udbhava may 2011

8/6/2019 Udbhava May 2011

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Dear Readers,

This months issue focuses on Value Creation in the Supply Chain as its theme.

Realizing how firms create value throughout their supply chain is crucial for the understand-ing of how competitive advantage is achieved. With this end in mind, the articles within

touch upon a variety of topics ranging from Integrated SCM and e-Commerce to a specialfeature on how the disaster in Japan can ultimately lead to changes in supply chain thinking.

The next issue will be focusing on Technologies in Supply Chain Management as its themeand will be released in the first week of July. We hereby take this opportunity to invite contri-butions for the forthcoming issue.

Happy Reading!

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[email protected]

SSUE

MAY

2011

Demystifying Lean!

Udbhava

Contact Points: Anjali Sardar : [email protected] Wilson : [email protected]

Team Udbhava


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2Udbhava Issue 02 May 2011

their SCM needs. It provides integrated spendmanagement for all categories of goods and ser-vices. It facilitates to adjust as conditions andbusiness goals shift.

Integrated SCM offers small and medium enter-prises (SMEs) specialized SCM tools using sub-scription models. Also, cloud-based deploymentwhich significantly reduces IT infrastructuremanagement cost for small and medium sizebusinesses

While choosing supply chain management solu-tion, areas such as features provided by softwareand ability to link those with business goals of anorganization are very essential. Apart from that,technology platform of the product, reporting ca-pabilities provided by solution, licensing model ofthe software provider along with maintenance and

support cost of the solutionneed to be evalu-ated

Integrated SCM Solutions

Vinu Wilson, MBA-C

Although technology absorption rate among Indianupply chain managing companies is quite slow

even today, the need for customized solutions isgrowing with ever increasing complexities of SCM.

According to Mr. Devendra Deshmukh , director andounder of e-Zest solutions, a customized enterpriseapplication firm , some of the typical SCM issues forwhich manufacturers is seeking customized solu-ons include e procurement, vendor integrationolutions, supply chain executions ,demand fore-

casting and integrated supply chain managementolutions.

Some of the key global SCM trends includes GreenSCM, Cloud based SCM solutions delivery, use ofRFID , GIS and GPRS technologies.

ndia is a slow adopter of SCM solutions. Currently,here are some large enterprises that are using spe-cialized SCM solutions, but penetration in small andmedium enterprises is very low. The high cost ofcensed software, and lower returns from SCM so-utions due to implementation failures have affected

SCM adoption in India. SaaS / Cloud-based deliv-ery and performance linked business models willhopefully help in improving SCM solutions adoptionn India.

ntegrated SCM solutions, which can address de-mand for group of companies in specific industrialareas. In addition, where previously customersused to be happy with limited SCM capabilities pro-

vided within ERP solutions, but now they can ac-cess range of specialized software that can address

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to plan production and distribution.

CPFR (Collaborative Planning, Forecasting & Re-plenishment) Advocates collaborative efforts between a supplierand a customer to plan replenishment.

Electronic Supply Chain or E-business SupplyChainLeverages the Internet to collaborate, exchange criti-cal information and execute key functions like pro-curement, order fulfillment, logistics and invoicing.Intranets are used within the boundaries of the com-pany to link their ERP systems. Extranets connectthe companies to their customers and suppliers. Theinternet is used by companies to give publicity to theirproducts and services offered and accept orders fromcustomers online.

RFID TechnologyA common method of identifying objects using RadioFrequency Identification or RFID, is to store a serialnumber that identifies a product and perhaps otherinformation, on a microchip, which is attached to anantenna. The antenna enables the chip to transmitthe identification information to a reader. The reader

converts the radio waves returned from the RFID taginto a form that is computer-readable. Tags can typi-cally store a unique 64-bit identifier, which are about300 words of description. The reader sends out elec-tromagnetic waves that form a magnetic field whenthey 'couple' within the antenna on the RFID tag.

The agile manager will embrace all the concepts toarrive at the optimal strategic mix. Successful compa-

nies understand that the ideal supply chain strategyis dependent on not one but a variety of factors.

