Handling Supply chain disruptions

Welcome back Readers I’m Sivakami - A final year MBA student from Amrita School Of Business majoring in Marketing and operations. I have found my space to explore on the various verticals in the area of  Logistics and supply chain and of course not limited to theories and  empirical studies 😅. So come lets discover on our never ending territory 😇 

    Everytime, I reach out to the supermarket nearby to get some goodies, I have always seen the shelves neatly stacked. Infact I always got what I needed with plenty of options and brands. I have wondered how retail stores maintain their stock despite the over hiking footfalls. But once the pandemic hit us hard I was able to figure out the answer to this. The supply chain disruptions actually draw our attention towards supply chain dependencies that we are otherwise not aware of.

    Sometimes these supply chain disruptions are small and localized which may affect only a few businesses. Other times it is globally felt.For instance when the asian markets are hit, it is felt by global economies since Asia is the main source for a diverse range of suppliers. One of the recently seen supply chain disruptions is COVID -19 Pandemic. We are witnessing the effect of global pandemic which has a massive supply chain impact because the number of people, regions, and global companies affected can upend normal operations at every stage of the production line.

    So in these circumstances, we probably won’t get much advance notice about disruptions to the supply chain, so it’s a good idea to make sure we plan ahead for any eventuality. So here we will be discussing the strategies for managing supply chain disruptions.

• Create a supply chain emergency plan.
• Build up inventory
• Conduct a supply chain vulnerability audit
• Identify backup suppliers
• Diversify supply base
• Partner with a logistics expert
• Adopt risk evaluation tools

  

  Firstly it is important for us to create a supply chain emergency plan or a backup plan, especially when it comes to supplies. Secondly, building up inventory. Stockpiles of essential supplies will help us in withstanding disruption. In other words, this might mean having a store of finished goods, components or even raw materials to maintain business if supply chains are temporarily cut off. Thirdly conducting a supply chain vulnerability audit will help us in analyzing the risk and see where the weakest links in the supply chains are and also develop alternatives for such areas. It can also be helpful to assess potential environmental, social, and political conditions that may impact the supply routes. 

    Identifying suppliers in other geographic locations and building a relationship with them can give us an edge over others. We can also diversify our supply base by setting up supply chains in different places. This will make us ensure that we'll always be able to get at least some goods amidst any disruption. Sometimes the risk evaluation tools help us in sensing the potential threats in the market. AI-enabled mapping and environmental analysis solutions, aggregate apps that provide geopolitical overviews, and systems that can evaluate cyber threats. Even social media can be used as a predictive tool to identify potential shortages and disruptions

    In times of trouble, having a good long-term plan in place or a strong crisis management strategy is essential.Supply disruptions are inevitable, but by planning your response carefully, evaluating potential supply chain risks, and diversifying your suppliers, you can help prepare for even the most unprecedented of circumstances.

Happy reading from Sivakami :)

#Lessonsfromthebest : Supplier collaboration

Author’s Note: Over the last few weeks, I have been using this space to write about the lessons I learn from organizations with respect to their supply chain management, but not limited to it. I have also been attempting to convey my learnings as a narrative, and a story of sorts. So, if you want to learn something informative whilst having some entertainment, go ahead and read away! Also, if interested, make sure you catch-up on my remaining blogposts as well. Click here! 😊

Shanmugeshwari, MBA

Amrita School of Business, Coimbatore

IMPORTANCE OF SUPPLIER COLLABORATION

COVID-19 has amplified the importance of supplier collaboration. Companies have long-viewed collaboration with suppliers as the key to value creation in the supply chain. This has been considered more critical than having a global procurement network that helps with scale or spend analysis that helps reduce costs.

Greater collaboration between suppliers helps both the Top-Line revenue contribution and the Bottom-Line cost control.

Top-Line growth comes from,

• Access to new technology
• Insights about the market
• Access to supplier's business network and logistic infrastructure.

How does this help the Top-Line?

• Faster New product development
• Help and assistance in entering newer geographies sustainably.
• Getting access to the supplier's capacity during disruption or capacity shortfall.

Similarly, the Bottom-Line is affected by shared capital expenditure and jointly manages customer demand. These can be done by:

1. Most favored customer pricing

2. Having visibility of the upstream supply chain

3. Jointly reducing redundant SCM activities

4. Jointly securing low-cost manufacturing.

Along that line, when P&G and Kimberly Clark had their earnings call this April, both finished strong and with some realistic supply chain lessons for us.

