VOLUME 2 ISSUE 2 FEBRUARY 2013                             . http://opepiimraipur.blogspot.in/EMERGING                    ...
EDITORIALIn todays dynamic business world,              Raipur has listed down the potential benefitsorganizations are cha...
DIRECTOR’S MESSAGE                       From a humble beginning in 2010, Indian Institute of                       Manage...
chain integration by supporting and assisting     Phase-I Strategy & Planningjoint practices. It is a business practice   ...
the partners, but the answers to the all      existing forecast or import their owncritical questions like who will get wh...
sort out the issue in the eighth step of           the lowest data level. Also, while sharing theresolving exceptions by q...
Superdrug faced a major challenge of                  Thus, we can see how CPFR is helpful intrimming the inventory as per...
EMERGING AREAS                  ENTERPRISE ASSET MANAGEMENT                  Integrating & Improving with EAM             ...
in achieving high reliability of operational   management system has to be seen in theassets it became imperative to repla...
out the 10 assets out of 10000 assets which     Workflow can be approved, rejected,require     immediate       attention. ...
capture more data which can be easily                 telecommunications and oil & gas. Now,entered into the system, which...
EMERGING AREAS              HUB AND SPOKE MODEL              In IT-BPO with INDIA as “HUB”              [SINDHUJA A]India ...
regions and provide services to the              the Hub integrates all the services andcustomers. The Hub and Scope Model...
would lead to a closely knit Hub and Spoke        structures and harmonized and standardizedModel of operation.           ...
SPECIALS                IT AND LEAGILE SUPPLY CHAIN                Emerging IT Trends in the Application of Leagile Techno...
of these two concepts within the scope of         (Mason-Jones and To will, 1997) whereinone firm or a single supply chain...
deployment (e.g., point of sale (POS) data,      Synchronizing all the essential IT activitiescollaborative planning forec...
information technology component              financial, and information flows that need to    within the organization or ...
SPECIALS             E-COMMERCE AND LOGISTICS             Wind of change in the field of logistics              [POUSALI C...
commerce business, the middle two layers        available of the book. So, the various e-are becoming more and more overla...
As far as the challenges are concerned, one        also a supporting strong distribution so as tomajor challenge in e-comm...
FROM THE INDUSTRYTRENDS IN THE AUTOMOTIVE INDUSTRYThe Journey of Automotive Industry with InformationTechnology[S SRINIVAS...
unaffected. Next, with the advent of desktop     number of users at different locations and allsystems in the eighties, th...
scheduling of customer deliveries is             automation through either hand held devicesfacilitated by complex dealer ...
b) Quality control tools such as in- process    material. To enable tracking of products    gauging, calibration software ...
FROM THE INDUSTRY                    INTERVIEW WITH PRAVEEN SINHA                    Co-founder and Managing Director at J...
WORK EXPERIENCE                                 The scale of operations cannot be managed                                 ...
8. Jabong.com claims to deliver                 logistics management systems for in-houseproducts in top 10 cities within ...
which is a result of high standards in service   Jabong.com believes that in the long run, e-and product quality to help s...
1. Lack of Technology Standards: Many            on pellet-level, box-level or container-levelorganizations prefer to have...
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
Strive 4.0
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Strive 4.0

  1. 1. VOLUME 2 ISSUE 2 FEBRUARY 2013 . http://opepiimraipur.blogspot.in/EMERGING COVER STORY SPECIALAREAS IT AND LEAGILECOLLABORATIVE TRENDS IN SUPPLY CHAIN 13PLANNING,FORECASTING AND AUTOMOTIVE E-COMMERCE ANDREPLENISHMENT 1 LOGISTICS 17 INDUSTRY 20C P F R WORKENTERPRISE ASSET INTERVIEW EXPERIENCEMANAGEMENT 6 WITH IMPLEMENTATION OF CORE BANKING E A M PRAVEEN IN SBI 31 SINHA 24 ROLE OF IT IN OPERATIONS 35HUB AND SPOKEMODEL 10 RFID REGULAR IN INDIAN & GURUMANTRA 37HUB RETAIL 28 CROSSWORD 39 SPOKE MODEL ON THE COVER The dispersion of light in the cover page shows the fast paced growth that every sector is experiencing in their operations & supply chains with the support of Information Technology. The blue-colored gear in the cover marks the strong and much required presence of Information Technology in Operations. In the background we have binary digits "1" & "0" to indicate digitization in the corporate world PHOTOGRAPH COURTESY: TEJIT MITTAL DESIGN: MANOJ H
  2. 2. EDITORIALIn todays dynamic business world, Raipur has listed down the potential benefitsorganizations are changing their way of of RFID technology in retail sector and thefunctioning by relying more on information issues limiting its implementation.technology - information systems and The students have also written articles aboutoperations management are critical to every some of the contemporary issues including–organizations success. IT infrastructure and ‘Collaborative Planning, Forecasting andoperations leaders are facing new and Replenishment (CPFR)’. This articleunforeseen challenges everyday and hence explores the various advantages which anare required to keep themselves updated so organization can gain from it and theas to convert these challenges into challenges in implementing it. We haveopportunities. The need to develop and continued the column Gurumantra frommanage a flexible infrastructure has Strive Issue 3 and Issue 2. Two 1st year PGPemerged as a top priority. students of IIM Raipur have shared their work experiences in role of IT in variedOPEP, the Operations and Supply Chain fields.Club of IIM Raipur, through its e-magazineStrive, serves as a platform for the We are thankful to Prof. B. S. Sahay, Prof.Students, Faculty Members and Industry Vinita Sahay and Prof. Ajit Prasad for theirPractitioners for sharing their knowledge in motivation and immense support & to Prof.the field of Operations and Supply Chain OmkarprasadVaidya and Prof. SumeetManagement. Gupta for teaching us the relevant subjects in the field of Operations and Supply Chain.This issue of Strive magazine focuses on therole of Information Technology in We also thank all our authors for taking outOperations. The magazine begins with an time from their schedule and contributing toarticle by Mr. S Srinivasan, the CIO of TVS the magazine. My editorial would beInfotech, who has given his insights about incomplete without acknowledging thethe role that IT has played in automotive support of Manoj, Sujitha, and Thousif insector operations right from the time it was bringing out this issue and the whole Teamintroduced to its contemporary issues. Mr. OPEP for their commitment and dedicationPraveen Sinha, Cofounder and Managing towards the club activities.Director, Jabong.com, through an interview,presents his outlook about the use of IT inthe online retail industry. In the academia Akshay Agarwal,section, Dr. Sumeet Gupta, a faculty Editormember of Indian Institute of Management Strive
  3. 3. DIRECTOR’S MESSAGE From a humble beginning in 2010, Indian Institute of Management Raipur has seen its pioneer batch graduating and joining reputed corporate houses across the country as well as abroad. Student-run initiatives play a major role in the process of achieving such feats. OPEP, the Operations and Supply Chain Club of IIM Raipur, has played a significant part in setting up this platform. The biannual e-magazine ‘Strive’ started byProf . B.S. Sahay our students has been successful since its launch last year. Three issues of Strive have already been released. In the current issue, the focus is on role of information technology in managing operations and supply chain. This has brought efficiency and transparency in the entire value chain with significant impact on the bottom-line. I wish OPEP a great success in their endeavor and hope that you enjoy reading this publication. Prof. B.S. Sahay Director, IIM Raipur
  4. 4. EMERGING AREAS COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT (CPFR) Functioning, Advantages and Challenges of Implementing CFPR [BIR BAHADUR SINGH] The purpose of this article is to explain the functioning of the CPFR (Collaborative Planning, Forecasting and Replenishment) technique in supply chain management system. The article also focuses on the various advantages which an organization can gain from it and what are the challenges of implementing it. Finally the article ends by citing some real life examples of how companies are using this technique.After winning the 2010 FIFA World cup of rupees hence the business houses arewhen Casillas was asked, what was their continuously trying to increase the degree ofwinning mantra the answer was a single collaboration as much as possible in order toword “Collaboration”. The point which I minimize the losses. In the pasts we havewant to stress here is that be it in business, seen many great initiatives in the field offootball or anything the success of the team supply chain like JIT (Just-in-time), ECRdepends how better they collaborate? (Efficient Customer Response) and VMI (Vendor Managed Inventory).In 80’s there was a huge cry for greensustainable environment as a result Volvolaunched green cars but the market’s “It is a business practiceresponse was opposite as a result Volvo had which combines thea green inventory. To reduce this campaignwas initiated which proved successful. The acumen of variousincrease in sales was wrongly interpreted trading partners in theand production department and startedproducing more green cars. As a result the planning and fulfillmentcompany again had a growing inventory and of customer demand”hence the whole motive behind thecampaign failed. This shows how importantit is for different entities in a corporation to Collaborative Planning, Forecasting andcollaborate. Replenishment (CPFR) is the most recentIn a football match it may result to a game concept which came into existence fromloss but in business houses it costs million 1995 that “aims to enhance supplyFEBRUARY 2013 1