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Venu Puttamraju, MBA - D

3

Supply Chain Strategies

Businesses are confronted with a variety of lead-ing edge supply chain strategies, such as:

VMI (Vendor Managed Inventory)Lets the vendor manage the replenishment for acompany.

BTO (Build - to- order) or ATO (Assemble - to-order)Present ways to organize production and orderfulfillment process from Push to Pull. These'demand-pull' supply chains anticipate and re-spond to changes in real time. The internet en-ables new velocities of execution, helping firms tobe instantly responsive to the changing demandsof their customers.

Mass CustomizationAims at building products and services tailored forthe unique needs of the customers.

Information IntegrationCovers three dimensions sharing informationand knowledge, coordinating roles and establish-ing organizational linkages across a supply chain.

PostponementIt is a concept about delaying the point of productdifferentiation at a later point in a supply chain.

4PL (Fourth Party Logistics)This extends the traditional third-party logisticsconcepts to include the planning and manage-ment functions provided by a third party.

APO (Advanced Planning Optimization)Introduce scientific optimization techniques to


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4Udbhava Issue 01 Mar 2011

Introduction of e-commerce has provided steelwith a unique avenuethrough which it canreach out to the end consumers directly, elimi-nating third parties in the form of retailers and

intermediaries. The concept of selling online orconducting business in general through theInternet was initially not received well by a con-siderable number of people. So, when it cameto selling steel via the same media it was re-garded as just another whimsical idea.

Moreover, Indians in general are not very ex-

perimental by nature. Though, this behavioraltrait might be changing as far as the newergeneration is concerned, yet it is marginal anddoes not account for a huge difference. Eventhough the entities who launched the idea weresure in their minds of the kind of impact itwould create, for the skeptics it was nothingmore than a trial and error methodology to es-tablish somethingwhich was not suited to the

way we Indians choose to conduct business.

Steel was introduced into the e-business arenasometime in the beginning of the decade and inthe past five to six years all speculations re-garding its failure have been rightfully put torest. There are a number of companies whichwork as e-commerce service providers for thesteel industry in India.

Realizing the Benefits of Trading Steel Via Internet

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Vinu Wilson MBA-C

The online participation of buyers and sellersof steel has brought about various uniqueadvantages to them which they could notavail of in the real or physical steel market,

since these benefits are an inherent part ofthe e-business model.

E-business has cre-ated a platform wherenot just the big namesfrom the steel indus-try, but also the frag-

mented, small and me-dium sized companiescan participate andenhance their efficien-cies in online transac-

tions for spot buying or selling of steel. Thisintegration of the entire segment comprisingbig, medium and small sized companiesbrings in a high degree of competitiveness

resulting in better quality and hence, pric-ing which is based on current market price.

The e-sales process provides steel consum-ers quality assurance for the product in themost simple, efficient and transparent man-ner anywhere in the country. E-sales, whichdoes away with long drawn negotiations and

Continued on Page 5.

Buying steel onlinehelps eliminating

hassles of managinglogistics, risks of cost

escalation due to

delay in delivery andproduct tampering.

Udbhava Issue 02 May 2011


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5 5Udbhava Issue 02 May 2011

Siemens has launched the industrys first automation software with one engineeringenvironment and one software project for all automation tasks.

Combining logic control, HMI, drives, safety, and networking, the TIA Portal enables you toefficiently manage all software development within one engineering framework throughout the

complete life cycle of your automation system.

The TIA Portal helps to increase competitiveness by reducing the complexity of software development

and maintaining multiple software packages, making the engineering process more efficient.

Continued from Page 4.

meetings with company executives, help

in saving precious time for both entities,the buyers and the sellers of steel.

Logistics is no longer the worry of theconsumer. Buyers who purchase steelonline are assured of on time delivery ofgoods at their doorstep, without any costescalation or tampering.

Therefore, right from material inspectionto listing of lots, from offer for sale topayments and from lifting to delivery, theadvantages brought about through e-business in steel sales, clearly spells in-creased convenience with complete

peace of mind for the consumer.

