Supply Chain Management

Quality Inspection Stock is defined as a stock that is quarantined for inspection and is generally not available for unrestricted usage for customer orders. The process of Quality Inspection could be a long drawn process involving multiple kinds of product checks to as short as couple of hours involving some kind of sampling technique. Most of the ERP systems available in the market have their own Quality Management module along with other modules such as Plant Maintenance or Production Planning. By implementing a Quality Management module, it is possible for supply planning systems to take into account realistic release dates of quality inspection stock into unrestricted stock. With such release dates being accounted for, the Supply planning system can accordingly propose incremental supplies in the network based on demand supply calculations as a function of time.

One very interesting challenge in such a Quality Management context is the handling of inter-plant movements vis a vis customer order replenishment. While the customer orders can only be serviced out of unrestricted stock, it is usually not the case with inter-plant movements. While different organizations have different practices, in general inter-plant requirements are not subjected to the same level of scrutiny as is the customer order replenishment. In some unique scenarios, the inter-plant movement time takes into account the time needed for products to get "ripened" and be finally made available for customer orders.

Complex ERP systems do not take into account the possibility of differential treatments of quality inspection stock for different streams of demands i.e Stock transport orders, dependent demands through Production Orders and Customer Orders. Inevitably thus, one has to build countless pieces of customizations on the application to finally make this requirement to work.

Some such options include:
1. Make certain portion of quality stock as always available. This gets us somewhere mid-way but not wholly accurate.
2. Build different kinds of demand streams for Stock Transport Orders that bank on Quarantine replenishment. This is very accurate, however very intensive on customization and fraught with technical risks.
3. Make all quality stock as always available - which leads to a false positive signal while confirming orders. This would mean that the final shipment process has to account for possibility of stocks not being at the warehouse which again could be an ugly process.
4. Make all quality stock as unavailable - which leads to a false negative signals at order confirmation. This would mean that the inventory levels of Supply Chain would generally increase.

Based on the four above solution options, each organization may have to pick up the best and most convenient solution to meet the business need.

Posted by K. Srinivas at 3:08 PM | Permalink | Comments (0) | TrackBacks (0)

Every year, eager, enterprising and wide-eyed management graduates join us at our Hyderabad campus, straight from B-school to the Enterprise Solutions Academy (ESA) for a 10-week boot-camp, at the end of which they get deployed in various cities across multiple enterprise packages to kick-off a career in enterprise solutions as Associate Consultants. This May, I was addressing and answering the queries of a set of folks slated to join the SCM practice. One question that caught my eye came was from someone who asked how come Distributed Order Management (from Sterling Commerce, naturally) was so hugely popular among retailers, but didn't cut it in other industry verticals.

Now I can reel off a whole slew of reasons behind a trend like this for retailers. Terms like Cross-Channel Integration, Multi-Channel Selling & Fulfillment and of course Distributed Order Management have been embraced by retailers for so long that there's no surprise to hear multiple initiatives around these themes going on at any point in time. One obvious trigger is the sheer complexity of fulfillment options that retailers end up handling for their end consumers - whether it is drop/direct-ship, merge-in-transit, assemble-to-order, customers cutting across multiple channels as part of their buying behavior, loyalty cards/points, different kinds of promotions to be applied at the same time, high levels of returns (especially in fashion retailing) and their tracking, seasonality and a number of related aspects which make the permutations around selling and fulfillment quite multi-faceted.

Now, traditional manufacturing especially with their B2B sales philosophy didn't have to go through similar challenges in the selling/fulfillment areas considering the fact that the product range had a limited set of buyers who were more contractual rather than transactional. There is less of impulse buying, more thought-through decisions, less overall emotion and switching vendors at the drop of a hat.

But what happens when the manufacturers decide to overstep the traditional boundaries and start looking at connecting with the end customers directly. Think Nokia and the Ovi experiment or Apple and their iStore. Even P&G with their famous crowd-sourcing and innovations funneled through customer perspective (whether complainers or raving fans) is all about directly connecting with your end users. Apparel & CPG companies, especially those with single-brand stores would be another good place to seek out this evolving trend. 

In such a scenario, web/store-driven fulfillment becomes a critical medium and hence, the marketplace for web-commerce (B2C-lite, as I put it) is set to increase. In the future, the likes of Apple, Nokia and even some non-cutting-edge product vendors may look at B2C, loyalty programs and variations of the direct-from-Dell model. That's when we would hear more of formal DOM and MCC from the non-retail world. My sense is that it's all going to take-off in a major way in the next year or two itself as the boundaries between retailers and manufacturers increasingly get blurred.

