Moglix Aims to Give a Digital Boost to Big-Ticket Infra Projects
Moglix Aims to Give a Digital Boost to Big-Ticket Infra Projects
On the opportunities from big-ticket projects and tier-II, tier-III transformations
Year 2022 will be a complete game-changer in the infrastructure sector. There will be a plethora of mega projects in the National Infrastructure Pipeline. The planned expenditure on the National Infrastructure Pipeline over the next five years stands at USD 1.5 trillion. The 35 percent CAPEX spending hike is historic. With the PM Gati Shakti Master Plan, both the financial and digital project monitoring frameworks will be in place, pushing immaculate planning and agile execution.
Role of your platform towards bringing in the desired change for infra space
Large EPC companies in the infrastructure sector that work on turnkey projects face a significant pain point in calibrating actual project costs to the estimated project costs. They get orders on a fixed-price model. The delays in the execution phase lead to fluctuations in sourcing: both costs and availability along with the offline approval workflow gap. This is where technology integration in the infra supply chain space can help.
Moglix helps large EPC companies increase their adoption of a digital supply chain solution to make project management seamless and efficient. Further, the digital procurement solution offers intuitive insights into hidden pockets of efficiency that have enabled the EPC company to consolidate its supplier base.
Goals set for the year 2022
Moglix’s goal for the year 2022 in the infrastructure sector is to partner with EPC companies that are building India by enabling their supply chain through four levers. These levers include (i) thrust on expansion into core construction material categories, (ii) fostering innovation in new material development, (iii) digital procurement transformation, and (iv) promoting the adoption of sustainable construction materials, processes, and practices.
Costs Bleeding Infra Projects and What EPC Companies Should Do?
Costs Bleeding Infra Projects and What EPC Companies Should Do?
The National Infrastructure Pipeline (NIP) is the most comprehensive registry of all infrastructure projects currently in progress in India. It lists more than 2400 active projects across 34 sectors in the country. However, a report amid the second pandemic wave in May 2021 recorded more than 470 projects suffering from project overruns. The total excess budget required was more than 61% of original estimates. It is likely that due to multiple factors, and not just the pandemic, this number is higher today.
Compliance: The main risks can be classified as technical or acquisition-related for the government. Construction technology estimates can change according to execution time, while delays in land acquisition can wreak havoc on the overall project timelines. We have to factor in social and environmental concerns in the acquisition phase that could have a spillover effect.
Procurement Strategies: 5 Ways Automobile Industry Can Unlock Savings and Add Value
Procurement Strategies: 5 Ways Automobile Industry Can Unlock Savings and Add Value
The automotive industry is one of the surest bellwethers for our economy. The rollercoaster ride the automotive industry has been through in the past two years is symbolic of our efforts to reimagine the future of mobility. The demand for vehicles saw a sharp surge in 2021 and continues to hold ground this year. In 2021, the supply side was dealt a significant blow due to the global semiconductor shortage that affected most OEMs, exposing the frailty of portions of the supply chain.
Procurement Strategies for Automobile Industry to Unlock Cost Savings and Add Value
The cost of vehicle production is merely 20% of the total lifetime cost of ownership. With rising fuel costs, this divide will increase further. The automobile industry must revise its procurement strategy to keep costs down to keep pace with the demand and provide better customer RoI perception. Here are some ways the industry can offer better value to consumers:
1. Vendor Consolidation
A vehicle has thousands of moving parts supplied by hundreds of vendors. An end-to-end, digital vendor management platform like we offer can help brands track and optimize the supply chain efficiently.
2. Digital Procurement Transformation
As part number complexity increases, it becomes more challenging for the OEM to optimize orders and delivery cycles to meet just-in-time production principles. Digitizing the procurement process provides better visibility and offers flexibility for bottle-necks.
3. Use of Clean Procurement Data
OEMs need to have dependable vendor performance metrics to predict profitable outcomes offer vendor assistance to scale and make customer commitments. A digitized procurement process allows for required analytics and data modeling.
