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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November 4, 2015

Demand Driven Supply Chain- Bridging the Gap by Flowcasting

Supply chain planning is the core need for any retail brand in the today's world. In order  to gain better visibility of their own Supply Chain, companies have started investing a lot into planning solutions. The driving point for such investments is to gain accurate visibility of material flow across the entire supply chain. Many solution vendors exist to address these kinds of solutions including SAP, Oracle or JDA. Even though lots of organizations have such planning solutions, yet the main question for any operations team still remains: - "In a forecast driven supply chain, where should be our demand point and how to control bull whip effect due to variability in customer demand?" (i.e between various nodes in the supply chain from supplier till retailers).

Continue reading "Demand Driven Supply Chain- Bridging the Gap by Flowcasting" »

September 30, 2015

How will Future Maintenance be?

Tomorrow's enterprise would want to limit their efforts, energies and expertise to the areas of their core competency rather than dwelling on non-core areas. When we look at asset intensive organizations, most of these firms would want to stick to their area of expertise i.e. manufacturing/producing products of value. So, these organizations can spend their resources and energies in innovating and manufacturing products and leave the supporting areas to the experts in those areas like how IT implementations are not carried out in house as it is not their core competency.

Continue reading "How will Future Maintenance be?" »

January 18, 2015

The Expert Talks- Sustainability

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 About The Expert

 

Vijayaraghavan Krishnamurthy is a Principal Consultant working with Digital and Integration Services at Infosys. Vijay has worked extensively across areas spanning Supply Chain Planning and Execution. He is based out of Hyderabad, India and is closely associated with the ECO group at Infosys, working on sustainable practices. Read on as Vijay shares with us his insights on Sustainability in the context of Supply Chain Management.

 

Continue reading "The Expert Talks- Sustainability" »

February 3, 2014

E-retailers exploring same day delivery

 

You ordered a product online and it gets delivered to you by end of day. Surprised!! But you would simply say WOW!!! We as consumers would feel delighted, lot more excited and confident about e-shopping. 

In US many retailers have started experimenting with same day delivery option. Few such examples are: Google is inviting its employees in the Santa Monica area to try out its Google Shopping Express service for same day delivery pilots. Walmart exploring same day delivery option for fulfilling their online orders from physical stores. E-bay launched a similar program with shoppers who spend more than $25 at local store can pay additional $5 for same day delivery. Amazon getting closer to reduce delivery lead time with their patented 'speculative shipping' model. This blog articulates about how e-retailers can get closer to same day delivery.
 

Continue reading "E-retailers exploring same day delivery" »

July 26, 2013

Importance of Proactive Master Data Maintenance in SAP SCM Support

In my current project about a year ago, North America region Supply Chain Planners were having major concerns related with flawed planning resulting from incorrect or no Source of Supply (SoS) for receipt elements such as  Purchase requisitions &/or Planned orders. These regular concerns were impacting planner community's confidence & trust with an existing APO solution & team managing it. This project was in a steady state from almost 2-3 years having Level 2 (support group based onsite at client locations) & Level 3 (support group based in offshore locations) model.

Continue reading "Importance of Proactive Master Data Maintenance in SAP SCM Support" »

February 5, 2013

Adding intelligence in the Forecasting process to support Supply Chain Segmentation

There has been a growing momentum across multiple industries to move from a "one-size-fits-all" approach to a portfolio of different supply chain strategies. Companies segment Supply Chains using different attributes across multiple dimensions of product [product volume or demand variability], customer [Customer/Channel value] to design multiple efficient or responsive Supply Chains. Mr. Thomas further recommends in his blog approaching Supply Chain segmentation as an end-to-end strategy that encompasses business processes starting all the way from the Customers over to Suppliers. This also includes Demand Management process, which will be the focus of my discussion in this blog. The Demand Planning Organization which is responsible to sense, plan, manage and communicate demand needs to factor in the different Supply chain strategies that are to be employed for different segments.
Most advanced planning systems provide a suite of statistical forecast models and different parameters for the Forecaster to further fine-tune the models and in addition they also contain Best-Fit models that perform multiple iterations to choose the forecast model and its parameters that provide the lowest Forecast Error specified. There is however no easy way for the forecaster to assign these models to different segments that is available out-of-the-box. As a result, the Forecaster ends up reviewing the forecast models for every part every forecast cycle and then changes the assignment, given a change in the strategy for a particular segment.

Continue reading "Adding intelligence in the Forecasting process to support Supply Chain Segmentation" »

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.

Continue reading "ROP using APO CTM" »

December 31, 2012

The Learning from the 2012 Holiday Buying Season: Balanced Investments in Online and Physical Supply Chain Fulfillment Capabilities

Guest Post by

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

This commentary is the third and final follow-up to this author's series of Infosys Limited Supply Chain Management guest commentaries related to the 2012 holiday buying season and its implications on industry strategies and technology investments. My guest commentary comes at the end of December as the early indicators from the 2012 surge holiday buying period already point to yet another set of significant learning for global retailers.  In 2011, I closed my holiday surge prediction posting with a message that the importance of balancing online commerce tools and product offerings with advanced backend fulfillment intelligence processes would prove critical.  In my initial Infosys commentary on this industry topic in mid-November, I opined that 2012 would add the realities that more supply chain complexity, market uncertainty and the effects of supply disruption are going to make this season ever more challenging.

