Now trending: Collaboration in business
The next wave of profits for the food industry can be driven by collaborative supply chains and innovation in India’s cold chain, says Raj Saxena, Director, Enterprise force. He explains how the segment can be beneficial for companies.
How did collaboration in this segment come about?
The cold chain ecosystem has started evolving – not as fast as we would want it to though – and we see that sharing in the enterprise, or what we call collaboration, specifically for the supply chain, has started. It didn’t start in India. It started a while back in Europe and we are catching up. We do collaborative supply chains for Indian companies.
What potential do you forsee?
Utilisation is the key word here. All of us who want better service at better costs in logistics need to help drive that one parameter of utilisation with quality. If we look at any kind of distribution, whether secondary, tertiary, or last mile, there is huge potential. If quality is paramount to you and temperature adherence is important, then there is a very small subset, but there is a subset, where collaboration can happen and it can be scaled.
How can this help companies?
This not only reduces costs, but also improves the service by multiplying the service levels to the tune of delivery times condensing, to the tune of quality being monitored with the help of technology.
How can collaboration lead to lower costs?
With collaboration, you will not have to pay more for quality and service – eventually. In the interim you may have to. But eventually when you get your systems right, you will pay less and get more. For example, let’s talk about delivery. The cost of one of my FMCG
`100 customer was three years ago. Industry costs have been escalating specially for quality, services and logistics, and the cost
`114 would be today as we speak. For this company, the cost has gone down to `88.34,
which is a 26 per cent decline year-on-year in absolute numbers with no inflation. This was a reasonable number, which
`10 led to crore of savings for this company.
How does this benefit warehousing and distribution?
Warehouse consolidation is a onetime thing. But distribution re-mapping is an ongoing activity. If you are a `5000-crore
company, you are going to take some time getting it right. As the network stabilises, collaboration is embedded, or is going to be embedded in the way we do business.
What does it take to collaborate?
You need a strong data foundation. We are not talking IoT data alone, we are talking Master Data. This includes costs, service, vendors, delivery times, SLAs, etc.