Evisible Magazine 5th Edition October 2020

Supply Chain Magazine October 2020

Supply Chain Magazine October 2020

PROCUREMENT
IN THE
MODERN
ERA
Present Nandasena
TUDAWE ENGINEERING

Supply Chains are a critical and sensitive function of any organization. Even the slightest mistake can lead to a lot

of damage, which maybe inflicted on a person, company, the public, a region, or to the world. The people who are
engaged in procurement are mindful of the different angles in the market due to their analytical experience with
practical knowledge.

When recruiting, company owners and other interviewers only look at a candidates’ expected salary. This is true with
the exception of Multinational companies and self-started company directors who are dedicated towards their own
success in terms of where they stand today.

An important point is to understand and examine a candidate’s legal combination and experience in whether the
candidate is competent for the post.

Irrelevant of the size of their Budgets, procurement professionals should have a good understanding on the potentially
worse-case scenario and the recovery steps in any unexpected situation.

Selection of Materials

Even if your suppliers are very familiar with their materials and are able to provide uninterrupted services towards your
business, you should always maintain professional formalities in terms of material and supplier selection. From time to
time you will also have to upgrade on the materials and suppliers you choose for your company.

During this global pandemic, the majority of the Hospitality Industry followed strict hygiene protocols to ensure a safer
environment for everyone. These kinds of rules and regulations were not prevalent in the past. Whether it be Shopping
Malls or Retail Centers, security and other personnel are always equipped with tools such as thermometers and
sanitizers to stop the spread. Before the Pandemic, such measures were not taken and thus it goes to show how we
have globally adapted to face the situation better.

Using the above example, Procurement Professionals must upgrade their knowledge and be aware of new rules and
regulations that are implemented in the market. These kinds of practices will ensure the success of a company in
fulfilling the expectations of their end users.

The nature of your products, its characteristics and its ingredients may work in favor or against your company and will
determine its success in the long run. The basis of this success will also be determined by how well you select your
materials and suppliers.

Legal Aspects

Even industry leaders who specialize in what they do with high levels of productivity must always be aware of every
material which they procure. Irrelevant of this size of your business, you must always maintain a checklist of the items
you deal with. This will help you to identify and mitigate any damages which may be inflicted on your raw materials and
products. These damages must be claimed as soon as possible from the party which is accountable. Paying attention to
these types of legal processes will help you to improve your procurement processes further.

Page 1 Supply Chain Magazine October 2020

HARSHA SIRIMANNA

PACKAGES LANKA

Everything you need to know about

ENTREPOT TRADE

In its simplest sense, Entrepot Trade is a facility to import and re-export the same goods to a third party
without the payment of duties and taxes.

Benefits of Entrepot Trade:
• Import of goods without the requirement of an Import Control License.
• Re-export of goods as imported with value addition.
• Trade of goods from one country to another without the goods physically arriving in Sri Lanka.
• Meet the buyer’s requirements by way of simple processing such as re-labeling or re-packaging.
• Change the status as transshipment to divert cargo to a consignee in another country by switching the bill of
lading on a request made by the original consignee in Sri Lanka to the shipping line or the airline.

Warehousing of Goods under Entrepot:
• Public bonded warehouses of SLPA.
• Custom Bonded warehouses under customs supervision till re-exported on a bonded carrier.
• Transfer of goods from one ship/ airline to another directly without warehousing.
Security for the liabilities (Duty and Tax):
• No security is required if the movement of goods is within the port premises or airport.
• The Removal of goods to places outside of the port or airport is allowed only under bank or corporate
guarantee and released only after re-export.

Terms of Payment:
• The FOB value of re-export should be more than the import value of CIF.
• Re-export is not permitted under DA terms.
• Exchange control regulations are applicable in respect of imports.
• Any deviation from the above should have the sanction of the exchange controller.

Processing of documents:
• Export and import CUSDECS are processed at the bonding division of the customs department.
• Traders or Importers must give details of both the import and export from the description of the goods to its vessel
details, value, terms of payments etc. These details must be given to the bonding division.
• Once the export is completed, proof of export such as remittance and Bill of lading to the bond division within one calendar
month from the date of export for the cancellation of liabilities.
Country of origin:
The importer should declare the actual country of origin of the import in the customs documents.
Prohibited Goods:
• Narcotics.
• Arms and Ammunition.
• Goods which are prohibited under International Conventions which Sri Lanka is signatory to under conventions.
Restricted Goods:
• Cloves – Re-export to countries under preferential trade agreements.
• Textile and clothing - re-export to USA, Canada, India, Austria, Italy, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Spain, Luxembourg, Sweden, Netherlands, Portugal, & the UK.

Supply Chain Magazine October 2020 Page 2

HOW BIG ARE YOU ON DA

Big Data is not a new buzz word. But we Is your leadership data savvy and does it understand operations in such a way that
still hear the term quite often in metrics, presented patterns and trends are noticed and acted upon? Do they
management gatherings, and corporate understand data in such a way that they seamlessly
events (virtual events with the new interpret the problem to real life operations and on ground realities?
normal), Does your organization have specialists who can design databases/tables, retrieve, and
webinars etc. I have seen and personally analyze and visualize data and has your
experienced the varying levels of comfort, company invested in the infrastructure that is required to do all of the above?
integration and application there is for If all of these questions were answered “Yes”, I believe that your organization has
data in organizations that are generated already set up or is in a position to set up a data strategy and that will facilitate the
in businesses and or from outside sources. overall achievement of the business strategy. If the answers were mostly “No”, It would
And I think its safe to say that “data” be a clear indicator that your organization is still at a beginner’s stage on a data maturity
remains a challenge and is still not a curve.
facilitator of improvements and better
efficiencies as it was predicted to be for
most
organizations around the world.
Let us try to explore the question posted
above at two levels.

How BIG are you on Data
Individually?
As a Person do you consume a lot of

information that is derived from data?

Do you like to go through summarized

statistics and different types of charts and

info-graphs?

Do you talk with others with facts and The above is a simple depiction of a (there are multiple models) data maturity model.
figures? Do you enjoy “deep diving” into As we move towards an increasingly digitized world, there is an overwhelming amount
a data sheet on excel or other analytical of data that is being captured. The amount of data that is captured by the tech giants of
software? the worlds have enabled them to make data driven decisions, and deliver better
products and services for their customers that have become a key for their meteoric
Do you enjoy the investigative analysis rise.
when statistics and measures contradict
each other? Netflix surpassed Disney in April 2020 in market value and is the highest valued media
These are just a few questions that you company in the world. Netflix has an impressive customer retention rate which is 93%,
may want to ask yourself to gauge how significantly ahead of Amazon Prime at 75% and Hulu at 64%. In 2017 when cable TV
comfortable you as a person around data originals were only renewed 35% of the time after the first season, Netflix Originals
and information derived from data. If most were renewed at a staggering 93%. How is Netflix this successful in retaining
of these questions were answered with customers and knowing what they would like to watch? Big Data and Analytics.
“yes” then you may feel at home in a data
driven environment. 35% of expenses in the construction Industry are attributed to Material waste and Work
Mistakes. A significant amount of money can be saved by improving the material usage
How BIG is your workplace on DATA? and labor usage during construction. Je Dunn Construction, an Honoree of the “US best
Managed Companies Program” in 2020 is developing real time analytics by
I do not believe that there would be any leveraging Big Data to allow builders to make more accurate projections in planning
and execution stage on projects.
entity that does not use data and derived
What is the scope for data in your business?
information for business decisions. But
Wherever your organization may be on a data maturity model the management and
does your workplace have hourly, daily, the leadership need to continue to question themselves on the scope of data that is
relevant to the business. It means constantly questioning what data is available? how is
weekly, dashboards set up to measure it being processed? what productive information is being derived out of it? and where
scope can increase with the best ROI?
performance against agreed upon

Business deliverables and make timely

decisions?

Does your team fully understand the

metrics you measure? How they are

measured and most importantly why are

they measured?

Page 3 Supply Chain Magazine October 2020

ATA Malik Farook
DARAZ

Yes. ROI. A data strategy that enables and supports business strategy is expensive and time consuming to implement. Therefore, it’s
extremely important for business leaders to understand what data is most important and can be leveraged upon. Organizations are
encouraged to do a scoping exercise before moving into any big data project.

Below is a very simple generic scope for big data analytics and applications for a general manufacturing related supply chain as an
example. It is by no means exhaustive.

S&OP

•Supplier risk management.
•Inventory projection and scenario planning.
•Forecast accuracy evaluation and optimization.

