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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February 29, 2012

Mobile Gift Cards

In my previous blog , I had highlighted various mobile payment options and their importance in retail industry. Another payment method which has recently gone mobile is gift card. Thanks to the growing popularity of doing everything we possibly can on smartphones, the shift from plastic gift cards to smartphones is inevitable, as the industry tries to keep up with consumer demand and preferences. Mobile gift cards are the newest innovation in gift cards for retail industry. Instead of using plastic gift cards, consumers are allowed to store their gift card numbers on their cellphones and smartphones and then redeem their gift card by presenting the stored information on their phone at checkout.

Typically, mobile gift cards are sent via email, Facebook or text. The recipient is notified that he has a gift card, and can take his smartphone into the store and use it immediately. The store clerk simply scans a bar code from the recipient's phone, and the card is applied to the balance. The mobile gift cards offer benefits to both retailers and customers alike.

The most important benefit from customer's point of view is the ability to store all gift cards at one place. No need to carry around physical gift cards. Your wallet is dropping inches by the moment.

Gift cards that are lost, unused and/or partially redeemed will be a thing of the past. Mobile gift cards are always with you on your cell phone. No more tossing the gift cards in a drawer and forgetting about them. Furthermore, mobile gift cards could solve the problem for lost gift cards. If the physical gift card is lost, it's gone. But with mobile gift cards, because data is saved to the cloud, even if the phone is lost, the user could manage cards using an online portal on a browser.

Convenience & accessibility - Because you always have your mobile phone with you, mobile gift cards are always with you. It's kind of the new 'don't leave home without it.'
Personalization perks - One of the biggest disadvantages of physical gift cards is inability of gift card senders to personalize it to make it more beautiful. This issue is addressed in mobile gift cards to a large extent. Mobile gift cards allow the purchaser to add things like their own text message, their own picture into the mobile gift cards. Sender can also include an audio message or even a video message.

From retailers' perspective, there are definitely some benefits to storing all gift cards on an app. For one, in the long term, it might be cheaper, as there is an only upfront cost of developing and deploying the app rather than producing plastic cards for years. There's a green angle in it as well. Mobile gift cards also help to reduce gift card fraud, thus reducing write-off expenses.

While gift cards are handy for people who need a quick idea, retailers also benefit from the cards. Generally, recipients who do redeem them end up spending more than the value of the card itself, meaning retailers generally get a profit when people redeem their gifts.

Given, all of above advantages, it is quite likely that mobile gift cards would replace physical plastic gift cards sooner than later.

February 14, 2012

Get,Set,Go-Agile Implementation of Multi Channel Commerce Solution

Retailers across the globe have realized the importance of Multi Channel Commerce (MCC). They understand the benefits derived from a unified view of customer orders and inventory across different fulfillment types. In early 2000 Retailers used to have 3-5 year road map for MCC solution implementation. The prevalent model of implementation then was Waterfall. Retailer had the luxury of time and resources then to work on long term projects

In a dynamic and competitive economy prevalent in this age every Retailer looks forward to have the said MCC capability enabled in the shortest span of time. Retailers have to be agile in terms of business process to respond and adapt to these conditions. Retailers expect the same from the IT partners. Hence it is imperative that we find faster, flexible and adaptive way to implement MCC solution.

Embracing 'Agile methods' will be one of the right things to do in this era when business models are changing at rapid pace. Many IT projects are using Scrum - a form of "Agile Implementation" for delivering products to Business users. In the Enterprise applications area the acceptance of Scrum has been a lot slower. I think it is high time that implementation of Enterprise applications move towards a cent percent Scrum model.
I want to illustrate how Scrum can be used for implementing Multi Channel Commerce solution. In Scrum a core team of empowered people consisting of IT development team customers and business team work together. Major advantage of agile methodology is the projects become responsive to business needs, and the projects are of shorter duration.

We will look at different aspects of Scrum and how we can use it in enabling MCC capabilities for a Retailer.

Product Owner: Is a person who is in charge of "Product Back Log". Product back log is prioritized list of features required by the business users. Product Owner is the sole owner of "Product Back Log", and decides what are the features going into it and the priority of the same. To start with we can have the "Product back Log" as the feature list from Infosys DOM solution, a pre configured MCC solution base offered by Infosys. This can be pruned based on the business requirements.

Scrum Master: Is an important role that helps the team in prioritizing the work and removing the road blocks encountered by the team.

Sprint: In Scrum, project implementation is divided into set of Sprints. Each Sprint is independent unit which can be delivered to the business for use in a 4-5 week cycle. At the start of the project a workshop can be planned with Business users. The goal of this workshop will be to come with set of Sprints and the capabilities which each Sprint will deliver to the Business.

So for typical MCC implementation the Sprints can be divided into - Order capture, Order Validation, Fulfillment and so on. At the end of each Sprint business users are given solution which it can use.

I foresee following challenges for implementing MCC in Agile manner 
1. To form a cross functional and close knit team.
2. To get a prioritized product back log
3. Decide on fixed duration of sprints.

Will Retailers and IT companies take up this challenge? I think Retailers who are most adaptative will thrive in the new economy. Get, Set, Go..embrace Scrum and achieve quick success.

