SUPPLY CHAIN MANAGEMENT AND SUSTAINABILITY

Zena Krishnoo

In recent years, customers, workers, investors, and governments have increased pressure on businesses to demonstrate better environmental stewardship and social responsibility. This occurs at a time when the business case for sustainable operations strengthens annually. With increasing demand from shareholders, investors, and the international community to integrate sustainability into all supply chain elements, there has perhaps never been a more crucial time to abandon outmoded procedures in favor of environmentally-focused innovations. However, a
sustainable supply chain encompasses much more than just the environment. Sustainability combines social, economic, and environmental elements in which neither is sacrificed for the other.
Many organizations have begun to focus on supply chains since they use a significant amount of resources and money and are usually a source of unneeded waste. Thus, supply chain sustainability has become an important company objective. Companies have begun measuring their products and services environmental and social effects over their entire life cycles. Here are some fundamental definitions and answers to frequently asked questions to help you better understand supply chain sustainability:
Supply chain:
A supply chain is a connected system of organizations, activities, information and resources designed to source, produce and move goods from origination to a final destination—typically from a supplier to an end customer.
Supply Chain Management:
In commerce, supply chain management is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. (Wikipedia contributors, 2022)
Sustainable Supply Chain Management:
A sustainable supply chain is one that fully integrates ethical and environmentally responsible practices into a competitive and successful model.
How to make your supply chain (more) sustainable?
There is no “quick fix” when it comes to incorporating sustainability into the supply chain, but a firm may attain a bottom line characterized not just by profit but also by people and the planet by implementing the necessary changes incrementally.
➢ Map out Your Supply Chain
Without an in-depth understanding of your supply chain, it is doubtful that you can even begin adopting significant sustainability reforms. In any case, how can you identify essential adjustments without a visual grasp of what they are?
Therefore, the initial step towards sustainability is to map out the complete supply chain. This will help you identify risks and waste drivers while correctly depicting global suppliers’ social, economic, and environmental difficulties. Then, you’ll be able to examine how human and natural resources are utilized at every stage of the operational and manufacturing process, indicating where adjustments may be made.
➢ Ensure Ethical Sourcing
As a manager of the supply chain, you must be able to observe how your suppliers produce and extract raw materials to guarantee they adhere to sustainability standards. This emphasis on raw materials is incredibly vital in supply networks. Although it is impossible to forecast the impacts of climate change, the nations from where these minerals are collected will probably be affected. This is a broad issue that requires a long-term approach, but there are modest steps you can take to incorporate sustainability into your business. Changing your pallet supplier to a local one, for instance, will cut transit delays and the accompanying expenses and minimize any carbon dioxide (CO2) emissions involved with travel.
On a lesser scale, basic hacks, such as becoming entirely paperless by using digital communication and documentation, will assist you in preserving the environment.
➢ Change Your Mentality
Education remains a crucial component in the delayed (and in some cases nonexistent) progress toward sustainability. Even though certain sustainability measures need physical procedure modifications, this is typically achievable only once behavioral and cultural adjustments are
established. Therefore, gaining respect and understanding from your personnel and suppliers is vital in attaining sustainability of the supply chain.
By implementing internal training programs that teach the significance of your purpose to both existing and new employees, everyone will become aligned with the same objective, allowing you to work for a community outcome every day. Showcase success stories, utilize data to build momentum within your firm, and have your team generate ideas for incorporating sustainable practices into more specialized business activities to achieve this goal.
➢ Collaborate with Other Companies
No matter how hard they try, individuals cannot handle complex supply chain difficulties on their own, whether on a corporate or personal basis. You may, however, become a voice for change and communicate this message to rivals who operate in comparable sectors of the supply chain,
pushing them to join in efforts to build sustainable practices that will ultimately benefit you all. These sorts of collaborations will enable you to define a single standard to which your suppliers can be held responsible, eliminating mountains of paperwork and allowing you to influence the
industry’s future as a whole.
Benefits of Supply Chain Sustainability
Sustainability in the supply chain benefits not only the company’s own interests and those of its stakeholders but also society and the planet as a whole. Companies have recognized, for instance, that extreme weather disruptions and growing resource scarcities posed by climate change threaten their business continuity.
Here are five frequently cited business activities that benefit from sustainability:

1. Supply chain operations: Recent examples demonstrate that energy costs decrease when companies set emission targets with suppliers and assist them in identifying potential improvement areas.
2. Branding: Consumers are more concerned than ever about goods’ origin and manufacturing process. Researchers at the Sloan School of Management at MIT discovered that consumers might pay 2% to 10% more for products with transparent supply chains.
3. Investor relations: Institutional investors are cognisant of the reputational risk associated with supply chain activities that are not sustainable. In recent years, the media has highlighted several reckless supply chain activities, and in certain instances, this has harmed the stock values of some companies. These stories have uncovered enterprises that import electronic components, maintain unsafe working conditions, utilize vendors that habitually damage local waterways, and acquire faulty components or harmful substances.
   Additionally, a recent Gallup study revealed that almost half of investors are interested in sustainable investing funds.
4. Corporate culture: According to demographers, Millennials desire more significance in their employment. Sustainability plays a crucial part in determining a company’s corporate culture and values, which significantly impact the recruiting and retention of personnel.
5. Compliance: Global governments are legislating more supply chain sustainability to fulfill the 2030 deadline set by the United Nations for meeting Sustainable Development Goals such as clean water for everyone. The scope of government restrictions includes the
   traceability of medications, the disposal of electronic equipment, and the avoidance of conflict minerals.
   Conclusion
   Many global firms demand fair labor and environmental policies in their supply chains. Adopting the MNCs’ sustainability strategies is a solid start. All businesses can do more. They should provide consistent messages to vendors that economic, social, and environmental needs are important. They should provide procurement authorities with the same message and encourage them to achieve economic, environmental, and social goals. These authorities should gather supplier data, assess their sustainability performance, and engage them in continuous improvement efforts. MNCs should cooperate with their suppliers’ procurement departments to spread sustainability criteria throughout their supply networks. Supply chains are only as strong as their weakest link.

