Supply Chain Management

Scanning my daily dose of RSS feeds I came across a very interesting piece from Farhad Manjoo where he tracks a growing phenomena of "Self Repair" in consumer electronics. He gave the example of a company that provides self repair guides and spare parts for Apple customers who would like to extend the life of their iPod or iPhone and are happy to do some tinkering at home while at risk of going out of warranty. This is a great example of customer demand being fulfilled by an opportunistic service provider in the white space left by the manufacturer/retailer in reverse logistics. Though many retailers and manufacturers have joined hands to set up efficient Return - Recycle or Return- Refurbish- Resell models for managing the end of life-cycle processes for electronic products, a lot of white space exists in the market for DIY(Do it Yourself) enthusiasts. We all know that the electronics supply chain is quite complex with multiple echelons for demand planning and is very susceptible to short product life cycles and inventory obsolescence. The supply chains have a very high level of information sharing and the participants even include appropriate returned or repaired items in ATP calculations. However I am yet to see a manufacturer come up with a DIY kit product line which enables a customer to easily replace parts themselves and send back the defective parts for recycling to the manufacturer or the component handling center. This would certainly be at loggerheads with the marketing agenda of planned obsolescence and new product introduction. On the other hand, the DIY kit sellers are a good outlet for the component manufacturers to increase the sale of their component inventory. So I do see this trend to continue and some type of natural equilibrium emerge where the manufacturer Recycling channel and the DIY/Direct channels co-exist. What intrigues me is that with WEEE/RoHS and similar legislations looming large, who will be responsible for ensuring compliance for the waste generated by the DIY projects - the manufacturer, component supplier, DIY kit seller or the Retailer?

Posted by Amarpal Sanghera at 08:03 PM | Permalink | Comments (0) | TrackBacks (0)

The misconception among retailers today is that retail is no longer store driven. Many retailers tell me that 50-75 percent of their business begins online; but, interestingly enough, the end purchase continues to take place at the store.

This suggests that the major growth opportunity for retailers lies in their ability to deliver a seamless shopping experience across channels.  The store delivers on the promise of orders that begin  online.  Estimates by leading analysts indicate that by 2012, nearly 40 percent of retail sales will be cross-channel sales.  But, the cross-channel shopper is spoiled.So meeting his/her expectations is challenging.

As consumers benefit from a better shopping experience at one retailer, they are going to expect the same experience at other retailers. Regardless of the retail segment, consumers are experiencing the advantages of cross-channel capabilities and therefore expecting more.  The end result is usually an unsatisfied customer … one less likely to be  loyal. Retailers need loyal customers to drive profits, so they must deliver a  cross-channel shopping experience, and the store is a critical customer touch point in doing this.

Posted by Jim Bengier at 04:09 AM | Permalink | Comments (0) | TrackBacks (0)

Selecting a WMS package to run your business might be a tricky situation to be in. It can either make or break your business; look out for these common pitfalls that you can avoid in the first place as they can jeopardize your initiative of automating your warehouse.

Business Requirements not well defined and not as per standard practices: This is where most of the companies make their first mistake. They need to get their house in order in the first place. Best would be to hire a logistics consultant (and sometimes the WMS vendor can themselves help) to advice on what needs to be done and what should not. Best would be to get all people from various departments and get things straightend out, this will help reduce unwanted modifications to the WMS package.

Cost of the implementation, rollouts and support: this depends mostly on the budget you set aside and whether the payback you get is justifiable. A two to three year payback time frame is reasonable, which also depends on the size and complexity of your business.

Integration with other existing systems: Look for the WMS's capability to seamlessly integrate with your legacy systems, with both upstream and downstream applications. Ask the vendor for references if they have done the similar exercises in the past.     

Lack of Top Management Commitment: This is a must, without which the whole exercise may fall like a pack of cards when things go off course. The MD/CEO must understand why the WMS is being brought in, what benefits it can bring to business and the ROI timeframe. Based on this he needs to assign an appropriate budget in consultation with IT and the finance teams.