Continue reading "The Learning from the 2012 Holiday Buying Season: Balanced Investments in Online and Physical Supply Chain Fulfillment Capabilities" »

September 18, 2012

Demand Planning - Practicing the Best Practices (contd.)

In the last blog on this topic, I mentioned that I will share some of the best practices in some of the sub-processes in the typical demand planning cycle. In this blog I will focus on first couple of sub process of demand planning cycle - 1) Setting up demand planning objectives and metrics for different business units/customers/key items/locations 2) Setting up the frequency of the forecasting process (create/review/publish) with the time horizons.

Continue reading "Demand Planning - Practicing the Best Practices (contd.)" »

May 24, 2012

How to make Preventive Maintenance a way of life in SAP APO Support Projects - Part 2

In the previous blog, I had shared from my experience, the varieties of issues that we come across in a typical support project. Similarly errors can occur in master data area that affects SNP and PPDS planning. Some of typical errors I have seen are:

• In case of change in BOM components / work center in ECC, PPDS PPM gets updated in APO but SNP PPM does not get updated and continues showing consumption of old component;

• Transportation lanes or Means of transport that have expired or going to expire in near future will result in creation of purchase requisitions without any source of supply.
Careful examination of logs of daily CIF jobs can highlight the issues with PPM even before they are caught by the planners. Similarly a periodic query of t-lanes that will expire soon will help in preventing purchase requisitions without source of supply.

Continue reading "How to make Preventive Maintenance a way of life in SAP APO Support Projects - Part 2" »

May 18, 2012

How to make Preventive Maintenance a way of life in SAP APO Support Projects - Part 1

I started my career as a maintenance engineer in a leading paint manufacturing company in India. The maintenance work that we did was divided into categories such as breakdown maintenance and preventive maintenance. I still remember the words of my first manager- "we should be spending our maximum time doing preventive maintenance so that we don't land ourselves into business critical breakdown maintenance".

Continue reading "How to make Preventive Maintenance a way of life in SAP APO Support Projects - Part 1" »

May 2, 2012

Supply Chain Control Tower Readiness- Part Two

Joint Post by

Gopi Krishnan GR, Practice Manager - Business Application and Services, Retail CPG, Logistics and Life Sciences, Infosys

Arun Kumar, Principal Consultant - Business Application and Services, Retail CPG, Logistics and Life Sciences, Infosys


In part 1 of this interview blog series with Supply Chain Matters, we have already analyzed the readiness of both IT and supply chain functional industries for the need to go for broader visibility, more timely and accurate decision-making, and predictive process capabilities which are more frequently expressed in the context of supply chain control tower (SCCT) capabilities.

In part 2 we have shared our views on the mode of expression of SCCT and our view for the best approach for adopting SCCT. Please read part 2 here.

Supply Chain Control Tower Readiness- Part One

Joint Post by

Gopi Krishnan GR, Practice Manager - Business Application and Services, Retail CPG, Logistics and Life Sciences, Infosys

Arun Kumar, Principal Consultant - Business Application and Services, Retail CPG, Logistics and Life Sciences, Infosys

 

With the current scenario of rapidly increasing base of business in terms of geography, customer base, varied suppliers and voracious line of products, the complexity of the global supply chain is becoming more difficult to manage.

In lieu of this, modern organizations are spending a lot to re-define the needs for broader visibility, more timely and accurate decision-making, and predictive process capabilities in their supply chain methods. These needs are more frequently expressed in the context of supply chain control tower (SCCT) capabilities.

We have expressed our views in an interview with Supply Chain Matters and posted it as a 2 part blog series on "Supply Chain Control Towers Readiness". In part 1, we have analyzed the rationale for SCCT in the IT industry as well as supply chain functional areas; and whether the readiness is coming from specific industry sectors. Please read Part 1 here.

 

March 6, 2012

Leveraging Social Media for Improving Forecast Reliability

One of the greatest challenges that complex supply chains of the companies today face are accurate forecasting and demand planning. In this context, the social media can be leveraged effectively to analyze customer data and achieve more insight on forecasting, planning, scheduling and inventory management. For example,  imagine if it was possible to predict   the percentage of customers that were interested in buying a black colored Reebok T-shirt against a brown colored one or to predict the percentage of customers interested in buying a sportz model of a car versus an another model. This would help to stock appropriate quantity of inventory and also facilitate in computing the right value of safety stock.

Continue reading "Leveraging Social Media for Improving Forecast Reliability" »

November 11, 2011

Demand Planning in CPG industry - Practising the Best Practices

No matter which industry you are in, I am sure you would have constantly encountered the term - "Best Practices". In order to maximize the shareholder value, organizations are constantly striving to adopt these best practices in almost every domain or process relevant for them. Demand planning is the most critical process in the CPG industry, since it drives all downstream processes (raw material/finished goods inventory planning, procurement planning, capacity planning, manpower planning, transportation planning, etc.) for running the organization in the most effective and efficient manner.

