Infosys’ blog on industry solutions, trends, business process transformation and global implementation in Oracle.

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September 28, 2017

OBIEE: An effective tool for quality control in Credit Bureau Reporting by Auto-Finance Companies

Auto-finance Organizations in US have to report the credit data of their customers every month to Credit Reporting Agencies (CRAs) i.e. Experian, Equifax, Transunion and Innovis to comply with FCRA (Federal Credit Reporting Act) of US law. For this they have automated software programs in place which extract the account and consumer data from their source systems and transform/ load the data as per defined business logic into data warehousing tables before it is finally sent to CRAs in the format of Metro 2 files. This process is called 'Credit Bureau Reporting'.

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September 11, 2017

Get IFRS15, ASC606 Ready - The Easy and Quick Way

 

The accounting standard for recognizing revenue is changing.  For the new comers let me briefly describe the change.

What's the Change?

For countries using the IFRS standards, it means they now need to account revenue as per "IFRS 15- Revenue from Contracts with Customers" instead of "IAS- 18 - Revenue" standard to recognize the revenue.

For the US based companies needing to report under US GAAP, they now have to account revenue as per new "ASC 606 - Revenue from Contracts with Customers" instead of the old "ASC605 - revenue Recognition".

The old IAS 18 standards (issued by "International Accounting Standards Board (IASB)") and the ASC 605 (issued by "Financial Accounting Standards Board (FASB)" for the US companies) where having substantial differences. The new standards issued by the IASB, ASC i.e. IFRS15, ASC606 are now synched up.

The new standard outlines the below five logical steps for revenue recognition -

What's the big deal?

So - what the big deal? The accountants will take care - should the rest of you be worried? Accounting changes always keep happening, so what new now?

This is a big because it impacts the most important numbers on your P&L - the top-lines and the bottom lines and many other critical aspects like the taxes to be paid, the annual plans, probably the commissions, bonuses to be paid as well.

This is also big because the change is complex especially if you have bundled deals (like the telecom and hi-tech industry). Not all accounting software can do accounting as per the new standards. Apart from the accounting systems, business processes and maybe business contracts also might need modifications.

So, it is not just the finance guys / accountants - the board, CXO's, auditors, the Information technology folks, the planners, the analysts, sales teams, HR compensation teams - needs to understand the change and plan for the impacts.

Getting this wrong, has a direct impact on all key stake holders - shareholder value, employees (bonuses, commissions), government (taxes).

By when do you need to ready?

That depends on whether you are applying IFRS or US GAAP. For most of the companies the standard has to be adopted from the financial year starting in 2018.

  • For "IFRS15" applying companies
    • The financial year starting "on or after January 1, 2018"

  • For "Public business entities" and "not-for-profit entities that are conduit bond obligators applying US GAAP" -
    • The financial year starting "on or after December 16, 2017"

  • For the other "US GAAP" companies
    • The financial year starting "on or after December 16, 2018"


Are you late in the game? Probably yes, but....

This is where Oracle - Infosys can help you.

The Oracle Revenue Management Cloud Service (RMCS) is tailor made to meet the IFRS15 / ASC606 requirements including the transition requirements. The product has been successfully implemented across industries and is a proven solution for IFRS15 / ASC606 needs.

The "IFRS15 / ASC 606 solution" of Infosys is a complete solution to get IFRS15 / ASC 606 ready - quickly and perfectly. The Infosys solution encompasses program/project management, change management, implementation of RMCS, implementation of Financial Accounting Hub Reporting Cloud, building integration with various middleware. The Infosys solution  creates a robust process with tight integration ensuring automated reconciliation and no revenue leakage / discrepancies.

Considering the need to ready on time, the solution will prioritize requirements, so the MUST-HAVE requirements are developed, tested and ready on time.

Below is the overview of the Infosys Solution

How do we make a difference? How quickly can you be ready?

Infosys has been working on numerous IFRS15 / ASC 606 implementations using Oracle RMCS. While a typical IFRS implementation is done in 6-12 months implementation time depending on the number of integrations, use cases, we are able to cut the implementation time by at least 25% by levering the accelerators repository comprising of

  • Pre-built Use Cases

  • Key Decision Documents

  • Pre-Configured Instances

  • Data conversion templates

  • Configuration templates

  • Key learnings from other project

Apart from the normal implementation, we also offer a rapid implementation which can be completed in 3 month time-frame. A typically rapid implementation assumes not more than 2 integrations, conversions using FBDI templates, 30-40 use cases and 5 custom reports developments. The typical rapid implementation plan would be as below

Sample List of use cases for telecom:

S.No.

Description of the Use Case

1

Billing & Satisfaction: Single Handsets plus Plan

2

Billing & Satisfaction: Contract Termination

3

Billing & Satisfaction: Multiple Handsets Plus Plan

4

Billing & Satisfaction: Multiple Products and Plan

5

Billing & Satisfaction: Contract Modification

6

Billing & Satisfaction: Contract Add on

7

Downward Modification

8

Loyalty points - Termination

9

Family share - Multiple Lines

10

Loyalty points - Redemption

 

Sample List of Issues:

Below is the sample list of problem areas

  1. How to determine the SSP (standalone selling prices)

  2. Significant financing components on the contracts

  3. Managing impacts on cost - both direct and indirect

  4. Managing Discounts

  5. Managing Variable considerations


Get Started now, this is your last chance...

If you have still not started on the IFRS15 / ASC606 journey - you need to start now. With Oracle RMCS and Infosys experience in implementing the same, you now have the chance to be ready on time.

 

Meet our experts at @ Booth 1602, Oracle Open World 2017, to see a demo of the solution.