Dedicated Freight Corridors: Importance in bringing down logistics cost

Article by- Rachee Dhabarde

What is Logistics? :-
Logistics means movement of physical goods from one point to another in the value chain of a product.

Logistics in India:
The logistics in India mainly happens by Road. Then most of the logistics takes place by railways, waterways and airways. In terms of cost, waterways are the cheapest mode of transport followed by the railways. Currently, the railway tracks for passenger trains and the fright transport trains are the same. The logistics industry in India is expected to grow at a compound annual growth rate (CAGR) of 15.5% between FY2019 and FY2024. The logistics sector employs around 22 million people and a potential to create another 1.2 million jobs by 2025.

Logistics by railways in India:
As mentioned above, currently in India, same railway tracks are being used to transport the goods and the passengers. This basically has two negative impacts on both the goods and the passenger transports. Firstly, the passenger trains have the highest priority in terms of transport clearance. If any clash happens between a goods train and a passenger train travelling on same track, the passenger train is given the first priority to go ahead. This results in a big halt for the goods train which eventually results in a huge delay for the goods transport. This delay means goods which were supposed to reach the destination in 2 days reach it after 8 days.
This basically results in a huge cost for the company delivering as well as receiving the goods.
Secondly, the use of same tracks for both types of trains means the tracks has to undergo frequent maintenance activities. This is because tracks have to bear the weight of both types of trains resulting in high amount of wear and tear. So the tracks require frequent repairs and not doing so may result in a fatal accident.
In terms of profits, 63% of the profits gained by the railways come from the freight transport while the remaining 27% comes from the passenger trains. Even so, the passenger trains take upper priority in terms of transport. Also, the expenses done on the passenger trains are 110% of the revenues earned. This is mainly because of the salaries of the maintenance staff, electrical supply, washroom cleanings, water supply expenses, customer helpline attendees’ wages, railway police salaries and other administrative costs associated with the passenger trains. In contrasts, freight trains require bare minimum maintenance and runs on a very little
overhead costs. We can say that the passenger trains are like the spoilt kid of Indian railways who has high demands and low returns while the Fright trains are hardworking elder child who has low demands and brings high value to the family.

Dedicated Freight corridors- a sense of justice to freight trains?
To tackle the problem of interruptions to freight trains from passenger trains, Indian government has launched Dedicated Freight Corridors (DFC) project. As the name suggests, the project will focus on building
dedicated railway tracks for the freight trains where only goods carrying trains will run uninterrupted. A new company, DFCCIL or Dedicated Freight Corridor Corporation of India Limited has been formed to take care of the DFC project.

Under the DFC project, 2 DFCs, Western and Eastern DFC has been planned. Out of this, around 600 km of track is currently operational on the eastern DFC while the western DFC is under construction. The DFC project is planned to be completely operational by March 2023. The Western DFC tracks measures around 1504 km while the eastern track measures 1856 km.

DFC Symbol–

The DFC tracks are being made attached to the proposed logistics parks. The problem with Indian logistics parks was that it had no connection with any railway track, so the intermediate transport was used be
done by road. This added to extra unnecessary expenses in the logistics costs. Now, the DFC trains will halt at the logistics [arks directly and loading and unloading can take place easily at the logistics park itself.
The trains that will run on the DFC tracks will have a specially made WAG-12 engine. The engine is being made in collaboration by a French company Alstom and Indian railways. It is a two section engine being
manufactured in Madhepur and have maintenance facilities in Saharanpur and Nagpur. Wag-12 is a 3 phase engine which is more powerful than single phase engine and it weighs 180 ton. The power of the engine is
12000Hp capable of carrying 6000 tons of load. That is equivalent to 600 trucks of loads..!!

Why the project was needed?
Currently, the logistics cost in China is 6% while for India its 30%. That means, a good manufactured for ₹100 reaches at ₹ 106 to customers in China while for ₹130 in India. This puts India behind the competitive
advantage over China in terms of logistics. So tackle this problem and compete with china, DFC was very necessary. Also, in terms of infrastructure, current freight platforms are only 700 meters long while the DFC platforms will be 2 Km long. So a huge amount of goods can be loaded and unloaded simultaneously. This will reduce the time taken to transport the goods. Current average speed of freight trains is just 30 Km/hr while the DFC trains will have a whopping 100 Km/hr speed. That’s a huge reduction in time taken for the fright transport. This is estimated to bring the logistics cost to 18%. Still less than China but this will be start. By using DFC, 24-hour goods transportation can be done and round 13000 tons of goods can be transported at a time as the DFC trains are double-stacked. That means one container on top of the other for the whole length of the train. Also, level crossing is avoided in DFC which means less accidents plus time saving. This will lead to saving of insurance money as well as delay costs. In conclusion, the DFC project will act as blessing for the logistics industry in India, bringing down the cost of logistics by reducing supply time, maintenance cost, saving time for transport and most of all, creating a positive image of India as a cost efficient manufacturing hub for many international firms. This will surely help to boost India’s 3 Trillion dollar economy target.