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September 22, 2011

The Role of Information Sharing in Global Supply Chain Operations

Information sharing can radically improve the way global companies and their partners do business, especially in the wake of increasingly globalization and outsourcing, which has and will continue to have a profound effect on supply chain operations. By exchanging information such as inventory levels, forecasting data, and sales trends, companies can reduce cycle times, fulfill orders more quickly, cut out millions of dollars in excess inventory, and improve forecast accuracy and customer service.

 

Continue reading "The Role of Information Sharing in Global Supply Chain Operations" »

August 27, 2011

Product Allocation Planning - Managing supply constraints

In my last couple of posts (here and here), I wrote about features of a good FG product allocation planning tool, and the strategies surrounding setting up the right process for it.

The focus was on setting parameters like product groups, customer groups, planning horizon and frequency.

The next important question is how to effectively distribute supply amongst multiple demand channels during periods of constrained supply.

Continue reading "Product Allocation Planning - Managing supply constraints" »

July 28, 2011

True Truckload optimization - Opportunity for leading supply chain products

Just imagine that you want to relocate with your family to another country for 2 years for company's work. It is but obvious that you would want to carry the maximum luggage with you without paying hefty fine for the excessive baggage at the airport. As a part of logical thought process, you would first consider the various constraints imposed by the airlines (weight, volume, number of luggage/ hand baggage, etc.) and then you would start to pack the stuff. Won't you agree with me that the most important step is  placing different items inside the bags - like which items should be at the bottom (ideally sturdy ones),which items should be alongside of the bag, which items should be in the hand baggage (fragile ones), et al. Applying similar other parameters after 1st round of packing you would weigh the bags, re-shuffle the items 4-5 times in various bags and would spend almost 3 hours in this process till the objective of maximum luggage within the specified weight constraints is met. How nice it would be, if any software program can provide an end-to-end solution to you - i.e. right from considering the constraint to the layout of the products to be placed in the bags?

Continue reading "True Truckload optimization - Opportunity for leading supply chain products" »

July 5, 2011

Is Inventory the "necessary evil"?

In my earlier blog, I had highlighted the following challenges most of the Supply chain professionals face across multiple dimensions from a Customer Service perspective:
1. The drive towards Globalization has resulted in the focus to not only look at the developing markets for cheap supply, but also to tap these developing markets to drive future growth. These newer markets do add to the overall growth of the organization, but also pose newer challenges in meeting the customer demand satisfactorily
2. Increasingly demanding customers with information at finger tips and lower brand loyalty
3. Increased channels to service the customers with varying degrees of Customer Service expectations
4. Intense competitive activity driving lower prices and reduced scope for differentiation
5. Increased pace of product innovation - rapid new product introductions combined with rapidly reducing product life cycles.

Continue reading "Is Inventory the "necessary evil"?" »

June 28, 2011

Supply Chain Planning Arena - Which product is better amongst the best

Every single day we are going through the product evaluation phase in our buying process for our personal/household needs. Consumer buying process normally involves - Problem recognition, information search, evaluation of different options, purchase decision, and finally post purchase behavior. Organizations are no exceptions to this process and are going through the same phases when it comes to the buying any products/solutions for either gaining the competitive advantage or for optimizing the current processes.

Continue reading "Supply Chain Planning Arena - Which product is better amongst the best" »

June 25, 2011

Capital Intensive Hi-Tech Supply Chains: Capacity Allocations Issues and Potential Solutions

The Supply Chain in Hi-tech and Semiconductor industry vertical is characterized by globally fragmented value chain partners with product design happening in Silicon valley, foundries and fabrication units spread throughout south east Asia region, software development happening in Bangalore and assembly and testing being conducted in Malaysia.

Continue reading "Capital Intensive Hi-Tech Supply Chains: Capacity Allocations Issues and Potential Solutions" »

June 3, 2011

What Products Should Be Campaign Manufactured?

Every marketer dreams of a manufacturing facility that is without any constraint. If marketing people had their way, they will expect all the products available "On Demand" whenever customer places order. However real life manufacturing does not work on such utopian considerations. Every manufacturing facility in the world, howsoever sophisticated it may be, has some constraints. Hence not all products can be made manufactured "On Demand". By extension few products have to be manufactured in Campaigns. By Campaign, I mean, manufacturing them at set frequency (Example - Once every quarter at scheduled date). Forecasted demand between campaigns is aggregated and campaign quantity decided accordingly. Campaign manufacturing is common practice across all types of manufacturing - Discrete, Repetitive and even Process manufacturing. This is because every technical asset has some sort of limitation and cannot manufacture everything "On Demand".

Continue reading "What Products Should Be Campaign Manufactured?" »

May 31, 2011

Is there a need for Next Generation Supply Chain planning products?

It is no major news that organizations are consciously gearing up to capture a customer demand regardless of the source/channel of demand and then attempting to fulfill the same. Internet dot com sites, cell phones/ ipads or any other such mobile devices give the buyers the necessary platforms to capture and convey data from multiple points and attempting to move to a truly smart consumer-centric model.