Production

•Statistical quality control and tolerance optimization capabilities.
•Lot sizing and scheduling considering cost, inventories and capacities.
•IOT based prodcution line/process optimizations.

Warehousing

•Picking zone/Warehouse space allocations and optimization.
•Robotics and automated pick zone replenishments.
•Automatic stock relocation in high bay warehousing.

Sourcing

•Cost modelling to identify cost drivers.
•Quantification of benefits from spend pooling.
•Automatic analysis of contract compliance.

Transportation

•Real time Dynamic routing.
•Load/volume utilization improvements.
•Network optimizations

Point of Sale

•Out of stock detection and prevention.
•Shelf space optimization.
•Channel/storeallocation of goods maximizing service.

Data has a significantly important role to not only facilitate business strategy but to direct and define the business

strategy in itself. Becoming a “Data Driven” organization is not an easy task, but It is a journey that all companies and

almost all supply chain professionals will have to embark on.

Supply Chain Magazine October 2020 Page 4

PARTNERSHIP IS MORE IMPORTANT THAN DIGITAL INNOVATION WHEN IT

COMES TO COMPLEX CONSTRUCTION PROJECTS

by Robert Handfield Ph.D. NC State University

Across all industries, construction management has perhaps been the slowest to adopt digital technologies, and many

opportunities exist to drive out inefficiencies. Due to the multi-stakeholder and shifting nature of roles and
responsibilities over the life of construction projects, numerous factors can be aided by digital technologies.

I recently worked on a detailed case study of a successful R&D facility construction project at Gilead Science, one of our
SCRC partner companies. In interviewing managers for this case, I discovered how digital investments for managing
large complex projects are not enough; they must be accompanied by the selection of the right team of individuals, a
strong sense of partnership with key suppliers, a burning platform that drives changes in behaviour, and a
transformation of the cultural values of an organization tied to fundamental operational principles.

The project in this case faced considerable challenges, including a
highly constrained market environment, a very brief time window,
cost constraints, and an Engineering group that was in the middle of
a multi-year organization transformation with a diverse mix of
stakeholder objectives for the project that had to be met.
Despite these challenges, the project was brought in under-budget
and on schedule, achieving other objectives that often seem at odds
with each other (best-in-class sustainability ratings, quality scores
from customers and with a remarkably low number of change
requests), resulting in a state-of-the-art laboratory research facility
for one of the leading scientific healthcare companies in the world.
In this study we found that deep operational working principles set
the foundation for internal and external stakeholder relationship
management in the project procurement activity.

In general, we find that significant stakeholder engagement early
in the architect and contractor selection process leads to a more
harmonious relationship, which plays a critical role in the ensuing
contract management process, and ultimately successful outcomes.
The differentiating factor that resulted in the award of the business
to several suppliers being considered was that the winning
company, despite not having lab-related or biopharma construction
experience, had a better alignment with the buying company’s
culture, and would be dedicating one of their co-founders to the
project,. One of the key questions used in the evaluation
assessment was “Provide a recent example of how a potential cost
overrun was identified, communicated to owner, and avoided. What
key lessons learned came from the experience?” This component
that assessed the right alignment of cultures later proved to be a
critical factor during the execution of the project, which involved a
good number of complex negotiations. The team recognized the
need for a contractor that was not unprepared for high levels of
uncertainty and change in a project environment, and sought one
that would understand the importance of facing facts,
acknowledging problems when they occurred, and engaging the
team to collaboratively work out each challenge as it arose.
Continued dialogue around performance metrics allowed both
parties to produce an amazingly successful project outcome.

A key insight from this case involves the need for differentiated supplier relationship
management for procurement-project team integration. Standard bidding practices are
ineffective for construction contracts that are fraught with high levels of risk, diverse
stakeholder requirements, and constrained market conditions. The results suggest that
the combined effect of reliance on metrics (the Deming method) and frequent visibility
(digital insights) lead to improved communication between internal and external parties,
which is imperative to enable agile responses to a changing project ecosystem.

Page 5 Supply Chain Magazine October 2020

Q How long have you been SUPPLY CHAIN Q What is in store for the fu-

in the Garments Industry and THE APPAREL ture of the Garments
what would you say is the INDUSTRY Industry?
best aspect of working in
such an industry? IN THE EYES OF A Presently with what we are

A I’ve been in the garments Prasadi Ruwanpura globally faced with: COVID-19 has
THE BOBBIN GROUP caused a massive strain on this trade &
industry since 2002. I believe the other trades. With many countries
exposure we receive locally & glob- negotiating the best prices is key declaring recessions and millions of
ally on trends, new techniques & without reducing the quality of the product. people out of jobs; everyone is very
innovative ideas along with the cautious of their spending. We hear on
relationships we build with our Q Your current organisation is the news that many department &
customers over the years would retail stores are closing down due to a
be the best take away from it all. dependent on much foreign severe drop in sales. However, online
procurement. What are the challenges sales have increased
Q What are the different you face in terms of competition in a significantly from last year.
foreign Market? Furthermore, people have become
Supply Chain Challenges in more conscience of their carbon
the process of a Garments A The price point & the deliveries have al- footprint; hence they are more
License Office to a Manufac- responsible with their purchases. So as
turer to a Supplier? ways been the challenge. vendors we need to
research on the best sellers,
A From what I understand; the sustainable fashion, and competitive
price points & cater to our
biggest challenge is making sure customers accordingly. Now, we need
that we meet audit requirements to be price conscience & be the
in order to be approved for a par- first one in to win any order. If not, Sri
ticular buyer or buyers. Thus, the Lanka’s garment trade will suffer
challenges would be, not being an immensely & it will take years to
approved supplier, rebuild it to its former glory.
maintaining the quality of our
products, the number of rejec- Q Can Technology
tions, any
liability issues due to that, our revolutionise the Garments
Industry? If so how?
prices not being competitive
against our competitors & lead A Technology can aid with speed
times to meet delivery cut offs.
& innovation. So yes, this will
Q Do you believe that the revolutionize the garment
industry. This isn’t news. Our
Sri Lankan Garments competitors are 10 steps ahead
Industry follows a proper due to technology & speed, so
Supply Chain Process? If not, what’s stopping us?
what could be the reason for
such?

A It does need improvement Complied by
Anoushkha Weerackody
from my perspective. The strength
of the
relationship between the supplier
& the customer needs tending to.
The prices & products offered also
needs to be thought of.
Considering the competitors
locally & globally; both suppliers
& customers need to collaborate
on the most reasonably priced,
exceptional quality product in the
market. In order to do this;

Supply Chain Magazine October 2020 Page 6

MI
C

19TH SEPTEM
PROV

Page 7 Supply Chain Magazine October 2020

INI AWARDS
CEREMONY

MBER MAIN AUDITORIUM, WESTERN
VINCE, AESTHETIC RESORT

Supply Chain Magazine October 2020 Page 8

Lastly, keep your transactional Vendors simple. There is not a
one size fits all approach to developing strong working
relationships but referring a proved matrix of SRM will help
the steps taken have a science behind it.

Q Can you tell me your experiences in Lowering Expenses

and Monitoring Costs as a Procurement
Manager?

DISHAN PEIRIS A “Being in the field for over a decade, I think as a
ATLAS AXILLIA
Procurement Professional you need to understand all the
DIVING INTO THE SKU’s you have. You need to eat breathe and taste the prod-
FUNDAMENTALS ucts that you
OF PROCUREMENT procure. Your strategy on Engineering Products will be
entirely different from your strategy on Consumables. The
Q What steps do you take as a Procurement Manager to cost of a product you see is not the cost of a product which
you procure. That is when the cost model comes in handy. If
Develop strong working relationships with key suppliers? you take a bottle of water, a procurement professional asks
the questions, what is the Cost of Water today? What are the
A “I believe as a Procurement Manager its important to first market dynamics behind water? Is water scarce or is an
abundance of water? Next, we would investigate the plastic of
outline your expectation with reference to the key supplier a water bottle. What is influencing the PET cost in the
deliverables. First things first, your Vendor segmentation is where market right now? Secondly, I think being sensitive to the
you start off with. You need to know your, Bottleneck/ market pulse is the most important as we live in a world of
collaborative, Routine, Strategic and Leverage suppliers. Then it’s commodities and the market volatility needs to be closely
important to understand the dimensions of each segment so you monitored. Being sensitive to the respective trigger points of
work with them with the attributes and implications in mind. The goods and services will help a buyer to “Buy at right time”. If
above segmentation will then feed into your supplier reviews. This I were to tie the approach on commodities to the basic cost
is where all the magic happens. There is no casual conversation model, its important to have a very deep understanding on
in business I believe, and each conversation is premeditated, and the commodities you procure so you can leverage your
your supplier reviews will help you structure your interactions. commodity forecasts to the cost model and ensure you drive
This will take to account the volatilities and the level of detail cost in all products and services you procure. I truly would
required in managing them. Its important to work towards not call it lowering expenses but rather drive value as value
bringing your suppliers up to a level of partnership. Spend more comes in more than just cost of purchase in rupees and cents
time with your Strategic Vendors, then focus on your but going an additional step to total cost of ownership.”
Collaborative and Opportunist Vendors.
QWhat sources do you use to maintain and build your
Page 9
knowledge of relevant marketplaces?