  5. 5. chain integration by supporting and assisting Phase-I Strategy & Planningjoint practices. It is a business practice The initial step is to Develop Front Endwhich combines the acumen of various Agreement - this step mainly concerntrading partners in the planning and with the creation of the unstructuredfulfillment of customer demand.” The basic documents that define the agreement.idea is to create an environment in which the The Business modules allow partners totrading partners share the information which define and measure specific Keyresults in benefit of both the parties. Also we Performance Indicators. Planning throughcan see the added advantage in CPFR is that the use of Information Technologyit answers all the aspects of supply chain ensures that all partners will have accessproblems unlike the earlier approaches to the information simultaneously, whilewhere one approach only answers one the Portal makes all the data andaspect. information visible across the wholeCPFR is nine step processes which can be supply chain. The next step is to Createrepresented by a picture and is summarized the Joint Business Plan, after making thebelow agreement it is obvious that a lot of information will start flowing betweenFEBRUARY 2013 2
  6. 6. the partners, but the answers to the all existing forecast or import their owncritical questions like who will get what? forecast based on the most up-to-dateWhen? Where? How? How much? will be information. Multiple forecasts can be prepared to allow using a dominantgiven by the joint business plan which algorithm that takes into report thewas created by the consent of both the historical accuracy of different forecastparties. Joint Business Plan also defines contributors. Exceptions are easilythe roles and workgroups. identified and when these exceptions are identified, messages are sent to reconcile unusual items. Each provider (partner, • STRATEGY & PLANNING supplier, and customer) is a very 1 important part of the real-time collaborative process. • DEMAND & SUPPLY 2 MANAGEMENT Phase-III Execution Sixth step of the process of creating • EXECUTION 3 “CPFR provides an • ANALYSIS ample of opportunity 4 for the managers toPhase-II Demand and Supply remove theManagement inefficiencies of theThe third step is to create the salesforecast; Collaborative forecasting is the supply chain.”engine which drives the success of thewhole CPFR if suppliers have betterunderstanding into the retailers’ sales order forecast is mainly dependent onforecast they can plan their operationbetter. In the subsequent steps again the causal information POS data andsame procedure is followed for order inventory strategies in order to forecastwhat was followed for sales. If the which supports the shared sales forecast.suppliers have better understanding intothe retailers’ order forecast they can plan Seventh step is of identifying exceptions,their replenishment better. By the same actual results very rarely matches withtoken, retailers can lower the frequency the forecast so to determine what is theof their OOS conditions and mitigate their reason and why there is a deviation thisconsequences by getting continuous step is must. The output of this step is ainformation about the replenishmentposition. The next steps of identifying the list of exception things that areexception and the resolution begins with recognized using the criteria framed inorder Forecasting’s statistical forecast, the front-end agreement. Aftercompanies can create changes to an determining the exception we need toFEBRUARY 2013 3
  7. 7. sort out the issue in the eighth step of the lowest data level. Also, while sharing theresolving exceptions by querying pooled data any weak link in one partner can bedata and submitting results to change in fully exploited by the other which againthe order forecast. calls for a great trust between the parties before going to the agreement. Below wePhase-IV Analysis will show how some companiesFourth and final phase mainly concerns implemented CPFR system.with the order generation and delivery.To maintain or to increase the customer Warner-Lambert & Wal-Martbase, the very important thing is to timely Warner-Lambert was a Americandelivery which means that the company pharmaceutical company which was later onshould stand on their promise of delivery acquired by Pfizer faced a problem in theit will not only generate trust in the minds demand fluctuation of its products. Theof customer but also sets the benchmark demand fluctuation was mainly the result offor the company itself. Wal-mart’s promotion. The only solution to the problem was collaboration. The partnersThere are lots of benefits of this system if shared the weekly forecast and workedproperly implemented some of them are together to resolve any variation which occurs. Optimal application of CPFRa) Improved responsiveness to consumer aroused when other retailers joined Wal-demand because of reduction of out-of- mart in sharing their weekly forecast. Thisstocks and shorter cycle time. helped Wal-mart to keep effective inventoryb) Greater forecast accuracy - sharing a levels. Also it helped Warner-Lambert tosingle forecast throughout the supply chain gauge market demands more effectively.enables participants to benefit fromsynergies. Also increased forecast accuracy Kraft food & J. Sainsbury Plc Kraft is a worldwide famous foodfacilitates decrease in safety stock as a result manufacturer and J. Sainsbury Plc is world’sinventory reduces which further helps in leading retailers. Both the companies werecost production. facing a major problem of out of stockCPFR provides an ample of opportunity for inventory which resulted in loss of sales andthe managers to remove the inefficiencies of high inventory level across Kraft and J.the supply chain. Europe and other western Sainsbury Plc’s supply chain. Both thesecountries have already realized its potential companies adopted CPFR as a pilot projectand are exploiting this system to its full. and the results were breath taking on-shelfHowever, there is certain area which poses availability increased by 20%.challenge for implementation of thistechnique. One of them is the selection of Super Drug & Johnson and Johnsontrading partner with whom the information Superdrug operates more than 700 storessharing because the confidentiality has to be throughout the United Kingdom. J&J is amaintained and the collaboration must be at global American Pharmaceutical company.FEBRUARY 2013 4
  8. 8. Superdrug faced a major challenge of Thus, we can see how CPFR is helpful intrimming the inventory as per sales also; achieving the desired results in the supplythey wanted to improve forecast accuracy so chain of organizations. Though, west hasthey started a pilot project with J&J with the adopted it but it is not being practiced inuse of CPFR due to similar culture of two India on a large scale. The advantages arecompanies. As a result of the unmatchable. With the increasing IT powerimplementation many future issues were in India we can say that sooner all supplyavoided due to proper highlighting of the chain managers in India will also beissues. Superdrug’s also got the access for enjoying the wonderful technique.the first time to a range of data which wereunavailable to them earlier. Superdrug also REFERENCES:-saw a heavy reduction of 23% in RDC 1. http://www.decisioncraft.comCover (Present Stock on hand/Last week’s /dmdirect/cpfr.htm accessedsales). on 01.01.2013 2. http://web.mit.edu/sheffi/wwGodrej Consumer Products Limited w/documents/genMedia.theVaGodrej implemented CPFR as a part of its IT lueOfCPFR.pdf accessed oninitiative which included Customer 31.12.2012Relationship Management and Business-to- 3. http://www.ecr.no/data/f/0/7employee portal. Godrej implemented the 0/62/2_2401_0/2001_a_guide_project with a name “Sampark”. The to_cpfr_implementation.pdfcompany appointed Accenture to design the accessed on 02.01.2013IT roadmap for the project. It addressed 4. http://www.sccori.com/SCM/various issues like overstocked distributors COLLABORATIVEPLANNINGFOwho were looking to reduce service levels, RECASTING.pdf accessed onout of stock scenario due to unexpected 30.12.2012demand. All these issues were solved to a 5. https://committees.vics.org/covery greater extent with the implementation mmittees/cpfr accessed onof CPFR and one of the remarkable 01.01.2013outcomes was the better integration between 6. http://en.wikipedia.org/wiki/the distributor & C&F (Clearing & Collaborative_planning,_forecaForwarding) agents. Company also achieved sting,_and_replenishmenta reduction in working capital of the accessed on 01.01.2013distributors.BIR BAHADUR SINGH is a B.Tech in Electrical Engineering from NIT Silchar, after a brief stint atSchneider Electric Infrastructure Limited he took admission in IIM Raipur as a Post graduate student.His academic interest includes areas of Operations and Marketing. He can be reached atpgp12014.birbahadur@iimraipur.ac.inFEBRUARY 2013 5
