As companies increasingly use their supply chain to compete and gain market share, spending and activity in this area are notably on the up-swing. Technology and process upgrades at forward-thinking companies clearly show that supply chain excellence is more widely accepted as an element of overall business strategy, and that increasing value to customers is not just management’s, but everyone’s, success. Benzon John, Head – SCM at Orient Electric specifies how his company views its supply chain to drive more value, as he considers answering Upamanyu Borah to these strategic and tactical questions.
Genesis and Business overview
A part of the diversified Indian conglomerate CK Birla Group, Orient Electric’s journey started over 65 years ago with a simple thought of making efficient, aesthetic, and durable electric fans. Since then, we have grown embracing new frontiers in technology and innovation, to become one of India’s leading electrical brands along with global presence and a diverse portfolio which includes fans, lighting, home appliances and switchgear.
Today, Orient Electric is the largest manufacturer and exporter of fans from India with more than 60 per cent market share in exports and presence spanning over 40 countries. It is also the second largest manufacturer of LED bulbs in India and the first Indian lighting brand to have been awarded BEE star rating for LED bulbs.
In the domestic market, Orient Electric has penetration up to the smallest towns with a well-organised distribution network driven by over 4000 dealers, 1,25,000 retail outlets and a strong service network covering more than 450 cities. The company has fully integrated manufacturing facilities based in Kolkata, Faridabad, Noida, and Guwahati.
Orient Electric has always focussed on building sustainable competitive advantage through a culture of innovation, whilst keeping its consumers at the core. The company takes pride in its Research and Development (R&D) capabilities, spirit of continuous innovation and commitment to manufacture cutting-edge lifestyle electrical products that meet the needs and expectations of new age consumers.
Across Orient’s entire product portfolio, we are working on to bring in innovative products which are smart, healthier, safer, energy-efficient, and adds convenience to life.
Supply Chain best practices
With the aim to strengthen supply chain management functions, Orient has particularly focussed on three key elements – Traceability, Efficiency, and Cost Management.
In conjunction with these objectives, we were able to achieve some noticeable results, viz:
- Consolidation of warehouses into three major warehouses which has helped to reduce to warehousing space by over 30 per cent.
- Direct billing to customers from the factories.
- Raising the service levels on order to delivery by more than 95 per cent.
- Continuous training to the SCM team members to keep them updated about the industry trends and educate them about the standard operating procedures (SOPs) for each operation.
- Centralisation of spare parts distribution operations to one warehouse, thus reducing excess inventory and ensuring increased material visibility and delivery.
- Reducing the inventory holding days, thus reducing the working capital requirement.
One of the key challenges we face is forecasting accuracy, which we are trying to improve month by month through introducing better planning processes, coupled with Sales Force Automation (SFA) and Document Management Systems (DMS).
Today, digitisation is transforming logistics and supply chain management functions, bringing in real-time insights, increasing efficiency in operations, offering process-driven approach, and also leading to cost reduction.
Some of the key projects under digitisation which are being taken up currently at Orient are Transport Management System (TMS), Warehouse Management System (WMS), Export Import (EXIM) Tracker, and Inventory Forecasting Tool.
We have a very strong review mechanism at place for all our service providers based on key performance indicator (KPIs) which are mutually discussed and agreed upon.
We also connect with our local sales and commercial teams on periodical basis to discuss the challenges faced by them on the field. These steps have helped us to resolve issues faster.
Digitisation of the supply chain processes is helping us to coordinate seamlessly with our suppliers and transporters. For example, our original equipment manufacturer OEM suppliers are connected on Arteria Platform which is linked with TMS system. Similarly, the transporters are connected though TMS for truck placement, tracking of shipments and for electronic proof of delivery (E-POD).
We are further planning to interlink all key digitisation projects of Orient so as to make information flow and decision making faster.
Scope for LSPs
Logistics service providers (LSPs) are an extended arm of Orient. We treat all LSPs as ‘Partners of Growth’ and expect them to display the core values of Orient in their day-to-day work and transactions.
At present, all key functions around logistics are outsourced. We are working closely with all key LSPs in the field of Warehousing, Transportation and Customs Clearance and have a robust review and control mechanism in place to ensure smooth and effective functioning.
Information visibility is of utmost importance, in order to improve process reliability and inventory control. We at Orient have a strong IT support including Systems Applications and Products in Data Processing (SAP) solutions and other digitisation initiatives that support our supply chain ecosystem.
Digitally-enabled procurement function
We will see an increase in companies choosing to adopt a digital procurement approach in the near time. The need for improved market coordination, better compliance, process optimisation and risk reduction are some of the key factors driving this change. Standard purchase platforms will become the standard norm for procurement of materials and services.
Many of the activities in procurement will happen through visual aids and virtual meetings.
Faster adoption of digitisation in daily operations and increased mechanisation will drive more value for the business. And it is better to actively pursue and implement increased digitisation when the company is in the growth stage, as this will influence the entire way of working and thinking process of the company’s employees. Besides, there is the need to bring in automation faster. Warehouse automation is an area where most of the Indian companies are still lagging behind. The manpower, rental and other fixed costs are going up, and therefore it’s time for companies to automate many of the manual operations in manufacturing and warehousing.