Supply Chain Management

This is related to my previous blog on Strategies for efficiently managing IT assets - Part 2. I would like to explain two key strategies in this; one is about reducing the time to respond and resolve service requests and establishing a well-developed courier network.

How quickly you can understand the issue, identify the real root cause and provide a quicker resolution is utmost important and that is the differentiator. When it comes to problem codes setup, analyze & understand the history information of problems and arrive at a standard set of problem codes. When you define the problem codes, form a tree structure to drill down from a problem category to a specific problem code level. Based on experience, you know the cause and remedy for most of those problems, create a link between problem, cause and remedy and store this for future reference.  When the requestor tries to raise a service request, the problem code tree structure helps the requestor to choose the right problem code. Most of your time is saved if the problem code setup is right and if the requestor is able to identify the correct matching problem at the first instance. Once you receive the service request, you can easily understand the issue and refer the possible cause & remedy which you have already identified.

In case of spare part replacement, the challenge is in delivering that part on right time at right place. Normally there can be central procurement for most of the parts and there can be chances of local procurement as well depending on your vendor network. In first case, a well-developed courier network helps you to plan your regular deliveries, urgent deliveries and track the part delivery till destination. This also helps you to inform the customer about the part status and the expected delivery date. Well-developed courier network is a cost effective and efficient setup where parts are tracked throughout its journey. Within a country, multiple region specific couriers can be clubbed to form maximum coverage area in any particular region. In second case also, a local delivery network which can deliver the part within minimum time is helpful. 

Posted by Jamuna Chinnathambi at 6:42 PM | Permalink | Comments (0) | TrackBacks (0)

This blog of mine is somewhat related to my earlier blog that talked about if companies run unique supply chains for each market segment. Staying on a similar subject, I want to ask few questions about designing a supply chain organization. Suppose you are the head supply chain for a global organization with operations scattered almost everywhere and fairly complex supply chain network. How would you decide which organizational structure is best suited to your company? And as the company grows in scale and size, how would you ensure that you keep pace with the growth and your organizational structure is aligned to enable this growth. I have listed few parameters that I think must be critically examined before arriving at a structure that is scalable, flexible and robust enough to fuel company's growth in the desired direction. I don't think that this is an exhaustive list and I look forward to hear from you all - about the parameters that you feel are really important and worth capturing. I understand that it will vary drastically from one company to other, but I have tried to capture the one that I felt are the 'must haves' and fairly common across multiple industry segments. Please do share your comments and provide your inputs - Read on...

There is no one single structure that fits into all types of possible supply chain organizations. Every company needs to evaluate critical design elements and answer few questions to arrive at the right organizational structure for its supply chain. Following table is a list of questions that needs to be considered while designing an organizational structure - Please have a look and do share your critical comments and inputs.

 

We recently concluded our All Hands Meet where I got an opportunity to meet my fellow colleagues from a practice called Next Gen Commerce. As the name suggests, it is associated with clients that are aggressively forward looking and ready to take bold steps in leveraging new technologies and venture into new domains to gain consumer mind share. One of the great things that I heard was about how companies especially in developed economies are trying to capitalize or monetize information that's available on net - basically using what we all call "social media" to gain competitive advantage.

While I was thinking all this and trying to imbibe all great things that I heard, I was wondering if there could be an impact of social media on supply chains. This blog of mine is therefore of an exploratory nature (since I have little awareness on this subject) where I would like to share my thoughts and seek your inputs and comments.
I am sure Social media is something that all of us know in bits and pieces, and it touches our lives today in some form or the other. The typical examples of social media are facebook, twitter and blog sites such as ours. Some of these are subject-specific and lot of these are fairly generic and provide a platform for people to share their experiences, ideas and opinions in this borderless world. Although, it is just a platform for people to exchange information, but I am sure, it has a powerful influence to businesses and of course, to supply chains.
The extent of impact of social media to supply chain may vary across industry segments, for e.g.-  companies in a typical service industry or consumer goods are definitely more prone to get affected than others. While I am not going to detail on where the impact is felt more, but in general, there are few questions that come to my mind when I think about all this:

1. Which are the areas within supply chain that are likely to get affected, and why?
2. Have companies realized this trend or still think it as relatively premature to act on?
3. If companies wish to leverage social media for improving supply chain performance, how to actually operationalize such a vast amount of data that's available to us
4. And so on and on.....
Let me share my thoughts specific to just point no. 1 listed above.
 In my understanding, unlike other traditional media such as print and television, social media is one of the channels where people can freely express their opinions about the various products and services used. The consumers become brand ambassadors and companies are left with no option but to manage perception created due to all this. Social media acts as a strong medium to influence consumer behavior and thereby company's sales. Let's take a simple example: you wish to buy an electronic product, what are the immediate steps that you are likely to take. Look for the various ads, see the commercial, and talk to friends and relatives to gain more information about competitive brands. What are the chances of you likely to go to a social media site and search for this product/brand that you wish to buy and read various comments that are posted? I think the chances are high; most of us do that, and very often get influenced by what others have experienced...
Take another example: suppose you plan to buy food products or anything like that for your baby, don't you think, you would definitely reach out to your friends in your network to seek more information. This being a different type of product category may drive people to closed-group communication rather than going out in public to seek information. Such closed-group behavior (just like 'group think') is easily enabled through social media sites that are present today, and therefore, will really impact a consumer's buying behavior.
The two examples that I shared show how company's sales may get influenced by interactions/communication that happens on social media. If I need to link this behavior to understand its impact to a supply chain process, the closest that come to my mind is 'demand planning'. We all know that the key aspects of a typical demand planning process include 'sensing' and 'shaping' of demand. As per AMR Research's definition, Demand sensing is the amount of time it takes to see true channel purchase or consumption data and Demand Shaping is a series of focused activities to drive and improve revenue. Demand sensing is a critical input to make Demand shaping process more effective.
Marketing professionals spend dollars on research and promotions to understand and influence consumer behavior to create pull and increase company's topline. As more consumers move to social media and start using networking sites to influence their decision making, I think, marketers have an opportunity (and of course the associated challenges) to sense changes in demand more quickly and capture this new trend in their demand shaping process. Demand planners need to design this additional feed of information from marketing team in the overall demand planning process in order to capture the latest consumer behavior and feed it back to supply side. To me, this is a great thing to happen since now, we have the information directly from consumers (no intermediaries or research agencies are involved) at a much faster rate.
Having said that, I think there are many challenges to face, before this information is really put to use. The foremost being "How to do all this or How to operationalize". Issues like Data quality, loads of data, more noise in data, etc etc need to be managed... and I really don't have answers to all these questions.
So, I urge all of you to share your experiences and especially the examples if you have seen companies leveraging social media in improving supply chain performance. Please do share your comments, thoughts and feedback on this subject. I am sure there are many other facets of supply chain where businesses will see the impact happening; definitely areas where a company works with other trading partners such as suppliers, logistics providers etc. It is just a beginning of a new supply chain world and this will definitely result in addition of a new chapter to most of supply chain text books we have today... Look forward to hear from you all.

 

 

Posted by Aatish Goel at 7:22 AM | Permalink | Comments (0) | TrackBacks (0)

Guest Post by

Bob Ferrari is the Executive Editor of the Supply Chain Matters Blog, and a periodic guest blogger on the Infosys Supply Chain Management blog.

 

Last February, I contributed a guest commentary on the Infosys Supply Chain Management Blog reflecting on last year's 2009 holiday buying season. The focus of that posting was on the implications of a far more sophisticated consumer on retailer capabilities in multi-channel commerce (MCC) and multi-channel operations (MCO).  My primary message was that a seamless customer experience starts and ends with deployed supply chain capabilities supporting an MCO process framework.  I believe that in the coming weeks and months, MCO will take on increased dependencies on downstream suppliers and the leveraged use of advanced technology, with broader implications for joint business success.

 

As consumers and supply chain professionals, we are fast approaching the upcoming 2010 holiday buying season which formally kicks off with the post Thanksgiving holiday Black Friday weekend event in the U.S. and other regions, where consumers search for the best bargains. Over the coming weeks, retailers in all product dimensions will be able to experience the results of their investments, or lack thereof, in MCC or MCO. Supply chain planning and operations will also experience even more challenges brought about by the implications of an uncertain economic environment, along with an even more experienced consumer than in 2009.

Three significant trends are playing out in various buying segments.  The Wall Street Journal featured a recent page one article, The Just In time Consumer (paid subscription may be required), which concludes that the recent severe recession in the U.S., and other countries, has brought forward a far more frugal shopper, where he or she practices a just-in-time approach to buying decisions.  The article notes that manufacturers and retailers continue to report that consumers are making more frequent shopping visits and are buying in less quantity. Consumers are far more value-oriented, and are embracing the very same lean and just-in-time principles that many operational teams have implemented across supply chains.  There is a similar pattern in emerging consumer markets such as India and China.  Grocers are accommodating smaller, more frequent trips while apparel and fashion have had to modify production and selling cycles to accommodate consumers who postpone buying to in-season vs. traditional pre-season cycles.  The implication noted is that the upcoming holiday buying season may well be reflected in a 'U' shaped demand cycle, where consumers will respond to initial incentives or wait until last-minute deals and incentives occur just before an actual holiday or buying need.