Inventory Management using AI-powered IoT Devices

Inventory is the stock of a resource used by an organization. There are mainly three categories of inventories: Raw materials, Work in process, and Finished goods. Planning and controlling inventories is crucial for organizations because they represent a commitment to monetary resources. Inventory management is the most debated topic in manufacturing. Why is inventory tracking important? Inventory management is a critical component of the supply chain and is responsible for overall corporate profitability and performance. Failure to balance incoming and outgoing inventory can severely destabilize a productive firm.

This balancing act can be difficult; on the one hand, you need to have an adequate supply of products, especially during peak seasons; on the other hand, you should avoid being overstocked. Keeping track of your company’s assets and understanding their status allows you to avoid unanticipated downtime and expenses. Product supervision from the factory to the warehouse and stores is essential to inventory management. Keeping track of numbers and availability dramatically improves work efficiency. Traditional Inventory management systems have issues such as the absence of real-time inventory data, decentralized control, and imprecise projection of demand and supply. 

IoT is one of the most dynamic and fascinating information and communications technology innovations. The Internet of Things is a massive network in which various physical items equipped with sensors, processing power, software, and other technologies are connected to the Internet or other communication networks. The sensors continuously communicate data about the devices’ operational state across the web. IoT enables devices to exchange real-time data without requiring human intervention.

Many firms are rapidly employing IoT devices to increase supply chain visibility. Sensors in IoT devices detect and report on various critical environmental parameters such as temperature, location, light, and humidity. They may also support businesses in assuring quality control throughout their supply chains. IoT technology may also improve visibility in production, inventory management, and predictive maintenance in warehouses and retail establishments.

IoT devices can help reduce human labor and errors while enhancing processing speeds and warehouse efficiency. Companies are installing IoT sensors in their warehouses to track the movement and consumption of goods and other assets. Businesses are also using shelf sensors to provide real-time inventory data to their management system. By ensuring that inventory levels and equipment placements are easily identified and constantly monitored, IoT and smart warehouse management are contributing to the avoidance of costly and time-consuming errors.

Now the question arises of how IoT can be implemented for efficient inventory management. All items tracked in an inventory management system that employs IoT and RFID technology are equipped with an RFID tag. Each tag has a unique identification number (UID) that contains encoded digital data about an inventory item, such as a model number, batch number, and so on. RFID readers are used to scanning these tags. When an RFID tag is scanned, a reader sends this information to the cloud for processing. The cloud also sends information about the reader’s position and the moment the data was recorded. Based on this information, the cloud determines the object’s location with the matching ID, provides a visual representation of the findings, and shows real-time updates.

The Internet of Things has been shown to increase real-time communication in logistics and inventory management. Sensors and gadgets attached to various inventory-related products aid in touch by monitoring data in real-time. IoT allows you to locate the location of every item in your inventory. We can trace its exact position, delivery status, transit status, projected arrival time, etc. The less human intervention required, the better for an inventory management system. The presence of each item in the inventory can be ensured through automatic data gathering of inventory items.

Warehouse management is focused on maximizing the efficient use of that area. The available space in a warehouse can be better allocated once the utilization pattern is established. More frequently used items might be kept closer to the access points to improve warehouse efficiency. Artificial intelligence has allowed us to create clever algorithms that can help us track and manage inventory far better than an ordinary humans. AI technologies will aid in discovering trends that humans cannot see by carefully analyzing IoT data. This procedure will undoubtedly improve inventory management decision-making.

Monitoring solutions offered by IoT that use GPS coordinates to capture data about fleet or equipment transit status aid in improved fleet management and usage, limiting unlawful access and optimizing the entire process. Inventory management based on IoT is crucial in estimating the lead times required to assemble all the parts necessary for manufacturing. High lead times are detected to reduce stumbling blocks produced by the absence of a critical role, which causes manufacturing process stoppages.

Most businesses might benefit from implementing IoT for inventory management. However, various problems must be addressed before IoT’s full-fledged inventory management adoption, such as investment costs, security, scalability, and standards that allow devices to interact. Despite these challenges, the investment cost of IoT technology has been decreasing. Many firms recognize the significant financial benefits of IoT-based inventory management and thus implement IoT for effective inventory management.

Regardless of issues with IoT adoption, IoT Inventory Management continues to improve and offers opportunities for advancement. It is increasingly becoming an efficient and cost-effective technique in supply chain management. This technology has numerous benefits, and several readily available industrial solutions may assist firms in remaining competitive. So in this era of Information technology, It’s time to capitalize on this and handle your inventory management issues.

Quantum Computing in Logistics and Supply Chain Management

IBM has always been a leader in technology and recently with the introduction of its 433 qubit quantum computer Osprey has achieved a big milestone in the race. It packs three times more qubit than the previous version named Eagle. Their current roadmap involves achieving a 4000 qubit quantum system by 2025. Before reaching this milestone they have 2 more quantum systems in the pipeline 1212 qubit Condor and 1386 qubit flamingo in 2023 and 2024 respectively.

Understanding the processing power of QC

There are a lot of open problems in the management which require a lot of computation power. These problems range from forecasting to finding the optimal solution to the last-mile problem. Quantum computing exponentially raises the speed of computing. If we consider the current quantum computer its processing speed is way faster than the current supercomputer. Leaving aside the theoretical power of Quantum technologies, even the current practical problems can be solved using the processing power of quantum computers. Due to the presence of the probabilistic nature of an electron, we can generate a string of random bits which can be used for solving the pressing problem of security. Many cryptographic algorithms are vulnerable to various statistical attacks that quantum technology can provide. This provides a lot of applications in the field of management. 