4. Vendor Managed Inventory
OEMs are constantly stretched for inventory management with multiple parts, space and time-based requirements on the assembly line. With more than 40 warehouses located in preferable production geographies across India, Moglix offers OEMs unparalleled inventory management options.
5. Site Aggregation
As modular and decentralized manufacturing become the norm for OEMs, the need for a single window and seamless experience for multi-location procurement becomes essential. By ensuring that the best performing vendors can supply material and parts to all production locations without worrying about product quality standards, we bring further optimization and cost reduction.
With the rise of electric vehicles, the automotive industry is going through a critical evolution cycle. As the customer demand for better value increases, OEMs should audit and revamp their procurement strategy for the next decade.
Centralized procurement
Centralized procurement
Centralized Procurement
What Is Centralized Procurement?
Picking the appropriate system of control is always difficult for an organization. And when it comes to procurement, the decision becomes crucial for the supply chain management. Centralized procurement is the purchasing system wherein all branches of the agency, spread over vast geographic expanses, fulfill their procurement requisites through one common purchasing organization.
Usually, it is one specific department that purchases all goods and services as per the needs of all the company branches. A purchasing manager leads it. This structured process gives balance to the organization and reduces costs. It is especially beneficial in finding local vendors in proximity to the company branches.
What Are The Merits of Centralized Procurement?
Centralized procurement prevents duplicity and enjoys the merits of low transportation and inventory management costs. Many of its advantages are discussed here.
- Overhead Expense Reduction- Separate facilities for procurement require individual lease agreements, facility, security features, and insurance policy. These costs can be reduced enormously by one functional, well-equipped department with well-trained staff for procurement. Overhead cost reduction is one of the essential features of centralized procurement. Moreover, purchasing managers can buy in bulk at reduced costs and manage inventory as per company needs.
- Advanced Control- Managers spread out over several departments and out of touch with the employees may become inefficient without proper regulation. Centralization keeps the staff well-knit and alert. It helps build team cohesion, as people get acquainted with each others’ work styles and approaches. The organization is consistent over all the channels, with employees following the same rules regarding brand image and customer service.
- Relations with Suppliers- Centralized procurement encourages cultivating and maintaining good relations with suppliers. It always proves to be beneficial. Besides, it enables the purchase of standardized items through standardized procedures.
- Elimination of Intermediaries- Buying in bulk strengthens the bargaining position of the buyer. Moreover, they can tap into the advantage of quantity discounts. Direct contact with suppliers becomes possible. It eliminates the link of intermediaries, thus making the whole process faster and more efficient. Other advantages of centralized procurement include specialization, sharing knowledge and resources, saving time, uniformity in purchase policies, and greater efficiency.
What Are The Demerits of Centralized Procurement?
As good as it sounds, Centralized procurement has its own set of disadvantages.
- There might be a disparity between a large number of purchasing demands and what is being bought. Specific requirements may not be met perfectly.
- There can be delays in obtaining the requisite items. Moreover, Centralized procurement depends on an exquisitely trained staff who need expertise in purchasing all kinds of specific items.
- If multiple branches spread over large distances, it may not be feasible to have a centralized purchase department. However, enterprises can resolve the issue efficiently by authorizing regional, cost-effective purchases.
- This process, although efficient, gets complicated as the organization grows in size. The management gets complex, and timely replacement of faulty items becomes difficult. Some argue that this might adversely affect employee morale as well.
What Kind of Procurement Is Right For a Business?
The question often arises whether a centralized or decentralized procurement method is right for any given organization. If someone wants more control and transparency, centralization is the key. However, a “Center-led-structure” for procurement rather than a fully centralized process may give the organization just the right amount of flexibility as well as control, with a strategic stronghold on procurement, leaving the tactical purchases to individual business units.
What Is Centralized Procurement?
