The focus of the supply chain management function has shifted to advanced planning processes, such as analytical demand planning or integrated sales and operations planning (S&OP), which have become established business processes in many companies, while operational logistics has often been outsourced to third-party or LSPs. Anil Kumar Mishra, National Logistics Head, South Asia, pladis Global explains Upamanyu Borah the opportunity that value chains have to reach the next horizon of operational effectiveness, to leverage emerging business models, and to transform the company into a digital supply chain.
Genesis and business overview
pladis is one of the fastest growing global snacking companies, based in the UK. Formed in 2016, the company is the proud steward of over 300 years of family baking and confectionery experience, and home much loved brand McVitie’s.
The expertise of the conmpany’s 17,000 global workforce spans 34 factories in 13 countries across Europe, the Middle East, Africa, the United States and Asia Pacific, and is founded on collaboration, agility and resilience.
Within two years of operations, plaids emerged as one of the fastest growing companies in the FMCG sector, with annual revenues in 2017 of £3.5 billion. The company expanded into new markets and used its global footprint to grow its brands and products in new and innovative ways – and now pladis has the potential to reach more than 4 billion people around the world.
Supply chain practices
Firstly, at pladis, we focus on advance planning for crafting a reliable and efficient supply chain to meet the timelines of internal and external customer demands, production, and other aspects of logistics such as freight forwarding, custom clearances and documentation process. Secondly, use of reliable transporter and suppliers in the long-term for a win-win situation. Besides, pladis focusses on speed, keeps pace with rapid digitalisation and maintains fill rate above its safety stock
to balance the inventory along the economic order quantity, with catering to the entire CSD/CPC market pan-India.
Warehouse and distribution plan strategies
Improved production logistics solutions are major drivers of productivity development. In the FMCG industry, warehouses play a key role in the integrated logistics strategy and its building and maintaining good relationships between
supply chain partners. Companies must accomplish the following objectives, regardless of the material being stored:
Consolidation to optimise freight on long and short haulage
Setting up internal benchmarks which further reduce our cost per order or hold the cost in line as volumes increases
Performance measurement or Key Performance Indicators (KPIs)
Developing flexible, scalable storage racking layouts
Outsourcing warehouse operations with third-party Logistics (3PL) or Carrying and Forwarding Agent (CFA)
Reducing number of handling to avoid damage
Training the CFA team on regular basis
Standard Operating Procedures (SOPs) for warehouse and inventory management
Using the right Material Handling Equipment (MHE) in accordance with Personal Protective Equipment (PPE)
Using of Enterprise Resource Planning (ERP) software
Fostering relationships
Development is the next stage in supply chain management. It involves building a strong relationship with suppliers of the raw materials needed in making the product the company delivers. This phase involves not only identifying reliable suppliers but also planning methods for shipping, delivery, and payment, including:
Use of technology and a close watch on the ongoing and upcoming activities
Advanced planning and clear requirements
Close coordination and communication
Tech-based live Management Information Systems (MIS)
Expectations for LSPs
Shipper’s expectation of a Logistics Service Provider (LSP) operating in the segment is most likely the daily operational effectiveness and efficiency against the contract, which too often is based mainly on price. Less clear are the expectations by clients for a more multi-dimensional approach to the contract, such as the capability to effectively manage the client’s variables in demand and supply, including manmade and natural emergencies.
However, LSPs need to be proactive in understanding the need of clients and should be flexible and tech-savvy, well-informed, innovative and compli ant, especially in the FMCG industry. Besides, warehouse hygiene and safety should always be a priority for any warehouse service provider.
Additional examples of challenges to growth for LSPs in the Goods Movement Services segment are:
Achieving what was originally promised to win the contract
Improving the satisfaction level for provided IT services
Demonstrating ongoing projects that reduce costs and/or improve service
Addressing the threat that elements of the process, or the whole process could be overtaken by a different technology or a disrupter start-up
The closer a services business is to the ultimate consumer, the more likely this could occur
Selling the capability to be entrusted with more responsibility
Tech-enabled procurement: Scope
Digital procurement which has huge scope in India and increasing adoption of advanced technologies are expected to drive market growth. Its potential further lies in:
Government’s support for digitalisation
Introduction of e-procurement, or electronic transmission of data
Just in Time (JIT) and Vendor Managed Inventory (VMI)
Supplier collaboration and innovation
Strategic alignment and posture
Capabilities and culture
Centralised, Decentralised & Hybrid Sourcing Structures
Category management and execution
Challenges in technology adoption
The below listed areas portray an interrelated dynamic – emerging technologies and digital transformation place greater pressure on existing IT infrastructure and cause companies to explore alternative delivery models (e.g. through third-party arrangements), while giving rise to new cybersecurity and privacy risks – all of which require an evolution in the skillset of IT auditors.
IT security and privacy/cyber security
Infrastructure management
Emerging technology and infrastructure changes – transformation, innovation, disruption
Any new system or technology that is adopted by your company will require some form of training in order for your employees and staff to use it.
Regulatory compliance
Budgets and controlling costs
Cloud computing/virtualisation
Catch up to industry trends
The business world moves faster than ever these days, and with the rapid advancements in technology, it can feel
like a constant struggle to keep up. But there’s a difference between barely keeping pace with your competitors and
being so far behind that you’re completely left in the dust. Heeding to the below will be the best way to catch up:
Customer focus
Cost optimisation
Agile distribution
Profitable business ideas
Digitalisation and interconnection of products and services, business models, and value chains
Identifying megatrends
We expect that the supply chain of the future will undergo a major transformation process. At the end of this process, supply chains will act ‘on their own’ with the ability to self-regulate and take appropriate actions, and as a result, will impact strategy, organisation, business results and more. I predict few factors will converge as we move toward this transformation:
Lean-Green-Digital Supply Chain
Speed to the market /customer
Product Quality on shelf
Leveraging distribution network for making it a profitable business specially in the cold chain
Forecast accuracy
Ageing stock which impact bottom line of the company
GOYA– know your customer, know your business, relentlessly raise the standard, alignment /collaboration, take ownership and lead in area
Performance measurement to know the status
Inventory management and regular monitoring of the progress through Management Information Systems (MIS) for business discussion
Next-gen supply chain
Technologies like robotics and automation, Internet-of-Things (IoT) Artificial Intelligence (AI), predictive analytics,
Blockchain, and innovations in the field of driverless vehicles and drones, has a big role to play in the next-gen manufacturing supply chain. Besides, companies will increasingly focus on making their supply chain more agile and lean, green and digital with real-time visibility into the goods and tracking of assets across the supply chain.
Today, sustainability is fast becoming a key conversation starter in unlocking greater efficiency and cost savings in the supply chain. Cost savings, efficiencies and higher profits are still a key driver for businesses and have become recognised as one of the major drivers of sustainable supply chain changes. Other practices would include:
Optimising inventory andfocussing on ageing stock
Shifting focus from B2B to B2B2C
3D printing for faster and cheaper production