The second trend is the empowered consumer, who continues to gain an information advantage and becomes more sophisticated with every passing day. The device most attributable to driving this trend is the explosion of smartphone purchases among all types of consumers. Similar to last year, consumers have the ability to perform all forms of online research, price-comparisons, and order goods and services without having to enter a brick and mortar store.  More importantly, the smartphone enabled consumer can do this research while in the store, or in a competitor's store, with the ability to ascertain who has the most attractive price and item availability.  In a recent research report, IDC Retail Insights notes that the new informed consumer wants a more engaging buying experience vs. being just sold.

The third significant trend is the changed state of demand forecasting and inventory management across global supply chains. In 2009, retailers practiced smart, lean inventory management strategies which paid rewards in increased profitability.  Since that time, manufacturers and wholesalers in many sectors continue to shed inventory and operate in the leanest just-in-time environment across geographically extended supply chains.  Products with strong demand such as smartphones or other high demand consumer electronics have experienced critical component shortages that have impacted demand fulfillment.  With every participant in the fulfillment cycle, from the end consumer to the lowest tier supplier, practicing just-in-time buying, inventory management becomes a far more intricate exercise, requiring far higher levels of coordination and synchronization.  As also noted, two years of severe economic recession and a just-in-time oriented consumer shatters previous demand forecasting assumptions based on historic buying patterns, and it is no wonder that many firms have shifted emphasis to more frequent sales and operations planning (S&OP) processes augmented by keener demand sensing and response processes.  Demand sensing, augmented by supply chain wide agility and flexibility is a far more important capability in the post-recessionary era.

There should be no doubt that multi-channel commerce and multi-channel supply chain fulfillment operations will again play a major role for retailers in the current holiday buying season.  Of more significance in the coming weeks will be how retailers and manufacturers jointly perform in engaging more informed consumers, practice smart  inventory positioning, and demand response.

Stay tuned since the post-holiday results may prove to be rather interesting.

Posted by Bob Ferrari at 6:38 PM | Permalink | Comments (0) | TrackBacks (0)

Earlier this week, I was invited to post my thoughts on S&OP on Kinaxis' S&OP Experts Blog Series. This series features a weekly Q&A with an industry thought leader on sales and operations planning trends and strategies.  It was a pleasure to join the company of supply chain thought leaders like Tom Wallace, Coco Crum, Lora Cecere, Andrew Reese, Bob Ferrari, Nari Viswanathan, Simon Ellis and share insights on a topic which is gaining rapid momentum in the supply chain arena today.  My sincere appreciation for Kinaxis for initiating this series which in my opinion has resulted into an amazing collection of thought leadership on S&OP every supply chain practitioner would benefit from.
Would like to invite you to check out the details on Kinaxis' site for more details and would love to have your comments and perspectives on the same.

Posted by Atul Chandra Pandey at 5:32 AM | Permalink | Comments (0) | TrackBacks (0)

It all starts with a desire to forge a long term partnership. The supplier impresses you (the customer) with his ability to do what it takes to exceed your expectations - ramping up volumes at a push of a button; reducing time-to-market; pushing cost down or not flinching to make capital investments just so that you get the desired quality....and then comes a day when you realize that the long term partnership has morphed into a dependency that you cannot get out of; at-least not without a painful divorce proceeding. Was Apple in this frame of mind when Foxconn attracted a spate of negative publicity recently?    

 

Though I had fleetingly raised this point in my other post on Foxconn (Is Foxconn to the electronics industry what China is to the world), I re-visit this thought here. Foxconn has regained some of its lost reputation lately; but certainly the strategists at Apple would have, at the peak of harsh criticism of Foxconn, wondered whether they are turning into the Nike of the electronics world (Nike faced a string of angry public demonstrations due to the labor practices employed by its contractors).

 

"Does this episode remind one not to rely too much on a supplier"? Well, if a buyer/customer can, why not. That is surely the least-risky way. But seldom does a business get to enjoy such a status. Instead, today's collaborative world demands that you increasingly partner with your suppliers to satisfy the market. So, how do you ensure that the partnership avoids turning into a liability?   