Let us first understand the concept of qubit

Imagine tossing a coin and assigning heads as 0 and tails as 1. An attacker can rig the coin to his advantage. Similar other ways to generate the classical bits can also be manipulated or interrupted. Now imagine an election passing through a sheet, there are two possible outcomes: either it will reflect or pass through the sheet. We can assign the respective phenomenon as 0 and 1. The bigger question is can we manipulate the process at any stage? The answer is a big No, even if we capture the electron midway it will collapse. This phenomenon makes sure that there is a 50% chance that we get either 0 or 1. The core of security lies in the probabilistic nature of qubit states which does not exist in classical cases. 

Quantum Computers can handle complex data for decision-making models compared to their classical counterparts. The ability to work with different types of data types helps in optimizing Inventory management and logistics in the supply chain. Problems such as Newsvendor problem/Last mile delivery is difficult with conventional computers. Because of the entanglement property of electrons, we can exponentially increase the speed of computation. Because of something called the No Cloning Theorem, a qubit cannot be copied and data cannot be retrieved unlike in classical settings. Integrating it with IoT can simulate the process and can be used for the maintenance of the machine. If you can find a highly efficient route in record time, quantum computers can perform multiple models simultaneously with processing speed a million times faster than the classical computers which makes it suitable for optimizing a classical scenario. 

Currently, It is not very feasible to implement QC in the supply chain industry due to high prices and impracticality. The error rate in QC is also high compared to classical computers due to the perturbation of electrons. Researchers all around the world are trying hard to restrict these errors. With Applications of QC, we can achieve great success with respect to the supply chain industry. Alongside AI & IoT, QC is one of the many digital tools that manufacturers can use to optimize and streamline their processes. 

This is becoming increasingly important as the trend of personalization of consumer goods continues and orders become more complex. With a processing speed up to 100 million times faster than traditional computers, quantum computers can perform multiple models simultaneously, making this technology particularly suitable for optimizing the classic scenario if you find a highly efficient route in record time.

References:

1. https://www.allerin.com/pilates/blog/understanding-the-scope-of-quantum-computing-in-improving-supply-chain-management
2. https://www.ibm.com/thought-leadership/institute-business-value/report/quantum-logistics

JUST-IN-TIME INVENTORY

                                     

JIT is a type of inventory management that calls for close coordination with suppliers to ensure that raw materials arrive at the exact time when manufacturing is supposed to start, but no earlier. It aims to have the minimum amount of inventory on hand to meet demand.

How does JIT work ?
JIT inventory management guarantees that stock will arrive at the exact time it is required for manufacturing or to satisfy consumer demand, but not earlier. The objective is to reduce waste and improve the effectiveness of your business operations. Since quality rather than the cheapest price is frequently the primary goal, JIT necessitates long-term agreements with dependable suppliers.

JIT is an example of a lean management technique. All components of any manufacturing or service system, including humans, are connected in JIT. They share information and depend on one another to produce effective results. The name Kaizen, which means “transformation for the better” in Japanese, is where this technique got its start. The business strategy has its roots in Japan and aims to continuously enhance operations while including every employee, from CEO to assembly line workers.

KANBAN – A critical element for the JIT Inventory System
The “nervous system” of lean JIT production, kanban regulates inventory movement and work-in-progress production. When it comes to reducing manufacturing waste brought on by overproduction, kanban is essential. 

Push inventory tactics are used in more conventional mass production techniques and are based on the anticipated quantity of sales. The pull approach used by Kanban allows for greater production floor flexibility because a business can only generate items in response to genuine customer requests. On a factory floor, Kanban uses cards—either paper or digital—to monitor the status of output. Kanban cards track the flow of inventory through the manufacturing process and can indicate when it’s time to place an order for additional stock.

Benefits of JIT
Just-in-time results in reduced scrap ,better quality products ,reduced cycle and setup times, higher productivity, higher workforce participation, etc. In addition to these benefits, JIT also improves relationships with suppliers.
It is clear that implementing a JIT system is a task that cannot be undertaken lightly. It will be expensive in terms of management time and effort, both in terms of the initial implementation and in terms of the continuing effort required to run the system over time.

Let us look more into the supplier side benefits of JIT.
Supplier gets a long-term guaranteed contract, steady demand and a good price. In return to these suppliers agrees to quality components (e.g. zero defects), guaranteed delivery times,
a “partnership” with its customer, contingency plans to cope with disruptions, common disruptions might be: the effect of bad weather, a truck drivers strike blocking roads/ports, a flu outbreak reducing the supplier’s workforce.

Criteria for supplier’s selection :
1) Good industrial relations (“involvement”, “value”, “dignity”, “ownership”), no strike deals
2) Close to production plant (else potential transportation delays)
3) You believe that the supplier can met their promises with respect to the list of factors given above that they are agreeing to.

You can decrease the total number of suppliers if they meet these requirements; in fact, it makes sense to do so. Why do you need five suppliers if five already meet all of these requirements? Obviously, for safety concerns, you can elect to have more than one supplier. A factory fire or an earthquake can affect even the best-run suppliers, but probably no more than two or three providers. Cost-wise, having a single supplier may be appealing, but one must weigh the danger versus the savings.

Some successful companies practicing Just-in-Time systems

Apple

Technology giant Apple has also used JIT concepts to improve the efficiency of its production process. The unique aspect of Apple’s JIT strategy is how they work with their suppliers to meet their objectives. With only one main warehouse in the

US and 150 major suppliers worldwide, Apple has built solid, strategic connections with its suppliers. This production outsourcing made Apple leaner, cut expenses, and decreased overstock as a result. The majority of their inventory is at their retail stores because they have just one central warehouse in the US. Apple started utilizing drop shipping, further adding to the JIT mix. This lowers the price of storage, shipping, and wastage.


