Supply Chain - Fundamental Rethinking

Secret to Productivity

2011-08-19T20:07:00.000+05:30

An article based on shop floor observation...

http://www.bloomberg.com/news/2011-08-18/secret-to-productivity-found-at-busy-auto-plant-syverson-levitt-list.html

The worlds largest automaker

2011-08-05T20:56:00.000+05:30

Finally GM has sold more cars than Toyota! Will it sustain?

http://www.bloomberg.com/news/2011-08-05/gm-tops-toyota-as-largest-automaker-on-japan-quake.html

Goldman Sachs & Aluminium Industry supply chain?

2011-07-28T16:59:00.003+05:30

A rare example of organisational diversified interests. Goldman Sachs holds the inventory of aluminium in its warehouses located in Detroit. It's as profitable an investment as much as the banking operations...

http://in.reuters.com/article/2011/07/28/idINIndia-58499020110728

Quite an article & an eye opener for those who have something to say on 'core competence' of an organisation!

Inventory Performance 2011

2011-07-22T21:13:00.000+05:30

Most of the supply chain managers always think - Inventory - when they think - Supply Chain.

The compilation of cross industry inventory statistics is a good study to have knowledge of. The link below is a snapshot of key numbers.

http://www.scdigest.com/assets/FirstThoughts/11-07-22.php?cid=4759&ctype=content

The Chief Supply Chain Officer Report 2011

2011-07-19T07:42:00.002+05:30

One of the latest surveys in Supply Chain. It offers insights into how Supply Chain is perceived to help organisations in creating sustainable value.

http://www.scmworld.com/?page=CSCOReport2011

One can either watch the video or download the report.

3PL - Strategies for the New Reality

2011-04-06T08:51:00.000+05:30

A good read for appreciating the nuances of 3PL & how the world leaders in the domain are shaping up their strategies.

http://events.eft.com/3pl/CEO-QA2010-11.pdf

Image based Barcode

2011-03-30T16:51:00.000+05:30

I like the new concept.

http://www.scmr.com/article/image-based_barcode_readers_transforming_the_logistics_industry/

You need to fill in the details to download the paper

Video on Supply Chain Visibility & Collaboration

2011-03-21T20:08:00.000+05:30

Much has been always discussed on the importance of supply chain visibility & collaboration. One more in the pool of such discussions although with a technology bias

http://www.scdigest.com/ASSETS/NEWSVIEWS/11-03-21-1.php?cid=4332&ctype=content

Stress Test for Global Supply Chain

2011-03-21T08:11:00.001+05:30

The impact of the Japan natural disaster on supply chains of large organisations.

http://www.nytimes.com/2011/03/20/business/20supply.html?pagewanted=1&_r=1

New Age Supply Chain

2011-03-16T11:58:00.000+05:30

Supply Chains evolve. Practices, Processes & Infrastructure have to adapt to new world realities. It was HLL a couple of decades back who made a shift from bottles to sachets which made a new supply chain evolve. Heart of the supply chain is the goal to meet the customer need. Meet it efficiently & effectively.

The recent visit to Big Bazaar initially made me feel that the Nano is a free gift on some purchases...a typical retailers strategy to attract customers. Little did i realize that a new supply chain is laid down where a retailer is a channel partner of an auto company. Perfectly discontinuous thoughts leading into a radical action. The link below from economic times is a confirmation that "Indigenous Management Practices" are needed to be local with a global perspective..

http://economictimes.indiatimes.com/news/news-by-industry/services/retailing/big-bazaar-helps-tata-nano-drive-sales/articleshow/7714901.cms

Ever heard of a retail outlet selling a car? Guess thats why Kishor Biyani wrote the book titled "It happens only in India".

(For records, i guess the sales only from Big Bazaar indicated in the article are more than total Nano Sales of November 2010)

Supply Chain Impact of Earthquake & Tsunami in Japan

2011-03-15T16:37:00.001+05:30

A country for long gained reputation for management principles & practices which changed the global landscape for Supply Chain. It produces worlds 19% of all technology solutions, 20% of all semi-conductors that the globe consumes (my gut feel is apart from food items, we need chips in every single product!). Maruti in India is carrying 300 - 350 units of the newly launched Kizashi & rest all is in Japan...

