Supply Chain Management

 Consolidation in Supply Chain Management: The Focal Point of Chain Effectiveness

I don't wear spectacles, but I do understand the pain my friends and colleagues undergo because of incorrect power, or in physics terms, focal length of spectacle lenses. It not only creates blurred visibility but also impacts effectiveness in responding to external changes. The role of right "level of consolidation" is similar in providing right supply chain visibility and ensuring its effectiveness. Over a few blogs, starting with this one, I plan to cover how level of consolidation defines harmony between supply chain players within its ecosystem.

 
What is consolidation in supply chain?

Supply chain is a world of complexity and challenges, generated by multi dimensional interactions across enterprises among its agents (as depicted in Figure 1) such as customer, supplier, manufacturer, retailer, distributor, carrier, warehouses and so forth. This world has travelled a long distance in streamlining characteristics and scope of each agent driven by virtue of supply chain consolidation.  Consolidation in supply chain can be defined as a platform which unifies diverse needs and challenges, arising from interaction among people, process and technology (PPT, as depicted in Figure 2) of the Chain, into supply chain building blocks. These blocks are nothing but aggregation of common set of features, which get identified based on nature of responsibility they carry, area of functioning and complexity of work. Historically, this view of the consolidation  has been guiding industry in simplifying interactions between different agents by standardizing its business processes, defining interaction boundaries and identifying responsibilities of each individual player, between planning and execution space of the chain.

   

   Figure 1: Supply Chain Interactions

 

Role of consolidation in Enterprise Architecture

 To take right decisions in handling supply chain problems, Enterprise Architects need to understand big picture of the architecture and supply chain complexity in simple fashion.  And consolidated assessment of the supply chain system building blocks guide them in right direction to identify root cause of the problems instead of wondering around symptoms. This holistic assessment approach of the consolidated building blocks subsequently results in defining right architecture by streamlining interactions between both functional and technical boundaries to create flexible and simple, but responsive and performing ecosystem.

 

Dynamicity of consolidation: A barrier to establish harmony between supply chain core elements

Even though the role of consolidation has been vital in bringing discipline in supply chain, consolidation is not a static phenomenon. It reacts positively or negatively with the changes in the supply chain ecosystem. Consequently, harmony between the cores of supply chain gets disturbed, and this requires periodic optimization of consolidation level. This exercise would provide focused re-adjustment of the interactions. The core elements of the enterprise architecture, which control complete dynamics of the supply chain, are: People, Process and Technology (PPT, as depicted in Figure 2).

 

  Figure 2:  People Process and Technology Harmonization

 

Most of the consolidation optimization exercises are concentrated around behavioral dynamics of these three core elements which are (a) change in people dynamics, (b) process re-engineering and (c) technology changes. Minor changes, generated by these behaviors, can be handled with a small refinement exercise, but major changes require new betterment cycle. New betterment cycle becomes indispensable since existing consolidation decisions either become obsolete or ineffective. That creates the need for further optimization to reestablish the harmony to a next level. The level of harmony between these core elements determines the degree of efficiency in a supply chain.

 

Going forward, I would like to focus on details about consolidation change management to improve the supply chain execution efficiency in my subsequent blogs on this topic.

Posted by Dharmendra Tripathi at 2:24 PM | Permalink | Comments (0) | TrackBacks (0)

I remember attending a session on the topic "How much customization is too much" in one of the Maximo events last year.  While the presenter during the event finally concluded by saying that (i) innovative and easy customization approach in Maximo leads client to make changes to Maximo, (ii) Customization is avoidable as there is no 100% fit for any package and (iii) suggested some best practices to avoid and deal customization requirements.

So, why last year's story now? Recently, I was talking to a colleague of mine who is working on a sizable global Maximo project. In this project, client has a clear mandate - no customization. This project is developing a global Maximo template which will be rolled out to multiple countries across the globe. Infosys and client project teams have successfully been able to adhere to "no customization" mandate - which was a surprise to me.

While I dove deep into the implementation approach, I found this client also has the requirements which are not meant by standard package but the project team has used Maximo's innovative configuration options to avoid the customization and met all the gaps by configurations.

Before we proceed further, let's also understand the difference between configuration and customization. In Maximo context, configuration could simply be described as extending the features without any code change, using software provided framework. While customization would mean extending or creating new features by changing code using outside tools.

Coming back to the project discussion - Another thought came to my mind "Is this project not having too much configuration??"  So, further deep dive and realized that they have explored each and every Maximo configuration possibility and met all the customization requirements by configuration. Bravo!!!

