletons, in delivering: Big data / throw out all the old systems and bring in India are trying to do this but doing it cat to a pole. The student obliged. This digitizing, not the processes. RFID, In Support: social media. There in a new one. globally makes much more sense. That is the happened every day for years together. Digitalization is about not just are many technologies which have Organization structure is another kind of digital ecosystem especially in supply One day, the Guruji passed away and changing the technology, but also come up now. The point is that there is challenge that needs to be overcome. chain. The moment you build that data his follower took his place. The cat also the processes from old to new. Use no question that digital transformation Sometimes the SCM departments intelligence asset, you can do anything on passed away. The follower started the of digital technologies is done to should be a priority for Organizations. do not pay attention to their own it- planning, optimization, analytics platform, class and said, “I can’t start this class change a business model and provide If they don’t do it, some other nimble internal organization structure. They etc. without having a cat tied to this pole. new revenue and value-producing company will do it, and one will be out are so focused in looking at other Can you go get a cat from outside opportunities. It would normally involve of business. departments, that they ignore their Now, what are the challenges? I will tell you somewhere?” How do we make people automation which means shifting of New digital applications are own. This is easier said than done. two stories and cover the aspects: realize that a certain thing is done for a work roles or transforming processes. enabling a truly integrated Supply Chain When a department has functioned in - The first story is the Shark Syndrome. specific purpose? Change management is Lastly, Digital Transformation ecosystem. Traditional supply chain a particular way for the last ten years, It is an experiment done by scientists the most challenging problem we face in is a series of digitalization projects, operated in Silos and every department it becomes difficult to change. The where they kept a shark in a tank with today’s organization, especially to a global automating processes and re-training had their own TATs (turn around old structure of having for example a many small fish. We all know that the audience. workers to use computers. Digital times). That model is being transformed country sourcing, regional sourcing or a shark eats the fish in no time. As the transformation is about the customer. into a control tower, track and trace global sourcing model may need to be next step, they put a very strong and It involves transforming the business model, where irrespective of one being relooked. Human beings by nature are model and organizations strategy. a customer, supplier, distributor or a creatures who love comfort and habits. Organizations tend to implement manufacturer, one is always connected. For example, we love to sit at the same the latest technologies and one can do All supply chain activities are now desk every day. The world is moving umpteen number of things using IoT, moving from linear to non-linear to a flexi desk or hoteling concept. So, 12 CELERITY March - April 2020 supplychaintribe.com 13
COVER STORY COVER STORY WHAT. WHY. PIC COURTESY: INDOSPACE WHERE-HOUSE. Demand for efficient logistics space that facilitates quick movement of goods to consumers has necessitated the design of new warehouses that are larger in size and height. In order to meet the increasing demand for quality warehousing spaces, a recent CBRE analysis predicted that most of Grade B warehouses located in close proximity to leading cities would undergo redevelopments as per occupiers’ specifications. This will provide dual benefits to both – developers who can gain from the rental increase and occupiers who will gain from the improved infrastructure. But how these new age warehouses are developed in accordance to 3Ss – Safety, Security and Sustainability; will be what drives the market share of developers in the country. Our experts in the space offer their expert insights into this very critical subject that needs attention from the developers, occupiers and policy makers alike… 14 CELERITY March - April 2020 supplychaintribe.com 15
COVER STORY COVER STORY processes. This also created the need Welspun One Logistics Parks: The of GST have all transformed the for large Grade A warehouses with 10- last few years have seen a sea- change warehousing market in India. 12 m clear height, as the only way to in the evolution of the ‘warehouse’. Especially with GST, companies have optimize the fixed cost efficiently was From the erstwhile ‘godown’ that were either consolidated or in the process to go vertical. This created opportunities basic storage facilities in marginal of reducing the number of small for large players to step into the locations to sophisticated, compliant, distributed warehousing setups in warehouse infrastructure creation, large, efficient and strategically located their network and move towards large which was previously dominated by storage solutions equipped to service warehouses in strategic locations across local real estate construction. The real the growing logistics demand for the the country. fill-up has come since 2017, once the country. Consistently the landscape decks for GST implementation were is transforming into one with more cleared by the government. Almost all