VUCA in Supply Chain Management

Introduction

In today’s volatile, uncertain, complex, and ambiguous (VUCA) world, supply chains are not only influenced by these characteristics but are increasingly exhibiting VUCA features themselves. VUCA was defined by Bennett and Lemoine (2014) with the following traits:

Volatility: Supply chain events are unexpected or unstable, but their impacts can generally be predicted based on available information.

Uncertainty: The cause and effect of supply chain events are understood, yet other details about the events remain unknown.

Complexity: Both the supply chain and its environment have numerous interconnected parts and variables, making it challenging to establish clear cause-and-effect relationships.

Ambiguity: Supply chain events are unexpected, and the causal relationships behind them are unclear.

As the global economy evolves and global enterprises cooperate deeply, modern supply chains involve many interdependent actors across different countries, resulting in substantial flows of materials, funds, and information. This complex network structure adds to the overall complexity of supply chains, making them even more susceptible to VUCA characteristics.

The increasing complexity of supply chains contributes to higher levels of volatility and uncertainty, leading to increased ambiguity in their operations. This situation is aggravated by the VUCA environment and the inherent VUCA features of supply chains, making disruptions more likely. Conventional risk management approaches, which follow steps of identification, evaluation, response, and monitoring, are inadequate to address these challenges, especially considering many risks are unforeseen. To effectively counteract these issues, it has become crucial to focus on constructing resilient supply chains, as a means to enhance the ability to respond to disruption risks.

Concept of Supply Chain Resilience

The concept of “supply chain resilience” was introduced by Rice and Caniato (2003) and formally defined by Christopher and Peck (2004) as the ability of a supply chain to return to its original state or move to a more desirable state after being disrupted. Scholars have reached a consensus that it involves the adaptive capability of a supply chain to prepare for unexpected events, respond to disruptions, and recover from them. Various metrics have been developed to evaluate supply chain resilience, including capabilities-based measurements, quantitative metrics, performance-based metrics, and topological network indicators.

The focus of existing literature largely centers around strategies for improving supply chain resilience, categorized into proactive and reactive approaches. Proactive strategies involve preparing for disruptions, while reactive strategies focus on recovering a supply chain after a disruption. Proactive strategies include network structure design, supplier selection, redundancy, flexibility, diversification, and building social capitals. Reactive strategies have received less attention, but emerging technologies like cloud computing and blockchain are increasingly recognized as tools that can enhance supply chain resilience by improving visibility, anticipation, and adaptability.

Research Methodology on supply chain resilience

Various theories have been applied to the study of supply chain resilience. Commonly used theories include the resource-based view (RBV), dynamic capability theory, relational view, and complexity theory/complex adaptive systems. RBV emphasizes that a firm’s competitive advantage comes from valuable and irreplaceable resources, suggesting that firms must continually integrate and reallocate resources to enhance supply chain resilience. Dynamic capability theory and relational view focus on understanding the capabilities and relationships firms need to develop to achieve resilience in a rapidly changing business environment. Complexity theory/complex adaptive systems, on the other hand, considers supply chain firms as self-organized and self-adaptive entities, adapting nonlinearly to their dynamic external environment.

Research on supply chain resilience employs various methodologies, categorized into three groups. Firstly, scholars often develop conceptual frameworks to build resilience in different contexts. Secondly, quantitative modeling approaches are widely adopted, including mathematical modeling, decision analysis, network modeling, and simulation. These methods address different aspects, such as optimizing supply chain structures, evaluating resilience, characterizing network interactions, and solving large-scale optimization problems. Lastly, empirical studies, such as case studies and surveys, are growing, focusing on examining the factors influencing supply chain resilience and developing resilience metrics.

Future Research on Supply Chain Resilience in Era of VUCA

The future directions for supply chain resilience research primarily emphasize responses to VUCA risks. However, there are other important areas for exploration. For instance, choosing among multiple strategies for building resilience and unifying conflicting evaluation metrics pose intriguing challenges. Additionally, investigating how supply chain resilience impacts integration and potentially reshapes firm boundaries in favor of resilience over efficiency is significant.