  9. 9. EMERGING AREAS ENTERPRISE ASSET MANAGEMENT Integrating & Improving with EAM [ANAND SIVAKUMAR J] This article briefly looks into how Enterprise asset management integrates all the principal interface of an organization namely, physical, financial, human, intangible and information assets to strategically reduce the operational costs and improving both the value of the organization and value provided by the organization. It also analyses how the emerging technology can also be integrated with the existing systems to improve the efficiency.Industries like utilities, manufacturing, and than costs. The standard practice ofreal estate are capital intensive and physical Terotechnology is concerned with focusingassets like equipments, buildings form a on the reliability and maintainability of physical assets of an organization likeconsiderable proportion of their total assets. machinery, equipment, plant, buildings withThey operate in highly competitive markets their selection, installation, testing,and they know the harsh realities of commissioning, maintenance and repair withoperating in such markets. They deal with compilation of information on design,high value assets and equipments and performance and costs. Based on the data, itwhenever there is a failure of these assets it also involved feedback to the originalcosts them a lot and also disrupts their manufacturer to improve equipment design and development.business. As downtimes and idle timebecome more and more expensive, both in As the companies were very much interestedterms of loss in production and revenue loss,it becomes imperative for the organizationsto maximize the productive life cycles of "a combination ofassets via optimized operations management, financial,management. engineering, and other practices applied to physicalEnterprise Asset Management emerged inthe 1980s in Europe as Terotechnology. BS assets in pursuit of economic3811 defines Terotechnology as, Now, the life-cycle costs ".companies are focusing on profits ratherFEBRUARY 2013 6
  10. 10. in achieving high reliability of operational management system has to be seen in theassets it became imperative to replace the context of getting the most out of assets ofword Terotechnology with the more an organization at lower operational costs.acceptable term ‘Enterprise Asset This can be achieved only when Finance,Management or EAM. The phrase Engineering, Operations and MaintenanceEnterprise Asset Management implied that are working together across the life cycle.the achievement is a result of involvementof the entire company. Operational Excellence can be achieved when there is improved asset reliability andAn organization’s strategic plan will be to performance. By whatever name it can beincrease the profit which involves low called Terotechnology, Enterprise Assetoperational costs and better customerservice. The principal interfaces of anorganization namely, physical assets, “An organization’s strategicfinancial assets, human assets, intangible plan will be to increase theassets and information assets have to bemanaged holistically. These interfaces build profit which involves lowthe important relationships between those operational costs and betterwho work on these assets and those who customer service.”ensure their availability. Management or Operational Excellence- itAny organization will face the challenges can be achieved only by a significant changelike provision of high asset availability in thinking and attitude at all levels.without increasing the costs of procurement, Now a days, accounting, HR andidentifying the critical assets and anoptimizing the asset maintenance strategy, manufacturing information functions areimproving asset efficiency, reducing standardized and consolidated by mostreactive maintenance costs and finally to companies using enterprise resourcedecrease the Total Cost of Ownership planning systems, but very few companies(TCO). A well planned strategy along with have integrated their calibration andimplementing appropriate solutions will equipment management systems. Theensure high availability of assets at lowmaintenance costs, improved efficiency and integration of systems involves variouslow Total Cost of Ownership (TCO) of dimensions, like integrating the systemsassets. horizontally over time axis, vertically between lifecycle functions or integratingTo build an effective system, asset the systems across the enterprise. Butmanagement system and quality achieving this level of integration involvesmanagement system have to be combined to implementing a very comprehensivefocus on the process of continualimprovement by following Plan – Do – solution.Check – Act methodology of Deming. Real time analysis of data and reportingThe concepts and duties of finance, across different systems connect individualengineering, operations and maintenance asset performance with the entire businessmust not be seen in isolation. A good asset performance by enabling the users to findFEBRUARY 2013 7
  11. 11. out the 10 assets out of 10000 assets which Workflow can be approved, rejected,require immediate attention. This escalated to high level, can be paused until ainformation provides an understanding and specific job is done. And remember thissome valuable insights to make quality workflow management can be applied to alldecisions about where the employees are modules like finance, human resources, andspending more time and which resources are operations in a single application withoutbeing used at what level. This system also going for different ERP solutions.provides the option of notifications, throughwhich the concerned operator or shop floor Asset descriptive attributes have to bemanager will be informed automatically standardized and structured in consistentabout the preventive maintenance activities, formats and values. Equipment Catalogingwarranty services etc. Based on this, staff serves the purpose. Equipment catalogingcan identify more efficient ways to operate enhances the asset management process bythe equipment, utilize and manage the assetsto get the best business outcomes. “An integrated informationRetrieving data from different computerized system will make the data frommanagement systems used in different different business modules likebusiness modules will take long time whichwill not help us much in taking real time physical assets to finance easilydecisions. Using an integrated information available and analyzable”system will make the data from differentbusiness modules like physical assets tofinance easily available and analyzable. A automatically combining attribute data intocommon language is particularly important useful management information.in modern enterprise systems wherein the In any database, we can easily search foruser will be empowered to inquire on and equipment by attributes such as modelmake selected updates to his equipment and number, manufacturer using modern searchmachinery data. The technical solution is algorithms like SQL. However, unless thestraight forward-simply define a common data is structured very well in the database,set of tracking attributes and establish searches are going to be slow, unreliable,validation tables and logic to enforce the particularly as the data volume growsvalues. beyond a few thousand items. Structured cataloging methodology will solve thisEAM provides us a single database where problem.even Vendor details, previous transactiondetails can also be included. We can design Now, mobility technology also becomes aour own customized approval system part of EAM. Companies are implementingthrough workflow management where mobility solutions as a part of EAM, torouting the workflow through the enable their technicians to access and referapplication is enough to approve the task. data on-site. This helps the employees toFEBRUARY 2013 8
  12. 12. capture more data which can be easily telecommunications and oil & gas. Now,entered into the system, which can be Organizations like TCS, Mahindra Satyam,accessed by anyone who is using the system Genpact, IBM are offering these solutions asin the organization. Integrated Asset Management (IAM) solutions.Dubai municipality’s public transportsystem, manages the maintenance and REFERENCESprocurement of components and to monitor [1]. Ricky Smith, CMRP, Ivaraall processes relating to periodic preventive Corporation. (n.d.). Connectingand corrective maintenance, spare parts and reliability to EAM.equipment for its fleet of 2000 light andheavy vehicles using EAM solution. [2]. Kennedy, S. (n.d.). Innovations in CMMS and EAM are making lifeEAM maximizes the value of critical easier for the plant maintenancebusiness and assets over their complete department.lifecycles with workflows by providing bestpractices that yield benefits for all types of [3]. Philip M. Parker, P. (n.d.). The 2009-assets, including transportation, delivery, 2014 Outlook for Enterprise Assetfacilities, production, communications and Management Systems (EAM) in TheIT. Industry-tailored EAM solutions are Middle East.available for nuclear power, transportation,utilities, life sciences, government,ANAND SIVAKUMAR J is a graduate in Production Engineering from Madras Institute of Technology,Anna University. He worked in Engineering and Industrial Services of TCS for 3o months. He iscurrently pursuing post graduate from IIM Raipur. His areas of interest include Operations. He can becontacted at pgp12007.anand@iimraipur.ac.inFEBRUARY 2013 9