 

 


Continue reading " Get IFRS15, ASC606 Ready - The Easy and Quick Way " »

March 22, 2017

***Chart of Account (COA) Design Considerations***

Chart of Account (COA) structure is the heart of an ERP implementation enabling business to exercise its day to day operations. This has very influence on how an organization wants to record monetary, contingent and statistical impact of different transactions taking place across the line of businesses, report it out to external entities to fulfil regulatory and statutory requirements, leverage it internally to gain insight on performance of different departments on both top and bottom lines. In order to be able to embark efficiently on these essentially require a modern chart of account mapped to different business modalities and dimensions that does not only takes care regular requirements as said but helps facilitate automation, rein in need of creating duplicate segment value pool, one segment does not override others i.e. maintains uniqueness of purpose mapped to each segment etc. Investing enough to lay down the foundation of COA structure would be the first step to lock down a successful ERP implementation and to drive innovation for businesses throughout the life of application. Note: Combination of segments (e.g. Company, Department/Cost Centre, Account etc.) forms a Chart of Account.

There are numerous essential characteristics including, but not limited to, below 5 that must be considered while designing COA structure:

Selection of business modalities/dimensions as segments of COA:

The selection of modalities as segments is not an objective matter but a very subjective in nature. While some are mandatory one irrespective of everything and anything but some are invariably vary based on types of industries, organizations and products or services offered, geographies where businesses have its operations, internal and external reporting needs, future considerations and volume of inter or intra company transactions etc. Each one of these are key drivers to design an idealistic, futuristic and holistic chart of account. For an example, manufacturing organizations may want to consider cost type as a segment to represent say fixed and variable cost in order to better assess contribution margin at the product level. They may look at a segment exposing sales destination location of a product to clearly articulate the strategy for multi-fold growth in determined geographies. In banking industry, companies may choose to introduce reference to a relationship manager/cost centre in order to measure performance at product portfolio level. In retail industry, looking at product categories instead of individual product can be the favourable option.

One segment should not override or make other ones redundant:

This is one of the vital discussion points while designing a COA structure in any ERP systems. While a thought leadership on this can offer long term benefits to organizations in account of easier maintenance, minimal master value pool for each segment, no duplication etc. On the other hand immature decisions, however, may erode the benefits eventually. A COA structure and value set for each segment should intelligently be designed in such a way that one segment does not make other one redundant, does not enforce introduction of similar type of values for a segment and most importantly they must be structured "relative" to each other. To understand it better, let's take an example of a COA structure that has 4 segments called Company, Cost Centre/Department, Natural account and Sub-Account. There are 3 companies COMP1, COMP2 and COMP3 and each company operates with its 4 own departments as Sales, IT, Purchase and Inventory. As a strategic and sustainable approach, a) one would recommend only 4 different cost centre value sets representing each of the 4 departments. These 4 can be associated with either of the 3 companies while actual transactions are taking place. On the other side as a poor design, b) organization can undoubtedly be enforced to introduce 12 different cost centre codes representing 4 departments working for 3 different companies. It is self-evident that option "a" firstly cascades the behaviour of relativity where Cost Centre is relative to a company and thereby does not lead to a redundancy and secondly avoids creation of duplicate codes for similar type of departments. This can further be well understood with postal code numbering system where it navigates through State, District and finally City. Here City is relative to a District and a District itself relative to a State for a given country. In regards to option "b", shortcomings are clearly countable as creation of duplicate codes while departments are of similar nature for each company, can't share segment values, certain to experience huge volume of cost centre values over the period of time etc.

Automation for Intra/Inter Company Transactions:

Organizations like GE who has leading business presence almost all over the world deal with huge volume of transactions b/t two or more internal business units. Transactions taking place b/t 2 business units ideally lead to inter/intra company transactions and that is where it is essential to consider a placeholder for inter/intra company segment in the COA in order to efficiently track referencing inter/intra company and enable opportunities for automation. ERPs like Oracle Application R12/Fusion Cloud offers an automation to create inter/intra company accounting entries by introducing pre-configured rules. For example, Oracle Fusion Financials automatically creates Intercompany Payable accounting entry corresponding to the Intercompany Receivable inter/intra company accounting entry by looking at the rules. Such entries have a counterparty reference in the COA code combination as in company (balancing segment) and designated inter/intra company segment.

Give meaning to each digit/character within a segment rather than just treat as code:

While a business meaning is tagged to each segment, a COA design can further be advanced by injecting an appropriate meaning to digits or characters within a segment. For example instead of just coding a company as COMP1 with no meaning to individual or set of characters, one can strongly advocate for "013060" where first 2 digits represents Country, next 2 region and last 2 State. Such logical combination may take away the need of an individual segment in a COA to signify location. This is additionally very helpful for easy reference.

Business Rules With Valid COA Code Combinations:

In regular business practice while creating different transactions, allowing only valid COA code combinations is usually the core business requirements. For example, although a COA code combination with Cash Account does not require any specific product code however the same would be needed while booking revenue. Thus, identification of such scenarios and implementing rules accordingly in the system is the key to rein in undesired code combination values.