A“I usually wake up at around 5.30 AM and after working

out, sit for breakfast from around 6.50 to 7.30. During
breakfast I usually watch Bloomberg, which mainly consists of
Bloomberg Commodity Indices, Global Commodities, the
status of the stock market, and what the general news is.
Taking Bloomberg as an example, we find tons of information.
The key is to contextualise this information to your
organisation. It’s your ability to connect the dots to your
product which will make the difference.

Supply Chain Magazine October 2020

Since we have suppliers in both China and India, I will browse Thus, what I learnt from this, is that openness and a great

through Indian and Chinese Channels to get information on how working relationship between us and our suppliers is of utmost

their countries are doing, how are their equity rates, the importance.”

appreciation and depreciation of their currency as well as the

Qstatus of their gold reserves. During Lunch, I read from the Wall What was your favourite negotiation and why was it your

Street Journal to see what’s happening in US. I will also look
at any local news and go to the customs portal to get any relevant favourite?

information. I constantly keep looking for information, because I

believe that as a procurement professional, you need to always be “My favourite negotiation took place in Germany this

Aupdated and informed. As there is so much information available
on a daily basis for a Procurement professional to find reference January. For the first time, I went into each negotiation

points which one can relate to the commodity they Procure. knowing the technicalities of our products after years of

Most importantly I enjoy being aware of what happens around me experiencing ups and downs and learnings from such

so I am fortunate to be in a profession that can leverage on a experiences. Every supplier we approached; we were able to

passion” find mutually beneficial grounds. I would not call a negotiation a

victory of one end because then there wouldn’t be a

Q partnership. It was very beneficial to our organisation and we
How would you handle working with a crucial supplier who are currently benefiting a lot through those negotiations. To be
was unreliable? a successful negotiator, you need to first learn. Every

negotiation must be taken as if it is the first time, you are

A doing it. In Germany, we negotiated with suppliers from all
“I believe that if a supplier is unreliable, and you are facing around the world, and as a result we had to use a different
such unreliability during a critical time, it means that you have not negotiation strategy for each nationality. For starters, each

done your due diligence beforehand. The Supplier Segmentation supplier represents a culture from which ever region they are

through Vendor reviews will surely give you a sense of where each from. First you need to understand the culture of the supplier to

supplier is segmented. Based on the segmentation, its important be prepared on their ways of conversation. Once you have that

you Develop the Supplier through a Supplier Development under control it’s all about understanding your leverage position

Program and take steps to de-risk supply. I believe at this point its through the research you do on the supplier and their market

important you have the tough conversations and remain honest position. Then it is just negotiation psychology and finding your

with where you see your business going and be very specific of sweet spot for the pitch. Patients is key. Overall, I would say it

the developments required is in Cost, Quality and or Service. It is was the best negotiation I’ve had over the years.”

important that each party understands where the short comings

Qare as without being self-aware, there isn’t a way up. They say” the What do you like the most and least about Procurement?

trouble child requires the most attention “this is no
different to that. Frequent supplier reviews will help you

understand if the steps taken to develop is effective or if further “What do I like the most about Procurement? Well for

Aattention is required.”
starters I’m an Adrenaline Junkie. Negotiations give me so much

of Adrenaline. Negotiations require a lot of effort and usually

come with instant rewards and satisfaction. The contribution

you make for your company through great negotiations is what

makes me love it so much. You get to meet different people from

different cultures and ethnicities and the level of exposure you

get off the world is just amazing! What do I like the least about

Procurement? I believe that Procurement Learning in Sri Lanka

must change. For example, a student from any other discipline

would be able to add value to their profession from day one

while a Supply Chain Academic would need years of experience

to relate and be that catalyst an organization needs in terms of

adding value. I believe there needs to be a lot more focus about

Procurement in the space of Supply Chain giving students the

skills they need to service in the world of Procurement.”

QCan you detail a negotiation which you had that was unsuc- Complied by
Anoushkha Weerackody
cessful and what did you learn from it?
Supply Chain Magazine October 2020 Page 10
A“In terms of Cost, Quality and Service; we had a supplier who

had a great cost, great quality but unfortunately really bad service.
The supplier gave us a delivery forecast very recently and was
xxunable to meet it due to capacity constraints. This is where the
negotiation on our part did not come through as well. While we
looked at the delivery plan, we never looked at the capacity
constraints of our Supplier before closing the deal. Some
suppliers are not open to such transparency as they tend to think
it is a weakness of theirs, but I think it’s important to assure your
suppliers that there must be transparency as it is a two way street.

DISTRIBUTION

TRENDS AND

POWER OF

5Cs

Gayathri Karunanayake

WiLAT GLOBAL VICE CHAIRPERSON
SOUTH ASIA

Distribution is a vital function and it is a part of the resilience of every organizational supply chain. The most important part of

the supply chain, and its backbone is distribution, and distribution entails a multitude of activities right from picking the product to
delivering it to the end-customer. It starts from the vendors, manufacturing floor, back off the factory yard, distribution centres and
to the end customer.

The main goal of distribution is to ensure that the product reaches the right person at the right time at the optimum cost. Logistics
and Supply Chain Management services necessitate a seamless flow and the timely delivery of goods and services to various
stakeholders involved in the value chain. These Stakeholders comprise of vendors, manufacturers, suppliers, wholesalers, retailers,
and end customers.

In the VUCA world, many professionals talk about market space for distribution and its unprecedented growth because of
emerging trends such as new delivery models, new distribution channels, advancement in technology, and process automation.
Mostly, Distribution is evolving around a distribution service provider’s offer packaging, creative logistics, freight forwarding,
warehousing, fulfilment and other value added- services that ensure accessibility and a wide availability of goods and services to the
end-user.

Organizations are increasingly leveraging distribution and logistics services offered by third-party logistics (3PL) and other
transportation service providers. The growth in demand for distribution can be credited to globalization, boundless complexities in
supply chain operations, growing e-commerce & retail sectors and customer expectations and experience.
The most common approach in distribution and logistics service providers are shifting from traditional processes to technology-based
processes, improving warehousing and transportation capabilities while enabling collaborative engagement to drive profitability and
operational efficiency.
The most common trends are,

• Building mega-distribution centres and fulfilment centres to achieve economies of scale, optimize delivery schedule, and ensure
optimum allocation of human resources.

• Adopting process automation in place of manual processing to provide real-time visibility, streamline process in material flow, and
drive customer satisfaction.

• Rise in omnichannel business models to tackle the sudden surge in online retail and multi-channel fulfilment to include last mile
delivery and same day delivery options to cater to the end customers.

While considering all of the above, why are distribution service providers expected to focus on 5 Cs? These could be the most vibrant
conditions to adopt and could be distribution service trends for the future

Page 11 Supply Chain Magazine October 2020

COST

Businesses must choose the most cost-effective ways in-house to be more responsive and create agile logistics solutions for distri-
bution by introducing new Distribution Channels and distribution models to cut down costs through entire value stream of manu-
facturing.

Disintermediation or Direct Distribution - Manufacturers and retailers have to invest in their own distribution networks, effectively
cutting out the middleman or distributor and supplying products to the consumers directly.
As a result, manufacturers and retailers have a financial gain since the manufacturer can afford to sell their items at a higher price
and the retailer gets them cheaper than he or she would have from the wholesale dealer.

Pop up Warehouses as Fulfillment centers -

Pop-up warehouses offer an excellent way for retailers to cater to their customer base and cut shipping costs at the same time. This
is what small retailers currently do. It’s quite intuitive, that the retailer goes to the
consumer rather than the consumer coming to retailer by setting up temporary warehouses or cross docking hubs.
It is a great solution to cut down the transport costs because Transport costs represent a significant portion of total distribution
operating costs.

CARBON

Adopting sustainable environmentally friendly processes is a trend that consumers are looking for in terms of sustainable solutions.
Environmentally friendly businesses tend to lower the carbon footprint of a company. Companies can use zero emission delivery
fleets and double decker truck fleets and could halve their carbon footprint and cost both at the same time.
Integrating technologies such as green practices to reduce paper use, minimize the usage of corrugated packaging, and motions
sensors to offer environmentally sustainable services to the customers are key environment friendly practices that companies must
look into.

