Mukund Vasudevan, Senior Vice President - Strategic Partnerships, Moglix

Mukund Vasudevan is the Senior Vice President, Strategic Partnerships at Moglix. He leads large transformation initiatives for Moglix customers and vendors globally. A recognized leader with a proven track record in driving strategy, operations, and organizational effectiveness, Mukund brings over 28 years of global leadership experience in the manufacturing and chemical sectors to the company. Prior to joining Moglix he has held leadership positions at Ecolab, Pentair, Schlumberger, and McKinsey and led enterprise customer collaborations in the markets of USA, the Middle East, Brazil, and India. Mukund is an alumnus of the Indian Institute of Technology, Bombay and the Booth School of Business, University of Chicago.

 

India is showing a U-shaped economic rebound, from a 7% decline in FY 2020-21 to a 20% growth in GDP in the first quarter of FY 2021-22. Though a big part is explained by the low base effect from FY 2019-2021, the GDP growth also shows how large economies can leverage technology to offset negative global events like the pandemic-led supply chain disruptions. The digital transformation of supply chains, from procurement to distribution, has been integral to this recovery.

 Traditional procurement is often offline and inefficient

Prior to the COVID19 pandemic, manufacturing enterprises in India often relied on a highly fragmented supplier base. With few exceptions, replacing hundreds of vendors with a few strategic ones was not common. Procurement teams often made multiple small value purchases. Often, and perhaps by design each supplier got a small piece of the procurement pie, depriving them of opportunities to scale up. No supplier had the incentive to think beyond the purchase order at hand and invest in best practices, process improvements, systems and customer-dedicated investments. 

Communication with suppliers was done largely through paper records, emails, and spreadsheets.  While many firms used ERP systems, few suppliers were integrated seamlessly with those ERPs.  

The pandemic severely tested this inefficient system. Overnight, suppliers were shut either due to regulation or due to shortage of manpower. Communication channels broke down. Working capital was a challenge. Order tracking and visibility was non-existent. Finding alternate suppliers was a slow and arduous process. In short, the supposedly solid supplier ecosystem, wasn’t quite what it was made out to be. 

Typical sales and distribution channels are inadequate

The story is similar in the sales and distribution network. Even before pandemic, manufacturing enterprises had distribution and retail networks spread thin across geographic zones. There was often a long tail of distributors who mostly used manual processes to set product specifications, book prices, place purchase orders, and check inventory levels. Distributors shied away from holding inventories of finished goods beyond what their confidence and intuition permitted. Logistics operations were decentralized, and order dispatches were difficult to trace. Manufacturers could only get a secondhand perspective of their customers’ requirements. Many brands often lacked data on what inventory to hold where. Fluctuating overstocking and stock-outs were common. The pandemic put the spotlight on this inherently inefficient system.  Customer experience suffered and it became apparent that the old supply chain processes were falling well short of the needs of the new economic reality.

Connectivity, Convenience, and Analytics: Digital Supply Chain Transformation in Action

Even before the pandemic, a few manufacturing enterprises had already embarked upon projects to make their supply chains agile and digitally enabled. Those companies which had mature digital supply chain programs were able to bounce back more quickly. Post pandemic, several others have jumped onto the bandwagon as they prepare for the future. Interestingly, what each of them is realizing is not only do digital supply chains make their operations more resilient, but it there is also an economic upside to this investment.  

For instance, a global metal and mining major created a unique configurable, and catalog-based buying platform for its customers. The solution was fully integrated with its ERP system for a hassle-free deal booking, and track and trace of order dispatches. Using this platform, it not only grew MSME sales by 40%, but it also improved its sales-force efficiency by 50%. In addition, it was also able increase adoption of its channel financing solutions through this platform. 

Similarly, a leading infrastructure company has adopted a digital procurement solution to standardize purchase of over 5000 indirect items (Maintenance Repair and Operations SKUs) across 250+ project sites. It wanted to create a catalog-based buying approach for all its project sites and consolidate the number of vendors it deals with to a more manageable number. After implementing this solution, it has been able to reduce its purchase-requisition to purchase-order cycle time (PR to PO) by 80%, improve on-time delivery through the order-track feature, and achieve 20% cost savings on these categories of items.   

Once the overall objectives of a digital supply chain transformation have been established, execution of the projects has three main components: 

  • Connectivity – With Both Suppliers as well as Distribution Channel Partners

The first step in creating a digital supply chain is to plug the communication gaps with suppliers and distribution channel partners through deeper technology integration. Today’s ERPs are cloud-based platforms that link upstream procurement, downstream channel sales, and manufacturing. However, in order to truly work seamlessly and create the process efficiencies desired, integration with upstream suppliers and channel partners is critical. This cannot happen with just a few “strategic” suppliers or channel partners. It must happen with every single supplier and distributor, or the weakest link could bring down your supply chain as we all witnessed during the pandemic. Using aggregators or master distributors is one step in that direction. 

 Convenience – A Touchless Buying and Selling Experience

The second step in these supply chain transformation projects is to develop a easy to use platform for both buying and selling industrial products. Bringing a B2C e-commerce like experience (think Amazon or Flipkart) for your typical industrial products buyer or seller is no more a nice-to-have. A single-click buying experience for your procurement team with clear visibility into purchase order values and volumes, product descriptions, expected time of arrival, lead times, and turnaround times will make the procurement team highly efficient.  

 Analytics to Optimize the Entire Supply Chain 

The third step in these transformation projects is to leverage the power of data analytics to optimize the supply chain performance. On the procurement side, you can move to VMI-based or pay-to-use kind of systems through analytics. This can drastically bring down your inventory costs. On the sales-side, analytics can be used for better forecasting on a product/SKU, temporal, and geographic dimension. Armed with these insights, companies can drastically improve sales (less stock-outs), improve delivery times, and reduce inventory in the entire supply chain. Of course, the physical infrastructure (warehousing and logistics partners) to match the real-time communication and data insights is also required to fulfill the demand. 

The Lessons That Will Remain in the Post COVID19 World

 The digital supply chain transformation stories of these successful manufacturing companies highlight important lessons for India’s initiative to make in India for the world. Bringing digital to the supply chain means being proactive, making change happen fast, and leading the disruption instead of being at the receiving end of it. 

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