“It’s time for companies to review supply chain operations to take into account the risks resulting from disruptions”
Improving logistics, procurement and procurement are the main focus areas of the Indian government and third party logistics is expected to increase by 8% CAGR (compound annual growth rate) during 2021-25 , Pande told PTI on Sunday.
Highlighting some trends in the sector, he said: “The resilience and sustainability of supply chains is an issue that is gaining the urgent attention of political and business leaders in all major economies.
“The supply chain industry is transforming by diversifying sources of supply, going beyond China, so far a clear choice for most as the manufacturing hub of the world,” Pande said, adding that “this is an opportunity for India and other countries as the next potential source of supply.”
Three major global trends are impacting global supply chains today, said Pande, president of Apex Avalon Consulting in Singapore.
These include the impact of the pandemic, the impact of the geopolitical rivalry between China and the United States and the growing impact of climate change, he explained.
The global push for sustainability at all levels is clearly embedded in three popular ESG goals: environmental, social and governance themes, he said.
These trends will require companies to take a closer look at how businesses organize themselves to source and source efficiently, especially selecting suppliers who will survive this coming disruption to ensure their supply chain becomes resilient and resilient. sustainable, he observed.
“This in turn requires a very different approach to organizing a company’s procurement and procurement organizations,” suggested Pande, who was previously the president of Tata Communications Services for Asia-Pacific.
At present, he said, many global and regional companies tend to prioritize large, centralized procurement functions that can be better overseen and allow companies to realize cost savings related to out-sourcing. company-wide.
Many have regional sourcing centers that source from various regional suppliers with whom they have established long-term relationships, observed Pande, noting that the industry’s primary concern is to keep costs down while maintaining performance. standards and reliability. “In the world of ‘just in time’ inventory this has worked well.”
However, in the new world impacted by the scourge of geopolitics, pandemic and sustainable development, purchasing and logistics will become very difficult to manage. He said, “Instead of just in time, very often it can become just in case!
Pande elaborated with questions. “Are internal procurement organizations ‘fit for purpose’ in a future world with these triple supply chain challenges? Can we envision specialized companies or vendors who are solely responsible for successfully navigating such changed environments? These specialized entities will then manage the procurement functions for many organizations using specialized skills, scalable processes and cutting-edge technological platforms to improve transparency in purchasing: see better, buy better! ”
The task of the procurement function within large organizations will then be of a much higher order to supervise these specialized purchasing entities, to force them to define measures rather than to manage both the procurement operations. in the short term and try to build a resilient and sustainable supplier base for their organizations. “In the new world, this might be the way to go,” Pande said.
There will be four tasks that these specialist sourcing providers will focus on: using their preferred wholesale buying position to improve profitability for multiple businesses, leveraging a diverse supplier base, providing a platform of digitization as a service, integrating the ESG framework as part of service procurement, said the seasoned business consultant.
More and more, these specialized suppliers are becoming more and more important. Some are being removed from existing procurement organizations, for example, Pande said, citing the example of Chain IQ in Zurich, a spin-off of UBS Bank that decided to outsource its procurement and procurement functions. by creating a neutral entity.
In some cases, large IT / Business Process Outsourcing (BPO) vendors such as IBM and Accenture have taken on this task in addition to their existing services; or, as in the case of Indian sourcing vendors like GEP and WNS Holdings, technology-driven companies created by sourcing specialists, he said.
Indian tech giant WNS is one of the heavyweights with solutions in the global market. According to Pande’s observation, many of these entities provide some or all of the above tasks and many often have in-house procurement staff to clients as part of a BPO arrangement that benefits both.
Pande suggested, “It’s time for companies to fundamentally review their supply chain operations to take into account the risks resulting from the upcoming triple disruptions. The winners will be those who take this into account and restructure early. ”