While there is a lot of activity and discussions on the trends in the Next Generation Commerce solutions and how a multi-channel e-commerce (MCC) solution enables retail organizations to offer consistent services across virtually any customer touch point, the question that comes to mind is "Are Supply Chain Planning systems (both demand and fulfillment) in a state where they can predict and plan the increasingly volatile demand?"

Continue reading "Is there a need for Next Generation Supply Chain planning products?" »

May 30, 2011

HazMat in SCM Needs to Worry About New Tech Impositions!

During the last couple of weeks, I have been associated with the brainstorming around how best to manage Hazardous Waste or Material (HazMat) for a major US retailer. The client management team is focused on having a solution that covers HazMat of all kinds across the enterprise since that is the core KPI of the department. Most of our initial discussions have been around two threads:
1. Understanding our Point of View on Reverse Logistics (RL) since HazMat typically need to flow in the opposite direction of the regular product supply chain flow
2. Figuring out whether SAP EHS solution is the best bet versus IBM Sterling Commerce RL capability and IBM Maximo's work management capability.
Personally, I wasn't too keen on going for either of these approaches.

Continue reading "HazMat in SCM Needs to Worry About New Tech Impositions!" »

February 23, 2011

Forecaster ABCs - The 'Vital Few' for Forecasting

Lets travel back in time in the 19th century, to take a quick look at the very interesting observation made by the Italian economist Vilfredo Pareto - 20% of the population possessed 80% of the country's wealth and the same was observed for other countries and over different periods of time. This has been known widely as the 'Pareto's Principle' or the 80/20 rule or the 'Law of Vital Few'. This principle has been adopted in the ABC Classification, which also happens to be the topic of my blog, with the 'A' group items [the 'vital few' representing 20%] contributing to 80% of the phenomenon, the 'B' group [representing 30%] contributing to 10% of the phenomenon and the 'C' group [the 'trivial many' representing 50%] contributing to only 10% of the phenomenon.

This law asserts that the outputs are not always equal as the inputs; that a small set of inputs, contribute or influence significantly the outputs. The principle plays an important role in depicting the imbalance, which may be 70/30, 80/20, 95/5 or 80/10, 90/30 or any set of numbers in between. The key to note is that this relationship is between two different sets of data [input & output or cause & effect] and hence need not add up to 100.

Continue reading "Forecaster ABCs - The 'Vital Few' for Forecasting" »

February 18, 2011

Product Allocation Planning - Managing allocation parameters

Continuing from my previous post, what questions come to mind when one thinks of a finished good product allocation-planning tool?

Well, one of the first question is how does the tool ensure right amount of supply is being allocated to the various demand channels, and how does it share supply when faced with a supply constraint?

Continue reading "Product Allocation Planning - Managing allocation parameters" »

February 14, 2011

Getting Serious about Supply chain collaboration

Based on the various client interactions & inquires so far, I  can say that organizations are getting very serious about collaborative  relationships with their suppliers and are investing a great deal of their time & resources in strengthening the relevant processes. In this blog, I share my thoughts on the market direction & activity in this space.  Supply chain collaboration is nothing new in the world of competitive supply chains, but collaborative relationships have so far been limited to mature and large suppliers. They were limited to suppliers  who can afford, and are mature in terms of IT infrastructure, to be connected with EDI. Organizations have realized that even smaller suppliers are important to be ahead in this competitive landscape, as disruptions from their end could potentially disrupt the entire supply chain.

Continue reading "Getting Serious about Supply chain collaboration" »

February 6, 2011

How to Monitor Forecast Accuracy? Forward or Backward

Generally Statistical Forecast generation process works in following way. History and Forecast horizons are always fixed. (Example - 72 months history period will be used to generate forecast for next 60 months). Every month oldest history data point is dropped and newest history data point is included in history zone. This process is called history rollover (Continuing with above example, if you are in Feb 2011 then January 2005 history data point will be dropped and January 2011 history data will be included in history zone to keep 72 month history period constant). Forecast engine runs after history rollover to generate forecast based on preset models for each SKU. Generally statistical tuning to find out best suitable forecast model for a particular SKU is performed only once during initial implementation. After that some sort of monitoring process and alerts are set up to find out forecasting cases where time series pattern has changed. Topic for this blog is to discuss logic for this monitoring process and consequently alerts.

Continue reading "How to Monitor Forecast Accuracy? Forward or Backward" »

December 31, 2010

Partnering with Honda at Supply Chain World Conference in Singapore: a lot to learn about high-growth markets

This blog of mine is quite different from all my blogs. Instead of trying to analyze what trends I see or what directions I construe in supply chain management, here I will share with you some of my experience during a recent presentation at the Supply Chain World Conference in Singapore. We (Infosys and Honda) were invited for presenting at this conference on some of the innovations carried out in supply chain inventory optimization and distribution lead-time management

Continue reading "Partnering with Honda at Supply Chain World Conference in Singapore: a lot to learn about high-growth markets" »

December 25, 2010

When and How to Use "Best Fit Model" in Your Statistical Forecasting Suite?

