Focusing on Cost Optimisation Will Enable India To Turn Into A Global Manufacturing Hub
Focusing on Cost Optimisation Will Enable India To Turn Into A Global Manufacturing Hub
Disruptions caused by COVID19 in global supply chains have moved the world to search for the next global manufacturing hub. This gives India the
As manufacturing enterprises navigate through “make or buy” decisions on costs, a focused approach to cost
Indian Start-ups are poised to navigate on the trajectory of growth: Sandeep Goel
Indian Start-ups are poised to navigate on the trajectory of growth: Sandeep Goel
COVID-19 pandemic has brought a new set of challenges for the economy along with a major inflection point for Indian start-ups. Such unprecedented economic challenges will create new opportunities for enterprises to innovate and develop new-age solutions to the problems created by the COVID-19 pandemic.
The ability of Indian start-ups to leverage the current paradoxical economic conditions to their advantage shall decide the winners and losers.
Read More: https://www.mediacatalyst.in/future-of-the-indian-startup-ecosystem-in-the-post-covid-19/
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Times Jobs spoke to Rahul Garg, CEO & Founder, Moglix on his perspectives as a leader and entrepreneur, on founding a B2B commerce Startup, among others. Here’s an excerpt from the interview:
With which job role/ position did you start your career?
After graduating from IIT Kanpur, I started my career with Ittiam Systems in Bengaluru. There I focused on learning the nuances of technology, learning how to build world-class products and working as a team member. It was a high energy environment where I gained well-rounded experience across my project, team and technology. It helped me build the foundation of my career around a high bar on technology expertise, hard work and team-building.
Name one person who had a tremendous impact on you as a leader?
My father has been a significant inspiration to me in my personal and professional journey. He has successfully scaled a large company in India, solving various supply chain challenges in the manufacturing sector and mentoring teams of talented professionals along the way.
5 Priorities for CXOs to Unlock the Manufacturing Supply Chain
5 Priorities for CXOs to Unlock the Manufacturing Supply Chain
Is a turnaround just around the corner for the manufacturing supply chain in India? Insights from various manufacturing indices suggest that while aggregate performance continues to be sub-optimal, the upward plateauing of some verticals suggest that distant signs of recovery may not be too far away after all despite the weak sentiments prevailing now. The dip in the Nomura Business Resumption Index from 70 to 66 over the first fortnight of July, suggests the manufacturing engine cooling down. Despite the Markit PMI rising from 31 in May to 47 in June 2020, industry verticals have continued to grapple with challenges of constrained capacity, weak demand, contraction of the workforce and lack of alternate supplier sites for import substitution. Moglix Business is partnering with manufacturing enterprises to make sense of these emerging patterns and identify the priorities that CXOs need to address to unlock the manufacturing supply chain. Explore these top 5 priorities here.
Read:COVID19: The Three Phases of Recovery in Manufacturing
Map Supplier Clusters, Demand Centers and Labor CorridorsThrough the Pandemic
In India, manufacturing supply chains are highly intertwined and consist of a complex matrix of supplier clusters, demand centers, and highly concentrated labor corridors. CXOs in manufacturing enterprises need to map the exposure of their respective supplier clusters, demand corridors, and labor corridors to the contagion to identify their supplier downtime, time to recovery (TTR), and the spikes in logistics and supply chain management costs. One hundred thirty districts in the country account for 38% of manufacturing output, 50% of final private consumption, and 40% non-farm employment. Many of these districts are still in the red zones. These insights explain the contraction of output and the sub-optimal capacity utilization in the range of 28-63%. Moreover, 50% of truckers in the logistics and construction sectors come from just 15 of these districts. It explains why workforce deployment has continued to be 33-57% and why consumer demand is yet to pick up.
