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

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April 27, 2011

Role of Consolidation in Supply Chain Management - An Enterprise Architecture View Part1

 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.

   

scmDT.jpg   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).

 

image004.gif  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.

April 21, 2011

Is Customization a bad word?

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.

April 11, 2011

Crossdock Warehouse - What drives its necessity?

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?

 

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