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For an e-zine version for your friends and colleagues, write to us at fasttrack@safexpress.com

Nicolas Piramals Neeta Sanghitalks about negative mindsets thatplague professionals

Five Bad Habits to Let Go

pg3

Supply chain and finance areevolving best practices together toemerge as winners

The Chains Next Frontier

pg6

Experts feel, in a few years India willcatch up with Chinese manufacturedgoods bandwagon

Tiger on the Dragons Trail

pg4INSIDE

H O W A G I L E I S Y O U R C O M P A N Y ISSUE 14, JULY-SEPTEMBER 2007

The shiny faades of latest shopping

destinations not only symbolize the

India-glory story, but have also become

a cornerstone for the retail boom in

India. While they may have faced a lot of

slack from people for over-development

or lack of a business model in some

places; carefully planned malls are driv-

ing India towards fast becoming a c on-

sumer-retail paradise.

This represents a great opportunity

for smaller vendors. It is also a big chal-

lenge. In order to compete with the

larger players, they would need to learn

and scale up at the same time. They can

do this by creating operational efficien-

cies at all levels and operational models

that complement new businesses. The

age of imitation is long gone. Ones who

keep an open mind and demonstrate

creativity are the ones who are more like-

ly to succeed.

As demonstrated by Koutons, where

they went against history and centralized

their operations with full supply chain

control; in an age where more than one

pundit preached decentralization. They

have even managed to establish a mutu-

ally profitable franchise business with a

keen eye on reverse logistics. All this has

resulted in them coming out trumps.So, it is not only a boon for con-

sumers, but manufacturers too; and a

new opportunity in the form of foreign

export.

As with China, this would help India

to improve the manufacturing base, by

increasing domestic consumption. It

would further help in strengthening its

position as the new manufacturing hub,

depolarizing Chinas position.

The next time you pass a new mall, just

try and think of it as a stepping stone for

India, and not a neighbourhood menace.

PAWAN JAIN

Chairman & MD, Safexpress Pvt Ltd

MESSAGE

MALLS,

ARE GOOD

COUP TO THE TOP SPOT

SAYANTANI KAR

Few of us spare a thought for the

journey that the petite top or the

sassy dress might have described

before it reaches the shop shelves

and catches our eye. Unknown to

us, ready-to-wear clothes reach the

stores after passing through one of the most har-

rying supply chains. Fashion's fickleness, multi-

ple hand-offs and innumerable SKUs of ready-

made garments script a supply chain that is even

more complicated than those of giant industrial

machinery. Here, the latter's size pales besides

sheer numbers and the need for frequent

changes. And, India's vastly uneven land with

poor infrastructure and even greater number of

consumers only compound the challenges of theapparel companies operating here.

That has not deterred apparel brands from

joining the fray to woo the Indian consumer,

who's increasingly becoming a spendthrift. One

that particularly stands out is the "Most Dynamic

Brand of the Year 2006", as adjudged in the

LYCRA Images Fashion Awards - Koutons

Retail India Ltd. It started out as a local apparel

maker, but burst onto the retailing scene with its

menswear brand in 2002, eventually to become

"Value Retailer of the Year 2006", according to

Star Retailer-The Consumer Way. Koutons can

boast of an organised retail presence and a

nationwide brand recall, when both are set to

grow manifolds in the Indian market.

Such a mercurial growth, that has left manya competitor smarting in its wake, is based on

identifying the critical need. H.S.Sidhu,

Executive Vice President, Koutons Retail India

Ltd., elaborates, "We are a nation (India) of a

large number of retailers and producers, most of

whom are not viable or profitable on their own.

What counts in India is how soon the company

gets the critical mass and a large scale counts".

This need for scalability has led Koutons to strike

out on paths less travelled by its peers - right from

the manner in which it opens new stores, its busi-

ness model for franchisees, to the supply chain

architecture that has been put in place. Sidhu

draws attention to China's success. "It is a pow-erhouse today because its enterpreneurs built for

potential demand too, as a result of which they

can now sell at such low costs."

In keeping with this belief, when opening up

new stores, Sidhu and company refuse to stick to

numbers that many would consider safe. Their

blueprint reads backwards. They start with the

number of Koutons Galleries that they would

want to open in the region, followed by the com-

position of the stock, including how much of

goods each might be selling.

Collective wisdom of supply chain practices

followed by the competition doesn't apply to

Koutons either. While others shrink away fromcentrally-controlled models for tackling a busi-

ness that is so unwieldy, Koutons has a supply

Continued on Page 2

From a local apparel

manufacturer tobecoming MostDynamic Brand of theyear 2006, Koutonshas scaled up byexercising total controlover their supply chain;right from manufactur-ing to retailing

D P S Kohli, Chairman, Koutons Retail India Ltd.

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JULY-SEPTEMBER 2007

chain that is helmed by people in the head office,

with a central distribution centre. Sidhu says,

"I (Koutons) am a manufacturer-retailer. We do

everything, right from planning, manufacturing,

advertising, to selling, without the interference of a

middleman. This arms us with the ability to plan

things and then decisively implement them. Without

such control, there is no plan; everything remains a

mere prediction with no ability to decisively imple-

ment plans".