Read: How to Reduce Coronavirus-led Supply Chain Disruptions
Track and Trace Opex Regularly Amidst Shrinking Revenue and Output
Keeping track of the OPEX and managing indirect and direct expenses is imperative to create new avenues of efficiency. The rise in direct and indirect costs facing manufacturing enterprises is due to higher overhead costs of safety protocols, loss of economies of scale due to a drastic reduction in volumes, high freight charges, and other logistic expenses, increased costs of raw materials, power cost and high costs of debt financing. CXOs in Indian manufacturing enterprises need to pivot their management of indirect costs on line items like MRO inventory, packaging materials, packaging design, maintenance, and interest payments on suppliers spend analytics through digital procurement platforms. Digital platforms that run on artificial intelligence and machine learning can enable CXOs to stay informed on evolving developments in the supply chain, exercise higher control on strategic sourcing, and regularly track and trace OPEX from anywhere and at any time.
Realign Supplier Networks to Facilitate Import Substitution
Manufacturing enterprises have continued to witness a decline in exports for four consecutive months during the pandemic. Trade wars and geopolitics have already weakened the global trading environment. The pandemic has caused further supply chain disruptions for several verticals like automotive, textiles machinery, leather goods, footwear, electronics, and electrical equipment. Consequently, these verticals have continued to register abysmal manufacturing output thus far. The erosion of trust in supplier networks with high exposure to one country calls for CXOs to explore import substitution opportunities for their strategic sourcing. While import substitution and realignment of global supply chains are strategic actions, Indian manufacturing enterprises need to avoid further procurement risks. CXOs need to explore strategic partnerships with local industrial suppliers through digital supplier collaboration models to achieve agility at scale in their import substitution efforts and hit the ground running.
Digitize Procurement Processes to Reduce Fixed Costs and De-Leverage
One of the significant challenges facing CXOs in Indian manufacturing enterprises is the resilience of their balance sheets and cost structures. Research suggests that fixed costs account for 20-35% of the total costs for Indian manufacturers due to a high CAPEX on investments in land, plant, equipment, and machinery.CXOs of Indian manufacturing enterprises need to rationalize costs in the short term while creating opportunities to move towards leaner fixed cost models in the long run. Leveraging digital models for the automation of cost centers like procurement organization, supplier collaboration, and quality control can enable supply chain leaders in manufacturing to transform fixed costs incurred on these functions into variable costs and achieve the targeted balance sheet impacts. At Moglix Business, we have seen enterprises that have migrated towards e-procurement models save up to 5% on direct and indirect costs.
Read: What Does Procurement Transformation for the Next Decade Looks Like
Digitize Sales and Distribution Processes to Open New Revenue Streams
The unlocking of the economy has shifted from a cold turkey and holistic approach to a more decentralized and localized one. The uneven spread of the contagion across regions in the country makes it difficult for Indian manufacturers to operate their sales and distribution functions. Technology penetration in Indian manufacturing enterprises is below 5%. One of the significant opportunities for CXOs in Indian manufacturing is to leverage digital B2B commerce models to restart the engines of revenue enablement while ensuring that sales and distribution people, distributors, and customers continue to collaborate from the protected environments of their homes. Research shows that OEMs and authorized distributors of industrial supplies that have leveraged digital B2B commerce models are likely to stay ahead of their contemporaries as the economy continues to move towards recovery gradually.
Podcast E6: Insights on Solving the PPE Quality Challenge in the UK
Podcast E6: Insights on Solving the PPE Quality Challenge in the UK
“Getting Back to Business Safely” is a series of podcasts that explores the latest developments in the UK as businesses resume their operations in the backdrop of the COVID19 pandemic. Through this series, we will bring expert opinions from the fields of supply chain and procurement and discuss challenges and opportunities faced by them. In the sixth episode of Moglix Talks, we spoke to Vivek Kashyap, VP- Business Development & Supply Partnerships, Moglix Business, about what businesses need to learn about quality of PPE and safety items while placing bulk orders and how they can respond to surge in demand as they resume operations in the UK and around the world.
