Come, let's play together

Neha Kapoor

Collaborative Supply Chain Management (CSCM) is all about partnering with customers and suppliers to capture critical information that enhances forecasting, planning and execution in business.

Though CSCM is relatively new to Indian companies, the country represents a huge market for vendors like SAP AG. Armed with its `mySAP Supply Chain Management' suite, the company is bullish about India.

eWorld caught up with Debashish Chatterjee, Director, Supply Chain Management, SAP Asia Pte Ltd, to discuss the emerging trends in CSCM and its relevance to Indian companies. Excerpts:

What are the current developments in CSCM ?

Today, the supply chain is no longer considered linear. It is a complex network of non-linear relationships. In fact, the technical term used to describe it is `Demand Pipeline Management'. A lot of discussion is happening around this subject. The basic premise being that CSCM is about event management where you observe every event in the chain to predict major ones.

How does SAP fit into this picture ?

Event management is also the crux of SAP's vision -- we should be able to monitor every event in the supply chain, no matter how small. Build rules around it to predict when a little drop of rain will result in a thunderstorm so people come prepared with an umbrella!

We have the technology but we do not use it in isolation. We link it to the entire chain -- design, demand and planning, procurement, manufacturing and order fulfillment.

Collaboration implies sharing of information, especially with suppliers. Are Indian companies, whose businesses are not always transparent, willing to share information ?

CSCM is not so much about technology as about shared information. And the willingness of companies to share information depends on whether they see value in it.

The awareness that there is value in sharing information is low. One can blame it on culture but the real issue is that supply chain managers have not designed chains with incentives for suppliers.

Most Indian companies source material from a number of suppliers, sometimes playing one against the other to get a better price. How does this fit into the CSCM model which entails building long-term relations with few suppliers?

Competition among suppliers is good if companies use technology to cut lead time, not if they do it at the cost of a longer lead time to react to demand.

CSCM requires companies to build relationships with suppliers but they should monitor and control these without forgetting the need to build competition between suppliers. Then again there are only so many suppliers with whom you can build a long-term relationship.

What are the key requirements for successful supply chain management ?

The essentials are top management support and understanding of SCM and selecting the right technology partner. Also, amenability of company process and organisational structure to change.

Most CSCM efforts fail because companies have wrong expectations from solutions. They usually treat deployment of any software as a turn-key operation and fail to realise the amount of work they have to put in.

Given the US slowdown and ambivalence of Indian companies to spend on IT, would outsourcing supply chain to a pure SCM player be a viable option for companies ?

If the service providing company is a pure technology one with no industry knowledge, the model will not work. However, if a company with extensive business know-how handles the network, it can go a long way in reducing supply chain wastages.

But pure players are few and far between. What you need is brick and mortar companies with domain knowledge to take on new technology and build an entirely new business model.

In India, most companies have not even reached the stage of deploying enterprise solutions. Are they open to CSCM deployment?

There are Indian companies which have deployed CSCM solutions but these are exceptions. The technology is here. So, this is the right time for more companies to re-look their business processes. And think about leveraging technology to build collaboration in supply chains.

Businesses that need it most are those with very short product life-cycles.

What would it cost a company to deploy the SAP SCM suite ?

The product can be deployed in a phased manner or by using the `Big Bang' approach where everything is done within nine months. Costs depend on the company's approach, number of modules, users, days of consulting, etc.

How many clients do you have in India ?

Marico has gone live with the SCM suite. Cadbury's will soon be rolling out the Business Warehouse module. Onida, Mahindra & Mahindra, BPCL and Tata steel are the other clients.

Picture: Mr Debashish Chatterjee

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