As per the reports of Reuters, in 2022, supply chain disruptions led to an average of $82 million in annual losses per company. What does this mean for CTOs of manufacturing enterprises? 

From the ongoing rising geopolitical tensions to raw material shortage and the unpredictable effects of climate change, it’s important to understand what’s causing these challenges. 

 Understanding the primary causes of disruptions can help you plan ahead of time and develop effective risk management strategies.  

Furthermore, using technology may enhance your supply chain, ensuring that your operations stay resilient and adaptive even when times are rough. 

Major Causes of Supply Chain Disruptions 

Supply chain disruptions can erupt from all sorts of places, impacting businesses in any and every industry.  

For CPOs, knowing these main causes is key to building resilience and effectively dealing with challenges when they arise. 

• Act of God – Natural disasters such as hurricanes, earthquakes, and floods have long disrupted supply lines, causing infrastructure damage.  

• These so-called ‘acts of God’ incidents frequently cause product delivery delays and expense increases. 

• Act of Human – Political conflicts can cause significant disruptions in supply lines. Political conflicts have the potential to seriously disrupt supply systems.  

Tariffs on Chinese products, for example, increased expenses for corporations such as Apple during the US-China trade war, prompting them to seek alternative suppliers.  

Similarly, sanctions against Russia resulted in abrupt shortages of critical supplies for several European enterprises. 

• Labor Shortages – Labor shortages have emerged as a critical challenge, particularly during and after the COVID-19 pandemic.  

Many businesses face difficulties in finding skilled workers, which can slow down production and delivery processes. 

• Raw Material Shortages – A persistent shortage of raw materials is disrupting manufacturing across various sectors.  

These shortages can stem from supply chain inefficiencies, increased demand, or geopolitical factors. 

• Shifting Consumer Behavior – Changes in consumer purchasing patterns can lead to inventory imbalances.  

The pandemic saw a surge in online shopping, leaving retailers struggling to manage excess inventory when demand shifted back to pre-pandemic levels. 

The Role of Technology in Mitigating Risks 

To navigate these complexities, CPOs must leverage technology to build more resilient supply chains.  

Here are some key areas where technology can make a significant impact: 

• Enhanced Supply Chain Visibility – Implementing tools that provide real-time visibility into supply chain operations is crucial.  

Technologies such as IoT sensors and RFID tags enable businesses to track shipments and monitor inventory levels, allowing for proactive decision-making. 

• Advanced Analytics – Utilizing data analytics can help CPOs identify potential disruptions before they occur.  

Predictive analytics tools can analyze historical data and current market trends to forecast demand and potential supply chain issues, enabling companies to adjust their strategies accordingly. 

• Scenario Planning – Scenario planning software allows CPOs to model different disruption scenarios and assess their impact on supply chain operations.  

This proactive approach enables organizations to devise contingency plans and adapt quickly to unforeseen challenges. 

• Automation and AI – Integrating automation and AI into supply chain processes can enhance efficiency and reduce the reliance on human labor. 

Automated systems can streamline order processing, inventory management, and logistics, minimizing delays caused by labor shortages. 

• Collaboration Platforms – Technology can foster collaboration among various stakeholders within the supply chain.  

Platforms that facilitate communication and information sharing between suppliers, manufacturers, and logistics providers can enhance responsiveness and adaptability. 

Way forward for CPOs 

Understanding the root causes of supply chain disruptions is essential for CPOs aiming to navigate today’s complex landscape.  

By leveraging technology to enhance visibility, analytics, and collaboration, businesses can build more resilient supply chains that can withstand challenges.  

Embracing these strategies not only mitigates risks but also positions organizations for success in a rapidly evolving market. 

Moglix has been, for almost a decade, working with organizations to mitigate the supply chain risks in India and the UAE.  

With our integrated procurement SaaS Solution, working capital solutions, catalog-based buying solutions, prequalified 20K+supplier base combined with ever evolving state-of-the-art physical warehouse network we have been helping organizations to start building long-term resilience into their supply chain.  