Koutons' control of the entire supply chain starts

right from the supplier. "It has been the result of our

hard work over the last few years," notes Sidhu.

Everything including the weave and the thread are

made as per Kouton's specifications. Suppliers pro-

viding such customised raw material have helped

Koutons consolidate their plans to scale up to match

international players.

Production and the supply chain, too fall in line

with what Sidhu calls the "command economy-style

architecture". Production of the garments is in-

house, except for knitwear, which is outsourced.Even then, Sidhu assures that the price and the

design are well under Koutons' control. "The exclu-

sivity remains our's", he adds.

Whatever gets made is first stocked in the central

distribution centre in Manesar, Gurgaon. This is the

nerve-centre of the inventory supply chain. Every

single delivery to each of the stores all over India is

directly booked from the central warehouse. Such a

taut co-ordination is indeed daunting, but necessary,

if Koutons wants to retain the power over the value

chain. "This is how we can tweak the volumes and

make changes at any of the stages," explains Sidhu.

The customised IT system furnishes the manage-

ment with a daily update of the status of stocks sold

and left behind in each and every franchise store, as

"retail management is all about planning for the nextday, next week", according to Sidhu.

Adopting the franchise route, where no store is

owned by Koutons, might seem contrary to their

overall strategy. However, the consignment model

empowers Koutons further. "In our trade, it is the

leftovers that determine the profitability", Sidhu

notes, referring to the stocks that don't find favour

with the consumer. Koutons has taken the risk upon

itself, instead of asking the franchisee to buy the

goods. It lets Koutons have full control of the stock

in these stores, be it promotions, stock composition,

reverse logistics or clearance sale. With no pressure

on them to buy the stocks that they store, the fran-

chisees are raring to go along with Koutons' plans.Of course, it is not without its attendant evil - man-

aging frequent changes, clearing stocks and dealing

with as many franchises as there are.

But Koutons did not have much of a choice. Sidhu

explains, "The speed at which you want to grow

should dictate the rest of your strategy". He believes

no other strategy would have fuelled their appetite for

more stock and growth. This enables both franchisee

and company to work as a team instead of harbour-

ing conflicting interests. It also solves another dilem-

ma - that of managing personnel in the selling posi-

tions. "At such distances,hierarchy creeps in, and if it

were our own employees in the stores the motivation-

al levels would have taken a hit. But the incentive-

based income and zero risk for a franchise brings

along the right dose of commitment and dynamism",

says Sidhu. Control over the pricing lets it take care

of stock clearance through sale.

Not just scalability, but other insights arising from

understanding their category well have strengthened

their business too. Keeping tabs on consumers'

changing preferences through IT and the ability to

predict trends for the next week, and racing the

stocks to the stores, notwithstanding, Koutons knows

that not everywhere, everyone will take to avant

garde fashion at the same time in their category -

western men's wear. "Only 20 per cent change,"informs Sidhu. There are no sudden skews in con-

sumer preferences. However, the cardinal points are

getting the right size ratio, the price points apart from

the overall fashion that suits each location which they

cater to. While the size ratios will differ in the hills

and the cities, the more expensive garments may trig-

ger a keener demand in small-towns because not

many brands cater to them. Thanks to the supply

chain these can be altered to match any major skews.

With its customised IT systems and agile staff

who work in a relatively flat hierarchy that keeps dis-

putes at bay, monitoring and preparing for the week

ahead is a dynamic daily process.Koutons' pluck has

won it the backing of private equity firms UTI

Ventures and Argonaut, worth Rs 112.6 crore.

Understanding its supply chain means under-standing Koutons' take on the adage of a leader

doing things differently. Sidhu's unwavering insis-

tence that "a company today has to be better in

everything, -- product, cost, and delivery" then

becomes a lot clearer.

The IT system

furnishes the

management

with a daily

update of

stocks soldand left

behind in

every

franchise

store

Retail Management is allabout planning for the nextday, next weekH S Siddhu, Executive Vice President,

Koutons Retail, India

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APRIL-JUNE 2007

Neeta Sanghi, Vice President and

Supply Chain Head, Domestic

Formulation, at Nicholas Piramal

India Limited (NPIL), has been han-

dling supply chains for nearly 20

years now. Under her leadership,

NPIL became the first Indian pharma company to

use planning software such as Factory Planner and

Demand Manager for shop floor scheduling and

sales forecasting activities, respectively.

She has guided both her own and the sales team

to mould the processes around these softwares, so

that NPIL can now boast of the most accurate fore-

casts in the Indian pharma industry.

With experience in all aspects of supply chain,

Sanghi shares with us what she thinks are the five

attitude-traps that supply chain (SC) professionals

fall for and how to avoid them.

I. Stuck in silosSC professionals tend to work in silos, concentrat-

ing only on their area of performance.

Different companies have different departmental

structures. Manufacturing and new-product devel-

opment may be part of the supply chain in one com-

pany, while in another these may be separate.

However, I think unt il the product reaches the sell-

ing point, the path is one large supply chain, encom-

passing all the business units.