A holistic approach is crucial when studying supply chain resilience. Rather than fragmented efforts, resilience should be developed within a coopetition context, recognizing the propagation of risks along the supply chain and the cost-intensive nature of resilience-building. Given the multidimensional challenges of the VUCA era, interdisciplinary research and diverse methodologies are essential.

Reference – Gao, Y., Feng, Z. and Zhang, S., 2021. Managing supply chain resilience in the era of VUCA. Frontiers of Engineering Management, 8(3), p.465.

The Role of Operations Management in ‘Make in India’

What is Make-In-India?

Since its inception in 2014, Make in India has emerged as a transformative strategy, aiming to establish India as a prominent global hub for manufacturing and investment. By extending a warm invitation to investors worldwide, the initiative has played a pivotal role in shaping the trajectory of India’s economic development, emphasizing the concepts of ‘Self-Sufficiency’ and ‘Aatmanirbhar’. Noteworthy progress has been achieved by Make in India, with a particular focus on 27 key sectors, incorporating both strategic manufacturing and service industries.

Vision

With the goal of surpassing China’s industrial might, India has actively sought foreign investments for new industrial development, concurrently strengthening its existing industrial framework. Setting an ambitious target of 12–14% annual growth in the manufacturing sector, the nation aspires to raise the sector’s contribution to the gross domestic product from 16% to 25%. Additionally, there is a strong emphasis on fostering export-oriented growth, positioning India as a significant participant in the global trade landscape.

Operational Initiatives to support Make In India

In a bid to simplify the business landscape, the Indian government has undertaken several measures to enhance the ease of conducting business within the country. A recent stride in this direction is the launch of the National Single Window System (NSWS). This platform has been specifically designed to streamline the approval and clearance process for investors by integrating multiple pre-existing clearance systems from various ministries and departments of both the central and state governments. Additionally, the government has implemented various initiatives to foster manufacturing and investments, including the reduction of corporate taxes and the enforcement of the Phased Manufacturing Program. To ensure the quality of locally manufactured goods, the government has introduced meticulous quality control orders. In 2020–21, the ‘Make in India’ campaign received a substantial boost through the introduction of the Production-Linked Incentive (PLI) schemes across 14 key manufacturing sectors, alongside a $10 billion incentive plan aimed at building a robust semiconductor and display design ecosystem within the country. Furthermore, the One-District-One-Product (ODOP) initiative has been put into action, facilitating the promotion and production of unique products from every district, thereby providing artisans and manufacturers with a global platform for socioeconomic growth. Complementing these efforts is the recently launched ‘Gatishakti’ program, which focuses on establishing multimodal connectivity for manufacturing zones. This program, spearheaded by the Prime Minister, is set to enhance logistical efficiency, thus ensuring the smooth movement of goods and people, reducing logistics costs, and enhancing market accessibility and opportunities.

Government projects like the Golden Quadrilateral, Sagarmala and Bharatmala Pariyojana, among others, are designed to speed up trade while cutting costs and time associated with logistics.

Key Concerns

India’s manufacturing sector faces multifaceted challenges that hinder the full realization of the ‘Make in India’ initiative. The productivity and skills gap within Indian factories remains a persistent issue, partly attributable to the scarcity of skilled labour. A recent McKinsey report underscores this concern, highlighting a significant productivity disparity between Indian manufacturing workers and their counterparts in Thailand and China. Moreover, the small scale of industrial units poses obstacles to achieving economies of scale, hindering the adoption of modern equipment and the establishment of robust supply chains, thus limiting the sector’s potential for growth. Infrastructure bottlenecks further exacerbate the operational challenges, with intermittent power outages and sluggish transportation infrastructure impeding the smooth movement of goods. These issues, coupled with incomplete labour reforms and land acquisition laws, underscore the critical need for a comprehensive regulatory overhaul to create a more conducive environment for foreign investment and to propel the ‘Make in India’ campaign towards its envisioned success.