A Chief Procurement Officer or CPO is in charge of managing the sourcing and procurement of a business. The primary job of a CPO is to ensure that the supply chain management is functioning smoothly. With the world becoming one giant tech hub, supply market risks, the pressure of compliance, automation in matters of procurement have suddenly put forth numerous challenges for b2b supply chains. And it gave rise to the growing need for a procurement department with well-trained staff and an executive to oversee things. That executive is the CPO. There has been a rising demand to increase expenses under management and improve the visibility of the procurement division’s specialization to help in better cooperation among employees and departments.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Bullwhip Effect
Bullwhip Effect
Bullwhip Effect
What is Bullwhip Effect?
The concept of the Bullwhip Effect first appeared in Jay Forrester’s “Industrial Dynamics” (1961). Hence it is also termed the Forrester effect. It is often interpreted as “the observed propensity for material orders to be more variable than demand signals and for this variability to increase the further upstream a company is in a supply chain”.
It is a phenomenon often observed in the distribution channels where demand analysis and forecast yield inefficiencies in the supply chain and is characterized by either inefficient production or excessive inventory. To the nightmare of procurement managers, the frantic hoarding and rationing during the onset of the Covid-19 pandemic created feedback loops with increased demand for everything from medical supplies to household items.
How Was the Term Coined?
When a whip is hurled, the distortion in its wave pattern increases further away from its point of origin. And the amplitude increases down the length. Similarly, the accuracy of forecasting estimates decreases as one goes higher up the supply chain.
Example Of Bullwhip Effect
To give a crude example, from the perspective of a retail chain, the demand for Christmas ornaments and gift-giving increases during December, with a lot of e-commerce websites furnishing discounts on items. With the increase in shipping and massive use of logistics services such as FedEx, the Bullwhip Effect speaks of how the entire B2B supply and distribution chain may get disrupted due to misestimates of sellers.
In the same example, Christmas isn’t celebrated as grandly in India, compared to the US, and sellers might misestimate the demand for such items in the Indian market, causing them to purchase in bulk from manufacturers who will produce more under the impression that demand is high. It will give rise to the Domino Effect as a small misreading of data on the seller’s part created a large bulk of products with drastically low demand, resulting in insurmountable losses.
What Are Its Causes?
Disorganization, lack of communication, free return policies, order batching, price variations are all common causes of the incitement of this effect. However, it can be divided into Behavioural and Operational.
- Behavioral causes are mostly due to the irrational behavior of humans in the supply chain, as well as the trade-off between stationary and dynamic performance, use of independent controllers, etc. Misuse of base-stock policies, misperceptions of feedback and time delays, panic ordering reactions after unmet demand also come under its ambit. Interestingly, it has been observed that people with an enhanced need for stability and safety seem to perform worse than those who take risks in a simulated supply chain environment; those with higher levels of self-efficacy experience comparatively less trouble in the same scenario.
- Operational- In 1997, four major causes of the Bullwhip Effect were proposed, which later became a standard in identifying the effect. Demand forecast updating is the gradual increase of each safety stock by the component individuals in the supply chain. Gaming and Rationing incite inconsistencies in the ordering information received as well as a supply made. Order batching and Price fluctuations create artificial variability making data more erratic.
What Are the Countermeasures?
Kanban or the scheduling system of lean manufacturing used by Walmart’s distribution system is a near-perfect success in this regard. Increased information circulation helps in accurately assessing demand and reducing costs throughout the supply chain. Order smoothing is another strategy against the Bullwhip effect. Several other methods are used, such as eliminating pathological incentives, strategic partnerships, demand-driven MRP, Just In Time Replenishment (JIT), Vendor managed inventory , etc. Cutting delivery time in half is said to reduce the effect by nearly 80%.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
What is Annual planning cycle
What is Annual planning cycle
Annual planning cycle
What Is The Annual Planning Cycle?
