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Orchestration-Examples

N. Viswanadham n.viswanadham@gmail.com

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B2B Logistics Chain

!  Logistics Network with several companies coming together to offer the service delivery.

!  Modular with modular organization structure !  The service network is formed for each order from

the collection of 2PLs or 3 PLs !  Each delivery is monitored for quality: time,

damage, etc !  Planning of the resources and their maintenance is

done by the coordinator generally a 4PL !  Execution of the each delivery is monitored

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B2B Logistics:

Redesign using Cloud & Big Data

Ware house

Freight forwarding

Customs clearance

Airlines/ Shiplines

Customs clearance

Freight forwarding

Ware house B

uyer

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E-Capacity E-Inventory E-Visibility

Cloud IS

IS IS

IS

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Reconstructed

Orchestrate

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The Indian Logistics Growth Model !  The logistics Industry moved from as a function under

procurement or sales managing end-to-end goods movement to modular clusters or stacks populated by specialist firms and infrastructure authorities.

!  The industry stack divides activities into layers that are complementary to each other, as depicted in Figure.

!  Most companies specialize in one or a few layers and rely on other companies to offer complementary components.

!  Each of these components is layered above or below the other, and communicates through more or less standard interfaces.

!  In this splintered atmosphere with no scale and big industry push the best model for Indian logistics is …..

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The Logistics Ecosystem

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191206 N.Viswanadham

LLP Business Model

Supplier 2 & 3 PLs Contract Manufacturer

Execution

LLP

Planning, Coordination and Overall Responsibility

Customer Orders

Operational Status

Plans

Material Flow

Payment

Service

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Execution : Online Supervisory Control

!  4PLs provide end to end B2B logistics services !  Coordinate all the services needed for the goods transfer

–  Warehousing at Shipper and Distributor Ends –  Arrange for the trucks all the through the Journey –  Manages the customs clearance at Ports or Airports –  Loading and Unloading , Cross Docking, Merge in transit as

required –  Manage all exceptions through a control room: Truck failure,

Truck registration, Payments at customs, Driver schedules, Expediting,…..

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LLP- Execution excellence

The LLP provides value added services to customers, supports and/or manages the production of multiple suppliers, coordinates their activities, assumes the responsibility for the logistics and the management of collaborative relations in the network, and aligns the participants’ objectives with those of the complete chain.

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Penske works with Genpact in India and Mexico to

improve efficiency and customer service. !  Genpact acts as a subsidiary of Penske logistics.

–  BPO workers in India and Mexico !  arrange for titles and registrations for the trucks leased by Genpact in

the United States. !  check the customer’s credit status and arrange for all the necessary

permits. If the truck gets stuck at a weigh station, failing to fulfill some permits, the truck driver would call an 800 number, and the BPO staff transmits the necessary documentation to the weigh station and the truck would be on road within a half-hour.

–  After the trip, the driver’s log would be shipped to a Genpact facility in Juarez, Mexico, where mileage, tax, toll, and fuel data are punched into Penske computers and then processed in India.

!  Genpact manages the logistical services of Penske, such as just-in-time delivery of components to US factories and shipping finished goods to retailers and home consumers.

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Mandi : Orchestrator in Indian Agricultural Markets

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Mandi: Agricultural market in India

•  In India, wholesale trade of agri products happens through Mandis. Trade outside not permitted.

•  Mandis are established under the Agriculture Product Marketing Committee (APMC) act to help small farmers (300M) get fair price and protect them from the traders

•  Governments have established about 7000 Mandis . •  Farmers bring agricultural produce to Mandi where it is

auctioned and sold to traders (or to commission agents) •  Classical open-cry ascending price auction is the format used •  Traders later sell to wholesalers, retailers or companies.

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Social Network of The Mandi

•  The players include •  Farmers (f),Commission Agents

(CA),Traders (T), Industries (In), Retailers (R), Wholesalers (W), Consumers ( C),APMC / Mandi Staff

•  These are desperate groups with no ties.

•  Structural holes exist among these communities.

•  Mandi is supposed to fill in the holes through interfaces, collaboration, etc.

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Farmer’s Dilemma

!  Where and when to sell the produce: –  Sell to the village trader

or commission agent –  Travel to the nearest

Mandi or another Mandi in a city?

