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“9-10% of cos in India have a world-class SCM system”
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Monday, 20 February, 2012, 08 : 00 AM [IST]
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 US-based Infor Global Solutions is a leading provider of enterprise software and services, helping 70,000 customers in 125 countries improve operations and drive growth. Venkat Rajaji, global PLM manager, Infor Global Solutions, in an email interaction with Anurag More, talks about emerging trends in enterprise offerings in general and supply chain management in particular
Brief us about your company and your product offerings for supply chain management (SCM) with respect to the food and beverage industry.
Infor is the third-biggest supplier of enterprise software in the world. Many of the world's leading food and beverage companies put their trust in Infor supply chain applications to improve their business - AB World Foods (United Kingdom), Basic American Foods, Brewster Dairy, Cropp/Organic Valley Family of Farms, Del Monte Foods, Heineken International, Heinz North America, Jack in the Box, Lakeland Dairies Cooperative Agricultural & Dairy Society, Molson (Molson Coors Brewing Company), and SAB Miller. Clients in India include More – Aditya Birla Retail – Food, Grocery, Beverages, CPG retailer. Future Supply Chain – Powers food retail supply chain for their Food Bazar and Big Bazar. PepsiCo Holding India for transportation.
For more than three decades, Infor has helped food and beverage producers manage their operations and improve competitiveness. Because the solution comes with that extensive industry experience built-in, customers get to deploy faster and solve more of their unique industry challenges.
Within SCM, the Infor portfolio covers a wide range of specific disciplines, from supply chain network design; demand planning and forecasting; sales and operations planning; warehouse management and transport planning.
Ideally what should be the yearly investment in process improvements, specific to SCM, for a company?
It is incredibly difficult to specify a given figure – even as a percentage - because of the idiosyncrasies of a given business. However, there are some instructive examples – one of our food and beverage clients has over 90% of their costs within the supply chain, so incremental improvements in service mean a big (Return on Investment) RoI. As a result, it makes sense for them to invest heavily in process improvements throughout the supply chain.
At what level should there be an interaction between the manufacturers and suppliers? What should be the focus of such interactions?
The depth of “connection” between manufacturers and suppliers is actually determined by time and speed. It's not enough to have an efficient supply chain—you need a fast supply chain. Complex supply chains make for complex decision-making, which takes time. And time is the enemy. You need to respond quickly to changes anywhere along your supply chain, be responsive to customer demand shifts and alert to supply side disruption, while keeping your manufacturing and warehousing operations as productive as possible. The focus of any interaction should always be “does this make the business faster, more agile and simply better than it was before?”
India has had a harsh lesson in this already – the impact of the onion crisis of 2010 led to an acute awareness of food inflation and many commentators quickly realised that high levels of waste within the supply chain was a contributing factor as well as damage to the crop at source.
What are the emerging trends in product lifecycle management (PLM)?
Within the process manufacturing-based food industry, PLM is now focussed on innovation (for new product and process development), compliance and regulation, and optimisation. All three of these need to be addressed in harmony for a food manufacturer to grow. This is a substantial undertaking and one that many businesses are now finding they need to dedicate significant resource to accomplish.
How important is Information Technology to SCM? What are the new technologies that are coming up in India for supply chain? Which companies are adapting to these technologies?
Modern, complex supply chains demand IT: especially when it comes to the high volume of production or goods in transit that are so typically found in the food and beverage industry. Traceability – a cornerstone of so much compliance – is fundamentally reliant on technology as it would prove near impossible to track millions of Stock Keeping Unit (SKUs) or products without it. Given the explosive growth of the Indian domestic market and increase in consumer spending, especially around Fast Moving Consumer Goods (FMCG) such as food, traceability technologies may well be high up on the agenda.
To manage the complexity of a supply chain in today's business environment, you need a supply chain management software application that utilises specialised functionality tailored not only for the current climate, but for a specific business. Whether your business needs a warehouse management software solution, order management system, manufacturing software solution, or a combination of many solutions, the demand is for a comprehensive supply chain management suite that improves the company's performance.
How many companies in India are able to boast of having a world-class supply chain management system?
9-10% of companies in India do boast of a world-class supply chain management system
How big is the supply chain market in India? What is the share of the food and beverage sector?
The macro-economic context here is truly staggering. McKinsey forecasts that by 2025 India will be the 5th largest consumer economy in the world (in 2007 it was in 12th place). They also see the middle- class growing from about 50 million people to 583 million, and with this not only a massive increase in spending, but a shift in the pattern of consumption from largely subsistence purchases to discretionary spending. That is a huge, dynamic market for food and beverage purchasing and the associated supply chain.
As an indication of the supply chain aspects, many commentators point to a huge requirement for skilled SCM professionals – one figure that often crops up is 100,000 warehouse managers. Beyond just logistics there will be a scarcely imaginable increase in the amount of planning and forecasting, procurement, supplier relationship management specialists needed.
With the new food law coming up, do you think a new trend in supply chain is likely?
Regulation always drives change and if the developed markets are anything to go by then yes, profound changes will result from laws such as the Food Safety and Standards Act. Likewise the Food Security Bill - the proposed law to provide cheap food to more than half of India's people - will demand one of the leanest, most comprehensive supply chains in the world.
What are the constraints for efficient supply chain management?
If by constraints, we are looking at the barriers to an efficient supply chain, then with regards to India there are some pressing issues: infrastructure is top of the list - freight movement in India is forecast to triple in the next decade. There is also a keen skills shortage, the logistics talent pool alone will have to increase from 10 million now to 20 million in 2020, according to McKinsey.
In order to compete, what steps should be taken by companies for improving their supply chain?
Firstly it is a case of assessing
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