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Podcast E5: Now and Next in The Packaging Sector
Podcast E5: Now and Next in The Packaging Sector
In the fifth Episode of Moglix Talks, we discuss the impact of COVID19 on the packaging industry with Shobhit Goel, Vice President, Packaging. In this episode, we’ll understand the impact of the pandemic on the industry, then we will move forward to discussing what challenges the industry is facing, how the industry will cope with single-use plastic consumption, what reforms it needs for better implementation of smart packaging and finally we’ll be concluding with what’s next for the industry.
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The PPE Shortage of 2020: 4 Insights for Your Supply Chain
The PPE Shortage of 2020: 4 Insights for Your Supply Chain
A recent press release published by the Department of Health and Social Care in the UK on 25 June suggested that about 2 billion PPE items were delivered to the frontline workers since the start of the pandemic. This outcome, the release said, was a collaborative effort of the government, NHS, industry bodies and the armed forces, to massively scale-up distribution networks. In the last two months, this news has come as a welcome relief to everyone, especially, frontline workers. What the government says it has achieved is no small feat.
However, some reports such as the British Medical Association suggest that about 1 in every 2 frontline UK doctors surveyed had to source their own PPE. Even Italy, which has one of the best public health systems in the world, was dependent on imports and donations of protective equipment and they didn’t have enough to fight the pandemic.
Could many of these have been prevented if they had access to effective and adequate PPE? The answer is a resounding yes. However, our unpreparedness to handle the PPE demand was largely due to the global nature of the crisis. In a scenario where a particular country or a continent were only affected, the rest of the world could have replenished the PPE demand. The global nature of this crisis has accentuated this shortage of PPE around the world. This does not mean that there are gaps in all global supply chains. Even before coronavirus struck, global trade volumes were falling for the first time since the 2008-2009 financial crisis.
In fact, what the pandemic has really done is reinforced the focus on the importance of medical supplies and products in the supply chain. According to a report by WTO, trade in medical products (personal protective products, hospital and laboratory supplies, medicines and medical technology) which have been described as critical and in severe shortage during the COVID-19 crisis totaled about USD 597 billion in 2019, accounting for 1.7% of total world merchandise trade.
Read: COVID19: The Three Phases of Recovery in Manufacturing
Today in the aftermath of the pandemic, it is now estimated that the global personal protective equipment (PPE) market, which was valued at USD 52.7 billion in 2019, is expected to reach USD 92.5 billion by 2025. A number of countries and companies, including us, have repurposed their supply chains to meet demands of masks, sanitizers and medical equipment locally and globally.
To ensure this demand continues to be met, organizations need to invest in increasing visibility and customise the operability of their supply chains if they intend to meet the complex demand patterns across countries and companies alike. These are a few lessons that we have learned from the disruption caused by the coronavirus. These practices will go a long way into exemplifying supply chains of the future.
Listen: How We are Enabling UK Businesses to Get Back to Work.
1) Adapt and learn
The modern supply chain is long and complex with multiple links. Therefore, it is important to establish accurate and timely communication between the suppliers and end-consumers. To ensure that it happens, and that the transfer of information doesn’t get lost in translation, there needs to be open communication between countries where the disruption of one supply chain can be overcome by another in the future. Localisation of supply chains is one thing, but tighter supply networks could also lend better enforcement of supplier standards and improve product quality. Take for instance, Since the 2011 disaster in Japan, global auto suppliers have changed the way they produce and source the auto parts required to assemble a single car, including raising stocks, diversifying production and creating alternative manufacturing capabilities.
2) Keep your customers close, keep your suppliers closer
Let’s consider the example of the NHS. The Category Tower Service Providers (CTSPs), which are responsible for approving the companies that appear on the Secretary of State for Health and Social Care (SCCL) catalogue, are not required to diversify the supplier base for the products in their “category tower”. This is done so, in part, to create an oligopoly or limit the competition. However, in the current circumstances like these, the NHS has the opportunity to expand the SCCL catalogue so that procurement of scarce goods in bulk can take place. This means that more suppliers will have the opportunity to enter the category tower and increase reliability of supply during disruptions.