Discuss your digital transformation project with Moglix 

As a CTO, you’ve probably seen the excitement around OpenAI’s recent GPT-o1 launch. It’s a clear sign of just how fast technology is moving.  

Back in 1999, Salesforce’s Marc Benioff shook things up by moving business software to the cloud, challenging the traditional on-premises systems.  

ERP systems were the go-to for managing everything for businesses from data heavy finance departments to process driven supply chain departments.  

But as technology evolved, Software-as-a-Service (SaaS) came along, offering even more flexibility and efficiency and now, with tech moving forward, CTOs are facing new challenges and opportunities that go beyond what SaaS can offer.  

In this blog, we’ll explore what’s next for CTOs as we move into a world beyond SaaS in today’s tech enabled manufacturing supply chains. 

SaaS Dilema for CTOs 

Technology typically advances in cycles, following an S-curve in which innovations grow, peak, and then level off.  

SaaS has already made a huge impact by moving us from on-premise systems to cloud-based solutions. However, it’s now hitting its growth limits and bringing new challenges.  

While SaaS was meant to simplify operations, it has introduced its own set of complexities, like managing a growing number of subscriptions, handling data, and controlling user accounts. 

CTOs are now dealing with issues that were once common in the on-premise era, such as complicated cancellations, misleading pricing, and charges for unused seats.  

This shows that a new approach is needed as companies transition from using individual SaaS tools to relying on them entirely.  

The focus now must be on controlling costs, optimizing data management, and preparing for the next wave of technological advances. 

AI-Powered Solutions 

Looking ahead, AI is set to revolutionize software in ways we haven’t seen before. SaaS changed everything by moving us from old-fashioned software to something much more flexible.  

But AI is about to take that transformation even further. With AI, SaaS is getting personal.  

It learns from what you do and adapts to fit your needs in real-time. Imagine software that doesn’t just react to your commands but understands what you want and improves itself automatically.  

AI also introduces smart systems that get better on their own. They handle problems, improve performance, and even predict what you might need next, all without needing human input.  

And because AI can analyze future trends, businesses can make smarter decisions based on what’s coming, not just what’s happened. 

So, what’s next after SaaS? We’re heading towards AI-powered solutions that keep evolving with your feedback. Instead of static software, we’ll see systems that grow and adapt.  

Moglix Business is already embracing this future with AI-driven solutions for procurement and supply chain automation. 

Way Forward for CTOs 

Switching from ERP to SaaS has already shaken up how businesses run, but we’re on the edge of even bigger changes. With decentralized systems and AI-driven platforms coming into play, CTOs need to stay sharp and ready to adapt.  

The trick is to stay ahead of the curve and embrace these new trends. 

Moglix Business has been leading the charge in digital transformation for almost a decade, both in India and the UAE.  

Our smart procurement solutions—like Integrated Procurement SaaS, Automated Workflows, and Catalog-Based Buying—combined with their top-notch warehouse network, are revolutionizing how businesses handle procurement.

You could be a CEO, a procurement officer, or a supply chain manager playing a crucial role in ensuring that every product reaches its destination smoothly and efficiently.  

Yet, in the last decade many organizations were caught off guard by supply chain disruptions that resulted in billions in recalls across industries like pharmaceuticals, electronics, automotive etc.  

These disruptions also resulted in delays and incomplete deliveries, because of which industry-wide OTIF rates have suffered, further straining customer relationships and operational efficiency. 

CEOs now know that they can’t afford not to prepare for a potential disruption. The key is to build resilience now, not after the next crisis hits. Here’s how: 

Understand Your Supply Chain Risks 

Known Supply Chain Risks: These are predictable and manageable, such as the risk of a supplier going bankrupt, which can be determined by looking at their financial situation.  

Cybersecurity threats can also be quantified using advanced systems that analyze IT infrastructures. 

