Supply Chain Management - What is it, and how is it important? | Improving Supply Chain Management in India.

With the rapid burst of ecommerce platforms over the last few years, the necessity for an omni-channel supply chain has never been this apparent. As consumers are getting used to same-day delivery schemes, investment into developing supply chain infrastructure is becoming crucial to the success of any product-based-business.

This is further emphasized by the huge investments made by ecommerce stores, and supermarket chains like Reliance, Amazon and Dmart making significant investments into making their supply chains reach the nooks and crannies of the country, all the while making the chain resilient.

What lessons are there to be learned from their efforts? How important is your investment in SCM anyway? What are the benefits of Supply Chain Management that your business stands to gain? How do you improve your business' supply chain management in India?

Let's find out

 

Demand For Supply Chain Management

 

A robust, resilient supply chain is the biggest asset any nation can have. Properly built, robust supply chains are pivotal, as it essentially has a major impact (mostly in a direct sense), on all the other sectors of the economy. With the Indian economy facing major questions, thanks to the ongoing fight against the COVID 19 pandemic. Even minor disruptions and hindrances in the nation's supply chain can cause a huge ripple effect and have massive repercussions.

There used to be a time in India, where the lack of infrastructure, and the complexity of tax regimes acted as a major hurdle. However, with the introduction of GST in 2017, taxes became simpler, and India has leapt leaps and bounds in terms of infrastructure.

This has led companies like Amazon and Reliance to build robust supply chains, which has led them to capture a significant chunk of the market. These companies can consistently to satisfy the growing demands of the Indian consumers. In fact, we'd go so far as to say that effective SCM is they pivot point that maintains the balance between demand and supply.

 

Okay, Stop. Take a breath. What is Supply Chain Management?

Supply Chain Management, often abbreviated as SCM, is an elaborate system created and utilized by companies to manage and deliver products - starting from acquisition of raw materials, to the delivery of the final products to the consumer.

 

There are many components involved in SCM, varying from business to business, depending on how their system is designed. Some of these components include acquisition of raw materials, manufacturing, inventory management, management of demand and supply, product portfolio, apart from planning activities (like sales forecasting, planning, operations planning, etc).

If you're in the end-to-end product business, your supply chain is the single most important investment decision that you'd have taken.

Just how important you ask?

Why don't you take a look at some of the benefits your company stands to gain through effective supply chain management?

 

Importance of Supply Chain Management

A well-designed Supply chain system comes with several key benefits.

Reduction in Operational Costs

Retailers are enabled to procure resources efficiently, and products are manufactured promptly. This enables  businesses to run using the JIT model (Just in Time model), saving the business on unnecessary storage and inventory costs. Not only is monetary loss avoided, but precious time can be gained as well.

Improvement In Customer Satisfaction

The ultimate goal of any SCM is to deliver the right products to the customers in a timely manner, at the required location. Without having an efficient supply chain management system in place, it can be extremely easy for wrong products to be delivered to the customers, way past the required time. 

While it might be impossible for you to bring down that number to 0 (yes, even with a robust SCM, mistakes sometimes happen - albeit at a much lower frequency, and to a much lower degree), you'll be able to stay on top of the situation, and provide timely support to the consumers. This makes it more likely for the customers to be retained, and in some

 

Increases Organizational Efficiency

The Supply Chain is the single most valuable asset to most companies. Supply chain managers tend to evaluate present performance, optimize workflows and processes, reduce costs, manage inventory better, reduce the time taken for the product to be manufactured end-to-end (product life cycle), and help the company spot trends, and stay ahead of the competition.

Not only are the workflows efficiently managed, physical and human resources are also carefully analyzed to strike a balance between costs and desired levels of output.

SCM helps the company to maintain a healthy business relationship with all the stakeholders involved, ultimately padding the bottom line of your organization.

 

Improvement in Cash Flow

Despite having amazing profits, at one point or the other, it is very common for businesses to fall prey to poor cash flow management. Working capital management, and cash flow management have become straightforward with a clear system implemented to manage the supply chain. Not only are the products delivered on time, goods acquired on time, and production completed on time, cash is also made available as and when required, completing the cycle.

The reduction in overheads also contributes significantly to the cash flow optimization, as an added advantage.

 

Mitigates Risks

By analyzing the relevant supply chain data, potential risks can be spotted well ahead of time, allowing the business to come up with an action plan to tackle these risks. As mentioned in the introductory sections, minor disruptions can cause a huge problem not only for the company, but for the economy as a whole.

By spotting the potential risks ahead of time, businesses can proactively attempt to address the negative impacts.

Conversely, it also allows for businesses to exploit lucrative business opportunities, and allows them to proactively position themselves to take advantage of the shift in trends.