!  Mandis are far off, long wait for auction date, Middlemen interference

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Analysis of the Mandi Network

!  The current agricultural network has structural holes. –  The farmers (sellers) and the consumers (buyers) are not allowed to

buy/sell directly with each other and are forced to transact via the Mandi.

!  Trader monopoly exists –  In the Mandi system, traders have a high bargaining power –  Traders can form a cartel and inhibit the ascending price auction from

taking place !  Supply Demand mismatch

–  Farmers do not follow demand driven crop cultivation –  Follow neighbors or past history –  Contract farming is not popular

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Mandi Electronic Exchange

Empowering the farmers !  Transform current Mandi to an electronic market place

!  Farmers can directly sell their produce online to consumer, brokers, retailers, etc breaking the monopoly of middlemen.

!  The Mandi exchange will also provide (with local language support) –  Latest market price of all crops and minimum support prices (MSP) –  Access to financial services –  Provide real time weather, seeds, fertilizers etc. information

!  Fills the structural hole by connecting Farmers, Quality control , Transporters , and Consumers

!  Follows the path laid by Safal, Amul, Nadini, cooperatives

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t Success of Mandi

!  Mandi Acts as an orchestrator and connects all the stakeholders in the agricultural ecosystem

!  Estimates the demand for each commodity and advises farmers on how many acres of cultivation is required every year

!  Act as an enabler for farmers to become socially connected

!  Help farmers to establish cooperatives (like AMUL) and do value addition

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Orchestrating the Print Supply Chain

N.Viswanadham

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"Print Supply Chain Governance Model "

N.Viswanadham

Manager Printers

Manager Courier Services

Manager Bank Branch

Interface

Audit – Partners of partners, finances,

Case History

Quality Performance

Track Demand

Track Delivery

Payment

Orchestrator

Audit – Partners of partners, finances,

Case History

Quality Performance Feedback

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Conclusions- Print SCN

!  Mapping the print supply chain, finding the strategic partners for supplies, printing, courier, technology changes and their effect on production distribution and business models, globalization and outsourcing strategies and finally having suitable organization for managing the entire supply chain is nontrivial and requires domain knowledge of the industry both in terms of geography and goods.

!  Connections with the stake holders and interconnecting with them through personal and business relationships are the soft skills needed.

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Risks of Orchestration and Mitigation Strategies

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Orchestration Is a High Risk Model

! The orchestrating company mobilizes the needed assets of other companies to support its own growth initiatives

! Once a company has chosen to orchestrate, it’s difficult (though not impossible) for it to go back and reintegrate

! Here is the story of Schwinn, the iconic American bicycle manufacturer, allowed orchestration to hollow out the core.

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Story of Schwinn !  Schwinn owned almost 20 % of U.S. market and produced

hundreds of thousands of bikes a year in five factories. –  It was the bicycle that all American children dreamed of owning –  Schwinn stood for cutting-edge innovation and unmatched

quality. !  Schwinn’s management felt that the company’s legacy of

innovation and customer relationships were the most valuable assets, so they outsourced production to a small supplier in Taiwan, Giant Manufacturing Corporation.

!  Schwinn did not ask for a stake in Giant even as it handed over four-fifths of its bicycle production to its partner.

!  The supplier gained knowledge and expertise, cut costs to become a far better bike maker than its partner.

!  Giant is now one of the world’s largest bicycle companies.

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Hollowing Out

!  Orchestration can look very tempting and

seductively easy “let your partners do a lot of the hard work while you sit back and reap the rewards”.

!  But there is substantial risk lurking beneath the attractive surface. –  Unused internal capabilities can quickly atrophy. –  Collaborators facilitating the process can get in the way. –  Partners may unexpectedly become competitors

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What is the solution?

! Governance Model: get involved in orchastration

! Keep some production at home: call it high end

! Run it as a JV ! Keep innovating and make the outsourced

model outdated and look for a new partner The need for network orchestration can be

seen most clearly in the failures of off shoring, outsourcing and strategic alliances.

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Conclusions !  Value of orchestration in manufacturing or service

networks comes from integration, bridging borders as well as leveraging the company’s connections and knowledge across the network.

!  Modeling & Analysis are in early stages !  Capability to connect to competencies - the core

competency of network orchestration- is as important as firm specific capabilities

!  Cloud, Big data and other technological advances will fuel orchestration as a popular mode of governance

!  Orchestration by NGOs and Foundations to ensure food security, health, affordable housing and skill based education would benefit the poor sections of the population.

N.Viswanadham