Recent disruptions have stretched supply chains all over the world. In some cases, supply chains have been broken in their weak places and have needed to be repaired. But there will always be unexpected events and outcomes. What helps are predictive models that can aid in decision-making. Dr. Madhav Durbha, the VP of Supply Chain Strategy at Coupa Software, suggests simulations can help companies make smart decisions that will lead to great heights.

Main Takeaways

• Macroeconomics: In order to best guide its customers, Coupa needs to have a sense of the ever-evolving, macroeconomic landscape. To do so, Coupa compiles and analyzes data from external as well as internal sources. Machine learning is an asset to help pour over and analyze the external data. Coupa is able to leverage its vast community of customers, and their data/resources, in order to provide high value insights. 

• Digital Twins: Digital modeling is an effective tool in order to analyze a given company’s supply chain. Predictive models can be established and then informed decisions can be made and implemented to impact the supply chain in the physical world. 

• Two Big Supply Chain Steps: One thing companies can do to shore up their supply chains is to go from a mentality of a one-to-one relationship with each distributor to instead thinking about each element of the supply chain as a multi-layered network. With this new mentality, companies can form relationships with other entities in the supply chain and leverage their scale in order to secure the products that they require. Additionally, companies must have a willingness to work with governments in order to secure the supply chain. This may involve certain products being manufactured at the local level rather than relying upon the global supply chain.

For a more in-depth look at this episode, check out the article below.

Article

Recent disruptions have stretched supply chains all over the world. In some cases, supply chains have been broken in their weak places and have needed to be repaired. But there will always be unexpected events and outcomes. What helps are predictive models that can aid in decision-making. Dr. Madhav Durbha, the VP of Supply Chain Strategy at Coupa Software, suggested simulations can help companies make smart decisions that will lead to great heights.

“So think about us as a flight simulator for supply chain,” Durbha said. “So you take a fighter jet pilot and you don’t put him or her in the plane all the time in the beginning and have them start flying, right? You put them through some simulation exercises. So just like [these] flight simulators exist, what we do is help build what we refer to as the digital twin of the physical supply chain. So think of that as the digital model with all the interconnections between what are my sources of supply, [and] which plants [or,] production facilities are they feeding to. From both production facilities, which distribution centers can receive the shipment and which DC scatter which customers. So we build a digital model with all those interconnections. And then what you do is you start feeding the forecast to set that drum beat for that digital twin.”

Just like for individual people, companies also must accept the inevitability that even the best plans will be impacted by events beyond one’s control. But this is not a reason for despair. Instead, it’s an opportunity for better strategy that includes even more flexibility. This is certainly true for companies looking to strengthen their supply chains. 

On a recent episode of IT Visionaries, Durbha explained how companies can increase their supply chain efficiency, sustainability, and resiliency. He discussed how companies need to rethink their supply chain relationship from one individual supplier to what he called a “multi-tiered network.” Furthermore, he made the point that companies must also work with governments to support their supply chain. Madhav also shared how he transitioned from the engineering world to focus on supply chain strategy. Enjoy the episode!

Durbha broke down how Coupa can really help its customers consider the economic management of their supply chains. 

“One thing is understanding my overall business objective, and then you would set certain objectives and goals seeing that this is the cost I want to have within my supply chain,” Durbha said. “Now, I want to design a supply chain based on those parameters and objectives that I established. So how many suppliers do I need to have? How many manufacturing facilities do I need to have? What kind of capacities do I need to build in those manufacturing facilities? How many distribution centers do I need to have? Each of these decisions come with a cost associated with that. So how do I best manage that cost?” 

Supporting sustainable practices to reduce a company’s carbon footprint is also an area Coupa can help its customers.

“Say that I want to reduce my carbon emissions by 33%,” Durbha said. “What levers can I push to make that happen? It’s really helping design supply chains for sustainability, for profitability, [and], last but not the least, resiliency as well. Because you want to build optionality in your supply chain — options in terms of different modes of transportation [and] options in terms of sources of supply. Each of these options come with additional costs. So how do you balance all these objectives together is something that we do.”

A big part of what a company like Coupa must do is to create economic forecasts that will assist its customers in their buying decisions. In order to do so, Coupa must accumulate data and then effectively analyze it to offer economic predictions.

“We do gather a lot of external data and we house about 600,000 different, what we refer to as, time series: Different types of macroeconomic data, such as consumer price indices, the GDP, housing stocks, weather related data, so on and so forth.” Durbha said. “Each of these data elements have an implication on what a company can sell into [the] future. We do apply some machine learning techniques to come up with [a] forecast. So that is one type of data. The second type of data that we house is what we refer to as the community data. If you think about Coupa’s community, we have our over 2,000 customers and all 7 million suppliers with about $2.9 trillion worth of spend that flows through our platform. So through [a] rights of usage agreement with our customers, what we do is we come up with these indices [or], what we refer to as a community insights. We strongly believe that none of us is as smart as all of us. So when you tap into that community intelligence, there are a lot of insights that you can gather.” 

Clearly, Durbha has had a fascinating career in supply chain strategy. He also shared how he’s ended up in the supply chain space.

“When I first started my PhD program, all I wanted to do was to become a professor in a university teaching chemical engineering,” Durbha said. “But somewhere along the line, it was the nineties. If you think about it, tech was starting to take off. And somehow I got hooked on to technology literature, reading about Bill Gates, Steve Jobs, and the tech icons. I said, ‘Oh, this is a cool industry to be in.’ And then opportunity presented itself where I could get into a supply chain tech company. So I didn’t know much about tech. I didn’t know much about supply chain. I had to convince somebody that [I was] someone that they could take a chance on and [the] rest, as they say, is history.”

To hear more about how the Coupa is helping its customers make economic purchasing decisions while strengthening their supply chains, check out the full episode of IT Visionaries! 

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