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Contents
Foreword 05
Introduction 06
The supply chain eco system in India 08
•• Supply chain in India and considerations 08
•• Cost structure and efficiency rates 10
Emerging supply chain trends 12
•• Changing operating models 13
•• Real-time visibility and tracking 16
•• Increasing usage of advanced technologies 17
•• Sustainability and cost reduction 18
Future of digitally enabled supply chain 20
•• Collaboration in value chain supported by technology 20
•• IoT and Industry 4.0 enabling shift to autonomous
supply chain 22
•• Talent considerations in the digital age 23
The way forward 26
About CII 28
Bibliography 29
Contributors 30
03
Next-Gen Supply Chain Next-Gen Supply Chain
Foreword
With adoption of exponential will influence the way supply chain in
technologies, organisations worldwide India is going to be redefined in the
are moving away from the traditional and near future. In this report, Deloitte’s
linear supply chain models to connected, supply chain professionals share insights
intelligent, scalable, customisable, on trends across four major areas –
and nimble supply networks. Early evolving operating models, usage of
adopters and innovative companies technology and its impact on the supply
are shifting to dynamic and integrated chain, real-time visibility and tracking of
networks that deliver a continuous flow the supply chain and its performance
of products, services, information, and and, sustainability and cost reduction.
analytics for decision making. Traditional The report draws on use cases from
organisations are evolving their supply within India and outside to give an
chain functions to meet increasingly understanding of the changes that are
volatile consumer preferences, while already underway, and what to expect in
trying to stay ahead of competition. the future.
While the level of emerging technology
adoption and use cases are relatively less
in India, it is only a matter of time before
supply chains across industries would be
reimagined, improved, and disrupted. P S Easwaran
Partner
CII-Deloitte report titled ‘Next-Gen Consulting
Supply Chain’ is an endeavour to explore Deloitte Touche Tohmatsu India LLP
upcoming trends and technologies that
04 05
Next-Gen Supply Chain Next-Gen Supply Chain
PHYSICAL DIGITAL
Source: Deloitte
Introduction
deliver. Today, the shift from linear, These traditional priorities are not likely
sequential supply chain operations to an to change but going forward, supply
interconnected, open system of supply chain decision makers are likely to be able
operations could lay the foundation for to achieve higher levels of performance
how companies would compete in the with supply chain capabilities developed
future. This interconnected open system in a non-linear environment.
called Digital Supply Networks (DSN)
Enabled by concurrent development and enterprises and supply networks. This combines digital information from many This document attempts to capture
integration of the digital and physical drives the physical act of manufacturing, different physical and digital sources and the evolution of supply chains in India
technologies, Industry 4.0 is transforming distribution and performance known as locations. over the last decade, dimensions to be
the way supply chains operate across the physical-digital-physical loop addressed and areas emerging in the
geographies. Industry 4.0 incorporates (PDP) - Fig 1. Historically, supply chain professionals future.
and extends digital connectivity within managed the “four Vs” (volatility, volume,
the context of the physical world in velocity, and visibility) as they attempted
06 07
Next-Gen Supply Chain Next-Gen Supply Chain
40%
30%
20%
10%
2001 2011 2021 2031
Growth is not uniform across states share decreases in Maharashtra, Gujarat, concentrated across top 5-6 states. Five
and the variation impacts consumption Tamil Nadu2. states accounted for ~60% of the total
patterns. Share of population increases net state value added in manufacturing
in states such as Uttar Pradesh, Net state value added varies across in FY173.
Rajasthan, Madhya Pradesh while the states with the manufacturing activity
25%
20%
15%
10%
Source: RBI
Andhra
Pradesh
Assam Bihar Gujarat Karnataka Madhya
Pradesh
Maharashtra Rajasthan Tamil Nadu Telangana Uttar
Pradesh
significant impact on the supply chains hubs across India on a public – private
of companies 4. partnership model which is expected to
Supply chain in India and population in the age bracket of 35-59
considerations years is expected to be equal to those in
Changing demographics and state-wise the 15-34 year bracket over the next 10-
preferences in India are creating varying 12 years. This changing demographic is
demand patterns and impacting the expected to alter demand preferences1.
supply chain operating models and
infrastructure of organisations. Share of
2.