The global supply chains will take time to appreciate the impact & post the analysis devise strategies for absorbing future shocks. The Reuters article offers initial analysis of the impact of the Earthquake & Tsunami in Japan on Global Supply Chains.

http://www.reuters.com/article/2011/03/14/us-japan-quake-supplychain-idUSTRE72D1FQ20110314

Aligning Supply Chains with Real Customer Needs

2011-03-04T09:35:00.000+05:30

Organisations exist because there is an unmet customer demand. The value chain of an organisation is viable only if it meets the customer needs. An ill organised & fragmented supply chain leads to dissatisfied customer experience of the organisation.

The alignment of supply chain to meet the customer needs of time, cost, quality & service is the basis of competition. The article offers a good insight into the alignment parameters for Supply Chain to meet the real customer needs.

http://www.scdigest.com/ASSETS/FIRSTTHOUGHTS/11-03-03.php?cid=4272

Sustainable Supply Chain - Research report by Accenture

2011-03-02T09:42:00.002+05:30

Supply chain managers face ongoing pressure from their customers and from regulators to reduce carbon emissions and run "greener" operations. With WalMart, the world's largest purchasing organisation, making it mandatory for suppliers to go green, the impetus towards sustainability has gained momentum.

Impression persists in many organizations that implementing more sustainable processes and technologies will be costly. Is that the ground reality? Accenture in its research report indicates that going green is not costly. The study identifies the performance characteristics of supply chain organizations that are achieving high performance in both cost effectiveness and customer service along-with their performance against key sustainability measures.

Follow the link to read the synopsis of the report

http://www.accenture.com/us-en/Pages/insight-sustainable-supply-chain-summary.aspx

The Smarter Supply Chain of Future

2011-02-11T07:31:00.000+05:30

The global marketplace today has no equivalent in the history of organisation. Like economies and financial markets, supply chains have become global and interconnected. The "buffers" in the system have been reduced so much that have increased exposure to shocks and disruptions. Time, Cost, Speed & Quality attributes further increase the vulnerability of the supply chain.

How are supply chain executives coping? We may learn something about it in the IBM research report of 400 supply chain executives. Follow the link below;

ftp://public.dhe.ibm.com/common/ssi/ecm/en/gbe03163usen/GBE03163USEN.PDF

Enabling Supply Chain Visibility

2011-02-10T07:49:00.000+05:30

Organisation today face significantly increased complexity in their value chains. The challenges of rising customer service requirements, rising logistics costs and increased supply chain risk exposure are growing with every passing day. In this situation, lack of visibility and need for collaboration becomes increased in significance.

In that context the below is a good research paper by Aberdeen.

Aberdeen recently benchmarked over 150 companies with respect to their supply chain application deployment strategies including on-premise, SaaS, Managed services etc. This benchmark report explores the critical role that Cloud based solutions play in enabling visibility and collaboration for the extended Demand-Supply Networks.

Please use to the below link to download the paper.

http://www.kinaxis.com/campaign/scdigest-email-enabling-supply-chain-visibility/

Dell Supply Chain Transformation

2011-02-03T19:22:00.000+05:30

A good video-cast to attend in March 2011.

Follow the link to register

http://www.supplychainvideocasts.com/videocasts/dell_videocast.php#

2010 Top 25 Healthcare Supply Chains

2011-01-27T10:51:00.000+05:30

Pharmaceuticals industry remains as one of the most complex supply chains. Although the Supply Chain cost as a percentage to COGS is lower than many other industries, the impact that supply chain has on the customer is the highest in comparison with any other industry.

