The Infosys global supply chain management blog enables leaner supply chains through process and IT related interventions. Discuss the latest trends and solutions across the supply chain management landscape.

December 3, 2014

Should we really 'Make in India'? Why & How?

 



Should we really 'Make in India'? Why & How?


Last month on my flight back to Pune after Diwali Vacations, I happened to read an article on Manufacturing strategy in India. The writer was a former bureaucrat of recently defunct Planning commission. It made me think have we really missed the bus, Are we too late or even if we aren't, Is it a step in right direction. Well if it is, then it should be put forward in the right manner too.


Politically speaking I have been giving cheers and thumbs up to the decisions of our Prime Minister so far. He talks about good governance, employment, growth and development so on and so forth. The article I read in my flight made me ponder on the decision to "Make in India". The motive behind the rhetoric which I think and have explained later is still naïve, is to bring and create more jobs in India, reduce unemployment and to thus solve the major problem of our burgeoning and aspirational young population. I agree that India's policy should mainly focus on creating millions of more jobs in manufacturing for the stability of India's socio-economic and political situation.


 Alas! There is a catch.....!!!!


In the present ever changing dynamics of world where new technologies can/are disrupting/replacing old monolithic production systems, It is not yet clear what our new government exactly wants from "Skill Development". Is it to predict how many technicians, mechanics or technicians or even carpenters will be needed in some years to come and precisely what skills are needed and  hence how to train those youth early?


Two kinds of technologies have combined together to disrupt the existing old conventional manufacturing monoliths. First one is the next big change which No doubt will change the dynamics of manufacturing processes. Have we heard about 3D printing lately?  It is basically manufacturing of a complete product by means of a single, automated machine, right from blueprint, prototype design, assembly and finished item. A 3D printer can make almost anything it may seem to take days, months and large skill force. Example: a complete apparel from raw material, or a complex internal combustion engine, turbine blade or even a machine gun that can fire bullets.. As a result, there are ever increasing fears that with the advent of this technology, what would be the role of human beings at operational levels as the number of jobs in manufacturing will appreciably reduce. No doubt the valuation of machines, patents, factories will reduce as newer invention of disruptive technologies but the risk of human liability is imperative. But doesn't automation kill jobs even though it creates fewer on which companies like ours exist?. No wonder enterprises come to us for (first) Cost Cutting (then) Outsourcing (through) Automation (using) Technologies (end) Blah Blah Blah.... J!


So this 'New  world order' is of cutting edge and more importantly Disruptive technology, we have to plan and devise our policy of 'Make in India' keeping this in mind.  A world in which everything is done by machines or computers is very much thinkable if not realistic. Let me try to complete my whimsical fantasy as one should also visualize what human beings might be doing in such a world, How will we earn to pay for all the products and services created by machines. A completely mechanized world, in which machines will produce machines. All this might require very few or negligible workforce. Probably the only people who will have money or will be generating it may be a handful of capitalists who own these machines, their financial managers to manage it and increase it further or their lawyers to fight for any property disputes amongst them! This might create a perpetual cycle in which power will entirely be in the hands of capitalists only, and to increase and protect their power they will replace leftover humans with more efficient and 'obedient' machines. While I have contemplated a twist in the script of Hollywood Sci-Fi flick 'Transcendence' which could have brought some more revenues to it. But I surely don't think the idea is far behind.


The second one is the Digital technology connecting widely dispersed suppliers and customers which are creating new disruptive business models in India like abroad such as flipkart, olacabs, bms. Even though things aren't as bad for our own Indian Baniya ? (Brick-mortar retail store) but the combinations of these different technologies are leading to ideation and thus invention of large networks of many small enterprises.


Hence, methods of skill development which are based on the Assembly-line production to ensure mass production through large workforce might not be the correct approach. When it's just not clear how to predict the type of these jobs in coming 5 to 10 years what are we going to teach in the program where youth's career is involved and India's future as well. The government skill development programs should inculcate in youth the ability to learn required and much needed latest technology skills in the enterprises where the jobs are being created rather than through a large system like Skill development institutes that aims for mass production by millions of narrowly skilled and certified people who may not be employable any more when they pass out from these institutes. A similar problem is faced by Indian IT companies for past several years.


Now coming on to the point from where I started the discussion: Is "Make in India" statement incomplete or flawed? India, with its large aspirational youth population must be at the forefront of the creation of new disruptive models of manufacturing. India's policymakers must envisage what shapes these new enterprises to safeguard the interests of youth keeping in mind the new technologies that might come up. The new models can be formulated on these new concepts of production management and technology. Hence we shouldn't create Jobs like old conventional model of say garment manufacturing which may lead to wastage of time, training and effort of youth at the advent of radically disruptive technology. We surely don't want to be world's largest 'towel' manufacturer!


