Keynote: Leading Organizations Using Supply Chain with Shiv Shivakumar

Keynote: Leading Organizations Using Supply Chain with Shiv Shivakumar | Makers & Movers 2024

Thank you, Alcot Global, thank you, J, and thank you, Radu, for inviting me here. I see some friends, Sanjay, a friend from my college days—wonderful to see you here. Come all the way from India to catch up in Singapore. The two of us, that's a long way.

I'm really delighted to be here to give you a sense of how I see supply chains, how they have worked for me or not worked for me when I was the CEO, and what I see as the future of supply chains going forward. I'll start with a few global charts in terms of what's happening out there. That’s the first one. Next, I'll talk about data and what happens with data in organizations. You'll recognize some of the symptoms out there. Then I'll discuss the backbone of a supply chain system in any organization, and I'll give you examples from my personal involvement with each of these in the freshness of the food industry, or in a price erosion industry, or in a direct-to-consumer industry. How do those things play out, and what are the experiences we had in implementing them?

When we look at the world today, there are four buzzwords that are thrown around: agility, resilience, digital, and AI. These four buzzwords apply to supply chains. Show me an organization that lacks agility or resilience, and I’ll show you a supply chain that doesn't work. This is fundamental.

Global Supply and Consumption Dynamics

The supply and consumption markets in the world are not the same. The supply base is completely different from the consumption base. There are countries abundant in resources and others that are absolutely short on resources. For example, America and India have a consumption-driven economy, but their supply bases don't match.

Looking at the data over the last 10 years, the top 10 exporting countries contribute about 51% of all global exports. These same top 10 countries contributed the same 51.7% ten years ago. For imports, the top 10 countries accounted for 49% then and 48.8% now. Not much has changed in terms of the top contributors to global trade.

We live in a multipolar world with many trade agreements and trade blocs. The world trading environment has become like a web, and companies need to understand this structure to thrive.

Key Economic Observations

Global trade is dollar-dominated. Even with discussions around other currencies becoming prominent, the dollar remains the primary trading currency, constituting 88% of global trading today. This dominance is unlikely to change soon due to the systemic trust in and mechanisms built around the dollar.

Supply Chain as the Backbone

As a CEO, I recognized that the supply chain is the backbone of a business. Without it, the organization cannot function efficiently. Whether a supply chain is seen as a cost center or a revenue enabler determines its position in the organizational hierarchy.

Data Management in Organizations

In many organizations, data silos exist, leading to multiple accepted data points and many versions of the truth. Achieving a single version of the truth requires a collaborative and honest company culture. Most companies use less than 5% of the data they collect.

Importance of Honest S&OP Processes

Many companies lack an honest SNOP (Sales and Operations Planning) process. An honest SNOP involves making trade-offs and working with a unified company perspective rather than individual departmental views. Effective S&OP processes contribute significantly to corporate success.

Freshness in Food Industry

At PepsiCo, we drastically improved the freshness of our products by refining our S&OP processes, reducing freshness times from months to one week. Freshness in the food industry is critical as it directly impacts consumer satisfaction.

Managing Inventory and Price Erosion

Inventory should always be managed efficiently, considering the margins. In price erosion industries, holding inventory can be detrimental. Industry examples like Motorola and Nokia illustrate the risks associated with price erosion and inventory management.

Business Models and Direct-to-Consumer Examples

Innovative business models like direct-to-consumer can provide significant advantages. For instance, Unilever’s direct-to-shop model for tea distribution eliminated the retailer's margin, improving efficiency and customer pricing.

Future Trends in Supply Chains

The future of supply chains lies in leveraging technology, being resilient, and focusing on ecosystem partnerships. Digital and AI skills are crucial for adapting to these changes. Resilience, agility, and the right data are vital for future success.

Key Takeaways

Supply Chain as Strategic Advantage: Supply web determines organizational resilience.
S&OP as Backbone: A disciplined SNOP process can significantly impact corporate performance.
Proactive Management: Being proactive in managing the supply web is crucial.
Nationalism and Barriers: Nationalism and trade barriers will persist, requiring localized production strategies.
Focus on Long-term Strategy: Balancing short-term tactics with a long-term strategy is critical for sustained success.

Thank you very much for your time and attention. It's been an absolute delight to put this together for all of you this afternoon.

Keywords

Supply Chain
S&OP
Agility
Resilience
Digital Transformation
AI
Inventory Management
Price Erosion
Business Models
Global Trade

FAQ

Q1: Why is the supply chain considered the backbone of an organization? A1: The supply chain is fundamental because it supports all business operations. If the supply chain fails, the entire organizational workflow suffers.

Q2: What are the global trends affecting supply chains? A2: Key global trends include trade blocks, the dominance of the dollar, and the different dynamics on the supply and consumption sides.

Q3: How should organizations handle data silos? A3: Organizations should strive for a single version of the truth by unifying data points and promoting a collaborative company culture.

Q4: Why is an honest S&OP process crucial? A4: An honest S&OP process involves making necessary trade-offs and focusing on a unified business approach, which is vital for operational efficiency and success.

Q5: How does inventory management affect supply chains, especially in the food industry? A5: Effective inventory management enhances product freshness, crucial in the food industry, and avoids financial losses in high turnover environments.

Q6: What is the significance of adopting new business models in supply chains? A6: Innovative business models can streamline operations, reduce costs, and improve customer satisfaction, providing a competitive edge.

Q7: What should companies focus on for future supply chain success? A7: Companies should focus on leveraging technology, resilience, digital and AI skills, and managing ecosystems effectively for future supply chain success.