Conclusion

The operational efficiency of the government plays a pivotal role in determining its overall effectiveness in carrying out various activities. Successful operations hinge on the seamless coordination of resources, labour skills, and supply chain management tasks, ultimately influencing the overall output. Effectively positioning the product in the market, considering crucial time and cost factors, is a key aspect of this process. The future success of India in the upcoming decade will significantly rely on the adaptability and enhancement of managerial approaches towards production and global product distribution. This underscores the increasing importance and role of operations management in shaping India’s trajectory in the years ahead.

References

1. https://thecsrjournal.in/enabling-make-india-csr/make-in-india-logo/
2. https://www.mapsofindia.com/maps/india/sagarmala-project-network-map.html
3. https://zeenews.india.com/news/education/make-in-india-importance-of-operations-management_1495891.html
4. https://www.linkedin.com/pulse/importance-operations-management-its-role-make-india-raju-gundala-/
5. https://99notes.in/upsc-notes/general-studies-3/indian-economy/infrastructure/industrial-infrastructure/
6. https://www.facebook.com/TheIndiaBusinessGroup/photos/a.1801453439881019/4202811179745221/
7. https://drishtiias.com/daily-updates/daily-news-analysis/make-in-india-4

Restaurant Supply Chain Management: From Farm to Table

Restaurant Industry

Food is one of the basic needs of a human’s life. The Restaurant Industry associates a new level of leisure with food.

The first question that comes up is, what does the Restaurant Industry exactly entail? The Restaurant Industry is primarily a service industry that provides food services. The service is the journey of ingredients from farms to your tables with the additional “dine-in” experience a restaurant offers. The emphasis on the “dine-in” differentiates the restaurant industry from the broad umbrella of the Food Service Industry.

Supply Chain Management in the Restaurant Industry

What does Supply Chain Management for the Restaurant Industry circumscribes? It is a series of interconnected processes ranging from procuring raw materials to converting them into food served on your plate. The complexity of it can be seen in the number of SKUs or Menu Items and, consequently, the collaborators a restaurant business has. The more SKUs a restaurant keeps, the higher the number of raw materials and processes involved, thus increasing the complexity of the supply chain.

Importance of SCM in Restaurant Industry

The importance of the supply chain can be seen in the cost breakdowns of a restaurant business. The three most significant costs for a restaurant are Food & Beverage and Labor in the same order. The costs associated with food and beverage are procurement, transportation and inventory management. The aforementioned cost headers fall under the purview of supply-chain management. Thus, supply chain management could result in efficient operations and optimised costs for a restaurant.

From Farm to Table

The journey from farms to your plates has a general pattern of stages.

The first stage is the procurement of raw materials. The procurement happens on a spectrum of quality and quantity. The quantity helps you negotiate better prices. Procuring the right amounts is always gruelling due to the accurate forecasts of consumer demands required. The quality gets you customers, and you can even charge a premium price. The emphasis is on building good relations with a variety of suppliers. The suppliers may range from local farmers to wholesale distributors as per the needs presented by the consumer base and positioning of the restaurant.

The next stage requires carefully transporting the procured materials to the operation site. Different food ingredients that the businesses procure as raw materials have varied transportation requirements. For Example, Two food ingredients can have different advised temperature requirements. Furthermore, the suppliers can be scarcely concentrated across geographies. Thus, clubbing of transportation can also be a difficult task. There is a need to efficiently plan the distribution network so logistics requirements and suppliers can be aggregated.

The next stage is where the labor work their magic and process the procured materials into the food served. The food then finally arrives on the customer’s tables.

Another inert aspect of the supply chain is Inventory Management. It helps the restaurants maintain an optimal stock of ingredients required across SKUs. This avoids failure to meet demand as well as the spoilage of inventory.

Recent Disruptions

The restaurant industry functions on a very intricate network of supply chains. The recent years have put a lot of strain on these networks.

The COVID-19 pandemic rendered this network in shambles. The global social distancing norms and lockdowns led to a steep dip in demand. Simultaneously, there was a shortage of labour. The industry does not work in silos. There were domino effects of significant supply chain disruptions, such as the blockage of the Suez Canal. The costs of raw materials and logistics have been rising. The pandemic also led to changes in consumer dining habits. A shift was observed from dine-ins to takehomes and deliveries even in the post-pandemic era.

