COVID-19 crisis has exposed several gaps in how enterprises in manufacturing sector create and analyse contracts
The ongoing disruptions caused by the COVID-19 pandemic have highlighted some gaps in the supply chains systems within hospitals. Rahul Garg, Founder, Moglix, reveals more about the need for hospitals to seek greater predictability into the demand patterns, assess financial costs, resource engagements and manpower, in order to survive, in interaction with Sanjiv Das
What are the challenges being faced in supply chain and logistics?
The nature and extent of challenges facing the PPE supply chain in India have continued to evolve over the period of the last three months of the spread of the COVID-19 pandemic. While India had only three lakh PPE kits in January 2020, it reached the milestone of inventorying 16 lakh in the buffer stock by the last week of May 2020.
Initially, the demand for PPE in India was fulfilled completely by importing from overseas suppliers located in China, Taiwan, the US, and the European Union. With China, the largest manufacturer of personal protective equipment experiencing severe downtime in production the supply chain risks were largely concentrated at the point of manufacturing. There was limited visibility into supplier production capabilities, quality specifications, TTR (time to recover), and also a highly volatile regulatory environment governing global trade.
The dependence on external procurement meant that hospitals, healthcare institutions and regulatory agencies had to devote significant resources, to set up a PPE supply chain control tower and set up process workflow mechanisms for the procurement consortium to collaborate with foreign suppliers. Traditional models of engaging with local distributors failed to serve the purpose and global supplier collaboration for procurement of PPEs was not the core competence of healthcare institutions.
Now that India has become the second-largest manufacturer of personal protective equipment in the world in a sharp 60 days, we need to be a step ahead of the curve, make our PPE supply chains more visible and data-driven through technology enablement.
What role can automation and data analytics play to enhance supply chain management?
The COVID-19 pandemic has served crucial lessons from the standpoints of both lives and livelihoods. It has demonstrated that supply chain digitisation is integral to the digital preparedness index of enterprises in the manufacturing sector prima facie at two levels: contract management automation and supply chain. While all enterprises have been affected by the pandemic and the consequent lockdowns, those with a higher digital preparedness index have continued to operate albeit at sub-optimal capacities and stand a greater chance of enabling a fast rebound across the stages of unlocking the economy.
Enterprises that have experienced the impact of invoking of force majeure clauses in contracts by suppliers now take cognisance of the need to continuously monitor and manage the rules-engine governing contracts with suppliers, further, the digitisation of supply chains could have enabled greater visibility into supplier capabilities, replenishment rates of suppliers and the time to recover in the face of labour shortages and lockdowns.
How is technology transforming the supply chain?
Enterprises realise the need to have greater visibility into their supplier relationships, stay in control of their supply chains and bring diverse supply chain capabilities closer to the points of decision making within a smaller local supply chain radius. This can be facilitated by the technology enablement of supply chains. With long-distance supplier relationships and cross-border logistics and trade coming under the scanner, the technology enablement of supply chains can enable enterprises to leverage opportunities to stay afloat in the local environments by enabling all stakeholders in the supply chain to stay connected and collaborate seamlessly.
What will be Moglix’s role in supply chain management?
In the wake of the COVID19 pandemic, we have been entrusted by enterprises providing essential goods and services with the twin responsibilities of procurement of personal protective equipment for its people and further, enabling the procurement of a diverse range of technical products for a strategic resumption of operations and unlocking of the supply chain in the shortest window of time. For instance, we have collaborated with Air India, the state-owned carrier to provide PPE solutions within a window of two days of turnaround time to fly home Indian citizens from abroad while ensuring their health and safety. We have also collaborated with not-profit-organisations like Hope Foundation. In all, we have provided five million PPE items for across 220 plants in India. In the SaaS segment, we are partnering with large enterprises to fix the gaps in their contract management processes.
The COVID-19 crisis has exposed several gaps in the way enterprises in the manufacturing sector create and analyse contracts. Through our contract management solutions such as iCAT for contract automation and C-Vantage for contract analytics, we are working with their customers, suppliers, and supply chain stakeholders to enable them to respond better to the crisis and prepare effectively for force majeure events in contracting and supply chain risks.
