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Supply Chain Management Professional - June 2016 Issue

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The Business Sense Behind Health and Safety

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Supply Chain Management Professional - June 2016 Issue

  1. 1. DEMAND PLANNING Demand Planning & Forecasting: The three essential pillars - Dr. Rakesh Singh 08 GURU SPEAK Campaign Supply Chain – How to deliv- er-in- full-on- time - Dr. John Gattorna 21 HUMAN RESOURCES The business sense behind health and safety Darryl Judd 40 June 2016 | Volume 2- No.2 | Rs.200 SUPPLY CHAIN P R O F E S S I O N A L MANAGEMENT SCMPro_Pg_1.indd 30 29/06/2016 12:21:39 PM
  2. 2. DACHSER India Private Limited • Regional Office India 4th Floor, AFL House, Lok Bharati Complex, Marol Maroshi Road, Andheri E • Mumbai - 400059, Maharashtra, India Phone: +91 22 42328200 • Fax: +91 22 42328282 • info@dachser.co.in www.dachser.co.in Our logistics athletes race towards your global future. With our intelligent solutions, we manage the entire supply chain to ensure your worldwide flow of goods and information. By Road, by Air, by Sea: get globally connected. OUR FAVORITE DISCIPLINES: ROAD, AIR AND SEA LOGISTICS. ARE YOU READY FOR THE TRIATHLON? DACHSER Interlocking 160531_ANZ_07IL_Triathlon_700_EN_185x265_V03.indd 1 09/06/16 13:23
  3. 3. Time to Define Our Business around Technology T h e w o r l d i s p o i s e d o n t h e t h r e s h o l d o f a n e w o r d e r – o n e d r i v e n b y t e c h n o l o g y . A c r o s s t h e W e s t e r n w o r l d , t e c h n o l o g y i s c h an g i n g t h e w a y i n d u s t r y o p e r a t e s . M an an d m ac h i n e ar e t o d a y ab l e t o o p e r a t e side by side, without impacting the safety of humans. apid strides in t e c h n o l o g y d e v e l o p m e n t h as r e d u c e d t h e p r i c e p o i n t s i n t e c h n o l o g y – FID devices now can be discarded a er one use. Mobile devices are ge ng smarter and better. Firms can use oogle maps to track their shipments – like we track the Uber or Ola cab as it comes to the pickup point. And that too free There are two distinct drivers f o r t e c h n o l o g y – o n e i s t h e h ar d w ar e – t h e p i e c e s o f e q u i p m e n t t h a t when embedded in all our shipments gives us instant visibility. Once devices start talking to each other, we can move on to the current wonder – driverless vehicles The second driver is so ware – when billions of devices start streaming live data, we need the ability to analyze and make sense of this data deluge. Technology advances like Big Data and analytics fit the bill nicely. In between these two paradigms, we have the social media phenomenon, which has the potential to change the way we s e n s e d e m an d o f a p r o d u c t . A l l p u t , t e c h n o l o g y i s a g am e c h an g e r . ThelogisticsIndustry,whichhasbeenalaggardintechnologyadoption, now, has a number of options – from shared pla orms to third party applications on a pay per use model. The bottom line – firms have to relook at their technology strategy. In my opinion, it time we start defining our business around technology. ot technology around the business. The time to digitize is now. We bring you a collection of views on technology in supply chains in this issue. We hope you find it interesting. And in the next issue, catch all the action at the second Demand Planning and Forecasting Forum and awards – the only pla orm for demand planning and forecasting professionals in India. Happy eading GIRISH V S E d i t o r g i r i s h . v s @ s c m p . i n editorial The structural imbalances that face us cannot be resolved with short term measures. Hope the government stays true to the course. Publisher Jayaram Govindan Nair jayaram.nair@scmp.in Mobile:9821732929 Managing Editor Dr. Rakesh Singh rakesh.singh@scmp.in Editor Girish V S girish.vs@scmp.in Designer Sidhi Jadhav sidhi.jadhav@scmp.in 022 28746757 Advertising Riddhi Solanki riddhi.solanki@scmp.in 022 28747808 Administration & Subscription Sanjay Gupta sanjay.gupta@scmp.in 022 28742227 Editorial Advisory Board Dr. John Gattorna Dr. Mahender Singh D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai 400062. INDIA. is printed, published and owned by Jayaram Govindan Nair and Printed at Kalakshi Printing Works, 205 Gopal House IB Patel Road Goregaon (E) Mumbai 63 and Published at 9/1, Neo Shastri Nagar, Mulund Colony, Mulund (W), Mumbai 400082 Editor: Girish V S No part of this Publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publisher. Such written permission of the must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in the future editions. Opinions reflected in the publication are those of writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. Annual Subscription Rate: INDIA: Rs. 2000/- SUPPLY CHAIN MANAGEMENT P R O F E S S I O N A L SCMPro_Pg_3.indd 2 28/06/2016 4:13:57 PM
  4. 4. June2016|Volume2|No.2 SCM News 06 Comments on Global Supply Chain News Demand Planning 08 The three essential pillars Lead story 10 Technology Convergence to Redefine Supply Chains Guru Speak 21 Campaign Supply Chains How to deliver-in-full-on-time to project sites Spotlight: 25 Supplier Relationship Management- making suppliers efficient Feature 28 Warehouse Optimization – A Competitive Edge in Supply Chain Interface 30 Becoming the World’s Shipping Partner Academic Advocacy: 32 Trends in SCM & Logistics: A Focus on Risk Humanitarian Logistics: 34 Feeding the next Gen – A labor of love Human Resources: 40 The Business Sense Behind Health and Safety LSP Focus – 42 Re-usable Assest pooling Event: 44 India Logistics Expo – 2016 SCPC 46 Customer Service in Modern Supply Chain 21 10 32 24 42 SCMPro_Pg_4.indd 4 29/06/2016 12:28:55 PM
  5. 5. SCM News 6 Supply Chain Management ProfessionalJune 2016 Rocket Scientists to Make Money from Logistics The wolves of Wall Street are sharpening their claws for a new way to make money – using the global shipping data on global commodity trade. A bunch of billionaires will use technology to track ships as they ply the seas, monitoring where they dock and what they carry. Using this data, they will trade commodity prices among other asset classes. A new company – US based CargoMetrics is planning to integrate this data with satellite data on cropping patterns to estimate crop yield. This will help them track prices and make money! Apparently, everything is fair when it comes to making money. A Long Term Threat to Make in India For years, corporate strategy moved manufacturing to low cost countries like China. But Industry 4.0 is changing that trend. Adidas – the German Shoe manufacturer is planning to shift manufacturing back to Germany – into a highly robotized production facility. Two factors are pushing this trend – rising wages in China and advances in robotics. The factory is expected to make a pair of shoes in five hours, as compared to the weeks it takes in China. Moving production closer to markets will reduce the response time of the supply chain to changes in customer tastes and reduce time to market. BCG estimates that by 2025, robotics will boost productivity by 30 percent and reduce wages by 18 percent. If this trend persists, our dream of make in India will revert to make for India! MIT CTL Research – Simple but Effective Every year, researchers from MIT-CTL engage with industry on a series of research initiatives to improve supply chain function. One set of researchers have come up with a simple but efficient solution to improve picker’s efficiency in a warehouse, thereby reducing costs. The researchers studied a retailer with relatively slow moving products. The study concluded that in a scenario where the factory considers both DC and store inventory, by rounding off the picks to the next higher even number, retailers would be able toreducepicksby11to13percentandthein-store inventory would rise by 2.8 percent. The research concludes “It is highly applicable to retailers who have been accustomed to picking exact pieces, offering them the opportunity to implement a “picking quantity multiple” that generates great savings with little negative repercussions.” The Not so sexy Application of Drones The idea of a drone delivering the product you ordered from Amazon is a compelling one. But it ignores the challenges of flying drones in a crowded urban landscape – security risk and cost of insurance (cover from plausible accidents) are major hindrances. However, Walmart – the second largest retailer is using drones for a very different and not so sexy purpose – inventory management. Walmart is testing out drones in its warehouses to take inventory. Drones flying up and down the aisles take up to 30 images per second. These images help develop an accurate inventory count. It is speculated that a drone can do what takes a month by humans crawling up and down the aisles in a day. Mr. Shekar Natarajan, Vice President of last mile and emerging science, Walmart believes that drones could improve supply chain efficiency. Walmart is looking to drones in reducing their supply chain costs. Not so sexy application after all- just inventory taking! SCMPro_Pg_6.indd 6 28/06/2016 4:19:46 PM
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  7. 7. Demand Planning 8 Supply Chain Management ProfessionalJune 2016 Demand planning and forecasting is about people, processes, and technology. The three broader aspect of demand planning today are finding the right model, understanding the performance of the forecast and managing the demand planning and forecasting processes. Many developments on technology front like emergence of data sciences and predictive analytics are playing an important role in shaping the practice of forecasting today. In this article, I intend to briefly discuss the art and science of demand planning. Thefirstpressingquestionishowdoes one choose a forecasting method? Most often firms choose a single forecasting technique as one size fit all solution for all products. They are on lookout for “the forecasting technique that will predict the future without much error.” The most commonly used method is time series method. When time series method is not able to predict a landscape which is dynamic today, we move to judgmental method. The most dynamically used judgmental model is “sales force composite”. This is closer to the concept of predictive analytics based on last mile demand assessment.Theuseofcausalmethod is very limited to a few organizations. In a world where demand is dynamic, using a single method of forecasting Organizations are driven by numbers – with each division or function generating its own set of numbers. The numbers start with the demand forecasting function. The result is confusion and chaos. Top management spends considerable time and effort to reconcile these numbers. The need of the hour is to develop a demand planning process which aligns consumer demand and organizational capabilities. Dr. Rakesh Singh writes about the three basic pillars for an aligned demand planning function. Dr.RakeshSingh, Chairman,InstituteofSupplyChain Management&ManagingEditorSCMPro Demand Planning & Forecasting: The three essential pillars Demand Planning SCMPro_Pg_8_9.indd 8 28/06/2016 5:07:39 PM
