SCMSCM OptimizationOptimization By By Leveraging Technology Leveraging Technology

Aroon Mehta for IIMM-Pune

Agenda.

SCM ConceptsSCM Road Map

SCM TechnologySCM innovationsSCM Illustrations SCM

Open session

SCM-> ALL ABOUT LEVERAGE.

Consider how to turn an aircraft. Aircrafts are steered through the use of a system of ailerons on the wings and the rudder at the tail of the aircraft.

In comparison to the aircraft, the ailerons and the rudder are very small; however, leverage allows them to turn the large aircraft. In other words, putting the right combination of a little leverage on the right places allows

incredible PERFORMANCE

SCM’S FOUNDATION IS ON THIS SIMPLE BASE.

To Deliver & Optimize your company’s

Services, Products, Communications, Support , Partnering Integrating.

SCM’S Foundation Layer

.

4 C SCM Formula.

C Customer C Competition C Cost C Connect

RECAP

. What is a Supply Chain ?

Supply chains are linkages of partially discrete, yet interdependent entities-processes that collectively transform raw materials into finished products.

Supply chains connect the functions of inbound activities (such as purchasing) with outbound activities (such as logistics and “place” activities).

Highly Customer Centric

Formal Definition- SCM

A supply chain is a “network of facilities and activities that performs the functions of product development, procurement of material from suppliers, the movement of materials between

facilities, the manufacturing of Products , the distribution of finished goods to customers, and

after-market support for sustainment ”

Highly Customer Centric

. SCM- KEY UNTILITIES/DP’S

TIME PLACE DELIVERY

SCM’S GOALSSCM’S GOALS

– Reduce cost Reduce cost – Improve ROA Improve ROA – Enhance visibilityEnhance visibility– Build actionable competencies.Build actionable competencies.– Backend IintegrationBackend Iintegration– MICRO & MACRO MICRO & MACRO

TransperancyTransperancy– Simplify the supply chainSimplify the supply chainSource: Global Supply Chain Associates (GSCA) 1999

A typical SupplyA typical SupplyChain Driven OrganizationChain Driven Organization

A supply chain organization is A supply chain organization is a relatively enduring interfirm a relatively enduring interfirm cooperative that uses cooperative that uses resources from all participants resources from all participants to accomplish shared and to accomplish shared and independent goals of its independent goals of its

membersmembers..

WHY VALUE CHAIN IN SCM.

The term value chain means that at each stage of the ORDER-TO-DELIVERY SYSTEM,

value is added to the product or service, for customer centric norms.

SCM NW TheorySCM NW Theory

Actor Bonds

Resource Ties Activity Links

FactorEndowments

DemandConditions

Firm Strategy,Structure, and

Rivalry

Related andSupportingIndustries

.

CompetitiveCompetitiveAdvantageAdvantage

Source: Porter 1990

Primary SCM KRA’sPrimary SCM KRA’s

Primary activitiesPrimary activities are the SIX basic functions are the SIX basic functions needed to needed to physically produce a product or service, deliver and market it to physically produce a product or service, deliver and market it to buyers, and support it after the sale. buyers, and support it after the sale.

– Inbound logisticsInbound logistics– Outbound logisticsOutbound logistics– Support function.Support function.– Technology leverage.Technology leverage.– Monitoring infrastructureMonitoring infrastructure

– QOHRQOHR..

Support FunctionSupport Function

Support ActivitiesSupport Activities provide inputs or provide inputs or infrastructure in support of primary infrastructure in support of primary activities. These supporting activities activities. These supporting activities stretch stretch

Across the entire value chain of SCMAcross the entire value chain of SCM impact each primary activity.impact each primary activity. MOST IGNORED AREA IN SCM.MOST IGNORED AREA IN SCM. Leveraging IT For total value chain- a Leveraging IT For total value chain- a

MUSTMUST

. CONCEPT # 1. STARTUP DRIVER

Challenge the Legacy & STATUS QUO as an Organization & not as an Individual

. CONCEPT # 2. Creation of a virtual Organization with,

Vendors, Customers, Employees as a partnering entities in a truly transparent Mode, at all levels of operations, both in Strategy & Implementation.

. CONCEPT # 3 Transparent workflow cycle. Database driven. Escalation triggers Tracking metrics Redundancy removal. Lean SCM/SCP

. CONCEPT # 04

SCM dependency is heavy on Real Time integrated backend systems and organization’s transperency & Requires State of the Art Technology & it’s fullest implementation.