COMPLIANCE

This is non-negotiable. Precision, expertise, and integrity, combined with professional insight, are the most valuable properties when
it comes to compliance.
There can be significant hazards associated with the storage, handling, and transportation of many products. Distribution service
providers must implement tight safety standards and quality standards to avoid system failures and maintain preparedness for
potential issues that can arise.
Quality and Safety on Wheels - A lot of things can happen to products between the manufacturers shipping dock and the doorstep
or the retailer’s receiving dock. Products can be physically damaged, temperature abused, exposed to unsanitary conditions and
numerous other undesirable conditions that can and do result in increased risk of microbiological, chemical, or physical hazards.
Working towards consistently applying quality and safety best practices throughout operations from truck to warehouse to delivery
is key to mitigating safety and quality risks through the point of use by consumers.

COLLABORATION

In a nutshell, it is what happens when two or more discrete organisations work closely together to meet shared objectives. These
objectives are typically focused on cost reduction, customer service improvement, or raising specific aspects of supply chain
performance.
- A retailer could collaborate with a wholesaler or manufacturer to distribute goods.
- A retailer or manufacturer could collaborate with a Last mile service provider.
- A manufacturer could collaborate with a distributor for a direct distribution to add value for its end-customers.
- A Distribution service provider could collaborate with one or more transport companies to generate service and cost
benefits.

High quality in distribution means high speed. When it comes to on time delivery, 50% of consumers need their deliveries same day
and rest within 48 hours. This is where businesses should explore on collaborations to achieve on time distribution to end customers.
On time deliveries motivate 72% of customers to make a repeat purchase from the retailer.

CUSTOMER SERVICE

The success and perhaps the survival of the business, is going to depend on keeping their customers happy. If distribution services
involves delivering to homes, then the last mile will play a huge part in any businesses ability to compete.
The products are delivered by a truck or a motorcycle, or a bicycle. They are delivered by a person. This person is the face of the
business, and if the business operates exclusively online, that may be the only face customer will see. So, we need to train distribution
service providers as this has become an expectation in the last-mile race. 38% of consumers will cease to purchase from a retailer
following a negative delivery experience.
Businesses might choose to manage last-mile services as a cost to be borne and do the minimum to meet customer expectations. But
the companies succeeding in distribution are the ones turning distribution services into a value proposition.

Supply Chain Magazine October 2020 Page 12

THE IMPORTANCE OF

IT EMPLOYEEEDUCATION
IN INFORMATION
SECURITY
Damith Jayasinghe
GENSOFT SRI LANKA

Employees are at the heart of every business and can be a company’s greatest asset or its biggest threat when it comes to

securing sensitive data and information. Lack of employee cybersecurity education and awareness, along with human error or
careless behaviors have been the cause of many major security breaches.

Many of the top studies of data breaches point to employee error as a leading cause of data loss. Breaches can occur through
employee error as a result of things as simple as not shredding secure information, clicking a bad link in an email, falling victim to
a phishing scam, or even sending secure information to the wrong person via email. Even if these things are done unintentionally,
they can still lead to large scale breaches which can be harmful to your customers and clients, your employees, and your business
reputation. Not only hackers but also your competitors take advantage of people and influence, trick and exploit them into taking

actions that ultimately lead to security breaches.

With employees representing a top security risk factor within organizations, it is no surprise that employee education and training
is an important aspect in strengthening a company’s security posture. Any workplace cybersecurity strategy should incorporate

efforts to educate employees about basic cybersecurity do’s and don’ts to avoid employees becoming inadvertent actors.

Employees should fully understand the risks and consequences, as well as their roles and responsibilities when it comes to
pErdoutceactteinYgotuhreEomrgpalnoiyzaeteiosnasfraomPrcoyabcetrivtehrSeeactsuarintdy aMtteaacskus.reSo, make a formal plan and get your IT guys to keep educating
employees on a regular basis with real world scenarios
Teach Basic Security Practices

While not every employee can be or wants to be a cybersecurity expert, all employees should understand basic security practices.
This includes password selection and uses, user access rights, installing updates, learning how to recognize and detect potential
threats, such as phishing emails. Also, Issues specific rules for email, internet browsing, social networks, and mobile devices.

Make Cybersecurity Training Part of the Onboarding Process

Onboarding is the perfect opportunity to set the foundations of good habits and cybersecurity best practices by introducing new
employees to IT security policies, guidelines, and procedures. Introducing cyber awareness education during the onboarding
process sets expectations of new employees as to their roles and responsibilities in protecting the company while giving the
message that your organization is committed to taking cybersecurity seriously.
Test Employee Knowledge

Testing employee cybersecurity knowledge can be done in many ways. If you don’t have a security team to perform such things, get
some experts who can educate and test your employees. It will not be a waste anyway.

A well-educated workforce is the key to strengthening an organization’s overall security posture. Enterprises should leverage staff
training, education and cybersecurity best practices to boost their cybersecurity efforts.

Understanding the essentials of cyber security and having a basic knowledge of what to look out for can empower employees to be
vigilant and better prepared to protect themselves and the organization from potential threats and attacks.

TAKE IT SERIOUSLY

Think your business has nothing to risk from cyber-attacks or information leakage? Think again.

Page 13 Supply Chain Magazine October 2020

SUPPLY CHAIN GOES DIGITAL
ADAPT OR FAIL

Enter the digital supply chain, a concept that encompasses and integrates all business processes
required for the selling of products: design, planning, engineering, manufacturing, logistics,
warehouse management, transportation and customer service. Each of those disciplines has

historically functioned in isolation, requiring the manual replication of data and often resulting in big
gaps in communication. To tear down those walls, companies need to begin transforming their supply

chains, with the goal of achieving customer centricity.

“The digital supply chain has arrived. It’s time for companies to start thinking about their supply chains
in a completely new way.” Supply chain goes digital, but what about the work force? Are they
competent enough to understand and weather the new changes in supply chain management?

When businesses want to be “customer-focused,” it is important to know what it really takes to earn
that description? Mass production is just old-school as companies should move beyond that and focus

on designing supply-chain processes to serve a customer segment of one and to do that require
personnel with robust knowledge on digital supply chain as it is the key. Take it as a representation of
the physical world; a “digital twin” that provides a high-level view of operations. Companies who can
have real time access to key processes, enabling them to maximize the productivity and deliver orders

in unprecedented speed. All this can be a reality only if the personnel are well equipped with
knowledge. This is the difference between an organization thriving to perishing without being able to

serve its customers when required.

Supply Chains are changing constantly with new technology and innovations. What you learn today can
be outdated. As the leader in postgraduate education providers in Sri Lanka, NEXT Campus with the

affiliation of Birmingham City University (UK) and Association of Business Executives (ABE) offers you
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Supply Chain Magazine October 2020 Page 14

Page 15 Supply Chain Magazine October 2020

Supply Chain Magazine October 2020 Page 16

TheCOVID-19 pandemic has ASANGA WEERACKODY BE AN EXAMPLE

made a mess of businesses in Sri EAGLE GROUP In this crisis if you are implementing
Lanka and all over the world. With salary cuts to save job losses, you
business revenue suddenly coming must lead by example and do the
down, all plans have been put on same for yourself before doing such
hold. During any crisis which affects to your employees. Specially as a
the profitability of a business, laying CEO, you should take the largest
off staff is a popular method of salary cut yourself which can cover
sustaining profits. But this time up many junior staffs’ full salaries.
something changed and companies
were restructuring their offices and EMPLOYEE SUGGESSIONS
encouraged staff to work remotely
with short term financial plans. I think It’s always best to open the floor for ideas
real leaders got the opportunity to from employees on what the
manage the economic effects of this company should do. You might fear that
crisis in a clear and compassionate employees will get upset if their ideas are
way while creating more value for not selected. But you can always say that
their companies which enables them participation is the most important thing.
to come out of this pandemic stron- And also, by getting ideas from your
ger than ever before. employees, you prove to them that you
care about what they think and suggest.
COMMUNICATING

Reserves are the most important LEADERS REVIEW YOUR BUDGETS
assets in any company when facing WILL NOT
a crisis. The leaders who understand Before pay cuts or job layoffs, consider all
this will have enough confidence to LAYOFF STAFF your non-essential expenses and look for
face a crisis of this nature. They will options to reduce costs. Get rid of extra
not scare away its best employees DURING THIS office space as some employees might
and they will hold their cards closer agree to work from home so that they
to their chest. On the other hand, will secure their job.
even if you don’t communicate the
risk factor, they will still be aware that Being a leader in a crisis at this magnate
certain sectors of the economy are can be nerve wrecking. If you act too fast,
already getting hit hard by changes in it might turn out that you overreacted. If
customer behaviour as a result of this you act too slow, the business might have
virus. And everyone knows a to close down. It would be wise to
slowdown in parts of the economy get your management team involved
and increased uncertainty might very regularly for all the actions you take
impact their company as well. So, it’s since their involvement and feedback is
best to communicate to them that important.
their company will always
protect their employees first. Most importantly
leaders must always
PANDEMIC remember layoffs are part

HR and
parcel of running a
business – they can
occur at any moment, not
just during times of crisis.