Gartner research has published their list of Top 25 Healthcare supply chains. The link below offers the synopsis

http://www.gartner.com/resources/209100/209188/the_healthcare_supply_chain__209188.pdf

Enterprise Risks

2011-01-26T15:29:00.000+05:30

One more recall by Toyota...adds to the importance of risk management processes in organisations

http://www.bloomberg.com/news/2011-01-26/toyota-to-recall-1-28-million-vehicles-in-japan-245-000-u-s-lexus-models.html

The power of Asia

2010-12-21T08:37:00.000+05:30

The rate of growth of the auto market will surely be one large trend for a long term..

http://www.bloomberg.com/news/2010-12-20/volkswagen-expects-china-growth-to-slow-on-capacity-update2-.html

Global Supply Chain disruptions

2010-12-07T15:30:00.002+05:30

A good article..

http://www.scmr.com/article/global_supply_chain_disruptions_on_the_rise/

Sourcing and Procurement in an Integrated Supply Chain

2010-11-01T13:12:00.002+05:30

A perspective on integrating Sourcing & Procurement in Supply Chain

A Primer on Sourcing and Procurement in an Integrated Supply Chain

Technology integration for Supply Chain Asset Utilization

2010-10-31T12:53:00.000+05:30

The advent of technology solutions have made the communication & availability of data a key value addition to managing supply chains. The slew of application typically deployed across the supply chain involve DRP, MRP or ERP solutions. Recently organisations have found utility of connecting the "shop floor to the top floor" through the use of Manufacturing Execution Systems (MES). Tracking & Tracing of inventory has increased due to Radio Frequency Identification (RFID).

One the probable ways to improve strategy, planning & execution of good inventory management across the organisation can be through integrating these two pieces of independent technology solutions. MES integrated with RFID has shown sustainable benefits of improved visibility to inventory. Hence the focus of best in class supply chain adopting MRP & RFID due to various competitive reasons has shifted from "Why" to implement to "How" to implement the integration solution. This involves establishing priorities leading into identification of what requires to be changed. The activities for implementing such a solution need to involve data capturing of on-hand stock, pipeline stock, storage & fleet locations.

MES integrated with RFID can lead to,

Improved market responsiveness, reduce inventory
Building supply chain visibility
Reduction in vendor lead time
Minimize cost & maximize customer satisfaction
Loading planning components in a time phase manner

Such solutions will provide managers the needed tools to improve inventory. Days are not too far off when we will be presented with amazing technology application which will further improve the supply chain asset utilization.

Video on - What is Supply Chain Management?

2010-10-21T10:55:00.000+05:30

A good video on Basics of Supply Chain Management

Supply Chain Flexibility

2010-10-20T09:00:00.000+05:30

Executives on Supply Chain Flexibility...

http://www.scdigest.com/ASSETS/FirstThoughts/10-10-15.php?cid=3821

Driving turn around through Improving Supply Chain

2010-10-18T08:00:00.000+05:30

A good case on Supply Chain Improvement initiatives

http://www.scmr.com/view/driving_a_turnaround_in_tumultuous_times/finance

Mass to Mass Customization to Micro Localisation!

2010-10-14T07:45:00.000+05:30

The evolution of management practices to bridge the gap between the customer expectations and the delivery capability of the organisation leads to discovery of ingenious processes.

We remember 1903 when Henry Ford bridged the gap between time & cost expectation vis-a-vis customization. Then the world got introduced to what is commonly understood as "Mass Production System". The basis of mass production was the complete & consistent interchangeability of parts & simplicity of attaching them to each other. These innovations made assembly line possible.

A new revolution due to wide spread use of technology - both for suppliers as well as consumers - led to expectations of customization. The supplier community retained the lever of mass while discovering new practices for customization. Dell led the management practices for Mass Customization which laid down the processes for meeting the customer demand.

The evolution in management practices to meet the customer demand seem to have taken a new turn. Introducing products with configuration, features, formulations or even ingredients to suit specific regions or communities is the new buzz. Call is "Micro-Localisation". The marketing folks would love this to be a reality as it takes them as close to the customer needs as much possible. So if you are a Bengali why not get a microwave with an auto-cook option for fish? If you are a South-Indian, the same auto-cook will be for idli and you are in the west or north, the auto-cook option will be for pavbhaji. The size of the market in India for each of the communities is large enough for marketing guys to make a business case for profitable market segmentation. I am sure the business case has justification.