Unknown supply chain risks: These are wild card events that are random, highly improbable events that have enormous impact.  

Mathematician and philosopher Nassim Nicholas Taleb termed such events as “black swan” events. 

A surprise natural calamity or an undiscovered cybersecurity risk might impair your supply chain. While predicting them is difficult, you may mitigate their impact by instilling a culture of alert and preparedness. 

Build a Risk-Monitoring Operation 

Invest in advanced supplier risk management. Create a team equipped with AI-powered tools to monitor risks across your entire supply chain, from direct suppliers to the deepest tiers.  

Consider risks from operational, financial, and geopolitical angles. Use data to track key risk indicators (KRIs) and plot these risks on a matrix to guide your response. 

Simplify Your Product Portfolio 

In our quest to meet every consumer’s desire, we’ve overcomplicated our product lines. It’s time to streamline. Simplify designs, standardize components, and reduce the number of suppliers.  

This not only cuts costs but also minimizes risk. Moreover, reducing product complexity can alleviate working capital crunch by lowering inventory levels and decreasing overhead costs. 

Take Control of Your Supply Chain 

Reevaluate your make-or-buy strategies. Invest in digital technologies like 3D printing. Consider reshoring or near-shoring manufacturing to reduce dependencies.  

Follow Tesla’s lead—design and make critical components in-house to ensure supply chain integrity. Strengthen financial resilience to withstand credit crunch situations by maintaining a healthy balance sheet and diversified funding sources. 

Are You Prepared for the Next Crisis? 

Preparing for the next crisis might seem daunting, but it’s essential. The CEOs who act now will not just survive—they’ll thrive in a post-crisis world.  

Global supply chains and their inherent risks are here to stay. By embracing proactive risk management and fostering a culture of resilience, we can turn challenges into opportunities for innovation and growth. 

Moglix has been, for almost a decade, working with organizations to mitigate the supply chain risks in India and the UAE.  

With our integrated procurement SaaS Solution, working capital solutions, catalog-based buying solutions, prequalified 20K+supplier base combined with ever evolving state-of-the-art physical warehouse network we have been helping organizations to build start building long-term resilience into their supply chain.

We are living in a disrupted globalized world and as a Chief Procurement Officer (CPO) managing a profitable procurement department, you’re navigating through numerous supply chain disruptions over the past five years. 

Events such as Covid-19, the Ukraine War, the Suez Canal blockage, and the recent Israel-Hamas conflict have posed significant challenges for businesses, impacting their financial health. Cutting costs remains more crucial than ever, but it’s also more complex. 

Traditionally, supply chain management focused on total landed costs to calculate the overall expenses of making a product.  

However, this approach is now recognized as inadequate.  

Costs go beyond just warehouses—they affect everything from delivering goods to customers, which can greatly influence profitability.  

While companies used to prioritize reducing procurement costs, there’s now a growing awareness of the need to take a broader view.  

Understanding costs in detail is essential to ensure that increased sales translate into higher profits.  

To achieve this, businesses need a thorough understanding of their supply chain and how it serves their customers. This is where cost-to-serve analysis becomes invaluable 

What is the Cost-to-Serve Model? 

The Cost to Serve model is basically a way of figuring out all the costs involved in getting products or services to customers.  

It’s not just about the obvious costs like making and delivering stuff.  

It also covers things like marketing, sales, customer service, and other behind-the-scenes expenses.  

This method helps businesses plan their finances better and make smarter decisions.  

When companies use Cost to Serve models well, they can really see how profitable each product, customer, sales channel, and market segment is.  

This helps them decide on prices, what products to offer, which customers to focus on, and where to put their resources.  

The Cost-to-Serve model is built on the foundation of digital transformation, leveraging advanced technologies to cover every aspect of the supply chain journey.  

This includes procurement, manufacturing, distribution, and customer service.  

By integrating these elements, the model ensures that all cost drivers are accounted for, providing a clear picture of the true cost of servicing each customer or market segment. 