  8. 8. Demand Planning 9Supply Chain Management Professional June 2016 can be dangerous. The uncertainty emerging due to industry competition and its impact on organizations to become more agile and improve service levels has made task of forecasting even more difficult. There is a need to understand segmentation based forecasting as multiple supply chain resides in the same business. Practitioner needs to realize that single forecasting method may not work in such a fast changing landscape. I have been oft repeating this in my speaking assignments at various forums. Sunil’s chopra strategic fit analysis and framework is needed to solve much of the problems that confronts demand-planning analyst today. Here data science can provide a good clue to demand planner about multiple supply chains and their characteristics. Using data science demand planners can understand the segment, which shows static demand and hence can comfortably use peak to average time series techniques like Holt and Winter Model. Use of big data and causal methods may help identify many macro and micro factors important in explaining the causal effect. Using the coefficient of determination and variable coefficient one can easily predict a lot of implied uncertainty and decide on supply chain strategy. Yes where predictability is not possible firms need to build their information channel and their responsive capabilities to react in the shortest possible time. Most firms have failed to incorporate this into their supply chain. The second issue that is important is to measure the forecast performance. The performance of the forecast is important mainly because the buy in of the forecasting process in an organization becomes easier and so does supply chain integration. The goal of any forecasting system should be to be as accurate as possible. One measure of accuracy is to minimize error, which includes two components - bias and magnitude. Demand planner should use at least one measure for bias and another for magnitude on an ongoing basis to assess accuracy. Bias is defined as a systematic difference between forecast and actual result over a period of time. The bias could be measured with the help of mean error, cumulative forecast error or mean percent error. A large and consistent negative or positive error signifies a forecast that is consistently high or low. Once the bias has been identified, management can take active steps to correct the forecast by adding and subtracting the amount of bias from the predicted forecast. The magnitude indicates the variance between the actual result and the forecast. This can be measured through Mean absolute deviation and mean absolute percentage error. When a magnitude reflects high forecast inaccuracies, it cannot be corrected as easily as the problem arising from bias inaccuracies. The problem may be with the forecasting systems and processes. In this case forecasting system needs to revised and streamlined. This takes us to the third pillar of a good forecasting organization. Firms in order to make forecasting as a lifeline of their organization need to build in dynamic alignment. There is a need to align the organization to their operating environment. Forecasting requires a larger buying from the organization and hence the chief executive should lead it. The sales and planning exercise has a meaning if it starts by mobilizing change and this is possible only through executive leadership. The supply chain strategy should be translated into operational terms. All the functional area should be aligned to this strategy. As we know these areas have their own forecast. The big question is how do we arrive at a single forecast. The process is to iron out various issues facing marketing, supply chain and finance function and arrive at a single forecast which aligns sourcing, production distribution, marketing and sales. The organization should motivate to make forecasting strategy everyone job. There is a need to make sales and operations strategy a continual process. These are the broader pillars of a good forecasting organization. These pillars will make forecasting the biggest aligning tool, and supply chain of such organizations will help create competitive advantage for the firms. Most o en rms choose a single forecasting technique as one si e t all solution for all products emand planner should use at least one measure for bias and another for magnitude on an ongoing basis to assess accuracy SCMPro_Pg_8_9.indd 9 28/06/2016 5:07:39 PM
  9. 9. Lead Story 10 Supply Chain Management ProfessionalJune 2016 Supply chain is a recent discipline. Supply chain was a function responsible for delivering a product to the customer. Nothing beyond that. For a very long time, Logistics and warehousing defined supply chain. And the operative word was cost reduction. However, changes in the business ecosystem is forcing a change. Today, the business is the supply chain. And the single biggest factor driving this change is technology. The manufacturing world is on the cusp of its biggest change so far – Industry 4.0. Industry 4.0 is a paradigm shift in manufacturing, driven by technology. A convergence of technology will redefine manufacturing, seeking greater efficiency and productivity. How will this affect supply chains? Supply chains cannot escape changes. For one, 3D printing will render aftermarket supply chain – one of the most lucrative segments – irrelevant. At the other end of the spectrum, Rolls Royce has unveiled their vision of global shipping – where a flotilla of unmanned vessels ply the seas, monitored from a central console. Again a redefining moment for shipping. On the ground, Walmart is using drones in its warehouses for inventory taking. AGV’s are an established idea in a number of factories. Robotics has spreadintowarehouses,whererobots do the running around, and humans the pick. Even here, technology is at play. Researchers are creating a robotic arm which can pick up objects – just like human hands. We will soon see fully robotized warehouses, with no humans on the floor. One significant area of technology in supply chain is in information sharing. A host of IoT enabled devices will continuously stream data to a central console. The data can be used to monitor the health of the systems, their position, helping track and trace. Three dimensions will define the supply chain of the future – supply chains need to connect all links in the chain – suppliers, manufacturers, customers, and intermediaries – in real time to exchange data seamlessly. The second dimension is the speed of response – the ability to analyze vast amounts of data and convert it into actionable information to the managers. Along with speed, the network should enable the supply chain manager to make decisions on the fly. Cloud enables firms to collect information in real time, using IoT, and using predictive analytics spot disruptions and take corrective action. Taleris, a Texas based firm offers a service - Intelligent Operations - on cloud platform, which uses tools such as performance data, prognostics recovery, and planning optimization solutions to improve operational efficiency of Airlines operators. We bring you a few perspectives on technology in SCM. Technology Convergence to Redefine Supply Chains Lead Story SCMPro_Pg_10.indd 10 28/06/2016 4:22:48 PM
  10. 10. Lead Story 11Supply Chain Management Professional June 2016 Opportunities open up in markets all the time. The problem is, firms rarely get to know about them until it is too late. The culprit is the information chain firms have built over the years – it takes up to a week for information to travel from the market to the head office – by which time competition is already aware and acting on the opportunity. In a recent conversation with the head of supply chain of a large consumer goods frim, the topic of how to capture transient demand surges came up. He was frustrated – by the time he was aware of the opportunity, others were at the job. The question was – is there a way to identify demand shifts in markets, without breaking the bank. This is where social media comes in. Many businesses don’t think to look to socialmediamonitoringtohelp.Itcan be an invaluable resource. Demand stems directly from consumers. Social Media and Pharma For example – imagine there is an outbreak of Dengue. Tapping into social media channels to monitor and track for spikes in conversation Think social media and you think of marketing. For many firms that is true. But social media has a far greater application in supply chain – for example, to gauge the demand for a product. And how firms should gear up to meet that demand. An astute demand planner can listen to the social media talk about a product and understand how demand can change in an area. Another use of social media is to estimate the demand for a product across geographies. In this article, Editor of SCMPro, Girish VS looks at the impact of Social Media in Demand Forecasting. GirishVS, Editor, Using Social Media in Demand Forecasting Lead Story SCMPro_Pg_11_12.indd 11 30/06/2016 2:51:00 PM