Page 17 Supply Chain Magazine October 2020

Q Air freight markets and airfreight Q Do you have any examples to share with regard to a few airlines

forwarders are the backbone of the who really adapted during the COVID-19 situation and helped their
global trade system specially during business survive? Please elaborate on the strategies they use.
this pandemic. When selecting an air
freight forwarder in the future, have A The latest modification to the airline industry to fill the capacity vacuum
you changed your strategies from the
Pre-COVID systems? caused by limited flight operations by all the airlines, was to convert the Economy
class passenger cabin to a cargo compartment. Emirates, Qatar , Kuwait led the
A It is a well-known and a proven fact that innovation and our own national carrier SriLankan also followed the same. Even
the cabin baggage compartments were not left alone if any suitable size cargo was
air freight forwarders play a pivotal role in the found to carry.
global trade system. Their performance is This was an ideal fit to the space issue, and it helped the airlines to earn additional
vital to have a perfect balance in global trade. revenue in lieu of the passenger operation. Further, almost all the airlines who
During the Pre-COVID times, the strategies had taken flights on short term lease arrangements released their flights back to
that we had deployed in selecting an air manage the cash flow and concentrated on their fleet as this was a relief on their
freight forwarder was straight forward and accounts as the grounded flights too needed to go through the regular
the measurements were built around Price, maintenance check-ups to keep them ready to fly at moment.
the airlines that they use, their Service
frequency, and the capacity that they can Q What sort of advice can you give the freight forwarding industry
offer. But, the COVID-19 pandemic
highlighted the requirement of re-strategizing if they face a similar situation in the future?
our selection process as the services
rendered during the pandemic were unique A The importance of carrying a sustainable business model with an ideal
and of course it was the first time any of us
experienced such a situation. Hence the rea- organization structure is a key pillar to face a similar situation in future. Even
son Long-Term pricing contracts was identi- though the business grows, does that mean the head count should grow
fied as a key strategy during the pandemic proportionately? In my opinion, the answer is “NO”. There are much advanced
as the businesses who negotiated the rates at ways of managing the business growth with a constant head count and Process
a shipment level were adversely affected Automation driving a company’s operations.
and hence Post-COVID; the selection strategy
would now revolve around long term pricing Getting rid of traditional practices such as duplicated work process within the
contracts with reliable services and the organization (Separate Finance departments for Air and Ocean departments .
adoptability to a different business even the HR functions across the organization when multiple offices are set-up
environment in a short lead-time is also an locally or internationally) will help the eco system to grow in a sustainable manner.
important parameter.
The risk-taking ability at a calculated pace and the innovative work processes to
Q The demand for air freight suit latest development at the customer’s end will definitely determine the
existence of any freight forwarder in the future under any pandemic.
declined since personal protective
equipment (PPE) is no
longer acutely needed by air freight.
Moreover, Retail Cargo is also not back
yet. Will this be an advantage to
customers who still continue with their
old volumes?

A Yes, this sets a perfect pitch to regular IS AIR
FREIGHT
customers who are dependent on air freight. ANY LONGER
At the beginning of the pandemic, the air NEEDED FOR
freight rates started sky-rocketing due to the PPE ?
demand and supply situation in the market.
But, with the PPE product range which was IMALKA UPENDRA - MAS
initially air lifted to the consumers end; now
being moved by sea, the regular consumer Supply Chain Magazine October 2020 Page 18
segment is slowly picking up and that has
opened up the space in the air freight
segment. So, the customers who continue to
have decent volumes with established
consumers – specially in the EU and US have a
golden opportunity to negotiate for better
rates with their existing volumes.
It is a commonly available opportunity where
the repatriates who are flying to their
motherlands create an air cargo capacity
which the airlines cannot fill as it was during
Pre- COVID, and therefore they also
welcome the available volumes allowing the
customers a better negotiation platform.

validation activities, and despite increasing levels of digitisation, the industry
continues to have moderate reliance on transferring and dealing with physical
documentation.

Currently, many businesses in China have implemented “working from home”
procedures. Despite IT functionality, where offices remain closed for protracted
periods, it is likely that customs and transport documentation will be disrupted,
potentially leading to problems delivering cargo at destination.

How managing the spread of coronavirus is Impacts on freight forwarders and logistics operators
impacting freight forwarders and logistics
operators Commercial Impact

This briefing considers the potential impact Any reduction in goods handled and shipped could have a significant impact on
customer revenue. There is also the risk that key customers will lean on
on ocean freight and supply chain forwarders to provide, without a contractual obligation to do so, more expensive
management activities of freight forwarders “workarounds”, such as airfreight and using non-core ocean service providers to
and logistics operators and the steps they perform voyages.
should take to curtail the spread of
coronavirus which continues to disrupt the In general, apart from office closures in China, many companies have
movement of goods. While key concerns vary implemented restricted travel regimes. As a result, expected business travel
from distil to delays and potentially cargo related to securing transactions or continuing servicing relationships are likely to
deterioration, the following provides some be disrupted. Inevitably, remote conferencing technologies provide a measure of
guidance on the potential risks to freight continuity. It will be important to maintain clear and open communications.
operators and how to mitigate them.
Legal Assessment
Ocean container supply chains include
physical, clerical and data entry processes, Special Contracts
many of which involve people congregating
and interacting in large concentrations. Whilst much of the forwarding industry operates without specially negotiated
contracts (relying on incorporation of standard trading conditions), some
Physical cargo packing operations inherently forwarders have in place supply chain or freight management agreements with
involve human interaction. Similarly, clerical their key customers. In such cases, it is necessary to review all specific customer
and data entry processes are normally contracts for ocean-related services and identify the obligations on the supplier
executed in the offices of a range of supply to perform in contexts such as the coronavirus. Is the forwarder or its agent
chain stakeholders, including forwarders, ships required to issue FCRs and/or bills of lading? Is the operator required to
agents, terminals, banks and customs undertake consolidations? Is it responsible for export customs formalities, etc.?
authorities. Apart from data entry and Some agreements are based on the customer’s standard purchasing terms and
may consequently be very customer friendly with few exclusions to benefit the
supplier. As well as identifying obligations,