Factors attributing Apple’s success
1) Apple is relieved of this obligation because to suppliers’ willingness to maintain stock on hand.

2) Keeping stock in their retail locations

3) Procedures for drop shipping internet purchases

McDonald’s

JIT inventory is used by fast-food businesses like McDonald’s to provide daily service to their consumers. These fast food restaurants typically have everything they need on hand, but they may wait until after the order has been received to assemble and prepare their hamburgers and sundaes, for example (except for a few finished products at peak times). This harmonizes the procedure so that customers always receive orders with the same consistent experience.


Factors attributing McDonald’s success
1) Standardized procedures ensuring consistency

2) JIT method increases customers satisfaction as items are made more freshly


JIT helps business owners save money and reduce wastage, while still providing their customers with the products they want and need in a timely manner. As excess inventory is vastly decreased by ordering inventory stock on a “just when you need” basis, business owners will not need to keep large quantities of inventory stock parts reducing all the costs associated with this.

Blockchain in Supply Chain

Blockchain is a distributed, unchangeable ledger that makes recording transactions and managing assets in a corporate network much easier. On a blockchain network, virtually anything of value may be recorded and traded, lowering risk and cutting costs for all parties involved. Business runs on information. The faster it’s received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.

New technologies are presenting promising opportunities for improvement across the supply chain. Using blockchain in the supply chain has the potential to improve supply chain transparency and traceability as well as reduce administrative costs. A blockchain supply chain can help participants record price, date, location, quality, certification, and other relevant information to more effectively manage the supply chain. The availability of this information within blockchain can increase traceability of material supply chain, lower losses from counterfeit and gray market, improve visibility and compliance over outsourced contract manufacturing, and potentially enhance an organization’s position as a leader in responsible manufacturing.

As blockchain gains publicity, large corporations and startups are exploring uses of the technology outside of the financial services industry. Many organizations are already experimenting with blockchain innovations to fulfill a range of needs. Provenance, a supply chain transparency start-up, recently completed a six-month pilot for tracking responsible sourcing of tuna in Indonesia via blockchain. Monegraph, a startup launched in 2014, uses blockchain to secure the usage and sharing rights of digital media such as video clips or brand-sponsored content and enable sharing of revenue across the media creators, publishers, and distributors. Skuchain builds blockchain-based B2B trade and supply chain finance products targeted towards the $18 trillion global trade finance market that involves numerous entities including buyers, sellers, logistics providers, banks, customs, and third parties.

Execution errors—such as mistakes in inventory data, missing shipments, and duplicate payments—are often impossible to detect in real time. Even when a problem is discovered after the fact, it is difficult and expensive to pinpoint its source or fix it by tracing the sequence of activities recorded in available ledger entries and documents. When blockchain record keeping is used, assets such as units of inventory, orders, loans, and bills of lading are given unique identifiers, which serve as digital tokens (similar to bitcoins). Additionally, participants in the blockchain are given unique identifiers, or digital signatures, which they use to sign the blocks they add to the blockchain. Every step of the transaction is then recorded on the blockchain as a transfer of the corresponding token from one participant to another.

A blockchain is valuable partly because it comprises a chronological string of blocks integrating all three types of flows in the transaction and captures details that aren’t recorded in a financial-ledger system. Moreover, each block is encrypted and distributed to all participants, who maintain their own copies of the blockchain. Blockchain thus greatly reduces, if not eliminates, several execution, traceability, and coordination problems in the supply chain. Since participants have their own individual copies of the blockchain, each party can review the status of a transaction, identify errors, and hold counterparties responsible for their actions. No participant can overwrite past data because doing so would entail having to rewrite all subsequent blocks on all shared copies of the blockchain.

A few key elements will determine blockchain’s suitability for a project in supply chain:

• Data Exchange: When data needs to be exchanged between multiple unrelated parties, blockchain is a good candidate as a solution.
• Trusted Partners: As blockchain requires updates to be made by multiple unrelated parties, you want to be confident you can trust the partners involved in the project.
• Defined Data Standards: A consistent and well-defined process and data standard that all partners can work with will keep data accurate, ideally with an existing standard like electronic data interchange (EDI).
• Shared Value: If the project offers value to all partners involved, they will be incentivized to adopt the technology and processes to make it work.

In adopting blockchain technology for its supply chain, a company must first decide on the type of blockchain it would need to build. Blockchains come in two dominant types. “Permissionless” distributed ledgers, such as bitcoin, reside in the public domain, while “permissioned” ledgers are centralized and governed by “actors,” “nodes,” or “miners,” and are held outside the public domain. This distinction has important consequences in the supply-chain context. In most supply chains, the parties are known and trusted. Moreover, the supply-chain world is unlikely to accept open access because its users don’t want to reveal proprietary details, such as demand, capacities, orders, prices, margins, at all points of the value chain to unknown participants. This means most supply-chain blockchains would need to be permissioned, with access governed centrally and restricted to known parties who may be limited to certain segments of data. However, for supply chains with known and trusted players, a centralized database approach is generally more than adequate. Thus, many of these supply chains do not need blockchain technology to solve such issues, as they can leverage existing technologies that are better suited to their high-volume transactions, either on their own or with partners. A number of companies are exploring the benefits of leveraging blockchain technology in adjacent areas, such as introducing smart contracts, bringing more rigor to purchase order payments or demand chains where “real demand” signals can propagate the upstream supply chain faster.