Factors which helped e-commerce retailing develop in India

It has come back and it's back with a bang. After the downfall and internet bubble burst in year 2000, this time e-commerce sites in India have come with a full swing. This time it is for real. Compared with the population of India in year 2000 there were limited people having access to internet. Now the scenario has changed and easily available internet connectivity has made this change.

Numerous e-commerce sites have come up in last 2 to 3 years. Flowers, cakes and chocolates are the ones which people widely used to send through e-commerce sites having operations in India. Earlier people from abroad used to frequent this site, but now locals residing in India have also found it to be interesting by surprising near and dear ones. As a result, these sites are getting good sales. This also has encouraged other active entrepreneurs to venture in India's online retailing scenario.

Today we can find categories from apparels to shoes, general merchandize to accessories and books etc. E-retailers have also gone ahead and started making customized delivery. This has connected well with the customers as they are more than happy to send gifts to their loved ones based on his personal requirements. They also don't mind spending some extra bucks with customization of their choice.

But is IT only the concept which has clicked with customers of these e-commerce sites? Not really. There are many factors which has helped the customer to revisit - these sites. The user experience is the key factor that drives the customer to come back to the e-commerce site. The lesser the time customer spends searching for a product, better will be customer connect and user experience. For example, if one has to search a book of a particular author, one can look into book categories and then click on the sub category fictional or non-fictional. He can also search by giving the author name. This is what makes the e-commerce more powerful.

One of the most important factors which tempt people to buy online - is good deal or discounts. Customers these days often try to search for better deal which gives them better discount than -brick and mortar retailers. With hardly any physical stores, less items to manage in warehouse and some items being managed by vendor, these e-commerce retailers have cut their operational cost to a large extend. Hence they pass on good discounts to customers, which is generally less than the market price. For example, when Home appliances are purchased from leading e-commerce retailers, the price would be approximately 6%-7% less than the market price. This means more percentage discount from MRP.

The other factor is the various payment options. They have Cash on Delivery (COD), pay by Debit card, pay by Credit Card and Net banking. Customers can choose their own payment mode. To top it up, some e-commerce retailers have tied up with leading Indian banks to provide EMI option with nominal processing charge, wherein customers can decide if they want to have 3 months, 6 months or 9 months EMI option. This gives decision making power to customers to purchase now, instead of delaying the purchase for next 3 to 6 months.

Finally the order packing and on-time delivery of the product is the last mile for e-commerce retailers to bring smile on customers face. Some e-commerce retailers in fact have mastered the art of packing. One of my friends ordered a mixer grinder online. They are packed well by manufacturers. It hardly gets damaged, when a truck load of it comes to distributers from manufacturers. But if a single one has to be delivered with other heavy and small items, there are chances it may get damaged if not placed properly in parcel. Hence when the parcel arrived they were excited to receive the product intact with outer box thick carton and bubble wrapped, apart from manufacturer's packing.

For on-time delivery the bigger logistics player are doing well in terms of bulk transfers for inter and intra city. They are also able to meet customer delivery timelines in tier 1 and tier 2 cities. But last mile delivery due to orders coming from remote places or outskirts of a city can be a challenge. I think that here local players can come up and help the bigger ones in fulfilling the last mile delivery. And with volumes growing exponentially, can help local players to grow and expand faster.

The above factors are based on my views. Please feel free to write about other factors from your experience and views that has given a boost to e-commerce in India.

February 10, 2012

Make your Assets Green, as Dollar is Green

In some of my recent conversations with clients and colleagues, while discussing asset management, we also discussed "green" which was little unusual some time ago in EAM context, but not any longer.

Companies have started talking seriously about reducing carbon emission, saving water and electricity, waste reduction etc for which asset management packages would play significant roles. After all, these "greening" measures would need sensors, automation, control mechanism and dashboards. In order to make use of this entire real time data, focus would be on software applications those can monitor, capture, weave the data together and take decision accordingly.

There is a scope of "green" virtually everywhere - Offices, Datacenters, vehicles, buildings, manufacturing assets etc. At the same time, implementing green is not simple as well, as in many cases it may require design changes, new capital investment and integrating with new control systems. For some of the very old assets, it might not even be feasible also to try converting them to green due to huge investment and return on investment many not be right.

Probably the easier areas to start with are building automation, datacenters and fleet management as some sort of basic automation already exists within these areas. Heavy and manufacturing assets could be next. Manufacturing assets coupled with precision control systems and historian databases can be monitored and controlled remotely to make them intelligent. These intelligent assets would speak about themselves indicating their health and energy consumption pattern, which can be used to make them green.

At the same time, making assets greener would need significant investment initially, and though results would be seen immediately but complete return on investment would take time due to small, but perpetual, savings. So, greening assets should also be seen from a financial sense perspective. Also, I don't think that companies want to make their assets green just because of some social responsibility; it should also make business sense, as the investment is high.

Within Infosys also, we have target of being a carbon neutral company by year 2017.