For online sellers of steel, the margins have been escalating with increased reach in the market,and discovery of new buyers for their products over the Internet. So, automatically this has im-

pacted the realizations which have gone soaring

With the e-selling process of steel the volumes sold online will only keep multiplying in the yearsto come.


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6Udbhava Issue 02 May 2011 6

Simplifying Back - Office Workload

Vinu Wilson, MBA - C

Contrary to the traditional practice of car-bon-traced PODs, use of networked PDAsncreases business efficiency.

Like several small companies providing same-day courierervices, in the early days of the business, in UCS too ac-

counting was carried out on Excel spreadsheets and PODswere paper-based. Many man-hours were spent on scan-ning or faxing PODs to customers, which took senior man-agement away from the lifeblood of the businessnew

ales.

n the words of Managing Director of UCS Kevin Davies,We used to use traditional carbon paper PODs, by theme they got back to the office, many of them were either

unreadable from bad weather or torn. We were unable tonvoice until this hard copy POD was received, which, fordrivers who are based on the other side of the country,ometimes meant days. This led to delays in us receiving

payments from customers.

Action PlanHaving seen the big players in the logistics markets usinghandheld computers, UCS searched the internet for a simi-ar system for smaller companies and found The POD Fa-her. After trialing the system using Orbit XDA PDAs, theyquickly began to realize the benefits.

Continued on Page 7..

United Courier Services(UCS), based nearBasildon, UK, offersservices for courier andlight haulage. Morespecifically, they

provide traditionalsame-day transport along withspecialist

delivery for garment andprint or displaycompanies. The companyuses a mixture of

permanent andsubcontracted staff todeliver a personalizedservice to customers via amixed fleet of vehicles

from motorbikes to 17tonne artics (articulatedvehicles), includingcustomized vehicles fordelivering 3,000 garments

per load.

Application of technologyhas simplified their

mammoth task of POD(Proof of Delivery)

management and

customer integrated

tracking.


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Continued from Page 6..

However, during their trialThey had to key eachjob via a desktop PC in the office. As they were agrowing business with new contracts to be fulfilled,sometimes everyone is out on the road, whichmakes keying jobs on a PC difficult.

ImplementationEverything changed when their account manager,Tony Ward, demonstrated a module of the POD-Father, which allowed the drivers to create new jobs on the handheld computer while out andabout. So, not only were the drivers returning elec-tronically signed PODs with photographs attached,but also if a customer needed a new job carriedout in a rush, the driver could create the job on the

PDA then and there.

BenefitsAccording to UCS, The PODFather is more than proof of delivery, in that the back - office systemhas a number of powerful modules, which not only let you import and create delivery jobs, but allo-cate them to run or driver in a number of ways, including visualizing the jobs on a Google map.There are vehicle, product and tariff databases allowing vehicle or job rates to be stored per-customer, meaning quotes can quickly be prepared. And the invoicing module allows batches of

PDF invoices to be created from PODs on a per-customer basis, which can be emailed out thussaving paper, administration time and postage expenses.

The feedback they have received from clients is excellent. The Customers have logins to the POD-Fathers customer portal so, should they accidently lose one of the PODs that is automaticallyemailed to them, they can log into the portal and retrieve a copy themselves, thus saving us admintime and expense.

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Will Japan Supply ChainDisruptions Really Cause

Changes in the Approach toSupply Management?

Vinu Wilson, MBA-C

The earthquake, tsunami and now radioactivity crisisthat have hit Japan in the past few weeks are caus-ing severe supply chain disruptions and leading

some pundits at least to call for companies to rethinktheir sourcing strategies.

One thing that many observers agree on is that thedisruptions from Japan are driving many companiesto realize that their supply chain risk profile is notdriven only by the direct supplier network, but theirsuppliers' suppliers and perhaps even the suppliersof their suppliers' suppliers.

Case in point: It turns out that just two Japanesecompanies, Mitsubishi Gas Chemical and HitachiChemical, control about 90% of the market for aspecialty resin used to bond parts of microchips thatgo in to Smart phones and other devices. The facto-ries of both companies were damaged in the quake.

