In this age of rapid and escalating change, what can businesses do to flourish? Take a look at their supply chains, say researchers in the Centre for International Manufacturing, based on their research in the UK and India. -
By University of Cambridge
A typical supply chain can be a vast, sprawling network of producers, suppliers, ‘super middlemen’, retailers and consumers that connect, for instance, a piece of mined aluminum with a finished car, or a field of wheat with a loaf of bread on the table.
Dr Jag
Srai and the team he heads in the Centre for International Manufacturing like
nothing better than a complex, multi-faceted supply chain, because within the
connections lies a vital source of competitive advantage. Companies that can
more optimally ‘configure’ this complex network have the opportunity not only
to improve their business but also to do so sustainably in an otherwise
resource-hungry and wasteful world.
Image Attribute: X2 Warehouse / Source : Wikimedia Commons [Link]
“Many supply chains today have developed
over time, a consequence of often short-term tactical decisions or
ill-considered mergers and acquisitions,” he explains. “There may be large
distances between component supply and the end product, delays in sharing
information along the chain, or an excessive fragmentation of activities.
“Within little more than a generation, the traditional model of a vertically
integrated firm, which has most of its component and final product in-house,
has become fragmented. Today, for manufacturing a typical consumer electronics
product, dozens of firms in as many countries might be involved in its
manufacture, with activities dispersed among narrowly focused companies
distributed across developed and emerging economies.”
Srai’s team has been
mapping these global networks across multiple sectors, developing novel tools
for their visualization and for identifying opportunities to reconfigure them
to meet demand more effectively.
Of particular focus has been a comparison of
the food and pharmaceutical process industries, and the assembly power houses
of aeronautical and automotive industries,
in both the UK and India.
“Manufacturing is a
top priority in both countries,” explains Professor Sir Mike Gregory, former
Head of the Institute for Manufacturing, where the Centre is based. “In the UK, the government has placed
manufacturing at the heart of plans for economic recovery. And in India, the government launched the
‘Make in India’ initiative in 2014 with the aim of transforming the country
into a major global manufacturing hub and generating millions of new jobs.”
The
project is funded by the UK’s Engineering and Physical Sciences Research
Council and the Indian Department of Science and Technology.
It began a year ago but follows a previous
study in which the team created a set of representations of the UK food supply
chain for dairy, fruit and vegetables, and staple foods. It was painstakingly
collated from industrial reports, literature reviews and first-hand case
studies, as well as interviews with key industrial players.
The resulting map
provides a fascinating insight into the dynamics of networks that many
consumers are unaware of – such as the one that links a cow on a dairy farm to
a pint of milk on a UK doorstep (a seven-step process, as it turns out).
Crucially, it also identifies how new trends are being driven by an increasing
demand from consumers to know where their food is coming from and for cheaper,
own-brand labels. “Organizations that are able to align these complex networks
with their own strategic aims have an opportunity to set themselves apart from
their competitors,” explains Srai.
One of the researchers’ main interests is
how maps such as this can be used to foster a more sustainable approach to
manufacturing, as Dr Mukesh Kumar explains: “Food security, for instance, is a
global challenge as populations continue to grow, yet 30–40% of food in the UK
is currently wasted, mostly at the retail and consumer end of the chain.”
Working with their collaborators in India, the team has now generated
comparable maps of the Indian food supply chain. The comparison could help each
to explore the key differences and identify how multinationals from one country
looking to do business in the other might need to adapt a supply chain to work
best.
“The UK food retail chain is dominated by a few large, organized retailers
who control 73% of UK grocery sales, and as a result exert considerable
influence over upstream partners in the chain, whereas in India this type of
organised retail accounts for only 12% of sales,” Kumar explains.
“But the
largest difference is where the wastage happens. In India, most wastage occurs
at the early stages of the supply chain, with tonnes of fruit and vegetables
perishing due to poor handling and storage facilities and lack of cold chain
infrastructure.”
According to estimates by the United Nation’s Food and
Agriculture Organization, each year about 40% of India’s fresh fruit and
vegetables rot before reaching consumers’ plates, as does an amount of wheat
almost equal to Australia’s total annual production.
“Supply chains that link the
UK and India incur waste up- and downstream. The figures are quite scary – you
sometimes wonder how anything ends up on a plate!” observes Srai.
He highlights
how crucial it has been to work closely with Indian researchers, industry and
policy makers, helped by funding through the UK India Education and Research
Initiative: “We have chosen partners in India who complement our skills. It’s
like a supply chain in action! It has seen a continuous stream of
collaborations emerging out of this, none of which would have been possible
without this project.”
For instance, researchers at the Indian Institute of
Technology Ropar and the Indian Institute of Management Lucknow have been
looking at how simulation and modeling of operations could be used to flag up sustainability
challenges.
“Our Centre’s research on ‘network mapping’ tools and close links
to industry have meant that we have provided methods and industry contacts to
our partners, while leveraging their specialist skills in the specific areas
that we require. We have also taken the combined output to inform our wider
work in the University’s Strategic Research Initiative on Global Food
Security,” says Srai.
“Technology, supply chains and the way markets and
regions develop become interesting change agents. I believe that our research
network will be able to anticipate these changes,” he adds. “It’s only by
understanding a company’s overall global supply network – a ‘whole system’
approach – that it’s possible to appreciate the opportunities and the benefits
that can emerge for doing things better, wherever you are in the world.”
This research article was first published at University of Cambridge's Blog on October 6, 2015 and licensed under a Creative Commons Attribution
4.0 International License.
Prof. Jag Srai can be reached through his official web page -IfM, Uinversity of Cambridge
Prof. Jag Srai can be reached through his official web page -IfM, Uinversity of Cambridge