Tackling the Disruptions

The restaurant industry responded by showing flexibility in the menu items. The scarcity of some raw materials led to the inclusion of more seasonal menu items and increased the frequency of menu rotation.

There has been a shift to local sourcing. This hedges the uncertainties of global supply chains and also appeals to customers who are vocal about local.

The Restaurant Industry has come up with innovative ideas to diversify revenue streams. Such concepts include DIY meal kits, brand merchandise, and hybrid grocery restaurants.

The restaurant industry is navigating one of the most challenging periods in recent memory. The supply chain disruptions of the past few years have underscored the importance of agility, adaptability, and resilience. While some disruptions may be temporary, many indicate broader global economic and consumer behaviour shifts. As such, restaurants would do well to take the lessons learned during this period and use them to build more robust and flexible operations for the future.  

Risk Management in Supply Chain: Strategies for Resilience and Sustainability

The topic of interest is risk management within the context of supply chain operations.

The advent of globalization in the 21st century has resulted in the proliferation of sophisticated supply networks. Corporations get raw materials and components from several geographical locations, undertake product assembly operations in numerous nations, and afterwards engage in worldwide distribution of those goods. Although expanded supply chains have the potential to provide substantial cost reductions, they also subject organizations to a diverse array of hazards. Hence, the need for organizations to prioritize effective risk management within the supply chain has emerged as a critical issue.

The comprehension of supply chain risks

The classification of supply chain risks may be generally divided into two main categories: operational risks and disruption risks. Operational hazards include the routine aspects of supply chain management, including inventory management, logistics, and procurement. On the contrary, disruption risks pertain to unforeseen occurrences that have the potential to significantly impede the functioning of the supply chain. Potential examples of events that may be considered include natural catastrophes, geopolitical occurrences, labour strikes, cyber assaults, and many other incidents.

1. Operational hazards refer to the inherent risks associated with the routine operations and activities of a firm. One potential issue that may arise is the constant delivery of substandard products by a supplier, while another concern might be inefficiencies inside a warehouse resulting in elevated expenses associated with inventory carrying.

2. Disruption risks have a greater magnitude of effect and have the potential to dramatically affect the operations of a firm. Illustrative instances include the 2011 tsunami in Japan, which caused significant disruptions to the global car and electronics supply networks, as well as the COVID-19 pandemic, which had an unparalleled impact on global supply systems.

Strategies for the Management of Risk

The implementation of effective risk management necessitates the use of a variety of methodologies. The following are many significant ones:

1. The first stage in the risk management process involves the identification and assessment of potential risks. It is essential for companies to strategically delineate their supply chains, meticulously identify plausible vulnerabilities, and thoroughly evaluate the probability and possible ramifications of various hazards.

2. The Importance of Diversification: Depending only on a solitary supplier or logistics provider might entail significant risks. The act of diversifying suppliers enables firms to mitigate their reliance on a single provider. As an example, Apple strategically procures its components from diverse vendors across many nations to mitigate the risk of production interruptions in the event of regional disruptions.

3. Inventory Stockpiling: The practice of maintaining surplus inventory may serve as a protective measure in mitigating the impact of interruptions in the supply chain. Although the use of this approach may lead to a rise in carrying costs, it may prove to be a financially efficient method, particularly for crucial components that have few alternative sources available.

4. Investing in technology is crucial for effective supply chain management. Contemporary solutions have the advantage of providing up-to-date information on inventory, order status, and logistics in real-time. This enables organizations to promptly address and mitigate interruptions. Emerging technologies such as the Internet of Things (IoT) and Artificial Intelligence (AI) have the capability to anticipate and forecast possible hazards, as well as propose appropriate measures for risk reduction.

5. Establishing Robust Supplier Relationships: Engaging in close collaboration with suppliers may enhance the ability to comprehend and effectively mitigate risks. The implementation of data sharing, collaborative problem-solving, and the establishment of long-term contractual agreements have the potential to enhance the resilience of supply chains.