Hence, SC professionals should work with other

disciplines as well and be involved with quality-

checks and promotional activities.

It is time they looked at the business as a whole

rather than through the facets of just logistics, sourc-

ing etc. This will allow them to identify new oppor-

tunities and recognise trends.

A good way to solve this is to hold cross-function-

al training will bring about an organic change in the

mindsets. There should also be a business develop-

ment team for all the major functions that will draw

people from various disciplines.

II. Stumped by exceptionsExceptions to the supply chain's routine often

trigger extreme reactions from SC professionals.Some become too system focused (rigid) while oth-

ers remain too ad hoc.

The larger the organisation, the more complex

the processes become, with a growing need to work

in a systematic manner. Some companies become

replenishment-oriented, while others focus on fore-

casts. On the other hand, there are companies where

the SC managers resolve conflict by taking each sit-

uation as it comes, without understanding the caus-

es or discerning a pattern.

Supply chain professionals should intelligently

assess the crisis and then apply a method to the mad-

ness.. Just as rigid systems rob you of flexibility, an

ad hoc approach can retard with its anarchy.

Situations of extraordinary business needs may

crop up anywhere and anytime. For example, morestocks (than usual) may be needed somewhere.

However, supply chains have their lead times where

some stocks are usually in the pipeline.

This is where the professional has to take a call

whether it is an emergency or not. Can it be

ignored? What will be the repercussions on the sup-

ply chain if it is not met? What about the strain on

the supply chain, business loss, people motivation,

rapport between sales and supply chain etc.? It takes

business acumen to come up with the right answers.

Once done, you can work on effecting the changes.

During the Chikungunya outbreak, last year, the

product supply team at NPIL decided to pump in

more drugs to treat it. For this, we had to utilise our

safety stocks even as we revved up production.

III. The fear of automationSupply chains need the efficiency that IT pro-

vides. Yet, move to automate through new software

can often trigger a road-block.

Supply chain teams often resist such changes due

to a sense of a loss of control. The most commonly

asked question, following such measures, is "Whatwill we do now?"

The team leader, then, needs to reassure her

team that IT will only automate the mechanical

work. I tell my teams that it will perform the clock-

work. They will still approve and analyse the results.

At times the installed software is complex. Only

an understanding of the software enable them to

rectify errors. The complexity makes them wonder

if the software will ever be as good as the person is.

By taking care to synchronise the changed

processes and roles with the new software, a compa-

ny will find the amalgamation easier.

IV. Swamped by informationIt is too easy to get swamped with all the data that

flies around. One must seive out information whichis likely to have an impact from the chunks of data

that arrive from various departments, everyday.

This is why one crucial tenet is sharing the right

data with the right people at the right time", which

makes information exchange more meaningful.

For example, the knowledge of fluctuating raw

material prices is important for a pharma supply

chain. The prices of the drug does not fluctuate

daily, but that of the other raw materials does the

price of aluminium used in the foil packaging, for

instance. If the procurement and purchase depart-

ment share this information with those in finance

and sales on time, the latter too can make accurate

plans for the future.

Finance guys only get to see the final transac-

tions. With the awareness of the price trends in the

market, they too will be able to predict prices and

costs. A holistic knowledge will keep them from

declaring bonuses when the stocks are low or the

input prices are about to spiral upwards. Similarly,

the sales teams will know what to expect in the last

mile and wont make baseless estimates.

V. Jumping the trend-wagonThe inability to buck irrelevant trends is a major

drawback among the senior managers. They must

learn to assess the significance of market trends.

Managing supply chains in different sectors

requires an approach specific to that business. Of all

the supply chain headways such as RFID, 4PL, bet-

ter railway corridors, a company should ask, "What

impact will these have on our supply chain?"

For a supply chain in the cement sector, logistics

factors such as railway networks are important,given

that 20 per cent of the input cost is driven by freight.

In contrast, for pharma it is only two per cent. For

us, RFID adoption is a bigger concern because spu-

rious stocks abound

SC professionals often have to work their way upthe organisation, as a result they may not have devel-

oped a business acumen. Just as the absorption of

talent will help remove mind-blocks, nurturing a

business sense amongst SC professionals will also for-

tify a supply chain against these pitfalls.

FIVE BAD HABITS TO LET GO

LEADERS

Neeta Sanghi, heading the supply chain atNicholas Piramal, in a conversation withSayantani Kar, lists five mind-sets she thinkssupply chain professionals should be wary of

Sharing the

right data

with the right

people at the

right timemakes

information

exchange

more

meaningful

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JULY-SEPTEMBER 2007

SAYANTANI KAR

Will India be able to overtake

China in the race for the

worlds top manufacturer?

China's location, its strategic

industrial clusters and its gov-

ernment's economic policy

have engineered its lead in exporting manufactured

goods. It has even swamped the market of the erst-

while giant synonymous with manufactured goods

the United States. To stem the influx and reassure

panic-stricken domestic manufacturers, the US hasresorted to levying anti-dumping laws against China.

Meanwhile, India, despite being regarded as the

more service-oriented and quality-adherent manu-

facturer, continues to trail China's prowess..