Alright. Alright. I'm sold. How do I Improve my Business' Supply Chain Management?

How to Improve Supply Chain Management in India?

Here are 7 key points to supply chain success in India.

 

Company Owned Inventory

One of the first things you should do when you're looking to improve your organization's supply chain is to take a look at the company owned inventory.

If you've managed inventories and taken a look at the associated costs, you'd know exactly how costly it is to hold and store inventories. It is essential that an adequate amount of inventory is kept in stock to ensure that stock out doesn't cause a major issue in the production schedule.

Studying the different factors, like the time taken for an order to be placed, and received, the daily consumption rates, and the maximum capacity of the floor, and the storage units will go a long way in reducing costs, improving efficiency, and ensuring that all the processes are done on time, every time - from procurement of raw materials to delivery to customers.

 

Optimizing the Distribution Network

Every supply chain starts out small, and is planned accordingly. However, as the reach begins to expand, the same distribution network might have redundant, or underperforming components. Sometimes, a better alternative that wasn't previously available to you, can be utilized now to ensure smooth functions.

Of course, all optimizations might simply not be worth the time, effort and resources. It is up to you to use your professional judgement to see which optimizations are worth it, and make sure they are implemented as quickly as possible. Usually, there are two methods properly used to improve distribution network.

1. Cluster Approach - Supply Chain Managers group charts, graphs, documents and other available data together. Usually, these clusters are influenced by geographic concentration - of suppliers, businesses and other associated institutions in a select field.

2. Holistic Approach - Supply Chain Managers review all the components of the distribution network, understanding synergy, and thinking about the entire network as a whole and not as an individual component.

Supply Chain Governing Body

Setting up a governing body to plan and control how the supply chains and distribution networks does wonders for your business. The intent is to create a new strategy, or align the existing strategy to the business' existing goals.

These bodies (some organizations call them councils, others call them boards - the nomenclature really doesn't matter) remove the different barriers within and outside the organization, all the while helping the business spot trends and opportunities that help the management to position themselves appropriately.

Tech, Tech and Tech

Honestly, with all the developments in the tech world, especially when it comes to the Supply Chain domain - we're surprised that tech is mentioned only as the 4th spot on our inclusive list of tips that will help you improve your SCM.  Supply Chain performance will be improved incrementally with the addition of state-of-the art technology.

From the utilization of machine visibility to the incorporation of artificial intelligence, inventory management can be improved tremendously with the use of technology. Of course, this is just one of the many aspects where tech can be effectively used to optimize your supply chain. In fact, technology is too broad a topic, that we can't justify asking people to utilize technology as a single "tip" to improve supply chain performance in India (spoiler alert).

Automate Procurement

Though this would have fit better as number 2 on our list, we felt that tech deserved it's own section in our list.

If you've managed inventory before, you know exactly how much time it takes for you to continuously monitor and gauge the inventory levels. ERP (Enterprise Resource Planning) systems with an in-built SCM feature can help you automate the purchasing process.

Whenever the RM level falls beyond a certain pre-defined limit the system will automatically place orders with the vendors. This will ensure that an appropriate level of inventory will be maintained at all time.

Data Analysis

Decision-making becomes a million times easier if the right insights and the right data is presented to the key-decision makers at the right time. With the growth of the SaaS industry, along with integrations from your CRM - you can create customized reports to gain valuable insights in-real time. Be it inventory, shipment, or production, there are plenty of tools available to access, process and gain insight from real time data instantly.

Psst. This trend is about to further increase with the inception of blockchain technology.

Transparency and Standardization

Process standardization and transparency are the two biggest solutions that can completely revamp your supply chain. When each individual process is standardized, efficiency is increased tremendously, saving the organization both the cost and the time involved.

Transparency helps in assigning accountability - a major problem faced in building robust supply chains. Supply chains across the world are bound to be riddled with wastes, mistakes and fraudulent practices. We understand that we're mentioning inventory management one too many times here, but one of the biggest pain points of a supply chain manager is to tally the physical inventory count with the numbers that are recorded in the software. Increasing SCM transparency will help identify the pain points, and reduce the wasteful losses.

 

Understanding business processes and supply chains can be an extremely daunting task, especially for businesses that are used to their existing models. A second pair of eyes will go a long way in identifying existing business problems, and provide a fresh perspective. Being one of the leading consultants in the Indian space, Krysalis is sure to identify, diagnose and address the different pain points in your supply chain. Not only do we consult and advise your business on what action could be taken, we guide you through the process of implementing it - making us one of the best consultancy in India.

 

What are you waiting for? Contact us now!

