SCM in High Inflation Environment at SCALE 2011

  • 176 views
Uploaded on

Inflation and its impact on business are explained in this PPT. The focus is more on drivers related to supply chain. Though I spoke on how SAP technology can help during economic downturns at this …

Inflation and its impact on business are explained in this PPT. The focus is more on drivers related to supply chain. Though I spoke on how SAP technology can help during economic downturns at this event, the slides here only show the impact and drivers of inflation and top level solutions from SAP.

More in: Business , Technology
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to like this
No Downloads

Views

Total Views
176
On Slideshare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
4
Comments
1
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Technology for Supply Chain in High Inflationary Environment Ramakrishna Potluri SAP Labs SCALE 2011
  • 2. Agenda Inflation Overview – Effect on businesses IT in Business to manage Inflation © 2011 SAP AG. All rights reserved. 2
  • 3. Inflation is taxation without legislation - Milton Friedman “Inflation is when you pay 15 dollars for the 10-dollar haircut you used to get for 5 dollars when you had hair” - Sam Ewing “Inflation is bringing us true democracy. For the first time, luxuries and necessities are selling at same price” – Robert Orben © 2011 SAP AG. All rights reserved. 3
  • 4. Inflation in India (CPI) - History Source:global-rates.com © 2011 SAP AG. All rights reserved. 4
  • 5. Inflation in India (CPI) – 2010-11 Source:global-rates.com © 2011 SAP AG. All rights reserved. 5
  • 6. Profitable Business Profit © 2011 SAP AG. All rights reserved. 6
  • 7. Inflation  Costs Increase & Profits reduce Cost increase Price Cost © 2011 SAP AG. All rights reserved. 7
  • 8. Inflation  Costs Increase  Loss Loss © 2011 SAP AG. All rights reserved. 8
  • 9. Effect of Inflation - Back to Basics Costs & Disposable Prices Incomes Costs & (Monetary Policy) Prices Interests Costs & (Monetary Policy) Prices Interests Consumption Savings Savings Working Capital /Debt Cost of Inputs Disposable Incomes Investments Consumption Recession Bankruptcy risk (also Interest rates) Prices (Lag) © 2011 SAP AG. All rights reserved. Sales Inventory Working Capital /Debt Bankruptcy risk 9
  • 10. Managing Inflationary Environment Monitor Cash, Operating Profit and Working Capital. Understand the drivers  Costs  Prices  Cash Flow Costs      Input costs Logistics costs Inventory Costs Financial costs Strength of Supplier base Prices  Price Elasticity – Brand Strength – Competition – Innovation (Ability to launch new products rapidly) Financial Costs  Debt burden  Cash flows © 2011 SAP AG. All rights reserved. Cost of Inputs Inventory Prices (Lag) Sales Working Capital /Debt (also Interest rates) 10
  • 11. Agenda Inflation Overview – Effect on businesses IT in Business to Manage Inflation © 2011 SAP AG. All rights reserved. 11
  • 12. Can IT Help Businesses During Inflation? Costs      Input costs Logistics costs Inventory Costs Financial costs Strength of Supplier base – N tier supplier ? Prices  Price Elasticity – Brand Strength – Competition – Innovation (Ability to launch new products rapidly) Financial Costs  Debt burden  Cash flows How fast do you get Information back from your supply chain ? © 2011 SAP AG. All rights reserved. Analyze Spend SAP SPM Manage Spend SAP Procurement Optimize Logistics & Transportation SAP TM Manage Supply Network to reduce inventory in network SAP SCM/SCPM Supplier Mgmt & Risk SAP Supplier Mgmt Contract Mgmt SAP SRM/ CLM Manage Liquidity SAP Treasury Hedging SAP CTRM Price & Promotion Analysis SAP HANA Supplier Network, Risk Mgmt & Benchmarking SAP Supplier Infonet 12
  • 13. Manage Spend, Compliance & Risk for All categories – Indirect, Direct & Services Address Inflation Challenges Do I have visibility of my supply base ? Can I source from low inflation regions ? Supplier Management How do I look at risk from ‘n-tier’ supplier ? Strategic Sourcing Can I source from ‘less risky’ suppliers ? SAP Procurement Am I managing my entire spend ? Do my buyers have time to look at strategic aspects ? Are my planning & procurement systems integrated ? Can I reschedule quickly ? Are my suppliers connected to make info flow faster? Operational Procurement - Contract Management Spend Performance Management (SPM) © 2011 SAP AG. All rights reserved. Are the prices locked ? What are the escalation clauses ? Can I incorporate penalties/rebates ? Can I renegotiate contracts ? Is my entire spend visible ? Where are the opportunities to reduce/postpone / shift sourcing ? 13