It is time that India puts its manufacturing sector

at par with the best in the world. We may well be on

our way with dedicated hubs for manufacturing and

export of auto components, leather, readymade gar-

ments and even small cars, but it is going to be a

long, winding path.

Fast Track asks experts, some of who already

belong to the club of world-class exporters, if there

are any short cuts.

The sweeping generalisation of low labour costs

as the reason for China's success does not hold true.

What counts is that China has, along its coast, entirecities dedicated to churning out single products.

Think of a city acting as a supply chain cluster and

you will realise just how enabling China's coastline

is for mass manufacture and export. (See box for

more details)

S.S.Nabar, Director, Videocon Industries

Limited, one of the major exporters of white goods,

believes China's rise was helped by its neighbours,

Japan and Korea. "The demand stepped up when

these countries witnessed rising labour and opera-

tional costs. With their cities just hours away from

China, they off-shored some tasks while still manu-

facturing critical components that required their

technical wizardry. As the first factories were built,

the component bases in China grew as well, linked

backwards. The production capacity grew exponen-

tially, enabling them to export the excess stocks."

Nabar thinks the lack of demand for a vital com-ponent base is holding India back. "There is not

enough domestic demand for components in, say,

TV manufacturing. Overall demand for components

that go into TV manufacturing is roughly one-fifth

of that in China. The quantities don't justify an

investment. It is cheaper to import the required

equipment with lowered import duties than manu-

facture it here on a large scale. So we end up assem-

bling TVs rather than manufacturing from scratch."

The lack of a proper supply base does not allow

manufacturers the convenience that short distances

and less time provide.

Nabar says manufacturers here take 20 days

longer than their Chinese counterparts to deliver.

This is what makes India envious of China's exten-

sive and all-inclusive component parts industry.Nabar is hopeful that the next three to five years,

which is when 'special economic zones' (SEZs) will

come up with the much-needed infrastructure, will

bring a turnaround.

Videocon has carved out its clusters around its

factories worldwide. Nabar explains, "Take our fac-

tory in Italy, for example. Close to the actual TV-

manufacturing factory, we have units producing

bulkier components such as plastic cabinets, picture

tubes and facilities for spray-painting.."

However, all the electronic parts such as electron-

ic tuners are still sourced from China while glass

shells and mechanical parts such as loudspeakers are

exported from India.

Technology makes it possible to manage the

company's supply chain spanning as many as eight

countries. Nabar and his team use SAP to keep track

of the supply chain, give instructions and tacklematerial requirement.

Gokaldas Exports Limited, the leading exporter

of readymade garments in India, has come up with

an unusual practice. It has made all its suppliers

open up offices in its own head office. Dinesh

Hinduja, Executive Director, Marketing and

Production reasons, "It saves time, leads to healthy

competition among suppliers and, of course, the

'answerability' becomes greater."

He acknowledges that their lead times are longer

than that of China, losing an entire day in import-

ing raw materials from the Far-East. In order to

reduce the current turnaround time of 45 days, he

hopes to start sourcing from closer home, just as

China does from its neighbouring countries.

Having clocked 22 per cent growth in exportsover the last three years, Hinduja attributes it to fac-

tors such as removal of quotas in the textile and gar-

ments industry by the government, their infrastruc-

ture revamp to meet rise in demand, good supply

chain partners and their software programme, cus-

INSIDE OUT

Chinas lead in exporting manufactured goods cant be overtaken in a day. But in a few years, experts feel,

India will have got its act together to do just that

TIGER ON THE DRAGONS TRAIL

The lack of domesticdemand for compo-nents retards a propersupply base...SEZs willhelp bring in the requi-site infrastructureS.S. Nabar, Director, Videocon

Industries Limited

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APRIL-JUNE 2007

THE DRAGONS NESTS

I

n China, there are entire towns and cities that specialise in particular industries or

industry segments. Most of these are industrial production sites with ancillary fac-

tories near the main manufacturing units.

These clusters, with numerous inter-related supply chains, capitalise on four main sup-

ply chain drivers: facilities, transportation, inventory and information. These are also

major factors that create cost-advantage for an entire economy. They can boast of lower-

ing the capital investment cost, the domestic sourcing cost, increasing the economies of

scale and facilitating government incentives.

The benefits are supply chain miracles of tremendous synergies and economies of

scale that is difficult for anyone to beat, without such an extensive infrastructure. Also,

costs of transportation and transaction are reduced, and knowledge sharing is increased.

China has taken the Japanese concept of "just-in-time" (JIT) production one step

further. The Japanese brought in JIT in the eighties to create the leanest of supply

chains. This approach had various components for production arrive from all over the

world just in time for assembly and manufacturing. Although, it did raise the cost of

transportation, it drastically reduced the need for buffer inventory and the lower inven-

tory costs offset the transport expenses.

By converting entire cities into thriving hubs for industries, China has ensured that

not only can the enterprises practise JIT but can also bear meagre costs of transporta-

tion for a lean supply chain.

The clusters line the coastal areas of China. Even though labour is not cheap in

these areas, the companies still retain their cost advantage over manufacturers from

around the world. The logistical set-up reduces costs by 20 per cent of similar products

produced in the United States.