  11. 11. Lead Story 12 Supply Chain Management ProfessionalJune 2016 about colds and people feeling sick, can help pharmaceutical firms to anticipate where remedy products will be needed most – then informing supply chain planning to ensure adequate stocks at those locations. The process is simple and straightforward – the firm first needs to set up a set of key words or tags that will describe the demand for the product. The trick is to create a wider set of keywords – not just the usual fever, high temperature, body ache etc. But also include “missing work” “missed an outing” – these too indicate an outbreak. Once set up, firms are in a position to pick up early warningsignalsofimpendingdemand spikes or shifts. The same data can help firms identify the geographic location where the demand is likely to pick up. Social Media in Retail One sector that is ripe for social media intervention is the Retail industry. Across the world, social media is changing the way retailers and consumers communicate. Retailers can use social media to monitor the customer interaction and forecast demand shifts. Traditional analytics used by retailers cannot catch fleeting demand spikes. Social media data can be used to identify events that have an impact on demand. For example, when a celebrity wears a particular brand of merchandise, piece of clothing or accessory, those brands can see an almost immediate impact on demand, thanks to Twitter, Instagram and the like. In the same way, social media commentary (e.g. product posting on Pinterest, positive or negative tweets) can be decomposed to determine potential impacts to demand. By capturing this information, retailers can predict and respond to these fluctuations in demand much more quickly by increasing order quantities for a particular style or canceling a promotion. One brilliant example of integration of social media in retail is the like- meter – an on-line display of the number of likes an article as received from Facebook, and other Social Media. This gives the manufacturer an idea of the popularity of a product and help them meet demand surges. For example, Tyrers Department Stores in UK has integrated a digital clothes rail which will tell shoppers how popular a garment is, depending on the likes, shares and comments on Facebook and Instagram. Above each item is a bubble with rising or falling level of blue water which shows the popularity of the item. In an example closer home, Lenskart introduced the Virtual Mirror concept in eyewear to assist decision making online. It provides a “virtual mirror” on the website where users were asked to upload their photographs and the glasses could be virtually worn to see how they would look. Firms can capture and utilize social media data to move beyond the traditional approaches and create the type of personalization today’s consumers expect. By utilizing social data, firms can also empower their value chain to predict and respond to their consumers’ needs, providing them with an enhanced buying experience. The ultimate outcome, if done correctly, is satisfied customers, happier value chain, and improved financial results for the firm — one of those rare cases where everyone wins. SCMPro_Pg_11_12.indd 12 30/06/2016 2:51:00 PM
  12. 12. The rd Edition of Warehouse Compendium will be relesed in December . A collection of thought leadership articles by some of the best in the Warehousing sector in India, the Warehouse Compendium by SCMPro is a resourceful informative handbook with well researched articles on various aspects of warehousing and inventory management. Experts from the Industry will be contributing to the compendium. With high referral value and long shelf life the Warehouse Compendium is a must have reference handbook for the stake holders of the logistic & supply chain industry. The Compendium will be reaching , decision makers and potential warehouse users and investors. We would like to have your esteemed participation in this compendium in the form of an advertisement. Some of the chapters in editions are as follows . The changing Warehousing Scenario in India . Pick to E ciency . Warehouse egulations . Human esource in Warehouse . VAS in Warehousing . Trends in Warehousing Automations . Managing Operational isk in Warehouses . Sustainable Warehouse . Augmented eality in Warehouse .Site Choice .Managing isk in Warehouses All the above Chapters and others are written by experts from the Industry. WAREHOUSE COMPENDIUM 2016 info@iscmindia.net +912228742227 / 7808 / 6757 D-204, Ridhi Sidhi Complex, Prem Nagar, Goregaon (W), Mumbai.- 62. www.iscmindia.com WAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSEWAREHOUSE Releasing - Dec 2016 To advertise jayaram.nair@scmp.inTo Book your copy sanjay.gupta@scmp.in Warehouse compendium Ad_2016.indd 1 30/06/2016 3:01:22 PM
  13. 13. Lead Story 14 Supply Chain Management ProfessionalJune 2016 A complex world, with follow-the- sun supply chains, hyper-connected partners, and expectation of exceptionally responsive service has pushed organizations to redefine how they run and measure their Supply Chains. With top line growth plateauing, there is more scope for organizations to increase profitability by optimizing their Supply Chains. Analytics is fast emerging as a key enabler to do so. The use of business analytics in Supply Chain processes has become more prevalent over the years. Organizations want to get insights into their Supply Chains and make data-driven decisions, instead of working on best-guess operations. Digital Supply chains help enable clients to enhance their operational performance and add revenue streams. This includes enhancing performance of supply chain in areas such as warehouses, logistics, inventory management, shop floor management, and new product development. Digital Supply Chain Digital Supply Chain services help an organization on the path to create a truly Digital Supply Chain. Digital supply chain senses information and provides a real time view of the extended enterprise, provides collaborative platforms and integrated best practices, improves operational excellence, productivity, and customer experience, and provides real time visibility into the supply chain. Digital supply chains help firms move from products to Services using advanced inventory optimization and spare parts planning capabilities to support this change and drive better CSAT through a combination of business process change and technology solutions. Helps Grow in emerging markets and tackle demand stagnation in mature markets by Enabling Supply Chain network design capabilities to optimally rebalancetheSupplyChainsanddrive cost efficiencies and Supply Chain agility. And harmonize process and technology in the era of joint ventures and M&A by bringing consulting experience and proven assets to drive process harmonization and best in class technology enablement and ensure that firms are able to deliver the business case. Traversing the Digital Journey: A Guide for Supply Chain Owners In recent decades, supply chains have relentlessly approached Digital maturity. But transformation to Digital is not just another level of improvement – it’s a quantum jump. It’s imperative that organizations understand the full implications and journey required. This article provides insight to customer-front technologies and trends shaping supply chains, explicates the digital journeybydefiningadigitalscorecard, and outlines the progressive stages of digital maturity. A set of new technologies is shaping today’s supply chain. Beginning with the Internet-of-Things (IoT), real time sensor data on geographical position and electromechanical data of entities can radically improve tactical decision-making. Wearables further empower supply chain operators. As consumers share buying experiences on social media, supply chain managers can access Big Data analytics to gain meaningful An organization’s supply chain is integrally linked to its successful growth. With mounting pressure to deliver multiple, often conflicting objectives of cost optimization, flexibility, and excellent customer service, enterprises often struggle to manage all the inherent trade-offs and complexities. An integrated supply chain operations strategy is imperative for enterprises to manage these trade-offs. Damodar Sahu writes on digital supply chains. DamodarSahu Partner–IoT,SmartManufacturing& Services|Manufacturing&Technology BU,WiproLimited Ushering in the next wave of Innovation in Supply Chain - Industry 4.0 SCMPro_Pg_14_16.indd 14 30/06/2016 2:21:34 PM
  14. 14. Lead Story 15Supply Chain Management Professional June 2016 SCMPro_Pg_14_16.indd 15 30/06/2016 2:21:35 PM
  15. 15. Lead Story 16 Supply Chain Management ProfessionalJune 2016 consumer insights. 3D printing will change dynamics of production and supply. NASA’s “Made in Space” wrench is an example. Mobility complemented with cloud computing makes more nodes accessible, increasing data visibility across all echelons. Robots can fully automate warehouses while drones are being tested for deliveries. There’s no doubt that the each technology has its own advantages but for most supply chain operators, the question remains as to which to implement. Consumers are increasingly demanding more value and highly individualized products. Expected turnaround times are shrinking. As customer demands become less predictable, supply chains must be more responsive, agile and resilient. The method of approach to converting a digitalization vision into operational strategy is crucial. The first step is determining the correct parameters for assessing supply chain digitalization. Typically, supply chain managers gauge success on getting the right product at the right place, right time, and right cost. These are often complemented by drill down indicators – fill rates, adaptability, productivity and efficiency. While these conventional parameters do gauge supply chain performance, they can’t evaluate the level of digitalization. “Digital parameters” are required, to not only measure the internal aspects of supply chain, but assess it from the perspective of stakeholders: ● Visibility: The ability to fetch a single truth of data from all relevant nodes ● Collaboration: A determining factor which indicates the propensity and potential to partner with multiple stakeholders in a complementary way, achieving a common objective. ● Agility: The ability to make a strategic and tactical shift based on market needs. ● Experience: The quality of experience delivered to all stakeholders – from vendors to customers. ● Simplicity: From defining strategy to operating physical and IT processes – all must be executed with simplicity. Once a supply chain assesses its digital readiness, it can then safely commence its journey. While Digital is the pinnacle of the supply chain maturity matrix, its maturity can be furtherunderstood,basedonthelevel of integration of digital enablement: Augmented - The digitalization journey starts with making incremental changes to the existing system. The core system remains but additional digital components enhance the performance. At this stage, the focus