Supreme Infrastructure India Ltd. does not rest on the laurels. It continues to endeavour towards the future progress and development to reach the peaks of the engineering professions i.e. Excellence, Expediency and Economy. Pankaj Udeshi shares his views about strategic procurement and also explains the nature of logistics.
Strategic procurementStrategic procurement is a continuous process in this fastest changing world where the importance is on buying the best product or service at the best economical price with reasonable credit by using negotiation skills for saving and maintaining long terms healthy relationship with vendors.
“The requirement of strategic procurement starts when each business unit starts thinking of good quality material/service buying at reasonable price from different states of country or different countries of the world,” points out Mr Udeshi. “Competition and interdependence among the states and countries will establish an efficient supply chain and make use of domestic and international resources to cut costs, competitive advantage, more suppliers, improve quality, and spur innovation.”
Present situation and challenges“India is still lagging in terms of strategic procurement. Infrastructure industries are the most unorganised sectors and a lot of improvement is needed to change the picture. The procurement area is obviously a major part of it,” says Mr Udeshi. He describes the challenges in procurement field as given below:• Price is volatile and it depends on many factors like government policies such as decisions regarding mines or diesel price) exchange rates of currency, export – import policy etc. and this situation leads to spend above budgeted cost which is beyond control.• Cash flow is a big problem as far as infrastructure projects are concerned. It requires very huge investments and very tight control on cash flow which leads to affect commitments to all agencies and makes easy control on cost of procurement.• Strategic process: When it comes to infrastructure sector, it is not possible to follow 100 per cent strategic process and if procurement people are focused more on process than result then targets could miss out.• Absence of skilled management: In India, still old systems are being followed of trained people to manage tactical activities and not to manage procurement based on the understanding of business drivers and supply market capabilities. Skilled management is required to have better results.Get benefit of tradeshows and exhibitions Mr Udeshi advises to take benefit of the tradeshows and exhibitions happening time to time. He believes, these largely help to procurement professionals in many ways:• To know new and innovative products and services and many suppliers of the same product under one roof• To understand benefits of products and services on the spot• To Increase awareness of new products and services before, when and after they are launched• Understanding the wide range and estimate price.
Logistics“Logistics is really a big challenge especially for some specified material. It is on improvement side day by day in India as supporting infrastructure is in process of development,” observes Mr Udeshi. “It is seen that storage is still a challenge and it is not yet on the priority list of an execution site. Also there is a lack of awareness and interest.”
Logistics means management and distribution of material and services. Nowadays big business units around globe are trying to cater their products in remote area or small villages of each and every country and they require good infrastructures like roads, railways and marine facilities etc.
The roads in India are not yet as developed by European standards. This is because transportation infrastructure did not develop at the same pace as international trading. In India logistic cost growing by 8 to 10 per cent annually and is higher than the US and Europe. The high cost of logistics India is due to poor quality of infrastructure. Transportation is a big term and it includes roads, railways, water, air and pipes line transportation.
Today India has the world’s second largest network of roads and railways. The air freight segment presently accounts for a small pie of India’s freight market but it is growing at fast pace. Pipeline transport generally used by oil sector companies for mass movement of petroleum products including gases. It is one of the preferred modes of transportation due to significantly low operating cost.
“Logistics in global sourcing refers to plenty of additional problems such as transportation delays, border-crossing procedures and longer inventory management etc.,” says Mr Udeshi. “Moreover, lack of logistics knowledge in small developing countries would trouble the procurement executives when executing international sourcing. Nowadays, logistics management has intensely improved in the developed countries and on the other hand, less-developed country suppliers are short of experience with the most advanced approaches.”
Warehousing refers to the storage of products and goods to be transported, whether inbound or outbound. A warehouse is often used as a stock piling location to manage demand-supply gaps over a longer term. In India warehousing is generally handled by local clearing and forwarding agents and some of them also provide additional facility of packing, labelling etc. In short, major problem are it’s a highly unorganised sector, lack of standards and process within the sector, poor infrastructure, shortage of skilled manpower.
“Our logistics supply chain is also good enough and improving day by day. It consists of all activities required for providing materials or services from manufacturing/ origin point to end user/ consumption point,” adds Mr Udeshi. “The capabilities of logistics supply chain are important in determining how much benefits a company can derive from domestic or global sourcing.”
For infrastructure sector, generally three to four major materials are required in large ratio like steel, cement, bitumen and other related refinery products. These products are generally supplied by government units like SAIL, RINL, HPCL, IOCL, BPCL etc. and also by some other cement companies in market. All these companies generally maintain same rates of their products in the market and very less bargaining is possible, so only choice remains is to choose right supplier.
Software help“Presently we are using SAP systems in our organisation for accounting and record it enables us to get report quickly and control easily our operations,” informs Mr Udeshi.
e-Procurement is mostly useful in services and products supplied by private manufacturers. We can use it for insurance purpose, vitrified tiles procurement, transportation work, computers, power project materials like HT and LT cables, transformers etc.
AchievementsApart from the latest methods and techniques, the company has introduced automation in its work. Use of QA/QC methods, project management and control tools, safety manuals, are the signs of company’s fluent operations. As an organisation, it is always on the move to improve its productivity further by resorting to new management of tools as they become available.
“Our company has recently got enlisted in BSE and NSE list. We have achieved turnover of procurement department over ` 2,100 crores in last 6 to 7 years,” says Mr Udeshi. “Procurement profession is having everyday challenges like recently we have started new vertical of power project, water project etc which we were new into as we were not doing that before 7 years. We had to procure completely new projects which were truly new for us. This is very informative profession and it always creates energy and enables us to constantly connect with domestic as well as global market.”—————————————————————The capabilities of logistics supply chain are important in determining how much benefits a company can derive from domestic or global sourcing.
– Pankaj Udeshi, AGM – Procurement, Supreme Infrastructure India Ltd.——————————————————————-BOX-Supreme Infrastructure India Ltd. is a public limited company and is one of the promising companies in India. It has been formed to undertake engineering works of unrestricted value with most of the government departments, public and private sector organisations. It is tribute to the company’s outstanding performance that national and international contractors have expressed their interests for partnership on equal footing for mega size projects.