  13. 13. EMERGING AREAS HUB AND SPOKE MODEL In IT-BPO with INDIA as “HUB” [SINDHUJA A]India has a major share of IT-BPO. With the strong base it can now leverage the position toturn into a “Hub” of global delivery. Hub and Spoke Model is new to IT-BPO but it has beenput in practice in many industries. Indian IT can analyze the cases of Hub and Spoke in otherindustries, develop some necessary skills, put all its strengths to work and attain the positionof “Hub”. The Hub and Spoke Model has many advantages over other outsourcing model.Though it is not completely without disadvantages, implementation of this model would give astrategic advantage to our country.Tertiary sector in India is the fast growing market for IT. India can leverage all these toand most contributing of all the sectors. move from an offshore site to a globalMore specifically, in this sector, Information “Hub” for IT.Technology- Business Process Outsourcing(IT-BPO) has grown remarkably in the past The outsourcing in IT has evolved overdecade and acted as a catalyst for the growth time. It has changed from onsite in 1980s toof the country. The phenomenon growth in offshore in 1990s to near-shore in 2000s.this industry can be attributed to the Each one of this has a special purpose toperceived cost advantage of outsourcing to serve. Onsite is best when the desiredIndia. Demographics, geography and customer interaction is high. Offshoreavailability of skill led to this IT revolution. reduces cost to a great extent. NearshoringThough initially outsourcing to India was moderately reduces the cost while still beingseen as a way to cut costs, over years the close to the customers. Each has advantagescustomers are realising that it is turning to and disadvantages. The new model that isbe a strategic driver. The vendors now are emerging in the field of outsourcing of IT-not just providing services at low cost but BPO is the Hub and Spoke Model. It is aalso providing high quality services by multi-tier operating model with abuilding strong expertise in technology, standardized governance structure.operations, business-knowhow and In the Hub and Spoke model, “Hub”management capabilities. India has emerged provides a single face to customers withas the leader in IT offshore outsourcing with each “Spoke” as an extension to it.a share of 55 percent in global offshore “Spokes” are distributed across variousFEBRUARY 2013 10
  14. 14. regions and provide services to the the Hub integrates all the services andcustomers. The Hub and Scope Model is not provides to the customers.a new model to experiment with. It hasalready been successfully implemented in “Hub” in the Hub and Spoke Model isvarious industries like automobiles, responsible for customer management, quality and performance management,electronics, consumer goods and aerospace. training and development, man-power management and regulatory compliance. OnIn aircraft industry, this model helped to cut the other hand “Spoke” has to meet thedown the production timelines. Also it performance expectations, manage localhelped the companies to concentrate on their projects and support the “Hub” on legal andcore competencies like aircraft design and tax compliance.assembling while outsourcing thecomponent manufacturing. Few major Initially it is good to keep managementplayers in Consulting and Technology also activities at “Spoke” minimal with ause this model. They split the process “Spoke” working under only one “Hub”.outsourced into various components like But as time passes, there would be “Spokes”voice, data, etc and routes these processes to addressing multiple “Hubs” by developing alocations that serve them the best. Finally, management layer and finally the evolutionFEBRUARY 2013 11
  15. 15. would lead to a closely knit Hub and Spoke structures and harmonized and standardizedModel of operation. delivery system. They must ensure compliance with global information securityHub and Spoke Model mitigates of risk by standards.locating in different locations. It takesadvantage of favourable tax and legal With good base in IT-BPO, increasingstructures of various countries, cost quality regulations, emergence of Tier-II andadvantage arising because of emergence of Tier-III cities, government initiatives (likeTier-II and Tier-III cities and the high tax benefits for IT-BPO), developingquality talent available at these locations. infrastructure, India has every chance ofAbove all it helps to be close to customers being a global “Hub” for IT services. Manyso that their needs are well understood. Also leading MNCs of the world are consideringthe cultural affinity helps the vendor offer a India as a “Hub” in their global deliverybetter customer experience. Centralized strategy and developing spokes in othertraining coordinated by “Hub” ensures a countries like Philippines, China, Uruguayconsistent employee quality. and Mexico.The model however faces some challengeslike ensuring data security, addressing taxissues, integrating services and managing Referencesthe difference in regulatory environment, [1]. Greenbaum, J. (2010, May). Insideculture and time zone. the Hub and Spoke Model. Managing Automation , 25 (4), p. 14.The companies that are planning to employthis model for their business need to [2]. KPMG, NASSCOM. (2012). Hubconcentrate of few aspects before the actual and Spoke Model: A new Paradigmimplementation. They must build a globally for Indian IT-BPO Industry.consistent brand, advanced technology, pro-active location strategy, flexible governanceSINDHUJA A is a graduate in Electronics and Communication Engineering from UniversityCollege of Engineering, Osmania University. She is interested in corporate banking. She can bereached at pgp12001.sindhuja@iimraipur.ac.inFEBRUARY 2013 12
  16. 16. SPECIALS IT AND LEAGILE SUPPLY CHAIN Emerging IT Trends in the Application of Leagile Technology [PULAK JAIN]The article deals with the application of the Leagile system in companies and the role IT inaiding this system. It talks about the emerging IT trends in the application of leagile technologyto gain competitive advantage.Adding value to the shareholder by waste, including time, and to enable a levelgenerating higher revenue is the main schedule.” On the other hand Agility meansobjective of any firm that can be achieved using market knowledge and a virtualby providing service or product that fulfils corporation to exploit profitablethe customer requirements. Therefore the opportunities in a volatile marketplace. Inobjective of the supply chain of any short lean is ‘supply what, when needed, butorganisation would be to ensure that it do this perfectly’, whereas agile aims at ‘besatisfies the consumer requirements. Going first, fast and best’.through the history of supply chain, craftshop was the first supply chain that High level of product quality as well as thedelivered exactly what the customer wanted, lead time is an important requirement forbut it was done at a very high price. Henry both the lean and agile supply chain systemford introduced assembly line for mass in order to satisfy the consumer demands. Inproduction of model T at low cost, but no lean system the lead time has to be smallchoice was given to consumers. In the recent because the time is considered as waste andtimes in order to gain competitive advantage should be removed, while in agile systemthe companies are focusing on mass shorter lead time is required to fulfill thecustomization and flexible manufacturing. In volatile customer demand as quickly asthe light of this requirement, lean and agile possible to gain competitive advantage. Thesupply chain management are heavily following matrix shows that the key orderstudied and adopted across the winner for the agile system is the availabilityorganisations. of the product to the customer whereas in lean system it is the minimization of theLean supply chain management, first created cost.at Toyota, focussed on reducing cost byeliminating wastes (muda). Leanness means Leanness and agility in a supply chain do“developing a value stream to eliminate all not have to exclude each other. CombinationFEBRUARY 2013 13
  17. 17. of these two concepts within the scope of (Mason-Jones and To will, 1997) whereinone firm or a single supply chain can be the visibility of demand; by means of timelycalled as ‘‘leagility’. Naylor et al. defined information sharing reduces complexity ofleagility as “the combination of the lean and control. Harrison and Van Hoek presentedagile paradigm within a total supply chain an integrated model for enabling the agilestrategy by positioning the decoupling point supply chain in 2005. It consists of fourso as to best suit the need for responding to a elements:volatile demand downstream yet providinglevel scheduling upstream from the 1. Market sensitive (or customerdecoupling point.” The decoupling point responsive)separates the part of the supply chain geared 2. Virtual (or IT-based sharing oftowards directly satisfying customer orders information)from the part of the supply chain based on 3. Process integration (of business pro-planning. The decoupling point is also the cesses)point at which strategic stock is held as a 4. Networked-based (partners with abuffer between fluctuating customer orders common goal).and/or product variety and smoothproduction output. On the downstream sideof the decoupling point is a highly variabledemand with a large variety of products,where as upstream from the decouplingpoint the demand is smoothed with thevariety reduced. As shown in the diagrambelow, the lean paradigm can therefore beapplied to the supply chain upstream of thedecoupling point and thereafter the agileparadigm can be applied downstream fromthe decoupling point as demand is variableand the product variety per value stream hasincreased. Market winners and market qualifiers for agile vs lean system, source: mason-jones et al.Stalk and Hout in 1990 warned of thedangers arising from slow information lead- Effective supply chain strategies combine atimes in supply chains stating that “the range of approaches from operationalunderlying problem here is that once flexibility(e.g., postponement, assemble-to-information ages, it loses value... old data order (ATO), make-to-order (MTO), andcauses amplifications, delay and lead time (LT) reduction), channeloverhead...the only way out... is to compress alignment (e.g., contracts, vendor-managedinformation time. Overcoming these inventories (VMI), and efficient consumerproblems leads naturally to the concept of response initiatives (ECR)), and jointthe ``Information Enriched supply chain decision making through informationFEBRUARY 2013 14