is on internal nodes of the supply chain under the organization’s control. Digital parameters, in their most modest form, are defined and measured quantitatively. Adjacent - At this stage, a select set of digital levers are imbibed into the supply chain processes, becoming integral to operations. Digital initiatives are introduced into the supply chain organization culture. The umbrella of digital levers also starts to incorporate external entities including key vendors, partners, and other stakeholders. Integral - This is the ultimate stage in the transformation curve. Digital is core to the business model, processes andculture.Bythetimeasupplychain reaches this stage, digital is imbibed in the majority of the processes. The supply chain has delivered significant benefits to consumers and improved internal measures. Digital parameters are tightly monitored and reported as part of the executive dashboard. Supply chain managers often ask what the view from mountain may look like. Here is a sneak peek via key supply chain processes: ● Digital planning is more collaborative with significantly reducedplanningcycletime.Multi- source and sub-transactional data analyzed by various tools makes planning process agile. ● Digital sourcing has, at its core, comprehensive demand aggregation. Multiple commercial models on shared logistics are available. ● Digital Manufacturing is largely on-demand with modularization, robotics and automation at the core. Delayed differentiation of product deliveries supports mass customization. ● Digital Delivery is more experiential throughout all the touch points in the supply chain. There is an accurate view of true cost to serve integrated into planning, thereby decentralizing the tactical decision making process. ● Digital Returns/ Service are completely prognostic due to high visibility. Collaborative models with stakeholders increase the service network reach, creating higher aftermarket revenues. The journey of becoming a Digital supply chain is systematic. Beginning with defining a digital scorecard, the three stages of maturity must be accurately assessed and traversed. At the pinnacle of transformation, Digital planning to service processes completely transform – becoming truly collaborative, visible, agile, experiential and definitely simple in their operation. SCMPro_Pg_14_16.indd 16 30/06/2016 2:21:35 PM
  16. 16. Lead Story 17Supply Chain Management Professional June 2016 Even though 3G and now 4G technologies have come up, its application in vehicle tracking has not really been prominent. A lot of research and implementation is being seen on data transfer over the internet. Advancements in Cloud Based Technologies to store data and availability of common platforms from Amazon (Amazon Web Services), Microsoft (Azure), IBM (Soft Layer) and others have made the cost and maintenance of tracking software very low. Moreover, with smart-phones pervading all parts of the society, accessing data has also become very simple. Data exchange from server on to the cloud and then to the end user is also witnessing some improvements. There has been a clear shift to REST (Representational State Transfer) based web services as it is easier and simpler than SOAP (Simple Object Access Protocol) and WSDL (Web Services Description Language) based interfaces. The advantage of REST is that it is stateless making it suitable for Cloud implementation. The format of the data exchanged between the GPS device and the server is normally in the request/ response payload or in the HTTP framework. Information is collected by a Telemat- ics device which is connected to a ve- hicle by vehicle interface. They can be of three types – Autonomous, Wired or Bus. ● An autonomous system is a battery operated device, which has no dedicated wired connection to the vehicle but is collocated. These devices are normally used only to collect vehicle information such as location and parameters of motion. OLA and UBER CABS have built in location services to enable tracking using a driver centric device along with a wired system to monitor fuel, A/C, Door Open/ Close. ● A Wired system is one in which the device is dedicatedly connected to the vehicle battery and to various sensors such as Fuel, A/C, temperature etc. ● A Bus based device connects to the OBD-II port or the CAN bus in the vehicle. The CAN bus can provide a lot of information about the vehicle including fuel consumed The world that we live in today would not have been possible without the various modes in the transportation sector. All of us are bound to be touched by transportation in our lives. From Fleet owners to Logistics Providers, from Taxi Services to School Buses, vehicle tracking technology is being increasingly deployed in all aspects of the business world. According to a report, “India Telematics Market (2013-2018)” from 6Wresearch, the Indian Telematics market is expected to reach $113.7 million by 2018, growing at a CAGR of 22.8% from 2013-2018. In this article Karan looks at vehicle tracking from a technology perspective and look at the interplay between information, propagation and standardization. KaranHanda ProductManager,AxesTrackSoftware Solutions Technology in Vehicle Telematics SCMPro_Pg_17_18.indd 17 30/06/2016 2:21:21 PM
  17. 17. Lead Story 18 Supply Chain Management ProfessionalJune 2016 and gear shift, giving insights in to the driver behaviour regarding sharp turns and harsh braking. Of late the OBD-II based tracking has gained momentum especially due to Usage Based Insurance (UBI) wherein vehicle insurance is decided based on driving behaviour. However, the OBD-II port is essentially a diagnostic port and hence connecting unapproved devices to this port continuously can seriously harm the vehicle. There are three fundamental categories of data that is monitored with the help of vehicle tracking solutions– vehicle location (latitude and longitude), parameters of motion like speed and acceleration, and vehicle parameters like fuel level, battery condition, ignition state, temperature etc. with the help of various sensors. Advanced Solutions- Futuristic Trends The Way Forward in GPS Based Vehicle Tracking System can be achieved by value addition to two present solutions: ● Hardware Driven Innovation - Focus on Hardware upgradation or integration of GPS hardware with various other sensors. ● Fuel Monitoring Sensors ● Temperature Sensors ● RFID/NFC Integration ● Biometric Integration ● Software Side Innovation - Providing high end analytics and user-friendly dashboards for senior and mid-level management to generate more value out of the data. ● Assessing fleet utilisation trends. ● Comparing loading times for turn- around times. ● Listing low performing routes/ drivers. Components of Software (Data) Side Advanced Solutions The three components of software based solutions are: ● Different UI for different viewers Different/Custom-made dashboards for senior and mid- level management to get a bird’s eye view. ● Proactive Analysis - Control waywardness and Defaults. ● Alignment with Operations - Custom tailor-made solutions to optimise routes and delivery times as well as reduce operating costs and identify bottlenecks and make long term strategy decisions. It can be said that vehicle tracking telematics technology is maturing. Vehicle interfaces as well as data interfaces are getting standardised. A customer requiring vehicle tracking telematics in his supply chain should not only look for a compliant device, but also a software that is compliant to standards. To conclude, we may say that Vehicle Tracking is going to expand from its current state and offer services as vehicles become an integral part of the growing “Internet of Things (IoT)” landscape. These services may includeproactiveroadsideassistance, vehicle health status, security and connected navigation. These services are all considered added benefits for the consumer, engaging the driver and ultimately improving customer satisfaction. SCMPro_Pg_17_18.indd 18 30/06/2016 2:21:21 PM
  18. 18. Lead Story 19Supply Chain Management Professional June 2016 In 2014, while researching the application of technology in businesses, we noticed companies were creating a huge asset base, but asset utilization was poor. Technology enables firms to utilize their assets better, driving better profitability. That is what Parsel set out to do – improve the capacity utilization in Intra-City logistics. Another realization was we could not use business models developed for other sectors. For example, we cannot copy the Uber model in intra- city logistics. One reason is the ticket size – intra-city may realize a ticket size of INR 25 to INR 30, while it will be INR 200 to INR 300 in Uber. Second, in Uber, the person you are contracting with is the owner of the cab. In our case, delivery boys are not entrepreneurs. Third, interacting with human beings – like in Uber is different from interacting with goods. We need to make decisions about goods. Fourth, the productivity range seen in logistics industry is in the range of 45 to 50 percent – leading to huge underutilization of resources. This is where technology fits best. At Parsel, we decided to address the underutilization challenge. Our strategy is to source deliveries from the biggest possible pool of service takers – not restricting ourselves to food deliver or e-commerce delivery. We see e-commerce as a separate delivery channel, not a separate business. For example, we do deliveries for Aditya Birla’s More – a modern trade retail outlet. The last mile delivery there is similar to Flipkart’s last mile delivery. One can derive synergies between these two models. This model of trying to attract a larger demand pool and trying to cross utilize the assets is what is unique to Parsel. This has led Technology aided logistics firms is an increasing crowded space – every major metropolis has at least half a dozen firms trying to create a technology backed play. Some succeed some do not. Parsel offers an IT enabled delivery infrastructure service to the last mile delivery that increases capacity utilization and improves efficiency. They do this by moving across the multiple last mile delivery models existing today – food, modern trade, e-commerce etc. Editor SCMPro Girish V S spoke to Himanshu Meena, founder and CEO Parsel. We bring you excerpts from the interview. HimanshuMeena, Founder,andCEOParsel Unifying Deliveries by Riding the Technology Wave Lead Story SCMPro_Pg_19_20.indd 19 28/06/2016 5:13:09 PM