Most of the Demand Planning applications like SAP APO, i2, Manugistics, Demantra etc offer statistical forecasting as one of their major differentiating functionality. Statistical forecasting generates the forecast for future periods based on history data provided. Lots of algorithms are on offer in these suites. Sometimes as many as 30 to 40 different algorithms / methods / Forecasting Strategies (All are different terms used for same thing) are on offer.

Continue reading "When and How to Use "Best Fit Model" in Your Statistical Forecasting Suite?" »

December 21, 2010

Product Allocation Planning - Sharing the supply pie and managing order commits

In my recent engagement at a consumer electronics client, I worked with the ops planning teams to understand their finished good allocation planning process, build a tool to support the processes and enable opportunities to improve upon

The function of product allocation planning is that of a bridge between the planning and order fulfillment side processes. In the context of multiple sales channels, this function primarily ensures the right amount of supply is being allocated to the right channel partners at the right time

Continue reading "Product Allocation Planning - Sharing the supply pie and managing order commits" »

November 8, 2010

Keeping up with Order Fill rate in a Reactive Supply Chain environment

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.

Continue reading "Keeping up with Order Fill rate in a Reactive Supply Chain environment" »

October 29, 2010

How far "Pull" concept should drive your Supply Chain Activities?

In this blog I will try to answer one of the most pertinent question every supply chain operating manager face in his or her day to day working. To set the context consider a simplistic model of a manufacturing supply chain.

Continue reading "How far "Pull" concept should drive your Supply Chain Activities?" »

October 25, 2010

Impact of Social Media on Supply Chain

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.

Continue reading "Impact of Social Media on Supply Chain" »

October 5, 2010

Is "Higher Forecast Accuracy" the silver bullet?

To answer this, lets take a step back and try to answer a more fundamental question - Do we need forecasts? Our immediate response to this will be YES. And for most of us, the response will be based on the following key challenges most of the Supply chain professionals face across multiple dimensions:
1. The drive towards Globalization has resulted in the focus to not only look at the developing markets for cheap supply, but also to tap these developing markets to drive future growth
2. Increasing lead times and lead time variability with most of the manufacturing bases of suppliers outsourced or offshore
3. Increasingly demanding customers with information at finger tips [thanks to internet] and lower brand loyalty
4. Intense competitive activity driving lower prices and reduced scope for differentiation
5. Increased pace of product innovation - rapid new product introductions combined with rapidly reducing product life cycles
Both the Product Supply Chain and Information chains are getting longer, making the task of the Supply chain professional challenging… and the need for Forecasting and Demand Planning more and more necessary, to ensure a steady flow of products to the right place at the right time in the right form.

Continue reading "Is "Higher Forecast Accuracy" the silver bullet?" »

September 9, 2010

How to set your Safety Stock Policies?

Every distribution warehouse in supply chain network holds inventory and has some safety stock maintained. How much safety stock or inventory should be kept at each warehouse is the topic I am going to address in this blog. In fact my focus will be on one common mistake that is made in the process of setting inventory and safety stock norms.

Continue reading "How to set your Safety Stock Policies?" »

September 1, 2010

The most important Phase in Supply Chain Planning Implementations

I believe that the most important phase in supply chain planning implementations is actually post implementation support. Many customers after having spent a lot of money on implementing planning systems are not able to leverage the systems to the fullest extent and the usage of the planning system dwindles down. This can be avoided with much needed management focus on post implementation support.

Continue reading "The most important Phase in Supply Chain Planning Implementations" »

August 13, 2010

How to Control Proliferation of SKUs?

One of the current biggest challenge faced in supply chain management is explosion of number of SKUs. It is very common scene that total number of SKUs are 50 to 100 times the number of "Real" product offerings. By "Real" product, I mean, a product which customer buy to satisfy some of their needs. SKU is something which is created out of "Real" product so that it can be sold to a customer in a specific market place. There are many reasons for which multiple SKUs are created from same "real" Product. Some of them are listed below.

Continue reading "How to Control Proliferation of SKUs?" »

July 30, 2010

How to Measure Forecast Accuracy?

Everyone who is associated with Demand Planning and Forecasting function invariably talks about a phrase called "Forecast Accuracy". It is a measure used for judging the efficiency of the Forecasting Process. At the back of the mind everyone knows that Forecast Accuracy is the comparison of Forecast Vs Actual.

Continue reading "How to Measure Forecast Accuracy?" »

July 8, 2010

Would SCM be a differentiator in your Apps Portfolio?

Dennis Gaughan of Gartner in his blog dated 29-Jun-2010 wonders whether its time for corporations to rethink their enterprise applications portfolio strategy (http://blogs.gartner.com/dennis-gaughan/2010/06/29/is-it-time-to-rethink-your-enterprise-application-portfolio-strategy/). Well, I think organizations are thinking about it all the time, sometimes when they do their annual planning and are reminded of the morass in their application landscape and sometimes thanks to M&A (esp for financial institutions) forcing them to look at what to sunset and what to fold in.

Continue reading "Would SCM be a differentiator in your Apps Portfolio?" »

May 30, 2010

Challenges of Dealing with Quality Inspection Stocks in Supply Chain

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.

