In the short term, halting promotions, prioritising products, and creating inventory reserves are strategies to help manage demand when supply is limited. For that, companies should work with their existing suppliers, to create a business continuity plan. Companies should also identify suppliers in different regions to diversify supply chain and safeguard against shortages. They will need to predict any areas of risks and find solutions to mitigate their production with speed and efficiency and effectively link supply to consumer demand and allow trusted suppliers to have full visibility of demand. This will allow companies to optimise service and inventory levels, thus reducing the need for excess inventory and helping minimise costly markdowns. In addition, supply chain managers should use data-enabled tools and technologies to analyse data on a granular level and formulate insights. Abhishek Sharma, Vice President- Supply Chain, Blackberrys in a conversation with Upamanyu Borah,explainshow aresponsive supply chain with greater transparency and visibility across the entire value chain has come in handy for them, redefining digital collaborations and interactions, single access points for information, underpinned by rapid generation of insights.
How did you manoeuvre Blackberrys’ supply chain activities in India been to be able to continue unaffected throughout the entire COVID-19 crisis and even during the second wave?
We undertook certain critical calls. We segregated our purchase and supply chain cycles into different phases. We divided products under three risk categories viz low, medium, and high and accordingly we put on hold the inventory, deferred some of them for the next season, and the rest were taken care of internally.
During the initial first half of 2020, we tried to manage the already placed orders, and streamline inverts, cash flows and expenses basis the range and scope of the placed orders. As we entered second half of the year, we started preparing for and remained focussed on the festival season. The entire drive during the second half of 2020 was about getting materials in, make bookings for the new season, plan aggressively for last three months of the year, and strategise on the retail side with its gradual comeback.
Till March this year, we had done reasonably good business, soon after which the second wave struck. With learnings from the last year, we relooked the supply chain. We divided our processes into different stage gates, for instance, not releasing all of the inventories at the first go, access the scenario for the coming fortnight and then release some more inventories. Currently, with the easing of lockdown restrictions that was in place since April, we are slowly releasing the remaining inventories.
What made Blackberrys supply chain stand out during these testing times? What do you consider to be the most important aspects? Kindly elaborate to our readers.
Few aspects matter here. When we plan our supply chain strategies, we ensure we have a clear overview of the key categories in each segment and how to associate the kinds of risks across product lines. Amid the pandemic, we had leveraged our in-house capacity (over 60%) for garment production. This was sufficient to meet the demand cycles. We continued sourcing and buying raw materials. Subsequently, we kept focussing on getting the core buildup materials—fabric and/or prints. We maintained constant communication with our vendor partners and gave them a clear picture of our demands and market approach.
Effective and scalable demand planning is something we continue to practice and plays a critical role. Our business is more retail-driven; we offer
ed assortments on the basis of what we had plan ned—to the large-format retailers, multi-business outlets, or apparel franchises. So, it was more of push process versus the traditional pull process where retailers ask for and the manufacturer fulfils the demands. Whatever we created, we managed to sell out. We did not have to go for any stock pile-ups.
Is there a corporate culture do you try to create to motivate your supply chain team to be disruptive thinkers? How do you go about building relationships with vendors, both here and abroad?
For a supplier it is important that we give them certainty and assurity of the business. If we meet that criterion, suppliers will be happy to partner with us for the long-term. For that, continuity of business is vital.
Secondly, what matters is transparent communication. If we plan to pick up a material at a later stage and inform suppliers beforehand on any such decision, they won’t have a problem holding the material at their end. This will help them manage their production planning, prevent overtime, and provide us what we need only when we need. In fact, we have segregated our supplier base into strategic and niche. While many other companies were firefighting, we strategised to build up strong relationships with our suppliers.
Lastly, finance management supported timely supplier compensation. Stores were closed, retail seemed weak and that led to significant decrease in inflows. Consequently, cash outflows were delayed. We maintained credible and transparent communication assuring suppliers that their payments are secured even though it may be delayed. And we will clear all dues we owe in a phase wise manner if not at one go. In the case of small or semi-sized vendors, we went for vendor financing.
