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View Point Supply Chain Visibility A driver to superior Supply Chain Performance - Sudripto De, Rahul Sharma Supply Chains are complex and high tech supply chains more so! Manufacturing Supply Chains are complex and perhaps Hi-Tech Manufacturing the most. Complexity of the high tech supply chain manifests from three clear sources: • In terms of its numerous players with strong network of supply dependencies • In terms of the “virtual enterprise” through collaboration and outsourcing in all functions • In terms of the complex configurability of products and service, both hardware and software www.infosys.com
The requirement of such complex supply chain with diminishing PLC (Product life cycle) is to reduce inventory of finished products, continuousadd agility of product configurations and periodically slash TTM (Time-to-market) while earning maximum profits from new productintroductions. DESIGN & INNOVATE BUY MAKE MOVE SELL & SERVICE PLAN EXECUTE SEMICONDUCTORS LOGISTICS PROVIDERS/ CHANNELS DISTRIBUTORS WAFER FAB / SORT ASSEMBLY TEST SUPPLIER DISTRIBUTION CENTERS RETAIL PLANT DISTRIBUTION CENTERS WAREHOUSES TEST CONTRACT FAB CONTRACTOR ASSEMBLY HOUSE WEB CHANNEL DISTRIBUTORS EMS DISTRIBUTION CENTERS EMS CONSUMERS SUPPLIER RETAIL RETAIL STORES DISTRIBUTION DISTRIBUTION CENTERS CENTERS FACTORIES FACTORIES PLANT WAREHOUSES SUPPLIER OEM or COMPONENT VARS MAKERS FACTORIESSupply Chain Visibility is necessary to drive superior Supply Chain PerformanceWith High volume, low margin mass production, the semiconductor manufacturers experience maximum amplitude of the bull-whip effect.Distributors provide the necessary conduit and Value-added services and EMS (Electronic Manufacturing Services) Contract manufacturersproviding the collaboration lifeline in-spite of a spate of Mergers & Acquisitions, experience maximum pressure for inventories, lead times andprofit margins. OEMs as the owners of product designs and the orchestrators of virtual collaboration supply-chain networks experience thedual pressures of: • Market pressure of introducing ever-higher configurability to meet daily changing requirements and • Rationalize product portfolio demand to control bull-whip effect.Channels downstream experience highest inventory liability and demand management pressure. With “configure-to-order” spread at eachstage of this supply chain, visibility becomes a necessary tool to drive the balance of agility and standardization. With stringent consumersafety regulations and environmental constraints, visibility emerges also as necessary tool for traceability and compliance.Lack of Supply Chain Visibility undermines Supply Chain PerformanceAn analysis of the challenges in the supply chain evinces three critical impacts across all aspects of Supply Chain functioning – design, source,make, deliver and service: Inefficient Ineffective Execution 1 2 3 Planning planning issues2 | Infosys – View Point
A detailed study of such challenges brings to light that “Visibility” as the main cause for all these challenges in the system, which adverselyimpacts supply chain performance. In the illustration below, some of the challenges have been illustrated. SOP adherence low, processes not executed as designed Low Maverick behavior, Timeliness / correctness of data an issue Maturity 1 Inefficient Planning Lack of Planning People skills and training issues, delays in plans/decisions for execution Many expedites, duplication of work Absence of Tools & Tool automation benefits not realized Templates No/inappropriate/ disintegrated tools and technology resulting in long cycle times Partners or functions not working on the same page Collaboration Lack of collaboration and poor supply chain partner responsiveness Issues 2 Ineffective Planning Resource Resource Skills Inadequate visibility to data inputs for planning Absence of feedback loop processes Skills Asynchronous and fragmented processes, no clarity on metrics, organizational overlaps Master data issues Inappropriate resources and skills Resource Lack of training Skills 3 Data Execution Integrity Users not trusting data quality, usability issues Issues Issues Change Mgmt Users not properly engaged in the initiative leading to adoption issuesIt is needed to build a systemic response to enhance supply chain performance managementIt is important to address the core issues of visibility, co-ordination and responsiveness to build a systemic response to enhance supply chainperformance management. Global manufacturers have already accomplished certain levels of Visibility, Coordination, and Responsiveness in theiroperations. Infosys believes global supply chains will continue to expand the width and breadth of their diverse partner network over the nextseveral years. Irrespective of the performance of the economy, the dynamic of increased supply chain complexity at the execution level will continue.A systemic response to enhancing supply chain performance will need strong appetite for change management and internal stakeholder alignment.Such a response should tie back in key business goals and objectives and clearly align business value delivery with such planned initiatives. • Capitalize on “lost sales opportunities” by providing • Identify additional revenue opportunity – cross-sell, up-sell, new Revenue demand information early to suppliers bundles, new offers based on market, customer and product feedback Visibility, Co-ordination and Responsiveness Themes – How do they help? • Design “Demand Shaping strategies” based on visibility • Cut down the “time to market” through better planning & visibility of Enhancement into inventory by locations, inventory velocity and price information across multiple parties in the value chain along with markdown flexibilities of products collaborative product development • Improve inventory turns through demand-supply • Minimize invalid returns, response to invalid warranty synchronization • Carry out product engineering analysis collaboratively between Cost • Reduce cost of expedites due to lack of information visibility partners for quicker CAPA actions Reduction • Reduce manual touches in obtaining information, in turn • Minimize invalid returns thru rule-based workflow engine to reduce cost of delays and errors automate return authorizations based on return value Goals & Objectives Customer • Perform better on delivery performance (ATP/CTP) based • Provide status and communicate early to customers in case of changes on visibility into supply capabilities • Manage tracking of product and service quality and take quick Experience & • Manage and accommodate late order change through remedial action through service campaigns & diagnostics Satisfaction order lifecycle • Reduction in number of IT tools used & redundant data entry • Make shared decisions and plans that allow better plan • Build in more Management by Exception capabilities across supply Partner adherence and execute at a lower cost chain partners • Reduce partner risk by publishing order/plan/inventory • Reduce human intervention in reconciliation of transactions Experience information to help partner planning and execution • Allow supply chain partners improve their asset utilization performance • Supply chain traceability and tracking of serial numbers of • Manage compliance requirements and documentation needs across Regulatory the products for installed base, entitlement management, the supply chain partners. Compliance Restriction on Hazardous Substance (RoHS) compliance • Manage product integrity in terms on BOM Compliance Infosys – View Point | 3