What is The Difference Between Market Research and Market Analysis

If you have ever been a part of strategic meetings in your company, or wondering if your product/service is taken well by the consumers - the term market research and analysis must be extremely familiar to you. In fact, these two terms are often used interchangeably, and it is easy to mistake one for the other. 

While often used interchangeably, the terms market research and analysis in business are not synonyms. Market Research, in fact, forms only a small part of Market Analysis.

If this leaves your head scratching, don't worry - for in this article we will go through everything that you need to know about market research and analysis in India

 

What is Market Research

In order to gather feedback, and judge how well your product/service is performing, your company would have conducted several exercises. These exercises are primarily used to judge the feasibility of specific business decisions, and can prove vital data to help you judge consumers' reactions to the various changes in your business. Successful market research practices could very well be the key difference between the success and the failure of a company.

 

The intent here is to arrive at an answer to a set of specific questions about the strategic business move a business intends to take. Usually, Market research tends to be consumer-centric.

 

For instance - take the example of popular fast food chain of restaurants - Domino's. They operate a flourishing chain of pizza businesses, with a mammoth 50% market share in the food delivery business across the world.

 

They could have very well not changed any of their practices when they entered the Indian market, and would still have been moderately successful. But their market research pointed out that the Indian customers prefer their pizza "spicier", and more "Indian". Rather than going for authentic pizza varieties that they usually serve in their "home" markets - they came up with authentic recipes to cater to the Indian taste.

 

As a direct result, Domino's has captured the tongues and the hearts of the Indian consumers, giving them a whopping 70% market share in the Pizza home delivery segment in India. 70%.

 

Of course, there were other factors involved in the Domino's success story, like their marketing campaigns, standardization of taste and menus across the different outlets, and coming up with truly gob-smacking recipes to satiate the Indian tongue has also played a major role.

 

Benefits of Market Research in India

As we'd seen with the example of Domino's, market research can prove to be extremely beneficial to businesses. Here's an inclusive list of benefits of conducting thorough market research practices:

 

1. Strengthen your Business Position - Businesses can utilize market research to gain a better understanding of their customer pool, and can utilize this information to stay ahead of the competition
2. Business risk management - Market research on new product/service lines allows businesses to take an educated guess on how the different stakeholders will react. Some businesses even spend a small portion of their investment to test the concept, and crunch the different numbers to see if investment in this new line makes sense.

 

3. Identification of Threats and Opportunities - Data collected from research can be an important tool that can be used to forecast and protect against prospective threats and dangers during a strategic business event. Market research, when done properly can also uncover potential opportunities that your business would have otherwise missed, or worse, have your competitor cash in on it.

 

4. Provides a Benchmark - Planning, and enforcing the plans much easier when the research has already provided you with benchmarks, including revenue projections, market share projections, among others. These numbers can be utilized to motivate your employees and get your targets achieved faster. According to a PWC survey, 69% of the companies grow faster when you set benchmarks ahead of time.

 

What is Market Analysis in Business

The generic definition of market analysis " A thorough assessment of a market in a specific industry" is a bit too vague, especially in the context of understanding the difference between market research and analysis. Let's provide a bit more context for you, which will help you better understand the difference between the two terms down the line.

 

With Market analysis, you will be able to study the different variables at play in your market, including important information that will be crucial to the survival of your business as a whole.

 

Market Analysis often includes the assimilation of all the facts that one can gather about an industry without a specific question to answer. It takes a broad approach to collect historical and current facts, and forecast potential outcomes. The market size, competition, trends (market, social and political), analysis of distribution channels, and answers to basically any other question that the industry might need.

 

Benefits of Market Analysis in Chennai

Market analysis is the fundamental building block to the success of an organization. The benefits of market analysis include:

 

1. Market Profitability - By gauging the barriers to entry/exit, supplier concentration, purchasing power and other such factors, estimating market profitability becomes an easy task. If the profitability is positive, but the analysis indicates potential risks on investment, the business conducts in-depth market research to find solutions to tackle the potential risk, and make decisions accordingly.
2. Identify Emerging Trends - Proper market analysis exercises can help your business get ahead of the competition, and identify potential emerging trends that your business can cash in on.
3. Understand The Nuances of the Market - Understand every single minute detail of the market including broad details like market size, barrier to entry/exit, investment required, target customer analysis and minute details like specific variants/opportunities that the business could capitalize on.
4. Provides Context For Past Mistakes - Market analysis can help businesses understand and learn from past mistakes. This could be a context for why the sales of a particular product line tanked, or why a certain marketing tactic backfired - allowing businesses to ensure that they don't repeat the same mistakes twice.