There are two main types of clusters found in the industrial network clusters on the

east coast of China :-

1. Hub-and-spoke: The cluster is dominated by one huge company usually the

large state-owned companies or the joint ventures. The hub company is supported by

a large number of suppliers and service providers. However, this kind of model is main-

ly restricted to the regulated and state-owned capital-intensive enterprises in sectors

such as telecom, energy, steel and chemicals.

2. The second type of clusters is what has turned China into the world's factory.

More prevalent, these mainly consists of private, especially small and medium enter-

prises (SMEs). They contribute well over one half of the nation's gross domestic prod-

uct and, of course, China's exports. Today, there are more than 1,000 supply clusters

for export-products, covering almost every major product category.

The majority of these supply clusters are located in China's most developed regions,

comprising the eastern provinces of Guangdong, Fujian, Zheijiang, Jiangsu, Tianjin,

apart from the metropolis of Shanghai and Beijing.

The characteristics of these supply chains also vary according to different regions.

For example, production clusters in the Jiangsu province mostly consist of units of for-

eign firms from Taiwan. In contrast, the neighbouring Zhejiang province hosts hun-

dreds of production clusters that are formed by domestic private companies.

Each cluster also has its own marketing strategy. The enterprises formed with for-

eign investments market their goods directly to large customers in foreign countries,

while the SMEs usually resort to brick-and-mortar marketplaces to reach out to both

large and small customers.

Examples of clusters:1. About 5,000 manufacturing enterprises in the Zhili township of the Zhejiang

province produce garments exclusively for children.

2. The famous toy cluster spanning the Guangdong Province in China, Macau and

Hong Kong, is the perfect example of the secret behind China's rampant low-cost pro-duction edge.

tomised to Gokaldas' requirements and aligned with

the world fashion exchange, providing supply chain

visibility to the suppliers. The electronic data inter-

face system through which the company can down-

load style details, order sheets and all other details of

buyers' orders has cut down the earlier 90-day lead

time to half of that.

While some industries have managed to establish

India as a serious exporter leather exports from the

Chennai cluster and auto components thanks to

companies such as Sundaram Clayton not every

SME can fund such extensive set-ups either at the

places of manufacture like Videocon, or in their

head office like Gokaldas.

Also, expecting that the manufacturing sector in

India will grow along similar lines as China is fool-

hardy. Saikat Chaudhuri, Assistant Professor of

Management, the Wharton School, University of

Pennsylvania, says it will be difficult to replicate the

way the Chinese government has been able tosupport enterprises there.

Chaudhuri feels encouraging FDIs in the

retail sector in a staggered manner, much

like India's telecom industry's growth over

the last decade,will shore up domestic con-

sumption and increase the volume of manufactured

goods. Foreign players initially can be asked to

improve infrastructure when they

move in.

For the short term, Chaudhuri stresses that

Indian manufacturers should concentrate on skill-

sensitive industries where both design and manufac-

turing of the highest quality (but lesser volumes) are

needed, for example, high-end leather goods.

Hinduja and Nabar too echo the sentiment that

India is ahead of China in terms of perception ofthe quality of the products. Moreover, while

Videocon is helped by anti-dumping duties against

Chinese companies in a few developed countries,

Gokaldas Exports is more flexible than its competi-

tors in accommodating changes in orders.

India can exploit its skilled and English-speaking

workforce till the infrastructure resembles that of

China and other automated countries.

"We need to spruce our manufactured exports in

order to feed over a billion people," Chaudhuri

points out.

Supply chain alone cannot provide that boost; it

has to be accompanied by infrastructure that facili-

tates demand and also fosters an environment for

increased production.

The Japanese gave JIT to the world, the Germans

engineering excellence and the Chinese cheap man-

ufactured goods. It is time Indian companies found

their niche.

By sourcing from closer homewe can match the turn-aroundtimes of Chinese firms.Dinesh Hinduja, Executive Director,

Marketing and Production, Gokaldas

Exports Limited

Encouraging staggered FDIs inthe retail segment will increasethe demand for manufacturedgoodsSaikat Chaudhuri, Assistant Professor of

Management, University of Pennsylvania

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JULY-SEPTEMBER 2007

THE AGENDA

THE CHAINS NEXT FRONTIERFinance and supply chain units have always had decisions to make that affected each

other. Now they are evolving best practices together, where both emerge winnersSAYANTANI KAR

Nothing in a supply chain (SC) comes

for free. At every link, money

changes hands. Supply chain man-

agers, the world over, are now get-

ting ready to tweak this reverse cycle

of supply chain finance (SCF) to find

the next set of benchmarks. Their quest is leading

them to make friends with their finance counter-

parts, even as the latter are realising that SC does

not affect operational competency alone, but also

financial efficiencies.

It is not that the two disciplines were at logger-

heads before, but there seldom was an effort to alignwith each other. This, despite the fact that the sup-

ply chain decisions such as where to open a new

warehouse or which supplier to source material from

are as much based on SC needs as they are on finan-

cial factors such as taxes.