Get a Conference Room Pilot done: This is the best way to acertain whether the WMS will meet your business needs. Check whether what is being promised against what the software can actually perform. Create business cases that are closer to real time situations that you face during your warehousing opeartions.

Future Readiness: See on what technology platform the software has been built and its ability to scale up. Also if you have plans to implement advanced technologies like RFIDs, Voice Based Picking, Pick to Light, Conveyor base Putaway etc. in the future, make sure that the software is capable of handling these, or whether the vendor has included them in his development roadmap, in case these are not part of the current product suite.  

 

Posted by Lokmanya Rawat at 09:50 PM | Permalink | Comments (0) | TrackBacks (0)

Last week my colleague Karmesh Vaswani, who heads client services group for Retail & CPG vertical in Europe forwarded me a very interesting article from Financial Times titled "E-retailers find big brands hard to touch" from Samantha Pearson (dt 08-Jul-2009, Page 20, part of FT series Dotcom Redefined).  There were a number of interesting observations in there starting with the dominance of the traditional giants like TESCO, Argos and Marks & Spencer in the Top-15, how the predicted dot-com way of buying never really became de-facto with a forecast of dot-com retail sales reaching just 10% by 2013 and also, major challenges faced by the diverse set in the top-15 as they try to ramp-up their sales online. One specific point to note was that Amazon.co.uk rules supreme (with Amazon.com independently at no.4) and would be definitely the one to beat, when it comes to dot-com revenues as well as e-commerce & fulfillment models.

As I mentioned above, the article talks of increased presence of brick 'n' mortar biggies in online space - TESCO, Argos, HMV, Marks & Spencer, Dell, Next etc are all there. I was listening to a briefing session by Kevin O’Marah of AMR last week where he was elaborating on this year’s AMR Top-25 (TESCO is the sole non-US retailer in the list) and the key message was what he terms as “flight to quality” of consumers gravitating towards more established names during a downturn.

Also, while online retailing in UK may crawl to only 10% by 2013, everyone realizes it’s the engine of the future including the huge investments some of the top retailers themselves are making in revamping the online channel. One major retailer we do quite a bit of business with has embraced the philosophy of “order anywhere, fulfill thru store” model which makes the distinction between channels that much more blurred and resultant outcome truly cross-channel commerce with far lesser resultant cross-channel conflict.

The article ended with a couple of paras on importance of “delivery service” being the key focus for everyone going forward. Taking care of the supply chain practice here at Infosys, you need to excuse me if I have blinkered vision vis-a-vis everything else, but this could only be interpreted as getting the back-end SCM in order (including all enabling functions – procurement, TMS, WMS, OMS, reverse logistics… the works). That said, this also results in some back n forth not-very-friendly banter between the retailers and their delivery companies with the latter saying retailers wanting to keep costs low prefer to let go of all other delivery parameters. This was in response to 26% of online shoppers saying they'd love it if retailers delivered in less unearthly hours (or thereabouts!).

Anyway, the way I see it, anyone getting their back-end delivery & fulfillment process ramped up could only mean more work for all of us, hopefully!

Posted by Gopikrishnan GR at 09:42 AM | Permalink | Comments (0) | TrackBacks (0)