Continue reading "Challenges of Dealing with Quality Inspection Stocks in Supply Chain" »

April 5, 2010

Demand Planning in Oil Field Services sector

Well, this blog of mine is focused on demand planning issues and solutions in the oil field services (OFS) industry segment. For those of you, who are new to this sector (just like me), Oil field services companies are a critical component in Oil & Gas value chain. These companies provide products and services to the oil and gas producing companies (also known as operators) in the upstream processes such as drilling, formation evaluation, completion and production of wells etc.

As you can understand, they depend heavily on the operators for their business and therefore, their growth is driven by how fast the Oil & Gas industry is growing. All of us know the typical external pressures that the operators face – oil prices, recession, credit crisis etc, that directly impact their business performance, and hence their capability to continue production. Oil field services companies, although they are big in size, but still largely depend on operator’s spending ability to produce oil and gas.

I am currently working on an assignment that is about demand planning issues that the OFS players face and how do they mitigate some of these challenges - such as how can they improve forecasting processes, manage inventory, reduce mismatch in inventory across sites etc. How mature are these players in demand planning space? I want to know at what level is the demand forecasting done. How is the forecast arrived at? How is the product demand (tools and equipments) derived assuming it is make to stock and assemble to order scenario? I know, most of these companies run heavily on ERPs such as SAP and Oracle, but what are the typical planning tools they use?

I know, they sell jobs and services, which would be a product + services wrapped around it and there is a significant amount of variation of what these jobs constitute across regions… for example, the same kind of job would constitute very different set of tools and equipments, if it has to be deployed in two different regions – for example say mexico and north sea. So there are lot of such industry specific nuances that are very relevant while designing a demand planning process.

Looking for point of views from folks who have worked in this sector and can provide me relevant pointers. Please feel free to comment anything, and I would really appreciate if you can share your experience. I would be more than happy to discuss one on one over a telephonic conversation, so please do respond, if you think you know what I am asking for ….

March 31, 2010

Pareto Theory in Supply Chain Implementation

The Pareto theory resonates among all of us, specifically the Supply Chain consultants. Based on general experience, it is usually a few deviants that take all of one's attention. Not only do these deviants get all the attention, they make the process and the solution to deal with general elements very complex.

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March 2, 2010

Are Demand Planners stressed out these days?

Well, this blog of mine is focused very specifically to ‘demand planning’ role in a supply chain organization. Most of us would appreciate the difficult conflicting goals that a demand planner faces in industry, and I believe, it is becoming increasingly more stressful for them to manage these goals. Being a demand planner myself in the past, I can empathize with their pain and would like to share few operational challenges that add to their stress levels, if not attended effectively. I would urge each one of you to provide your experience, comments, and advise how demand planners can effectively work to mitigate these issues to improve business performance. Read on…

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January 8, 2010

Supplier and Customer Collaboration

Over the last few years supplier collaboration is gaining prominence and lot of data sharing is happening with the suppliers helping them to plan their manufacturing capacity better. It has helped the suppliers meet the requirements and ensuring adequate inventory control. Supplier collaboration has become an important supply chain initiative across different industries and corporations have realized the benefits. Of late there seems to be surge in the supplier collaboration initiatives as organizations want to follow the example of others who have done it and have achieved significant benefits.

Organizations who have gone ahead with supplier collaborations- have not done so on the customer collaboration side (or the number of organizations who have done is far less- I am referring to non VMI scenarios)- sharing replenishment data with their customers.

Customer collaboration can be at a strategic level whereby an organization can work with its customers’ long term plans to develop new products & services, enhance its capacities and thereby ensuring strategic customer relevance. 

Customer collaboration can also be at an operational or tactical level wherein customer forecasts, promotions and short term demand signals can be used to recalibrate the supply responses providing better service levels, lead times and flexibility. 

In operational   customer collaboration it will be the vendor who will inform the customer of the supply quantity that needs to be delivered as against the order quantity- this will help in demand supply balancing keeping inventory levels low.  If we take a VMI scenario, the situation is different. The common issue in VMI is less transparency with respect to the SKU and quantity being replenished by the vendors- this is primarily because very few companies share the forecast data and leave it to the vendor to replenish the SKUs based on the inventory position at the time of delivery- may be because they do not forecast for VMI items.

Customer collaboration would help in fine tuning the VMI process – for VMI to be effective, the retailer should share its SKU level forecasts for the VMI items with the CPG manufacturer and the manufacturer can share the data in terms of what will be replenished in the next delivery schedule. This will help smoothen the process and the customer can plan appropriately for the SKUs being delivered with respect to promotions, space management and warehouse management.

However the customer collaboration has still not caught up- as much as it is being done on the supplier side.

Probable reasons would be that organizations are not tuned to tell their customers

what quantity they would deliver which would help customers ensure proper inventory control- this would be possible if they look at the ordering pattern from their customer. It is still working based on an order from the customer about the quantity based on their business plan and the supplier supplying that quantity.