Oracle Financial Accounting Hub (FAH) - A True Value Enabler

For any business organizations, recording accountings for its different transactions taking place with internal or external entities is an obvious objective. It is essential to measure the overall performance of the organization, gain insight to penetrate the new markets and to control cost expenses, fulfil the statutory and regulatory reporting requirements and so on. To efficiently support all these any modern organizations need a reliable, scalable, centralized fulfilling global and local accounting requirements, quick enough to implement a change and importantly economical solution. The answer is Financial Account Hub (FAH) and embarking on it is a first step to plant a foundation for innovation. FAH is an intuitive accounting engine that consumes business transactions' attributes interfaced from legacy systems, apply the accounting rules and mapping to eventually create accounting entries. For a better reference and understanding, it is similar to Sub-Ledger Accounting (SLA). While SLA is an accounting processor for business transactions originated from different sub-ledgers like AR, FA and AP etc within Oracle ERP, FAH is to deal with transactions originated from legacy systems and interfaced to Oracle ERP. Here are the 5 key value enablers that innately help drive organizations to inject FAH in their accounting solution footprint:

 

Centralized Accounting Solution:

In a traditional approach, consider a scenario where accounting entries are created for 10 different types of business transactions in 10 different front-office systems and finally interface it to Oracle where general ledger operation is supervised. This apparently counts some of the inefficiencies like:

a) Maintaining business accounting rules in 10 different systems

b) Requiring multiple resources with different product specific skills to implement accounting solution, change and support.

c) Lack of governance and control over accounting

d) Lost opportunity of reusing different components e.g. mappings and common accounting rules.

e) Have to invest on front-office applications for something which they don't primarily mean to do.

To overcome all these, FAH is one of the best options that offers centralized accounting engine empowers organizations cultivating a strategic roadmap to consolidate the accounting solutions lying at different places to just one at enterprise level.

 

Quicker and easier implementation:

Unlike Oracle EBS 11i and prior lower versions, both Oracle EBS and Oracle ERP Cloud offer front-end configurable capabilities to mimic business accounting rules on FAH setup components to eventually derive accounting entries for interfaced business transactions. Configurations are simply divided into logical groups likes Accounting Derivation rules, Journal Line Type rules (Dr and Cr) and optionally line/header descriptions rolling up starting from transaction, application, accounting method and finally to ledger. All these are configured corresponding to its relevant entity, event type and class model. An accounting solution for an interface can be ready in one month or so. 

 

Minimize dependencies on IT teams for maintenance:

Unlike custom accounting solution, most ongoing maintenance requests like capturing additional details to the journal line description can easily be achieved without even involving developer and a code change. Consider another scenario where there is a regulatory requirement to book asset expenditure to expense account instead of asset account for certain asset categories. Unlike in traditional back-end accounting engines where a medium size IT project may require, FAH can deliver it to business as part of the BAU processes without involving IT teams and notably in a quicker, easier and cheaper manner. In this particular case, accounting derivation rule will require a change to accommodate expense account for certain asset categories.

 

Capability to handle exceptions and complex mapping/rules:

While FAH is capable of handling most of accounting requirements with out-of-the-box configurable features, it also provides a powerful custom source concept where you can code your own accounting logic and link it to a custom source available for use in FAH. Consider a scenario where you want to derive BSV (balancing segment value) of COA based on the complex mapping and exceptions, a custom source can be defined for the same linked to a custom s/w code. FAH invokes the custom source at run time while interface processing to derive the BSV based on the logic coded in the custom s/w program.

 

Cost avoidance:

With FAH is in place for interface processing, organizations can avoid multiple licensing cost by eliminating the need of licenses for all front-office applications having its own accounting engine. It naturally avoids the salary costs needing for product SMEs with different skills set related to core legacy systems.

 Thus, FAH is categorically a strategic accounting hub be it Oracle EBS or Oracle ERP Cloud that offers agility extensively enabling modern organizations gain radical benefits of faster responsiveness to the regulatory and statutory accounting requirements, cost effectiveness, and importantly consolidation of accounting solution on a single platform.

February 16, 2017

Oracle Service Cloud - One Product for Multiple Service Needs in Multiple Industries

'The world is becoming smaller' is the catch phrase which I get to hear nowadays pretty often. What does it mean? Of course, the world has not shrunk but the communication channels have expanded in their mode and reach thereby bringing people together and closer to give them a feel that no matter where you are, smart channels of communication will keep you connected to your family, work and needed SERVICES. In line with this boom in communication channels the expectations from the Customer Service industry has increased manifolds with the connected customer demanding service ANYWHERE and on ANY CHANNEL.

Continue reading " Oracle Service Cloud - One Product for Multiple Service Needs in Multiple Industries " »

February 10, 2017

Centralized Vs Decentralized VCP Architecture

 

One of the critical decisions that businesses considering VCP implementation have to make is to choose between the centralized and decentralized architecture of VCP. This decision is very crucial not just from the operational perspective once they have implemented, but also due to the fact that the cost of the overall project is dependent on this. For a decentralized environment, business have to invest in new infrastructure and hardware required for the new VCP instance. For smaller businesses, these costs could be higher than the overall implementation cost itself.  Through this article, I would like to discuss the pros and cons of each of those approaches and throw light on the aspects which businesses need to consider for making an informed decision.

A centralized architecture is where both the EBS and the VCP reside on the same server. In a decentralized architecture EBS and VCP reside in two different servers connected through the database links for exchange of data.

Before talking about the pros and cons of these architectures, let us understand the need for a decentralized architecture when by default we have the centralized architecture enabled.

Unlike most of the transactional systems, where the transactions are done at database level, the planning in the VCP modules happen in the application server memory. The planning engine processes are highly memory intensive and the plans require great amount of memory while the planning engines are running.

One of the most common issues encountered in ASCP (one of the important module of VCP), are the plan failures related to the application memory where the plans fail after exhausting all the dedicated/available memory.  These errors could be caused by an inappropriate setup in EBS or even by manual errors as simple as creating an internal requisition with inappropriate source. These transactional errors takes a lot of process maturity and user knowledge\training to control but still very difficult to avoid. What this means is that in case the application sizing wasn't done scientifically or in the case of above errors, the planning engine run impacts the performance of all the applications that reside on that server.

