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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January 21, 2013

Managing After-Sales Service by coupling CRM and Asset Management

Guest Post by

Sajit Kumar C.N., Principal Consultant, Infosys and

Ganesh Subramanian, Lead Consultant, Infosys

Enterprise-centric Asset Management is a new model evolved from the rapid and radical change that businesses have undergone. This radical innovation in business is brought about by globalization and may be profoundly displacing many of the well-accepted models that businesses used to follow. 

In such a scenario, the world is rapidly adopting collaboration across value chain as a competitive differentiator. The same holds true for after-sales asset management, which is the last and perhaps the most decoupled "link" in the value chain in asset-intensive industries like industrial tool manufacturing. Organizations can no longer afford to sustain with inward-looking Enterprise Asset Management only ...

Read more on our article in Spend Matters, a global content community dedicated to examining a range of procurement and supply chain issues.

January 14, 2013

ROP using APO CTM

It is generally recommended that you plan critical products and components in SAP APO [or an APS system] and non-critical products and components in SAP ECC [or the respective OLTP system]. The critical products have some typical characteristics that can be used as guidelines to identify them: long replenishment lead times, usage in multiple Upper Level parts and A-Class products [based on ABC Classification that I had discussed in my earlier blog]. The non-critical parts are planned in ECC with the assumption that the planning for these parts does not need advanced algorithms and the parts can be procured easily and quickly on a need basis.

However this consideration misses one critical aspect - the Supply Planning Organization Structure. The above recommendation works generally well where we have planners that are dedicated to plan just these non-critical components. However, we have seen in multiple clients that the Planners are responsible for planning the entire Product Family across all the levels of the BOM for both the critical and non-critical parts. The planning done for non-critical parts in ECC requires the planners to access not only multiple transactions, but also multiple systems and then execute on the system proposals. Also, with increasingly shorter lifecycles for the components, it is getting increasingly important in the High-Tech industry to plan the components considering substitutes, before placing a buy signal to the Suppliers. We have seen that due to these reasons, the planners prefer to have both the critical and the non-critical parts being planned in APO and the proposals presented to them in a consistent manner for them to make decisions.

Now that we have seen some merit in planning the non-critical materials in APO, let us now further delve into how these parts can be planned differently from the critical parts and also how the proposals can be presented to the planners in the most effective way. Since these are non-critical parts, the objective is to let the planners spend the least amount of time and resources in making replenishment decisions and one of the ways that we have seen works better is to deploy Reorder-Point planning methodology in conjunction with the planning solvers in APO. The SNP Heuristics solver supports 6 different methods of Reorder-Point planning in APO, but since it plans infinitely, it does not do a very good job in considering material constraints and substitutes. The CTM solver takes into consideration material constraints and substitutes, but it does not support Reorder-Point planning out-of-the-box. As a result, organizations generally choose the SNP Heuristics for these parts and let-go of the opportunity for planning considering material constraints and opportunities for substitutions. We have come up with an approach, where we can have a Re-order Point planning based on a static Re-order Point in CTM.

Below is the theoretical construct for the Reorder Point planning:
Reorder Point Planning Theoretical Construct.jpg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This is one of the simpler replenishment models that can track the On-Hand or the Projected On-Hand position and accordingly make proposals for replenishment. CTM is an order-by-order planning solver and plans demands by first prioritizing them in a sequence, based on the criteria specified in the CTM Profile and then generate supply proposals to meet the prioritized demands considering the constraints.

An effective approach to model the Reorder Point in the CTM Solver is by modeling the Reorder Point as a Demand element that gets prioritized at the earliest for the respective part. We can have a demand element created in LC using a custom program based on the Reorder Point value maintained in the Product Master, which will be available as a separate demand in the Product View and SNP Planning Book. This demand element can be updated in LC whenever the Supply Planner updates the Reorder Point.
ROP with CTM.png

 

 

 

 

 

 

 

 

 

As can be seen from the example illustrated above, the replenishment proposals made by the CTM planning run that considers the Reorder Point as an additional demand matches that with the proposals following the theoretical Reorder Point model. I have presented a very simple example to demonstrate the point that the Reorder Point planning can be achieved with CTM Solver. The CTM solver can take into factor all the typical material constraints in conjunction with planning this demand.

The key point to understand is that since CTM has already secured the supply that corresponds to the Reorder Point, the subsequent supply proposals placed when the projected On-Hand goes below zero has the same effect as the theoretical Reorder Point Planning model, which triggers a replenishment proposal whenever the On-Hand Inventory falls below the Re-Order Point.

Approach Benefits.jpg

 The major benefit is gained in Productivity improvement for the Supply Planners, since they do not have to access multiple systems or transactions to execute on the planning proposals for all the parts they are responsible for. In addition, the planners need not review the proposals for these parts on a weekly basis, since once the Reorder Point has been set by them, the system will generate the supply proposals accordingly and these can be published over to ECC without additional review by the Supply Planners.