Posted by Gopi Krishnan at 4:51 AM | Permalink | Comments (1) | TrackBacks (0)

I was in a discussion with one of the customers for ERP Implementation and their main focus in implementing the procurement module was to achieve savings and the concern area that they identified was Service Procurement, so that thought created some anxiety in me why customers have started thinking on Service procurement to have an insight how service procurement can be managed. In recent times spend on service procurement is growing day by day and hence it is gaining attention and so the procurement managers wants more visibility in service spending, compliance to savings target and want to collaborate with suppliers for achieving effectiveness in performing better. So service procurement can be defined as one of the key elements in managing resources which have complex categories like maintenance activities, contracted labors, IT services so the challenge here in such kind of service procurement is undefined quantity, duration and after consumed the price is known and deliverables are all based on time based and milestone based which becomes difficult to quantify with the framework of service procurement as the business priorities and goals have to be met, by collaborating with different business lines and having an effective supplier management which can drive values and savings and have a seamless end to end processes.
If services procurement is handled ineffectively it may lead to following situations:
1) Poor visibility - A decentralized control over services spend can lead to poor visibility of suppliers leading to throttled relationships in business
2) Adhoc purchases - Maverick purchases for appropriate resources can lead to unauthorized suppliers being on boarded
3) Disintegration of manual processes - There could be some manual process that are not integrated which may lead to slow processing of purchasing documents
4) Less Savings - As for poor visibility the savings opportunity is not captured
5) No clear visibility of suppliers - Suppliers don't get completely involved in the business definitions and procurement processes leading to ineffective supplier collaboration
So what could be an appropriate approach to address these issues that are faced in service procurement to add value to the business?
1) Centralized Management - With different service categories available there can be centralized control which will give a top view of different categories purchased
2) Supplier Collaboration - Making suppliers apart of the business by collaborating them in business processes like bidding, confirmations and invoice management
3) Realized savings - Reduce the cost through identified entities
4) Automated processes - Many manual processes can be automated giving the buyer for time to spend on analytics
5) Acquiescence enforcement  - Proper enforcement of compliance for negotiated rates and supplier confidence
These are the drivers for enabling business value like:-
1) Aggregation of demand and increasing of procurement power
2) Providing easy to use tools for both the employees and the suppliers
3) Having visibility of spend on services
4) Mapping complex business processes
5) Usage of best practices centrally to increase the compliance level
I hope some questions are answered we will also have an insight in my next blog of how SAP SRM has enabled service procurement in all new way.

Posted by Nilesh Dhoble at 9:38 PM | Permalink | Comments (3) | TrackBacks (0)

Sterling Commerce recently held its customer conference April 12-14 in Dallas, Texas.  Customer Connection had over 1,000 attendees, including a 40 percent increase in customer attendees from last year.  For retailers, the event was a great opportunity to hear about trends in seamless cross-channel enablement, learn more about the company's solutions - especially our new mobile apps - and network with partners such as Infosys and other customers.  The conference offered a dedicated track to retail, providing over 120 different retailers with three days of networking, breakout sessions, and educational meetings. The events highlights can be found at  http://webapps.sterlingcommerce.com/connection10/index.php

Highlights for retailers included:
• John Thompson, SVP and GMM of BestBuy.com, presented the keynote session on Wednesday,  "Transforming Multi-Channel Order Management," focused on BestBuy's customer experience journey and the role Sterling Commerce solutions played in helping the retailer optimize and transform the way it does business.
• A session on cross-channel inventory synchronization and optimization, led by Chap Achen, Best Buy, George Lawrie, Forrester,  Pat Ogawa, Infosys, and Sterling Commerce executives, was well received for the best practices shared with the audience around cross-channel supply chain visibility, cross-channel customer order management and efficient low cost fulfillment practices.
• Sterling Commerce demonstrated its mobile applications. The company has already introduced two commerce-focused solutions for store associates and Web storefronts, two supply chain execution solutions, and two B2B integration applications that provide the company's customers with an additional access point or deployment choice for improved productivity. 

It was exciting to hear retailers' positive comments on the company's overall retail strategy around cross-channel enablement and its mobile apps strategy for both commerce and operational efficiency. Additional details on the company's mobile solutions can be found at http://www.sterlingcommerce.com/products/mobility.htm

As many retailers commented that "this was the best event yet," it's clear that we succeeded in our goal to help retailers understand the value of partnering with Sterling Commerce.

Posted by Jim Bengier at 8:43 AM | Permalink | Comments (0) | TrackBacks (0)