An operational plan made every year is strictly dependent on the planning cycle of the corresponding year. It facilitates the entire planning and manufacturing of b2b supply chains by encompassing financial budgets and prediction of possible uncertainties in a given period.
In other words, an annual planning cycle is a process repeated every year that considers budgets, forecasting risks and opportunities in the future, and forming strategies and operational plans. The business flourishes with efficient management and better coordination between departments and employees.
What Are The Steps In The Annual Planning Cycle?
Different b2b supply chains and manufacturing organizations follow specific steps in the annual planning cycle. Widely, these five steps make up this cycle.
- Strategy Alignment- In an article in Harvard Business Review in 2016 raised two questions. How well can a business strategy support the realization of the company’s purpose? How well can the organization support the achievement of its business strategy? Strategy alignment is a system that ensures that a b2b or any organization’s structure, utilization of its resources, and work culture support its strategy. Wider work environment, awareness, technological upgrade helps in this. It helps in the efficient utilization of resources. It is beneficial in large businesses spread over vast geographical firms or regions having complementary goals.
- Operational Forecasting- Manufacturing, new product generation, and logistics, come under operational processes. Purchase managers and procurement professionals are in charge of the same. However, organizations implement forecasting methods such as time series analysis, projection, and causal models to predict business outcomes. The resultant estimates from these forecasts help managers to develop and implement production strategies accordingly. Operations managers contribute to the entire process to deliver the final product to the end-user. These forecasts enable budget formulation, sales, and demand planning.
- Financial Forecasting- Financial forecasting involves collecting requisite data, processing, estimating, and predicting the possible future performance of a business. This estimate is crucial in getting a fair understanding of how the business might look financially in the near future. Like all forecasting, historical performance data enables visibility into the future. These help predict future trends so that the business can prepare accordingly.
- Capital Facilities Planning- Capital planning proposes specific work or projects and estimated costs for the future. It allows businesses to better understand the future of their assets and plan in accordance. Effective capital planning has numerous merits. It facilitates the organization’s strategic objectives and priorities, long term goals, ensures understanding and coordination among key decision-makers, and provides a viable platform for communicating the same to shareholders about the financial needs and priorities of the business.
- Facilities Planning- Facilities planning is the formulation of a long-term and progressive strategy for managing a single facility or an organization’s complete space area that supports its operation for present and future scenarios.
- Annual Operating Plan- The last stage of this cycle is developing an annual operating plan, which is a document that defines the financial, physical, and human resources required to achieve the short-term goals of the business. In other words, it is a roadmap for operations within an organization for a given time, usually a year.
Moreover, it is often thought that the alignment of business strategy and HR strategy impacts performance. Coalignment of business strategy, business structure, IT strategy, and IT structure contributes to performance. Alignment also generates a positive work climate, staff engagement, a solid commitment to core values, and fewer in-fighting.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Sunrise on the East: The Purvanchal Expressway Story
Sunrise on the East: The Purvanchal Expressway Story
The 340 km long Purvanchal Expressway is a 6-lane wide (expandable to 8) newly launched expressway in Uttar Pradesh, India. It is currently the longest expressway in India and part of the four connected expressway visions of the U.P Government.
A Lifeline for Commerce, Trade and Transportation for East U.P and Bihar:
The Purvanchal Expressway connects Chand Saray village near Gosainganj in Lucknow district with Haydaria village on Mohammadabad–Buxar highway (NH-31) in Ghazipur district. It passes through 9 districts of Uttar Pradesh, i.e. (from west to east) Lucknow, Barabanki, Amethi, Sultanpur, Ayodhya, Ambedkar Nagar, Azamgarh, Mau and Ghazipur. The expressway also includes a 3.2 km long airstrip for emergency landings at Akhalkiri Karwat in Sultanpur district.
A Stellar Addition to an ever-impressive List of National Infrastructure Projects (NIP) in India:
The entire project was split into eight packages awarded to 5 contractors. Apart from these contractors, two independent companies were chosen to design one half of the expressway. The total project value (including land acquisition) is upwards of INR 22000 crores.