But I realized that few of their customization requirements could have been met by a simple customization for which they have used complex configuration.

Here the debate starts; should we customize software or not, considering requirements being met by configuration. Also consider that generally customizations are not upgradable and would require revisiting the code during upgrades later.

My opinion here is that customization is not a bad word. If you have a critical business requirement which can be fulfilled by either a simple customization or a complex configuration; solve the problem by simple customization. Document it properly to be used by upgrade teams later.

A complex configuration may mean a high level of support activities, expansive changes and difficult debugging, once system is in production.

Posted by Praveen Kumar Agrawal at 10:02 AM | Permalink | Comments (0) | TrackBacks (0)

I was keenly looking forward to IBM Impact this year on behalf of the SCM practice due to the formal induction of Sterling Commerce into the IBM camp and more so, to understand what exactly was the much talked about "Smarter Commerce" theme. Putting supply chain into a Websphere event meant limited attention and focus especially in the daily key note sessions, but we more than made up via some interesting discussions across the board, especially with senior leaders from IBM, both from WW sales team as well as the product management team.

 

The massively attended "Smarter Commerce Mini Main Tent" on day-1 afternoon made the future intentions clear in terms of dividing enterprise supply chains into buy-market-sell-service, but what's clearly needed are focus on two themes (a) vertical flavors which is what smarter commerce owners - the industry solutions group intends to do in alignment with their name and (b) next level details on these four basic supply chain functions beyond mapping which product goes where. Today, Smarter Commerce was more about Retail, CPG & Logistics, for tomorrow, banking definitely seemed to be a big bet, though it's anything but a traditional supply chain function.

 

Smarter Commerce is a very interesting take on the supply chain market and the theme would obviously evolve as we go along, but the vision clearly exists. On top of core websphere commerce, Sterling Commerce, Unica & Coremetrics, one also adds the interesting piece of ILOG's optimization engine that can influence the supply chain planning space, right from supply network design to specifics like transportation or inventory management. IBM seems to be really gunning for an end-to-end supply chain portfolio in alignment with the oft-quoted maxim that all differentiation happens on the fringes (which means addition of CRM also to a good measure).

 

I enjoyed Guneet Paintal's flawlessly delivered session on our long running theme on the importance of MCI or Multi Channel Integration (as against MCO or Multi Channel Operations) being the foundation on which all Multi Channel Commerce (MCC) programs can be launched. A videocast on the same session can be viewed here. The joint client session with Target gave an opportunity for Giridhar Kuppili to share the podium and bring out real-life nuances around go-live planning. I also could catch up again with Bob Ferrari of Supply Chain Matters, who is always a delight to speak to, especially around all things SCM. We discovered we do have a fair amount of convergence around the possibility and open issues around the Smarter Commerce pitch.

 

That said, I felt IBM Impact could be better served by grouping itself around functional or technology based tents so that everyone doesn't have to go everywhere & talk to everyone to figure out who or what is relevant. I would hope that by this time next year, Smarter Commerce would have its own showcase event and the product components would have melded among themselves into a more seamless whole with some real life customer stories to back up.

Posted by Gopi Krishnan at 11:04 AM | Permalink | Comments (1) | TrackBacks (0)

The reason for investing in Environmental Health and Safety [EH&S] are many. It can range from being the "coolest" thing to do in order to show case the social consciousness of the company to real, local, regulatory compliance at the other end of the spectrum. Irrespective of the actual reason - whether it is a moral compass for the business or it is avoid legal action against the company, the EH&S as function has gained great deal of prominence in the recent times.

The key to having a robust environmental compliance is in knowing the regulations and putting in proactive measures to address those.

Knowing the regulation is a dynamic activity. Change is inevitable -everywhere. Regulations are no exception. According to this article in the latest Supply Chain digest, on an average 17% of regulations change annually. Something like recent BP oil spill tragedy can result in drastic changes in the safety regulations in the industry.  It is very important for the companies to analyze such changes and determine which are all applicable and which are all not. Complying with a dated regulation is as bad as not complying at all!

Compliance is everyone's business- It doesn't matter whether you are an automotive manufacturer or a manufacturer of aircraft engines or computers, regulators want you to account for the effect your products have on the environment, consumer health, and employee safety. This goes well beyond finished product quality testing against regulated specifications. Firms have to manage the levels of emissions and waste created during the full spectrum of operations throughout the entire lifecycle of their products and facilities, from R&D through transportation to customers--and increasingly to end of life and disposal. The broadening reach of environmental compliance is leading several organizations to assess and repair environmental risks throughout their supply networks, and they need smart software and service providers to do it.