Toilet paper comes in two varieties, consumer and commercial - the raw material, quality, packaging, and suppliers for both these varieties are different. Due to a shift in consumption during the quarantine, the household consumption of toilet paper rose by 40%, which is a huge leap for a product whose demand is primarily a  constant one.

It took time for the information to move up and manufacturers to respond to the real demand spike.

For a bulky low-value product, retailers relied on continuous replenishment and did not store inventory. Shifting commercial toilet paper to household consumption would need new retail relationships, contracts between suppliers, distributors and stores, change in packaging  and labeling and new truck transport routes.

Companies responded by running production 24*7, reducing assortments, simplifying packing, re-routing vehicles, directly shipping to retail and making innovations in the product as below!

Thus, supplier collaboration can help companies always deliver sustainable growth ranging from recessionary phases to periods of successive boom.

CISCO-Next Generation Supply chain management

Welcome readers to my blog.I am Madhumitha from Amrita School of Business.We all know about CISCO and the supply chain of CISCO is highly diverse, extensive and global.Lets see it in detail. Happy learning.😊😊

Background 

The supply chain for Cisco is highly complex, large, and global. With over 300 product families, Cisco has a wide variety of gears aimed at a number of consumers with widely different preferences and criteria for satisfaction.

Most Cisco products use a development model for the configure-to-order (CTO). Products are produced with customer orders reported. Acquisitions result in a significant percentage of Cisco development and carry their own supply chain specifications and processes that need to be incorporated into Cisco core operations.

In addition to more than 1000 vendors, the Cisco supply chain includes: Manufacturing partners and logistics providers.

● 16 CTO fabrication sites

● 4 Positions on the BTS

● Eight strategic logistics centres

● 25,000-plus order-able product IDs, or PIDs (approximately 25% assembly-to-order, 75% spares)

● Millions of shipments per annum (such as about 9 million cartons delivered in the six months ending March 2014).

Challenge

Like many major companies in today's highly competitive world, Cisco has been trying to transform its supply chain to improve business size and agility. But a highly complex supply chain management ( SCM) system had stymied the business. Disparate CTO and BTS operations, numerous ERP instances, and inefficient, non-standardised processes made scalability almost impossible and hindered customer service and productivity. The Oracle e-Business Suite 11i complex and excessively customised Cisco version included

● More than 2500 customisations, of which an estimated 50% are unused

● 250 Personalised Settings

● Unique Data Objects 30,000

● 19 Special Databases

Fulfilment of order:

● Reduced request latency and order specifying response time

● Automatic prioritisation of customers allocated during supply constraints

● Build to stock model shortened order fulfilment time from 11 days to 3 days

● POs handled in minutes, rather than hours

● Quicker management of transition (due to the removal of multiple systems)

Order and Returns:

● Supply segmented by customer used to plan customer orders

● Close real time backlog contact with setup info

● Parallel realisation of low-margin products through BTS supply chain

● Strengthened handling of returns with Return to Stock

Next Step

The priority of Cisco IT and the LSS program team is on:

● Stability of the R12 platform and of all new features introduced.

● The platform for any new features and functionality, or improvements to existing ones.

● Transformation of other supply chain related LSS systems. 

The IT framework is under way between order management and the supply chain, which will promote the growth of fully automated entities in developing countries.

Thank you!

Have a great day 😊

The secret behind "Louis Vuitton" Success !

 

Hi, I am Nikitha Akula, an aspiring operations enthusiast currently doing my 2nd year MBA in Amrita School of business. Today I am going to explain how Louis Vuitton manages its customer demand and how it has updated its supply chain process over the years, to satisfy the increasing demand. 

Louis Vuitton – part of the LVMH group – is a 160 year old French fashion house who produce  leather goods, handbags, trunks, shoes, watches, jewelry and accessories.They were recognizable with the famous “LV” logo and the monogram canvas. In 1893, the firm started its expansion by participating in the Chicago World Fair and promoting the brand in the US. 

The expansion strategy continued in the 20th and 21st century with a focus on the Asian markets. Vuitton also expanded its product line with smaller leather goods such as purses and wallets and started creating limited-edition collections to refresh the brand from time to time.