References:

https://www.ibm.com/in-en/topics/what-is-blockchain

https://www2.deloitte.com/us/en/pages/operations/articles/blockchain-supply-chain-innovation.html

https://hbr.org/2020/05/building-a-transparent-supply-chain

https://www.forbes.com/sites/forbestechcouncil/2021/11/08/blockchain-in-supply-chain/?sh=27ec7a434e1a

https://www.mckinsey.com/business-functions/operations/our-insights/blockchain-technology-for-supply-chainsa-must-or-a-maybe

Supply Chain Malady due to Covid-19: The Bullwhip Effect

The bullwhip effect, also known as the Forrester effect, describes a phenomenon in which inventory levels undergo increasingly larger fluctuations up the supply chain in response to a shift in consumer demand. What starts out as a small change in demand at the retail level leads to an even more substantial variation and uncertainty in supply, demand, and lead time. The bullwhip effect in the supply chain may arise due to variations in demand forecasting, order batching, over- discounting, rationing, and gaming. The bullwhip effect can lead to different outcomes such as over-inventory across the supply chain, over-hiring and firing employees, surplus and shortage of inventory, and poor service to customers in the supply chain

The novel coronavirus, COVID-19, has been impacting businesses and communities across the world in ways that seemed unimaginable even a couple of years ago. All industries have felt its effects, but brands and retailers in the consumer-packaged goods (CPG) industry are among those on the front lines of this fight. With consumer shopping habits fluctuating rapidly, there are new rules of engagement, to keep shelves stocked with critical items, and at the same time, keep shoppers and employees safe.

Global Supply Chain Shock Waves

Supply chains have had to ramp up production to cope with the unprecedented increase in demand. However, as retailers place larger orders, so do wholesalers, suppliers, manufacturers, and so on, with orders and demand being magnified the higher one moves up the chain. High consumer demand, product shortages, and transportation disruptions in the second half of 2021 triggered inflation and changes to manufacturers’ order patterns, setting up the bullwhip effect.

The retail industry is currently stuck between a rock and a hard place, or rather a bottleneck and bullwhip, as transportation and manufacturing delays continue heading into 2022. Retailers felt the effects of transport costs and constraints even before the pandemic. Covid-19-related supply chain disruptions began in early 2020 and have only grown worse since. As more people have stayed home, commercial airline traffic has taken a nosedive. With significantly fewer flights, there is significantly less opportunity for retailers to rent cargo space to transport their goods in the sky. McKinsey predicts that air traffic won’t return to 2019 levels before 2024, so the effects will likely continue to impact retailers for years to come. At the same time, buyer behavior is completely unhinged due to the ripple effect caused by COVID-19. Manufacturers are inundated with replenishment requests, days or sometimes weeks after a supply shortage occurs. And, businesses are tapping into multiple manufacturers to procure the goods they need to manage the overwhelming influx of demand. This often leads to overproduction and misinformed inventory build-up.

Due to the current situation of the COVID-19 outbreak in the world, the pharmaceutical industry plays an essential role in the production of medicine and vaccines against COVID-19. In recent years, the production and marketing of vaccines have become a complex process. This complexity can be reduced through market coordination with producers and other sides. One of the influential factors that significantly decreases the performance of the pharmaceutical supply chain and the disruption of the vaccine, is the bullwhip effect.

Pareto Chart of the important factors on the Bullwhip Effect Reduction of Covid-19 Vaccine Supply C.

A bullwhip effect in the vaccine supply chain would significantly affect the production and distribution of pharmaceutical products, especially vaccines. In vaccine supply chains, several factors make the supply/demand procedures complicated. These factors include product complexity, globalization, regulation, regulatory requirements for manufacturers, product quality improvement, government policies, public security, and general health sector supports. Recent studies have revealed that employing expert managers alongside well-trained human resources and appropriate transportation could significantly decrease the demand fluctuations’ effects and would make the supply chain much more stable. Poor production planning, inappropriate transportation, incorrect demand prediction, and increases in raw materials cost are among the most important factors that lead to a bullwhip effect in a vaccine supply chain.

Dealing with the bullwhip effect involves improved automation and real-time understanding. Companies that invested in good ERP and supply chain planning systems have done better than those keeping things status quo. A few things can be done to tackle the bullwhip creeping in and wreaking havoc:

• Real-time data aggregation to spot trends. It’s equally important to understand how panic buying happens, what is being panic bought, and how it affects overall demand.
• Frequent communication with vendors and suppliers to about availability of products and ease of procurements.
• Onboarding new suppliers needs to be rapid and hassle-free, and needs to be done in a way which does not push aside existing suppliers. The more sources one has, the better.
• Addition of more digital channels to cope with lower demand of a product

The results of studies have confirmed that information sharing throughout the supply chain would significantly reduce the bullwhip effect in the supply chain. The other factors which would reduce the bullwhip effect are identified as supply chain coordination, lead time reduction, accurate demand forecasting, information technologies alignment, real-time inventory management

Managing the bullwhip effects caused by COVID-19 requires situation awareness, localization, and an intelligent supply chain. Situation awareness is a vital concept in emergency response, knowing what is going to figure out what should be done. Furthermore, reducing the geographical distances between the firm and other parties in the supply chain, which equates to supply chain localization, enforces just-in-time inventory. Finally, supply chain digitalization is no longer an option; implementing such a solution enables end-to-end visibility, collaboration, flexibility, and optimization of orchestration of the supply chain.