 

If there is one take-away from the Apple-Foxconn episode, it is that long term outsourcing partnerships require the customer to make strategic & tactical investments (to avoid any such embarrassment). And the investments need to go much deeper than initial scrutiny of suppliers or mere monitoring of the supplier's output. Continuous monitoring of supplier's internal operations & policies (in this specific case, Foxconn's employee policies including wages and working conditions) is equally essential.  

 

Easier said than done - why would any supplier entertain such intervention into its internal operations? No one in the initial stage of your relationship would. But when your relationship has reached a level where your fate is tied to your supplier(s), you better convince your supplier to do so. And if you are in the B2C space where market reputation & public opinion decides your fortunes, you do not have a choice.      

 

To argue in favor of Apple, it could very well have relied on Foxconn's reputation in the industry; hoping that the reputation risk alone would have acted as the necessary deterrent. After-all, a company that is China's biggest exporter, boasts of a  client list comprising the industry bellwethers & expects to hit $85 billion revenue this year, would better have the necessary safe-guards in place. Unfortunately, as was to be in this case, the safeguards were not enough. But thankfully for Apple, the damage was contained. For the rest, the episode serves as a grim reminder of effectively managing your supply risk.   

Posted by Amit Tambi at 3:20 PM | Permalink | Comments (1) | TrackBacks (0)

In this blog I would try to put forth my understanding on the point as to why Distributed Order management is deeply rooted within the supply chain function and why to me it turns out to be a founding member of the SCM club.My thought process strated here.  This is an attempt to draw parallels or bring out the core SCM areas Order Management addresses and also talk about few classic supply chain concepts from which the OMS way of problem solving has emanated from. I believe manufacturing is the genesis of all Supply Chains so excuse me if my points/cues are skewed and towards planning in Manufacturing.

This is how I understood, by taking a baby step approach:-

1.  "Distributed" in DOM typically refers to the situation where a trading partner (nominal or dominant) eg a retailer or a supplier is offering products to be served to many several demand sources. The word also refers to distributed nature of enterprises and their relationships ( inter and intra) that collaborate to execute demand driven supply chain planning and fulfillment.
If I try to be the author of "The brief history of DOM" and try to corroborate the dominant SCM gene, the primary motive for effective Order Management in the manufacturing world would be to Integrate and coordinate "distributed" production and distribution facilities. In other worlds too the understanding is pretty much the same. Cut it short- the pan organizational view and the need to model the same is something which needs to be clearly drawn at the very outset.

2. All SCM stories and relationships start with SKUs and Bills of material. Pretty much the way BOM is the necessary input for Materials Requirement Planning, solving the Order Management puzzle needs getting the basics right in terms of item definitions, carrying out SKU rationalization between different demand channels, and maybe apply a Pareto Principle/ABC classification of SKUs based on defined criteria (eg velocity) to enable the desired performance on to the front end of the supply chain. Check this to know more. Depending on the degree of penetration (more commonly understood by classification as ATO, CTO, MTO, and MTS) parent and child relationships, components need to be bundled and knitted together. This has further implications the way it would be sourced, packed and shipped maybe delivered with a white glove service till the last mile.

3. Talking on Inventory Implications on Order Promising for manufacturing, this requires detailed/real time (or near real time) visibility into different inventory buckets for e.g. available inventory (be it safety stock/cycle stock in batched processes), pipeline inventory (in transit/aka scheduled receipts) to name a few. Forecasts are also considered here as a valid proxy for frozen orders which are actually consumed when real orders flow in, as essentially in Manufacturing we are talking about planning. In executing  real orders flowing in and Managing them forecasts ultimately is seen dictating the Purchase orders and  Transfer orders incoming (which is truly representative of the stock transfers) On hand inventory , In transit Inventory , inventory staged in for quality checks, etc  are the ones that define fundamental "Supplies" in Order Management. These "supplies" within the frame work of predefined rules are netted against the demands that originate from diverse and often "distributed" sources.DOM plays the key role of matching the most suitable types on demand and supplies on the list.

4.  To take ATP calculations to greater detail, the time phased calculations take into account the production lead times, procurement lead times,capacities along with the master production schedule. There is often a need to factor in any back log that could have crept in to the order book .These are measures/checks to finally serve the purpose of making dependable and credible promises to customers.  Taking a cue from this,are the calculations done in the retail world too. One has to factor in similar parameters defining the lead times for individual SKUs, define the horizon for looking up demand and supplies both forward and backward, and back orders if applicable. Once again pointing the fact that OMS's membership is not going anywhere and neither is it newfound.

