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Five Keys to Supply Chain Success in India

July 15, 2009
India presents many opportunities to U.S. manufacturers, but just as many operational challenges.

As India's economy continues to expand (it grew at a rate of 6.8% in 2008, and is expected to dip only slightly to 5.5% in 2009), global manufacturers are adjusting their supply chain operations by focusing on balancing costs and services. "To keep pace with India's growth rate, companies have been focused on building production capabilities, distribution networks and retail outlets, resulting in complex supply chains with long lead times," explains Stephen McNulty, regional vice president, Asia Pacific, with supply chain solutions provider JDA Software. "As the market continues to mature, companies must focus on optimizing operations to become more efficient. More frequent operational reviews are now essential to meet increased demand, adapt to varying fuel prices and account for fluctuating currency valuations."

McNulty offers the following five strategies for managing demand in India's emerging market:

  • Ensure a clear understanding of local principles, customs and barriers. Understanding the tariff structures, road taxes, patent legislation and labor laws of India will be crucial to running a successful enterprise. "Knowing the limitations of India's transportation infrastructure is critical in adjusting distribution strategies and having the flexibility to adapt to the varying restrictions and needs that exist within India," McNulty explains.
  • Establish constant communication. India's communications infrastructure is still inadequate for global companies doing business there. As a result, companies are relying on more traditional means of information sharing to ensure that manufacturers, suppliers and retailers are all on the same page. As McNulty notes, "Many large manufacturing companies are allowing their partners, vendors and dealers to have direct access to their internal supply chain management systems in order to increase visibility with minimal investment."
  • Develop comprehensive procedures and processes. Streamlining supply chain functions, as well as sales and marketing operations, will allow companies to implement and adopt standardized processes that can be easily replicated as they expand, he observes. McNulty suggests that manufacturers operate with a structured base for demand forecasting, and then analyze the impact of drivers such as pricing and promotions on overall customer demand, as that can significantly improve forecast targets that result in overall lower supply chain costs. "By synchronizing the multiple dynamics of demand planning and production planning, companies will have the ability to reduce over-stocks and stock-out situations."
  • Ensure the quality of input information. McNulty suggests that companies invest in collaboration, planning, forecasting and replenishment (CPFR) and sales & operations planning (S&OP) solutions, which provide a link between disparate information and allow companies to create plans based on actual demand data. "By enabling suppliers and retailers joint visibility into inventory management, current and expectant inventory levels and requirements can be continually updated and merchandising, inventory, logistics and transportation needs are synchronized."
  • Identify and integrate the right professionals and insist on teamwork. "The scarcity of a skilled, knowledgeable and committed workforce is a challenge facing Indian companies," McNulty points out. "With an increased number of mergers and acquisitions and management takeovers, remote reporting is becoming a mainstream part of corporate life. Combining logistics and procurement personnel into a supply chain team with shared responsibilities enables companies to utilize individual strengths and strategically map skill sets to help lower operational costs and bring in efficient customer management and sustainability."
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