THE CORONAVIRUS AND FREIGHT FORWARDING

Page 19 Supply Chain Magazine October 2020

forwarders should identify any “force If a line issued an original bill of lading to the Chinese agent or network office of the
majeure” clauses in their agreements customer’s forwarder but it has not found its way to the destination forwarder/agent
and pre-emptively send notices to owing to reasons outside its control, then as a “workaround”, the line is likely to demand
customers setting out the problems in a letter of indemnity (LOI) at destination prior to delivering the container to a party who
China and invoking their force majeure is unable to present the original bill.
right to be discharged from their
obligations to perform. Failure to provide a line with an LOI could delay the goods being released and lead to
container detention charges being incurred. This can easily turn into a large sum if the
Industry Standard Terms line exercises a lien and stores the container at the terminal for a long time. Given that
the freight forwarder will want to pass all costs payable to the line onto the customer, it
Where an operator trades on industry should keep the customer informed about all detention and hold the customer
standard terms (such as national responsible for it. If large detention sums are demanded, legal advice should be sought.
association forwarding conditions), it is
prudent to send force majeure notices. The requirement for an LOI should not generally arise if the line has only issued a waybill.
Further, while the precise date of the Forwarders and logistics operators may find it advisable therefore, where
commencement of the situation may possible, to instruct lines only to issue
be open to argument, taking on new waybills.
transactions relating to a supply chain
reliant on fulfilment in China requires As well as original line bills not arriving at destination, there is also the risk of house
detailed scrutiny and probably specific non-vessel operating carrier (NVOC) bills not arriving. Particularly in the circumstances
legal advice. of the coronavirus, but also generally, operators are advised to take great care before
releasing goods without the receiver presenting an original house bill. Insurance
Communications to customers coverage will be prejudiced where claims arise from intentional release of cargo without
presentation of an original bill. Legal advice should be obtained and, if the operator
It is crucial for freight suppliers to keep agrees to accept an LOI from the customer/receiver, it should ensure that the wording
their customers abreast of all problems clearly responds to the risks arising and the party issuing the LOI is good for its money.
experienced by other stakeholders in LOIs should be signed by a first class bank as the party providing the indemnity or as
the given supply chain, such as vendors, guarantor of the customer as the indemnifying party. If the customer/receiver refuses
hauliers, lines, agents and terminals. To to provide an acceptable LOI, legal advice should be sought.
rely upon a force majeure clause or to
be discharged of an obligation under It is also possible that customers/receivers abandon cargo at destinations if bills are
general law, an operator needs to unavailable, “stop” instructions have been issued by vendors and/or substantial
evidence that the customer’s losses detention charges have accrued. Forwarders should work proactively to avoid the costs,
and any failure to perform were caused customs complications and operational problems arising from abandoned cargoes;
by matters genuinely and reasonably specifically, avoid the temptation of doing nothing in the hope that the problem will
outside its control. Suppliers will resolve itself.
generally be contractually required to
consider and implement any Claims in China
reasonable “workarounds” if they
involve modest additional cost. There is a risk of claims from sellers against forwarders and logistics operators and/or
their Chinese agents/network offices. If sellers fail to get paid owing to clerical or data
Communications to other supply entry problems, or because the buyer has received the goods but failed to pay, they are
chain stakeholders likely to claim against the party issuing the forwarder’s cargo receipt (FCR) or NVOC bill
in China. Before any goods are released to receivers, operators should check that sellers
Freight forwarders and logistics have not issued stop notices to them or their Chinese agents/network offices or inti-
operators need to maintain a paper mated a claim should the goods be released. LOIs provided by buyers/receivers should
trail to minimise the risk of claims and expressly cover this risk. If stop notices or claims have been intimated, then operators
to evidence that they did everything are advised to seek legal advice.
reasonable to avoid the customer’s
losses. Keep written records of CRAIG NEAME
communications with supply chain
stakeholders and contractors and send Craig Neame is passionate about disruptive technologies and
them notices holding them to their spearheaded the development of HFW’s Risk and Compliance Training
contractual obligations. A high-level Platform and GDPR training courses in partnership with Olive Group. He
summary of the steps taken, and
problems encountered should be advises a broad range of clients on new product development,
included in communications to compliance issues, insurance solutions for emerging risks and crisis
customers. management. He is particularly well known for his expertise in global
supply chains. Craig believes that as well as advising clients on crises
Destination Problems when they happen, HFW also should be helping clients to train their peo-

Clearly, it is not only problems in China ple so incidents don’t happen altogether.
itself that should be considered. If
original bills are not produced and/or
not couriered to destinations, there is
the risk that forwarders,
purchasers and lines will have to find
“workarounds”.

Supply Chain Magazine October 2020 Page 20

Continuity of supply chains HANDLING LOGISTICS IN AN SUPPLY CHAIN
UNCERTAIN WORLD PERSPECTIVES,
have been a concern to most
organisations Modes of transportation had to be SKILLS AND
shifted, passenger flights were no PERSONAL
especially during the last longer available and cargo aircrafts TRAITS IN THE
two quarters in 2020. Raw needed to be hired. There was NEW NORMAL
and packaging material and overcapacity in the container business
finished goods have been and large vessels sailed at less than MAINTENANCE
optimal capacity. Procurement had to MANAGEMENT SKILLS IN A
out of stock for weeks. deal more with cancelled orders rather DIGITAL WORLD
There is a dilemma in than new orders. These uncertain times
planning long term and at demand a dynamic skill set in logistics. In manufacturing, robots and cobots
the same time, with shops Firms can now employ digital increasingly provide additional data to
closed during the pandemic logistics practices, using thousands of flag problems or identify improvement
and people working from data points to optimise and track real opportunities. Digital diagnostic
home, demand for certain world inputs for real time solutions capabilities allow for real time
types of products fell monitoring of equipment, helping to
FOCUS ON SUSTAINABILITY lower cost by reducing wasteful
precipitously. maintenance practices. Instead of visits,
Most supply chains could The new normal may see a stronger push plant engineers need to develop
not react fast enough when for sustainability and a reduced collaborating skills and work with OEM’s
consumers shifted their environmental impact to customers and through online platforms. In addition,
spending away from brick regulators as lower pollution levels have plant mechanical and electrical
and mortar stores towards been one of the few fortunate
by-products on account of reduced
e-commerce and door activity
to door vendors. Others
couldn’t ramp up production MANAGING AUTOMATED
to meet soaring demand FACTORIES AND DIGITAL
ACUMEN
from pantry loading
consumers. Yet some Automation and digitisation
companies were consistently empower firms to reap long term
able to meet demand in the benefits. Through accurate forecasts,
short term, thanks to their reduced downtime, faster delivery and
advanced supply chain turnaround times, digitisation of the end-
capabilities. Certain to-end supply chain will help a
businesses were able to business eliminate inefficiencies,
mobilise rapidly and set up improve responsiveness, and reduce sup-
ply chain costs. Digitisation will be a criti-
crisis cal tool in the supply-chain
management mechanisms. organisation’s response to future
challenges. Digitisation builds supply
The typical focus was chain resilience and, the invention of
naturally short term. How disruptive technologies, help accelerate
can supply chain leaders supply chain progress

prepare for the
medium and long terms and

build
resilience and capability that
will see them through in the

‘new normal?

Some of the hard skills
supply chain

professionals need to
develop in the ‘new normal’

include,

Page 21 Supply Chain Magazine October 2020

technicians need to sharpen their PRODUCTION PLANNING AND DATA BASED DECISION
machining and fabrication skills – in FORECASTING SKILLS MAKING SKILLS
house - as spare part sourcing and
importation becomes difficult The pandemic has posed many new chal- Gathering accurate technical data from
lenges to supply chain planners. Tradi- internal & external sources, integrating
tional forecasting techniques that rely data into a ‘single source of truth’ is
on historical production data, rather than important but sometimes not sufficient.
forward-looking external sales data, have The data must be delivered to decision
become ineffective. makers in digestible, user friendly
formats. In an emergency, supply chain
FINANCIAL ACUMEN AND SUPPLY executives will not be able to make
CHAIN CASH MANAGEMENT SKILLS decisions in a timely manner if they have
to wade through and pressure test
The ability to understand when and hundreds of spreadsheets and
where supply chain issues will start caus- documents that yield limited insights
ing a financial impact to the business is for their work
critical.
SUPPLY CHAIN SCENARIO
Similarly, some of the soft skills in PLANNING
supply chain include,

NEGOTIATION SKILLS

This would be critical in re-negotiating Effective supply chain teams are skilled
terms for the time during the crisis and in tools and processes to conduct
in the new normal, especially with local scenario planning regularly and rapidly,
suppliers. in minutes or hours instead of days or
weeks. They should develop a range of
CROSS FUNCTIONAL AND scenarios, model the implications and
COLLABORATION SKILLS tradeoffs i.e. operational and in each of
the scenarios, and generate
Supply chain team members must be recommendations for action
empowered to make important business

decisions quickly, within reasonable time ADAPTATION SKILLS BY
limits. Organizations need to rethink the NECESSITY
way employees communicate with each
other and with customers and
suppliers – within the office, regionally
and globally.