5. Taking about credible promises, one important element of promise is time. As the promise sets expectations in terms of quantity, form and time each element in this triad is paramount. Scheduling the delivery, considering the better, faster cheaper options is another line that Order promising needs to tread. This is where the role of efficient rule based sourcing, scheduling and finally allocating goes a long way in the quest for that elusive perfect order. Whether it is allocating in way that is FCFS or be it following the greedy algorithm for consuming quantities, or whether giving preference to a particular fulfillment channel, proximity, cost to serve, all these are concepts which have caught the imagination and cost countless hours for academicians and practitioners alike. These problems gather multiple facets as the Distributed nature of the business flourishes/multiplies with time.

6. The contrast however is the very nature of the sphere or the context. The examples or the so called cues are from the manufacturing planning context. To delve in to more detail taking the example of Material Requirements planning, forecasts are assumed to be orders which eventually will be consumed by the real orders.  This is a major demand signal here. On the supply front master production schedule is considered as supply signal.  This clearly comes within the demarcated line of planning. Where as in an e commerce enabled supply chain for example, Order management would mean dealing with orders in real-time forming the concrete demand signal and often satisfying them and promising against the most reliable source of supplies then and there. So an overwhelming majority would classify this as supply chain execution.

In my honest opinion, Order Management has a greater role. The future is about providing the unified brand experience for customers irrespective of the fact where the customer is (physically) or which channel he is using to communicate his intent to buy. We are also envisaging a tomorrow where a pure single channel player for example could exploit partnering with a player who has a stronger presence in terms of physical supply chain/access to channels (off course taking into consideration other critical factors). In my understanding, this is invariably the lynchpin that unites the execution and planning functions across the distributed supply chain. It enables transition from merely estimating to planning and then planning to execution like the critical member of the 400m relay who often helps preempt a win or a loss..

Posted by Dawn Mathew Varghese at 5:45 PM | Permalink | Comments (0) | TrackBacks (0)

In continuation with an earlier blog, 9 months further on in the same project and with key business process learning in that context, I would like to add a further perspective to the Fill rate topic. Supply Chains, especially in the retail segment, face some unique challenges that are not easy to encounter without supporting technology. The product-life-cycle in the retail segment takes lesser time to take a new product offering into a state of "commoditization". The differentiators among competitors from a product characteristic view blur out within no time. As a result, the key differentiating factor is to manage to stock the product as efficiently and effectively as possible while controlling the cost to replenish pipeline inventory. The longer the supply chain can sustain such a model, the better the chances are of its survival in the long run. Based on a recent supply chain transformation project that thankfully went successfully live, I feel the following are some key points any leadership should consider to take on this survival challenge:
- Put metrics in place to measure, track and manage key customer-oriented statistic in your supply chain i.e the percentage times an Order is fulfilled. Such a measure is ideally tracked from an absolute and percentage profit perspective and also tracked based on time delays in fulfillment, if applicable.
- Since merely having an Order Fill rate metric, is completely agnostic to workings of supply chain, there has to be another metric to keep a tight leash on the cost that this Order fill rate objective imposes. An average pipeline inventory in your organization is one such measure that is more inward-oriented to the organization. Such an average inventory could be measured in the factory, in-transit, Distribution Centers and even at Customer segments of supply chain such as their warehouses or in some cases their retail store itself - applicable in cases of VMI(vendor managed inventory) and DSD(Direct Store delivery) models.
- Make Order Fill rate metric as a Key Performing Indicator (KPI) to customer facing organizations.
- Make the Average Inventory metric as a Key metric to Logistics and other supply chain facilitator organizations.
All the above metrics can be tracked with appropriate technology in place. These unbiased measures coupled with a reporting layer help keep a retrospective view on orders that have already been fulfilled and a forward view in case of orders that are still open in the system to be fulfilled.
In spite of the above capabilities provided by the project, one area where the project always feels challenged is in the area of Organizational Change Management i.e the preparedness of all stakeholders to accept and embrace the transformation. More on that topic in one of my next blogs, while we savor the occasion of completing an Order Fulfillment project, achieved after a grueling one and a half years of relentless effort.