Louis Vuitton bag designed in collaboration with Japanese artist Takashi Murakami

Louis Vuitton’s success relies on a few key principles:

• Stores located in the most prestigious locations in the world (e.g. on Fifth Avenue in New York or on the Champs-Elysées in Paris)
• Glamorous brand image with an advertising strategy focused on travel, famous models and actresses with a recent shift towards celebrities in general
• Quality products
• The right balance between automation and “human-work” reinforces LV’s luxury image

Louis Vuitton’s operating model

In 2005, Louis Vuitton was still operating under a traditional operational model. It would usually take 8 days and between 20 to 30 craftsmen to produce a “Reade” tot bag.

Although this traditional process was synonym of quality and luxury for customers, it was not efficient nor adapted to the growing demand. New designs were often sold out quickly and the company was not prepared to speed up production in this situation.

What changes did they do?

With the help of McKinsey, a strategy consulting firm and inspired by the lean processes used in the Japanese auto industry, Louis Vuitton revolutionized its operating model. Under the new system, Louis Vuitton was able to assemble bags in less time and in a more efficient way.

• Workers who were originally specialized in only one operation are now trained to be able to accomplish different tasks in the assembly process. For eg, a worker who was specialized in stitching would now be in charge of cutting, stitching and finishing the edges of a pocket.
• Workers were also organized into small teams of 6 to 12 following the example of workers in the Japanese electronics industry.
• Workstations were re-arranged in U-shape, with the sewing machines on one side and the assembly on the other in order to minimize time to pass the work from one station to the other, this led to freeing-up space in factories which allowed to hire more workers and therefore becoming more efficient thanks to a better use of assets.
• Louis Vuitton also uses computer programs to help leather workers identify flaws in the skin they receive, reducing earlier the number of defects and the amount of faulty products returned.
• Similarly, robots are now smartly used to help workers focus on their core competencies: for example, in a shoe factory, robots are sparing workers walking back and forth from their workstations to the shelves.

Changes in Distribution Procedures:

• With a global distribution center near Paris, they are now able to ship products to six regional distribution centers in the world. Stores around the world send sales information to the French headquarter a few days after product launch in order to adjust demand appropriately.

LV’s operating & business models work well together, by being able to provide products to their customers on time, ramping up production if a bag becomes popular, LV does not exasperate their customers by turning them down.

Because workers are cross-trained, they identify defects earlier, which leads to fixing flaws more quickly and reducing returns of faulty handbags. This improves the quality image of the brand. Furthermore, the automation of the processes allowed to reduce costs and maintain jobs in France in order to keep the “Made in France” label, further contributing to the brand value.

Finally, less specialization enables workers to make more types of bags – you can shift workers more easily to producing a more popular bag when needed, depending on demand. This allows to create more collections every year and to ship them once every six weeks, twice as fast as before.

In conclusion, LV managed to reach a smart combination of automation and hand-made processes leading to a better ratio between quality and speed, enhancing the reputation of the brand.

 

 

Benefits of supply chain analysis - UPS

 

Hello ladies and gentlemen!

After 2 weeks of break, I am back with another concept that is quite familiar to many of you.

We all have heard about UPS and how they saved millions of dollars by improving their supply chain process. So how did it happen? Generally, be it small or medium-sized business, a small change in the day to day operations can have huge impacts on the revenue. A small/medium business may have limited time & resources, so in order to use them effectively, one needs to analyze and use its supply chain effectively. More importantly, effective utilization may not just pave way for more revenue but also helps the environment and CSR activities. 

The example for the above is what UPS did or doing even now, which inspired a lot of other companies to follow the same. In 2005 UPS decided to optimize its supply chain process, after having several discussions they decided to launch a particular idea wherein they decided that most of their delivery trucks in the US will minimize left turns. Soon after they did this, they saved a lot of fuel and also distance covered. Amazed by this, UPS decided to work further on this and still optimized it much more. What's the magic behind this?

Well, the magic is ORION, not the star in the universe created by Zeus, rather an intelligent telemetry and data analysis system. ORION stands for On-Road Integrated Optimisation & Navigation, provides the drivers with optimal organization of which stops they had to make. The sensors in the vehicle gather information from the road and then sends it to the server, which is then analyzed and guides the driver to ensure that an optimized route is provided by not needing to take a left turn. 

