Introduction

The COVID pandemic has been a good wake-up call for many- individuals and Corporates alike. The world has possibly not witnessed such a massive downturn since WWII and it has invariably forced nearly every industry to rethink several priorities from a strategic perspective. Structural cost reductions and contract value enhancements have come out to be key levers in putting Corporates back on track and hence Supply Chain as a function has a highly critical role to play in the path back to glory.

The Path Back to Glory

What lessons have the pandemic has us? How can procurement/ Supply Chain Strategies be adjusted to cope with future uncertainties?

• Understand the supply chains better: Focus on critical products which has the potential to disrupt business continuity and understand the whole supply chain, its pain points such as lead times and identify risks and mitigation measures.
• Understand costs from first principles: Detailed understanding of cost structures of products/services from first principles through a combination of Should-cost/ Total Cost of Ownership models, benchmarks, and focused external Intelligence.
• Dual/Multi-sourcing of critical products/services including multiple production locations of the same supplier
• Nearshoring– While global sourcing would continue to play a critical part in Complex supply chains of large Corporates, Creating/Developing local supplier expertise for selected products/services is an area to focus on
• Open and transparent line of communication with the business function- Supply Chain is not a support function as it used to be; It is essential for the Supply Chain representative of a particular business to have a seat at the table and have joint accountability in driving business decisions
• Process simplification and Integration: It may not be possible to go explosive with big investments and strategies all at once as all Corporates face the inevitable issue of resource constraints- Time, money, and manpower; Hence starting from Developing a sourcing strategy, Actual sourcing & Award to Implementation and execution/ managing of contracts critical process bottlenecks need to be identified across the chain and Continuous simplifications processes need to be implemented

Digital Leadership in Supply Chain:

• Digitalization and Agile ways of working driving productivity improvements and efficiencies in the supply chain backed by strong digital leadership; While lane shifting strategies and investments are essential, it is key to have a continuous improvement mindset and they need to complement and support the bath breaking strategies
• Digital and analytics adoption (incl. predicative Supply Chain Analytics, AI, Big Data, Machine Learning) will need to be accelerated to identify and capture new procurement opportunities.
• While Analytics, AI, and Machine learning in Supply Chain sound like a panacea, this hinges on one highly critical element: Quality of Supply Chain Data; Hence it is highly imperative to improve the overall quality of project and Supply Chain-related data. The critical datasets might include but not limited to the contract performance information, external information, payment and invoicing, due diligence information, etc.
• In order to achieve digital leadership it is just not sufficient to acknowledge the data problem but really to do something about it- it is essential to have a data-centric and fully/partly real-time data-driven project management and key enablers for these are also inculcating the right digital mindset and defining the contractual obligations and commercial structures to seamlessly reflect the data-centric contract approach.
• Standardize specifications where possible, replicate best practices in Supply Chain and projects across locations, Aggregate global demand/spend to realize economies of scale in procurement
• Developing deeper supplier partnerships and co-innovation and bringing supplier onboard earlier on in the project can be key to reducing costs; building a transparent ecosystem with key suppliers to collaboratively solve supply chain issues
• Last but not least and more importantly strong Safety and ethical practices in engaging with suppliers creates an environment of mutual trust and value over the long run

Conclusion

As we step into 2021 with hope, we should certainly give ourselves a pat on the back for having stood strong with our business partners, our P&L units, in ensuring continuity and driving bottom-line value. Having said this, there are still elements and levers which we as Supply Chain professionals and leaders can pull to further drive structural value for our firms and more importantly to try and build better resilience into our Supply Chains to be prepared for such events in the future.

– Ganarajan Govindarajan

(CII – IL Elite Member)

Head of MICA- Shell Global Supply Chain Consultancy

SHELL INDIA MARKETS PRIVATE LIMITED