3) Increase visibility across the supply chain
The modern supply chain is long and complex, but it doesn’t have to be opaque. Investing in increasing visibility across the supply chain will enable executives to make decisions in real-time, conducting an end-to-end risk assessment, identifying potential problem areas, and devising crisis management strategies. Visibility across the supply chain is also critical for making decisions around how to restart lines, prioritize products, and manage relationships with suppliers. A large networking solutions company provides data on changes in supply and demand to partners continuously so they can respond quickly with the help of an technology platform, to connect suppliers and the company. This allows all the firms to have the same demand and supply data at the same time, and keep track of changes in supply or demand immediately.
4) Invest in monitoring tools and analytics
The companies that have responded well to the crisis are ones that took a digital-first approach. They invested in monitoring tools and analytics to forecast the changing demand patterns using market, economic, and social media indicators at the beginning of the pandemic and adjusted their operations appropriately to avoid overstocks and stockouts.
The coronavirus pandemic has given us a lot of food for thought. If nothing else, it has proved that our supply chains need to be more resilient to such unplanned disruptions. Business leaders need to get together to discuss all the possible “what-if” scenarios and the plan of action for the same. The one thing that will aid them in making these decisions? Investing in making their supply chains more transparent and technology-driven.
Moglix has extensive experience in streamlining the supply chains of some of the biggest companies in the world. Our range of solutions including Optimize MRO, Digitize procurement, Simplify packaging, SaaS, and now PPE has helped us in supporting businesses to handle this unprecedented crisis.
Podcast E4: Enabling UK Businesses to Get Back to Work
Podcast E4: Enabling UK Businesses to Get Back to Work
“Getting Back to Business Safely” is a series of podcasts that explore the latest developments in the UK as businesses resume their operations in the backdrop of the COVID19 pandemic. Through this series, we will bring expert opinions from the fields of supply chain and procurement and discuss challenges and opportunities faced by them. In this first episode, we invited Piyush Malviya, Senior Director – Operations & Business Development in Moglix, to discuss the challenges that he sees businesses facing in the UK from the lockdown days, onward to June 15 and beyond.
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How Can Sustainable Packaging Enable Cost Reduction During Covid19?
How Can Sustainable Packaging Enable Cost Reduction During Covid19?
The need for enterprises to be more efficient could have not been more relevant than it is today, thanks to the huge costs imposed by the COVID19 pandemic. One of the ways in which enterprises that manufacture consumer goods can reduce their costs is by reducing wastage in packaging. With intelligent innovation, it is possible for enterprises to combine economic efficiency with compliance with health and hygiene requirements in packaging to achieve the best of both the worlds. Packaging that entails the reduction of wastage and seeks to enable enterprises to do more with less creates new avenues for cost reduction while ensuring hygiene factors for contactless delivery. Some of the major ways in which packaging can enable such hygiene centric cost reduction are as follows:
Reimagine Packaging Design for E-Commerce and Contactless Deliveries
Give the need for social distancing in the wake of the COVID19 pandemic, a clear trend that is emerging in the consumer packaged goods industry is a shift of consumers away from supermarkets, malls, and grocery stores and towards e-commerce enterprises that offer contactless delivery of goods. As such, the paradigm on which packaging is designed has shifted from the locus standi of store shelves to that of e-commerce and online retail. This implies that manufacturers of consumer packaged goods need to pivot their packaging design for greater and clearer visibility on personal devices like smartphones and tablets rather than store shelves. Doing so can actually allow enterprises to reduce packaging costs by forgoing the packaging requirements of grocery stores and supermarkets.
