Global supply chain creaks, Bengaluru’s software offers tweaks3 min read . Updated: 03 May 2020, 07:23 PM IST
Supply chains have a domino effect, because each player affects the adjoining ones
The scarcity of alcohol-based hand sanitizers was one of the first visible impacts of the coronavirus pandemic. But supply chain disruptions far go deeper with multiple factors at play such as factory closure, halting of international shipping, and governments clamping down on export of essentials. From the likes of Nike and Apple to smaller businesses, multiple sectors have been affected by disrupted supplies.
Procurement managers have to be more agile than ever in these circumstances, taking decisions on switching sources or evaluating the risk of prospective suppliers. Real-time data and analytics with a global view become critical to responding intelligently to disruptions. This is where the software to enable this comes in.
Bengaluru-based Eka Software has commodity management software used by multi-billion-dollar companies like Unilever, Cargill and Cofco. “Our job is to make sure we are able to provide technology support as they provide goods to their customers during this time," says Manav Garg, founder and CEO of Eka Software.
“The whole world is thinking of supply chains in a new way," adds Garg. Before coronavirus hit the world, companies focused on just-in-time supplies and optimizing inventories. Now, supply chain transparency is a priority.
An FMCG company would typically contract a trading company in Europe to provide the coffee for an instant coffee product. The trading company, in turn, would buy the coffee from multiple suppliers in places like Vietnam, Brazil and India. Now the FMCG company would ideally want a view on whether those underlying suppliers and transport from their countries would be affected.
A number of Eka’s clients in the agriculture, mining and manufacturing industries want to know if their core suppliers are getting disrupted. They have to take into account bottlenecks in ports and transport.
“We’re going to see more collaboration and real-time availability of information between buyers and sellers on the supply chain," says Garg.
Supply chains have a domino effect, because each player affects the adjoining ones. For example, suppliers can explore alternative delivery modes if some of them are disrupted. For this, they need the visibility to quickly spot trouble and respond.
From the buyer’s side, there could be large shifts in demand during a crisis. This information, therefore, has to be available to suppliers who may need to adjust production.
Eka’s cloud-based software provides a digital platform to manage this complex market as well as analytical tools to mitigate risks. Around the same time that covid-19 was declared a pandemic, it released an app that correlates supply chains with data on virus outbreaks. This lets companies see supply contracts which could be at risk and plan for alternatives.
Digital transformation of supply chains was already happening, but coronavirus accelerated it, says Garg. If it was a cool thing earlier, it has now become an imperative.
Going digital removes silos in traditional supply chain management. Being on the cloud helps with integrating and analysing multiple data points.
Food and beverage companies are among those needing to respond fast to a shifting landscape in the wake of coronavirus. Among Eka’s clients is a large European supplier of coffee and snacks. They initially turned to Eka’s CTRM (commodity trading, transaction, and risk management) software when they started investing in sustainable sourcing for a growing green coffee business. The company was earlier using an ERP system to manage trading, but it could not support more than 1,000 contracts a year.
“The entire workflow from farm gate to warehousing to ports to international shipping and distribution to buyers has become fully digital," says Garg.
Garg himself was a coffee trader before he became an entrepreneur. He’s used to ups and downs, and takes nothing for granted. He knows the coronavirus situation is benefiting his SaaS business, “but it’s hard to predict what will happen in the next six to 12 months." He’s just focusing on working closely with his customers.
A DIFFERENT CRISIS
“In trading, you get used to anticipating likely scenarios and taking decisions fast. But this is a crisis of a different nature. It’s much more than a business crisis. It’s also a humanitarian crisis."
That puts many more layers to the decision-making. “It’s not just about money or good business. It’s also about human lives and employee safety. All that has to be factored in when you take a decision," he says.
One thing is for sure. Commodity markets and supply chains will continue to be buffeted as the coronavirus effects unfold in the months ahead. Software to help enterprises navigate through this will be handy.