  19. 19. Lead Story 20 Supply Chain Management ProfessionalJune 2016 to better capacity utilization for our resources. This has helped us scale up in a less capital intensive manner. A second aspect is Uber can expect to subsidize its customer and gain market share. But to expect to do that in a B2B model is suicidal. These realizations shaped our focus. Parsel focuses on three business verticals – one the e-commerce segment, by far the largest contributor, second, the retail, and start up segment. The third is the corporate segment. If we look at operational cycle in the e-commerce segment, the warehousing part starts early – around five AM., where hub to hub transfers happen. The last mile delivery starts at nine in the morning and first mile pickups at around three in the afternoon. This is a set patter. An intelligent business can utilize its resources, try, and fit in those cycles. A major part of the time in logistics operation is in organizing or travelling. Hence achieving geographical density is crucial. For example, the food delivery industry will see activity between 11.00 AM to 2.00 PM and 7.00PM to 9.00 PM. The delivery boys are hired to work in a 12 hour shift. There is a slack of seven hours. The idea is to use this capacity in other segments. I can now use this capacity for first mile pick-up, last mile delivery, and courier delivery – wherever there is a demand. Parsel is more than movement of goods – at this time we see three types of flows which will happen on this platform. One is the flow of goods. We have a plug and play platform where we can integrate other functions like warehouse facility or a sorting facility etc. The second is the flow of information which is crucial going forward. In terms of information, we are collecting the ordering pattern of customers, locational information about customers and vendors, etc. Over a period, this will become a major source of revenue for Parsel. The third flow is payments – we are planning to integrate virtual payment platforms with our solutions. A new frontier we are exploring is in retail distribution. E-Commerce majors cannot plan capacities based on their peak demand. They are now moving to a model where they are renting out space in retail stores. Once an order comes in, they depend on a service provider like us to pick up the products from the retail store for delivery. This will be a new business channel for us. The one thing that will set us apart is automationofourprocesses.Logistics is predominantly a manual process. We depend on automation to keep us lean. There are three aspects to our business – logistics, technology and distribution patterns. We demarcate deliveries into two – scheduled or on- demand. Our plan is to build a base of scheduled deliveries and on that base build an infrastructure for on-demand delivery. Parsel is positioning itself in that cusp, where it can tap into all kinds of distribution – e-commerce, B2B, retail, and modern trade. We are trying to emulate the way information packets moves across the internet – the TCPIP protocol. A similar efficient system should exist for the physical world. We do not distinguish between packets moving across our network – we currently cater to up to five tons per shipment. Eventually we will have a main line running across the city, shuttling goods from one end to the other,andfeederlinesthatwillcollect it and deliver it to the customer’s doorstep. We call this the relay system. In the relay system, we will use a truck as a moving warehouse. For example, we are piloting this for a pharma firm. Four tempos arrive at their warehouse in the morning and pick up the packages. They then reach certain pre-fixed staging locations, where bikers come and pick up the packages for final delivery. This has led to an 18 percent growth in the retail outlets serviced. The unifying trend is the use of technology that will help us seamlessly choreograph our activities, without any one entity having to wait for picking up their share of deliveries. We believe we are in a unique technology sweet spot that will give us the leverage to play across categories. Our strategy is to source deliveries from the biggest possible pool of service takers – not restricting ourselves to food deliver or e-commerce delivery SCMPro_Pg_19_20.indd 20 28/06/2016 5:13:09 PM
  20. 20. Guru Speak 21Supply Chain Management Professional June 2016 Let’s meet the Project Accumulation customers The unique nature of large-scale industrial projects might lead us to expect that the customers are all as different as their projects. Far from it. Our behavioral segmentation regime, introduced in Chapter 2, shows just what type of behaviors we can expect from our customers i n these construction sites. Let’s consider who the buyer on this demand side of the Campaign supply chain actually is. The customer could be the main contractors on site, who India is poised for a growth surge – with large investments planned in almost all sectors – including infrastructure. We plan to invest USD one trillion over the next five years on infrastructure – half our current GDP. This means ability to execute large projects in tight timelines – something our construction industry cannot do. We need to learn the skills to deliver such projects. We bring you excerpts from a chapter of a book Dynamic Supply Chains – How to design, build, and manage people centric value networks by Dr. John Gattorna. This is the second part of the series Dr.JohnGattorna, ExecutiveChairman, GattornaAlignmentPvt.Ltd. Campaign Supply Chains How to deliver-in-full-on-time to project sites Guru Speak SCMPro_Pg_21_23.indd 21 28/06/2016 5:14:05 PM
  21. 21. Guru Speak 22 Supply Chain Management ProfessionalJune 2016 are responsible for the build actually happening. They want to get it done, on time, and as specified. Or the customer could be regarded as the owner of the development. Then again, the customer could be the parties who will be the ultimate users or customers of the facility itself. Costs can grow astronomically and the consequences can be of a similar scale if any mistakes are made. Typically, the customers are longer”- term in their thinking. You can’t just say - let’s change that, we’ll do it different now. Too late! We want costs and scheduling to be of the precision of a space flight. So the customers in the Campaign configuration demand the opposite of unpredictability. We need precision in the staged delivery over time of our products; essentially, it is tight accumulation rather than rapid response. Hence, I’ve called the dominant buying behavior for this supply chain Project Accumulation. Meeting the demands of this segment is critical to the Campaign supply chain’s configuration. Fortunately,experiencecanhelphere: key demand-side characteristics have been identified on several industrial sites, which are listed below: ● Products, components, sub- assemblies, and Engineered-to- Order capital equipment designed for a specific project have to be gradually accumulated over time, in a specified location. ● This complete package of equipment must be fully visible to individual suppliers involved in the project, and the project manager in-charge of the project itself, and controlled along the supply chain with all the usual disciplines inherent in good inventory management. ● It may be necessary to phase the delivery of the equipment according to a predetermined schedule, in which case accuracy in inventory management on the supply-side becomes even more paramount. ● Typically, apart from clever support systems, this type of supply chain requires a ‘hands-on’ management style along the full length of the chain. ● In logic terms, we would code this segment (and corresponding supply chain), as ‘AP’ in terms of our P-A-D-1 code. There may also be a secondary behavior associated with the Campaign supply chain, and that is ‘Ia’, which implies a certain degree of collaboration between buyer and supplier during the project. If this does not exist, then completion of the project on time and on budget becomes even more difficult, if not impossible. If collaboration does exist there is a good chance that VMl practices will work as well, with suppliers proactively delivering goods to site as needed, but this could also lead to confusion. In the case of many projects where designs are changed during construction, no matter how good the front-end engineering design, equipment often needs to be redesigned. This involves a ‘reverse loop’ of information to help re-assess the corresponding logistics needs to move re-designed equipment, units, or modules. There are two possible buying behavior logic variants. We are focusing mainly on the inbound or buy-side as seen from the customers’ perspective (or demand-side seen from the suppliers’ perspective), because that is the critical one for successful on-time delivery of projects. Accurate lead times are essential, and hitting project-specific schedules on time with the required materials is mandatory. If not, the customer’s production post-project on the demand-side can be negatively impacted, with serious financial repercussions. Due to this, suppliers often have to sign up to liquidated damages clauses to win contracts and take on some of the risk. For example, Bechtel was hit with US$27 million liquidated damages bill when it ran eight months over on the construction of a power station for the Athens Generating Company in 2004-13. It can even happen to the best construction contractors. So t he c ust om ers in t he Campaign con guration d em and t he opposit e of unpred ic t ab ilit y D ue t o t his, suppliers o en have to sign up to liq uid at ed d am ages c lauses t o w in c ont rac t s and t ak e on som e of t he risk SCMPro_Pg_21_23.indd 22 28/06/2016 5:14:05 PM