Most of the businesses going with centralized architecture face challenges during the month end\period closure activities where the finance processes (which process a huge volume of data) overlap with the planning processes

Also the amount of memory consumed depends on multiple factors such as volume of finished goods, depth of BOM, volume of transactional data , type of plans being run, amount of constraints and the list continues. In our experience we have seen businesses where the plans have a peak application memory consumption of over 64 GB. What this means is that an unscientific application sizing would not just impact planning but the activities in transactional modules in a centralized environment.

For businesses which have operations spread geographically across globe and have multiple plans catering to different geographies, it is imperative that they run those plans at different times in a day meaning the server resources need to be made available at all points in time such that the plans complete smoothly.

Having said that below are the pros and cons of the available architectures:

Centralized

Decentralized

Pros:

·     Lesser investment in infrastructure and its maintenance.

·     Simple architecture.

Pros:

 

·     Issues related to planning engine will have least impact on the transactional systems.

·    Supports different versions of EBS and VCP. EBS can be at the same or lower version than VCP.

·     VCP can be easily upgraded without any changes to EBS. VCP can be patched with a minimal impact on the EBS.

·     Ideal for implementation of multiple VCP modules.

·     Ideal for businesses with multiple plans running at different times.

·     Scaling up solution (such as adding new organizations, businesses) to the existing VCP instance is easy.

·     Ideal for businesses with multiple EBS instances which can be connected to a single VCP instance.

·     Can maintain multiple but not so powerful servers.

 

Cons:

 

·    Risk of facing issues related to memory.

·    Does not support different versions for planning and EBS.

·    Difficult to patch and upgrade. Upgrading VCP would be possible only when the entire instance is upgraded.

·     Limitation in terms of scalability of the solution.

·     Not ideal when multiple VCP modules have to be implemented.

·     Need to maintain huge and powerful servers.

 

Cons:

 

·     Higher investment in infrastructure and maintenance.

 

 

To conclude, a decentralized architecture is the most preferred and recommended architecture. Small organizations which could not afford multiple servers and the businesses with very limited and minimal planning requirements can choose OR start with a centralized implementation and move over to de-centralized architecture slowly.

 

For any inputs, clarifications and feedback, please feel free to write to me at mohan.chimakurthy@infosys.com. Our specialist team of VCP consultants will assist you in taking the right decisions at the right time.

September 12, 2016

Customer Delivery in Semiconductor Industry

Introduction

Semiconductor products finds application in various industry verticals that requires digital technology embedded in their end products to enrich them with the ability to program, configure, connect to other devices, automate or provide extra features to delight the customers.  Analog semiconductor application are also diverse such as in the field of power electronics, servo control application and energy.  Some examples are machine control units in automobiles, smart mobile phones, and control units in industrial automations, robotics, solar energy etc. 
With a wide range of application, semiconductor industry commands a business little more than $330 billion worldwide.  Supply chain in the semiconductor industry is characterized by the price sensitivity, constant innovation, product complexity, collaboration with manufacturing partners and globalization of its value chain.  The semiconductor product is not an end product by itself and is usually used to build one and hence its supply has a significant impact to the business downstream.  Low margin in this business requires higher volume turnover for them to be in green.   Competition and the above challenges forces the industry to emphasize on the customer delivery performance and service levels to their clients, who are from diverse segments in the market. They have to add value not only to the technology through innovation but also to the supply chain process by reduced cost along with reduced reaction time to demand.


  Customer delivery function is identified as the priority one processes to sustain in the semiconductor business.  It involves order capturing, calculating demand, delivery promising, tracking logistics till ownership transfer to customer and keeping customer informed.  This is supported by the planning function to ensure service levels that reduces or prevent line down situations for their clients and maintain optimum inventory.  The key performance elements of the customer delivery that depends on the supply chain are -
a. Reaction time to the demand.  The ability to respond with promises or exceptions to the client.
b. Ability to meet the customer demand as per the schedule with negligible or no slippages
c. Real time status information availability.  This is the ease of accessing status of inventory in terms of location, reservation and quantity.





Continue reading " Customer Delivery in Semiconductor Industry " »

September 8, 2016

Internet of Things (IoT) in field service management (FSM)

In today's competitive world, real-time data and innovative service methods are vital for field service enterprises to ensure customer delight, increase revenues, and expand profit margins.

The IoT explained

The Internet of Things (IoT) allows machines to communicate with each other (M2M communication). It is built using a combination of networks that comprise of data-gathering sensors, devices, big data, analytics, and cloud computing, which communicate via secured and encrypted channels. Connected devices enable efficient predictive maintenance by constantly providing information on a machine's performance, environmental conditions, and the possibility of failures. IoT can connect machines on the field in order to record incidents in real-time into a semi-intelligent 'Gen-X' FSM system.

Integrating IoT with FSM software applications

Field service organizations always strive to consistently provide the best service experience to their customers, by ensuring immediate repair and maintenance of their equipment and machinery. By collecting data about the machine's health and performance from IoT sensors, organizations can leverage predictive and preventive field service to minimize device downtime.


Three primary traditional FSM challenges

Here are three primary issues that challenge the current reactive scenarios:

    Field technicians execute the job and fix the equipment after the issue is reported. However, the delay can impact business continuity, which in turn affects the operating profit margins


    Adding more field technicians and service trucks to the field comes at a cost and sometimes the increased capacity remains under-used


    Assigning more work to existing field teams can have a negative impact on SLAs and first-time fix rates. Even worse, it can increase the cost of travel and overtime

Essentials of a new-age FSM solution

A field service management system that integrates device sensor data, technicians, customers, and technology is the key to address these issues. It should function in a predictive and preventive mode with the following features:

    The FSM process, which includes issue identification, communication, incident creation, scheduling, and assignment can be automated, thereby ensuring zero disruption in machinery operations and no or negligible downtime. This not only increases productivity, but also expands operating profit margins

 