Collaboration between the two units, then, natu-

rally became the next frontier for SC innovation. It

was further pushed by other factors. Global foot-

prints and managing multiple trading partners, such

as logistics providers and global vendors, called for

shifting the focus on SCF. The US and Nordic coun-

tries like Sweden were quick to the party.

Interestingly, Indian companies, such as Shoppers'

Stop, have not trailed behind either.

It was three years back when the two teams at

Shoppers Stop began to work as a single unit forsupply chain transactions. Earlier, while the supply

chain team negotiated with the suppliers, projected

margins and sourced globally, the finance team had

to work out the monetary roadmap that included

payments, tax calculations etc. Devadas Nair, Head

of Logistics and Supply Chain, Shoppers' Stop, says,

"There were too many surprises arising from deci-

sions taken independently by the two groups, which

hampered operations at both ends." A lot was to be

gained if only they joined forces.

Now they work together at each level in the sup-

ply chain. It starts right from registering a vendor.

Apart from verifying the terms and conditions such

as landed costs in the contract, the finance team

chips in with its recommendations while the SC unit

prepares the business model and the margin

between the cost and the MRP. Together, they

finalise cash discounts and payment terms with the

suppliers. Knowing each others capabilities, both

the units commit payment cycles which they canjointly fulfill, strengthening the trust their vendors

have in them.

This has cemented Shoppers Stops relations

with its 800-odd vendors. Not only do they oblige

with discounts and longer credit periods but also tag

their own products on behalf of the retail chain, sav-

ing time and cost.

Vendor interaction is only one of the stages at

which information is shared by the two departments.

There are weekly meetings which see the teams dis-

cussing budget deviations, margins achieved and

predictions for cost escalation.

The daily co-ordination is mainly automated,

making for error-free exchange of information. Nair

says, "Details such as number of SKUs, the cost of

an order, the landed costs including freight and salestax automatically get uploaded from our ERP sys-

tems on to Oracle Finance. The finance team can

trace the status of each and every SKU." What

plagues other organisations a common way of track-

ing transactions is easily resolved by this automated

audit trail. An annual reconciliation with suppliers

tops the collaborative efforts. This should receive a

further boost when the planned electronic payments

system is rolled out.

This partnership also makes global sourcing a lot

easier because "the finance team takes care of all the

import licenses, insurance etc.," informs Nair.

The process of alignment did come with its own

set of challenges. It took successive meetings to con-

vince the teams of the benefits of working together.

With time, the supply chain engineers came to think

like businessmen and the accountants got a hang of

supply chain best practices. Nair is happy with how

they have now become "an open book, discussing

everything before implementing".The finance and the supply chain departments

can, thus, jointly work out tax advantages and risks,

win suppliers, predict trends affecting the supply

chain and the business, prevent goods from being

stalled along the supply chain and keep tabs on sup-

pliers' financial health.

These practises have enabled companies to hold

fewer inventories, free more working capital, avoid

custom delays and provide suppliers with more pre-

dictable payments, building strong commercially-

optimised supplier relations.

A report by the Aberdeen Group notes how bet-

ter visibility for both the departments leads to

greater cash and credit flexibilities. This is becasue

of a better understanding amongst all the stake-

holders. Nair sums it up: "We don't have unpleasantsurprises, anymore."

SCF is clearly where the next set of supply chain

best practices will come from. It takes SC innovation

beyond the realm of a single discipline, to give a

company its competitive advantage.

Supply chain

decisions are

also based on

financial

factors.Supply chain

finance,

then, is

where the

next best

practices will

come from

8/2/2019 July Sep 2007

7/8

ANKITA SHARMA

Staying ahead of compe-

tition is imperative to the

success of a business.

Whether you are devis-

ing new business strate-

gies, entering new mar-

kets or exploring new technology, an

understanding of your competitor's

moves can make a ton of difference to

your profits.

Competitive Intelligence (CI) or

decision-making based on understand-

ing the competitive environment is a

necessary and proven ethical business

discipline that can give your business

the edge.

When applied to the supply chain,

CI is the art of acquiring, presenting,

analysing and refining knowledge

about rival supply chains and then

reaching actionable conclusions about

improving your own, according to the

Society for Competitive Intelligence

Professionals.

This will let you know if you are

competing well or are in for a rude

shock.

Further, it helps you improve

your supply chain and heighten

barriers to competitive

inroads. Key areas that

should be investigated

include lead time, vendor

response time and accuracy

of delivery information.

Michael Porter, in his book,

Competitive Strategy, identi-

fies threats from new

entrants, existing rivals,

buyers negotiating for a

lower price, suppliers negoti-

ating for a higher price and

substitute products with similar

or disruptive solutions. With CI,

identification of threats

becomes easier and you canleverage the knowledge you

gather into successful strate-

gies and operation tactics.

Ultimately, you gain competi-

tive advantage because CI makes

your business more flexible to adapt

to changes in the market conditions.

So, if you are convinced about the

old saying: "keep your friends close,

and your enemies closer", the follow-

ing steps will help you analyse your

competitors' supply chains better.

Acquiring the informationBefore you start looking for com-

petitive information, figure out what

kind of information is relevant to

you and chase that. Will it be useful

to know if your competitors' supply

chain is more cost efficient or deliv-

er faster?