 

 

Difference Between Market Research and Analysis

If it isn't evident by now, the term market analysis is much broader than what market research encapsulates. In fact, market research is merely a part of the process of conducting market analysis. Market analysis contains five key elements

1. Competitor analysis
2. Industry Analysis
3. SWOT Analysis
4. Consumer Analysis
5. Market Research

Market research usually begins with the questions that are determined from the other functions of a market analysis.

For instance, your business could have outlined a potential opportunity in the industry by analyzing the emerging trends. However, you might not have enough data to commit to a massive investment pursuing the potential opportunity, only to realize it wasn't feasible in the first place. This is where market research comes in.

Market analysis is comprehensive, and usually takes into account historical data, apart from the data collected from market research and reach meaningful business decisions.

However, this has led to the common misconception that market analysis is 100% a secondary research affair. That no new data is collected, and only pre-published/pre-existing data is used for the process, and market research is the function which focuses on collecting new data.

However, this assumption is mostly incorrect. While, yes, market research deals primarily with primary data (pun intended), it does not relegate market analysis to a purely secondary research function. Both these tools are important elements in the success of any business - big or small.

Conducting Market Research and Analysis - The Problem

For big organizations, funds to conduct market research and analysis are easier to come by. This, however, might not always be the case with smaller businesses. Small businesses usually tend to focus their limited capital on their core business, and tend to shy away from market research and analysis efforts, despite understanding their many benefits.

With the increased focus on agile teams, and lean workforces, it becomes even tougher to conduct market research and analysis for small businesses. Business owners can't justify hiring a full-time team to conduct these exercises from time to time. It becomes a traditional damned if I do, damned if I don't dilemma.

The solution to this dilemma is rather simple and elegant - Krysalis.

Krysalis - The One Stop Shop For All your Business Consultancy Needs

Krysalis is a boutique business consultancy located in Chennai. We offer a wide variety of business consultancy services, but we are primarily known for our expertise in market research and analysis.

 

We understand the necessity to conduct thorough research and analysis, as understanding markets and customers, and creating strategies that address the many nuances of a product/market is key to the growth, profitability, and success of any business. Krysalis has a host of offerings for you to choose from, depending on what your business might need the most. Insightful research, after all, is paramount in this endeavor.

 

1. Voice of Customer

Krysalis specializes in studying the customers' perspective of your business, and helps businesses understand the deeper needs of the customers. Over the last few years, we've carried out diverse studies in multiple fields including, paints and surface coatings, cables, construction equipment, abrasives, IT services and hospitality services. With Krysalis you'll be able to answer several important questions:

 

1. What does your customer like and dislike about your product/service?
2. Where do you stand in the mind of the customer vis-a-vis competition?
3. How your after sales service is received, and how high the quality of your product/service is.
4. Who is your potential competition, and what are their strengths and weaknesses?
5. Are there threat of substitutes for your product or service?
6. Are there regional or segmental differences in expectations?
7. What needs to be done to increase market share?

            and more.

 

One such client who benefited a lot from our voice of customer business proposition is one of India's leading telecom providers- - Bharti Airtel. Krysalis carried out a six month detailed study, covering over 1000 customers every month to study the reasons for customer churn, leading to a revision of strategies to improve customer retention.

 

2. Market Size Estimation

Krysalis specializes in estimating market potential for complex products/markets and provides important insights. We have helped estimate the market size for a number of industries, including that for gear boxes, cables, metal enclosures, and fishnets to name a few.

 

Did you know that the market for Olive oil is over $150 million per annum, and that the low tension cables market is valued over $2 billion? Corrugated boxes alone make for a $3 billion market. We have more where this came from, help us help your business make key investment and strategic business decisions.

 

One such client who has benefited a lot from our Market size research is English Indian Clays Limited. Krysalis conducted a detailed customer satisfaction study in all the key customer segments, highlighting segment specific expectations and recommended crucial strategies to improve satisfaction levels.

 

3. Concept/Value Proposition Testing

What if you launch a new product/service - say an air purifier, or a smartphone based blood pressure monitoring device. How much should you produce? What should be your pricing strategy? How are you going to distribute these products to your customers? How will you position your brand? Find out the answers to these questions and more through our concept acceptance study.

 

We've helped many companies test new products and concepts in different markets, and have helped them take key decisions in their business.

 

For instance, take the case of Woodstock Ambience. They're a venture funded IT/ITES housing provider, and were looking to understand the mind of their potential client. This study helped the company decide on the format and the pricing of their housing product.

Understanding the needs of your customers, and the state of the overall market is crucial in making every single successful business decision. If your business is ready to take the next step, why don't you shoot us a mail to consulting@krysalis.co? We'll be more than happy to help your business grow.