6. Formulate a Response Plan: Despite implementing many preventive measures, it is important to acknowledge that unforeseen disruptions may still occur. The implementation of a well-defined reaction strategy serves to mitigate the extent of the damage. This entails the identification of alternative suppliers, logistical providers, and even alternative production sites.

Let us take an example of “The Automotive Sector”

The car and bikes sector serves as a compelling illustration of the significance of risk management throughout the supply chain. Contemporary automobiles have components purchased from several global sources. The occurrence of any kind of interruption has the potential to impede the manufacturing process, resulting in substantial financial losses.

The occurrence of the Japanese tsunami in 2011 resulted in significant disruptions to the supply chains of certain electrical components and paints. Numerous automotive manufacturers on a global scale were compelled to suspend or curtail their manufacturing activities due to their inability to get the necessary components. Companies who had engaged in supplier diversification or had implemented inventory stockpiling strategies were more effectively positioned to navigate the crisis.

The Path Ahead

The significance of risk management in supply chains is of utmost relevance as they progressively expand on a global scale and become more linked. To enhance their operational efficiency and competitiveness, it is essential for companies to adopt a proactive approach, use cutting-edge technology, and cultivate robust collaborations with their suppliers. Although it is not feasible to accurately forecast all potential interruptions, a well-prepared organization may effectively mitigate the adverse effects of such occurrences on its business operations and financial performance.

In summary, the management of risk within the supply chain encompasses more than just mitigating interruptions. It entails the establishment of a robust system capable of adapting and flourishing within a dynamic global context.

What is the “China +1” strategy and why is it significant?

The global supply chain has undergone significant transformations. One of the most noteworthy shifts has been the emergence of the “China+1” strategy. The China +1 strategy has gained traction due to current geopolitical situation, disruption due to pandemic and need for diversification in supply chain.

What is China +1 strategy?

It is an business approach which aims to reduce dependency on China for their sole manufacturing and expanding their operation to other location to mitigate the risk caused due to global disruption.

Since reform of 1978, China offered lucrative packages to multinationals like cheap labor, low taxes and lose environmental laws which led to heavy investment in China. However, this has led to an over-reliance on China for their business interests, which can be risky given geopolitical tensions and unforeseen disruptions.

When everything seems alright why is it that now company want to diversify?

Chinese economy has matured, and competitive advantage China provided no longer exist. For instance, the average wage rate is increasing 10% annually from 2012. Tax incentives for foreign investors have expired and the risk of stealing IP makes the situation worse for international companies. The risk of trade war and geopolitical situation in front of China make it essential to have plus one strategy.

To put an analogy to the situation, companies should refrain from putting all eggs in on basket, if that basket is compromised due to external factor it can put whole company in jeopardy. So, to mitigate the risk it makes sense to diversify business in different countries.

The China+1 strategy enhances supply chain resilience by increasing redundancy and flexibility. When a company has production facilities in multiple countries, it can quickly pivot production to an alternative location in case of disruptions. This agility in response to unexpected events helps maintain a consistent supply of goods to customers, preventing stockouts and revenue losses.

One of the early adopters of this strategy was Intel who in 2010 made an investment of 1 billion dollar into Vietnam. In the similar time frame many Japanese firms in China also diversified their business in other Asian countries

Is exiting China feasible?

The answer to this question is not straightforward. Companies have setup their global value chain with China being at the center. Directly or indirectly there will be dependence on China.

Companies adopting China +1 strategy are mostly opening their assembly line in different countries for finished product however for crucial parts they are dependent on China.

Who can be Plus One?

While the benefits of China+1 strategies are clear, implementing them successfully requires careful consideration of various factors. Companies must analyze various factors such as infrastructure, regulatory environment, workforce, political stability, and logistical capabilities in potential new locations. Moreover, maintaining operations in multiple countries requires effective coordination, supply chain management, and investment in building local supplier relationships.

Many south and southeast Asian countries such as Vietnam, Indonesia, Myanmar, India are among top in this list but many of these lags in infrastructure and supply chain similarly in country risk each country comes with different challenges.

The free trade agreements could also play an important role for many companies for instance the asean countries have FTAs with big markets such as Japan, South Korea, Australia and even China this could bring asean countries to forefront in the plus one strategy as it would open these big markets for the companies, also the companies operating in asean countries could trade with these big markets with minimal tariffs and yes this would be quite beneficial for them.