  18. 18. deployment (e.g., point of sale (POS) data, Synchronizing all the essential IT activitiescollaborative planning forecasting and to achieve supply chain agility is crucial. ITreplenishment (CPFR), and schedule enables a supply chain with a high degree ofsharing). The partners are cross-linked and visibility, connectivity, responsiveness, andare all contributing to the value generated flexibility. Among different ITfor the final customer. competencies, IT integration and IT flexibility are deemed to provide the mostExamples of IT that enhance supply chain obvious contributions to supply chaincapability are: agility.  Mobile and wireless technologies for IT integration is defined as the extent to real-time data collection which information systems are linked and  Integration technologies (Web information is shared among different services) for real-time monitoring of functions and supply chain parties, thereby events through Portals effectively creating a virtual supply chain  Business process re-engineering and (Knapp et al., 2006; Lin et al., 2006). IT management tools for business integration helps coordinate supply chain process automation and redesign of functions and partners through the sharing of supply chain system or enterprise information related to demand forecasts, system. production schedules, inventory, and production quality that dictate supply chain activities (Li et al., 2009). IT integration also includes the exchange of knowledge with partners up and down the supply chain, allowing them to collaborate and to create synchronized replenishment plans. IT flexibility is defined as the ability of IT infrastructure to adapt to both incremental and revolutionary changes in the business or business process with minimal penalty to current time, effort, cost, or performance (Conboy, 2009; Nelson et al., 1997). It is characterized by (1) Connectivity, which refers to the ability of the information technology component to attach to other components within the organization or with other organizations (2) Compatibility, which pertains to the Flow diagram linking Lean, Agile and Leagile ability to share information across anyFEBRUARY 2013 15
  19. 19. information technology component financial, and information flows that need to within the organization or with other be accurately and promptly delivered to organizations reflect the status in the supply chain.(3) Modularity, which denotes the ability to add, modify, and remove information REFERENCES technology components with ease and 1. Mason-Jones et al. (2000), Lean, without negative effect on performance agile or leagile? Matching your (Byrd and Turner, 2000; Fink and supply chain to the marketplace, Neumann, 2009) International Journal of Production research 2. Martin Christopher et al. (2000 vol. 5), Supply chain migration from lean and functional to agile and customised 3. Mason-Jones et al. (2000), Engineering the leagile supply chain 4. Childerstone and Towel (2000), Engineering supply chains to match customer requirements 5. Moron, Haan (2011), Improving supply chain performance to satisfyModerated by the effect of firm scale, IT final customers: ‘‘Leagile’’competence acts as the foundation of supply experiences of a polish distributorchain competence, in which IT integration 6. Eric W.T. Ngai et al. (2011),supports a better supply chain integration Information technology, operational,and flexibility, whereas IT flexibility and management competencies forsupports better supply chain advancement. supply chain agility: Findings fromMoreover, inter-organizational collaboration case studiesis important in achieving a complete IT 7. A. White et al. (2005), The role ofintegration along the whole supply chain, emergent information technologieswhich, in turn, supports supply chain and systems in enabling supply chainintegration and flexibility. IT has facilitated agilitythe formation of global supply chain 8. Cheri Speier et al. ,The Role ofmarkets; changed the relationships among Information Integration incustomers, manufacturer, and suppliers; and st Facilitating 21 Century Supplyaccelerated and visualized the product, Chains: A Theory-Based PerspectivePULAK JAIN has done B.Tech in Electronic and Communication Engineering from IGIT, GGSIPUDelhi. She is an avid reader of philosophy and fiction. She can be reached atpgp12113.pulak@iimraipur.ac.inFEBRUARY 2013 16
  20. 20. SPECIALS E-COMMERCE AND LOGISTICS Wind of change in the field of logistics [POUSALI CHAKRABARTI]One of the interesting definitions describes technology and starts using to its fulllogistics as “having the right item at the potential, the stronger it makes it presenceright time at the felt in theright place in the industry. IT-right quantity to Operationsthe right integration pavedcustomer” way for a faster(Susan Mallik, and smoother2010). The all- logistics industryinclusive by reducing thedefinition talks frequent errorsabout the holistic and glitches.nature of thetraditional business logistics – right from With the advent of e-commerce, nature ofproduction, procurement, distribution, business is undergoing changes. Along withinventory management and of course it, the conventional logistics problems aredelivery across the entire supply chain. also changing. Earlier the process used to beLogistics industry used to rely heavily on supplier driven, whereas now the driveindividual skill and dexterity of the comes from the customer. It is more of orderemployees. Efficiency used to be thought as fulfillment rather than stocking. The goodan outcome of practice. However, with old logistics is getting changed. Typically, ininvent of technology, especially with Indian e-commerce industry, the back-endinformation technology, revolution is operation is often outsourced to somehappening across the business sectors. logistics firm who would take care of theLogistics industry also has become equipped physical supply-chain process with the e-with new ways of doing things. In many commerce sites providing the user-interfaceinstances, manual labour has become with the front end operations. However,eliminated or has been reduced significantly. there are a few players who do manage theirSkill requirement has enhanced as well, in own distribution network partially.terms of grasp and capability around the In a conventional supply chain, there are twonew methodology. The new skill set distinct players in between therequired includes efficiency in using new manufacturers and the customers. In the e-technologies; the faster one gets hold of theFEBRUARY 2013 17
  21. 21. commerce business, the middle two layers available of the book. So, the various e-are becoming more and more overlapping. retailers would eventually be competing forIn the conventional structure, the the share of an almost fixed pie. The morewarehouses used to be located in the the stock, the more profit a company woulddistribution level of supply chain across make. The more profit a company foresees,various places including both rural and the more discount it can offer. The moreurban locations. However, in e-commerce, discount is on, the more is the chance of athe warehouses are often integrated with the money transaction by the customer.manufacturing stage and are located inoutskirts of a medium to big city. According More and more e-commerce sites are nowto the order placed online, the goods are investing in strengthening their logistics.moved to the exact locations in smaller They are cutting on the outsourcing. Onetruckloads. The transportation has become prominent example would be Flipkart. As amore frequent and less bulky. At the same start-up, it started in 2007 in the Amazontime, the transportation need has become model. Becoming the most popular choicemore intensive because of the B2C for online book-retailers, Flipkart has(Business-to-Customer) outlook. This shift ventured into FMCG, apparels and smallin the logistics eventually has impacted the and medium sized electronics as well. It haswhole supply chain. Since there is no now 7 warehouses across 25 cities to cater tophysical presence of retailers in e- the customers.commerce, the retailing objective has been However, building your own logistics doeschanged entirely. Instead of making a good not necessarily mean that you have to cutphysically available to the customer through down on outsourcing. Specially, in athe intelligently planned retail layout, the country like India, where distribution hasretailers are attracting customers online always been an issue for some and also thethrough pages. There too, competition is on competitive advantage for some others, itfor giving the customer more and more real does make sense to reach as many customerslife look and feel of a product. Order-to- as you can by all means. Naaptol has beendelivery time is also increasingly becoming following the same strategy of a mixeda competitive feature for the various e- distribution. They are continuing to follow aretailers. As a result, the onus is often on mixed model where they are outsourcing, asthese retailers so far the stocking or well as banking on the self owned deliveryinventory management is concerned for a mechanism for the last mile delivery.particular product. For instance, let us take According to Naaptol, in Indian e-commercethe example of e-retailing of a novel by context, the mix-model will rule for at leastChetan Bhagat just before the launch of the a while as to have a fully self ownedmovie made on it. It is expected that there logistics will need money and the revenue –would be huge demand for the book. Since investment only manages to provide a slowpublishing rights would be restricted, there but steady support in the entire process.would be a limit over the number of printsFEBRUARY 2013 18