organized players for whom compliance THE GROWING DEMAND RAVIRAJ RODRIGUES, ALVIS LAZARUS, large manufacturing companies with and quality is at the heart of developing FOR BUILT-TO-SUIT Director Supply Chain-India, CEO, Hesol Consulting national presence saw the benefits of effective warehouse infrastructure. WAREHOUSES Alstom Transport India Ltd consolidation, which meant bigger and For any built-to-suit warehouse, the better warehouses with more efficient Rajesh Jaggi, Vice Chairman, companies must take a longer-term view lighting and power consumptions. Real Estate, Everstone Group: and ensure meticulous planning before Today, many of the warehouses in The warehousing sector is growing embarking on any investments, as one will India are at par with global standards at a very rapid pace. According to a have to live with the consequences if not for warehousing. We are seeing a recent report by Savills, warehousing planned well. 20% y-o-y demand for warehousing sector is expected to add 40 mn. sqft. infrastructure in the country and my space across top 8 cities this year. Raviraj Rodrigues: The large estimate is that close to 200 million This indicates a growing demand and e-commerce companies saw efficiencies sqft of warehousing space will be added expansion of space allocated to our in managing the warehouses using in the next 5 years. industry. Demand continues to be technology. They came in with a clear strong particularly in the warehousing plan for large and energy efficient Alvis Lazarus, CEO, Hesol segment specially for Grade A space. warehouses, with clear height 10- 12 Consulting: The Warehousing industry’s Top consumption and industrial centers meters at eaves. They saw this as JASMINE SINGH, ANSHUL SINGHAL, progress is good for the past three years such as Mumbai, Delhi-NCR, Pune, the only way to optimize the fixed Nation Head– Industrial & Logistics Managing Director, Welspun One starting early 2017. Currently the y-o-y Bengaluru and Chennai, are expected to cost efficiently. Also, the fire safety Services & Senior Executive Director Logistics Parks growth is between 15-21%. The initial drive growth of the warehousing sector. requirements for such large warehouses Advisory & Transactions Services, CBRE boom is fueled by the e-commerce In addition, tier II and tier III centers are were way higher than normal South Asia Pvt. Ltd businesses. Typically, the fulfillment by emerging as warehousing destinations warehouses and called for Advanced the online players has direct impact on due to increased consumption and rise Sprinkler Systems complying with space requirement. in e-commerce transactions. We feel NFPA13 guidelines. This has created a the Indian warehousing market is still demand for Built to Suit warehouses Jasmine Singh, Nation Head– at an early stage in terms of its overall across the country. While there will Industrial & Logistics Services & potential. be some standardization for Grade A Senior Executive Director Advisory & structures, it will still take time before Transactions Services, CBRE South Aditya Virwani, spokesperson we have uniform specifications for Asia Pvt. Ltd: As India’s prominence Embassy Industrial Parks and COO warehouse construction. The need to as a global logistics hub grows, the Embassy Group: The warehouse sector reduce CO2 emissions means that more segment is witnessing the entry of is on the path to becoming an integral and more organizations would prefer several global players and increasing part of the logistics matrix due to green solutions to lighting and power. awareness of domestic players to the swift advancement in technology This will create unique needs like solar ADITYA VIRWANI, RAJAN EKAMBARAM, enhance the quality of offerings. This is and the reform-led policy measures. panels for power generation, further RAJESH JAGGI, Spokesperson Embassy Industrial Parks Partner, Qwixpert resulting in the demand of warehousing Dynamics like the growth in the mandating a BTS warehouse model. Vice Chairman, Real Estate, and COO Embassy Group that are in line with global standards. manufacturing sector, rising consumer Finally, the product confidentiality and Everstone Group With the increasing demand, developers demand, a boost in international safety controls will be the uppermost on have also started focusing on large- relations, the emergence of organized the minds of larger MNCs, necessitating THE PERFORMANCE REPORT this segment to the overall growth of the steady increase in capacities and quality scale developments in the logistics retail in the country, increasing private the need for a separate warehouse The warehousing and logistics landscape economy, the government aims at enacting of infrastructure in the last 5 years, sector and are offering quality and and international investments in infrastructure and not a common pool is going through a paradigm shift and several structural reforms to improve corresponding with the surge in online technology compliant space to the infrastructure along with the dynamic warehouse. transformation in India. From an increasing physical connectivity and infrastructure retail. The e-commerce companies occupiers. The increasing interests from growth in e-commerce is ought to number of policy incentives to tech- developments, thereby attracting were constantly looking at increasing foreign players has also led to opening- maintain prosperity in the sector in the Alvis Lazarus: BTS warehouses enhanced warehouses, the sector is now investments. scale and presence across the country up of new avenues for various