We cannot deny the fact that leaving China will be leaving a huge market but still don’t forget that the plus ones will also bring profit to the table and as far as global value chains are concerned we have to understand global value chains by their nature are continuously adapting and adjusting to the changing conditions and responding by restructuring and relocating activities so diversification or the China plus one strategy might be a good option for corporation.

References:

https://www.gep.com/blog/strategy/sensible-china-1-supply-chain-model

https://www.5paisa.com/stock-market-guide/generic/china-plus-one-strategy#:~:text=The%20concept%20of%20%22China%20Plus,taking%20advantage%20of%20its%20benefits.

GREEN MANUFACTURING IN INDUSTRIES

The entire world and all the countries (mostly) have now understood (majorly) that we are in dire need of protecting the planet we live on and that the need for the hour is sustainable and green practices otherwise we will soon have to kiss our home as we know it goodbye. The resources that we make use of are not ours in the first place, these have been borrowed from the future generations as we say because these limited resources belong to them as well.

All the activities need to collectively become more “green” but especially manufacturing because this is the sector which relies heavily on huge and complex machines using up a lot of natural resources. Understanding this, there has been a slow but gradual shift towards promotion of green manufacturing, i.e., the renewing the current production processes and establishing operations which are environmentally-friendly – basically using processes that do not hurt our environment. Both the governments and pressure groups have been advocating this but how does one convince the manufacturing giants which focus a little more on their profits? The answer is the long-term benefits of the green manufacturing. There is initial expenditure on R&D but then there is also cost savings in future in terms of cheaper raw materials (renewable resources) and increased efficiency and thus less use and less wastage. There is also less pollution and hence less penalties from government, in fact there has even been positive push from several governments in ways of subsidies and promotion. There is also the factor of improving the brand image among the customers who display more loyalty and are even ready to pay a premium of sorts for sustainably manufactured products. A 2019 survey found that 37% of people cited environmental impact as a factor that affects their purchase decision, and hence making your manufacturing greener can have a huge impact on the sales. The companies pursuing such methods are rewarded in other ways too – the employees also feel that their contribution to the go green initiative is worthwhile, the industry looks at you as an example and what not. You have the chance to stand out in case you pioneer green manufacturing in your industry. The aspect of costs might haunt you and this is quite understandable but the limitlessness of future prospects should give you the motivation to pursue the drive. Apart from this, if we account for the guilt factor, aren’t all manufacturers ultimately coming from the society and making use of several common goods? Does it hence not make one of their responsibilities to also give back to the same society and rather in a better form? It is also because of this change in the mindset that we see people moving towards ESG style where various other aspects and not just profitability and economic growth. Global bodies are working towards the same as well and this can be reflected in their goals and agendas – 17 Sustainable Development Goals set by the United Nations and this being taken up by other relatively smaller bodies as well like the G20, ASEAN, BRICS and others because all the nations do wish to contribute to this. They are aiming for a healthier planet where one can make use full use of the resources being provided and enjoy the small stay a human being has on this planet.

There have been some negative reinforcements to promote the change as well. Some governments have been taxing the firms not adhering to the same and there is also demotion in government contracts for production if any.

A greener manufacturing set up is beneficial for all stakeholders and especially for the society at large. Once we imbibe this in our values, there is no stopping in achieving a better and more healthy future.   

References:

https://www.deskera.com/blog/green-manufacturing/#:~:text=Key%20Takeaways%3A-,Green%20manufacturing%20is%20the%20renewal%20of%20production%20processes%20and%20the,their%20impact%20on%20the%20environment.

https://www.brahmin-solutions.com/blog/green-manufacturing#:~:text=Green%20manufacturing%20means%20making%20products,will%20run%20out%2C%20like%20oil.

HEALTHCARE SUPPLY CHAIN MANAGEMENT

Not very long ago, COVID-19 revealed significant flaws in the global and Indian healthcare supply networks. Additionally, in recent years, demand to boost profitability and address rising supply chain expenses has increased for healthcare businesses. So, let’s move forward with the 5-W’s in order to approach this issue comprehensively!