  22. 22. As far as the challenges are concerned, one also a supporting strong distribution so as tomajor challenge in e-commerce lies in the minimize the order fulfillment gap.geographically and demographicallydispersed traffic these sites cater to. In a It is true that e-commerce rejects many ofconventional retail based supply-chain the facets which were crucial forsystem, it is comparatively easier to conventional logistics problems. Forunderstand your customers, their needs and instance you no more need to worry aboutalso to trace their purchase patterns. your physical shelf space, physical layoutHowever, in case of an e-commerce site, the design. But, at the same time, e-commercetrend analysis could be difficult. Here comes also introduces many newer aspects to thethe demand of better analysis procedure. logistics problems. E-commerce calls for aOften, the information provided by an online more dynamic, more versatile framework ofshopper is so minimal in nature, it is logistics. In order to achieve that, we need topractically impossible to trace any sort of have an efficient data-collection andcorrelation between his or her background analysis methodology. This, together with aand purchase pattern. This problem qualifies dynamic and flexible implementation, willto be a two-way sword as it puts you in a help us integrate the e-commerce anddilemma whether to ask your customer logistics.about personal information or to make the References:process as hassle free as possible for the [1]. Susan Mallik (2010). Hossein Bidgoil.customer. Bombarding the customer with ed. The Handbook of Technologyquestions makes you lose to your Management: Supply Chaincompetitors and otherwise you end up losing Management, Marketing andthe factor which connects your customer to Advertising, and Global Management,you. We must also acknowledge the vol 2 (1 ed.). Hoboken, New Jersey:dynamic nature of e-commerce in contrast to John Wiley @ Sons, Inc.. p. 104the traditional business. Here, the customers [2]. E-commerce matures, players investare from varied background. Since, there is in logistics, warehouses, Businessno geographical boundary; the customer Standardbase is also continually changing. Challenge [3]. Anshoo Sharma, AEmerging Trends Inremains in correct prediction of the demand. Indian E-Commerce: On Logistics, NoOne solution to mitigate the risk of faulty Poach, Payment Gateways & More,prediction could be to switch to a dynamic http://www.medianama.com/2012/05/22business model altogether. This model will 3-emerging-trends-in-indian-e-ideally have zero or negligible inventory and commerce-on-logistics-no-poach- payment-gateways-more/ POUSALI CHAKARBATHI is an Electronics and Instrumentation Engineer from Heritage Institute ofTechnology. Her interest areas are Operations and Supply Chain. She can be reached atpgp12032.pousali@iimraipur.ac.inFEBRUARY 2013 19
  23. 23. FROM THE INDUSTRYTRENDS IN THE AUTOMOTIVE INDUSTRYThe Journey of Automotive Industry with InformationTechnology[S SRINIVASAN]Mr. Srinivasan S (Chief Information officer – TVS InfoTech) has over 38 yearsof experience in materials management, corporate planning, manufacturingplanning, logistics and information technology in leading organisations inIndia and Oman. In his tenure at Sundram Fasteners Ltd., he implementedSAP at a dozen plants of various types and sizes and also handled all aspectsof IT, ranging from hardware and software to connectivity and specialapplications.Srinivasan is a B Tech from IIT Madras and an MBA from IIM Calcutta.He was nominated by the Automotive Component Manufacturers Association(ACMA) to discuss the methodology of data exchange with vehiclemanufacturers and was deputed by the Ministry of Commerce to UN-ESCAPfor understanding EDI and data exchange issues.In the Indian context, while computers made If we were to broadly analyze the impact oftheir mark in operations as much as half a Information Technology on business in thecentury ago, there has been a profound shift automotive industry, we would see thein their role in business. Earlier they were following phases. In the opening phase, theconfined largely to processing data in role of IT was almost exclusively to savecommercial areas such as payroll and clerical effort. This was marked bypurchase where their utility was seen in applications such as payroll and billing innumber crunching operations. On the other large organisations, where large mainframehand, today they are integrated to such an systems could compress the time for suchextent into the operation that the line documentation and bring high levels ofseparating business and Information accuracy in mass scale work. The style ofTechnology, is fast disappearing. doing business was however, completelyFEBRUARY 2013 20
  24. 24. unaffected. Next, with the advent of desktop number of users at different locations and allsystems in the eighties, the emphasis shifted could share information from the sameto empowering individual users to create database. Real time systems became thetheir own local applications, which would norm and across the organization, thebring relief to the user. This was based more integrity and consistency of informationon individual creativity and hence users were enhanced substantially.developed applications more from theviewpoints of their interest and ability. It is significant to note that through all theseTypical applications revolved around transformations, several areas were beinginformation that had to be submitted addressed such as cost reduction,periodically to some authority such as daily information reliability, rapid developments,material receipt or cash collection data. quicker processing and enterprise wideSome relief was available to individual users participation. However a key aspect was stillbut again, these were in pockets and did not missing. Information Technology is a verymaterially alter the business scenario or the powerful tool and the ultimate benefit can beoverall working environment in any extracted only when the application directlysignificant way. impacts business. One index is that final end customers, outside parties, agencies and institutions with whom the business "Information Technology is a enterprise has a relationship should perceive very powerful tool and the the benefit of technology and two, business ultimate benefit can be extracted itself needed to go through a change, in order to be relevant in the changing world. only when the application From these viewpoints, several changes are directly impacts business" occurring in the business environment that can be traced to the powers of technology.In the nineties, the emphasis shifted to the Having seen the various phases of ITuse of IT over a wider horizon, marked by applications in the industry, it would bethe introduction of larger applications such useful to examine in depth, some of theas Enterprise Resource Planning and the use developments taking place as of now.of advanced software in technical areas suchas planning, design, quality and The business process starts logically frommanufacturing. These helped to tackle some the customer and it would be interesting toof the chronic issues such as, suboptimal see the developments taking place here.decision through the use of inappropriate Customers demand immediate and completelocal applications, or, difficulty in churning information. In the automotive industryout drawings and developments unlike the old days, this takes the shape ofexpeditiously, with changing customer enormous choice of models, variants,requirements. In addition, with the shift to colours and products, each of which islarger servers with wide area connectivity, it processed appropriately so that the customerbecame possible to give access to large gets delivery on time. This backwardFEBRUARY 2013 21