In my previous blog we had discussed on one area of focus that’s crucial during an SRM upgrade, which happened to be  Readiness and Adaptability of the End User community – SRM Users, in this blog, we will discuss another important area that happens to be business driven, which is the involvement of business transformation team that rolls out the solution to the user community both internal and external, we will call this Blog “Early stake holder involvement and Supplier On-boarding” during the business process transformation coming off an upgrade program.
It is always a challenge to get convinced before getting to convince someone and make it a religion.
Daunting tasks of getting the factor called change “into the organization” is the biggest key we are talking here.
Have you ever had that feeling when you take a certain route to reach a destination and are extremely comfortable, even to the extent of knowing where every speadbreaker bumps you over and traffic cameras that flash your face, you ever want to take an alternate route.
Just relating that to a business scenario transformational change kicking in, seldom is it easy for the business team to get past veterans that execute a process in a way that they have been doing in the past.
Trust me even if you get to push the internal stake holders to adapt to the change, the external stake holders such as suppliers, never get the transformational adaptability easy, they feel it’s a bane for them to be even associated with you.
Some of the factors such as supplier awareness and an early involvement of the key external stakeholders in the transformational change can be a win-win for the buy and the sell side, I have witnessed it live that a Supplier On boarding kit, comes really handy if rolled out at least 3 months prior to go-live.
So project managers, when you are chalking out that very detailed implementation or upgrade plan, don’t forget to get this as a critical line item to success of the upgrade, even a screen that’s new and not well informed can get you uncomfortable signals than the kudos you’d generally expect from the sell-side.
What’s important to them is the volume of business and the repeatability, what’s important for you is TCO reduction.
Please ensure that you take these stake holders into confidence and let them know, what’s the impact, have a steering committee that specifically handles this change.
Trust me, don’t get bogged down, if things don’t go right the first time, teething issues are a given in such transformational programs, but nevertheless the success story goes a long way ahead.

In Part 3 we will specifically address how the post go-live issues are handled by the already comfortable “Support team”, that at the time being is handling 2-3 tickets in a week and get paranoid when they see a sudden high tide in the number of support tickets that hit them immediately post go-live.

Let me know if you ever felt the jolt of such a situation.......

Posted by Tridip Chakraborthy at 06:43 AM | Permalink | Comments (0) | TrackBacks (0)

It is extremely common in any organization to maintain status quo and not review the deployed solutions periodically unless the results are awfully incorrect having a significant business impact. Given the current economic downturn, it would be extremely critical to assess the performance of your advanced planning systems which help you to achieve a good balance between demand and supply while optimizing your inventory. The planning system would have been implemented a few years back or in boom time. Hence the solution configured in the planning system would not have factored in bad times. This becomes critical- as the results churned out of the planning system may not be in sync with the current business environment which would lead to bad decision or too much of manual intervention is necessary for review and modifications.

It is extremely important that the solution deployed is reviewed not only in such bad times but also periodically in order to ensure that the results are in line with the constantly changing business environment. For example, it is extremely necessary to review the different planning parameters which act as input to your planning engine. For example, safety stock levels you would want to maintain during different business environment would be much different- ranging from days of coverage to say statistical/dynamic. These parameters which are input to your planning engine will impact the results what you get.

Having this planning system audit or health check should form a part of your yearly or half yearly planning process review. This would ensure that you take corrective actions at appropriate times and even if no major correction is required, it will also give you opportunities to fine tune the solution deployed. Most of the times, there will not be a need for major changes and what will be required is slight tweaking of the solution.

Lot of times, organizations do get this opportunity when they have to upgrade to a new version of the software. In these cases rather than just doing a technical upgrade, the opportunity should be used to do a proper assessment of the solution while performing the upgrade.

I would like to understand if your organizations are doing it- and if yes the benefits realized. If no, what are the challenges/difficulties for not doing.

Posted by Amit Bakre at 09:08 AM | Permalink | Comments (0) | TrackBacks (0)

This blog is a representation of my feelings and thoughts about the significance of supply chain as a function. I have been associated with supply chain for little less than a decade now, and based on my experiences and interactions with supply chain practitioners, I feel that supply chain function has slowly started gaining importance in the industry. We know that companies are driven by functions that drive business, get revenue and manage money. And therefore, functions such as Sales, Marketing and Finance have always been the pillars of any organization, independent of its size and scale. Having said that, I feel that over the past few years, supply chain as a function exists as a more formal organization and has grown from a mere supporting function to the one that has a direct impact on a company’s balance sheet. As per one of the articles in AMR Research, the average tenure of a supply chain organization in consumer products is eight years. So, there is still a long way to go from here.