private next few years. contribute between 22-25%. BTS seeing a change in every aspect of its and this brought about a need for large equity firms and foreign players to demand is specifically driven by operation. The continued growth of the Raviraj Rodrigues, Director Supply consolidated space. Also, the large seize the opportunity and invest in the Rajan Ekambaram, Partner, organizations, which have green e-commerce sector in India is leading to Chain-India, Alstom Transport India e-commerce companies brought with development of high-quality assets. Qwixpert: The recent trends in the initiatives as part of their strategy increasing demand for effective supply chain Ltd: The warehousing infrastructure them the need and technology for logistics landscape, the advent of and also organizations, which require systems. Recognizing the contribution of creation in the country has seen a automatic/semi-automatic warehousing Anshul Singhal, Managing Director, e-commerce and the implementation customized warehouse design 16 CELERITY March - April 2020 supplychaintribe.com 17
COVER STORY COVER STORY PIC COURTESY: EMBASSY INDUSTRIAL PARKS built-to-suit projects as it complies with to 2X expandability. stages considering all the critical factors, A modern Grade A warehouse has to be needs of the developers and occupiers developers can implement effective well-positioned and connected closely along with the market demands. Rajan Ekambaram: The extent of usage of space management. with the cities. This makes business economic efficiencies demanded by convenient and benefits our end users. Anshul Singhal: The demand for built- present-day businesses coupled with Anshul Singhal: The modern warehouse to-suit warehouses has gone up over increasing customer expectations on is a concept that has filtered down Rajan Ekambaram: It is essential to the years since the maturing market the delivery speed (mainly influenced from the more developed economies understand the role of the warehouse needs more bespoke solutions. This by e-commerce), have made into India. Principally the prerequisites in the supply chain and establish a involves structural requirements to suit warehousing operations extremely include 100% compliance to design basis for the time horizon. The their operational needs. However, since important for organizations. Companies government norms and regulations, design basis must be in terms of SKU Grade A warehouses with high quality are often looking at automation specifications that align with Indian and profiles, storage, throughput, order PEB structures with associated specs to cope with these circumstances. global standards, safety and security profile, value-added services, packaging, like FM2/ high grade flooring already However, most of the standard measures that ensure that manpower returns, etc., that the warehouse will provide many of the requirements for warehousing infrastructures available and goods are out of harm’s way and handle. The design basis and land BTS customers, the quantum of BTS in the market today, across cities, where throughput is efficient and time availability will determine the material modifications have become smaller. do not meet some of these specific sensitive. These pre-requisites mandate handling systems, automation needs, Even speculative Grade A buildings can requirements. So, companies are the entire planning and design process processes and technologies that will meet almost 80% of the requirements going for built-to-suit warehouses of the Warehouse: Secure developments, be required to design and run the of ‘BTS’ customers. in selected locations, of a particular a high degree of traffic planning for warehouse efficiently. Also, safety is one size and infrastructure to meet their peak traffic scenarios, design measures of the crucial elements most warehouse Rajesh Jaggi: Demand for built-to- business needs. However, there are for large transport, effective docking designs do not consider. It is imperative suit warehouses is undoubtedly on a only a handful of such cases across measures, provision of optimal storage to build-in engineering controls to rise, owing to the full-fledged smooth industries and standard warehousing heights, structural integrity, buildings ensure a safe working environment for customer experience that the facility will suffice a high percentage of needs. designed to withstand fire risks, FM2/ people inside the facility. provides. According to a recent JLL In a nutshell, I wouldn’t say there is a high grade flooring, amongst others. Alongside, companies need to fix report, Built-to-Suit accounts for massive requirement for built-to-suit the overall supply chain and distribution almost 40% of the warehousing warehouses in India; however, there is Rajesh Jaggi: Warehouses have strategy for the foreseeable future. absorption in 2019. These warehouses undoubtedly an uptick, and it is bound transformed to modern facilities Their distribution strategy will broadly are automated and tech-led spaces to increase as the economy improves. with advanced, real-time tracking define the warehousing needs to with a key motive of fulfilling individual mechanisms, and other tech-led be met – in terms of customers to client requirements. These facilities are BUILDING NEW AGE advances that could ease the processes service, throughput to deliver, inventory the need of the hour especially when we WAREHOUSE for both the supplier as well as levels, value-added services and any are living in a transformational phase A few of the essential prerequisites that