http://censusindia.gov.in/
3
RBI
1
MoSPI, “Youth of India”, 2017 4
IBEF
08 09
Next-Gen Supply Chain Next-Gen Supply Chain
•• Objective would be to connect •• Hubs could also provide value added Cost structure and efficiency rates
multiple modes of transport for services such as custom clearance,
Fig 5: Lending interest rates
seamless movement bonded storage yards
6% 5.2%
4.3%
3.5%
4%
Fig 4: Location of logistics hub planned
2% 0.5%
0%
India Australia China US* UK#
12%
10%
8%
6%
4%
2%
0%
Consumer goods Cement Industrial products FMCG
Surat
With the cost of capital for organisations associated with dispersed demand,
being relatively higher compared to many concentrated manufacturing ecosystem,
Nagpur developed nations (Fig 5) and the logistics cost of capital considerations and
Guwahati and warehousing costs being significant, emergence of new demand locations.
organisations need to adopt innovative Given this context, visibility, real time
business models and exponential information, efficiency and control in
technologies to sustain and grow in a the value chain becomes critical for
competitive marketplace. Focus will be organisations.
Hyderabad Vijayawada on effectively addressing dimensions
Bangalore
Parameter Pharma FMCG Automotive Industrial Steel EPC
products
Source: https://economictimes.indiatimes.com.
10 11
Next-Gen Supply Chain Next-Gen Supply Chain
From traditional operating model… ..to working in an Insight-driven and Agile way
Governance
Emerging supply
Organisation &
Customer
Technology Societal Shifts
and adopting
Advances
Leadership feedback: learning
Customer
Strategy & customer
Products & Services Inputs Continuous
chain trends
Continuous Inputs
customer Strategy &
Channels
feedback: learning Leadership
Advances
and adopting
Societal Shifts Technology
Process
Processes
Organisation &
Governance
..to working in an Insight-driven and Agile way
Data
As companies address challenges visibility. The fourth industrial revolution Data,
Operations & Data,
related to demand volatility, dispersion would therefore be driven largely by Technology Customer Technology &
Technology &
Processes Infrastructure
and cost pressures, Digital Supply DSNs where machines are expected to Infrastructure
Enablers
Source: Deloitte
12 13
Next-Gen Supply Chain Next-Gen Supply Chain
These operating models allow for new While few leading companies have Fig 10: Next generation integrated and collaborative planning process
areas of collaboration and innovation matured to an integrated business
across organisations – hyper planning model, majority still rely on
segmentation for personalised customer traditional operational models to meet
experience and targeting, collaborative business requirements. Currently the Real Time Data Captutre – Cloud Computing Cognitive Technology Parallel Processing
distribution models, and new product planning cycles depend on regular IOT, Big Data
development leveraging real-time monthly meetings, and follows a
customer feedback and upcoming sequential approach to supply and
Single Integrated Platform Strategy Planning Management Execution
megatrends. demand planning. In today’s dynamic
environment, this rigid structure is
Rapid Stimulation & Scenario Planning Capabilities
Aligned to all these changes, ineffective to accurately respond to
organisations are revisiting their planning sudden changes in demand and supply. Continuous KPI monitoring
processes, which have always been a The globalisation of the business
demanding and challenging process environment and increasing complexity Highly Scalable
independent of scale and scope. But in the value chain, has made accurate
in the current age of information and forecasting even more difficult and thus Customizable
Collaborative meetings
connected networks, these challenges reducing the effectiveness of traditional
have become even more daunting. planning cycles. Source: Deloitte
While companies are still evaluating on the way they are servicing the market
how to leverage evolving technologies/ by providing customised solutions. A division of a leading logistics
Fig 9: Inefficiencies in traditional planning model player is exploring the feasibility
trends and integrate them into their Players in the value chain are considering
planning and operating models, some strategic and tactical aspects including re- of consolidating marine freight.
ecosystem partners like logistics service aligning the footprint, value enhancement The company does not have their
providers have already started changing and technology enablement own vessels, but instead owns
slots for cargo which customers
Process Technology People can book through an app/ device.
