Green Supply Chain in India

The idea of incorporating environmentally sound practices into the established supply chain is known as a sustainable or green supply chain. The need to incorporate changes towards sustainability is imminent and organizations around the globe are already transitioning towards sustainability using the 3CIs i.e. Continuous Innovation, Continuous Improvement and Continuous Interactions. ITC, PepsiCo, Coca-Cola, ONGC, TCS, State Bank of India and L&T are some organizations that have ventured into this space in India.

The transition towards sustainability  can involve procedures including choosing a supplier and buying supplies, designing a product, making and assembling it, distributing it, and managing its end-of-life. The green supply chain involves value addition and/or value creation through the operations of the entire chain, as opposed to mitigating the negative effects of business and supply chain activities. Unquestionably, the primary objective of a green supply chain is to reduce air, water, and waste pollution. On the other hand, green operations also improve a company’s performance by reducing waste production, reusing and recycling products, cutting manufacturing costs, increasing asset efficiency, cultivating a positive reputation, and increasing customer satisfaction.

As environmental consciousness grows globally, businesses are coming under intense pressure from various stakeholders, including the government and consumers, to reduce their negative environmental impact. In order to gain a competitive edge, the corporate sector must take into account integrating sustainable practices into their business processes in the manufacturing and service sectors. Since the last few decades, the effects of climate change, waste, and air pollution issues have grown, drawing more attention to the need for specialists to think more sustainably and create the best available solutions.

India has already developed into one of the largest economies in the world and is a prestigious member of the trillion-dollar club. In this scenario, the environment and ecology have been severely impacted by the rise in energy demand and consumption, the rise in greenhouse gas emissions, and the scarcity of vital natural resources including land, water, and oil. These problems require immediate attention and priority treatment. Consumers in today’s technologically advanced society are more aware of and engaged with ecological issues, and as a result, they are adapting their behavior to fit a socially responsible lifestyle.

Going green can help businesses make long-term profits while simultaneously saving the environment and reducing their influence on it.

Additionally, the media generates beneficial attention for the businesses that carry out green efforts. Positive media attention for going green can improve the company’s reputation greatly. Therefore, businesses who actively participate in going green will become more visible and credible. Putting in place a green initiative program also guarantees that businesses will abide by any future environmental legislation or regulations.

Thus, green supply chain management (GSCM) is becoming more important as a result of the depletion of raw materials, degradation of the environment, overpopulation of wastelands, and rising pollution levels. In today’s cutthroat business market, it’s important to be environmentally friendly in addition to having stronger commercial acumen and profits.

Green SCM can help organisations in the following ways:

Savings: The green movement offers chances for long-term savings. Companies must demonstrate their long-term commitment by sticking with the GSCM investment.

Lower risk: Companies can minimize risks that frequently result in expenses or losses by purchasing greener goods or services. Environmentally friendly measures can be used and followed to reduce risks such as those associated with illegal extraction techniques.

Increase in revenue: Leveraging tools like green supply-chain management, businesses are competing to increase the efficiency of their business processes and decrease the use of energy and materials.

Indirect yield: – Being environmentally friendly allows an organization to significantly cut waste, safeguard natural resources, and improve its brand image.

Organizations can adopt various strategies to enhance their supply chain towards sustainability further. It involves strategies and policies like biomimicry, Environment friendly product and package, Adoption of clean technologies, Green Stakeholders, Waste Management, Reverse logistics and e-waste management.

The relevance of the supply chain’s sustainability will only increase over time, according to the industry. It takes continuous time and effort to implement and improve the green capabilities. The organizations’ current methods of operation are harming the environment, not just in India but all around the world. Soon, the harm done to our planet will be irreparable. The businesses are working hard to create environmentally friendly production facilities. Green distribution and warehouse strategies have helped businesses become leaner and more effective. As the idea is still in its infancy in India, there is not a lot of awareness of green SCM. raise awareness and distribute knowledge about GSCM practices and highlight the advantages for businesses in terms of cost and efficiency, a framework must be put in place. The management of the green supply chain should be viewed as a vital component of the company by the leaders as it can contribute to cost competitiveness and value creation over a longer period of time.

References:

http://www.ciiblog.in/green-supply-chain-management/

Knowledge Economy and Business Strategy

The briskly developing world economy is transforming into one that relies more on intellectual capital and skills and less on the manufacturing process. The rapid spread of knowledge and the growing reliance on computerisation, big data analytics, and automation drive this colossal change in the business landscape as the need for updating management strategies grows.

Peter Drucker, a management consultant, developed the concept of a “knowledge economy” in the 1960s. Drucker coined the term to characterise the transition from economies based on manual labour and primary production to those that are knowledge-based and require higher levels of education and training. The knowledge-economy is a structure of production and consumption of knowledge-intensive operations, such as data gathering, analysis, and synthesis.

The rapid pace of this transformation can be attributed to the widespread adoption of ICT, Big Data, and automated processes across industrialised economies. Greater numbers of highly educated workers requiring specialised knowledge or expertise are a hallmark of knowledge-based economies.