  22. 22. Guru Speak 23Supply Chain Management Professional June 2016 At this point, it is worthwhile making what is perhaps a fine distinction between the logistics serving new construction such as large Greenfield capital projects, and that serving overhaul or maintenance of an existing Brownfield installation. Very often, big plants undergo annual ‘turnaround’ projects, shutting down part of a plant to upgrade or re-engineer a re-build, and then turned back on. An example of the former is the way Toshiba Logistics works with Toshiba Corporation and Westinghouse Electric Company when constructing new nuclear power stations. Four such facilities are currently under construction in the United States. Ray Ledford of Toshiba Logistics says that as a logistics service provider of the Engineer-Procure-Construct contractor, Toshiba Logistics likes to reach back upstream to the various suppliers and sub-suppliers and take over the logistics responsibility at the earliest possible opportunity. They do this by requesting materials are ordered ex-works in the case of domestic suppliers. While in the case of global suppliers, components, materials and assemblies are delivered to the nearest port of export on an FOB or FAS basis at which point responsibility is transferred to them. This is a case of the ‘owner’, Toshiba, taking over part of the inbound process on behalf of the contractor. Woodside Petroleum, an Australian based oil and gas producer that operates Australia’s North-West Shelf project provides an example of the latter situation. When it undertakes maintenance of one of its liquefied natural gas (LNG) trains, Woodside does not want to see materials delivered to site early, as this leads to poor cash management, and unnecessary storage and handling risks. On the other hand, if materials are delivered late and the train comes back on stream late due to delayed delivery of maintenance materials, production is lost, the value of which far outweighs the actual cost of the materials involved. For example, a two-day delay in a 40-day shutdown program adds up to a 5 per cent loss - enough to throw the whole program into negative cash flow. There are some very good examples of project delays due to scheduling problems in the Gorgon Project, one of the world’s largest natural gas developments, which is currently being constructed within the same region off the coast of Western Australia, in the North-West shelf. Costs have blown out by more than 50 per cent to US$70 billion, and poor planning, including logistics, are partially to blame. According to Peter Williams, of the West Australian newspaper, “Gorgon has suffered from cost overruns and delays as contractors struggle to move materials and equipment from the Australian Marine Complex in Henderson to Barrow Island in the Pilbara, in a timely manner. Industrial companies such as Schneider Electric find themselves caught between two worlds, i.e., between the supply of products and components for day-to-day sales and Consequently they have not honed t heir proj ec t sk ills t o t he d egree nec essary t o supply t he m aj or c apit al proj ec t m ark et usage via distributors and end users, and Engineered-to-Order equipment for capital projects. Consequently, theyhavenothonedtheirprojectskills to the degree necessary to supply the major capital project market. This is now changing as the Project Accumulation customer segment grows faster than the conventional product business, and consequently more focus is being placed on handling this type of business. Indeed Schneider Electric in Australia is in the process of designing and building a Distribution Center that is dedicated solely to servicing its project customers. They have started mapping, for the first time, the end- to-end processes involved in projects, and identified the issues that must be addressed to execute the new projects facility; this will become the centerpiece of their Campaign supply chain. It is likely Schneider Electric will follow a similar path for their business in China and elsewhere in the world as well. In the process, they are developing completely new customer logistics offerings, because none previously existed for this type of business. In addition, they are cleaning up the internal procurement of products from business units across their entire business, because until now this has posed many problems. They are also introducing new forecasting processes that will ensure material is ordered from internal and external sourceswellaheadofpotentialusage. A priority for the IT systems currently being installed is that they have high visibility of project components at all times. The proposed new Distribution Center will have cross-dock and merge-in-transit capabilities to ensure deliveries are consolidated for delivery according to a previously agreed schedule. This will most likely be operated by a 3PL under contract. To be continued... SCMPro_Pg_21_23.indd 23 28/06/2016 5:14:05 PM
  23. 23. Spotlight 24 Supply Chain Management ProfessionalJune 2016 One of the toughest negotiations in corporate life is the vendor – supplier negotiation. Months of effort bears fruit in the one signed contract. And this is where the story stops for most corporates. The duty to deliver the contract is the goal. However, new management thought believes the work starts after signing the contract. Modern supplier relationship management is a two way street, where the vendor and the buyer collaborate to develop skills and products in the supplier. In this scenario, the buyer extends every kind of support, including design and development skills to the vendor. In this issue of the spotlight, we look at the changing nature of supplier relationship management. Spotlight 24 Supply Chain Management ProfessionalJune 2016 SCMPro_Pg_25_27.indd 24 29/06/2016 11:54:00 AM
  24. 24. Spotlight 25Supply Chain Management Professional June 2016 Supplier Relationship Management - making suppliers efficient One commonly accepted definition of Supplier relationship management is –SRMisacomprehensiveapproachto managing an enterprise’s interactions with the organizations that supply the goods and services it uses. The goal of supplier relationship management (SRM) is to streamline and make more effective the processes between an enterprise and its suppliers just as customer relationship management (CRM) is intended to streamline and make more effective the processes between an enterprise and its customers. In the first phase, firms looked at vendors as source of raw materials and services, delivered as per the corporate plan. The role of the vendor was restricted. Very rarely did a vendor cross the barrier to be a part of the strategy team of the corporate. But things have changed drastically. The vendor today is a quality manufacturer, capable of innovation and R&D. The focus is shifting from efficient delivery at low cost to strengthening relationship with the supplier. Across the world, corporates share with their suppliers their strategy and concerns, moving the relationship to a partnership. One area where SRM will immediately bear fruit is in supply chain risk management. As the relationship is elevated to a partnership, the supplier becomes a willing link in risk mitigation. Studies have found the top procurement teams that have successfully aligned with their key suppliers have improved supplier capabilities of innovation, quality, reliability and costs/price reductions, and agility to reduce risk factors. Greatervaluecanbeachievedforboth businesses, something that would be difficult to achieve if operating independently. Why SRM? The first step in developing a supplier is the spend analysis and market analysis. Inherent in the market analysis is supplier risk assessment. This leads to a rationalization of supply base and consolidation of suppliers. This provides the firm a point in time reduction of cost. The next step – moving the relationship to a partnership is the core of supplier relationship management – the supplier now is an inherent part of the organization and will work with the firm to deliver consistent reduction in prices and enhancement in quality. Done well, this yields savings year after year. A report by PWC- “Supplier Relationship Management How key suppliers drive your company’s competitive advantage” reveals that SRM is focused on joint vale creation, based on trust, but with a limited number of suppliers. According to the report, the main reason why firms embark in SRM is to leverage on the capabilities of the supplier and to reduce costs. A beneficial fall out of a SRM is the reduction in risk and improvement in supplier profile. Developing a Supplier Partnership SCMPro_Pg_25_27.indd 25 29/06/2016 11:54:00 AM
  25. 25. Spotlight 26 Supply Chain Management ProfessionalJune 2016 Developing a Supplier Partnership The next best practice in supplier relationship management is systematic creation of post contract value from the supplier relationships. The firm should realize that supplier relationship is not an end in itself, but an avenue for both the supplier and the buyer to enhance each other’s utility. In as much as the firm needs the vendor, the vendor too requires a buyer willing to manage value, not just focus on cost. SettingupaSRMprogramisacomplex task. Firms do recognize the benefits of SRM, but still face challenges in developing a fair and equitable partnership with their suppliers. The single biggest hurdle in SRM is the focus on costs. Traditional sourcing has ingrained cost reduction as the strategic imperative for firms. But as firms focus on cost reduction, they lose sight of the long term benefits of a true partnership. Value drivers like innovation and risk reduction require a long term focus. A report by Rand Corporationreveals,“Companiessuch as Honda, John Deere, and Praxair are increasingly making full supplier cost disclosure a condition for consideration as a potential supplier while also corroborating d a t a from multiple sources, particularly unbiased external data, and their own knowledge o f internal costs.” The second challenge for S R M is the lack of specific SRM skill sets. Firms which have u s e d sourcing like a sword to c u t prices are not the best teams to build partnerships. For a l o n g time, we at SCMPro have been talking of aligning the supply chain to the organizations goals. In a similar vein, firms should s e e k alignment between t h e i r procurement team a n d business strategy. F o r example, Cessna reported a 113 percent increase in production inventory turns over six years, with dramatically higher material availability. Cessna achieved this improvement by creating a strategic plan and cross-functional commodity teamsthatrationalizedthecompany’s supplier base. IoT in SRM Technology is the backbone of a SRM roll out. Like in all other fronts, IoT is set to change the paradigms of SRM. Another fallout of IoT is the increasing complexity in product development. As microprocessors and sensors become mainstream, product development will become complex. Firms will now need to increase collaboration between the product teams and the suppliers. Most of the IoT developments are now front ended by the supplier – not the firm. A