Another challenge for us is to make the "Make in India" financially viable. Unlike China, India may not sustain to be the market place of 'cheap labor'. We have a vibrant democracy which has its roots spread till Worker Unions in each factory. The main aim of Indian policy makers must be  improving the livelihoods of all Indian citizens. So can we compete with China's Low cost manufacturing? No! Have we ever wondered about the recent decision by our Communist neighbor to abrogate one-child norm with two-child norm. Why has this been done? Is it because India will soon overtake the dubious distinction of World's most populous country? I think probably not, it's because China's working class which is primarily 'Youth' is diminishing as a percentage of country's total population. China will soon be the place of world's most populous country of old men. Hence to increase the youth's population and sustain in being world's manufacturing hub, they had to change this policy. It is an inexorable certainty.


But we must keep this in mind as well that we just can't merely aim to increase the gross domestic product (GDP). Our aim should also be that the manufacturing strategies lead to growth in jobs and opportunities for better livelihoods, not just increase the share of manufacturing output in overall GDP (which has been stagnant for years)--As that can be easily increased by some large investments in capital-intensive factories which probably the government is doing right now from back end, much to its folly. The Indian economists overriding concern must be the satisfaction of workforce and not the satisfaction of capital. Humanistic values should be core of governance policies of manufacturing enterprises in which the creation of shareholders financial value must not overrun human aspirations. Moreover, centrestage of the growth of employment should be to have it dispersed across the country into many smaller enterprises. This will lead to all round regional growth and prevent mass scale migrations and regional polarization of jobs. No doubt, their network with larger clusters must be facilitated, with which they will get the benefits of a large scale enterprise, purchasing power without losing their innovativeness and entrepreneurship.  Therefore the push through policies must be on  core strategy of supply chain design which is to drive the creation of more effective supply networks, clusters, hubs, and cooperative enterprises.


Let me offer a polemic to my earlier confabulation: Technology is the only force shaping this 'New world order' today. No doubt the production systems are changing with technology or sometimes even some business processes get re-engineered (Radically change with a need of doing away with what was done earlier to reduce costs , effort and bring efficiency). But Human need may not be completely eliminated. They will be performing new activities in the enterprises which will gradually take new forms. Technology will enabler in shaping new enterprises and may be they will ascertain my earlier concern somehow but we must agree that as more disruptive technologies are developed, human beings will remain at the center of new forms of sustainable and networked manufacturing systems.



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November 12, 2014

How to measure the performance of a manufacturing plant?

Posted by Abhay Dhall, Associate Consultant (Manufacturing Vertical), Infosys Limited

In my previous blog, I spoke about the need for companies to create a value stream map for their processes in order measure, control & improve their processes. To preach is one thing but to perform is something else. Is it as easy to execute as being said?

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October 20, 2014

Simple Measurements - Levers for Operational Efficiency Gains

Posted by Abhay Dhall, Associate Consultant (Manufacturing Vertical), Infosys Limited

The world of manufacturing is perpetually concerned with improving operational and manufacturing efficiency of a plant. A common approach is the much-used and abused lean manufacturing. Manufacturing companies think of lean manufacturing as a formula but instead it is a philosophy with many facets which can create value by reducing redundancy and non-value processes in a manufacturing system. The philosophy of reducing waste must be applied throughout the value chain of a product and not just during the manufacturing phase because by the time the product is on the shop floor, most likely it has gone through multiple unnecessary systems and processes.

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September 30, 2014

Typical Challenges in a Repair & Return Process - Part 2 ( Analysis)

Analysis & Probable Solution:

The conversation which is mentioned in the blog titled "Typical Challenges in a Repair & Return - Part 1" brings out some of the key issues which are pertinent to a repair & return process. In the following section I have attempted to classify the issues into categories and suggested possible solutions for them.

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Typical Challenges in a Repair & Return Process - Part 1

Very recently I was a member of a project team implementing an Asset/Inventory Management system for a well-known pipeline maintenance company in North America. In the course of the implementation I had the opportunity to interact with the business leads managing both operations and inventory functions in the organization.  During these interactions I came across many process related issues like enabling material visibility across the organization, acknowledging service receipts, tracking material movement across warehouses, material reservation by work management teams etc.  But the challenges posed in one process area stood out amongst all these and that was the 'Repair & Return' process.