  25. 25. scheduling of customer deliveries is automation through either hand held devicesfacilitated by complex dealer software that or through SCADA and similar technologiesabsorbs inputs in the form of customer help to control groups of machines and theirpreferences and translates these into outputs, as also to report production. Alsoshipping schedules from the manufacturers. machine performances, downtimes andIn turn these are exploded further into part reasons are being captured through suchrequirements from various suppliers so that avenues. Vehicle manufacturers insist onthey get a schedule for delivery of parts in a systematic documentation of productionseamless manner. through well defined processes and IT plays a part in the generation of such documents.Engineering and design software play a keyrole in product development and in ensuring “Vehicle manufacturers insistrapid turnaround of new products to gain on systematic documentationcompetitive position in the market place. In of production through welladdition to providing a design platform,such tools are performing a range of defined processes and IT playscomprehensive functions. These include a part in the generation ofa) Search mechanisms for locating similar such documents.” products or tools to avoid reinventing the An area that is well addressed is planning at wheel during a new product the shop floor level as well as the enterprise development,b) Providing a framework for traceability level through advanced planning software so that the complete history of design and Manufacturing Resources Planning changes, their impact on the inventory of software. At the shop floor level, the products, remedial action taken and final challenge is to optimize a deliverable such resolution of inventory are all preserved, as customer satisfaction and to arrive at the to enable future investigation. best manufacturing plan for the week,Collaboration between suppliers and vehicle month, quarter or the year. Complexitymanufacturers is the name of the game and arises since the best plan to maximize salesincreasingly business processes are may not maximize other parameters such asbecoming collaborative in nature. Areas profits or customer deliveries or satisfaction.include design and development where While scheduling looks at these issues, MRPcustomer and supplier cooperate over the goes beyond, to generate or regulate ordersweb electronically for product design and for supply of materials and requirements fordevelopment, submission of product data, all the inputs necessary to make the finaldisplay by manufacturers of supplier product. Other developments that areperformance parameters and conducting helping to bring sophistication in shop floortransactions through portals. operations includeBeing the heart of an automotive enterprise, a) Supplier portals that assist in interactionmanufacturing has evolved significantly in with suppliers through electronic modethe use of technology. Use of shop floor for all transactionsFEBRUARY 2013 22
  26. 26. b) Quality control tools such as in- process material. To enable tracking of products gauging, calibration software to monitor with high level of accuracy, several aids the quality of gauges and statistical such as barcodes and RFID tags are being quality control software for real time employed in the dispatch and warehousing quality analysis.Shop floor material management and control process.is a crucial area since day to day shop floor Finally we come to current developmentsscheduling has to be based on the position of where technology and products have startedmaterial availability. Demands by various to merge. With a view to vastly enhance theagencies such as auditors, excise authorities reliability of vehicles, developments areand customers are compelling organisations taking place wherein software will reside into have clear data on material movement the vehicle and operate, to close a vital need.between manufacturing organisations and The simpler examples are where vehicletheir subcontractors and customers, as also controls can be made to respond toaccounting of rejections, scrap, individual drivers based on say fingerprintsreconversions and dispatches. With large or biometrics and everything from seat tovolumes of transactions involved, stock mirrors can be automatically adjusted basedstatus and monitoring has become a concern on the driver. The more advanced involvearea and this is a focal point for every applications using software embedded incommercial and enterprise software. components such as engines or brakes soWith customers demanding Just in time that the component behavior can be(JIT) based deliveries, there is a major need transmitted directly to say service centers,to build complete transparency in the final which can diagnose faults and prescribedelivery. This is required to empower field remedies.personnel who interact with customers, to Thus, the impact of information technologyapprise them of delivery position. This calls in automotive organisations spreads not onlyfor total integration of data between into the management of its operations but onmanufacturing, transport and warehousing to the end product itself. Success oforganisations. A well executed integration organisations depends on their ability tofacilitates the tracking of consignments with foresee customer preferences, emergingclear geographical location, from the business processes and other changingmoment they leave the manufacturing unit, requirements and adopt technology totill the time the customer accepts the suitably close the gaps.FEBRUARY 2013 23
  27. 27. FROM THE INDUSTRY INTERVIEW WITH PRAVEEN SINHA Co-founder and Managing Director at Jabong Founding Jabong.com in the autumn of 2011, Praveen Sinha envisions an online E-commerce portal that delivers the trendiest and the fastest, while inducing a memorable customer experience. The present sees him as MD and Co-founder of Jabong.com,however, his past achievements bring to light someone who is considered a maven instart-ups and a turnaround specialist. Having worked in companies like Microsoft, Marutiand Mckinsey, he has also played a pivotal role in effectuating energy conservationinitiative across the span of Asia. In addition, known for a keen interest in new businessinitiatives, like establishing Aquabrim, he exhibits an immense passion forentrepreneurship that is highlighted in his frequent sharing of work experiences andinsights at various institutes like IIMs, XLRI, Great Lakes to name a few.ENTREPRENEURSHIP investing in a start-up is a huge bet on the team.1. What were the reasons behindtaking up an entrepreneurship route 3. Could you please tell us about thewhen you had the safety of a corporate idea that resulted in establishment oflife? Jabong.com?The idea to start business was there After assessing the utility and popularity ofsince my College days, during my MBA e-commerce in electronics market, I realisedin IIM C I started my first venture - that there was a huge scope in the arena ofAquabrim.com which is still active and fashion and lifestyle. Given the economiespresent in NCR and has plan to go to of changing lifestyle patterns, e-commerce isnational level. However finally, I left the future of retail and Jabong.com wasMckinsey and got full time into start established to capitalize on this hugeups with Jabong.com as opportunitywas huge and I was prepared to take opportunity as I had a firm belief that Indiathe required risks and challenges was ready for it.2. What are the factors that you wouldlook into while investing in a start-up? “One of the major challenges that we faced was scaling upI think investing in a start-up is aboutbelieving in the quality of the team, the really quickly whilesize of the opportunity and the maintaining the high servicescalability of the idea. While the ideacan be worked upon or pivoted, the core levels.”team cannot be changed; henceFEBRUARY 2013 24
  28. 28. WORK EXPERIENCE The scale of operations cannot be managed without strong IT backbone. Maruti has a4. Could you please explain the work strong IT system to support all itsculture at Maruti and McKinsey? Also, operations. In fact, IT has helped in multiplewhat was your most important froms by not only bringing in efficiency inlearning from your experience in these operations but also reducing overall cost ofcompanies? operations.Maruti as an organization takes pride in OPERATIONS AND SCMsome of the best practices prevalent in the 7. What have been the major issues inindustry. The operational excellence and 5S the Operations and Supply Chain ofprocesses are the way of life at Maruti. Jabong.com and how have you resolvedWorking with large teams under stiff them?timelines and disciplined execution are thekey learnings for me. One of the major challenges that we facedMckinsey, on the other hand, gave me an was scaling up really quickly whileopportunity to work on a varied set of maintaining the high service levels. Fromassignments across industries. The challenge day one, we were clear that whatever wewas to walk into a company, understand the build has to be scalable. To achieve this, weproblem and turnaround quickly with adopted modular approach so that processesworkable solutions. Developing the ability could be replicated and scaled easily. Weto add value and create a significant impact designed the capacity on base load butwas the key takeaway for me. developed flexibility in the system to take care of peak demand situations. We5. What were the major supply chain leveraged technology wherever possible tochallenges faced by you while working automate or semi-automate the processes.in Maruti Suzuki Limited? We also made adequate checks and took measures through detailed and intelligentMaruti’s operations thrive on efficiently run MIS reports which helped us in identifyingsupply chain. One of the major challenges our areas of improvement.was to maintain the service level, given theinvolvement of multiple stake holders andoperational complexities. “We have also built6. Could you please give us some strong, cross-functionalexamples on how IT is leveraged byMaruti Suzuki to solve their issues in teams to ideate andOperations and Supply Chain? improve processes.”FEBRUARY 2013 25