In certain cases, the drivers might have to travel longer than the usual routes, but the advantage is that, when they don't take left turns, they avoid traffic signals because when a truck waits in the signal for few mins, the ignition is on and the engine is idle which tends to consume more fuel. By keeping the truck on the go, fuel consumption is reduced. This is the key highlight of this system, as this type of optimization helped UPS shave 28.5 million miles of its delivery routes which resulted in saving close to 3 million gallons of fuel and reduced CO2 emissions by 31,000 metric tons.

So this supply chain analysis not just brought monetary benefits but also benefits to the environment. Even the US government after noticing the change UPS brought in, advised the entire nation saying be like UPS. 

Adios, Amigo!

- Varadharaju R

SCM and LIS of Asian Paints

     

             Worldwide, businesses are adopting mass customization-the latest marketing model-to tackle the global phenomenon of rising demand for a range of products and services at affordable prices. Mass customization not only delivers a range of products and services but also enables the quick, low-cost development of goods and services that satisfy the increasingly specific demands of consumers.  Asian Paints is no exception to this. It brings in a range of products, historically produced by low-volume (process-focused) manufacturing, at the expense of mass-based, automated high-volume (product-focused) processing.

Customer Service Strategy of Asian Paints.

Market development techniques include supply chain management, digital product design, global businesses, best-of-breed information, and communication technology (ICT) technology, and agile development. A paradigm of different chronological phases is needed to follow in order to provide a formal and thorough approach to the strategic management of customer care.

Asian Paints currently works practically in a competitive marketplace. The consumer reigns supreme in the age of crumbling economic walls. Asian Paints currently works practically in a competitive marketplace. The consumer reigns supreme in the age of collapsing economic walls. In this highly competitive market, popular companies like Asian Paints are those that are able to maintain a high degree of customer loyalty even at a considerably low cost. Asian Paints is based on fulfilling client standards. The logistics and supply chain management play a strategic role in this respect.

The Asain presents a perfect concept of strategic customer service management and it has opened up to global competition, the strategic customer service management is launched with a corporate vision of customer care this data was gathered from customer reviews and the data was presented to present customer service strategy to assess the difference between customer service. The understood gaps are used to improve customer experience required for the product or strategic advantage and a new customer service approach can be established according to the customer satisfaction gaps. Assessments and assessments will be carried out for further progress following the introduction of the latest customer service plan. After Implementation of new customer service strategy, evaluations and appraisals will be done for further improvement of the evaluations and appraisals done by (CSMC, FCSS, CC, IIWS, CFS).

• CSMC: Customer Service Monitoring Cell,

• FCSS: Formal Customer Satisfaction Survey,

• CC: Customer Conference,

• IIWC: Informal Interaction with Customers, and 

• CFS: Customer Feedback System.

Logistics Information System (LIS) of Asian Paints.

A variety of obstacles to effective SCM have been established in Asian Paints SCM techniques and procurement activities. These issues included collaboration and trust between supply chain members, capacity to exchange knowledge, competition from other supply chains, and regional proximity among supply chain members. This platform was built on the basis of these standards and hurdles and also contained a range of general questions about SCM and its relationship to different elements within the company.

The central goal of management in general, and of the distribution and supply chain in particular, is to deliver value to the consumers. The knowledge a LIS offers may be as useful as the company's simple product or service that it delivers to its clients. Simply put, an integrated approach to the management of standardized and relevant data is a method of logistical information that can help managers make decisions on the seamless running of logistics.

Forecasting Process at Asian Paints.

In other words, LIS refers to a collection of interrelated and interdependent functions for capturing, preserving, evaluating, and extracting information in a system needed to enable a seamless flow of input products from their source to process facilities and outputs to their final destination of usage. LIS is a branch of the complete knowledge structure of the company, usually referred to as the MIS. LIS's key function is to gather, collect, archive, and exploit data within an organization, encouraging the decision to solve any logistical problems. LIS is a group of hardware and software computers that collect, compile, analyze, and record all information for administrators, clients, and others to use.

The Future Group - Reliance Retail Deal

 

Welcome Readers !