Vendor Consolidation and Single-Window Approach to Procurement of Packaging
Given the evolving contours of quarantine and lockdown across diverse geographies and the decentralized regulatory environment governing these, it makes enormous good sense to suggest that enterprises shall do well to focus on a single-window approach for the procurement of packaging materials to reduce the risks and costs associated with disruptions and freezing of local logistics. An integrated platform for sourcing packaging materials from a single vendor with strong upstream partnerships with local MSMEs and logistics service providers can enabler manufacturers to reduce costs, TAT and respond swiftly to market demand in niche markets.
Digitization of Packaging Supply Chain to Enable Mapping of the Demand and Supply Gap
One of the major factors affecting the packaging supply chain is the manual workflow that impairs the optics of vendor KPIs for packaging. A switch to digital packaging supply chain platforms can enable enterprises to map supplier capacity, objectively assess the TTR (time to recover) from lockdowns, and consequently quantify the quality, cost, and delivery metrics. This shall further allow enterprises to make their packaging supply chains faster, safer and more de-risked during the COVID19 pandemic and beyond.
Differentiate the Necessary Costs from the Unnecessary Costs in Design
The best packaging designs that lead to cost reduction follow a 4D Methodology of ergonomics, cost, sustainability, and logistics. If you want to bring down costs without impacting performance, then you need to think about how you can curb costs on aesthetic aspects. You can do in-depth scrutiny of the below questions to enable the best possible cost optimization process within each carton:
- Can your printing cost be optimized to highlight essential information only?
- Do you need full-color printing? Are there any design tweaks that can give coverage to the blacks and whites?
- Does your product need an inner pack and an outside carton?
- Can your packaging material have more environment-friendly materials like jute, which can reduce your carbon footprint?
Use of Technology to Optimize Packaging Costs
Brands are increasingly using popular CAD systems like Solidworks, Siemens NX12, and ArtiosCAD to ensure the right size and strength needed to package a product. Such technologies will help your enterprise to figure out a lot of information like:
- Dimensions of the inner pack and outer cartons
- Use of right packaging design like blisters, clamshells, corrugated boxes, paper packaging, sacks, or boxboards
- Use of the right dunnage material and size for full protection of the product throughout its journey to the end customer
- How does the carton need to be stacked on a pallet to enable maximum cartons shipped per pallet and higher pallet density?
- Configuration for loading container that holds the pallets
With a focus on these factors in packaging, supply chain professionals can effectively protect the product during its shelf life and the integrity of the contents inside the package. As a result, enterprises gain from reduced cost benefits like no product re-work, lower returns and replacements, and higher savings due to lower occurrence of damaged goods or ‘written off stock’. Also, shipping costs reduce because enterprises can do away with dead weight and optimize volumetric weight and thus make their supply chain more efficient.
Ergonomic Pallet Redesign
Companies are also looking to reconfigure the labor aspect involved in the ‘per piece’ packaging with compact packaging. This technique of simplifying the packaging process needs less labor and brings down the amount of warehouse space needed for storage. Such innovation helps the brand redesign pallet configuration and ship more product volume per pallet. Take the case of an online home décor brand, Exclusive Lane. They used India Post for delivery services. But this service stipulated the wrapping and stitching of products in jute. This step not only took 2 to 3 hours but also an additional cost to execute. When they changed the delivery service, they were able to do away with this packaging cost overhead.
What is Good for Unit Economics Can Address Hygiene Factors Too
It is apparent that in the wake of the COVID19 pandemic enterprises across a wide spectrum of industry verticals will have to prioritize hygiene even as they continue to explore new ways to lessen the devastating impact of COVID19 on businesses. Even a 1-3% cost reduction assumes importance in this context and sustainable packaging has the potential to create new avenues of cost efficiency for enterprises. As enterprises stare at a new normal characterized by the need to be more efficient, safer, and faster in their supply chains, the shift will transform from a trend to a mainstream practice in the packaging domain. In doing so, they are also managing to bring down costs and improve toplines, as seen in the above examples.
Integrated MRO and Packaging Solutions
Integrated MRO and Packaging Solutions
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