TRANSPARENCY AND In this time of unprecedented change,
VISIBILITY supply-chain managers must adapt fast.
As experts point out, the best ways to
Manone Perera The ability to establish critical tasks, stay on track including the use of
components, determining the origin of scenario planning, relentless focus on
has close to 25 years of manufacturing supply and identify alternative sources customer needs and how they’re
experience in two leading multinational are important capabilities. When there is shifting, tapping into experience to
companies i.e. Unilever and Coca-Cola. He stress within a supply chain, accurate and recognise patterns and constantly
has 15 years of lecturing experience at reliable real time data promotes trust in tracking quality, cycle time, price
University of Colombo and 3 years at the relationships, especially with critical elasticity and more.
Human Resource Management Institute. suppliers. Shared visibility and mutual
Manone has specialist skills in Project goals help build organisational resilience LEVERAGING DIVERSITY
Management, Environmental Auditing,
Total Productive Maintenance (TPM), Total EMPOWERED TEAMS Supply chains should consider diversity
Quality Management (TQM) and, Hazard as a strategic initiative. Diversity across
and Operability Studies (HAZOP). Currently, Supply chains cannot fulfill its purpose in gender, age, work experience etc. has
he is a TPM trainer and consultant for the emergencies and pandemics if it’s made proven to add value to organizations in
Institute of Lean Manufacturing and a lead up of juniors and mid-level personnel terms of balanced decision making and
consultant for the Chartered Institute of tasked with generating reports for their faster input of market dynamics.
Personnel Management higher ups. Rather, individuals must take
charge and be empowered technical ex- Supply Chain Magazine October 2020 Page 22
ecutives who have the trust and respect
of CEO’s and COO’s and, be high-per-
forming individuals in their respective
areas of technical expertise

W H Y E- S O U R C I N G

CONTEXT #4: The communication portal within Ariba RFx / auctions is a
hardly used functionality to this day. Not only can a buyer

Constantly changing consumer trends along with fast evolution of communicate with a bidder regarding the Ariba event, the same
technology has led companies to not just review what they offer can be converted into a negotiation where the parties can con-
to consumers, but also rethink the way their back-end processes clude the finer points there itself. All responses will be saved
are managed. Accordingly, we in the Procurement function, being along with the time stamp, saving all parties a lot of time
a part of the operations community, also need to evolve in terms otherwise spent later via emails, calls or letters.

of how we source and what we source. Needless to say, the
unprecedented changes in the way we work following Covid-19, #5: Scope of e-sourcing and its applications should not be
restricted to bidding. Ariba e-sourcing portal can also be used
has now expanded the application of the concept of
by Procurement as a repository to store their category sourcing
e-sourcing. Disruptions in physical movement, face to face
meetings, or in general any travel seen as ‘non-essential’ during strategies, providing a single location as a repository and also
a crisis has brought digitalization to the center stage. It is in this allow to fulfil compliance requirements. Approval of the
reshaped context that Procurement should view e-sourcing; it is strategy by a head of Procurement can be done through
workflow, giving any viewer a timestamp of the approval.
no longer a ‘nice to have’, but a ‘must have’.

E-SOURCING: SIX ‘MUST-USE’ FEATURES #6: Ariba e-sourcing also has a Contract Management
repository application. i.e. a platform to store all legal

#1: At its most basic application, e-sourcing can be used to run agreements with suppliers. Gone are the days where a
RFI/RFP/RFQ events (request for information/proposal/quotation) Procurement professional has to dedicate time to maintain files
for supplier selection. For example, the SAP Ariba interface can be upon files of paperwork. To review existing legal agreements,
used to run such sourcing projects, where instead of the any person with approved access can log in to the Ariba portal
traditional mode of emails or physical document submissions, and locate, thus limiting the risks in misplacement of documents.

suppliers are able to submit their proposals digitally. The applications of e-sourcing mentioned above are easy to

#2: The ‘level-up’ version of RFx events that can be adopted is to implement provided proper training is given to users, most
include other elements of a vendor approval process (VAP); such importantly buyers and suppliers.

as the assessment of financial stability, other commercial terms

(e.g. credit terms), and the communication and acceptance of

standards related to food safety/quality and ethical practices.

#3: E-auctions is another tool that is ideally suited to digitalize
sourcing in spend categories where a ‘leverage’ strategy
exists – i.e. high value spends with multiple suppliers available. It
is a dynamic real time event with a defined time slot. E-auctions
can have a ‘reverse’ auction format with or without a ceiling price
for suppliers to bid and where each supplier/bidder can see the
position of their offer compared to other bidders. In the ‘dutch’
auction format the price offered is gradually increased where the
first bidder to click is awarded the business. These tools present
great opportunities for Procurement to transform the way of
buying and unlock value to levels previously unimagined.

E-SOURCING BENEFITS AND HOW TO OVERCOME ITS
CHALLENGES

It is important to note that both Procurement professionals as
well as suppliers understand e-sourcing offers benefits and
opportunities for cost and efficiency improvement and
simplification through digitalization across the value stream.
First and foremost, competitiveness is quotations is ensured,
not to mention the administrative cost saving in terms of less
time spent in the tendering process - from bid evaluation/
comparison, to documentation. This allows Procurement
managers to dedicate time to expand their category
knowledge, support business needs and build relationships
with suppliers. Moreover, the buyer is able to send out details
of requirements and maintain communication through the por-
tal itself – without having to rely on email records or having to
worry about creating back ups for future reference.

Page 23 Supply Chain Magazine October 2020

G AND WHY NOW

KANCHANA FERNANDO Suppliers might perceive e-auctions as a tool to push them
towards a corner, however, Procurement managers need
NESTLE LANKA to step in here to change this mindset with proper
awareness and training and ensure that only offers that
can be met, are submitted. The buyer, in turn should have
a sense of when to intervene to ensure sustainability of
the process as well as the supplier. If this is overcome, s
uppliers too will see the benefits e-sourcing brings – it
allows transparency in the sourcing process, gives them
insights to their customer’s culture and structure, and
most importantly provides competitive intelligence on
their standing in comparison to their competition. As with
any other situation, Procurement managers need to
execute proper change management to ensure both team
members and suppliers understand the benefits and start
embracing e-sourcing.

CONCLUSION

Organizations with Procurement teams that are
ahead in their Procurement maturity at best in
class levels are already expanding the boundaries
of e-sourcing. The Objective is simple – we must
have end to end integration. Interfaces developed
should no longer be standalone, with manual

intervention needing to connect one tool to
another. E-sourcing should be connected with
e-contracting/purchase order generation, all the
way up to e-invoice capturing solutions with all
collaborators from Procurement to requestors, to

payment processes, and most importantly
suppliers having access. This is where we are

heading. It is a fact that companies with
Procurement teams who had made at least some
inroads in the e-sourcing journey have fared better
in ensuring supply and having business continuity
during the disruption caused by Covid-19. Such

disruptions in similar or different forms will
continue to come our way. Therefore, e-sourcing is
no longer a Procurement buzz word, or something

that Procurement organizations can include in
their ‘future opportunities’. It is now a

‘must-implement-today’ tool with an even bigger
range of potential applications being added to its
scope that will soon cover the entire value chain
from category sourcing strategy development to

facilitating payments to a supplier.

Supply Chain Magazine October 2020 Page 24

We Need to get Back to Basics in Managing
Supply Chains

We have been frustrated by so many of the In these challenging times, even those with well-developed
alarmists’ reactions to the challenges we business continuity plans have been caught out, with too many
have all faced this year. “What is wrong with of some products and too few of others – undermining
our supply chains?” they ask. Even production plans, distribution performance, service levels and
reputable business schools are publishing cash flow management.
articles with click-bait titles like “The Death
of Supply Chain Management”. Managers from both the Finance and Operating parts of
businesses regularly express concern about the cash tied up in
inventory… they want to set targets by item, category, supplier
etc., in order to release some of that cash.

But inventory levels are not targets, they are outcomes of
implemented policies and practices. An understanding of how
these policies and practices will play out is therefore critical.

So, let’s go back to basics.

We have developed the following checklist to facilitate a
discussion between company leadership and planning personnel
to support a self-evaluation of current status and gaps, and to
set you on a path to manage inventory in the best way possible.

The outcome should be to set new and transparent inventory
objectives, with frequent reviews to align on desired service
levels, cash invested and short-term tactics.

HOW ABOUT “THE DEATH OF (BUSINESS) COMMON
SENSE”?

The body of knowledge to which we now refer as Supply Chain
Management has evolved very nicely over time. We look
forward to the enhancements and efficiencies that will come
along very soon, taking advantage of the new technological
developments.

In the meantime, there is nothing wrong with our supply chains
that getting back to basics won’t fix. Actually, “getting back to
basics” is probably generous in many cases because our biggest
failing has been poor adoption of good practices and / or poor
discipline in execution, even before this year’s unique
challenges.

To elaborate on this notion, we propose to focus here on one of
the cornerstones of Supply Chain Management (SCM), Inventory
Management.

Barry Elliott, Managing Director, ABF1 Consulting in Hong Kong

Page 25 Supply Chain Magazine October 2020

CHECKLIST FOR ALIGNMENT ON INVENTORY COMPONENTS

We are presenting this as a discussion guide, but it can easily be viewed as a checklist to be followed as a recurring process, driving
continuous improvement as you progress.

Supply Chain Magazine October 2020 Page 26

ANNU
GENE
MEET

ANNUAL GENERAL MEETIN
MAIN AUDITORIUM
WESTERN PROVINCE
AESTHETIC RESORT

UAL
ERAL
TING

NG 2020

CORONAVIRUS HIGHLIGHTS THE NEED TO TRANS-
FORM TRADITIONAL SUPPLY CHAIN MODELS.