Once you know what you are look-

ing for, gathering information is the

next step, and also the most important.

Given that companies leave a paper

trail as they go about doing their busi-

ness, primary data can be gathered

straight from sources such as annual

reports, stockholder communications,

financial press releases, speeches by

top management and even patents.

Next, data from secondary sources,

especially the internet, comes into

play. Newspapers, business magazines,

analysts, expert opinion and blogs also

help indicate the competitors' position.

Single out key competitorsand vulnerabilities

Prioritise which competitors you

need to focus on - direct or indirect

ones. The first group comprises firms

that offer similar services and solutions

for the same kind of problems.

Indirect competitors are difficult to

identify - it could be a start-up slowly

eating into your market share or a

company ushering in new technology.

Look out for choke points in the

competitor's supply chain, delivery time,

product shelf-life and sophistication of

the supply chain software they use.

Deducing from an incom-plete picture

A complete picture will never be

there as CI will vary with the avail-

able information, and decisions have

to be skilfully made from what can

be acquired. Observing erratic press

releases, delivery failures and slower

turnaround of special orders can

also point out the competitors vul-

nerabilities.

Conducting the AnalysisA number of analytical tools and

models are available to execute the

strategies based on CI. Tools such as

Balanced Scorecard are a good exam-

ple of a proven and helpful analytical

tool. A simple SWOT (strengths,

weaknesses, opportunities, and threats)

analysis also helps. A tool will help you

reach your conclusions quicker.

CI offers a successful strategy based

on your understanding of the com-

petitor's soul its market assumptions,

decision-making process, risk analysis

and potentially irrational reactions to

sudden changes. A new CEO, a merg-

er, a public relations catastrophe, law-

suits, unexpected write-offs of plants

and equipment, or even a rumour can

shake up the industry and help

you make your moves.

One cannot predict the

future, but one can evalu-

ate the past and analyse

trends to forecast the

future. CI's real contribu-

tion is in equipping man-

agers with the knowledge to

learn what the competitor

will do and not what the

competitor has already done.

In India CI has existed as a

function within the market

research department, but

now it has started playing a

vital role and has gained

prominence. Companies

with CI programs havebetter knowledge of

their markets, better

cross-functional relation-

ship between their business

units and a greater ability to

develop proactive competitive

strategies.

7

APRIL-JUNE 2007

Competitive Intelligence makes you aware of your competitive environment and reveals how you compare with

the rest. Result: your business can now truly brace for the future

KEEPING ENEMIES CLOSER

Actually, both.

When Hogwarts Express started its

eventful and historic journey to thou-

sands of Indian homes for the last time,it had a mammoth target. It was to

reach out simultaneously to 300 loca-

tions on Potter-Day after covering 1

million kms across the vast Indian geog-

raphy. More than some magicking was

required to achieve this almost unat-

tainable feat.

The first part saw Hogwarts Expresstransform into Safexpress. The cargo of

2.5 Lakh books of Harry Potter & the

Deathly Hallows was then broken into

300 smaller consignments. These were

loaded into Safexpress weatherproof,

Global Positioning System-enabled

vehicles which travelled across India at

break-neck speeds.Right at the stroke of midnight in

London, Potter-magic unfolded in India

as well. At 5.30 am on the morning of

July 21st, the books hit the bookshelves

at 300 locations simultaneously.

The project was executed at par, or

better than international standards,

despite the distribution complexitiesand a total distance of 1 million kms in

India. Even the distribution in Potter-

country, UK, could not claim such a

blemish-free record.

Mr. Pawan Jain, CMD of Safexpress,

says, We have been managing the

supply chain of Harry Potter books

for many years now. This coupledwith our supply chain expertise of man-

aging 98.78% on-time deliveries has

helped us in achieving this almost-

impossible feat.

PRIORITY

CONCEPT

HARRY POTTER CAME IN HOGWARTS EXPRESS OR SAFEXPRESS?

8/2/2019 July Sep 2007

8/8

SAYANTANI KAR

The crusade for the cricket

World Cup just ended in

the Caribbean Islands.

Most of us were catching

the Calypso carnival on

TV, for whatever it was

worth, after Team India's early exit.Be

it the wicket-keeper's pep-talk near the

stumps or a bird's eye view of the sta-

dium, the cameras were bringing

home the excitement from every pos-

sible angle.

For all this game play on the emer-

ald fields, before each match lies the

mammoth task of making the stadium

ready for a live telecast. In less than

half a day, the cameras, microphones

and other video production equipment

have to be installed in and around the

field, connected to a control room,

choc-a-bloc with audio-video gadgets,

somewhere in the gallery.

When done,the equipment, weigh-

ing around 13 tonnes, has to be port-

ed around cities, often the very next

day. It doesnt help that most of the

fragile cameras, mixers and recording

devices, hired for crores of rupees,

demand a gloved handling.

This is one jittery challenge that

sends the usual tenets of logistics for a

six. Yet, this is what the production

team at Nimbus Communications

Limited, which is covering cricket

matches, following a contract with the

Board of Control for Cricket in India,

have to do for the next four years.