the client. A few of the essential other special requirements. Modern of supply chains blurring the needs of go into building a modern warehouse prerequisites that go into building a warehouses should meet this specific retailers. We have observed a rising are land banks at suitable locations, modern warehouse are undoubtedly – requirement. The level of automation interest for built-to-suit warehouses for financial investments to fulfill the capital land bank at suitable locations, financial will vary depending on complexity. companies that want their facilities to requirements, quality infrastructure, investments to fulfill the capital Imagine a warehouse that has to be completely customized as per global sustainable design and layout with focus on requirements, quality infrastructure, process 5,000 orders/day, 40,000 specifications, including warehouses increasing logistics efficiency, tech-enabled sustainable design and layout with order- lines /day with 1 lacs SKU in with refrigeration rooms, automation, machinery development partners and a focus on increasing logistics efficiency, their portfolio with a warehouse that etc. skilled workforce that is the backbone of any tech-enabled machinery development has to process 200 orders, 3,500 order- industry to meet the set objective. partners and a skilled workforce that is lines, 1,500 SKUs in their portfolio – the (traditional warehouse won't suit their supply, and will focus on understanding Aditya Virwani: At EIP, we are the backbone of any industry to meet design, technology deployment and businesses); for example, B2C sorting the occupiers needs, thereby offering constantly upgrading ourselves and Jasmine Singh: With India evolving as the set objective. construction will be drastically different. and distribution warehouses. The only modernization of supply chains, knowing the business requirement, one of the largest consumption markets, reason the BTS pie is small is TIME. optimization of delivery networks and we ensure our parks are enhanced it is imperative for regional supply Aditya Virwani: The growth of Raviraj Rodrigues: To have the Most organizations don’t have a reliable greater synergy between retail and technologically. Today built-to- chain operators as well as industrial e-commerce as a mode of purchase capability to understand our business space forecasting model or tool, thereby logistics networks. With models such suit warehouses are evidently larger and logistics landlords to future-proof by the consumer across the country model and design warehouses with in many circumstances, warehouses as built-to-suit (BTS), occupiers can compared to the standard warehouse their assets in preparation for this has caused a revolution and caused a minimal waste of surface area, optimal are needed overnight and due to this specify the details in line with their to about 60—70%. We can proudly new era. Besides cost, speed, reliability positive influence on the warehousing LXB ratio (2:1 preferred), developers shortage of time, BTS is often ignored. needs, thereby allowing developers to say that built-to-suit warehouses and connectivity, modern supply chain business. India is enduring a massive need to have the capability to build implement their requirements on the offered by Embassy Industrial Parks model has resilience, sustainability and development and demographic warehouses with minimum height of 10 Jasmine Singh: We anticipate that back of financial security. With more have helped our clients largely because agility to attain long-term continuity transformation igniting a huge wave meters. For yet to construct warehouses, warehouse leasing is expected to rise ecommerce players wanting to own and every business comes with their specific and growth. Rise in diverse needs of of consumer demand over the next the warehouse should be ready for going forward. This will largely be fueled operate their own facilities, it will result requirements and our effort is to cater supply and logistics, warehouses now decade. “Next Generation” warehousing fit-outs within 12 months from signing by an anticipated rise in product sizes, in more built-to-suit facilities, thereby to their needs efficiently. We ensure play a crucial role and require efficient and logistics solution brings an the agreement and they should plan continued demand from etailers, policy taking off some “pure” leasing from the we meet the need of our clients and planning streamlined with its flexibility effective solution to the problem. This for technology enhancements like cable impetus to both sectors and higher market. BTS warehouses come with a give them exactly what they need so and functionality like never before. has been possible for us by being an provisions for wireless routers, cameras demand from tier II cities. As the sector benefit of expediting the project’s time that they can focus on their business. Through modern warehousing, with efficient and fully compliant warehouse and they should have the capability to evolves, we believe that developers will frame and reduce the effort as well. We provide built-to-suit industrial and strategic planning of pre-empting all management system that helps align install the latest Fire-safety systems. move beyond meeting the demand and Players are anticipating a boom in the logistics parks where clients can have up warehouse requirements needed at all their client’s pathway towards success. The material throughput measured 18 CELERITY March - April 2020 supplychaintribe.com 19
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