How is Blackberrys staying up to date with trends and developments in supply chain management and operations? What is the appetite for new innovative technologies in your supply chain system?
Last year, we initiated a project called ‘Automate’ as part of which we started digitalising and automating every internal process and procedure, enabling swift solutions, while focussing on enhancing capabilities of our existing platforms—all geared towards accelerating tech-enabled transformation.
We recently onboarded technology provider BlueKaktus who had created an intelligent software solution wherein we and our supply chain partners come together, communicate, collaborate on tasks alongside financial management, thus enabling an entirely digitised value chain. Information about each stage of the product life cycle, sales and other pertinent data is available to all concerned in due course.
Over the years, how precise has been Blackberrys’ ability to constantly analyse needs and market requirements, helping create an effective supply chain design to the ultimate benefit your company?
In its three decades of existence, Blackberrys has evolved tremendously, starting from the brick-and-mortar model which until late 2012 saw high dependency across our stores. Then the drive was towards franchise business wherein we entered into partnership with large format retail and multi-brand retail format stores. The vision has entirely evolved with a stronger focus on the end consumer. The role of marketing research in product designing started taking the front seat while a good amount of analytics was infused into product categories, such as the suits and casual trousers we manufacture—how are we fairing vis-à-vis the competition, specific zones where specific designs got marketed better—helping define gross marketing strategy and operating profit strategy. Based on all that, we have been able to formulate a supply chain structure that is agile, cost-effective and wherein we also experiment—linked to the ultimate goal of ‘agility’ and ‘innovation’. Despite having our own factories, we have created a rich pool of partners over the years and for whom we make up for 80-85% of business.
From a personal point of view, what you believe as the most important aspect of apparel inventory planning and management? How reformed should be the role of a supply chain manager in today’s scenario?
It is three-dimensional. First, how supply chain managers continually monitor demand planning process and evaluate it effectiveness, as well as interacting and interpreting with sales channels. Second, how the company’s merchandising function is planning assortment. And third, how the company’s retailers are getting the assortment booked. This factors when integrated, the supply chain manager has to start defining the norms for each area. For instance, the supply chain manager should define the number of inventory that should pass through a distribution channel as the standard. Considering upstream supply chain, reducing manufacturing lead time has to be another key consideration for supply chain managers and the actions they take—consolidate suppliers/vendors, optimise raw materials sourcing and ensuring lean product flow. Also important is to diversify the buying pattern with suppliers to be able to react to changing market needs and factoring in the ‘never-out-of-stock’ concept by discreetly filtering off-season inventory through some amount of freshness and controlling inventory count.
Today, the ever-evolving supply chain landscape impacts product delivery. Despite all of that, how do you maintain a stable and cost-effective supply chain policy?
First, we have to keep rationalising our partners. And second, we need to consider vendors as partners and not just someone to the business.
Today, when there is a lot of evolution taking place, there is a need to act strategically and not just react with a tactical approach pushing partners to their limits.
Rather than placing 100% of the business with 50 vendors back in those days, today we place 85% of the business with the top ten. This changed the criteria of how we managed costs and vendor contracts. A vendor who has often been asked 50,000 pieces of a buildup material now has 100,000 pieces demand from our end—which makes it a win-win situation. This, in turn, supported signing of contracts for the next 3-5 years with vendors—leveraging a stable cost structure, irrespective of macroeconomic scenarios.
With specific experience of working as a supply chain analyst, what to you were the most challenging part of this role and the most rewarding? Amid the pandemic, how critical your role became for you and the company?
Amid the pandemic, mapping the constant change in demand, consumer behaviour, and then engaging in transparent communication and setting expectations with partners was a difficult job to accomplish.
Most of it was centered on revenue credits, which means obtaining supplies at our end and also ensuring the vendors have the orders, provided they fall within specified contract agreements that have been signed.
There were ways and means that came out. For every situation, we took a different approach—all through or mostly alienating risks.