Source: Deloitte
Collaborative value chain –Value enhancement by integrating with stakeholders
14 15
Next-Gen Supply Chain Next-Gen Supply Chain
Real-time visibility and tracking •• Sensor data: Unstructured data that While most organisations have all participants in their supply chain Increasing usage of advanced enables components to be printed based
Enhancing the supply chain with real- characterises the conditions of the recognised the need to adopt key data network. This enables greater supply technologies on requirement and nearness to the
time visibility supports in transforming enterprise’s physical assets, from management capabilities—including data chain efficiency by conducting payment Innovation and advanced technologies customer, thus reducing the lead time
business operations and providing voltage to vibration. governance, master data management, and audits, tracking inventory and are critical to company and national to supply as well as logistics cost. While
insights needed to operate quickly, and data quality, among others - assets, purchase orders and shipment level competitiveness; they differentiate this has enhanced flexibility, coordination
•• Other unstructured data: Data
accurately, and more effectively. complexity of managing and integrating notifications. By linking physical goods businesses and help them thrive amidst efforts among players in the value chain
existing within the organisation such
Fortunately, most companies are already data across the enterprise may also to serial numbers, bar codes, digital tags global competition by creating premium have also become efficient .
as spreadsheets, emails, engineering
awash in the data they need to create require new technologies. Some of the like RFID and sensors, and recording products, processes, and services that
schematics, drawings, and beyond.
a DSN, whether through networked cognitive technology categories that the transactions in a blockchain, it is capture higher margins. Advanced A leading aircraft manufacturer
systems on the factory floor or back- companies are exploring for deriving easy for the stakeholders (including end manufacturing strengthens economies uses 3D printed titanium stress-
A DSN can be enabled by leveraging
office databases. The key is to tap into insights and visibility are Robotic Process consumers) to verify certifications or and creates higher income jobs. bearing parts, a first in the
existing data sources, aligning them with
these data sources to optimize the DSN. Automation (RPA), Cognitive - language properties of the product at any given Technologically advanced manufacturing aviation industry. This is expected
desired business outcomes, and applying
This data can take many forms: technologies, Machine Learning and time and trace the product to source. industries employ a higher-skilled to save the organisation USD 2-3
the insights in a scalable way. This
Cognitive - computer vision. workforce that earns higher wages Mn per aircraft.
•• Master data: Business-critical data that journey has three primary steps:
than workers employed by traditional
is consumed by applications to enable A state government food
•• Locate the data among your assets and Additionally, companies are exploring industries. An online jewellery brand is using
business processes. distribution project in India is
systems, and organize and prepare it the usage of blockchain for real-time 3D printing to make jewellery for
expected to use blockchain and millennials.
•• Transactional data: Post-business- visibility of the supply chain and to ensure Over the last couple of decades, with
•• Organise and validate the data for RFID tags to track circulation of
process information such as purchasing trust and authenticity in the transactions Additive Manufacturing (AM)/ 3D printing,
analysis milk, vegetables and fish through
inventory records or sales volumes by across the chain. Through blockchain companies are exploring the feasibility A major automotive manufacturer
the state. uses 3D printing to test its
region. •• Turn insights into action companies gain a real-time digital ledger of eliminating or significantly reducing
of transactions and movements for inventory requirements. This technology prototypes for design, engineering,
production and mass production.
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Next-Gen Supply Chain Next-Gen Supply Chain
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Next-Gen Supply Chain Next-Gen Supply Chain
Fig 11: Application of emerging technologies and tactics across the supply chain
Source: Deloitte
Sample Tactics
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Next-Gen Supply Chain Next-Gen Supply Chain
IoT and Industry 4.0 enabling shift to Smart sensors increase the level of Fig 12: Digital transformation from an IoT perspective
autonomous supply chain automated collection and processing
As part of the Industry 4.0 drive, a of data and broaden management Digital performance management Simultaneous Predictive maintenance Product cost analytics
constant drive has been to interface visibility across the supply chain to help engineering
human actions and computing power, companies reduce operating costs,
Complexity reduction Digitalized purchasing
and one key enabler has been the use improve asset efficiency, and generate Digital transformation
of smart glasses and augmented or incremental revenue. Smart sensors
mixed reality head-mounted displays combined with smart glasses close the Automated planning Virtual product
(HMDs). Smart glass technology has physical-digital loop in minutes and allow development
evolved significantly over the last five engineers to identify the root cause 3D continuity New
years. Today’s devices are less intrusive, of manufacturing issues at the time of Traditional Simulation
business
more ergonomic, and faster than their assembly. core business expand core
predecessors. Artificial intelligence e.g. cost reduction, business into
optimized solutions for new Predictive
When we talk about how these sourcing, footprint and adjacent quality
Smart glass technology is already advancements are disrupting supply 3D printing strategy markets
advancing in hands-on industries such as chains and the way they interact with
Human-machine
manufacturing, logistics, field services, all the ecosystem partners, including
Model-based experience Transformed cooperation
inspection, and operations. Initial customers, suppliers and other partners
enterprise
implementation will be driven through the key is how we address information
Next level product
the logistics, maintenance, and assembly flow between the physical and digital Cost para-metric analyzer
cost optimisation
functions, but as the devices gain more worlds as indicated in Fig 12. There are
mainstream adoption, companies will be three elements that have to addressed: Remote monitoring and control Data driven demand prediction Product complexity analytics
more comfortable experimenting with
•• First, companies need to establish a
the technology in different environments.