Another: The compact battery in Apples iPods relieson a polymer made by Japanese company Kureha,which holds 70% of the market, and whose factorywas damaged. While the battery producer is fine, itsability to manufacture is threatened by the troublesat its supplier.

All this, many say, is leading to a rethinking of aglobal production and logistics systems in which anatural disaster in a small part of Japan's industrialbase could have such broad effects around the

world.Continued on Page 9.



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Continued from Page 8...

Automotive and electronics manufacturers appear to be the hardest hit. While companies might normallyhave expected suppliers with modest damage to get back to speed quickly, continued aftershock quakes

and now the fear of radioactivity contamination could extend the supply disruptions for some time. About13% of worldwide auto output has been lost due to parts shortages, and IHS Automotive has recently esti-mated it may cut output by as much as 30% within six weeks in a worst-case scenario

Shin-Etsu Chemical Co. is the world's biggest producer of advanced silicon wafers, a key material neededfor the producing semiconductors. Its factory in Shirakawa Japan received heavy damage from the quake,and represents about 20% of the globe's capacity to produce key components for several high tech prod-ucts. The disruption could prove to be a big problem for chip makers such as Intel Corp. and Toshiba Corp.that buy wafers from Shin-Etsu, and then in turn OEMs that buy chips from those companies.

Chinese computer maker Lenovo Group recently informed that a shortage of components from Japan couldhave a impact on output, among others citing the same concerns. The likelihood of more disruptions tocome has touched off a scramble for alternative suppliers, and triggered a run-up in the price of memorychips and other parts.

One interesting fact: those companies that had the largest inventory buffers are able to managethrough the crisis better than those operating just-in-time. " Just-in-time "is a good plan for normaltimes, not for emergencies," said Tetsuji Morino, a managing director at Dai Nippon Printing Co., a $19-

billion company based in Tokyo.

Some large Japanese electronics manufacturers have their plants back up and running but are operating atonly 50% capacity because of their own supply chain disruptions. The automotive industry especially mayneed to rethink its supply chain model, according to one expert.

"What this says is that there might be some cracks, some inefficiencies, some unplanned-for problems notonly in nuclear power plants, but in our global supply system for the auto industry," Sean McAlinden, chiefeconomist for the Center for Automotive Research, said at a conference near Detroit last week.

But will these lessons really lead to changes in supply chain thinking, or will the short term pain some com-panies are experiencing from the current Japan disruption quickly be forgotten once things have returned tonormal? "Many pundits are over-exaggerating impact from this," says Gene Tyndall, an executive vicepresident at Tompkins Associates and long time observer of global supply chains. "The primary impact onbusinesses will be to reinforce, or expedite, their supply chain risk management strategies and contingencyplans." Tyndall says that some 50% of companies still do not have adequate risk mitigation plans and/orclear action steps if a major supply chain disruption of any type occurs.

"Companies are just not prepared for the key questions of What if? and What will we do?" Tyndall

added.

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The Top 11 PositiveSupply Chain Value Creation

Opportunities for 2011

Sunil Kagalkar, MBA - B

The increased complexity of todays supply chains highlights the impact that these operationscan have on shareholder value - positive or negative.

So, here are the Top 11 Positive Supply Chain Value Creation Opportunities for 2011

Profitable GrowthNot all growth is profitable, and therefore, not all growth is good. View the supply chain not justas an opportunity to impact the bottom line by reducing cost, but also as a way to increase thetop line by capturing new markets, new customers, providing new services and / or increasingmarket share.

ProcurementProcurement in many firms is really little more than purchasing. Procurement needs to accept amuch broader responsibility beginning with strategic sourcing, to include all supply chain mega-processes (Plan-Buy-Make-Move-Store-Sell) and encompassing responsibility of supplier rela-tionship management

Outsourcing

Focus on tasks that are your core competency. All other tasks should be outsourced, as we allneed to enhance our performance on our core competencies.

InventoryIncrease inventory turns and fill rates simultaneously. Advanced Sales Inventory and OperationsPlanning (SIOP) must be put in place to unleash working capital and drive customer service.