Human expertise is the business product or productive asset in a knowledge-based economy which can be traded for profit and these intangible knowledge-based assets are called intellectual capital. The innovation, research, and rapid technological advancement that underpin a knowledge economy allow it to function largely independently. There is a high level of computer literacy among workers, and efforts are being made to advance AI and algorithmic developments that will allow for more precise financial and business forecasting.

Michael Porter, a professor at Harvard Business School, argues that for a business to gain competitive advantage in today’s knowledge-based economy, businesses must be responsive, adaptable, and innovative. Furthermore, it needs to invest a considerable percentage of its resources toward research and development.

Early on, many manufacturers noticed issues in their supply chains, but they needed more understanding and insights to implement effective solutions. While there are other contributing factors, it became clear that a lack of ownership was often at the heart of businesses’ inability to achieve operational goals. No one at the company was in charge of the logistics of supply. Now, if you work for a company that relies heavily on its employees’ knowledge, ask yourself: Who within your company is in charge of creating company-wide knowledge? This is where the Knowledge Supply Chain comes into the picture.

Knowledge Supply Chain

Typically, the physical “tangible aspects such as the raw materials, trucks, and storage facilities associated with supply chains are the first things that come to mind when the term is mentioned. However, supply chains encompass more than just the transformation of raw materials and the distribution of finished goods; they also include the “knowledge supply chain.”

“Knowledge workers” are those whose jobs require them to “plan, acquire, search, analyse, organise, store, programme, distribute, market, or otherwise contribute to the conversion and trade of information.” Those in the knowledge economy are those who put their own and others’ expertise to good use.

The information and knowledge management roles are filled by individuals who, in most cases, need more authority to coordinate the many, often competing, activities that take place across the many, often autonomous, groups that make up an organisation. If the manufacturing industry is any indication, the worst case scenario is when you have multiple independent groups reporting directly to the CEO, who is not the right person to run your knowledge supply chain. One more thing to take away is the importance of working together on a project. Companies with efficient supply chains often employ cross-departmental teams.

The Knowledge Economy in Force – A few live cases

The influence of the knowledge economy is visible in virtually every sector of the economy that you think of. Automation and “just-in-time” inventory management systems and the crusade toward developing driverless cars are all examples of how the knowledge economy is impelling traditional manufacturing sectors like the automotive industry to transform.

The healthcare sector is an important contributor as well as a major primary beneficiary of the knowledge economy. The growth of telemedicine services, widespread use of 3D and robotic surgical aids, and accelerated research and development of new medicines result from the information economy.

An excellent illustration of the knowledge economy is the ICT (information and communications technology) sector, which is concerned with the convergence of communications services and IT, as well as the development of an information infrastructure. Connecting data storage facilities like computer servers with the means of transmission, like cell phones, is a primary goal of the ICT industry to maximise the usefulness of the information.

Since the turn of the century, companies have raised their IT spending by more than 50%, a figure that reflects the technology’s centrality to the success of modern enterprises. Companies working on developing cutting-edge technologies like AI and robotics are currently experiencing the fastest expansion rates in the IT/ICT sector.

Challenges of the Transformation into a Knowledge Economy

The process of shifting from an industrial to a knowledge-based economy gives rise to numerous challenges. Many workers lack the knowledge and abilities to do their jobs effectively in today’s knowledge-based economy.

Companies can help employees adapt to the transformation by providing them with more opportunities for on-the-job training and offering financial assistance to pursue additional education and training outside of work.

What does it mean for Businesses?

• If you feel that, in your organisation, information management (and implicitly knowledge management) is treated as a cost centre rather than a profit centre then the concept of KSC may help you position information management as a source of strategic advantage rather than a necessary nuisance.
• The innovation of R&D-heavy companies is increasingly dependent on their ability to cultivate a wide range of external relationships to foster innovation. Organising complete business processes throughout a value chain of multiple companies is a crucial benefit of thinking about these networks in terms of a supply chain.
• The focus can easily be diverted from the careful thinking and design of a solution to the business problem and technology when managers, whether in IT or any other department, place too much emphasis on the technology itself (such as this deep learning technology or that blockchain technology, or whatever the hype du jour happens to be).
• While data and the quality of data are crucial to success in the knowledge era, other factors such as cultural shifts, business process changes, and operational adjustments must also be carefully considered and accounted for in the overall ROI evaluation.

References

1. Knowledge Economy. (n.d.). Retrieved December 10, 2022, from https://corporatefinanceinstitute.com/resources/economics/knowledge-economy/
2. The Concept and Importance of Knowledge Supply Chains. (2019, August 21). Retrieved December 10, 2022, from https://www.copyright.com/blog/the-concept-and-importance-of-knowledge-supply-chains/
3. Cuofano, G. (2022, January 2). What Is The Knowledge Economy? The Knowledge Economy In A Nutshell – FourWeekMBA. Retrieved December 11, 2022, from https://fourweekmba.com/knowledge-economy/

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.