Posted by K. Srinivas at 7:08 AM | Permalink | Comments (2) | TrackBacks (0)

By asking this question, I do not intend to question the efforts and intentions of the personnel from the Forecasting and Demand Planning organizations. However, I intend to question the role of the Forecaster and the philosophy adopted by the Forecasting and Demand Planning Team in your organization. I would want to state my stance at the onset that I do firmly believe in the benefits of a formal forecasting process and the key role the forecasting organization has played in the recent past to guide the subsequent planning processes in providing early guidance. But I do not want this to be considered at face value for all situations, but would rather want to question and constantly challenge the role of Forecaster for the different scenarios being planned... Again, the idea is to not doubt or question the intentions of the Forecasters, but with the premise that even noble intentions, if not managed well could lead to bad results, objectively evaluate the contribution made by the Forecaster and the Demand Planner.

My objective is to wean us away from the plausible "Placebo effect" - the ingrained position that it is the job of the forecaster to review and adjust the forecasts and that of the Demand Planner to enhance the same based on market intelligence, and once these are done, the end result, the final demand plan would be the most accurate that we can get. Do we ever really question - Do the changes made by the Forecaster and Demand Planner have any impact on the overall Forecast Accuracy. It is this phenomenon where the Forecaster actions lead to no or negative impact that I term as the 'Placebo effect', though I do not use the term in its conventional sense. The fact that we have a formal forecasting process leads us to believe that the decisions made by the various players are adding value in a positive way and thus improving the health of the overall planning process, whereas, in reality these interventions end up having no impact on the effectiveness of the process, if not further deteriorating the same.

So, how do we guard ourselves against this 'Placebo effect'? The old adage goes as - We get what we measure well... So if we want to measure the contribution of the Forecaster, we need to have the right measures in place... We do have the conventional Forecast Accuracy measures that have been so very well detailed in the blog by my colleague. These measures provide an indication of how well a particular forecast generated was compared to the actual historical demand for the same period. The question that we further need to ask ourselves is - how much better or worse would the forecast be if the Forecaster or the Demand Planner had not intervened - is the action provided by the role providing any positive contribution?

To answer this question, we need to take a step further and compare the Forecast Accuracies for the forecast numbers computed by the Forecasters with those of a forecast that would be computed with minimal or no effort - These are referred to as Naïve Forecast in the Makridakis text. There are various known variants of such Naïve Forecasts that one could consider - the simple moving average, incase there is no seasonality in the data pattern and the seasonal random walk, incase there is seasonality in the data pattern being forecasted.

We could thus come up with a new metric that would depict the contribution made by every step in the forecasting process. The formula for the same could be as simple as follows: Forecast Accuracy (Forecast Step 2) - Forecast Accuracy (Forecast Step 1) OR Forecast Accuracy (Forecast Step 2) / Forecast Accuracy (Forecast Step 1) For the first formula, a positive value for the metric would mean a positive contribution and a negative value would mean that the step in fact is deteriorating the Forecast Accuracy and a zero would mean that the step is redundant and provides no benefit in being executed. In case of the second formula for the metric, a value of 1 would mean that the step has not impacted the Forecast effectiveness in any way, a value greater than 1, would imply that the step is important and does bolster the effectiveness of the forecast. A value of less than 1 would mean that the step has impacted the overall process effectiveness negatively. We must take prompt actions to analyze the reasons for the same and accordingly decide on whether to improve on the step or eliminate it completely.

Some of the Key benefits that can be derived by using this approach: 1. This metric provides a very simple, yet powerful way in identifying the wasteful steps in your forecasting process and helps you plan to take steps to take corrective actions to improve the overall efficiency and effectiveness of your forecasting process. 2. This can be a key strategic input to the management for the effectiveness of the various steps in the planning process. This analysis can be further enhanced by additionally considering the attributes such as ABC Class, Lifecycle Status and product family to devise separate strategies for different sets of parts to be forecast accordingly and eliminate non-productive tasks altogether. An example of the same could be that we remove the step of Forecaster Adjustment for parts that are in their maturity stage or for the low runner items, but have this step as the most important step for parts that are in their Growth Stage or even A-class parts. This way, we could better segment our parts into different ways of Forecasting and Demand Planning, thereby making the complete process more efficient and effective. 3. This measure does consider the oft-missed consideration for Forecast Accuracy - the uncertainty involved in forecasting a particular data pattern, the concept that I had talked on in my earlier blog. By comparing the Forecast Accuracies of two Forecasts that have been generated amidst the same Uncertainty, we do neutralize the measure of any effect of the uncertainty involved and thus this measure is a true measure of the effectiveness of a Forecasting step or a process.