What is healthcare supply chain management?

Obtaining resources, controlling supplies, and providing physicians and patients with goods and services are all parts of the healthcare supply chain management process. Physical items and data about medical goods and services typically pass through a variety of different stakeholders, including producers, insurers, hospitals, providers, group purchasing groups, and various regulatory bodies, to be completed.

Managing the supply chain is frequently a highly difficult and disjointed process in the healthcare industry. The COVID-19 pandemic and other medical supply shortages have worsened the problems, making it harder for physicians to get the supplies they require for providing high-quality care at a reasonable cost.

Here’s a look at what goes into managing the supply chain in the healthcare industry and how healthcare firms can overcome significant obstacles to further cut costs.

Why is it a major concern?

Due to the individual interests of each stakeholder, healthcare supply chain management is distinct. The focus at various points in the supply chain flow may be on a different objective. Despite the fact that hospital officials like to buy the most reasonably priced, high-quality products, providers can desire to utilize a particular product since they were educated to use it. Medical device manufacturers might also be motivated by financial gain when developing their goods, which would result in a disjointed and ineffective SCM.

The COVID-19 pandemic has also had a long-lasting impact on the supply chain, even though this is typically true in healthcare supply chain management. Healthcare organizations are not only dealing with actual supply constraints, but also rising prices for basic necessities and limited equipment availability.

Today, on average, a quarter of hospital costs go toward medical supplies. Due to broad inflation as well as the rising prices of medical equipment and other things, supply chain costs are anticipated to rise.

Challenges

With a population of 1.4258 billion, India has overtaken China as the world’s most populated nation. The health sector has a little fiscal allocation (2.1% of GDP in FY 2023–2024). According to the WHO, India has little over 0.5 beds per 1000 people, depicting its inability to manage inventory or track consumption. Moreover, public health supply chain professionals are under-qualified (e.g., community health centers are missing 80% of the necessary health specialists). On an average, 20% of hospital expenses go towards medical supplies. The inability to foresee and quantify data in real-time (e.g., oxygen cylinders and PPE kits during COVID-19), is still a huge issue. Other problems like: procurement delays and lengthy lead times, multilevel supply chain management increases complexity, absence of Standard Operating Procedures (SOP) and supply chain management  standards, add to the misery.

Way Forward

Strengthening Information Management Systems: Logistics Management Information System can give real-time vaccination, medicine, and diagnostic stock levels in national supply pipelines to health management.

Streamline procurement processes: To speed up public sector procurements, procedures and approval lead times should be simplified. The coordination of public sector financing disbursements with Ministry of Health procurement cycles will prevent funding delays for health commodities procurements.

Implementing strategic purchasing: Governments and large national insurance agents that reimburse medicine costs should actively negotiate volume prices to get the lowest unit costs.

Training supply chain professionals: Health systems should invest in local supply chain staff training and professionalization due to their crucial role in supply chain management.

Robust SOPs: Designing clearly defined supply chain SOPs per programming requirements.

Efficient prioritaztion: Prioritizing products to prevent shortages, bidding wars, and other healthcare supply chain issues.

Better planning: More inventory and demand planning data sharing between providers and suppliers would protect the healthcare supply chain.

ERP solutions: Interoperable ERP solutions that connect providers and suppliers to a national database to improve healthcare supply chain responsiveness.

Effective Value Chain Analysis: It will help in cost-savings, enhanced outcomes, and proper usage and pricing.

Cutting-edge technology: Computerized provider order entry systems and Radio Frequency Identification (RFI) technology that can gather amounts of data from a product’s barcode to promote price transparency.

Hospitals, providers, pharmaceutical companies, and other healthcare stakeholders can improve supply chain management to reduce inefficiencies, costs, and build agility and resilience in the healthcare value chain. Upstream and downstream partners can better respond to natural catastrophes and global pandemics and work collaboratively to enhance patient outcomes and save lives with a more flexible and resilient healthcare supply chain!

