BPO DRIVING GREATER VALUE IN SUPPLY CHAIN BUSINESS
Guest Author: Vibhore Khandelwal, Supply Chain Consultant
RECOVER | REASSESS | RESPOND
Table of Contents
Over decades supply chain is undergoing major disruption and striving towards to become more organized, robust, agile and adaptable. To succeed and sustain, organizations will not only need to monitor their current ways of working and competition landscape however need to understand and adapt to fast-changing ecosystems, focusing on customer-driven market, reflexive supply chain and multimodal value chains.
Supply Chain being the backbone of the entire value chain has to be robust and resilient to market fluctuations and has to be measured very empirically. To make rapid decisions in today’s fast-acting environment, we need smart, time-saving, easy to interpret and most importantly decision-supporting key performance indicators (or even better Actionable Insights).
Though the organizations are aware of these facts but still unable to bring the processes and models up to the mark. Amid these challenges, supply chain and procurement will assume greater strategic importance than ever before. As objective business partners focused on both value and cost, they are strongly positioned to champion the recovery through the crisis and set the stage for winning the future. While most Fortune 500 companies have recognized the need for robust and effective supply chain and procurement functions during the past 20 years, leaders will use 2020 to strategically reposition the impact of these functions.
COVID-19 has thrown the global economy into flux. And with that, has triggered a rapid shift in enterprise goals and priorities. Amid this volatility, how should procurement and supply chain teams organize for the rest of 2020 — and beyond? What should you be doing now to thrive in the new normal? To address this, ‘e-SMART’ will be the New Normal Approach for Supply Chain Functions –
e – EMPATHY (PIVOTAL POINT – Supplier & Customer)
S – SUSTAINABLE
M –MEASURABLE & MANAGEABLE
A – AGILE & ANALYTICAL
R – RESPONSIVE & RESILIENT
T – TRANSPARENT
Let’s first analyze the current situations and see how e-SMART is going to be NEW MANTRA for sustainable supply chain during COVID and beyond. Also, how BPO will help customers in institutionalizing this concept and support in speedy recovery.
A. PRE-COVID Supply Chain command areas for organizations across globe –
B. DURING-COVID command areas –
Supply value chains cannot be established overnight. It takes time and effort to qualify potential suppliers in areas of manufacturing quality, capacity, delivery, cost and their ability to respond to engineering or demand changes. Thus, supply value chains are designed for longer-term needs. Once they are established, it can be difficult to change them quickly to adapt to unpredictable disruptions. The COVID-19 pandemic has reminded corporate decision-makers that there is a need to develop new business strategies in their future supply chain designs. The KPIs to be considered for future supply value chain designs will likely contain both traditional metrics such as cost, quality and delivery, and new performance measures (3R’s) including resilience, responsiveness, and re-configurability. What companies actually need is a really user-friendly, yet smart, system that supports and drives action in a process of continuous improvement.
The focus of supply chain management is shifting from limiting and controlling spending to looking at how to build better relationships with customers and suppliers
Things that will work – Considering the short term and looking for immediate gains, following are the options where BPO’s can support and proves to be strategic partner in recovering from this pandemic:-
Forward-looking intelligence and benchmarking are producing fact-based insights about cost drivers and advancing supply chain and procurement to new levels of sophistication.
Digitalization has helped immensely in driving efficiencies and allowing companies to make smarter decisions in their supply chain. Therefore it is the high time when BPO can partner with organizations and run POC’s (Proof of concept) on the low hanging processes. This should include RPA followed by AI/ML coupled analytics.
Things that will not work – Areas where BPO intervention can’t be helpful at this stage (in shorter duration) are as follows –
C. POST COVID command areas (TO BE SUPPLY CHAIN)
Moving forward, there will be an increased need for infrastructures and technical means to create the transparency within global supply chains. There must also be a call for the development of predictive models for proactive scheduling and dynamic planning of supply demands with the consideration of uncertainties and risk factors. These predictive models will help corporate decision-makers do what-if analysis of various scenarios.
BPO is going to be the game changer for the clients. The COVID-19 pandemic is acting as a catalyst for rapid transformation of the traditional BPO model. It’s going to be time when Outsourcing Partner competes on the preparedness and flexibility clients may choose to strengthen the relationship and perhaps looking forward to work ahead rather take work back in-house. The providers are lauded for their practical and pragmatic approach. The future of outsourcing completely relies on flexibility, responsiveness and digital adoption.
The Deloitte CFO survey shows that 99% of CFOs have taken or intend to take measures to introduce or expand alternative working arrangements (e.g. remote working, shifts and other flexibility measures) as a response to the COVID-19 pandemic. Therefore, here comes the larger play of BPO players to show the brighter side of the competencies and capabilities.
Things that will work – Considering the long term esp. post COVID, following are the options where BPO’s can support and proves to be strategic partner in establishing supply chain sustainable model:-
Outsourcing Partners that have acted like true business partners, have been flexible with their clients, and have rapidly implemented digital solutions. They will come out of this crisis with their reputations not only intact but potentially enhanced. This will put them in a position to increase their market share post COVID-19. In contrast, traditional Outsourcing Partners that are still operating on a simple labour arbitrage model and that have been neither flexible nor willing to adopt new digital operating models may fall by the wayside. This was the direction of travel within the BPO industry before the crisis – COVID-19 is simply going to accelerate this trend.
Supply chain leaders should look to invest in greater visibility of demand and its impacts on inventory and production capacity. Post-recovery, demand will be more volatile, requiring more rapid supply adjustments to manage costs. Investments should target deeper inventory visibility and distribution speed; the more agile the technology and the higher the visibility, the more effectively supply chain can control costs.
What are the benefits, organizations can expect by partnering with BPO players with reference to Supply Chain Function?
The benefits from the entire suite of offerings both during COVID and post COVID, organizations can reap are ‘ A LA CARTE’ Supply Chain –
A | LA | CARTE |
AGILE | LEAN | COLLABORATION |
ASSET LIGHT | ADAPTABLE & FLEXIBLE | |
RESPONSIVE & RESILIENT | ||
TRANSPARENT | ||
EMPATHY |
The COVID-19 pandemic could be the perfect storm to reset that balance, incentivizing a step change that clients have been looking for both contractually and operationally. The power of analytics can help secure supply chains in times of crisis and avoid costly interruptions in production and entire value chain. BPO will certainly help companies to keep their supply Chain alive.
‘With the fires burning all around us, speed of execution is like nothing we’ve seen before’
Even from supply chain performance assessment perspective, following should be the top 20 metrics to be considered for health check up & BPO can monitor the real time dashboards across the followings –
“It’s not the organizations that are competing. It’s the supply chains that are competing.” – WaelSafwat, SCMAO.
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