This piece from Deloitte Canada highlights short-term actions COVID-19: MANAGING SUPPLY
companies can take to respond to business disruption and CHAIN RISK AND DISRUPTION
supply chain challenges from the global spread of COVID-19 ─
and looks ahead to the longer-term solution of digital supply
networks.

Could COVID-19 be the black swan event that finally forces JIM KILPATRICK
many companies, and entire industries, to rethink and trans-
form their global supply chain model? One fact is beyond Global Supply Chain & Network Operations Leader. Deloitte Consulting

doubt: It has already exposed the vulnerabilities of many

organizations, especially those who have a high dependence on China to fulfil their need for raw materials or finished products.

China’s dominant role as the “world’s factory” means that any major disruption puts global supply chains at risk. Highlighting this is
the fact that more than 200 of the Fortune Global 500 firms have a presence in Wuhan, the highly industrialized
province where the outbreak originated, and which has been hit the hardest. Companies whose supply chain is reliant on Tier 1 (di-
rect) or Tier 2 (secondary) suppliers in China are likely to experience significant disruption, even if, according to the most optimistic
reports, conditions approach normalcy in China by April.

How can organizations respond to the immediate change?

As the COVID-19 threat spreads, here are measures companies can take to protect their supply chain operations:
For companies that operate or have business relationships in China and other impacted countries, steps may include:

• Educate employees on COVID-19 symptoms and prevention.
• Reinforce screening protocols.
• Prepare for increased absenteeism.
• Restrict non-essential travel and promote flexible working arrangements.
• Align IT systems and support to evolving work requirements.
• Prepare succession plans for key executive positions.
• Focus on cash flow.

For companies that produce, distribute, or source from suppliers in China and other impacted countries, steps may include:

• Enhance focus on workforce/labour planning.
• Focus on Tier 1 supplier risk.
• Illuminate the extended supply network.
• Understand and activate alternate sources of supply.
• Update inventory policy and planning parameters.
• Enhance inbound materials visibility.
• Prepare for plant closures.
• Focus on production scheduling agility.
• Evaluate alternative outbound logistics options and secure capacity.
• Conduct global scenario planning.

For companies that sell products or commodities to China and other impacted countries, steps may include:

• Understand the demand impact specific to your business.
• Confirm short-term demand-supply synchronization strategy.
• Prepare for potential channel shifts.
• Evaluate alternative inbound logistics options.
• Enhance allocated available to promise capability.
• Open channels of communication with key customers.
• Prepare for the rebound.
• Conduct global scenario planning.

Looking ahead: the imperative for a new supply chain model
A decades-long focus on supply chain optimization to minimize costs, reduce inventories, and drive up asset utilization has removed
buffers and flexibility to absorb disruptions and COVID-19 illustrates that many companies are not fully aware of the vulnerability of
their supply chain relationships to global shocks.

Fortunately, new supply chain technologies are emerging that dramatically improve visibility across the end-to-end supply chain, and
support companies’ ability to resist such shocks. The traditional linear supply chain model is transforming into digital supply networks
(DSNs), where functional silos are broken down and organizations become connected to their complete supply network to enable
end-to-end visibility, collaboration, agility, and optimization.
Leveraging advanced technologies such as the Internet of Things, artificial intelligence, robotics, and 5G, DSNs are designed to an-
ticipate and meet future challenges. Whether it is a “black swan” event like COVID-19, trade war, act of war or terrorism, regulatory
change, labour dispute, sudden spikes in demand, or supplier bankruptcy, organizations that deploy DSNs will be ready to deal with
the unexpected.
Page 29 Supply Chain Magazine October 2020

The dramatic unfold of COVID-19 has disrupted SUPPLY CHAINS ARE
ADAPTING/ADAPTED TO
lives, livelihoods, communities, and businesses THE COVID-19 LOCKDOWN
worldwide. Organizations around the world, are
getting together and transforming to mitigate the DR. Priyangani Jayasundara
impact on public health and to limit disruptions to
economies and supply chains.

Here we glance at some ways of corporations and
other organizations globally are fighting the pandemic
and how the disruption in the supply chains has been
addressed to achieving the balance?

As the world struggles with the social and economic crisis unravelling, supply chains are finding themselves in public eye while
experiencing distinctive challenges of their own. Here are the visible challenges experienced by consumers:
a. The Supply Shocks
b. The demand shocks
c. The aftershocks
d. The New normal

THE SUPPLY SHOCK:

At the beginning of the year, as COVID-19 was spreading in China, experts were focusing on ‘supply shocks’. These were disruptions
to the availability of goods sourced from China; both finished goods for sale and products used in factories in developed markets.
Organizations are struggling to sort out what production was possible, and what demand can be met.
The Demand Shocks:

As the pandemic crisis excavated and nations have begun initiating lockdowns, supply chains have been undergoing something
utterly new: systemic demand shocks, where the public are stocking up on food supplies due to the fear and to comply with restric-
tions on movements, in some cases shopping for buying months’ worth of goods in a single day.
On the production aspect, the thriving replenishment is the result of maximizing production with all spare capacity in use. Since food
supply chains are frequently tuned for steady demands, the complete pipeline has not yet been restored to expected level.
The agility issue is less relevant for food supply chains as they have tendency to be much more local than non-food supply chains.
The Aftershocks:

The bullwhip effect that describes how demand spikes tend to increase as they move up the chain. A slight increase in demand at the
customer level could cause massive in production at a food manufacturers.
So, can the bullwhip strike now? There are many reasons to assume that it will not. Among the significant drivers of the bullwhip
effect is a lack of visibility into the nature of the demand increase. All actors in the supply chain are conscious why demand is
increasing which does not represent an organic evolution within the sales of the merchandise.

THE NEW NORMAL:

The economic impacts are occurring to be felt, and various economists are envisaging a deep recession of an unidentified timespan.
For supply chain planners, one drawback is to avoid moving forward is the inventory bounce. Once the demand reaches a brand new
steady-state that is below the previous steady-state, there should be a cut in production to permit the pipeline of stock to lower to a
new steady-state level. At that point, production will increase a bit to match the new demand.
What sort of a stage are supply chains facing now? Have they reached a balance? What are the challenges supply chains are facing
now?

a. The COVID-19 pandemic is raising questions on risks in supply chains.
b. Past disruptions provide lessons for the current crisis.
c. Solutions embrace knowledge sharing, trustworthy networks, and multi-stakeholder input to legislation.

To strike the balance, companies are appealing governments to act intelligently and flexibly and implement pandemic response
policies to avoid freezing the supply system for medical items at a time when they are most required. Within the shorter period,
businesses also requires flexibility to adapt production to manufacture essential goods; the supply chain investment to keep
suppliers operating, and the legal adaptability to address the realistic problems such as accepting digital signatures to curtail the
human contact. Essential goods must not be lying for days waiting to clear customs.

The global economy will face important changes in the post-COVID-19 world. First, several organization will question their
dependence on China-based suppliers, preceding towards a localization or regionalization of supply chains.

Despite fast advances in technology, the rapport between buyers and suppliers remains mostly paper-based. Digitalizing the
buyer-supplier connection is an elementary component for building robust supply chains, and recruiting distinctive new suppliers
far less time-consuming. With the advancement of technologies such as artificial intelligence and the Internet of Things, supply
chains could rapidly switch to alternate suppliers when regular suppliers face disruption.

The existing crisis is an opportunity to reorganize a system that has depended on outdated practices. Inventing smooth and agile
supply chains is the key to constructing a world trade and investment network that is capable of enduring future storms.

Supply Chain Magazine October 2020 Page 30

i am
Sarath Pathegama Gayan Wijayasundara
Manager Manager
Supply Chain
Logistics & Imports Flexicare Lanka
Maliban Biscuit Manufactories

Tharindu Rukmal Pathum Tharanga
Assistant Manager Country Logistics Manager
Sri Lanka and Maldives
Procurement Schneider Electric
Heinkein Lanka

Bimalka Perera Thushara Wimlarathna
Deputy General Manager Manager
Procurement & Administration Operation
Enrich Tea and Food Exports
EWIS Peripherals

Ruvani Nanayakkara Irusha Palawatta
Manager Manager
Procurement
Supply Chain (Imports & Inbound Logistics) Diesel & Motor Engineering PLC

Maliban Biscuit Manufactories

Sarath Pathegama Lushan Hewapathirana
Manager Deputy Manager
Procurement
Logistics & Imports Midas Safety Sri Lanka
Hayleys Fentons

Thilanka Munasinghe Chathushka Gunawardena
Manager Supply Chain
LAUGFS Maritime Services
Supply Chain
American & Efird Lanka

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Supply Chain Magazine October 2020 Page 32