As I understand, supply chain used to exist (may be it still exists today for few industry segments) in a very nascent form with hardly any interaction with business teams. Even, the term ‘supply chain’ has been used by companies in a very ad-hoc manner and each company has understood it in its own way. I remember instances where few buyers in a purchase organization would comprise a supply chain function. As companies grow rapidly without a formal supply chain organization, it develops processes and systems that are inefficient, sub-optimal and costly to maintain. This, in addition to stiff competition, has resulted in having supply chain function taking a lead role in company’s business decisions, and running large business transformation projects. It has helped companies in gaining market share, sales growth and controlling costs.

Let me share a real-life example here to explain my point. Very recently, I spent some time with one of our hi-tech manufacturing clients, which is a global leader in the industry. They have been showing consistent performance over the years in revenue growth and profits, despite an economic slowdown. They are also present globally in most of the countries, as any other large corporation, but have their supply chain processes and systems disintegrated, disparate and regional in nature. I observed that although this company has been pioneer in its industry, the supply chain function has never grown in the same degree. The function had existed in piecemeal and had a much localized presence. Even the designations of people were fairly traditional. The processes and systems lack the ability to provide flexibility and agility that a business environment demands today. But, now they have taken a very serious view of their supply chain processes, systems and organization structure. Their strategic intent is to have centralized global supply chain planning processes with few controls given to regional supply chain teams. They are even mapping their talent pool to the future needs and then analyze the gaps and take appropriate hiring decisions.

To close my viewpoint, I would like to share a data point: I was reading the ‘Global supply chain planning study 2009’ done by Capgemini, wherein one of the survey results is about “perception of supply chain function”. Interestingly, 16% respondents view supply chain as a source of competitive advantage and another 29% consider it as a critical decision-making function. I hope this number improves in future…

So, what has been your experience? Do you feel that supply chain is bound to gain that competitive edge and mature on a continual basis? Please share your experiences and feel free to comment especially if you disagree.

Posted by Aatish Goel at 08:36 AM | Permalink | Comments (4) | TrackBacks (0)

The term “perfect order” has become a well-worn metric for anyone with a supply chain.  Typically, most people think in terms of the basic measures of “on time, in full, in spec,” which means have the customers gotten what they wanted when they wanted it, in the full amount ordered and with the expected level of quality?  Over time, the metric has expanded to specifically call out subsidiary metrics like Right Product, Right Packaging, Right Documentation, delivered to the Right Location, etc.  And all of these metrics make perfect sense.

What gets interesting – and I think a bit misleading – is when you aggregate these metrics  to come up with a single perfect order index, the “POI”, by multiplying all the individual KPIs together.  Some have argued that this makes sense, because looking at just individual KPIs could “lull you into a false sense of security.”  Perhaps. 

But looking at an aggregate index like POI can cover up specific issues in your supply chain performance.  For one thing, the underlying factors could be shifting around significantly from month to month but with no overall change to the composite POI.  You would have no sense if some metrics were trending better while some were simultaneously trending worse. What’s worse, you could be implicitly assuming that all of the component metrics carry equal weight, which is almost never true. 

Bottom line: There’s just no getting away from looking at the individual metrics and their interactions to have a clue as to what is happening in your supply chain.

Posted by Richard Douglass at 01:36 PM | Permalink | Comments (6) | TrackBacks (0)

For the Sterling Customer Connection 2009 event, I was asked to co-present the Ecommerce transformation initiative at Life Technologies. As it turned out due to last minute exigencies, Christian Wip, the Director E-Commerce at Life Technologies was unable to make it to the event and I became the sole presenter.
 
The Life Technologies Ecommerce initiative aimed at replacing their ecommerce web based sales channel with a new customer centric and technologically scalable solution based on Sterling MCS.The idea of the presentation was to share key insights, learnings and best practices we put in place to enable this successful transformation.

One of the innovative and customer centric approaches we used to capture user feedback was the 'voice of customer'. Through various techniques such as focused group studies, surveys, usability studies etc, Life Technologies had pulled together a list of 'voices' from customers. This included their expectation of "knowing my order and doing them right" to "guide me", "make things clear" etc. These were then translated into actionable requirements such as providing better order status/tracking/history information, minimizing the number of clicks in the checkout process etc.