Why Does the Cost-to-Serve Model Make sense? 

Enhanced Visibility and Control 

The Cost-to-Serve model offers enhanced visibility into the cost structure of the supply chain.  

Granular insight allows CPOs to identify high-cost areas and implement targeted strategies to reduce expenses.  

With a clear understanding of cost drivers, businesses can better control their spending and improve profitability. 

Data-Driven Decision Making 

By leveraging detailed cost data, the Cost-to-Serve model enables CPOs to make informed decisions about resource allocation.  

For instance, identifying the most profitable customer segments allows companies to focus their efforts on high-margin areas, optimizing overall profitability. 

Customer-Centric Strategies 

Understanding the costs associated with the entire customer journey allows companies to tailor their services to meet customer needs more effectively.  

This customer-centric approach enhances satisfaction and ensures that services are delivered cost-efficiently, contributing to profitable growth. 

Leveraging Digital Transformation and SaaS Solutions 

Digital transformation plays a pivotal role in the successful implementation of the cost-to-serve model.  

Modern البرمدة كخدمة (Software as a Service) solutions provide the advanced analytics and real-time data processing capabilities necessary for accurate cost-to-serve analysis.  

These platforms automate many aspects of the supply chain journey, reducing manual effort and minimizing errors. 

Data can make or break a Cost to Serve initiative 

Data Sanity 

Getting the data right is crucial and hence the more detailed and specific the cost data, the better the Cost-to-Serve model will be at giving insights.  

A common misconception floating around is that basic data like order numbers, order details, quantities per order, picking methods, shipping types, and costs would be straightforward.  

But as per the findings of a study, even in big companies with advanced ERP systems, getting good data sets is tough and often inconsistent.  

Data Updates 

The Cost-to-Serve model becomes more dynamic and responsive with frequent and timely data updates.  

With constant changes, it’s crucial for end-users to have up-to-date information available precisely when decisions need to be made.  

Updates too soon and too frequent would be impractical.  

Data Integration 

For a cost-to-serve model to pack a punch there needs to be a central data warehouse or an intelligent SaaS product like Moglix that can pull relevant data from multiple sources like WMS (warehouse management system), CRM (customer relationship management), and TMS (transportation management system).  

Knowing exactly where the data lives and collaborating closely with end-users to figure out what’s essential for the model to guide decision-making effectively. 

What do we know? What have we learnt? 

The Cost to Serve model empowers supply chain leaders with timely insights to make informed decisions.  

By providing a holistic view of the entire supply chain, this approach prevents unforeseen pitfalls that can disrupt profitability and team morale.  

It’s about sticking to basics, staying proactive and maintaining a clear path towards sustainable success in a dynamic business environment. 

Moglix for almost a decade now has been enabling organizations in India and in the UAE to achieve end to end procurement & supply chain efficiency.  

Its integrated procurement البرمدة كخدمة solution, automated workflows, and catalog-based buying solutions, combines with its state-of-the-art physical warehouse network to revolutionize your business’s approach to procurement.

As a CIO navigating long-term transformation while juggling short-term goals, you understand how much the market has changed in just a few years.  

Today, CIOs need to equip their organizations with the right tech, tools, and skills to act swiftly and harness data for immediate and lasting value creation. Balancing immediate cost cuts with future planning has become crucial.  

If you can strike that balance, it’s a huge win. Business Spend Management (BSM) shines here—it’s a low-risk, cost-effective strategy that quickly benefits procurement and extends its impact across the entire business, including IT.   

The primary value of BSM is that it provides an end-to-end business process across all aspects of spending.  

This, in turn, empowers collaboration, improves visibility, and allows companies to move beyond some of the typical challenges that result from a siloed approach to spending.  

Many organizations, of course, use their existing enterprise resource planning (ERP) systems for spend management.  

Some ERP platforms offer native procure-to-pay (P2P) modules, but despite the commendable efforts of established solutions like SAP and Oracle ERP to keep up with technological advancements, they face significant challenges from emerging platforms like Moglix.  