References:

https://sloanreview.mit.edu/article/prepare-for-the-bullwhips-sting/

https://www.sciencedirect.com/science/article/pii/S2666412721000234

https://www.oliverwyman.com/our-expertise/insights/2020/apr/covid-19-shocks-supply-chains.html

https://www.cips.org/knowledge/procurement-topics-and-skills/operations-management/bullwhip-effect-in-supply-chain/

https://www.oliverwyman.com/our-expertise/insights/2020/apr/covid-19-shocks-supply-chains.html

Human Side of Project Management

by Meenakshi Agarwal, PGP 2021-23, IIM Indore

Project management is defined as the art and science of getting work done with the active cooperation of individuals and organizations directly or indirectly involved with the project. This includes Senior Management, Project Sponsors(s), Customers, End-users, Stakeholders, Team Members, Sub-contractors, Vendors, and Consultants. I think it is fair to say that organizations are made up of people and that the projects and programs that take place in these organizations are highly dependent on these people for their success. However, companies are still not placing enough emphasis on the human side of project management, and not enough is being done to equip project and program managers with the skills they need to do the “human side” of their business. Today’s project manager faces a number of issues that go beyond juggling scope, schedule, and cost. One or more human elements limit each area of project management. The project manager has to deal with a variety of conflicts on a daily basis.

Project Management is more than just planning, tracking timeline, controlling the budget, managing scope, or whatever taught you. How do you really succeed as a Project Manager? It doesn’t matter if you’re a junior PM, a senior PM, have completed small or large scale projects, or even delivered a few or a hundred projects – the Human Side of Project Management is a skill set you need to master if you’re going to succeed as a great Project Manager.

A good majority of project errors, if carefully analyzed, would result in one or more human problems not being identified, prevented, or addressed. However, many of these would resemble other problems on the surface, and project managers attempt to address them without identifying the exact human problem behind them. One reason for the scarcity of managerial greatness is that we focus too much on technical proficiency and too little on the character in educating and training managers. The management sciences—statistics, data analysis, productivity, financial controls, service delivery—are things we can almost take for granted these days. They are subjects we know how to teach. But we’re still in the Dark
Ages when it comes to teaching people how to behave like great managers—somehow instilling in them, capacities such as courage and integrity that can’t be taught.

The main reason organizations are still struggling in this area is for two things:
People are hard to change. Think about your recent New Year’s resolutions and how many of them you have already accomplished. Like behavior change at home, behavior change in an organization requires serious work, focus, and commitment. Most organizations, like people, are short-term oriented. The business world is mainly rational, and most managers are much more comfortable with analytic skills: planning, controlling, and budgeting. And much less satisfied with emotional skills: leadership, training, and handling of cultural issues.

Creating successful teams requires a conscious and deliberate investment of time and effort. Teams are built around four basic principles that recognize the importance of Team Structure, Team Process, Team Culture, and Team Influence. The structure provides leadership and organization. The process provides discipline and predictability for team interaction. Culture provides the foundation for the team’s norms and values for successful interdependence and relationships. Influence helps the team to leverage internal and external politics in a constructive way to drive the project to a successful outcome.

Teams must embrace a common purpose and develop and follow a set of common processes based on the team’s values and culture. The Project Manager’s role in team building is to guide, coach, mentor, facilitate and direct as required to achieve the intended project outcome. The success and survival of project teams depend on understanding the human side of project management.

Abuse of Human Rights in the Supply Chain Industry

by Anant Gautam, PGP 2021-23, IIM Indore

The 2021 data for 193 nations by the IMF projected India as the world’s fifth fastest-growing economy and the fastest-growing trillion-dollar economy of the world. India, still aiming to enter the “Developed Nation-State” category, aspires to become a global manufacturing powerhouse. In order to accomplish it, the Indian government launched several initiatives for reforming the supply chain with a major focus on the Make in India campaign. These reforms transforming the supply chain ecosystem started the boiling debate around human rights violations in the supply chain industry. 

The Supply Chain Industry offers the emergence of new business opportunities that helps in the economic development of the state; however, it also presents serious human rights breach which the companies and laws do not effectively respond to. According to the International Labour Organization, more than 450 million people in the world work in supply chain-related jobs. For India, one estimate predicted that the Indian supply chain Industry may employ 30 million people by 2022. This figure is slightly troublesome as this population will include women workers, migrant workers, child laborers, or residents of rural or poor urban areas too. 

Human Rights Violation?

The Business and the Legal field are intertwined with one another but not many legal provisions are discussed within the companies supply chain. Each product that is headed to reach the end-user goes through a cumulative effort of multiple organizations. These organizations combine to form the Supply Chain Industry. Thus, these multiple chains are not paid a lot of attention by the company because they do not fall within the four walls of it. This leads to severe violations of various laws and most importantly the human rights. Major human rights violations in the context of the supply chain industry are;

1. Labour Law violation (Four codes- Code on Wages, Code on Social Security, the Industrial Relations Code & the Occupational, Safety, Health and Working Condition Code) 
2. Child Labour (Article 24)
3. Right to life and all rights covered under it (Article 21)
4. Breach of International Humanitarian Law,
5. Right to safe environment

These violations leave us with very prominent questions; who should be held liable, how should it be curbed, and what should be the course of action.

Placing blame and mea culpa

The debate of shifting the liability for these violations has been long-standing. There has been a constant shift of blame by different institutes but no concrete action, to date, has been taken. However, these institutes are largely responsible for providing and implementing provisions but have failed severely. There are discussions but no public mea culpa for their involvement. Three major institutes responsible for harboring a safe human rights environment are;

1. State 

The lack of state action has led to a surge in human rights violations. The government does not regulate the business effectively. India has come up with four specific codes covering all aspects of labor law, but there is a need for proper implementation. The loopholes in these codes and poor enforcement leads to the violation of human rights. 

Government should oversee and regulate business human rights practices. They must do so by enforcing laws, regulating company behavior, and ensuring that all companies that are part of its economy, must responsibly take their human rights due diligence.