How about the impact on the Supply Chain?

Cost of Poor Supply Chain Infrastructure

2010-09-03T09:34:00.000+05:30

The reason why we need better Supply Chain Infrastructure

http://economictimes.indiatimes.com/news/economy/finance/India-loses-65-bn-annually-due-to-poor-logistics-Report/articleshow/6475809.cms

Current Practices and Limitations of Supply Chain

2010-06-30T11:36:00.002+05:30

Recently I was a speaker at a conference - "Vision - 2015 - Demand Driven Supply Chains". I deliberated upon the "Current Practices and Limitations of Supply Chain".

Drawing from multiple perspectives encompassing People, Process and Technology aspects of Supply Chain I attempted to touch the breadth of the critical issues impairing the supply chain. The presentation that i used is at this location:

http://www.slideshare.net/pinak_k/current-practices-amp-limitations-of-supply-chain-pinak

Triangle of Competing Priorities

2010-04-29T14:39:00.006+05:30

Organisations are systems. They take input from the external environment, process it and give back the output to the external environment. The subystems of the organisation play their role in the cycle. A subsystem has a role for itself and a contribution towards the overall system. The delicate balance of individual goals and the system goals is an area where many organisations fail. Failure lacks reasoning for many as the subsystems seems to deliver what is expected out of them. It is apparent that individual achievements don't necessarily lead to organisational achievements. Something some where seems to be wrong.

Supply Chain is the central nervous system of an organisation. By the definition of being the central nervous sytstem it inherently has the accountability of the health of the system. A central nervous syetsm is still a 'subsystem' so is Supply Chain. In my understanding it is the role of the central nervous system to ensure the synchronization of the other subsystems to ensure system performance. Extending the same analogy to orgnisations, one subsystem which makes the rest 'dance to the same tune' (read: aligns to same objective) is the Supply Chain. It is likely that the role of supply chain hence will be critical and also a composite of multiple simultaneous 'competing priorities'.

Its the pull from multiple subsystems and the push from the overall system objective which represents the conflict and hence the challenge for a Supply Chain. The overlap of consistent objectives is pretty rare an occurence in organisation. In my experience of organisations I have observed that organisational objectives represent 'competing priorities' which a supply chain has to finely balance and deliver upon.

I term them as the 'Triangle of Competing Priorities'. Those are;

a. Reduce the working capitial

b. Reduce costs (transaction costs)

c. Offer world class customer service

The organisational objectives represent priorities which are naturally not in synchronised with each other. Balancing those necessarily means risk . Supply Chain hence can't eliminate risk. In the world of business, Supply Chain Risk is the most critical aspect of business management and seems to be least acted upon in the business.

In my experience, I know organisations appreciate that they have objectives to achieve, progressive ones acknowledge the "Triangle of Competing Priorities", am not sure if any are acting for mitigate Supply Chain Risk.

Risky is it not?

Responding to random event called 'Sales'

2010-04-27T15:23:00.001+05:30

'Demand Planning' has been in vogue for a while. Simply put its ancipating the probability of occurance of an event called 'Sales' led by an action by an entity called 'Customer'. Sometimes 'Consumer'.

Supply Chains have gotten themselves equipped with all possible ammunition to meet the 'demand' in the most efficient way. Processes have been laid down to forecast, parameters for identification of variations are more than what humanly is identifiable and demand planning process is an obession for most of the stake holders in the organisation. Network Analysis and Decisions have been the core of Supply Chain Design which dominantly exists for aligning and synchronising the supply side with demand (read: what the customer may need). Inventory policies are laid down with identification of safety stocks and reorder levels.In the supply chains which are mutli organisations and geographies, 'technology' becomes the back bone of the planning process. Hence Supply Chains have invested (rather over invested) is advanced planning and optimization softwares so as to remove all possible errors in anticipating demand.