    Most FSM products can also automate incident creation, scheduling, assignment, and invoicing processes. Using IoT, we can predict upcoming issues based on sensors data analysis and auto-creation of incidents based on preset threshold rules

The workflow of a FSM system with IoT integration

Here is an outline of the flow of incidents in a typical IoT-enabled FSM system:

1.   Data from the equipment's sensors is collected and transmitted, using secured and encrypted channels, to a big data storage


2.   Big data management and analytics is used to parse and analyze for refined sensors data


3.   The IoT command console is configured with predefined threshold rules to identify errors and monitor the device's health and performance


4.   Incidents are auto-created in the FSM system whenever errors are detected


5.   Auto-scheduling, routing, and dispatching of field service technicians against the incidents is done based on customer entitlements, location, product, skills required for the job, technician's availability, parts availability, etc. via the FSM system


6.   A field technician performs the job at the customer's site; records the effort, parts used, travel time, and any expenses incurred; and then bills the customer


Workflow of Field Service Management application using IoT.

Six Solution benefits



Wind turbines: A case in point of how IoT integrates with FS systems

Failures in wind turbines interrupt power generation leading to lower productivity and higher system downtime, which result in varying energy production and higher operating costs. To maintain profit margins, higher efficiency and uptime are required.

Near-real-time analytics provides data so that FS teams can react faster and address the issues before they become mission critical, thus reducing impact and avoiding downtime.

The wind turbine's sensors collect real-time data that is analyzed and through which, auto incidents are created, service scheduled, and an agent assigned to fix the issues. Wind turbine sensors are also used to continuously collect operating temperature, rotor acceleration, wind speed and direction, and blade vibrations - all of which can be used to optimize the turbine's performance, increase its productivity, and execute predictive maintenance to ensure reduced downtime.


*** Authors: Haresh Sreenivasa and R.N.Sarath Babu **


Continue reading " Internet of Things (IoT) in field service management (FSM) " »

August 31, 2016

Look before you leap supply chains from on-premises to cloud

 

Today, many businesses in the world are moving towards cloud applications and supply chain managers / chief operations officers (CIOs) are feeling the itch to go with the tide. However, the inability to measure the actual worth and effort involved puts them on the back foot. Here are some apprehensions that these leaders need addressed before taking the leap of faith towards cloud:

  1. Inability to measure the effort required to move applications from on-premises to cloud

  2. Concern that data security and sensitivity could be compromised

  3. Apps on the cloud mandate zero business downtime, which means internet connectivity should be made available at remote locations

  4. Existing cloud applications in the supply chain space still have a long way to evolve, and so cannot act as benchmarks

  5. Lack of comprehensive understanding of end-customer requirements, which is essential to customize applications

Having said that, I also believe that the cloud offers immense opportunities in scaling up the supply chain business to meet new digital demands. These include the following:

  1. Flexibility: Cloud apps help your organization gain flexibility while integrating with on-premises / other applications

  2. Faster time-to-market: They significantly reduce time-to-market, as these apps are mostly pre-configured for specific industry needs

  3. Scalability: If you are looking at quickly scaling up your business in a specific area, cloud is the best option. You don't need to size it accurately upfront.

  4. Accessibility: Cloud apps are accessible anywhere. So, if you have a global footprint, it helps you reach out to all time-zones effectively

There is immense potential in certain key areas to migrate to the cloud and realize early benefits. These areas include:

  1. Transportation management: This is an area that is gaining momentum, since it is not always part of the core enterprise resource planning (ERP) solution

  2. Communication with trading partners: This is again an area where there is huge potential to use best-of-breed cloud applications in order to communicate with your trading partners

  3. Trade compliance: Trade compliance checks are best carried out by third-party services that maintain the most current information with respect to restricted parties

  4. Business intelligence and analytics applications: There is a huge maintenance overhead to maintain a data warehouse as well as business intelligence (BI) reporting tools, especially for organizations that have limited IT staff

  5. Predictive analytics: This is an area where one could scale up much faster as well as gain competitive advantage in opting for cloud-based apps rather than build the whole platform in-house

There are many providers of cloud-based supply chain solutions today. However, the exclusiveness of Oracle's cloud offerings comes from the fact that it has solutions for every segment of supply chain management -- product lifecycle, supply chain, procurement, logistics, order, manufacturing and maintenance. Procurement Cloud and Logistics Cloud are Oracle's flagship products that have gained recognition, especially because these can be deployed as stand-alone applications and the offer immense value on cloud.

At the same time, there are some areas where cloud is making slight inroads, and has a long way to go:

  • Warehouse management applications: Due to the high speed required for carrying out handheld transactions, this is an area that will take some time to mature

  • Planning engine: This makes more sense when the whole ERP application is on cloud

As Oracle's strategic partner and with experience in handling over 500 large customer engagements, Infosys has partnered with Oracle across its product portfolio. One of the many engagements required us to deploy Global Trade Management (GTM) Cloud (which is a part of Oracle Logistics Cloud) through a fast-track mode for a global semi-conductor manufacturing major. This deployment helped the organization to achieve trade compliance and integration with its global Oracle ERP solution.

In summary, organizations should tailor a supply chain management (SCM) cloud strategy that fits their needs around scalability, time-to-market, flexibility, and accessibility. By analyzing these requirements correctly and implementing appropriate solutions, they can gain competitive advantage through valuable migration to cloud.

Do meet us at our booth at Oracle Open World (OOW) 2016 to discuss more on this. The event will be held between September 18-20 at San Francisco. Click here to know more.