2. International Organizations

International law is not binding in nature. Therefore, any organization violating the principles and provisions set by the ILO is not held liable for its actions. ILO conventions have promoted the welfare of the labor by discussing their rights at length and asking the member state in creating and implementing Labour laws and extending their scope by encompassing Human Rights, but it does not bind the states. Its high time that ILO should bring out a binding standard on human rights in global supply chains.

3. Companies or Organizations

UN Guiding principles mentions that companies must have a human rights policy. Indian constitution provides a set of fundamental rights that if infringed will hold the organization liable. These companies need to follow state laws and the company guidelines of their respective organization. However, weak labor laws help these companies in bypassing the system and human rights are left at the mercy of the segments of the supply chain industry. Thus, in a full circle, strong labor laws need to bind these companies responsible for human rights breaches by extending their responsibility outside the four walls of the company.

The course of Action for curbing Human Rights Violation

The west is known for advocating human rights. Paradoxically, the demand for a dedicated Supply Chain Act started in Western states because of the number of human rights violations. However, Indian labor has adapted to the weak system and when coupled with unawareness about the basic rights, there has never been a push for such demand. 

A dedicated Supply Chain Act along with a binding ILO statute for the member states can positively impact the supply chain Industry. This move could help in curbing human rights violations in a developing state like India. India by bringing such an act could become a flag bearer of advocating human rights in the supply chain industry across the world.

Conclusion

Managing a supply chain in a country like India is a challenging job for any organization because it has a diverse market, flexible yet strict government regulations, infrastructural problems, etc. However, all organizations must endeavor to achieve the unaccomplished goal of protecting human rights along their supply chain. They must take preventive steps and design frameworks such that no person involved in the supply chain faces a human rights violation. 

VUCA in SCM & Operations

by Hrishikesh Hundekari, PGP 2021-23, IIM Indore

Excellence in Supply Chains and operations management is achieved by predictability and an intuitive foreseeable future. “Vuka” in Xhosa, South Africa means “WAKE UP!”. There is an ardent need for us to “VUCA” in the current global environment which is increasingly Volatile, Uncertainty, Complex and Ambiguous.
VUCA is relevant in all aspects of businesses, especially Supply chains and operation management. The major factors responsible for the relevance of VUCA in the current times are:

1. Globalization
2. Changing local and global regulations
3. Constant shift of power and influence of developed nations
4. Emergence of developing nations in the Global trade
5. Unprecedented events – Covid 19, Suez Canal Block etc.
6. Climate change and sustainability policies.
7. Ever-evolving Technologies

In such times, companies and governments try to cope with these factors and respond positively, profitably and powerfully. To do so, they require certain drivers with form as a basis for their actions. VUCA dictates businesses to discard outdated management and leadership practices and adopt new resilient and robust techniques. This approach allows businesses to normally and seamlessly handle extreme variations in forecasting without breaking any processes, morale & systems.

The application of VUCA is a constant learning curve as learnings from past events form a basis for future decisions to tackle problems.

Case Study (Self-made):

Mr. Charles, a SCM manager of HRIZY (semi-conductor chip manufacturing company) is responsible for supply of semi-conductor chips used in EVs(Electrical vehicles) to major automobiles companies. Due to COVID 19, there is a sudden spike in electronic devices and hence as created a shortage of semi-conductor chips. This has caused stock prices of these major automobile companies to plummet. How should he apply VUCA drivers?

1. Volatility: Sudden spike in the sales has caused delay and stress on production and logistics of semi-conductors in the backdrop of COVID. Rules, restrictions & regulations are changing very frequently.

2. Uncertainty: These waves and repercussions of COVID are still undetermined and uncertain. Will the demand for semi-conductor chips be increasing, sustained or decrease? After this technological boom, the demand is still uncertain and hence forecasting, inventory management and logistics are a major conundrum.
3. Complex: A plethora of reasons are affecting the supply chain and hence this has become a very tedious and difficult task for Charles to manage this situation. Keeping up-to-date itself has become difficult with ever changing world, at a pace no one imagined.
4. Ambiguous: Sources of information, knowledge and assistance are not genuine and require careful inspection before acceptance and action. This has created an ambiguity in understanding the current situation, let alone forecasting the future.

VUCA Solution :
The action plan is based on the 4 VUCA drivers, which provide a complete and resilient solution to this unique and difficult situation. A fresh and supportive outlook must be adopted by the senior management of HRIZY. They should understand the gravity of the situation and also gain constructive feedback from this problem to tackle such future unforeseeable events.
Charles must employ an independent & unofficial team to monitor the
changing rules, restrictions & regulations. This will provide a competitive edge over their competitors and also help to gain trust of stakeholders as their actions will be in accordance to the external environment. This will help limit the volatility.
To tackle uncertainties and complexities of demand of semi-conductor chips, a classical just-in-time approach would not work as the demand is changing at such a fast pace, the supply/production side will not be able to cope up.
Innovative solutions such as market research induced inventory management could be employed. Knowledge and information must be passed down to every level of the hierarchy of HRIZY.
Fact-checking and authenticity of information becomes of utmost
importance. This provides clarity of thought in latter stages of the execution as the base is laid on genuine information platform.
Change is inevitable and the only constant. It has always done so and will continue to do so. It is sometimes the initiator. It is frequently unexpected. Accepting that reality and being able to prepare for and deal with it begins with understanding that it is unavoidable.
That reality does not change just because these situations are labelled as VUCA. However, the labelling does identify the problem, which we must address immediately. After all is said and done, dealing with these difficulties begins and ends with proactive and strong leadership, as well as the development of a high-performance culture, methods, and structure that can effectively cope with change.