Supply Chain have hence become extremely structured with well laid down supply chain network, planning processes and KPI's(!) to respond to an event called 'Sales' which by it's inherent characteristic is 'Random'. The probability of all the actions contributing to the event called 'Sales' (like Product, SKU, Packaging size, Price Point, Purchase point) make the overall probability of occurence of the event too thin to derive much from those calculations.

Wonder if 'Structure' can handle 'Randomness'. Structure by it's own definition implies construction which means organised with lesser degrees of freedom. Randomness necessarily lacks structure.

In today's Supply Chains, a random event called Sales led by the customers desire to purchase is being attempted to be responded through a well laid down, policy driven, Supply Chain Structure. Fundamentally doubt if this works.

Wake up Plan

2010-04-26T20:29:00.001+05:30

Organisations, as they grow, find business continuity to be a risk hence have a "Back Up Plan". Its also termed as 'Alternate Strategy', 'or may be 'Plan B'. It simply means that there always is a fall back option.

I have been wondering if Supply Chains also need a 'Wake Up Plan'? As Supply Chains have become more complex, highly interdependent, synchronous and almost working towards no room for 'blinking your eye' the possbility of a small lapse somewhere in the long mutli- partner chain can have tremendous cascading effects reaching very high proportions. To avoid any member in the supply chain to create a lapse, i like to have what i term as a 'Wake Up Plan'. It's just a system which keeps the system error proof so that organisations continue to march on their journey of supply chain excellence.

'Wake Up Plan'! I like my newly coined term.

Sustainable Supply Chain Excellence

2010-01-27T21:37:00.015+05:30

Organisations need to achieve excellence. Guess post the Tom Peter's book, In Search of Excellence, 25 years back, the term seems to have made organisations aspire for - Excellence. Supply Chain excellence is critical initiative for achieving organisational excellence. But what is excellence? It simply means the customers of my product or service choose me ahead of my competitors. Even when they have a choice. You don't follow benchmarks, you create one. (http://ageofdiscontinuity.blogspot.com/2009/06/supply-chain-excellence-and-relevance.html)

For sometime excellence was equated to Quality. Quality in turn was meetings specs. So excellence = meeting specs. The imitation of specs made the parameter redundant. It was so easy to meet the desired specs that competitors sooner than later made the organisation loose the competitive advantage. The product or service was thus 'commoditized'. If you can't differentiate, you can't claim excellence. So the revolution of making 'mass customization'. The lever moved from quality to transformation link of the supply chain. Organisations using that lever excelled for some time. A lever like manufacturing is easy to replicate. It requires the competitors to use a supply chain design which makes them achieve the same results. No more is excellence achieved.

The interesting part of the story is the way in which organisations try or have tried to achieve excellence is by 'configuring the supply chain' for its 'hard' components. Organisations change processes and practices, adopt to world class benchmarking for their inventory cycles, OEE, working capital cycles and logistics networks, undertake Process re-engieering for their procurement department or production or new product introduction and many more...but stay far away from achieving 'sustainable excellence'. My understanding is that all that is done to achieve excellence is the 'hard' part of the supply chain. Advantages like new technology have their life before the competitor makes it redundant, improving inventory turns is only to a limit before the benchmark you followed was turned over by some better number..

Sustainable excellence is - People. Something which can't be replicated by your competitor hence will be sustainable. Supply Chain excellence is about People.

Nurturing the Connectors, Salesman and Maven's of your Supply Chain!
(http://ageofdiscontinuity.blogspot.com/2009/12/connectors-and-saleman-in-supply-chain.html)
(http://ageofdiscontinuity.blogspot.com/2009/09/mavens-in-supply-chain.html)

Are Your Sources of Strategic Advantage Eroding? - HBR

2009-12-17T14:34:00.003+05:30

I guess this link on sources of strategic advantages has to be viewed in the context of Supply Chain.

Read the article here

Connectors and Salesman in Supply Chain

2009-12-13T22:04:00.005+05:30

While Mavens (http://ageofdiscontinuity.blogspot.com/2009/09/mavens-in-supply-chain.html) represent a much needed community in the supply chain universe, the need for making a change be acceptable to the supply chain organization needs a different category of individuals.