Having both supplier and customer collaboration would ensure that the extended enterprise works in a real partnership model and that there is free flow of information which will help in effective decision making and inventory control and cost savings. Hence I strongly feel that organizations should not restrict their collaboration on one side but should do it both at the supplier and customer end. Organizations which have had experience say in supplier collaboration- should focus on extending it to customer collaboration end- this will be more effective as they can bank upon their learning while doing supplier collaboration.

It would be interesting to understand from you if you have done both supplier and customer collaboration and how has it benefited your organization and also the challenges faced.

 

January 2, 2010

Demand Planning in the CPG industry- The decade that was

I wish the readers a very happy new year and a happy new decade. This morning, I was reminiscing on my journey through the past decade, on how during the last 10 years I saw myself transition from a student to young professional to a doting husband to a responsible father. I concluded that life seemed much simpler 10-20 years back, in retrospect that is. Well, how is it connected to demand planning in the CPG industry (the topic of this blog)? You are right; there is no connection, except that demand planning in the CPG industry also underwent a transition during this decade, just as I did.

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November 27, 2009

Buffett’s bet on railroads- basically, a bet on America?

Hope you had a great time with your family this Thanksgiving. For me, Thanksgiving was an excuse to maximize my time with my family before they left for India this coming Sunday on a three month long vacation.

Anyway, coming to the topic of this blog, today I watched this amazing show on CNBC called Warren Buffett and Bill Gates - Keeping America Great, where the two greatest legends of the current times took questions from Columbia B-School students on various topics ranging from the economy to philanthropy.

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November 21, 2009

The Death of DRP- an eyewitness’ account

I simply loved reading Lora Cecere’s blog titled The Death of DRP. I loved it, because it brought me a feeling of déjà vu. You see, for the past few years, I was part accomplice and part eyewitness to the slow murder, while working on a supply chain transformation program for a leading CPG.

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November 12, 2009

Demand sensing- is it a solution to capacity planning or near term deployment planning problem?

I came across an interesting blog on Kinaxis website which talks about the importance of demand sensing especially during the post recession recovery period (Is the supply chain finally being recognized by the mainstream as a strategic capability of a company?)  It talks about how Nokia could have avoided Q3 loss of $832 m, had it utilized demand sensing capabilities to sense demand upturn and accordingly adjust capacity well in advance. Using demand sensing, they could have (theoretically) looked at the future customer orders (or other leading indicators) and sensed that they are hitting them faster than their forecasted pace and used that information to identify the future capacity issues. However, I feel, even with a good demand sensing system in place, Nokia would have still faced the problem. To elaborate further, let me first explain how demand sensing system works.

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November 9, 2009

A big fat geek wedding- JDA weds i2

On Nov 5, JDA Software Group announced its plan to acquire i2 Technologies  in a cash and stock deal of $396 m. The merger is said to bring in net annual cost synergies to the tune of $20m and help elevate JDA as a leading supply chain management software company with combined revenue of $617 m and EBITDA of $179 m. Unlike last year, when the much touted deal broke off due to JDA stating inability to borrow money, this time around, the deal  has been structured to ensure a high degree of completion certainty (through Plan A- Intended Structure and Plan B-Alternative structure). The deal is expected to close by Q1 of 2010.

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November 5, 2009

S&OP Process – Do whatever suits you best!!!

S&OP has been talked about a lot almost everywhere and anywhere. The point of view that I am going to share through this blog is that there is no defined and one-single way to manage S&OP process. At least, this is what I have seen across various organizations in multiple industry segments. We have read about S&OP processes in books and various public domains, and almost everywhere the approach has been fairly generic, standard and uniform, but when it comes to real-world scenario, each organization takes a unique approach towards S&OP. I will share my opinion on critical success factors for an effective S&OP process and how organizations have been doing it differently. Read on….

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November 4, 2009

My 6 cents on S&OP best practices

In my earlier blog (Office politics and forecasting), I talked about how office politics contributes to forecast bias and how it can be overcome by implementation of a well designed S&OP process. In this blog, I will talk about some of the best practices I have come across in S&OP.

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August 26, 2009

Supply Chain “Proverbs-to-ponder”

IDENTIFYING CAUSES FOR UNSUSTAINABLE BEHAVIOR

Efforts for sustaining supply chain benefits have been under fire. Business requires supply chain programs for implementing their strategies. Variability, especially uncertainties in operations dim the chances for even the best solutions to return results in a consistent manner. Sustainability, is taking center-stage for CXOs and I see them scramble for ideas that have demonstrated results.

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May 26, 2009

Resolving the puzzle of achieving Higher Service Levels and Lower Inventory Levels through Faster Demand Sensing!!

I had talked about how to do forecasting during recession in my earlier blog here. During my discussions with end users the common feedback has been that frequent forecasting can help in faster sensing of demand, it doesn’t help in reducing inventories. Some of the most common questions emerging from end users on short term frequent forecasting are –  

• How to deal with lead times which are longer than the forecasting period?
• How do I change my safety stock levels? Do I need to?
• How will my service levels will be affected?
• How shall I deal with larger demand variation in granular level forecasting?