February 8, 2012

A New Lens for Supply Chain Roadmaps

Enterprise-wide supply chain transformations begin with a clear articulation of business objectives that the program is expected to achieve. They expand into an analysis of revenue-accruing & cost-optimizing functions, and result in the identification of capabilities that the organization aspires to develop or enhance. Distillation of such capabilities leads to the establishment of the right solution set (package or custom solution) through an evaluation of alternatives. Finally, a phased roadmap is laid out that sequences the timelines and roll-out of identified solutions. After spending nearly a year to narrow down the roadmap and solution set, the execution phase begins with the actual implementation and roll-out of the identified solutions in a phased manner. This structured approach has been followed for a long time with very good results. And when results turn out not so good, 'execution' gets blamed.

But isn't execution a very wide brushstroke? Was everything prior to execution correct? Are poor results only attributable to the usual suspects such as 'weak change control board', 'less than ideal program management', 'schedule/cost overruns', 'poor definition of requirements' etc?

I have often wondered whether the seeds to less-impactful programs (I prefer not to use the word 'failed programs' because successful programs can also be less impactful) are sown prior to execution when organizations do not have the right cross-functional team to assess current state, define future capabilities and perform gap analysis. Even though we acknowledge that today's supply chains are more integrated than ever, there is a tendency to view supply chain problems primarily through the prism of organizational functions. Interconnectedness gets missed when such problems are analyzed within organizational silos and not from an end to end perspective. Compounding the issue is the sudden realization within an organization that it has spent nearly a year in 'discussions', and that it is now time for 'action'. The result is usually a supply chain roadmap that is more functional than operational, and aligned to 'getting quick wins' and 'plucking low hanging fruit'.

Let us take an initiative such as Inventory Optimization as an example. Somewhere along the year-long journey of cataloging requirements and assessing gaps, inventory optimization takes a SKU rationalization flavor and the goal turns to the avoidance of SKU proliferation. The resulting solution set focuses on master data management, demand planning and replenishment management systems, and the sequence in which they must be implemented. The low hanging fruit has been plucked and everyone is happy.

But what has been lost is an opportunity to look at inventory optimization through the lens of revenue generation and cost optimization. A cross-functional team would have correctly diagnosed that SKU rationalization requires both SKU reduction (to streamline supply chain costs) and SKU addition (to fulfill untapped demand). It would have institutionalized online strategies to capture customer preferences to tailor revenue-enhancing online offerings. It would have evaluated Analytics to derive insight on future home-runs. It would have changed warehouse operations to create an agile value-added services organization. And once it had a handle on the final SKU list along with its demand, it would have negotiated much better price agreements with LTL and parcel carriers.

What you now have is a broader solution set to address the same problem encompassing Master Data Management, Demand Planning, Replenishment Management, Web Analytics, Order Capture, Warehouse Management Systems, and Transportation Management Systems. You can also be assured that the resulting phased roadmap will be more comprehensive than the one defined earlier.

Enterprise transformations are a multi-year exercise in the making. While it is perfectly understandable to be itching for the actual implementation to begin after months of meetings and conferences, it may be equally worthwhile to use the right lens early in the process to validate that supply chain roadmaps remain multi-disciplinary. After all, execution is not the only culprit in less-impactful supply chain transformations.

February 6, 2012

Supply Chain Agility - Is it for Real?

Supply Chain Agility represents how fast a supply chain responds to the changes in environment, customer preferences, competitive forces etc. It doesn't talk about random variations in executing day-to-day supply chain operations. It rather  specifies how a company's supply chain responds to changes,  once business is aware of external changes which can negatively/positively affect the business in achieving its objectives. It is a measure of how companies adapt their supply chain to these changes and then how fast it is able to achieve it.

Supply Chain Agility comes with a cost and sometimes that cost might be huge enough to turn down the profitability. Companies have to decide how much agile the business has to be and where in the value chain they need agility and whether it  fits in well with overall strategy of the company.

Sensing the change much in advance gives lot of room for companies  to respond to changes in business environment. That said leveraging this knowledge to proactively respond  to the change with the right velocity, differentiates winners from laggards.

Companies aspiring to be Agile should build flexible organization and design flexible processes. Organizational structure should encourage co-ordination among various departments/units within the same organization as well as partners (Vendors, Logistics Partners etc.).

Setting target for lead times and then working towards reducing those lead times specially "Order to Fulfillment" lead time would greatly help organizations achieve the velocity that is needed to be Agile in today's competitive and changing business environment. Velocity, in how information progresses across the supply chain and how fast the physical product moves down the supply chain, is a critical factor in being a leader among the pack.

Thus Advanced Sensing, Flexibility, Coordination and Velocity are four pillars for achieving an Agile Supply Chain.

"Advanced Sensing + Flexibility + Co-ordination + Velocity = Agility"

And, IT systems can greatly help in strengthening all the four pillars of Agility. It would need Business Process Re-engineering (BPR) along with Best of Breed IT systems to achieve this goal and choosing a right transformation partner like Infosys would be the key towards building an Agile Supply Chain. 

In my next blog, I will share my point of view on how each of these pillars can be strengthened using the right processes and best of breed IT systems in the meanwhile, do share your opinion on my thoughts on Supply chain agility.

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