Competencies Needed for Efficient Competencies Needed for Efficient SCMSCM

PositioningPositioning The selection of strategic and The selection of strategic and structural approaches to guide structural approaches to guide global operationsglobal operations

IntegrationIntegration The establishment of what to do The establishment of what to do and how to do it creativelyand how to do it creatively

AgilityAgility The achievement and retention of The achievement and retention of global competitiveness and global global competitiveness and global customer successcustomer success

QOHRQOHR A MUST. Before SCM INITIATIVE.A MUST. Before SCM INITIATIVE.

MeasurementMeasurement The internal and external The internal and external monitoring of global operationsmonitoring of global operations

Source: Michigan State University (1995)

1. Cut Cost Drivers2. Reduce Downtime 3. Compliance no compromise4. People restructuring5. MENTORING & MONITORING6. Spares/Logistics thru system’s7. Communication8. SCM revamp & IT (Real time)

SCM‘S IMPACT DRIVERS

Leveraging ITLeveraging IT

SCM’S SCM’S Technology MapTechnology Map

SCM

CRM

B2B

ERP WITH100 %

SPREAD

Enterprise Portal

IT-BACKBONE

RFIDBAR CODING

eCOM

B2B

ERP

Enterprise Portal

People Technology

Processes

CHALLENGES

Re Strategizing/Reinovating

SCM BASIC--- INNOVATION MODEL

TECH PATH

KEY Excellence/Innovation in SCM

1. ITC e-choupal2. GE-SCM MODEL3. TVS Logistics4. SAP OSS5. LG6. IIMs Program’s thru DTH satellites

THE REAL/LIVE SCM@INDIA.

SCM targets thru innovation

- Reaching to customers- Innovating to exceed customer expectations- Adding layer of operating convenience- Affordable COST -Enhancing product/services value- Has a Mass level effect - Models involving customers/vendors/Partners employees- WIN WIN FOR ALL STAKE HOLDERS

SCM CHALLENGES

SCM- faq’sSCM- faq’s

Manufacturing Strategy:Manufacturing Strategy:– How many plants do I need? How many plants do I need? – Where should each plant be located? Where should each plant be located? – What products should each make? What products should each make? – What process technologies should each What process technologies should each

have and how much of each process is have and how much of each process is needed? needed?

– What part of the world should each plant What part of the world should each plant serve? serve?

Source: Global Supply Chain Associates (GSCA) 1999

Scm-FAQ’SScm-FAQ’S

Supply Base Design / Vendor Consolidation:Supply Base Design / Vendor Consolidation:– How do I simultaneously perform supplier selection for How do I simultaneously perform supplier selection for

all the parts in the same commodity group?all the parts in the same commodity group?– How many suppliers is best and which suppliers should How many suppliers is best and which suppliers should

send which parts to which plants?send which parts to which plants?– Am I missing opportunities by sourcing one part at a Am I missing opportunities by sourcing one part at a

time?time?

Outsourcing:Outsourcing:– What parts of my supply chain should I keep "in-house" What parts of my supply chain should I keep "in-house"

and what parts to outsource? and what parts to outsource? – What if a third party has a higher variable cost but a What if a third party has a higher variable cost but a

lower fixed cost than in-house production?lower fixed cost than in-house production?

Supply Chain Structure Supply Chain Structure BeforeBefore

ReorganizationReorganization

Source: Global Supply Chain Associates (GSCA) 1999

Supply Chain Structure Supply Chain Structure After After ReorganizationReorganization

Source: Global Supply Chain Associates (GSCA) 1999

All SCM’s across all industries/verticals

Start with Customers &

End with Customers.

THE REAL/LIVE SCM@INDIA.

TAKE PRIDE AS AN INDIANTAKE PRIDE AS AN INDIAN

The BEST INDIAN SCM IN TRUE ACTION WITH NO TECHNOLOGY IS TOTALLY

INTENT & DELIVERY CENTRIC

Inspiring SCM BY OUR OWN DABBAWALA @ MUMBAI.

‘ Customer Ahead of Everything Else ‘. NO TECHNOLOGY ... NO AUTOMATION... NO RFID.. NO BARCODE. JUST PURE UNDILUTED INTENT WITH COMMITTMENT.

SCM AT IT’S BEST : THE DABBAWALA TIFFINS

“Intent will drive technology & SCM Innovation

& technology will never drive the Intent at any cost.

Hence build innovative intent to drive SCM at large “.

Best WishesAroon Mehta.Head- IT Serum Institute of IndiaPune.

Thanks to theIIMM Executive Committee

Wishing all the IIM members the very best to attempt with a + intent , all your Innovative Initiative in SCM

Aroon Mehtaaroonmehta2@gmail.com