The total construction cost is around ₹11,216 crores. 22 Flyovers, 7 Railway-over-bridges (ROB), seven major bridges, 114 minor bridges, 6 Toll Plazas, 45 vehicular-underpasses (VUP), 139 Light VUP, 87 pedestrian underpass and 525 Box culverts have been constructed.
Paving A Carrier of Development for India:
Government sources have dubbed the Puvanchal expressway as the ‘spine of development’ for Uttar Pradesh. The project’s sheer scale (the largest of its kind) brings a significant upgrade to the economically under-developed districts and towns of Eastern U.P and neighboring states. The government has also planned eight industrial hubs along the expressway to boost commerce and job creation further.
The Purvanchal Expressway is an EPC-based project with multiple contractors. The seamless alignment of the contractors to the master design plan detailed by independent agencies was critical to the on-time completion of the project. While the second wave of the pandemic did introduce delays, the contractors and government were able to largely mitigate considerable delays in the launch.
The addition of an airstrip to the design of the expressway added additional material, labor and quality benchmarks per DGCA compliance standards.
A Digital Procurement Solutions Approach for New-Age Contractors
As one can imagine, a project of many moving parts needs intense coordination in procurement and the supply chain of raw materials, consumables, and made-to-order manufacturing solutions. A single missing link in the chain results in labor inefficiency, time delays and a bloated budget. Some key takeaways for EPC companies, contractors and suppliers to usher in a transformation in crucial infrastructure projects:
- Adopt a flexible, reliable and digital procurement solution to reduce the PR to PO cycle. A slight reduction in the time cycle can have a lasting impact on costs.
- Digital procurement enables end-to-end flexibility and transparency of the procurement chain, involving many materials like TMT bars, cement plates and ready mix concrete.
To know more about how an EPC solution can work for your construction or infrastructure project, reach out to Moglix. Explore the best raw material procurement solutions for infrastructure companies. Click here to know more: https://business.moglix.com/our-solutions/infrastructure
Pioneering B2B e-commerce and Supercharging SME Growth
Pioneering B2B e-commerce and Supercharging SME Growth
Moglix is the first industrial B2B e-commerce platform to enter the unicorn club. Set up in 2015, we have grown at 500% for three consecutive years now. With 7 lac SKUs across 50+ categories of MRO spanning a price range of INR 50 to INR 1 crore, Moglix offers the largest and widest range of industrial goods in India.
We pioneered GST compliant e-invoicing required for audit trail and input tax credits at all levels in the B2B supply chain. We have enabled RFQ placing for getting quotes on bulk procurement. We also offer consultative selling for customers to improve performance and reduce product costs and the total cost of ownership. We enable suppliers to promote their brands and build equity with MSMEs and direct customers, offering discounts and product updates for customers under our loyalty program.
In the last 6 years, we have grown four to five times in terms of top line. We have enrolled 5,00,000 MSMEs and 16,000 suppliers into India’s digital economy and created jobs for our 1000 strong workforce. We have 35 locations in India, Singapore, UK and Middle East and we have expanded our global sourcing portfolio to a very large extent. We believe that India will be going through the same rush in the B2B e-commerce segment as the B2C segment. With deeper penetration of smartphones among rural and suburban users and digital financing, India has an opportunity to revel in the benefits created by the digital economy. In the next 5 years, we are looking at a 20X growth of the SME business.
Abheet Dwivedi, Senior Director, Moglix, Speaks on the Future of Infra Supply Chain in India
Abheet Dwivedi, Senior Director, Moglix, Speaks on the Future of Infra Supply Chain in India
“With the inception of the National Infrastructure Pipeline, India’s investment in the infrastructure sector as a percentage of the GDP is now at 8.5%, which is quite phenomenal when you look at historical trends of our infra spending.”