significant part of a sourcing team’s time is spent chasing deliveries. IoT has the potential to ease this. Connected devices can inform the sourcing team about potential blockages on a route and, in conjunction with Google Maps suggest alternate routes that are not blocked. IoT will help the sourcing team generate huge amounts of data. Quite a number of tasks undertaken today – like inventory count will become redundant. Smart shelves will be able to estimate the amount in stock in real time, and extrapolate it with the velocity of consumption to auto schedule deliveries. Similarly, the machines will self-diagnose and order parts for maintenance. IoT will automate a number of procurement processes, and gather huge amounts of data. The future procurement teams should be able to analyze this data and develop synergies with their critical suppliers. The ultimate aim for a sourcing team is to convert itself from an ad- hoc buying team to a world-class procurement team. Across the world, SRM has become a focus area for firms. We believe that the time is not far off when Indian firms will explore SRM in a structured manner. while d a t a o f S R M u s e d c u t teams l o n g a s e e k t h e i r a n d F o r Leverage on supplier capabilities Figure 1. Objectives to initiate SRM Deliver on cost reduction targets Improve security of supply Become a ‘customer of choice’ Manage the supply risk profile Enhance supplier relationships Guarantee sustainable sourcing Increase the responsiveness of the supply chain Anticipate on volatile commodity prices Other 0% 10% 15% 20% 25%5% SCMPro_Pg_25_27.indd 26 29/06/2016 11:54:00 AM
  26. 26. info@iscmindia.net +912228742227 / 7808 / 6757 D-204, Ridhi Sidhi Complex, Prem Nagar, Goregaon (W), Mumbai.-400 062. www.iscmindia.com Our Differentiators  ISCM offers a unique weekend program for Supply Chain and Logistics Executives  Taught by some of the best Academicians and Practitioners  Opportunity to interact with industry peers  Graduates with 2-3 years of experience can apply  Scholarships are available to exceptionally bright candidates Eligibility Criteria World Class Mentors Dr. Rakesh Singh: Chairman- ISCM Dr. Vaidy Jayaraman: Associate Professor, University of Miami. Dr. Satish Ailawadi: Director, Institute of Management Technology, Hyderabad. Dr. Antony Paulraj: Professor, Operations and Supply Chain Management- Alliance Manchester Business School Arif Siddiqui: Founder and Director- Coign Consulting. Deepak Jakate: Ex Head – Strategy, Solutions and Projects (Distribution), Reliance Logistics Dr. Rahul Altekar: Consultant. Dr. Suhas Rane: MBA Faculty in Leading Management Institutes EPGPSCM Attracts Talented Nominations From: and more ..... ExecutivePost GraduateProgram inLogistics&Supply ChainManagement (EPGPLSCM) EPGPLSCM.indd 1 28/06/2016 5:08:34 PM
  27. 27. Feature 28 Supply Chain Management ProfessionalJune 2016 Warehousing and Logistics are two key levers and enablers within Supply Chain. To describe each one of them in a single word, I would use the verb ‘Store’ to describe Warehousing and ‘Move’ to describe Logistics. Supply chain will cease to perform without these key verbs (Store and Move) since products have to move through multiple nodes of the supply chain to undergo the transformation from raw material to final product and then move through different distribution channels to multiple channel partners before it reaches the customer. Logistics Management is all about this journey to ensure that the journey happens on time and happens efficiently; Storage (Warehousing) gives the opportunity for consolidation and gives you much needed control to have enhanced service levels. Space is money. We understand this from our investment in land and property. Because of the large investments in land, firms need to maximize use of the space available to them. An obvious place to look for space usage is the warehouse. Industry is at a juncture where it must save every rupee. Warehouse forms 2 percent of product cost. Alvis Lazarus, Founder, and Executive Director at Hesol Consulting writes on warehouse optimization. AlvisLazarus Founder,andExecutiveDirectoratHesol Consulting Warehouse Optimization - A Competitive Edge in Supply Chain! Feature SCMPro_Pg_28_29.indd 28 30/06/2016 2:47:53 PM
  28. 28. Feature 29Supply Chain Management Professional June 2016 KANO MODEL IS GETTING SKEWED DAY BY DAY Customer Expectations keep pushing us to our limits. KANO model best explains the impact of this change. Most of the past Wow moments experienced by customers – which were classified as either ‘Excitement’ factors or ‘Performance’ factors in KANO model have moved to the ‘Basic Needs’ factor in the KANO Model. I have been doing a lot of KANO models through the years. These changes result in a skew to the KANO model. In this article, I have focused on warehousing specifically, and how it can be an organization’s competitive edge. Warehousing has just become part of top company strategy: Decades before, Warehousing was never even part of the company strategy and it always took a back seat. The focus was on Manufacturing and the game is all about running the factory efficiently. As years passed by, competitive edge created by lean manufacturing and other TPS concepts slowly died down and it has become an even game. With that, Warehousing and Logistics started coming to Limelight. In a supply chain, Warehousing cost is about 1-2% of the total sales. Efficient supply chains operate at < 1% of warehousing cost to total sales. But there is a huge variation between different organizations. For example, current E-Commerce companies operate at 4-8% of the total sales… Yes, E-Commerce industry was not much worried about this leakage in 2010 but today leadership team from E-Commerce industry is under tremendous pressure to monetize and certainly, they cannot leave warehousing costs out. I am sure warehousing and logistics costs are in the top 3 of the priorities. The lamest argument I have heard is ‘Anyways I can bury this cost in my costing and why do I have to invest on any technology or skills here at warehousing? Investment here won’t break even?’ Answer is simple: (1) Current market is so competitive and customerscan see all competitive info right on their hand-phones. If you are not price competitive, you cease to exist. (2) We are talking about leakage of 3-4% on total top-line and that’s a huge stake. When it comes to competitive pricing, healthy bottom line and enhanced service levels, warehousing and logistics have to be part of the core strategy. WAREHOUSE OPTIMIZATION There are two main optimization verticals under warehouse optimization. Warehouse Resource Optimization ● Warehouse Space Optimization ● Warehouse Resource Optimization Warehouse Resource Optimization is all about the efficiency of the people. There are about 10+ measurements on evaluating the efficiency. A single metric called the ‘LPMH’ – Lines per man hour consolidates all these metrics. Warehouses achieve efficiency through eliminating non value added activities. There are multiple methods available – Theory of Constraints (TOC), Waste Analysis, Therblig Study, VSM (Value Stream Mapping), GEMBA Study, Spaghetti Map etc... A combination of the type of problem/requirement and used as stand-alone or as a combination determines the techniques selected. Out of the total value that can be brought-in through warehouse optimization, Resource optimization contributes around 15-30% of the total value addition as bottom-line savings. Warehouse Space Optimization In a business language, it is all about efficiently using each square feet you are paying for. When your business teams are sweating it out on field building the top line, these space inefficiencies silently eat out huge percentage in bottom-line. Unfortunately, most warehouses operate at around 60% or less in cubic space utilization. On a positive note, once warehouse optimization is on radar and once the organization starts to drive that, there is a lot of potential to make warehouses a key strength and edge. The organization can initiate Space Optimization on a green field project, brown field project, or an existing warehouse. Warehouse Optimization is not a one-time exercise; it is an activity to be done every Quarter. One methodology for Warehouse space optimization is concepting or slotting. Concepting or Slotting is a technique using which we can evaluate storage designs and storage structures needed and allocate products in the right storage zones and bins. To explain it with a simple example, just walk into your kitchen, and ask your Mother or Dad, whoever is cooking, where are all the spices stored? Where are the pans? Where are the vegetables? Where is the red wine? You would see a specific place for each of them and a specific storage container for each of them. It is possible to employ the same technique at a very large scale in the warehouse where there are Millions of products and lakhs of square feet. As years passed by, competitive edge created by lean manufacturing and other TPS concepts slowly died down Warehouse Optimization is not a one-time exercise; it is an activity to be done every Quarter SCMPro_Pg_28_29.indd 29 30/06/2016 2:47:53 PM