  29. 29. 8. Jabong.com claims to deliver logistics management systems for in-houseproducts in top 10 cities within 48 operations. In addition, we have introducedhours and to other places within 1-3 Mswipe facility at the point of delivery and developed content management system fordays, while it is delivering products on production.the same day in metros like Delhi.Could you please explain how 11. Wal-Mart has the largestJabong.com has achieved this information technology infrastructureremarkable feat within one year of its of any private company in the world.Itinception? helps Wal-Mart to accurately forecast demand, track and predict inventoryWe have actually revolutionized the industry levels and create highly efficientby offering same day delivery in Delhi NCR transportation routes. Is Jabong.comand next day delivery in metros. It has been using any Demand forecasting tools soa team effort and has been achieved bystrong co-ordination across functions like; that it can reduce inventory levels andcustomer care for order confirmation, forecast demands effectively?warehouse for order processing and logisticsfor delivery. We have also built strong, Being in the e-commerce industry, wecross-functional teams to ideate and improve have access to consolidated dataprocesses. involving clicks and page views on our website. We have also gone granular in9. Flipkart has started its own courier our customer segmentation. We have aservice, perhaps to reduce their dedicated forecasting team which usesdependence on third party courier state-of-the-art methodologies and tools to predict the demand based on theservices. Does Jabong.com have any huge chunk of data as well as industrysuch plans? trends.JaVAS, which stands for Jabong Value JABONG.COMAdded Services has been operational foralmost as long as Jabong.com has been 12. Jabong.com is now the mosttaking orders from customers. It is currently trafficked e-commerce site in India.present in close to 50 cities. The same day What are the steps taken byand next day deliveries mentioned have been Jabong.com to achieve this?achieved through JaVAS.10. Could you please let us know how We always believed in big bang approach to enter the market and went for onlineInformation Technology is leveraged advertising aggressively at the start of lastby Jabong.com in its Operations and year, which was complemented by presenceSupply Chain? in traditional advertising channels like television and radio. We have strong focusInformation & technology is the backbone on organic growth through Google andof our warehousing, customer care and Facebook which helps in driving hits to ourlogistics operations. We have implemented web shop. Aligning all our operations withERP at warehouse and built CRM and these steps, we ensure customer delightFEBRUARY 2013 26
  30. 30. which is a result of high standards in service Jabong.com believes that in the long run, e-and product quality to help spread the commerce is a scalable and cost efficientcustomer base and loyalty. way to reach out to maximum customers. We do not plan to enter into offline retail.13. How do you see the future of However, we have and may continue to haveonline retailing in India, given the some strategic, located touch points to createtough competition and thin profit awareness, establish customer connect andmargins? build trust.E-commerce is still evolving in India andthe current players are focusing on “E-commerce is stillexpanding the market i.e. getting more andmore end users to transact online. This is a evolving in India and thelong drawn process as it involves changinghabits. In this quest for new customers, current players arecompanies are offering free shipping, focusing on expanding thereturns, COD, etc which are impacting themargins. In our view, after a few years, there market - getting more andwill only be a few large players and a set offew niche players who would successfully more end users to transactmaintain profitability. online.”14. How does Jabong.comdifferentiate from other players in the GENERALe-retail segment? 16. What is the one advice that youThe DNA of Jabong.com is all about widest would give to young managers aspiringassortment, speed, efficiency and process to join the supply chain managementexcellence. We differentiate ourselves in sector?being the first to get new styles and optionson our website, first to get the products Supply chain is about continuousshipped to the customers and the first to improvement and operational excellence. Inrefund customer’s money in case of returns. order to bring in significant improvements,In the process, we have redefined the market it is important to get into the details of eachby introducing options like instant returns process, understand the involvement of(open delivery), same day delivery in NCR stakeholders and work on incrementaland next day delivery in metros, instant improvements. It is very easy to fail in thisrefunds, etc. And we have done it on a large sector; however, to be successful, one needsscale. to work diligently and have strong checks and balances. This sector gives huge15. Does Jabong.com have plans to opportunity to create next level of serviceenter into Brick and Mortar models of experience.retail?FEBRUARY 2013 27
  31. 31. ACADEMIA RFID IN INDIAN RETAIL SECTOR [PROF. SUMEET GUPTA & AKSHAY AGARWAL] Prof Sumeet Gupta is a professor in the area of Information and Technology Systems. His areas of research includes Management Information Systems (Technology Adoption), Virtual Communities, Supply Chain Management. He Is a member of Association of Information Systems, USA. He has numerous paper and publications in the field to his name.It was in the year 2005 that Wal-Mart made 1. Collision: RFID tag readers faceit mandatory for its suppliers to use RFID. problems when they collide with eachIn 2008, the Future Group incorporated this other. The signals from one reader maytechnology in their operations through a tie- interfere with those from another, especiallyup with Cisco Systems. Given that the when their physical coverage overlaps.technology isn’t new, and has huge potentialto tackle many issues in modern retail 2. Lack of allotted frequency band: RFIDsector, its penetration has been rather slow. works on radio waves, which are regulated by the governments all over the world.RFID tags were first used commercially in There exists no international agreement on1960s by Sensormatic, Knogo and the frequency band to be allotted for RFID.Checkpoint which developed systems to Given that this technology can heavilycounter the theft of merchandise. At that change the face of supply chains globally,time, they could only detect the presence or this is a huge hindrance in the way of itsabsence of tags; however the tags could be global adoption.made inexpensively and hence were quite 3. Signal detection and interference: Theeffective in reducing pilferage. These RFID tags also have a tendency to interferesystems were known as Electronic Article with each others signals, thus making itSurveillance (EAS).Over half a century difficult for the tag readers to detect them.later, widespread application of this Adding to the difficulty, the signals aretechnology is still in its nascent stage. partially blocked by certain types of packaging materials, metals and liquids.IssuesThe various hurdles on the way of wide On the other hand, the following are theacceptance of RFID systems can be managerial issues:categorized as either technical ormanagerial. The major technical issues areFEBRUARY 2013 28
  32. 32. 1. Lack of Technology Standards: Many on pellet-level, box-level or container-levelorganizations prefer to have their own in such cases, thus limiting its capabilities.proprietary RFID systems because of thefear that their RFID tags could be read bytheir competitor, leading to a serious leak of APPLICATIONSsensitive information. Thus it has been verydifficult to reach a consensus on a universal Now let’s have a look at some well-knowntechnology standard for RFID. applications of RFID in retail sector:2. Lack of Acceptance by Supply Chain 1. Out-of-stock Warning: Stock out is aPartners: Even a giant like Wal-Mart had bigger evil than excess inventory in retail.faced some difficulties in implementing RFID tag readers can detect the number ofRFID in its supply chain due to resistance units of each SKU on the shelf in a retailfrom some of its supply chain partners. store in real time. This enables theRFID might not make sense to everybody, implementation of an out-of-stock earlyespecially given the high initial costs of warning system. This system can also beimplementation. integrated into a vendor-managed inventory platform. The same concept would work in3. Returns on Investment: Implementation warehouses, thus benefitting the whole retailof RFID usually costs a lot and the break- supply chain.even period and returns on investment mightnot be acceptable for every retail business. 2. Shoplifting: Shrinkage, i.e. unaccounted losses in retail, is perhaps the most daunting4. Customer Privacy: Some of the reality for retail businesses, and its majorapplications of RFID come with a baggage – cause is shoplifting. It should also be notedcustomer privacy issues. Hence a lot of that the RFID usage mostly seen around uscontemplation has to be done on these relates to security of the merchandise, whichaspects. shows that the benefits of RFID in this aspect already exceed the investments.5. Data Management Problems: RFIDsystems generate a lot of data in real time. 3. Supply Chain Visibility: The ability toManaging this data would require major detect each unit or pellet of each SKU inchanges in the data structures of master files retail setup as well as warehouses and evento maintain consistency across the firm and during transportation (RFID readers can beits value chain participants. placed in the vehicles and connected to the GPS) can be translated into very high6. Expensive for Low-Value Merchandise: visibility across the supply chain. This helpsThe cost of RFID tags varies from Rs.5/- to in combating the dreaded bullwhip effect,Rs.100/-, largely depending on the type – making better forecasts and avoidingpassive (not self-powered, derives power shrinkage and other losses in the supplyfrom the signals of the tag reader), Active chain.(completely self-powered) and Semi-passive. Even the cheapest RFID tags would 4. Rapid Inventory Counting: Inventorynot justify their item-level application on counting is an essential exercise in any retaillow-value merchandise like small toys, business to avoid or at least detectchocolates etc. Currently, the tags are used shrinkage. It is executed very frequently inFEBRUARY 2013 29