TransportationPut forth efforts to develop core carrier programs, implement TMS, decouple inbound freight,

and enhance shipment planning and execution opportunities.



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Continued from Page 10..NetworkThe uncertain economy, globalization of business, M& A and the evolution of your marketplace all demand

an annual review of your network. Evaluate the num-ber of and justification for your locations, along withthe operation strategies, in order to establish thehighest cost / highest customer service network forcurrent requirements.

Service Supply ChainView this as a profit center. Reverse logistics andend-of-life product opportunities need to be assessed

with an eye towards enhancing profitable growth.

Speed, Agility & ProductivityShareholder value will often be determined by how quickly the supply chain can bring prod-uct to market and fill orders. It will also be determined by the agility of the supply chain to re-spond to changing market conditions and by the elimination of waste to enhance productiv-ity. Successful organizations will be innovative in boosting speed, agility and productivityacross the processes of Plan-Buy-Make-Move-Store-Sell-Return.

Tax-Effective Supply ChainInclude the Effective Tax Rate (ETR) in supply chain decisions and perform the analysis pre-tax to avoid making bad decisions. Since the ETR for multinational corporations is often inthe 25 % range, supply chain managers need to understand the ETR and tax managersneed to understand the supply chain. ETR and the supply chain is a big deal and it is oftenoverlooked.

Cash-to-Cycle ManagementConsider the C2C cycle in all supply chain improvements. At a ba-

sic level, the C2C cycle is the length of time a companys cash istied up in working capital before it is returned in the form of collec-tions of receivables. Like all assets, cash is useful when it is avail-able, so you can see how it has a major impact on the supplychain.

TechnologyMove forward with technology upgrades that have a strong busi-ness case. The business case for supply chain technology applica-

tions is compelling and helps achieve supply chain excellence.

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The Sustainable Supply Chain:

Creating Value Through Sustainable Packaging

Ashish Nayak, MBA - A

The trend to sustainable consumption gives high performance businesses the opportunity to place sus-tainability at the heart of their supply chain strategy.

Packaging is a highly visible consumer marketing tool, but it is also a significant cost to the supplychain, accounting for up to 12 percent of the cost of many typical consumer goods. This combinationcreates an ideal opportunity for businesses to drive both brand growth and supply chain cost reductionby moving to a more sustainable approach for packaging strategy. Consumer goods firms and retailerscan use sustainable packaging programs to create value in four main ways:

1.They should try to reduce supply chain costs by usingsmaller amounts of fewer complexes packaging, therebycutting sourcing, and production and distribution costs.For instance, Wal-Mart plans to reduce packaging by 5percent by 2013, with an expected net saving of $3.4 bil-lion. The retailer predicts that if 10 percent of the US re-tailers cut packaging similarly there would be a net indus-

try saving of $11.0 billion.

2. They should achieve sustainability targets through sig-nificant reductions in raw material consumption, carbon emissions and waste. This is especially relevantat a time when new standards such as the Climate Change Act in the United Kingdom, the Carbon La-beling Standard in Japan and California's AB32 legislation are beginning to impact.

3. They should enable customer intimacy by refocusing brand identities towards sustainability. The afflu-ent and growing LOHAS consumer segment is worth more than $500 billion a year globally. Consumers

in other segments also increasingly prefer more sustainable products.

4. They should create goodwill for key brands with consumers, retailers and wholesalers as well as in-ternally within the business. Accenture research has shown that 64 percent of consumers are prepared

to pay a premium for products and services that help reduce carbon emissions.

The Value of Sustainable PackagingPackaging plays a vital role in the commercial strategies of the consumer goods and retailsectors. Transit packaging such as pallets and cartons mitigates product damage throughthe supply chain and enables cost-effective handling. Consumer packaging has a more complex



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Continued from Page 12.

role, additionally supporting brand development on the retailer's shelf, communicating information and makingconsumer access easier. Examples include portion or gift packs.

