Reinventing SCM Practices
ECONOMY & POLICY

Reinventing SCM Practices

The COVID-19 pandemic has disrupted the world on an unprecedented scale. As the virus spread across continents, the pandemic has had a devastating impact on people, countries, economies and businesses. According to a report by Bain & Company, the US-China trade war (since 2018) has...

The COVID-19 pandemic has disrupted the world on an unprecedented scale. As the virus spread across continents, the pandemic has had a devastating impact on people, countries, economies and businesses. According to a report by Bain & Company, the US-China trade war (since 2018) has led to a 15 per cent drop in share price and $ 1 billion erosion in the market cap of a global computer maker. Similarly, Japan's Kumamoto earthquake in April 2016 resulted in a 16 per cent drop in revenue and a 66 per cent drop in net income for a global electronics manufacturer. The consequences of the modern supply chain have been significant and exposed its fragility and structural weaknesses. Supply chain disruptions are costly and might require a considerable amount of time to restore to normalcy. Supply chain disruptions in India Indian businesses have also been reeling under the impact of supply chain disruptions. Even as the lockdown is being gradually lifted and industries kickstart their operations, the irregular supply of material coupled with adequate cash flow is causing major bottlenecks across sectors. The manufacturing sector is also grappling with the unavailability of labour. Supply chains today have become highly sophisticated and vital to the competitiveness of many companies as they impactinput costs. And their interlinked, global nature makes them increasingly vulnerable to a range of risks, with more potential points of failure and less margin of error for absorbing delays and disruptions. Years of focus on supply chain optimisation to minimise costs, reduce inventories, and drive up asset utilisation have removed vital buffers and reduced flexibility to absorb delays and disruptions. The COVID-19 pandemic has demonstrated how companies are vulnerable to global shocks through their supply chain relationships. Companies that are overly reliant on a single geography or single supplier for key products have borne the brunt of the COVID-19 pandemic. The global crisis has also exposed hitherto undetected factors such as the lack of visibility across extended supply networks to anticipate risks, lack of systems to understand inventory status, absence of tools to project stock-outs of direct materials and optimise production or to project stock-outs of finished goods to optimise customer allocation, and unavailability of flexible logistics networks to ensure the flow of goods profitably. SCM: A profit centre As always, there have been some exceptions. Organisations that invested in building smart supply chains and management systems have successfully bucked the trend. For such organisations, SCM is a profit centre rather than a cost centre. These organisations have developed and implemented supply chain risk management and business continuity strategies over the years. Consequently, they have shown resilience, have been better prepared to mitigate risks, and suffered minimum impact from the pandemic. Organisations need to invest in five capabilities—network agility, digital collaboration, real-time network visibility, rapid generation of insights, and empowered teams—to create resilient supply chains. Organisations must leverage the disruption to accelerate their strategies tofuture-proof supply chains built on the platform of technologies such as artificial intelligence (AI), machine learning and automation that enables operational efficiency and effective decision making. Technologies such as Internet of Things (IoT), cloud computing, 5G, 3D printing and robotics will increasingly play a critical role in enabling the digital supply network of the future. The frequency and intensity of shocks to the global economy are increasing. The COVID-19 pandemic has exposed the vulnerability of far-flung supply chains. Forward-thinking organisations must leverage the disruption created in the industry to reinvent their SCM practices and build a future-ready organisation. Companies with a resilient supply chain will be best positioned to weather the next disruptor. About the Author: Rajendra Khandalkar is Group Head SCM at Sterling and Wilson.

Next Story
Building Material

Ambuja Cements Drags JSW Cement to Court Over ‘Kawach’ Brand

Ambuja Cements, part of the Adani Group, has filed a trademark infringement case against JSW Cement in the Delhi High Court, alleging that its rival copied the ‘Kawach’ brand with its new product ‘Jal Kavach’.Justice Manmeet Pritam Singh Arora issued summons to JSW Cement and its subsidiary, JSW IP Holdings Pvt Ltd, while referring the matter to mediation. Hearings are scheduled to resume on October 15 if no settlement is reached.Ambuja, which registered the ‘Kawach’ trademark in 2019, argues that the term ‘Kavach’—meaning shield—is the distinctive feature of its branding. ..

Next Story
Technology

Bentley Systems Named Innovation Partner of the Year 2025 by Afcons

Bentley Systems, the infrastructure engineering software company, has been recognised by Afcons Infrastructure Limited as its Innovation Partner of the Year 2025 at the Innovation Partners 2025 Felicitation Ceremony in Mumbai. The award acknowledges Bentley’s contribution to Afcons’ engineering digitalisation journey through an enterprise agreement providing access to over 250 Bentley engineering software tools. This adoption has enabled Afcons to accelerate project delivery, standardise digital workflows, and strengthen innovation across its infrastructure portfolio. Among key i..

Next Story
Infrastructure Urban

SBI Sells 13.18% Stake in Yes Bank to Japan’s SMBC

State Bank of India (SBI) has completed the sale of a 13.18 per cent stake in Yes Bank to Japan’s Sumitomo Mitsui Banking Corporation (SMBC) for over Rs 8,889 crore. The divestment is part of a Rs 13,482 crore deal finalised in May with SMBC and seven private banks.Following the transaction, SBI’s shareholding in Yes Bank stands at 10.8 per cent. The deal, involving 4,134.4 million shares at Rs 21.50 each, is the largest cross-border transaction in the Indian banking sector.SBI Chairman C S Setty described the 2020 RBI-led rescue of Yes Bank as a pioneering public-private partnership, addi..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?