Global supply chains have been rapidly changing over the last few years. At a forum conducted on November 23 at Indian Institute of Management, Bangalore (IIMB) on the topic, academicians and industry experts explored the current practices and emerging trends in this field.
Firms outsource to take advantage of the changes in cost and skill between countries.
“Can an Indian firm become a global player without strong participation in and development of local market, before it builds its capabilities and proves its qualities here?” asked Pankaj Chandra from IIMB, as he led the forum to understand the primary objective of global supply chain, which is meeting demand by creating value.
According to Bernard Richardot, vice-president of procurement, Airbus, “In 2006, India was sought after because it rendered value for cost and had access to market. But in 2012, it also has access to rare resources, which typically are finance and engineering graduates and it enhances risk management.”
According to experts, supply chains have many models. Companies either have offshore centres, enter into master supplier agreements with Indian companies or transfer work. It works differently in different industries.
“Increasing cost pressures and rise in demand in emerging markets are driving growth of aerospace supply chains in low cost countries,” said Arvind Melligery, chairman of Quest Global.
In a telecom company in the service sector, the dynamics differ.
“We source electronics, IT services, call centres, mobile device, data cards and real estate among others to suppliers across the globe,” shared Moti Gyamlani, director of global supply chain, Airtel, “and the challenge is that global sourcing requires partners with consistent competencies across geographies.”
“Wage differential between India and developed countries is shrinking,” pointed out Morris Cohen from The Wharton School, University of Pennsylvania, “and this is causing countries to rethink decisions concerning supply chain. Global supply chain is at a tipping point because of the danger that once you outsource a process or manufacturing activity entirely, you lose the ability to develop or innovate the next generation of that product. Companies and countries must recognise this.”
The forum discussed the various supply chain models of different industries and exchanged views on the managerial concerns from the perspective of both, Indian and non-Indian companies.