This trend is particularly noticeable in the supply chain sector, where CPOs often favor specialized tools over traditional ERP systems, even within organizations that have formally adopted ERP solutions.  

Here are four reasons your ERP software falls short: 

End User Adoption 

CEO Spencer Fung nails it when he talks about Li & Fung’s digital makeover, highlighting that success isn’t just about technology—it’s about getting people on board with using it.  

Many companies struggle with ERP systems because users resist them. ERPs are often designed for top brass and finance, leaving everyday users to maneuver and come up with patchwork.  

Another challenge is ERP training, which can take a whole month—tough for supply chain managers juggling fire at multiple fronts.  

Plus, the complex manual means training needs to be frequent, eating up resources and time, not to mention costs. ERP solutions often miss steps in supply chain workflows, forcing workarounds that lead to unclear reports and missing data.  

And let’s not forget the sluggish and infrequent support responses, a major frustration for supply chain managers who need quick fixes from a support team that neither understands the business or the enormity of the requirement.  

These issues hold back ERP use, leaving many managers stuck with outdated data. 

To really take charge of your company’s resources and boost ROI, businesses need a smart add-on SaaS solution to their current ERP setup—one that’s user-friendly, so people can find what they need and get it approved easily.  

This solution should simplify the procure-to-pay (P2P) process for both employees and suppliers, giving approvers real-time insights into budget impacts before they commit financially.  

Success Kills Innovation 

This isn’t a blanket statement, but it applies to legacy ERP systems.  

They’ve been trying to keep up ever since cloud platforms emerged. To their credit, SAP and Oracle have been making efforts to adapt, releasing new cloud-based versions.  

However, instead of just moving to the cloud, these legacy ERPs should have been completely rewritten. 

To be fair, part of the reason they haven’t done this is because they can’t. ERPs have large, important clients who are used to the way things currently work, and making big changes can be tricky without upsetting them. 

Legacy ERP systems rely on outdated technologies and architectures, limiting their ability to adapt to modern business needs and integrate with newer technologies and APIs.  

Their rigid structures also make it difficult to customize or configure for unique business cases and processes. 

Lacks Adaptability 

ERP systems were primarily designed to handle transactional data and internal processes, focusing more on operational efficiency than on strategic functions like Business Spend Management.  

As a result, they lack the specialized features needed for advanced spend analytics, indirect procurement, and real-time cost savings insights. 

For instance, a retail company using an ERP system for supply chain management might face difficulties in adapting to sudden changes in supplier pricing or demand fluctuations.  

Integrating new spend analytics tools or dynamic procurement processes could require extensive reconfiguration, leading to delays and increased operational costs.  

This rigidity hinders the company’s ability to respond swiftly to market changes, optimize procurement, and achieve cost savings. 

Deployment Cost 

ERP systems can be incredibly expensive, costing millions of dollars just to purchase and deploy. To get started, companies need to buy licenses for each individual module and suite they want to use.  

On top of that, integrating ERPs often means hiring consultants.  

These consultants take the time to understand the business structure, recommend a new system architecture (sometimes reengineering structures and processes to align with best practices), map the old system to the new one, evaluate and clean up the available data, configure the application, and oversee the rollout. 

Way Forward with Moglix 

At Moglix, we’ve been at the forefront of bringing digitalization to supply chains.  

It’s clear that despite all the talk about digital transformation in supply chain management, many large companies still stick to spreadsheets and isolated apps.  

Forward-thinking CIOs like yourself are taking charge of overhauling outdated ERP systems. In preparing for the future, you must not just tech be innovators but also strategic partners, working closely with CFOs.  

You need to strike a balance between IT’s need for flexibility and the growing complexities in finance.  

It’s about embracing change to stay agile in an ever-changing business landscape. 