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May 1, 2009

An Approach to Effective APO Demand Planning Design

APO Demand Planning offers great set of functionalities tuned to very popular business requirements. The key is to come up with a design that takes care of multiple dimensions including Scale & Scope management, Product Life-cycle Management and finally a platform to manually att value to the Statistical Forecast planning process. APO Demand Planning also offers extensions and customizations that can meet some of the complex and atypical business requirements. The end objective of a DP implementation is to make sure that the planners use the tool and make them more productive than before. These thoughts have been summarized in an insightful technical white paper prepared specially for different stakeholders in a DP project.

April 22, 2009

DNA Therapy for Strategic Cost Reduction in Supply Chains

My recent hunt for stem cell banking information in South India got me excited on a subject of high interest in the biomedical world. Stem cell therapy is the latest medical wonder discovery and supposed to be a cure for 70 odd complex maladies of humans, especially interesting because till late these ill’s were supposed be hard to win over with the conventional medical treatment methods - treatments which were more focused on treatment of the symptom or providing a patch solution for the life threatening diseases, not usually a permanent cure.

DNA is the building block of all life and living on this planet. They are the smallest finite elements which determine the characteristic and personality of any individual. DNA or gene therapy gets to the root cause of the problem. They provided the paradigm shift in medical treatment from the symptomatic treatment of the yesteryears to treating or correcting the diseases cells at source.

What has DNA therapy got to do with Supply Chain Management?

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April 13, 2009

What’s the right forecasting approach in the current business environment?

I am talking about short term operational forecasting here, since that’s the one that drives business on an ongoing basis and has a direct impact on the financial performance of an organization. Forecasting has been a very statistically driven exercise with too much weightage given to quantitative techniques. Quantitative techniques take historical data as the reference or basis for forecasting, and therefore, the results are acceptable as long as the industry and other players work in similar economic environmental conditions. Now, when the consumer demand is extremely volatile and sentiments are down across almost all the industry segments, the historical consumer sales data cannot be considered as the right reference for generating forecasts. And therefore, dependence on quantitative techniques may not be the right approach and might lead to serious consequences such as rise in excess and obsolete inventory, increase in blocked working capital and finally, shortfall in achieving sales targets.

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February 23, 2009

Power Supply and the Supply Chain - Part 2

In one of my earlier blogs, I had drawn a hypothetical comparison between a power production process and a best-in-class supply chain. We saw how supply and demand situation can result in a stable equilibrium. A stable equilibrium is defined as an interplay of balancing forces where any deviation from normal, results in greater propensity for self-restoration.

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February 17, 2009

How do I forecast during Recession?

In a client meeting on Friday – the 13th, I encountered a “scary” statement!! The category manager told me that his gut forecast was more accurate than the one generated by his ‘expensive forecasting system’ for last quarter or so. The symptom was recent and the forecast was going away by as much as 40%!!! Could this be symptom of a recession? How do I forecast during such times? Complex algorithms are far more powerful in finding out hidden patterns and extrapolates them beyond the capacity of human mind. Then why would such powerful models fail to detect a recession which is so obvious?

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January 19, 2009

Multi-Level Vendor planning in APO: Your means to control the extended supplier network

One of the grave challenges companies, specifically in the area of consumer electronics and Hi-tech, face today is the reality of diverse and multi-echelon supplier network. The different tiers in the network are core competent in different aspects of manufacturing the product, and usually are driven by their own set of KPIs which may or may not be in alignment with network level. OEMs of today's world thus have to grapple with co-coordinating the right supply of materials and capacity to cater to a fluctuating set of demands in the customer side of the network. They have to balance with two counteracting objectives of controlling inventory/obsolescence cost on one hand and fill rate of demands to the customer on the other.

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January 2, 2009

Ownership of forecasting function

Organizations treat forecasting function differently based on their maturity levels; with a lagging organization having an ad-hoc approach to the entire process. There is hardly any focus on forecasting process and a dominant function decides the final numbers that also keeps changing and always remains a moving target. On the other hand, a mature supply chain organization would try to incorporate systems in place to ensure that forecasting as a process works fine and achieves the overall business objectives. I have seen and experienced that “right ownership” of this process is a very important and critical element to ensure that the forecasts are not biased and serves its desired purpose.

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January 1, 2009

Attribution Analysis in Supply Chain

Supply Chain function in most organizations is multi-faceted and requires management through a complex hierarchical organizational structure. At one end are Forecasters who manage the most upstream function and at the other end are executioners (production and procurement managers) who manage the most downstream function of supply chain. These functions have evolved over a period of time, found to be most optimal and is based on simple principle of segregation of duties.

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November 22, 2008

The Other Side of Supply Chain

Supply chains have been traditionally linear in nature. Let me explain what I mean by a linear chain.

Raw materials are procured from sources such as vendors, transformed into a sub-assembly and/or into a finished good again at  factory and transported to a distribution center or a warehouse. The number of echelons in the chain vary based on industry structure and resulting dynamics. Each echelon adds a finite value by either transforming the product into something more worthy of consumption or moving it closer to a consumer. This chain quickly became a network when organizations felt strongly about leveraging core-competencies of other organizations and developing one of their own.

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