Keeping in mind the Pareto distribution, this solution address 80% of the parts and by achieving efficiency gains in reviewing the procurement proposals, we expect this simple yet effective approach to provide significant benefit instantly to the Supply Planning Organizations and I will be happy to hear your thoughts and point of view on the same.

January 11, 2013

Green Supply Chain Management

                                                                GREEN SUPPLY CHAIN MANAGEMENT (GSCM) 

 

What is Green Supply Chain Management: Green Supply Chain Management is all about delivering products and services from suppliers, manufacturers to end customers through material flow, information flow and cash flow in the context of environment. Traditional Supply Chain Management focuses on Total Quality, optimum Cost and best service which in some way contributed to environment. Today's Green Supply chain management mandates to incorporate the environmental idea in each and every stage of the product and service in a Supply Chain. Hence Supply chain managers have a great role in developing innovative environmental technologies to tackle the problems faced by the economy on environmental problems and communicate this to every stake holder in the chain. Lean Manufacturing is eliminating waste in every stage of supply chain. It focuses on producing economically and environmentally friendly quality products which meets the customer expectation. It is the best practice to be followed since it reduces inventory, saves space and energy. Hence Lean manufacturing contributes to the Green environment. EPI is to measure the effectiveness of environmental performances of a country. This measure provides the details on how close the countries can establish environmental friendly policies and procedures.

                                                                       Ways to build Green Supply Chain

  • Product Selection: Designing the product in such a way that it should be safe for use, creating least pollution and consumes less energy. It should not be hazardous during storage, transportation and also while disposing once it reaches end of its product life cycle. DFE (Design for Environment) is about developing products that has no negative side effect for human and environment, cost effective and environment friendly. This practice has to be implemented in product design stage.

 

  • Process and production: Process has to be designed so that it conforms to the Green Supply Chain Management initiatives to reduce environmental negative impact. Efficient and effective production strategy to reduce energy consumption which includes reducing waste material, air and water emissions. This contributes to lean manufacturing. All possibilities have to be checked for recycling the Scrap materials. 

 

  • Business Partners selection: Selecting suppliers who have proven track records on practicing lean manufacturing and using environment friendly material. Involving vendors during product conception and design so that they can share their best practices to best align your strategy with the customer strategy on going greener supply chain. Ultimately it results in customer delight and satisfaction.

 

  • Logistics Design: Efforts should be practiced to reduce fuel consumption. This we can achieve by setting up suppliers near to the OEMs (Original Equipment Manufacturers) and its Hubs. Less use of air freight, increased use of rail and sea transport. Logistics partners have to be included while product designs so that it improves cubic space utilization and effective fleet management. Back hauling should be practiced where the empty vehicle should be used to collect the goods from other sources once after delivering finished goods.

 

  • Packaging Material: Replacing package materials which are eco-friendly. Fumigation certificate should be obtained for international shipments for wooden pallets and crates.  Packaging material has to be designed in such a way it can be re-used and re-cycled. Packaging should be robust so that any hazardous material inside it doesn't spill over and cause environmental hazard. 

 

  • Reverse logistics Design: Materials after consuming should be effectively used for re-use, repair, recycle, remanufacture and redistribution. It calls for reusing containers and pallets, redesigning and recycling package materials etc. Reducing pollution during transportation are important activities of reverse logistics. Proper design of Reverse logistics contributes greater towards Green Supply Chain Management.

 

  • Information Technology: A Green approach to IT has to be achieved through various automatic processes thereby reducing carbon foot prints. Paper usage has to be minimized through automatic invoice/payment processing. Using EDI for creating/transmitting orders.

 

  • Green Building: Deploying greener practices in Design, construction and maintaining the buildings. Using energy efficient bulbs, natural lightning saves considerable energy. Water has to be recycled for day to day use. LEED certification (Leadership in Energy and Environmental design recognized by US and other countries) has to be obtained. Investment in Renewable energy sources such as solar, wind etc. are needed for sustainable green practice.

Benefits of GSCM

1. GSCM will help us to gain a competitive advantage and help us to attract new customers.
2. Increased use of resources, improved efficiency and reduced production cost.
3. It contributes greater towards improved financial performance.
4. Reduces risk by avoiding hazardous material that leads to environmental effect. 
5. Improved quality of products and services gives higher customer delight and reputation.


Hence trying to deploy all the above designs in each and every stage of a supply chain will in turn creates values financially and socially to the customer. Hence we can go a step further and call the chain as a value chain. Ultimately all these practices have to be sustainable and should keep improving continuously by researching and innovating new ideas.

Information Driven Innovation in Supply Chain

Guest Post by

Rakhi Makad, Industry Principal, Information Transformation, Manufacturing Unit, Infosys

In today's rapidly changing world, even the world's best companies are susceptible to disruptions in supply chain and the only possibility of being ahead and avoiding or tacking these issues is to continuously innovate the supply chain.  As time has progressed, supply chain needs have also changed and the industry today faces a whole new set of interrelated challenges and opportunities. For more insights into the need to innovate supply chain and how goals translate into business and technology needs, read my latest 2-part blog series in Supply Chain Matters. Find here Part 1 & Part 2.

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