Moglix has been, for almost a decade, leading the charge on digital transformation not just in India but also in the UAE, helping organizations in the UAE stay ahead in their digital procurement journey, with its most comprehensive procurement solution.  

Moglix’s integrated procurement saas solution, automated workflows, and catalog-based buying solutions, combines with its state-of-the-art physical warehouse network to revolutionize your business’s approach to procurement. Click here to know more. 

The relationship between India and the United Arab Emirates (UAE) has always been characterized by warmth, with roots extending back to the 1970s. This ever evolving relationship, is further supported by geographical proximity, cultural affinity, and longstanding friendship, has only grown stronger and more dynamic in recent years. The catalysts for this deepened relationship span across various dimensions, from commerce to culture, each adding a layer of complexity and collaboration between the two nations.

Trade amid Global Challenges

The aftermath of the Russia-Ukraine conflict has seen a significant bolstering of trade between India and the UAE. This uptick in commerce is partly attributed to several pivotal developments that have streamlined and enhanced bilateral trade, investments, and cultural exchanges.

Bi-lateral Agreements

A landmark decision saw the central banks of India and the UAE permitting the use of local currencies (Rupees and Dirhams) for cross-border transactions. This move, aimed at facilitating trade, remittances, and investment flows, represents a significant step towards financial integration between the two countries. The linkage of India’s Unified Payments Interface (UPI) with the UAE’s instant payment system, Aani, alongside the acceptance of India’s RuPay cards in the UAE, is set to benefit over 3.5 million Indians residing in the UAE, as well as travelers between the two countries.

CEPA

The Comprehensive Economic Partnership Agreement (CEPA), signed in February 2022, has been a game-changer for India-UAE trade relations. This agreement, aiming to elevate bilateral trade to $100 billion in the next five years, has already yielded impressive results. With the UAE being India’s second-largest export destination after the US, and India being the UAE’s second-largest trading partner after China, the CEPA has facilitated historic highs in trade volumes. The period from May 2022 to March 2023 saw a 14% year-on-year growth in bilateral trade, with significant tariff cuts and streamlined business approvals under the FTA framework.

Investment Flows and Economic Integration

The UAE’s position as a key foreign investor in India has been solidified, with the Emirates emerging as the fourth largest foreign investor in FY23. Investments from the UAE’s sovereign wealth funds, such as the Abu Dhabi Investment Authority (ADIA), in various sectors of the Indian economy, underline the deep economic ties between the two nations. The establishment of a $4-5 billion fund by ADIA to invest in India through GIFT City, Gujarat, is a testament to the growing confidence in India’s economic potential.

The Innovation and Start-up Ecosystem

The UAE’s focus on innovation has opened new avenues for Indian entrepreneurs in sectors like e-commerce, logistics, and electric vehicles. Dubai-based VC firm NB Ventures is a prime example of how Emirati investors are supporting Indian start-ups, facilitating their expansion into the UAE and beyond.

Cultural and Demographic Bridges

The demographic and cultural ties between India and the UAE serve as a foundation for their strong bilateral relationship. With Indians making up nearly 30% of the UAE’s population, the social and economic contributions of the Indian community are significant. The recent inauguration of the BAPS temple in Abu Dhabi by Prime Minister Modi, a project gifted by UAE ruler Sheikh Mohamed bin Zayed Al Nahyan, symbolizes the deep cultural connections between the two nations.

Looking Ahead

Despite the positive trajectory, challenges remain. Trade analysts point to the need for diversification in trade and addressing the low value-add in India’s exports to the UAE. The CEPA, while a significant boost, is still in its early stages, with the full potential of the agreement yet to be realized. The India-UAE relationship stands at a promising juncture, with trade, investment, and cultural ties all witnessing unprecedented growth. The strategic initiatives and agreements between the two countries are not just milestones but stepping stones towards a future of even greater cooperation and mutual benefit. As this partnership evolves, it holds the promise of setting a benchmark for bilateral relations on the global stage, underpinned by shared goals of prosperity, innovation, and sustainable development.