What type of impact will it have in hospitals and healthcare facilities?
From the perspective of public healthcare, technology enablement of supply chains shall allow hospitals and healthcare facility providers to map local risks and opportunities and thus enable a more decentralised supply chain ecosystem that shall be more adept and responsive to on-ground realities. Staying connected to supplier networks shall allow hospitals to be more self-reliant and assured of the procurement of essential technical goods and personal protective equipment. This shall imply a lower time to turnaround, lower time to recover, and on-time and in-full deliveries of PPEs of the right medical standards.
Moglix is collaborating with VCs and start-ups through the ACT – Action COVID Team. Tell us more about the collaboration.
The Action COVID Team (ACT) is a unique initiative that brings together the entrepreneurial community in the country and leading venture capital firms to raise a corpus of Rs 100 crore to support startups working on products and services to contain its impact.
What will be the purpose and function of the Action COVID Team?
The COVID-19 pandemic has dealt a serious blow to the startup sector in India. Given the potential of the Indian startup ecosystem to deliver innovative solutions and create employment, it is vital that we insulate startups from transient shocks. The Action COVID Team (ACT) Grants initiative is aimed at lending liquidity support and mentorship to startup enterprises that are working to provide innovative solutions relevant to the challenges posed by the COVID19 pandemic by rolling out new age products and services.
How can we develop a value-based supply chain system in hospitals?
The ongoing disruptions caused by the COVID-19 pandemic have brought some gaps in the PPE supply chains of hospitals. There is a need for hospitals to seek greater predictability into the demand patterns, assess financial costs, resource engagements and manpower required to collaborate with multiple suppliers, and create economically efficient pick-up and drop-off (PUDO) networks for stocking PPE in partnership with hyperlocal logistics and warehousing service providers.
Therefore, the value is in making PPE supply chains more granular, flexible, and transparent so that hospitals can be in control of their procurement network. Singapore has leveraged such a model to make its PPE supply chain more agile and responsive by investing in contingency planning for pandemics, inventorying PPE, and making their workflow mechanisms more technology-driven and data-centric so that critical-to-mission information is available at their fingertips within seconds of a supply chain disruption. This calls for making the PPE supply chain more sticky and creating localised networks of stakeholders in manufacturing, logistics, warehousing, and distribution.
What type of special permission is required to go ahead in this business?
A single-window regulatory and approval mechanism for scaling the testing and approval infrastructure across the country can enable faster go-to-market for PPE manufacturing enterprises. We have earned the regulatory approvals and certifications of CE, ISO, FDA, and SITRA for the PPE products that we are providing to our customers. However, the pain point of a lack of a single testing window persists and therefore PPE manufacturing enterprises in India continue to face delays in their go-to-market. The scaling up of testing and certification infrastructure across the country can fasten the rollout of PPE items across the country.
Tell us more about your funding mechanism?
Moglix has been getting good traction from top-notch venture capitalists and corporate executives in technology and supply chain and has raised $100 million thus far. The list consists of both individual investors such as Ratan Tata and institutional investors such as Aceel, Jungle Ventures and Sequoia Capital. The company has some of the leading corporate veterans from the global manufacturing industry and new-age technology leaders on its advisory board.
What will be your growth plans for the next five years?
Amidst the new realities of the COVID19 pandemic, Moglix looks to move forward in emerging and mature markets across the globe on the following trajectories over the next five years:
- In the wake of the massive global supply chain disruptions due to the COVID19 pandemic, we are looking to partner with enterprises across industry verticals to map their supply chain requirements and provide technology-enabled solutions that are customised and scalable.
- We aim to collaborate with governments and public bodies in both mature and emerging economies to create a new-age digital supply chain ecosystem to promote their local manufacturing sectors, expand the scale, size, and speed of their go-to-market models and unlock new avenues of revenue enablement for them across geographies.
- We are focussing on strengthening our presence in the UK, Europe, and SE Asia.