                                                                          

August 26, 2016

Optimizing Supply Chain Inventory Using Oracle Inventory Optimization

 

In an increasingly competitive and globalized world every organization has to attempt novel methods to stay ahead of the competitors. Enterprises constantly strive towards improving their revenue, profitability and operating margins. It is no more possible for the enterprises to record a positive Year or Year (YoY) growth just by increasing the sales volume and thereby increasing the revenue and profit.  Most of the successful enterprises today have started looking within rather than outward to achieve their growth targets. The focus is on reducing the inventory (safety stocks), carrying and operating costs to improve the profitability without having to impact the productivity. The key to success is to optimize the overall supply chain inventory which reduces the cost of inventory and carrying costs eventually reducing the overall operating costs and contributing to improved margins.

The biggest challenge that looms over the inventory managers in large enterprises is how much inventory we should carry such that we do not compromise on the customer service level. In a global enterprise spanning across multiple geographies with multi-level and multi-layer supply chains, it is not an easy job to decide upon the ideal stocking locations and stocking strategies. With increasing number of competitors retaining the loyalty of the customer is increasingly difficult which leads to high demand variability and forecast inaccuracies. The variability in the lead times committed by our suppliers, transportation contractors and our own production engineers due to the unforeseen events, adds fuel to the fire. Given the circumstances and complexities the use of an IT tool is inevitable. Oracle Inventory Optimization is one amongst the tools available which could assist the enterprise managers in formulating and executing their inventory stocking strategies.

Oracle Inventory Optimization is part of the comprehensive Value Chain Planning Suite of applications from Oracle. The module provides a seamless integration with oracle e-Business suite transaction modules to get a snapshot of the supply chain and master data setups. It also integrates other supply and demand planning modules in VCP for further planning. IO provides the businesses with time-phased safety stock figures under the complex supply chain network.

The key advantage of IO is that it does a multi echelon inventory planning there by optimizing the inventory in the entire supply chain network as a whole in contrast to the conventional inventory planning techniques/tools which does a local optimization of the inventory. Businesses can now plan their entire supply chain network in a single plan. Along with the flexibility in fulfilment lead times and in-transit lead times between various levels of the supply chain network, IO recommends ideal stocking location of the inventory through postponement. Based on the supply chain network, it attempts to pool the risk of variability at higher levels in supply chain to a level lower in the supply chain network which would considerably lower inventory levels and costs without affecting the service level targets.

IO takes into account not just the demand variability and the forecast inaccuracies but also accounts for the variability of your manufacturing, in-transit and supplier lead times. It provides an insight on the contribution of each of those variability towards the overall proposed safety inventory levels.

Illustration 1: Time-phased safety stock analysis in analysis workbench

IO allows the users to perform different inventory simulations with different business objectives such as target service levels, budgets for different category/class of items for different customers/geographies. Inventory planners can perform different what-if scenarios and compare the outcomes related to target safety stock levels, budgets, inventory costs etc in Analysis workbench. The workbench provides the comparisons in both tabular and graphical formats with different types of graphs which are easy to interpret. The users can perform budget, cost break down, profitability analyses along with the safety stock and postponement analysis using the analysis workbench.

Illustration 2: Bar chart comparing safety stock recommendations for different IO Plans

 

Illustration 3: Line chart comparing safety stock recommendations for different IO Plans

 

Once the planners have arrived at ideal safety stocks in line with business objective, this information can be input to Advanced Supply Chain Planning (ASCP) for supply planning.

To conclude, Oracle Inventory Optimization is a very handy tool to enterprise managers which acts both as a strategic tool to decide upon the inventory stocking locations and as a tactical/operational tool once the strategy is formed. Its seamless integration with other Oracle demand and supply planning tools make it easy to implement and use.


August 24, 2016

Enhancing Business Partnerships Using Partner Relationship Management

Every sales department must keep a close track of sales through both direct and indirect channels. An average of 70 percent of a company's sales are estimated to be generated via an indirect sales channel of business partners. Yet, in spite of the dependency on these partners, very few organizations have the ability to effectively manage partner relationships for mutual benefit. This is where Partner Relationship Management (PRM) comes in, which serves to connect organizations with their channel partners and optimize sales activities. A typical Partner Relationship Management Life-cycle can be illustrated as below:

Typical Lifecycle of Partner Relationship Management

PRM Lifecycle.JPG

Automating the Partner Relationship Management interface helps organizations optimize partner performance and accelerate indirect sales, which in turn, amplifies marketing reach and translates into better profits for both organizations. It is also a key approach to help channel managers navigate the following key challenges associated with multiple partners, products, and campaign programs:

 

1.       Lack of real-time communication

·         Companies that sell through partners often face the risk of not knowing their customers, whereas the partner knows the end user much better

·         When a partner is assigned to work directly with a prospect, the channel manager must also have visibility about the situation. Without real-time communication, the channel manager wouldn't know if the partner is struggling and if so why -- especially if a competing vendor is also scouring for a similar sales opportunity

·         The absence of closed loop feedback mechanism will prevent valuable information that a partner has from reaching channel managers.

2.       Ineffective motivation, on-boarding, and mentoring of partners

·         Another challenge faced by Organization is Partner On boarding when a new Partner is recruited. In the absence of a software based Partner Portal it can be a cumbersome task for a Channel Manager to educate Partners about the processes & help them in downstream selling during Partner On-boarding

·         For enhanced partner performance it becomes critical for a channel manager to retain his partners while keeping them motivated and mentoring them from time-to-time for downstream selling

·         To ensure that partners remain loyal, channel managers must keep them engaged on a regular basis and monitor their performance, which can be a herculean task in the absence of a software-based PRM program.