A supply chain is one of the organizational entities which undergoes a change more than any other organizational function. The tighter the competition in the market the more agile a supply chain needs to become. The higher the pricing pressure the leaner supply chain has to be. The more regulated the market becomes the more transparent the supply chain needs to be. The continuous changes in the internal as well as external business environment imply that the supply chain is under continuous change. Most of the “transformational” initiatives in the organization are taken to improve it’s supply chain. The large scale projects in Business Process re-engineering or Theory of constraints driven Viable Vision Projects or be it a Lean Six sigma initiative for continuous improvement. They all impact the Operations of the organization. And these initiatives need the “buy-in” of multiple supply chain stakeholders.

In my supply chain consulting projects across multiple geographies I have found a common thread amongst supply chain individual constituents. A large scale change needs so many more people to believe in the vision and invariably it is not the senior most in the supply chain team who can make other supply chain stakeholders believe in the initiative for change in process or policies or tools that they have been using in their current roles. There are individuals who hierarchy wise may not represent organizational power house but they are very well “connected” in the supply chain. They represent the link between the initiative and it’s adoption. I like to call them as “Connectors”. They connect with multiple people & have the network in place. The connectors are a breed which typically would have spent long time in the organization, wish to prove their utility to the organization, & mostly are not very high in the hierarchy. Connectors are well at networking. They have the ability to spread the message. Connectors are needed in Supply Chains to ensure the communication can easily flow through the network.

Connector’s have limitation. They are not influencers. For this, in a supply chain we need “Salesman”. These are the torchbearers of any initiative and have the ability to convince others. Salesmen are the energetic, flamboyant and dare to do kinds in the supply chain. They represent themselves as the front end of an initiative. Salesman is the individual who will own the initiative for making it fly with others. In large scale supply chain projects, these salesmen play an important role to make the project a success. As external consultants to organizations I have always found them to be the first ones to take a baton and carry it with force. Typical Salesman will be forthright, reasonably higher in the hierarchy, has significant stakes in the project in making his or her career successful, can manage and lead rather than do it by him or herself, and is aimed to achieve higher goals.

All along my consulting career I have found Mavens’, Connectors and Salesman. They all have a role in shaping up supply chains. The prudence of Supply Chain organizations is in identifying these characters and then making them assume their own roles to make a supply chain initiative successful.

Maven's in Supply Chain

2009-09-15T10:09:00.000+05:30

It’s now almost a cliché that the supply chains are growing longer and more complex. The increased activity and the resulting complexity in supply chains is attempted to be optimized using contemporary processes and / or technology solutions. Supply Chain Processes have also evolved into leaner practices leading to make organizations more responsive and flexible. Advanced Planning and Optimization techniques have digitized most of planning processes using business rules and business intelligence solution which can simulate multiple scenarios.

The central nervous system of Supply Chain across the industries and geographies still seem to be individuals who posses knowledge. It’s not too difficult to find a typical scenario on the shop floor where some machine has just gone down. All digital solutions have run their simulations to find the solution to the problem. But its intelligence still falls short of finding the solution. Then one person who knows the machine and the functioning of it knows where the root cause of the problem is and offers the solution. (S)He possesses knowledge which is shared voluntarily. Or an assembly on the floor is halted due to non arrival of the material from the vendor. The Procurement folks are running all over the place to identify an alternate source either through their identified (approved) vendors list maintained in a sophisticated information technology system or their own network. While all this is happening a person from the shop floor holds the knowledge of a source that can get the material of the specified quality within the specified time. This person has nothing to do with sourcing but still possesses the knowledge of where the solution can come from. And is solving his/her problem by solving others problem.

