Nihar Parida, Industry Expert & Supply Chain Consultant says that digitalising the complete supply chain is the need of the hour and data at every point should be captured as much as possible. Also, data analysis should happen at a single point and not in silos.
During the change in tax from local sales tax to VAT, most organisations opened warehouses in every state. The moment GST was declared, the finance and logistics fraternity started exploring how they could consolidate their stocks in few warehouses as the state borders became obsolete from the tax point of view. For the first time, the logistics people started thinking of inventory from a logistics cost saving perspective rather than a tax saving perspective. But again most were guided by the common thought of consolidation. The LSPs also started selling the idea to ensure they could save cost in their multi-user facilities. The distribution factor was sidelined. The transporters and the courier companies were in the limelight.
However, during this pandemic it has come to the fore that consolidation of inventory with few warehouses has become the biggest pain. With state borders being closed the distribution of goods has become a major issue. The trucks going off the road made life more miserable for the logistics planners. The longer routes were hard to fathom. When the market in few states opened, it was difficult to capture that market as the inventory was somewhere else.
The questions which arise now are, do we go for consolidation or do we spread out our inventory? How do we ensure low inventory carrying cost? How do we predict well in advance and how do we move goods to the next location?
Within my 30 years of experience across verticals and departments, and the little that I have learnt, I would suggest the following:
• Digitalising the complete supply chain is the need of the hour. The data at every point should be captured as much as possible.
• A platform of single data point should be built, and data analysis should happen at a single point and not in silos.
• AI and ML being easily available now a ‘Big Data’ analysis engine should be engaged to overcome the preconceived ideas of a data analyst.
• Data analysis should happen real-time and not once in a month.
• Stock planning should be more dynamic and faster and feedback to the Production should be more accurate.
• Design the inventory network with four mother warehouses and multiple child warehouses across the country. Fast moving should be JIC and high value and slow moving should be JIT.
• JIC should be predicted using AI, with maximum inventory being 30 days at any given point of time. JIT should be maximum seven days inventory or an inventory depending on how much time the organisation takes from a PO to fulfillment including the transit time.
• Sales forecast gaps should be compared with the AI-driven insights and decisions should be taken accordingly.
• If possible, a consortium should be built to cater to transportation capacities to the maximum. Rates of transporters within the consortium can be negotiated better. With the GPS and transport management software available, planning within the consortium can become easier.
Overall, joining every dot within the supply chain under a single platform will not only make the supply or logistics chain more resilient but will also ensure risk is minimised.