This philosophy has been further extended, as mentioned in the blog by our colleague to perform attribution analysis between the Planning functions and the Execution functions within an organization. Another variant that could be really effective is to compare the Forecasts computed by the planners against the 'Best-Fit' forecast generated by the system, after optimizing various forecast parameters and with the least forecast accuracy amongst various forecast models. This would be an acid test for the effectiveness of the interventions made by the Forecaster and the Demand Planner. With the advanced planning systems available, these could be implemented with no or very little effort - an opportunity that I would urge the Supply chain professionals to consider with the most leverage to improve on the effectiveness of the Demand Planning functions in your organizations.

Alas, this seems so intuitive and logical and yet as the concept discussed in my last blog, so less widely prevalent... There are many reasons for the same, some of the key being: - Such a metric could instill a sense if insecurity amongst the Forecasters and the Demand Planners - This could also increase or exacerbate the politics between the Forecasting and Demand Planning Organizations with the others. The list could go on and on... I would like to know your views on the same and if you had experience in implementing such similar metrics in your Planning organizations.

Posted by Sandeep Deolekar at 5:00 AM | Permalink | Comments (0) | TrackBacks (0)

Enough has been written on this but mainly in context of ERP. There have been many reasons given- toppers are lack of training, lack of top management commitment, poor package fitment and, unrealistic expectation etc. While, most of these hold good for EAM packages as well but I see two other reasons which are also the major factors for EAMs; (i) Master Data Management (ii) ease of use.

EAMs are data eaters and that too quality data. I have seen some EAM implementations not living up to the expectations and the simple reason being the data which was fed during implementation was not usable, though the package was a good fit for the business processes. For example, a standard operating procedure (SOP) for a maintenance job. The SOPs provided by equipment manufactures come in many shapes & formats and varies in granularity. Modeling those in an EAM package is a tedious job and if not done with proper planning can make whole equipment's SOPs unusable. The most common reason I have seen is granularity of SOPs. Many implementations even have the data which goes into lowest level of operations/tasks, and which is not required to be reported into software; though those tasks may be required to execute. Implementation team should note that while it is good to have each & every operation details to be maintained in system library but they should also note that while maintenance users report the actual against these tasks, they should not be spending too much time entering data into software. I have seen instances where maintenance teams spending more time to enter the data than the time spent actually on machines. Hence there should be a fine balance between data granularity & actual requirements. 

Ease of use is another factor. EAM packages are mainly used by shop floor people who spent most of their time working with machines and then find some time to report data into packaged application later in the day. These folks are not very much computer savvy and are not expected to be super users for sophisticated softwares. They do not have lot of times as well to struggle with bulky navigation of complex packages. Hence an easy to use package, tailored screens, mobile devices, touch screens etc are to be used by EAM users to make the implementation successful and get more out of the package. The user interface, specially for shop floor folks, should be as simple as pressing few buttons on a hand-held device or a touch screen. Probably that is going to be the most emerging trends for future EAM packages.
Certainly, all other reasons which hold good for ERPs are relevant for EAM as well. Add if you have seen any other potential failure reasons for EAMs.

Posted by Praveen Kumar Agrawal at 8:35 AM | Permalink | Comments (0) | TrackBacks (0)

We had an interesting discussion earlier this month with a senior manager at the level of CIO-1 heading the Multi-Channel Commerce program at a leading retailer (with both B2C and B2B arms). The question posed at me was why I kept referring to OMS under the ambit of supply chain and whether its a uniquely Infosys point-of-view. SCM for him was procurement, transportation and warehousing, OMS was a sink where orders needed to flow in from wherever they are entered - specifcally the e-commerce and call center apps. Considering the strength of the relationship and the positivity around our work, I could afford to be a little edgy in my response.

So I said - "if you have one ordering channel from where you route your orders all of which go into one fulfillment channel where you have unlimited inventory, then yes, OMS can be a pass through system with not much intelligence built in, but that's a whole lot of ifs". The question did have its merit since network or distributed management of orders is a concept that started getting currency less than a decade ago.

On one end of the spectrum, I am aware of a top notch apparel retailer who keeps separate warehouses for each of their major brands and that too per ordering channel. Under such circumstances, implementing DOM (when no true MCC exists) would be an overkill.The moment one applies business constraints and customers compete for constrained inventory lying scattered across the organization, you need a program manager, a puppeteer in the middle orchestrating who gets what and why - this is where DOM, as the new, improved avatar of OMS comes in.

When DOM gets introduced as a philsophy as channels start sharing customer/item data, order info and most critically, inventory, then OMS as a function becomes distributed and gets welded into the entire Supply Chain Execution framework, glueing the likes of replenishment orders sent via procurement systems, supplier portals, TMS and WMS through a series of interdependent messages.