In a soon-to-be-published point-of-view paper on Leveraging After-Sales Service for competitive advantage, co-authored by me, we have attempted to highlight the need for 'Proactive service management' and 'Analytics and knowledge management' to address, among other things, the environmental compliance. Essentially, the idea is to have a real-time or near real-time monitoring of performance of assets (read original equipment's) from the time they leave the manufacturer's premises. This will help the manufacturer identify potential health and safety issues and address them proactively. This can be achieved by a combination of asset visibility through the life cycle using GPRS enabled alert mechanism and developing an information system based on transactional data. The standard operating procedures of the equipment should be dynamically updated based on dynamically changing regulations. For this to happen, the enterprise asset management applications should have a real-time interface with tools like Applicability Review Tool mentioned in this SC digest article.

Keen to hear more ideas on how EHS can be achieved through IT enablement.

Posted by C. N. Sajit Kumar at 12:32 PM | Permalink | Comments (0) | TrackBacks (0)

Sometime ago, I had visited a warehouse in New Jersey which took me by surprise. From the outside it looked like a long barrack with a large number of dock doors and from the inside, it was a lot strange. There were no aisles, bays, levels or locations for storing goods. Instead there was a conveyer system that was used to receive goods from the receiving dock door and to move them to a work area where the pallets were de-palletized. The resulting cartons were then loaded into smaller trailers stationed at the shipping dock doors. This was not a warehouse in the true sense, but what warehousing science would call it a 'Crossdock Warehouse'.

 

Well, even a warehouse can have cross docking facilities provided it stores items that need to be cross docked. However, the instance for of this activity to occur would be far less than that in a dedicated crossdock warehouse. Cross docking in regular warehouse would occur when a shipment consisting of full or partial items in an order have been received and there is a trailer available at the dock door which is on the same delivery route as that of the shipment being received. In such a case the shipment, instead of being unloaded, received and putawayed, is moved directly to the crossdock area and loaded on the awaiting trailer.

 

Now the question is why do we need to have a dedicated cross dock warehouse?  How do we benefit from one? How does it differ from a regular warehouse?

 

The need for crossdocking arises when multiple shipments from different retailers are shipped in one trailer. At the crossdock warehouse, these shipments are unloaded, sorted and then loaded into trailers destined to the stores to whom the shipment needs to be sent. Thus an additional activity of sorting may take place at such a warehouse.  This allows multiple shipments to be transported in a single truck (full truck load), instead of sending less than truck load, thus saving transportation costs.

 

However, there would be a good number of MHEs (Material Handling Equipments) like forklifts, conveyers that would be used immensely to move pallets/boxes from receiving docks to shipping docks.  You will also find that a cross dock warehouse will have a large number of dock doors, both for receiving and shipping when compared to a regular warehouse.  Also, the distance between the receiving and shipping doors is kept at a minimum so that the travel time while moving goods from the inbound trailer to the outbound one is considerably reduced.       

 

A major challenge for cross dock warehouses is appointment scheduling of trailers for both inbound and outbound trailers, since there is a big traffic of trailers arriving and leaving the warehouse at any giving point of time, which is a challenge to dock door schedulers.  

  

Other advantages include minimum or no inventory hence no dedicated locations to store SKUs, thereby reducing additional infrastructure cost to build racking systems. Also, since there are no putaway and picking operations, there is a considerable cost saving due to minimum labour utilization. Some crossdock warehouse also facilitates in-transit shipment bundling, which means receiving knock down kits from various OEM vendors and bundle them into a single shipment. For e.g., parts of a machinery received from multiple manufacturers are bundled and shipped to an assembling unit where they are finally assembled.

 

The question to debate is how strategically a crossdock warehouse needs to be physically located down the supply chain, in order to achieve maximum savings in terms of cost, time and effort.  One of the driving factors that comes to my mind is to determine the number of retailers supplying goods to a particular route that would require their respective shipments to be de-palletized (in case items  are shipped in pallets)  and sorted before being shipped to their respective destinations.  Also, there need to be a good number of trucking companies that would provide services on the same route where the cross dock warehouse is proposed to be located. Are there any other pre-requisites that you can think of?

 

Posted by Lokmanya Rawat at 5:23 AM | Permalink | Comments (1) | TrackBacks (0)