Maven’s are what these folks in the organizations are. Maven is a Yiddish word. It means one who accumulates knowledge and in case of an epidemic act as a data bank. And more importantly Maven’s don’t collect information passively. Once they know there is a good deal available, they will be more than willing to share the information that they have collected. They turn out to be critical in cases of disruption as they know what other’s don’t. In Supply Chains we talk about “disruptions”, “risk” and “collaboration”. It needs an intent from the organizational constituents (read: People) to lay down the culture of collaboration. Supply chains need folks who not only posses’ knowledge but know how to pass it along. Supply chain need Maven’s who are kind of people who want to help for no other reason than they like to help! It would transform a supply chain from being one with barriers to a supply chain which is nimble as Maven’s would spread the virus (in it’s positive sense!) of collecting knowledge, looking for new ideas, and more importantly share those unselfishly. In the process Maven’s gain attention of the organizational leaders. This means more attention to themselves. No amount of process improvements or digitization can ever replace the importance of Maven’s from organizations, and particularly Supply Chain Organizations’. Core of supply chain is “relationships”. Means People. People who are excellent accumulators of knowledge and will volunteer to share it to help overcome a difficult situation. And Maven’s are more than experts and socially motivated to make it happen than anyone else.

We need more Maven’s to make Supply Chain responsive and agile. Talk Talent Management in Supply Chain!!

Supply Chain Innovation

2009-06-19T16:13:00.008+05:30

A few years back when I quit my SAP consultants’ job stating to my boss that I came from and wish to go back to Supply Chain domain as there is a lot happening there, the response that I got was that listen to your heart but before you go let me know ONE supply chain innovation in the recent past which is not a function of technology. Leaving the bias to technology (as after all he was head of a SAP practice) it’s a profound question.

Innovation is a breakthrough in a system which is path breaking. It may or may not have similarities with the current way of doing things. e.g. In the past organizations had supply chains which were functionally oriented hence used to have a procurement function, a planning function, a production function, a warehousing function, a logistics function and so on. Each had their individual objectives to be met which may not be consistent with over all organizational objectives. The term used was “Local Maxima”. In later 80’s, I guess, organizations appreciated the concept of an end to end supply chain and local maxima gave way to “Global Optima”. Global Optima is path breaking hence an innovation.

We have seen organizations innovating on products and services. Organizations’ have spent enormous time in design innovation. Innovation seems to be at the heart of Business models and frameworks. But when it is Supply Chain organizations seem to lack. Most of the contemporary innovations which get elaborated and discussed in a supply chain innovation context seem to be a decade old the least. One still feels energized to reduce inventory, reduce operating expenses, to adopt a Kaizen program for continuous improvement, undertake a Six Sigma project or do a Business Process Reengineering for the supply chain. Advanced Supply chains seem to talk visibility, traceability, continuous replenishment, use of 3 PL or 4 PL and collaborations with supply chain partners etc. The advanced supply chains still have innovations which were discovered at-least a decade ago! And on top, these innovations all seem to be possible more due to advancement in technology rather than a supply chain effort for innovation.

The contemporary Supply Chain, which has been stated to be the central nervous system for organizations, is expected to have objectives of revenue enhancement, cost containment and sustainability. Organizations have focused so much on product design/services innovation that as compared to those initiatives the progress made of supply chain innovations is pretty less. And still we hear that – Competition is not between organizations, it’s between the supply chains of organizations. Most of the organizations are no more monopolistic. Most of them offer products or services which can’t even be differentiated. Or at least consumers may not be able to appreciate that. So aligning organizations with the interests of consumers would mean making the organization work along the consumers’ expectations. In simple terms it means – Avoid Commoditization. The goal is achievable through investments in Supply Chain innovation.

I believe that organizations will have to follow sets of principles which will form the base for a sustainable supply chain innovation. e.g. can I have my manufacturing done on the ship which is moving from China to USA, and gets required raw material at multiple ports on its way? This virtual factory will be the kind of supply innovation for future!

Supply Chain excellence and relevance of benchmarking

2009-06-15T18:14:00.010+05:30

In the advent of supply chains somewhere in the root of its aspirations lies a factor of achieving excellence. Organizations need to excel which means components of organizations need to excel. Logistics, the movement of goods, has now been replaced by Supply Chain, end to end flow of goods, knowledge, finance and information. The extent to which an organization can succeed in the market place is now a factor of its excellence in Supply Chain. The cliché is – Competition is no more between two organizations, it’s between the Supply Chains of two organizations.

