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Supply chain management: The HyperCITY way

Thursday, March 01, 2012 IST


Vijay Nair

Supply chain is fast-becoming one of the core determinants of a companys


business model. Organisations are now in an era where their operating model is
being defined by its supply chain functions. The pressure on supply chains is
approaching, or already exceeding, a type of critical mass. Success in business
is now more dependent on the performance of the underlying supply chain than
ever before.
Supply chain managers must both embrace and act upon an evolved and
elevated role in strategy formation, leadership and value creation. Though
profitability is returning, top-line growth remains elusive and by most forecasts
may remain so far the foreseeable future. Given this realisation, business leaders
are now seeking to achieve the next generation of productivity gains. In
particular, they are upping the ante in terms willingness to innovate in areas such
as how and where work gets done and it is here that supply chain operations
come to the fore.
Supply chain scenario in the country
The supply chain scenario in the country inspires a lot of antagonism. A cynical
view but arguably accurate considering the frustration a supply chain executive
faces in his day to day functions when well laid out strategies, plans and routine
logistics operations are held ransom to archaic government regulations, labour
blackmail, trucker strikes and whims and fancies of landowners, local self-styled
protectors etc.
These elements cannot be wished away and its the ability of the supply chain
managers to evolve and innovate to confront and deliver under such trying
environment.
HyperCITY supply chain principles
The bedrock of supply chain management is and remains IT systems, without
this fundamental backbone whatever is discussed in the following paragraphs will
just not be possible. When it comes to supply chain efficiency, information is king,
the more you know, the better you can manage the process and engineer
improvements. Corollary also goes, that the more you share, the better efficiency
you derive both upstream and downstream.
1. Understanding costs: Supply chain management as a head is a cost centre,
however, it is the capability of the supply chain managers to orientate themselves
to how to deliver more from the given cost and show value in higher cost.
Manager incapable of showing value for the cost that he incurs will suffer. For

example, using the cheapest carrier can backfire if it results in significantly


increased damages or delivery delays, bad carton quality will lead to higher
damages, compromising on the quality of the people similarly, will have its impact
on DC efficiency.
2. Visibility and transparency: The earlier and more frequently you begin using
visibility systems preferably at the order management level the better you will be
able to avert supply chain disruptions, reduce the need for excess inventory, and
limit substandard supply chain performance. HyperCITY like most retailers today
has a B2B site where vendor can log in and access information related to sale of
his products, stock levels, payment status etc
3. Practice Kaizan: Each day is a new day in supply chain and bring along with it
fresh challenges in supply chain management. Kaizan is a culture and demands
commitment from all in the chain. These programmes often do not require a huge
capital commitment for training, especially if you adopt a grassroots approach to
train a few key employees, and then let them educate the others.
4. Optimise: Doing more with less could be the simplistic way of defining
optimisation. Management focus on any element without even addressing it,
brings about an improvement in that activity by 5-6% without exception. Courage
to do the same job in a different way will bring in new learning and result in
optimisation.
5. Prototyping: Before any process change is implemented, it is necessary to run
it through a trial and simulate time, expense and output. This will demonstrate
value by showing how solutions will play out in the real world. Most models get
generated by fundamental understanding of theory, however, most answers may
not come out of it.
6. Availability increases sales: Since its first store opened at Malad in Mumbai in
May 2006, HyperCITY has been known as a pioneer in big-ticket retail stores
keeping pace with the fast-evolving Indian consumer who does not only expect to
buy products from across the world but also expects shopping to be a unique
experience. This experience can only be completed if the customer finds his
habitual buys always and every time.

Ensuring this customer delight is not the responsibility of the retailer only as the
suppliers have a huge role to play in this. Partnering in this cause with suppliers
has shown visible improvement in availability and consequent sales.
7. Adopting best practices: Here is where we learn more from the developed
supply chains in the Western world. Real-time visibility, IT systems, automations
etc. that provide windows of opportunity to excel. Much that we would want to

benchmark our service standards, however sadly today, in the retail logistics per
se, there are no published benchmarks in the country. While there are some
global benchmark figures available. However, considering the technology used in
those countries, the quality of labour and the maturity of supply chain is
incomparable, however, we may not be too far from these too. A comparison
table is illustrated below for some of the operational parameters.
*While most receiving, picking and shipping is done in case pack configuration in
the Western and European countries, here in India, we pick and ship in each.
The world benchmarks have been obtained from various articles and comments
in the Internet and cannot be authenticated
8. Damage analysis, insurance and claims: Most damages occur in transit and
handling at the time of loading/ unloading. Damage analysis provides valuable
source of insight into transit methods, feedback on bad packaging and loading
techniques. HyperCITY has set up a simple but effective process to collect and
analyse claims data including mode, carrier, and location so you can identify
damage trends, determine root causes, and pinpoint responsibility. Secondly,
processing of claims is a lengthy and painstaking procedure and most units tend
to ignore this valuable source of reimbursement of losses incurred in transit.
9. Self Audit: Setting of challenging targets and resolute commitment to improve
through self audit will keep service levels up.
10. Cross Docking: In order to reduce time from dock to rack, we follow cross
docking at the DC. The vendors are advised to create store packs and these are
cross docked. This not only improves the TAT of product to the shelf, but also
permits to keep cost under control and minimises handling.
11. QC: Suppliers over the period have been graded and inconsistent suppliers
are subjected to QC Hire a logistics representative to inspect products for
exceptions before they are transferred from the production to the logistics phase.
Charge professionals with preventing damage and removing compromised
shipments at key hand-off points, such as during loading and tie-down, and at the
end of a transit.
12. Safety and security: Supply chain environ has drivers, transport systems, left
trucks, handling of material, all of which may be prone to cause grievous injury.
Although most logistics locations have safety and accident-prevention efforts in
place, that is no guarantee your employees are as safety-minded as th