References:

https://revcycleintelligence.com/news/exploring-the-role-of-supply-chain-management-in- healthcare

https://www.researchgate.net/publication/289356810_Supply_chain_integration_in_healthcare_industry_in_India_Challenges_and_opportunities

http://www.ijsom.com/article_2749.html

https://www.medicalbuyer.co.in/india-has-just-over-0-5-hospital-beds-per-1000-people/

https://www.business-standard.com/article/economy-policy/community-health-centres-lack- 80-of-health-specialists-needed-rbi-data-122112100396_1.html

MEESHO – THE NEW AMAZON OR JUST ANOTHER DROP IN THE OCEAN OF CONUSMERISM?

Who can ever get fed up with shopping? Especially in this era of changing trends, where one day you see yourself in a pink gingham dress, bringing forth your inner Barbie, while the next day you have the urge to rock a chikan kurti with a pair of embellished jhumkis! That’s where Meesho comes dressed as your white knight to help you build your infinite wardrobe. One might say this is nothing but a desperate attempt to rebrand fast fashion. Nonetheless, at least Meesho is not a conglomerate of sweatshops with overworked and underpaid children *pointing fingers at you, Shein*. So how exactly does Meesho cater to the ever-growing fashion needs of the masses as well as the classes when it claims not to own a single warehouse? Let’s find out!

In the bustling realm of e-commerce giants, where industry titans battle for supremacy, Meesho emerges as a refreshing Indian breeze. Meesho, founded in 2015 by Vidit Aatrey, an IIT alumnus, and his friend Sanjeev Barnwal, has become the third-largest e-commerce company in India, and it continues to grow by leaps and bounds. Its unique model leverages social media networks, primarily WhatsApp and Facebook, to enable sellers to reach a wider audience and potential buyers to discover a diverse range of products. Meesho’s story is undeniably compelling – a classic David versus Goliath narrative where innovation and grassroots empowerment have taken centre stage. This emphasis on inclusivity and grassroots empowerment not only fosters economic growth but also resonates deeply with the ‘Make in India’ sentiment. The platform boasts affordable prices and zero seller commissions as some of its unique value propositions. However, what’s most intriguing is how well it manages its supply chain. Instead of incurring huge expenses in the name of logistics, Meesho decided to benefit from the expertise of the already established logistics players in India, Delhivery, Xpressbees and Shadowfax, to name a few. This smart tactic has helped Meesho reduce its carbon emissions and has also resulted in a significant drop in its average cost per shipment. 

Meesho makes more than 2.5 million shipments a day, with its orders ranging from vegetable cutters to gorgeous dresses. The platform works on the principle of ‘efficiency over urgency’. In simpler terms, Meesho does not promise same-day or next-day delivery of orders, unlike its counterparts. They focus on vehicle utilisation and refrain from creating artificial urgencies that drive up supply chain costs. 

Another way Meesho is able to keep its costs to a minimum is by not spending on warehouse infrastructure. The platform deals mainly with small sellers with small product volumes; hence, the sellers are able to manage inventory at their end. The logistics partners of Meesho pick up the orders directly from the sellers and deliver them to the end customers. 

In addition to this, Meesho is also working on developing an enterprise software solution for logistics to support small and medium-sized enterprises. This would also allow Meesho to experiment with less dependence on third-party logistics providers. The software solution is being reported to “address a lot of inefficiencies that exist in Tier 2 and Tier 3 supply chain in terms of e-commerce deliveries.”  

In the grand tapestry of e-commerce, Meesho represents a unique thread woven with entrepreneurial zeal and digital innovation. Meesho definitely has miles to go before it dethrones Amazon and Flipkart in the kingdom of e-commerce. Still, it is praiseworthy and a feeling of immense pride to witness an Indian company compete with industry giants while showcasing remarkable results. We are definitely Meesho lovers – on our way to order more dresses for the movie premieres! 

References:

https://economictimes.indiatimes.com/tech/startups/meesho-builds-logistics-saas-platform-to-widen-its-network/articleshow/93862444.cms?from=mdr

https://www.meesho.io/blog/how-we-reimagined-the-supply-chain-and-saved-our-sellers-big-bucks

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.