Another key innovation we focused on was the process to work out the ultimate user experience for the end consumer.  My experience with typical Ecommerce implementations is that a lot of time and energy is spent in putting together the user experience. It is one of the areas where a significant overlap occurs between the UX focused marketing teams and the technology enablers. This is not always the most productive or 'smooth' meeting of the minds. Gaps tend to emerge later on in the development and testing processes, because usability testing may bring about significant changes as also 'understandings' of features offered varies. This is further complicated by the demands of a packaged application to keep processes consistent and repeatable thus implying a 'reduction' in flexibility. We were able to overcome some of these challenges by using the Infosys user centered design methodology. This involved up front usability studies and walkthroughs of existing UX flows to allow all stakeholders to contribute their ideas and thoughts. These were then converted into 'to be' flows and wireframes with each element of functionality and data mapped out on the detailed wireframes. These wireframes e also took into account 'out of box' package features to retain high upgradeability. Clickable prototypes and visual designs made these screens real to all the stake holders. These visual designs after sign off were converted into code or html which were then used by the development team to integrate with the backend process flows.

You can find out more about my session here. Also Christian Wip, the eCommerce Director from Life Technologies talks about this initiative and its execution through a video.

Posted by Guneet Paintal at 09:32 AM | Permalink | Comments (0) | TrackBacks (0)

Much has been said, written and debated about Procure-o-marketing. My friends in the procurement community have advocated the advantages of introducing procurement concepts in marketing. This  group in procurement community has seen marketing spend with skepticism and disdain, as an overhead which needs curtailment. So, all these talks of Procure-o-marketing have come as a “novel concept”. The million dollar question, (and this is not figurative alone…)  Is a natural “marriage’ of the two enterprise entities possible? I strongly advocate NO.

Let us try and analyze the circumstances which make a procurement exercise successful. From the supplier’s perspective it is the survival of the fittest in the competitive environment. Cost structure optimization, delivery accuracy and reliability, quality of products and services, regulatory compliance and responsiveness to customer’s needs are quintessence of success. There is no room for “creativity” here!! The surmise from a buyer’s perspective is that all suppliers are equal and each one stands a fair chance. In industries where there are supply constraints, buyers go all out to book capacities in advance to prevent supply choking or exceptional spend on late bookings. Mature buyers would resort to hedge procurement to minimize costs and ensure supplies. They do take a beating sometimes, when price fluctuations break “set norms”, but that is what hedging is all about. 

 

A buyer’s buying behaviour is to look for ways and means to deride the “differentiators” projected by the suppliers and try and buy the products and services as “commodity” products and services. The yearly contract negotiations start with price and end with price. Taking the accounting route the objective of any buyer is to “chop off” the COGS and Inventory, to increase EBDIT and have a positive cash flow in their books. Since the procurement experts find it challenging to squeeze more out of COGS, so they have trained their guns on SG&A.

 

Let us take the case of marketing. The marketing professional is “glass full of ideas”. Their sole objective is to do something unusual to catch the eye of the person on the street. The five critical issues for success are differentiate, differentiate, differentiate, differentiate and finally differentiate….. Else the result is similar to the remakes of the epic movies, which have not lasted the test of time. Let us take the simple case of billboards spend. The location, the message, the colors, the depiction, the face and the expression on it….. these are more important success factors than simple buying fabric. Pepsi would go all out to have a blue attire for their brand ambassadors, what be the price.

 

So, if one starts probing into the cost structure of marketing spend and try to cut corners, one would surely find a lot of “scope’. But the fact remains that cost of innovation and creativity is simply….. priceless. Some organizations claim to have excelled in their art of procure-o-marketing. But behind the art lies a scientific classification of what is commodity and what is creativity. These organizations cut radically on commoditized products and services, but when it comes to creativity, they spend in millions to nurture it. That is what brand management is. It would be suicidal for organizations to jump onto the bandwagon of procure-o-marketing armed with scissors, if they have not yet mastered the art of classifying commodity and creativity.

Posted by Sudripto De at 02:32 AM | Permalink | Comments (0) | TrackBacks (0)