Barriers to PRM that give Channel Manager the blues

PRM Pain Points.jpg

1.       Poor lead lifecycle management

·         Legitimate leads developed by multiple sources sometimes are managed below par because partners fail to followup with a potential prospect

·         Channel managers are unable to analyze the partner's overall lead performance as updates are sent back to multiple stakeholders, but not to the correct one due to lack of a common database

2.       Lack of visibility into downstream investments

·         Many organizations fail to understand the buying patterns of the end consumer, which is key to decide on future investments. This information is also valuable in generating data-driven insights about program effectiveness across different geographies, partner types, industries, and product lines

·         Organizations traditionally tend to provide investments to their partners who distribute it via tiered levels to re-sellers in the form of sales and marketing support to add value to their programs. To ensure the money is being utilized effectively organizations need to have clear visibility of the effectiveness of their investments to justify them

 

Given the wide range of challenges that channel managers have to address, the Partner relationship Management component of Oracle Sales Cloud (OSC) provides a comprehensive solution to handle all of these aspects. The following diagram details the features of this solution:

Improving Partner Relationships with the Help of Oracle Sales Cloud

OSC-PRM.JPG

ü  Oracle Sales Cloud provides a conducive channel ecosystem complete with Branded Partner Portal (tablet version as well) where both parties have access to content, information and tools of the sales cycle. Furthermore Oracle Social Network provides a  platform to interact, discuss & collaborate real time basis

ü  Partner Registrations & On-boarding capabilities are customized by configuring the workflows to include process which are company/ industry specific. To avoid conflicts Deal registrations, and Deal Management smartphone app can be used by both partners and channel managers for Leads-Opportunities Life-cycle Management.

ü  For effective and flexible Partner Management, quotes can also be integrated with OSC to help Partners create special pricing for different customers to give them competitive advantage in the market.

ü  Market Development Fund or MDF functionality in OSC is used for Business Planning, managing partner funds & downstream investments functionality where Claims details, approvals, settlements, tracking all are done in a single portal.

ü  In order to retain, monitor & motivate Partners Infosys has developed Infosys Program Management app which enhances PRM functionality in Oracle Sales Cloud with Partner Competency Management. It leverages on Game theory to keep Partners engaged & motivated with Tier Based Specialization, Training & Certification and Products-Services management.

ü  Features like White Space Analysis, Reports are provided to track & analyze data to gather insights into customer behavior, market trends and effectiveness of various Partner Programs. Configurable reports and easy to use dashboards give a clear picture of Partner's performance and thus more visibility to Channel Manager.

 

Consequently, the bottom line is that automation of PRM using OSC is done to provide a positive experience to partners and drives the following key business benefits:

  • Ø  Partner engagement becomes more collaborative, and effective.
  • Ø       Improved speed-to-market increases revenues through partner channels.
  • Ø       Both parties enjoy financial benefits as marketing investments are more regulated, which create opportunities for effective joint-marketing campaigns.
  • Ø   Increased channel insights enable organizations to channelize joint efforts towards more profits.
  • Ø   Effective management of partner credentials helps identify improvement areas for maximizing return-on-investment.

January 21, 2016

Supply Constraint Impacting Customer Order Promising in Outsourced Manufacturing

Continuing from my previous blog, upon delving deeper into the supply constraint aspect, we come upon certain aspects of the high tech industry that prima face indicate to concerns regarding lag or mismatch of information, genuine loss of data (systemic and manual) which I will touch upon briefly.

1) Due to the inherent structure of an outsourced high tech environment, there is no single source of truth (SSOT) for supply data. Each partner/vendor maintains his supply information in different ways. Horizons may vary. Some maintain gross values while others go with Net. Some get hourly updates from suppliers while others may work on the daily model. Consumption patterns may reflect differently. Given these disparities, it is evident that there will always be discrepancies between the actual supply and what is reflected in the system of OEM

2) Down the supply chain, the allocation of these supplies to different classes of customers leads to allocation issues. Some customers cannot be made to wait. Systemic segregation rules may not always allocate enough for such contingencies. In other cases, we are left with excess supply for priority customers while lower priority customers are made to wait. Maintaining a fine balance between customer satisfaction and idle inventory becomes more art but science is quite applicable to an extent.

3) ECO transitions affect supply picture across the supply chain. Variants of a component which can be practically used as alternates but maintained differently lead to a skewed picture around the time frame of transition. Systems may not be able to identify the interchangeable nature of components leading to a higher promise date for the customer while the technician on the shop floor knows he has enough to fulfill the demand on time. 

4) When any out of system corrections happen to get around the systemic issues, it further aggravates the problem of supply accuracy. For this reason, it becomes imperative to build systemic checks to ensure any system reflects the ground reality accurately.

Join our session "Reliable and Accurate Customer Promising" to understand how a major High-tech OEM deals with such issues with a combination of process constraints to rein in time lag variations to keep it consistent for all partners (by means of EDI cut off timings) and systemic interventions to combine supplies for different versions of components for planning purposes. In addition, consistent monitoring and manual corrections are done to keep the supply picture as current as possible.


January 20, 2016

Inventory Accuracy - Control Negative Inventory

Negative inventory occurs when over consumption/issue happens from a location as compared to its actual on-hand quantity. This can happen because of many reasons like - Error in Bills of Material Maintenance, over reporting of Scrap and Production Quantities, wrong UOM Conversions, Delayed Transfer to transacting location, wrong Counting Transactions etc. Although it is a temporary phenomenon, its impact is more significant mainly in Planning and Inventory valuation reporting. Negative inventory acts as a demand for planning engine resulting in inaccurate inventory value statement.


For a Manufacturing Organization, not allowing negative transactions can stall the Production Line, even though material is physically available, thereby impacting Finished Good Reporting, Schedule Attainment, Line stoppage and Customer order fulfillment etc. On the other hand if we allow negative, we may hide many pertinent problems which will remain uncaught and then passing the onus to cycle counter/inventory controller to run around in finding the reason and fixing it. It gets more complex when organization has complex Product Structure and complex warehousing operations.