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September 28, 2014

Automated Workforce Management - Part 2

In service industries, which are mainly dependent on their field force to execute the work, the key ask is to co-ordinate and manage the completion of high volume of work requests that are executed by the field force.  The requirement is to optimize the scheduling and mobility processes which along with the tightly integrated Enterprise Asset Management processes will automatically determine the most appropriate resource to carry out field works and dispatch work orders directly to the responsible engineer and allow for a two way communication flow between the engineers and office support team to provide a real time status update with minimum intervention from office management team.

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September 24, 2014

A Tryst with ERP Implementations

Gaining efficiencies, reducing maintenance cost, improving visibility across the company, reducing diverse IT system maintenance costs - these are some of the common reasons a company goes for an ERP implementation. Agreed, the reasons and the benefits are well thought out and the plan is all firmed up. But is it always a 'Bed of Roses'? I would say, not at all. Especially after my recent experience at a well-known oil pipeline company in North America. Immediately after the go-live we not only encountered a lot of unexpected issues especially in areas like reconciliation & document approval management, but also had to face a lot end user queries on how certain things are done in the new system. We did manage to bring the situation under control. But I would say that there were a few important lessons which I learnt from this experience which will stay with me for life. These include some of the good practices we followed which helped us and some of the improvement areas where we could have done better. The intent of this write up is to share the lessons from my experience so that it might be helpful for others embarking on a similar journey.

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September 22, 2014

SAP - Concur deal : SCM Practioner's view


In order to acquire an unbeatable leadership position in the SaaS and Cloud based solutions SAP recently acquired Concur technology, a market leader in cloud based Travel and Expense management software.This 8 billion USD deal has several questions in the minds of several SCM practioners across the globe. My blog will try to address few of them.

With Concur's acquisition SAP will be strengthening its position on the cloud base ERP market which is different ball game then the traditional on premise ERP market. Though SAP is a leader in the on premise SAP market the cloud / SaaS ERP is different ball game altogether. Though SAP took a while before acquiring Ariba, a leader in the cloud based procurement solutions, it was quite swift in acquiring Fieldglass, 'cloud' based vendor management software specialized in temporary workforce management. The question is where in concur fits in. Ariba and Fieldglass are so far successful acquisitions for SAP and Concur will help SAP to help customers in T&E  space. Looking at the fitment, scope and potential of the product, some doubts have been raised on the price at which SAP clinched the deal. But as it happens with every deal, concur's acquisition is no exception as most of the deals are questioned either on the acquisition cost or the timing of the deal.

We can certainly say that SAP has taken a lead in positioning itself in this new 'ERP on cloud' scenario. Besides other advantages, cloud based ERP can help the online access to all the all the parties involved in the 'transaction' without specific integration needs. SAP expects revenues from on demand ERP to surpass on premise from 2020.

We can certainly say that Ariba, Fieldglass and now concur are part of the large jigsaw puzzle which SAP wants to solve in order to be an unquestionable leader in cloud based ERP solutions. I am sure there will be few more acquisitions especially in the mobile ERP space to solve this puzzle which will put SAP in lead position both in premise and cloud.


September 17, 2014

How Maximo can help optimizing the Pressure Pumping Services in Oil Field Services Organizations.

 

It is being observed that oil companies once rushed to get a well in the ground just to prevent their leases from expiring. Now that those leases have been established, these companies are now focusing on optimizing their operations so to extract the oil at competitive cost. In order to help these oil companies to maximize the gains from the existing oil fields, OFS (Oil Field Services) companies are offering the service mix called as IPM (Integrated Project Management). Analyst predicts that the OFS companies without the ability to deliver the IPM will go nowhere and will have to struggle for their existence. IPM helps the OFS organization to charge the fees for the expertise available within the organization. In near future most of the oil and gas exploration companies would be opting for IPM approach so that the specific expertise can be hired at the reasonable fees and the risk can be shared at affordable price. Thus making oil exploration more attractive and predictable.

Within IPM, Pressure pumping plays a key role .Pressure pumping services consist of cementing and stimulation services used in the completion of new oil and natural gas wells both onshore and offshore. Pressure pumping services play key role in optimizing the recovery of oil reserves and maintain optimal flow for producing wells.

 

According to MarketsandMarkets (www.marketsandmarkets.com), Global hydraulic fracturing market will grow to $64 billion by 2017. North America is expected to lead the global hydraulic fracturing production market. Currently North America leads the market with almost 90% of the market share. In North America the market is led by Halliburton, Schlumberger, Baker Hughes, Superior Well Services and Cud Energy Service.