What's your take on this? Would you place DOM in the middle of your supply chain execution process/application map or is it a supporting app which feeds order data to the true SCE apps of procurement, TMS & WMS?

Posted by Gopi Krishnan at 6:00 PM | Permalink | Comments (3) | TrackBacks (0)

Over the years, my assignments have taken me to multiple organizations which have been trying to streamline their sourcing processes. One congruous observation across all these organizations, which I made, was that the ease for suppliers to do business with them is pretty low. I have seen suppliers:

• Having to fill out a flock of  purposeless and complex product documentation
• Being made to interact with numerous departments
• Having to sign same contracts multiple times
• Not being given any idea as to how the sourcing process is going to work for them

In fact in one of the organizations, some of their suppliers actually left in between the sourcing cycle because the overheads of dealing with the (sourcing) organization turned out to be enormous.

From a sourcing organization perspective, it is important that it is able to attract good suppliers, and entice them for a long-term business relationship building. Adding meaningless/ineffectual overheads in the sourcing process increases the supplier's cost of providing goods and services to the buyer, and thus drives the suppliers away. So what is it that sourcing organizations can do to make life easier for the suppliers, and yet not lose any negotiating leverage?  Based on my experiences, I have tried to jot down few pointers that sourcing organization could benefit from. At a very basic level:

1)     Have a well-planned souring process laid down: Unless the sourcing organizations are not clear about the sourcing process and schedule at their end, there will be confusion and disillusionment for the suppliers as well.

2)     Have a clear supplier communication policy: Having the suppliers talk to multiple people from different departments may send out inconsistent messages to them. This may also not turn out to be propitious for the buyer, from a negotiation perspective. Ideally, the supplier should be hooked up with a single point of communication from the souring organization.

3)     Have supplier expectations set right: Interactions with the suppliers at the start of the sourcing process to explain how the sourcing process and schedule works will set the correct expectations for the suppliers.

4)     Have minimal documentation requirements for supplier: It was surprising for me to know as to how much of a problem this particular point was. The documentation requirement from the supplier should depend on the scope of the sourcing proposal. It is injudicious to bury suppliers in documentation that really might be redundant. I recall one particular instance where a supplier was asked to fill up the same contract form four times!!!

5)     Post decision activities: Once the sourcing decision is awarded to the supplier, the focus should be to get the supplier on board. All the negotiation and contractual agreements should have been finalized and completed before the sourcing award is made. In one of the cases I witnessed, a supplier backed out from an award after being overwhelmed with the negotiations that started after the decision was made to source from the supplier.

The purpose of a sourcing process is to select suppliers, and thus, it is important that the sourcing organization gets the best suppliers into the process. Making life a little easier for suppliers to participate in this process is a good step in this direction.

Posted by Sameer Prashar at 5:10 AM | Permalink | Comments (0) | TrackBacks (0)

Recently I interacted with Senior supply chain managers at some of our customers around their changing roles due to IT. Discussions from these interactions leads me believe that companies are convinced of the strategic importance of supply chain planning information technology and SCM organizations are being enhanced to significantly leverage these applcations.

Supply chain organizations and leaders within companies have evolved fairly recently as businesses understood and appreciated the importance of supply chain management. Supply chain management organizations have undergone the transformation from being merely a support organization to being at the forefront of business strategy. SCM is constantly evolving, with latest innnovations occuring due to IT strategy being completely intertwined with business & supply chain strategy. Within the SCM IT space, Planning applications have gone through the hype cycle phases and are now entering the plateau of productivty.

Traditionally, planning implementations have not been very successful, either because the designs were too complicated for users or plans were too difficult to understand but mostly due to lack of user enablement to leverage the planning applications. Based on my interactions, it looks like Businesses have recogninzed the value that planning applications can add as well as  the issues & challenges in using the applications. Hence Supply chain organizations are keen to rampup their key users in the supply chain information technology areas and take the initative rather than depend upon IT organizations to help them.companies are adding new roles within the SCM groups to leverage existing investments in IT and provide IT enabled reengineering, if existing users cannot be sufficiently reskilled, The customer I mentioned earlier, has added new roles in SCM with IT enabled process improvement as the key performance areas.

Businesses are now getting into a largely uncharted territory with these initatives and it will be interesting to see how this will further evolve.

Posted by Sachin Shetty at 2:15 AM | Permalink | Comments (0) | TrackBacks (0)