But, Yes - I intend to say that maintaining Inventory accuracy is as important as ensuring uninterrupted production. Since Oracle does not have a solution to allow Negative for some items (ex. Low value items), so we are left with following options, and mixed mode approach is one of the best suited solution for manufacturing organizations. We should weigh each option and assess organization's preparedness adopt on of these.


Option

Pros

Cons

Do not Allow Negative

Root Cause can be analyzed and fixed

 

Accurate and reliable Inventory Reporting and Planning

Can potentially stop Production Line and affect schedule attainment KPIs.

 

Root Cause Analysis may take longer time and can cause significant disruption to the Production Line

Allow Negative

No Interruption of production as back flushing can drive inventory negative indefinitely

No detection and control over the erroneous transactions or erroneous data.

 

Difficult to detect the root cause as the time progresses.

 

Data is not reliable for Inventory reporting and planning.

Mixed Mode

(Allow Negative During Back flushing)

Production can go smooth till inventory goes negative at the Organization level. i.e Back flushing happens from the Lineside sub inventory till total on-hand at organization level goes negative.

 

Inventory reporting and planning at the organization level is accurate and reliable.

 

In a case where back flush is not allowed because of the total inventory going negative, root cause analysis should be done quickly. But this option will narrow down the root cause analysis.


Contact

In case you have additional questions or need more detailed discussions, please drop me a note @ Saroja_Nayak@infosys.com

Connect with Infosys
Infosys is a gold sponsor this year at Modern Supply Chain Event. You can listen to Infosys clients discuss industry leading best practices in the manufacturing track panel discussions. Discuss with our thought leaders on how Infosys can help you realize measureable business value from your supply chain management investments.
Join us at booth #410 to learn about our cutting-edge offerings and supply chain management solutions.

January 14, 2016

Integrated Supply Chain with Contract Manufacturer

In today's competitive world, Manufacturing Organizations subcontract many of their key processes to gain competitive advantage in operational efficiency, operating cost, capital expenditure and several other benefits. Comparatively, manufacturing organizations need a tighter bond with its outsourcing partner(s) at various stages of its manufacturing cycle. Today's supply chain processes demand an end-to-end integrated & interactive view to enhance collaboration with subcontracting business partners. Current outside processing functionality is rather insufficient to solution this gap.
Oracle's Outside Processing Functionality is not sufficient enough for end-to-end system driven transactions and visibility with varied business processes and complex subcontracting supply chain. Then you have Oracle Outsourced Manufacturing - a complete integrated supply chain module. It is integrated to core manufacturing, planning and distribution modules, it provides the required visibility, traceability and scalability to implement many variants of subcontracting processes.

Overview of the Outsourced Manufacturing Transactions:


Integrated Planning and Execution:


Contact

In case you have additional questions or need more detailed discussions, please drop me a note @ Saroja_Nayak@infosys.com

Connect with Infosys

Infosys is a gold sponsor this year at Modern Supply Chain Event. You can listen to Infosys clients discuss industry leading best practices in the manufacturing track panel discussions. Discuss with our thought leaders on how Infosys can help you realize measureable business value from your supply chain management investments.
Join us at booth #410 to learn about our cutting-edge offerings and supply chain management solutions.

Importance of Accurate Customer Order Promising in Outsourced Manufacturing

Driven by strategic importance and strength of internal capability, industry leading Original Equipment Manufacturers (OEM) often outsource sourcing, manufacturing and logistics functions to partners but retain supply chain planning and scheduling/ATP largely in-house. While outsourcing confers sharper focus and reduced costs in general, outsourced Supply Chain Planning has many high-impact risks for OEMs like

•    Loss of competitive advantage
•    Reduced quality of planning output
•    Coordination and synchronization miss
•    Limited supply chain flexibility
•    Slower responsiveness to customers

With in-house planning, the Available to Promise (ATP) response cannot be made instant but at best with a lag due to the fact that there would always be a difference in supply statement in the system when compared to partner sites. Companies especially in High-Tech industries who have Build to Stock, Build to Order and Configure to Order products often promise their customer within the target lead time goal across different product families. With lighter configuration, shorter lead time, high volume and perishable demand, planners and backlog management functions are under tremendous pressure to promise customers within the goal to meet revenue targets. With companies scheduling orders too conservatively or incorrectly and later having to re-schedule to be able to ship within the goal would impact following performance metrics

1.    Scheduling against target lead time: Ability to provide a promise date to the customer with in the lead time goal from the order entry date
2.    Scheduling touches: Backlog management activities to pull-in or push-out dates from initial scheduling
3.    Customer satisfaction: Customer dissatisfaction due to inability to provide accurate initial promise date



Impact to performance metrics has a direct bearing on the business not limited to:

1.    Customer dissatisfaction : Multiple touches and repeated date changes develop nervousness and loss of trust in customer
2.    Unpredictable sales revenue: As promising dates extend beyond the goal, revenue targets get impacted and increases backlog management activities.  
3.    Excess inventory in channels: As supply planning is based on the revenue targets, excess inventory lies in the channels as the scheduling attainment rate is lower than anticipated
4.    Increased number of touches: As companies try to improve revenue targets by pulling in the orders, it increases the touches
5.    Increased support cost: OEMs have to pay additional charges to Manufacturing Partners, B2B partners for change in assembly and shipping completion date

There are many reasons why companies in outsourced manufacturing find it challenging to attain high promising accuracy and it can broadly be classified into three

1.    Supply Constraint: Inaccurate supply picture, B2B delays, incorrect allocations, supply lost between engineering transitions etc.
2.    Lead time Constraint: Conservative transit lead time across geographies, incorrect application of holidays, and extended lead time on components etc.
3.    Configurations: Incorrect lead time, calendar, sourcing rule and other item related attribute set-up's