Abheet Dwivedi, Senior Director, Infra & PSU
Moglix is into the supply of materials; every material that is needed in the infra value chain. Abheet Dwivedi, Senior Director, Infra & PSU was in conversation with ET Infra for the podcast “The Future of Supply Chain in India”. During the conversation, Abheet Dwivedi shared his perspective on a range of questions concerning the infrastructure industry vertical and how Moglix is disrupting the infrastructure supply chain space for EPC companies with a unique offering of a digitally integrated suite of supply chain solutions. Here are the excerpts of the conversation:
Interviewer: So, let me begin by asking you about the long-term spending by the infrastructure companies say in the next five years under this national infrastructure pipeline, what do you make of this?
Abheet: Thank you…. So, firstly, if you look at historical spend perspective, from the 2000 onwards all the way up almost 2016 -17. With the NIP, national infra pipeline coming into the picture, this spend has actually more than doubled to in the current budget to almost 3.5%. we are spending close to eight and a half percent of our GDP on infra which is quite phenomenal compared to the levels we had historically seen….
Interviewer: And what about the digital project management under the ambitious PM Gati Shakti plan, which was unveiled by the Prime Minister in October?
Abheet: ….One thing that has historically been missing is “how efficiently are we spending the infra budget”, right. We have started measuring this more coherently now. I would like to mention four major initiatives….
Moglix Set To Take a Big Leap, Tap Bigger Opportunities
Moglix Set To Take a Big Leap, Tap Bigger Opportunities
‘Moglix’ may sound like an unusual name for a company. But if you suspect that it has been derived from the iconic character in Rudyard Kipling’s Jungle Book, you will have scored ten on ten. The founder of the Noida-headquartered start-up, Moglix, dealing with regular supplies to enterprises, infrastructure projects and now also supplying chain financing (basically B2B retail play) is clear in his mind: his business should eventually have the universal appeal of a character like Mowgli.
“It had taken me more than two months to finalise this name. I was looking for a name which can readily establish our brand identity. Alibaba and Google are great brand names. And everybody knows Mowgli,”
Rahul Garg, CEO & Founder, Moglix
Since the beginning of its journey in 2015, the company has been in the news for having the legendary Ratan Tata supporting it individually as an investor which Garg says has been a huge blessing.
As Moglix grows in age, its future leaps is getting higher. The company recently saw its valuation more than doubling as it touched $2.6 billion after Series F funding around the end of January when it raised a further $250 million (a total of $470 million has been raised since its inception). Starting mainly with tools and equipment suppliers to industries and manufacturing units, the company has significantly broadened its portfolio over the years and today boasts of over 700,000 SKUs in 50-plus categories across MRO, packaging and infrastructure. It has over 5 lakh SME units as part of its ecosystem and it manages 35 warehouses across the country.
“70-80 per cent of our backend logistics requirements is taken care of by our own team. We partner with players outside of the company mainly for long-haul transportation,”
Garg adds
Claiming complete ownership of the source-to-site supply chain for EPC construction projects and business, it serves some of the largest infrastructure and construction companies, energy companies, and oil & gas producers.
“We decided to launch the vertical in 2020 because of the demand from customers. Most infrastructure sites are geographically dispersed and in non-metro locations. The firms working in those locations want reliable partners for the regular needs of their engineering and design teams working on site,”
Abheet Dwivedi, Director (Infra & PSU), Moglix
Meanwhile in July last year, Moglix also ventured in a new direction to further endear itself with manufacturing customers when it acquired Vendaxo (founded in 2017), an e-commerce platform for the buying and selling of used machinery. According to a company note, Vendaxo is a B2B e-commerce platform that provides used machinery liquidation solutions to MSMEs and large manufacturing enterprises such as Siemens, Arvind India, Marico, Raymond, and Torrent Pharma. India’s used machinery market is estimated to be worth close to Rs64,000 crore.
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