I am Sheerapthi Ramiya, 2nd Year MBA from Amrita School of Business, coming back with this week's read ! Hope my readers are doing well and I hope you enjoy :) 

This is hot news! The Future group has reached out to Reliance Retail to buy their business for an overall transaction value of Rs. 27,513 Crores! Future group owns well known brands such as Big Bazaar, Brand Factory, Buffalo, DJ&C, FBB, etc. The transaction takes place as a three-step deal:

-        All Listed Future Group companies to be merged into Future Enterprises Ltd.

-        Future Enterprises to transfer assets of retail and wholesale undertaking and logistics and warehousing business to Reliance Retail entities

-        Reliance Retail will also invest Rs. 2,800 crores for an up to 13% stake in Future Enterprises.

 

But why did Future Group sell out ?

The Kishore-Biyani founded Future group has been seeking funding support for several months as around Rs 15,000 crore is in debt to the company as well as substantial decrease in sales and cash flow on the account of pandemic and lockdown. The loss for Future Group was its excessive leverage. It did win a very small investment from Amazon Retail several months ago, however India's FDI (Foreign Direct Investment) rules restrict foreign ownership of multi-brand retail. This deal with Reliance Retail will avert any further financial crisis at the Future Group, which last averted a debt default at the minute. The Future Group deal is a big relief to banks like Bank of India, SBI, Axis Bank, Canara Bank and RBL Bank.

What in it for Reliance Retail ?

Reliance Retail runs several retail formats in the grocery, electronics and apparel space but it does not have a large reach as that of Future Group, especially in the grocery Business. With household retail brands like Big Bazaar, Fashion at Big Bazaar, Easy Day and Brand Factory going to Reliance, an in-house multi brand retail product will be obtained giving Reliance Industries an immediate edge in the retail market. The deal will lead to an stronger organised retail market giving Mukesh Ambani led Reliance Industries’ retail venture pole position in the close to over $700 billion retail sector in India. The deal will also add over 1,700 retail stores to Reliance's footprint of 10,900 stores across groceries, electronics and other formats. The deal gives a positive cash flow and will also make Reliance Retail become the largest grocery player in the country. 

 

 

What does this mean for Reliance Retail?

This deal includes - store front, warehousing and logistics. Future Groups loss is Reliance gain as it gets a readymade reach and supply chin built over the years and ready for further execution by Reliance. The execution in retail will be rolled out in months to come and also promise growth from an established platform. Access to Tier 2 and Tier 3 towns where the Future group has inherent presence in shall develop and build the overall franchise footprint in grocery, retail and lifestyle and other businesses. Over a period of time, warehousing and supply chain dynamics should aid in cost synergies and overall digitization of the Jiomart Platform. The opportunities to make a 360-degree presence through digital mediums, brick and mortar stores, supply chain backward operations should ensure Reliance Retail are able to take over the competition from global players. That's not all. The important part with the deal coming in is that they are not only acquiring the front-end stores but also the backend for retail, which is highly important because we will have the ability to earn a margin out of it unless we have a proper backend if we want to start a grocery business. Reliance doesn't have to only use warehouses, but can also use the available brick and mortar as small warehouses to strengthen their supply chain and logistics network. 

 

The Windup 

India's retail market is highly fragmented and dominated by corner stores or Kirana stores. However there is large headroom for the top 5 retailers to increase their market share from the current less than 5% to 10% - 12% in the next decade (BCG Report). Isha Ambani, Director, Reliance Retail Ventures says that the transaction will help in the evolution of modern retail in India. The will actively collaborate with small merchants and kiranas as well as large consumer brands to help grown momentum in the retail industry. This will help accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during challenging times says the press release. 

We can see how Reliance is trying to grab every single opportunity, to strengthen its position in the retail sector with the purchase of Sri Kannan Departmental Stores a few months back which is a local departmental store in across Tamil Nadu, the Purchase of the leading retailers - Future Group Retail and collaborating with technological companies to gain a dominant position in the Indian Retail Landscape. With Reliance's introduction of Jiomart and the availability of a large network of warehouses and brick and mortar stores and also the backend suppliers, logistics and supply chain will be seamless and digitized while reducing the delivery time in the modern age of India. 

What are your thoughts about this ? Give your comments below :)

If you haven't check out my last week's read, which is about Chennai being self sufficient and self reliant during lockdown, click the link below !

https://logisticsmatters.blogspot.com/2020/08/will-chennai-become-self-sufficient-by.html

- Sheerapthi Ramiya

ASB, Coimbatore