digital record – collect information from Augmented reality Rapid prototyping
the physical world and create a digital
In the world of information and analytics,
imprint
a key differentiator would be the use
of smart sensors. The accelerated •• Second, once the digital information
exchange of physical-turned-digital is created, there’s a digital to digital
Next Level of Cost Optimisation Lean Manufacturing Lean Product Development
information can exponentially increase connection – sharing digital information
the range of opportunities for increased to allow for advanced analytics and Lean Sourcing & Procurement Lean SCM / Logistics 4.0 Overall
performance, higher capacity, greater visualisations, and start to generate
reliability, and advanced innovation. decisions Source: Deloitte
Smart sensor computing capabilities
•• Third, how does that translate into
have strengthened substantially, thereby
movement in the supply chain
enabling data processing and analysis at
Talent considerations in the digital age
or near the source (“edge computing”) A leading paint manufacturer Smart automation, coupled with
and reducing the amount of data that has successfully conducted PoC techniques of cognitive and machine
moves between the device and platform. (Proof of Concept) in emerging learning, are becoming more
technologies like IoT, Artificial mainstream, most organisations are
Intelligence, Conversational chat looking to find as many applications as
bots, Natural language translation possible to optimise their day-to-day
and 3-D visualisation of home operations. At the same time, other
décor. changes are taking place as well, shifting
the expectations for the skills, training,
An independent power producer and capabilities that could be most
is using IoT-enabled solution to relevant for supply chain roles. Figure 13
send details on the equipment lists some of these changes.
and environmental conditions
every 90 minutes. This enables
the company to estimate energy
production and the amount to plan
for storage (excess energy).
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Next-Gen Supply Chain Next-Gen Supply Chain
Collaboration between trade partners, including Customer expectations continue to change quickly, with
both customer and supplier relationships, is being demands for lower cost, faster response times, greater
facilitated by the rise of technologies that can transparency into how a product is made and the origin of its raw
provide broader systemic visibility of movement of materials, and customized products and services looming large
goods and materials—and is becoming increasingly for supply chain organisations.
important for supply chain talent to master. These trends may demand a closer integration of customer
service and fulfillment functions, and also require faster cycle
Supply Chain Workers at every level should be able times in many departments to meet ever-changing pressures.
to facilitate and maintain interpersonal relationships
with external partners and Customers.
End-to-end supply chain processes have allowed New technologies are improving workflows, connecting large
for greater transparency and related services volumes of data to improve visibility and generate more holistic
to customers, such as detailed track-and-trace insights. Advanced technologies can also complete some of the
capability. However, this change also breaks many “thinking” for humans on relatively simpler tasks.
traditional supply chain silos.
The rapid pace of technological change can also mean that
Individual workers should have a working workers may need to engage in continuous learning or training
knowledge of, or the ability to access information to keep building their skills, so they can evolve alongside the
across, the entire supply chain from end to end. technologies.
Source: Deloitte
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Next-Gen Supply Chain Next-Gen Supply Chain
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Next-Gen Supply Chain Next-Gen Supply Chain
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Next-Gen Supply Chain
Contributors
P S Easwaran
pseaswaran@deloitte.com Antony Prashant
Partner and Supply Chain Practice prantony@deloitte.com
Leader, Deloitte Partner, Deloitte
Sincere appreciation to the efforts of Soumyadeep Banerjee, Urvi Rohatgi, Mir Noaman Ali and Prathyusha Adurthi who have
provided support in development of this thought paper.
30
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