V-Guard Industries, a consumer electrical and electronics brand based in Kerala, recently partnered with IBM India to digitise its strategic sourcing/procurement.

Implementation of the IBM's Ariba Sourcing platform would improve operational efficiency and productivity at V-Guard, helping its internal user experience, says Prashobh Chandralayam, Executive Director, Retail, Global Buisness Services, IBM India.

In an e-mailed response, top V-Guard honchos - Robin Joy A, Vice-President & Chief Information Officer, and Gautham T, Head, Strategic Sourcing - explained their take to BusinessLine.

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Gautham T, Head, Strategic Sourcing, V-Guard

 

 

 

Strategic sourcing is becoming more predictive and transactional procurement more automated. What do you expect to achieve with the IBM platform?

We had observed that our current enterprise resource planning (ERP) solutions were largely catering to record and report procurement transactions. However, they fell short in supporting strategic sourcing, which primarily involves vendor identification and price determination.

Strategic sourcing activity, which involves communication with suppliers and internal stakeholders such as quality and R&D, was happening traditionally through phone and email communication. This had resulted in an increase in transactions cost and time. With the IBM platform, we hope to digitise information collected from supplier and internal workflows/approvals.

Though strategic sourcing is becoming more predictive for indirect sourcing, Indian industry standards have not evolved to an extent where direct sourcing can be more predictive. This requires pre-qualification of suppliers through request for information (RFI) and audit, price determination through request for quote (RFQ) and auction. The IBM platform with its custom-made techno-commercial-administrative workflows will facilitate formalisation and centralisation and this should reduce the transaction cost and time.

While capturing required data, how do you mark out 'bad' data from 'good' data?

The data capturing templates have been designed centrally and incorporated in IBM Ariba. We have formalised the procedures like RFI, supplier audit, RFQ, sample approval, cost analysis and supplier and price approval. Therefore, we have enforced structure of the data capture through centralisation and formalisation, which also provides adequate filters for the bad data.

How do you manage transformation of legacy systems and their integration?

Our legacy system was being managed over phone and email in case of sourcing activities. Therefore, apart from the cost of new solutions such as IBM Ariba, transformation will require a significant investment in training the internal manpower and suppliers and, later on, for encouraging and ensuring widespread implementation. We would say that the cost of adoption of some of these tools still continue to be higher and, probably, with more base in adoption, it may come down.

What are benefits on supplier risk management and cost savings as a whole?

Formalisation and centralisation of supplier identification and price determination will reduce the administrative cost through efficiency, analysability and predictability. Auction is another tool which will help in cost savings of repetitive and indirect purchases. Moreover, the supplier network of Ariba helps us to connect to global pool of suppliers in our domain which also helps in reducing risks.

To what extent do you expect to reduce human intervention in processes? Have you redeployed excess staff?

Human intervention in any process is key. We have bifurcated the routine non-value added activities and value-added activities in sourcing process. We will use the new technology to eliminate human intervention in non-value adding routine activity as a result of which participation of employees in value-added activities will increase. Technology will also provide better inputs for decision making in value added activities.

Our IBM Ariba project is part of a supply chain optimisation process consulting initiative. We had new categories coming up as part of our expansion into new products. In a conventional approach, this would have meant resourcing product-specific skills and groups of resources for catering to the same. Through IBM Ariba, we achieve better volumes of scale in resourcing and tighter process adherence. We have digitally re-skilled our employees to be in control with the complex supplier environment.

Digitisation is known to help optimise operations rather than waste time on damage control. What is your take?

Agree totally. In the corporate sector, especially companies with pan-Indian and overseas operations, we have a matrix organisation structure. This requires horizontal communication of data between different teams and there are chances of likely conflicts due to data understanding and data errors. Digitisation of data and digital communication platform is a prerequisite for effective horizontal communication and coordination. With variability of data reduced, the extent of time spent for damage control would be minimised.

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