There is no guaranteed routine of

the regular workplace. Anything can

go wrong from equipment malfunc-

tion in the stadium to delays on the

road with the match-date drawing

near like a ticking time-bomb. A crick-

et match, after all, won't wait for the

TV guys.

Taljit Nirankari, Production

Controller, Nimbus Communications

Limited, lets us in on the madness.

For a cricket match, the crew has to

race ahead of the travelling playersand are the last ones to leave the

grounds after the match is over, even

when the matches are scheduled back

to back in a series. (And you thought

only the players kept a hectic routine?)

The IL-76 Nimbus uses to cover

international cricket makes for a fast

air-transport. It not only seats the

entire team but all the unwieldy and

fragile equipment as well.

Yet, flying is not always breezy

thanks to venues with airports

unequipped to handle such a large

cargo plane. For a match in Rajkot, for

example, the plane lands at

Ahmedabad. The crew and the equip-ment then have to hit the road to reach

the spot.

Road conditions, which necessitate

special travel cases and shock-absorb-

ing container trucks, are not the only

speed-breakers. Road taxes and inter-

state permissions are major chores that

a 3PL partner helps them out with.

They literally take a huge load off the

production team by arranging permis-

sions and clearing taxes in time.

Except for the inaugural matches,

the team doesnt get much time to

install their paraphernalia. All they

have is a day to wire a stadium and set

up the control room to beam thematch to our drawing rooms.

Before setting shop, a quick check

tells them how far apart are the control

room, the commentary box and the

third and fourth umpire's chambers,

the weather conditions etc. which gets

them started. A huge stadium such as

the Eden Gardens in Kolkata, will

need kilometres of wire and rain

clouds on the horizon would mean

extra covers to prevent water seeping

into the cable joints.

As many as 25 cameras, right from

the ones at the stumps to the highest

point in the stadium are installed to

bring home every detail. The monitorsand the video production equipment

follow suit.

The testing of the installed equip-

ment can turn out to be a cliff-hanger

precursor to the match. The check for

inputs from the cameras precede the

"satellite check" that tests the

uplinking to the satellite.

If the rigging had started at around

eight in the morning, the satellite

check can be done by three in the

afternoon."With less than half a day to

go, we might realise that we have lost

the link with the channel or there's no

feed from one of the cameras," says

Nirankari. But there is no room for

panic when a job is at hand. In-house

guarantee engineers are the trump-

cards of the team as there is no tech-

nical snag that these wiards can't diag-

nose and fix," according to Nirankari.

The eclectic team also includes two

people from the equipment vendor for

rigging and de-rigging, technicians for

graphics, sound and video mixing,

commentators and the director.

Ideally, the team needs to reach the

stadium a day before the match to fin-

ish the rigging and a half day to de-rig

after the match before getting on the

road for the next venue.

However, every day does not turn

out to be an ideal one. Day and night

matches are often nail-biters for the

telecaster team because the time to de-

rig and rush to the next city gets meas-

ured in minutes.

One such edgy situation happened

during the recent Asia Cup for

women, which had two matches

scheduled for Delhi and Jaipur. Only

this time, the two were slated on con-

secutive days," recalls Nirankari.

The first match, held in Delhi, got

over only by 6 pm and left them with

just two hours for de-rigging and an

overnight journey ahead. "We reached

Jaipur by road in the wee hours, head-

ed straight for the stadium at 2 am,

and were all-set by 9 am, right before

the match started", informs Nirankari.

The crew, of course, had to go without

sleep for over a day.

At times, it is sheer luck that keeps

them in-step with the cricket teams. "A

match in Vizag [Vishakhapatnam]

had gotten us worried because of the

place's fickle weather and the conse-

quent landing problems." A miracu-

lous clear weather saved them from

another 800 kms of road journey from

Hyderabad to Vizag.

It is as much about foresight and

planning, as it is about ingenuity and

luck. The safeguards such as advance

schedules, leeway of a couple of days

for travel and back-ups of basic equip-ment may well get dashed since every

match can pose a different challenge,

much like the sport itself.

Nirankari reassures that even with

a few equipments out of action, the

show can still go on without the audi-

ence noticing anything amiss, thanks

to the expertise of the specialists on-

board. Their only respite from the

unrelenting schedulesthe monsoon

months when cricket is not played.

Otherwise, their relentless focus

keeps the process, with such a low

margin of error, from turning into

a disaster.

8

JULY-SEPTEMBER 2007

The run-up to a cricket-match telecast is a nail-biter. The gump-

tion of a few people brings the footage to your living rooms

RIDING THE CRICKETJUGGERNAUT

OFF-BEAT

Fast Track is a quarterly magazine on management, with a special emphasis on supply-chain issues, brought to you by Safexpress Private Ltd. The

magazine is committed to promoting business agility. Fast Track reaches out to CEOs, finance heads and logistics heads of companies. We would be

happy to take on-board issues related to supply-chain that you might be facing. A MINDWORKS MEDIA PRODUCT FOR SAFEXPRESS PVT. LTD.contact@mindworksglobal.com