Both types of packag-ing come with both afinancial and environ-mental cost. Put sim-ply, either too little ortoo much packagingcan waste money,send the wrong mar-keting messages and could potentially impact sales. Firms must know both what they need their packaging todo for them and what their customers expect of their packaging.

The challenge for a firm is to find the optimum balance in its packaging strategy .

They are: Cost. Product protection. Consumer marketing. Communication. Environmental impact.

Well-designed sustainable packaging programs should create commercial value whilesimultaneously helping to achieve corporate social responsibility targets, especially thereduction of consumer waste and life cycle carbon emissions from the product.

Value creation in a sustainable packaging initiative comes from collaboration acrossseveral areas of the organization and wider supply chain. The areas may be: Research and development

Product and packaging design Marketing strategy Supply chain process design

Responding to customer feedback, Amazon has teamed with suppliers to design outplastic wrapping across the end-to-end supply chain, substituting with recyclable card-board boxes.The world's largest online retailer expects to see significant benefits, in-cluding increased customer satisfaction, a more sustainable corporate profile and adirect boost to the company's bottom line.

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pple is a force to be reckoned with when itomes to the supply chain for gadgets. Itves buyers what they want faster than its

vals, and in the process, it sometimes de-ys the competitions products from com-g to the market.

he natural disasters in Japan slowed pro-uction of hundreds of components that areund in consumer electronic devices, in-

uding the iPhone and iPad. Yet Appleold a remarkable 18.7 million iPhones and7 million iPads last quarter. COO, Timook said that the company would sufferno material supply impact despite whate called the mother of all backlogsanks to very strong demand for the iPad.

ot only has Apple been able to beat com-etitors to the market with devices, it alsoells them more cheaply. Despite having aear to catch up, no major tablet competi-rs have been able to match Apples $499ntry point for the iPad.

ow does Apple do it?pple aggressively uses its size and vastray of resources - including its very deep

ockets - to get the deals it wants with com-onent makers. The company sent execu-ves to its Japanese suppliers literally with

ash in hand to make sure supply remaineddequate, Brian White (Supply Chain &pple analyst at Ticonderoga

Securities) said. But part of the reasonApple wins in the supply chain is sim-ply because it is successful overall. Intimes of a shortage, suppliers are goingto sell to their biggest customers first,said Tom Dinges, senior electronicsmanufacturing consultant at IHS iSuppli.

Sales of Apples devices have risen astro-nomically over the past several years,

and the company has grown to becomeone of the worlds biggest componentpurchasers. What separates Apple fromthe other big companies out there is itsability to sell a lot of products while sellingremarkably few different kinds of prod-ucts.

Apple predominantly sells just 5 differentgadgets - iPad, iPhone, iPod, Mac and

Apple TV - and a combined total of 15

different variations of those devices, ex-cluding modifications like the amount ofavailable memory. That small handful ofproducts shares many parts commonto all the devices. That makes Applessupply chain among the most pre-cisely honed in the world.

For a company of Apples size, no oneout there sells so few different products,Tom Dinges (senior electronics manufac-turing consultant at IHS iSuppli) said. Asa result, Apples sourcing strategy can bemuch more finely tuned than other com-panies with very disparate products.

All of that adds up to a very well-oiledmachine. Despite ongoing worldwide sup-ply constraints, Apples COO said thecompany is so confident in its ability tosupply that its launching the iPad2 in 13

more countries in May.

Source: CNNMoney.com / Technology

Anjali Sardar, MBA - A

14

How Apple Blocks Its Competition

Team Udbhava

Abhijat Bharadwaj

Anjali Sardar

Ashish Nayak

Nitin John

Sunil Kagalkar

Vinu Wilson

TCS has launched its

business solutions on

cloud (iON) for SMB.

This is a significant step-ahead addition in the IT

as a Service (ITaaS)

segment, especially for

Indian SMB.

The integrated solution

facility will enable SMBs

to enjoy the advantage of

Pay- per-use business

model, which will bringthem a great relief from

incurring huge expenses

to adopt technology. Also

they will be relieved from

the burden of frequent

upgrades and product

replacement because of

fast technology obsolencein the IT sectors.

udbhava may 2011

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