The industrial revolution leading into technology innovations has transpired organizations to adapt to multiple and dynamic business environments. The organizations metamorphosed many times all along the history but the need for achieving excellence has consistently been the key driver for survival and growth. Alignment and Integration of Supply Chain with the organizational objectives is a critical parameter for success. The alignment of Supply Chain to corporate objectives generally follows the top-down approach where organization goals are taken as inputs for supply chain. Supply Chains are then aligned with the goals through multiple methodologies and approaches.

Supply Chain Excellence is achieved when the supply chain supports, enhances and also integrates itself with the corporate objective. Off late, Supply chains have been viewed more as revenue generating opportunities rather than cost functions. In the process of reaching the goals lies the process of setting objectives for supply chains. In my personal experience of a Supply Chain consultant, I have come across this issue of goal setting in supply chain as one of the most acute in practice. The first and foremost question is – where am I today? It’s desirable for supply chain to start with an exercise to identify parameters against which it is being measured today and its achievement against those parameters.

The critical question to be addressed is – are the measures appropriate
a. In the width (coverage of activities)
b. In their depth (level of achievement expected)

Supply Chains have to have a holistic viewpoint for their overall operations to be measured for their excellence. So the fundamental questions to be answered are;
a. What to measure?
b. How to measure?

To respond to these issues, supply Chains have used multiple philosophies to aspire for higher goals, which means “excellence”. One of the most aggressively used and implemented technique is “Benchmarking”. It was one of the most favoured ways to aspire to become someone like the leader in the in the industry. Founded on the firm belief that aspiration for excellence ends with the quest to achieve similar results as the best in the industry, it guided organizations to a self created maze of measures and numbers. As a practitioner in the former assignments and a consultant in the current, I realize that;

a. Finding absolute relevant data is a humungous challenge. It’s rare to find the right organization, in the right industry subsector and in the same geographic area. The mismatch on either of the parameters will lead to erroneous benchmark, particularly so in emerging country contexts. e.g. an organization in engine manufacturing of a size of 100 million USD with operations only in one country will been benchmarking data of a similar organization. The limitation experienced normally is lack of availability of relevant data.

b. Benchmarking practices lack appreciation for process maturity of organizations.

c. Lack of justified benchmarking created a backlash of emotions and lack of acceptance by users.

d. Excellence is achieved by surpassing competition. Benchmarking limits organizational thinking to achieve results to match the “best”, not surpassing the best.

The process used for designing a supply chain for excellence hence seems to be limited if only benchmarking is used by organizations. Being relevant is no proof of being adequate.

A question of GAME change for Supply Chains

2009-06-10T16:55:00.003+05:30

In the aftermath of the 2008 crises, the landscape of consumption in the largest economy of the world will undergo a permanant change. An economy which consumed the largest and lived on credit will make a life style change to savings. This will dampen the demand for products and services.

Organisations across the globe will have one time downward impact in the demand for their products and services to be digested. But the implications of that will create a large mismatch of demand and supply for significant time in future. Most of the supply (read: capacity) which got built across the globe in the recent past will suddenly turn out to be "excess" on a permanant basis. The demand destruction of this kind will create a new supply chain challenge which on one side will be price elastic demand while on the other side will have high costs to be absorbed for the supply chain assets that got created.

Many of the suply chains are global in nature for which demand exists in developed world while supply sources are in the developing world. That means countries like India, China and the likes have built their supply chain assets (read: capacities) based on consumption expected. These will now be challenged for meeting efficiency and effectivess performance parameters.

We now have a situation where;
a) the working capital requirements of the supply chain have gone up due to the asset base, while the demand has undergone a permanent downward revision.
b) The pricing power will be less as the consumer will want to spend less (as he wants to save more!) and supply will exceed the demand.

Organisations across the globe need to make a plan for GAME changing supply chains which will result into meeting the same Pre 2008 "customer" with his / her new post 2009 demands of cost, efficiency, speed and quality.