Pumping machinery is very the critical component of the Pressure Pumping .Pumps are always subjected to wear, tear, erosion and corrosion and therefore can fail frequently. Therefore the correct operation, timely maintenance and lower downtime are very important to ensure uninterrupted services form these pumps. Unplanned failures can be avoided by timely inspection, follow up actions on observations of inspection and by planning periodical maintenance. Down time also can be reduced by adequate stock of general spare parts. Maintenance professionals have also noted that lack of preventive and timely maintenance or poor maintenance can further cause undue wear and tear of fast moving parts, and premature failure of the equipment. If not maintained properly pump can also result in increase in hydraulic and power losses and low efficiency. And finally inefficient running of the pump can increase the power cost. To support the preventive maintenance activities maintenance schedule also needs to be updated and revised based on the experience and analysis of failures and breakdown of the pumps. The preventive maintenance schedule shall mention the detailed steps to be carried out during the specific time intervals For example daily, monthly, quarterly, half yearly, annually etc. The PM schedule shall mention specific inspections and tests those can be performed at appropriate timespan.

 

Maximo can help optimize the operation by pulling these pumps in to the system as the assets along with their hierarchy and by defining the respective PM and job plans against each of these assets. These PMs can be invoked based on the usage or the duration. Maximo also offers the functionality wherein we can include the respective steps related to hazards and safety. Thus Maximo can help these pumps to be more effective and efficient

 

Thus by utilizing Maximo, Oil Field Services companies can improve the operating efficiency of the one of the key divisions within IPM. These savings generated can be passed on to the oil field companies.

Demand Signal Repository: Foundation for demand driven supply chain

Demand Driven Supply Chain: Characteristics & Benefits

Posted By: Supratik Ray, Principal Consultant, Manufacturing

Supply chains today are becoming more complex as companies today expand their geographical footprint and leverage outsourced manufacturing and operations. The consumers today on the other hand have multiple choice of fulfilling the demand due to increasingly similar product offering and penetration of multi-channel retail. The changes in supply complexity and demand variations are transforming the traditional forecast & push based supply chain to pull or demand driven. The key characteristics of a supply chain driven by demand driven:

1.     Material movement based on actual demand or consumption

2.     Real-time visibility of demand & supply across the chain.

3.     Single demand signal shared with all the tiers in the supply chain.

4.     Having inventory at right stage and right quantity at right.

The benefits of a supply chain driven by demand:

1.     Reduce or eliminate stock out situations

2.     Reduce safety stock and left overs / obsolescence.

3.     Reduce stock and inventory cost

4.     Improved promotions effectiveness

Demand Signal Repository: Foundation for demand driven supply chain.

One of the key enabler to a demand driven supply chain is removing information latency across partners of the supply chain and having single view of the supply and demand position. Demand signal repository (DSR) is the key enabler is getting a harmonized view of data from external and internal systems. DSR is an important building block of the demand driven supply chain and serves the following purpose.

1.     It is a central database for all demand.  It stores demand from all sources like point of sale data, store & distribution center inventory, retails forecasts & events.

2.     Harmonizes internal line of business data like sales, shipments and forecasts along with external data for analytics.

3.     Create a multi-dimensional analytic model using data from 3rd party sources like syndicated data, maps and other consumer information.

4.     Improve cross functional analytic tool to support business monitoring and pro-active decision making for supply issues.

The picture below illustrates the downstream data analysis and planning without DSR.

Image 1 DSR JPEG.jpg

 

The picture below illustrates real time supply chain with DSR.

Image 2 DSR JPEG.jpg

Demand Signal Repository: Benefits and challenges

The advantages of DSR driven demand driven supply chain:

1.     Improved forecast accuracy by having demand & supply position in a single repository and having a semi-real-time inputs for improving forecasting accuracy.

2.     Improved cash flow by reducing inventory. Right quantity and right place and right product phase.

3.     Improved promotional efficiency with integrated analytics for cross functional analysis of promotional spend & performance.

4.     Cycle time reduction for new product introduction due to availability of semi real-time data for sales across retail channels and consumer response to promotions.

The demand driven supply chain lots of benefit it also comes with its own set of challenges:

1.     Fragmented IT landscape across the supply chain and disparate usage of same data elements by different partners.

2.     Willingness of distributors and retailers in the supply chain to collaborate.

3.     Schedule adherence to share data to have a compete view of the demand and supply position.

4.     Executive sponsorship to adopt and demand driven as culture rather than tool or technology.

Conclusion

Industries like consumer goods which have typically shorter product launch schedule; strong regional channel preference and high demand variability have seen improvement in improvement in forecast accuracy and improved insights for new product introduction. Industries with long lead time or inventory at different stages are able to make better decisions on reducing supply chain inventory.

Though there are challenges in orchestrating a demand driven supply chain many industries are seeing the benefits and adopting DSR to achieve a demand driven supply chain. The proliferation of information technology across the tiers of supply chain, shortening product life cycles and multi-channel retail are going to increase the adoption by retailers and manufacturer.

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