  29. 29. Interface 30 Supply Chain Management ProfessionalJune 2016 The promoters of Vamaship have a successful brick and mortar 3PL service offering. However, there still is a huge gap in the logistics service business – organized players are not able to reach out to the SMEs. On-boarding these SMEs is a costly proposition, requiring a large dedicated sales team going into these clusters where SMEs operate, and tap each of them, one at a time. Apart from effort and cost, it is a huge drain on corporate time. There are quite a number of excellent freight forwarders with exemplary service and reasonable costs. But are not able to reach these mass shippers. This gap has always existed. This gap can easily be bridged using technology. Vamaship was conceived as a multi-modal platform to serve these mass shippers. The idea is – any shipper should be able to sign in from anywhere in the world and ship any product to another part of the world at neutral prices. Today we have multiple touch points through Vamaship is a technology–driven logistics platform launched in October 2015, which integrates unorganized logistics processes through air, ocean, and surface transportation, aggregates customer demand for cargo movement from SMEs, e-commerce websites and even individual shippers with fewer requirements. With the aggregation of volumes and automated shipping processes from inquiry till payment, the company helps shippers minimize cost, passes customers bulk shipping rates and cuts short the time taken for logistics brands to collect their dues from customers. Girish V S Editor, SCMPro interviewed Bhavik Chinai, CEO Vamaship. We bring you excerpts from the interview. Becoming the World’s Shipping Partner which a customer has to access his data. There is no one platform that can be used by everyone across the value chain. The factory can use it for their movement, FTL or LTL, the admin can use for courier, and the core business can use for sea and air freight. You may still have the same partner, but there is no automation. And hence the genesis of creating a single platform for shipping anything, anywhere, anyhow. We should realize that each service offering follows its own TATs, price levels, and processes. Of these prices will continue to be different. The way to bridge this is to bring all partners to one neutral platform, which is the service offering of Vamaship. The freight rates offered by freight forwarders between two locations could vary by as much as 50 percent. This is purely due to information asymmetry. The need of the hour is a neutral platform where shippers can see who is offering what rates. This is a great value add for shippers Interface BhavikChinai, CEOVamaship SCMPro_Pg_30_31.indd 30 28/06/2016 5:13:23 PM
  30. 30. Interface 31Supply Chain Management Professional June 2016 and partners. This brings in price transparency. Moving on to service levels – there are minor variations, but more or less, the shipping process is the same across the world- in terms of the number of documents required from the shipper, customs clearance practices for different HS Codes, in terms of the shipping documents required for the last mile. It is always the same. The only difference is the number of agencies connected. As the agency count increases, the documents will change hands more number of times. We have identified, across the spectrum from dangerous goods to perishables to general cargo, all the sets of documents required. We are now trying to connect with different agencies and ICEGate to figure out if we can automate the flow of information into ICEGate to give them a shipping bill number instantly. Automation of document flow is done. The next step is automation of the other stakeholders. There are a number of players who have tried to do this in bits and pieces. The sticking point is absolute neutrality in price – there should not be even one instance where a shipper can get a better price using the traditional model, as opposed to the platform price. Shippers need that assurance. Promoters get absolute visibility with shipping. Today, with the way logistics works and the way logistics managers control the supply chain and partners to work with, visibility is compromised. With our mobile apps, promoters can track their shipment without having to depend on any third party. The biggest sticking point for us is our single point of contact – across the different shipping categories and needs. From having to deal with multiple agencies, and multiple follow up, today they have the luxury of a single point of contact for all their logistics and courier needs. Managing such a service does require better quality of people. We have been able to attract people who are passionate about logistics and technology. To keep our costs down, we have automated every process within Vamaship. One of the advantages technology offers is track and trace capability. Barring a few dark spots like a container moving from the ship to the dock, we have managed to offer complete visibility to our customers. And we are working towards eliminating some of the dark spots. We use some of the best technology to ensure our customers can transact seamlessly over our platform. Which brings us to our value proposition – we can provide a one stop solution for all movement needs. When an SME comes on board, they have complete visibility of current prices and delivery times. They can then take an informed decision about the shipping mode and agency. They have this option at the click of a button. Another big value add is our assurance of the genuineness of the agencies transacting on our platform. Several countries have stringent conditions on supply chain partners. Every partner who signs up with us goes through a rigorous checklist, including the technology they have. They come on board only if they pass the inspection. Books Published Pocket Book of Shipping Definition Clearance Through Customs Clearance Port Management Handbook for Custom Clearance - English/ Hindi/ Gujarati A Pocket Book of Shipping and Logistics All you Needed to know about EXPORT-IMPORT SCMPro_Pg_30_31.indd 31 28/06/2016 5:13:23 PM
  31. 31. Academic Advocacy 32 Supply Chain Management ProfessionalJune 2016 Supply chains connect the manufacturer, his supplier, and consumers in a complex web. An efficient supply chain can lower costs andhaveamajorimpactoneconomies and societies. Because of its impact on economic growth, both firms and governments focus their attention on supply chain costs. According to the author, “Logistics costs accounted for 8.2% of gross domestic product (GDP) in the United States in 2013, or about $1.39 trillion (Wilson, 2014). In Europe, they accounted for 7.2% of GDP across the EU 27 countries or about €850 billion in 2008 (A.T. Kearney and the European Logistics Association, 2009). Asian logistics costs, excluding China, Japan and India, accounted for about 17% of GDP (Wilson, 2014), while in Thailand they represented a little over 15% or US $55.4 million of GDP in 2010 (Paijitprapapon, 2013). Thus, costs may be considered a hygiene factor as a trend and ongoing issue that underlies management thought and decision-making.” The author discusses the following rends in this paper: ● Globalization of supply and markets ● Time compression, product complexity and shrinking product life cycles ● Quality of performance and service A number of pressures affect the supply chain function – globalization of supplies and markets, shorter time to market, product complexity, faster obsolescence, talent shortage and supply chain disruption. In a paper published by David B. Grant, Hull University Business School, Hull, United Kingdom, discusses and synthesizes these important trends and focuses on risk as an issue that, besides costs, underlies and/ or affects almost every other trend. You can read the entire article at https://helda. helsinki.fi/bitstream/handle/10138/159808/194_1048_1_SM.pdf?sequence=1 DavidB.Grant, HullUniversityBusinessSchool,Hull, UnitedKingdom Trends in Logistics and Supply Chain Management: A Focus on Risk ● Shortage of logistics and SCM talent ● Impact on the natural environment ● Risk and disruption and supply chain security The aim of supply chain risk management is to ensure products reach consumers in time, at the least cost. It tries to anticipate any event that can delay or disrupt the delivery of goods and services. Next to cost, risk should be the focus of any supply chain. The domain of logistics research and SCM face several trends and issues going forward for the rest of this decadeandthenext.Further,Thailand and other Asian countries need to address some of them in a unified fashion in the run-up to AEC 2015. Globalized markets, operational pressures to produce better and cheaper products at a faster rate without compromising quality and service, a shortage of qualified and interested talent, and external pressures regarding the natural environment all provide a challenging and risky business environment for firms in developed and developing countries. However, recognition of these trends and issues, and the inherent risk surrounding them, also present an opportunity to manage them and become leaders and indeed long-term survivors. SCMPro_Pg_32.indd 32 28/06/2016 5:13:35 PM
  32. 32. Demand Planning & Forecasting MAster Class 22nd & 23rd September 2016 Continuous improvement in demand planning and forecasting is a must for companies using supply chain as a source of competitive advantage. This master class will look at why some firms do better than others in terms of demand planning and forecasting. What are the basic tenets that are missing? What is required to make demand planning exercise successful? info@iscmindia.net D-204, Ridhi Sidhi Complex, Prem Nagar, Goregaon (W), Mumbai.-400 062. +91 22 28742227 / 7808 / 6757 www.iscmindia.com  How to develop an effective and realistic baseline forecast that drives better planning  What is the right forecasting model for your supply chain  How do we deal with different kinds of uncertainty while demand planning and forecasting.  How to minimize politically motivated biases and reduce bullwhips in supply chain.  How to align all functions to a single S&OP Forecast Learning Objectives  Matching demand with supply: The Basic framework for demand planning  Supply chain complexities, uncertainty and forecasting  The Forecasting methods: Selection, estimation and assessment  Forecasting Methods and Approaches  Understanding Variability in the supply chain.  Measuring the Forecast performance: Understanding Bias and Error  Technology in Forecasting  Managing forecast by building an effective Operations and sales planning processes  Dealing with real time demand planning challenges: Simulation exercise The agenda Master Class Leaders D r. R ak esh Singh Chairman of ISCM Pvt. Ltd. Mumbai. D r. N eeraj H at ek ar Director & Professor University of Mumbai D r. R ahul A lt ek ar Advisor to AurionPro – an IT solutions provider. Who Should Attend? CMO/CSCO/Demand Planning Professionals/ CFO/COO/Head of Sales etc. Master Class fee INR 20000 taxes DPF Ad.indd 1 30/06/2016 3:00:34 PM
  33. 33. Humanitarian Logistics 34 Supply Chain Management ProfessionalJune 2016 Feeding the Next Gen – A Labor of Love What are the challenges you face in running a humanitarian supply chain? 1. Demand Estimation: Being a school meal program, Akshaya Patra enjoys the benefit of largely predictable demand as the number of routes, location of schools, number beneficiaries per school and the menu – all are pre-decided. At the same time, there are instances where sudden demands arise; internal factors like production issues, manpower issues, nutritional India is a young nation. India is a hungry nation. India seeks knowledge and education. Ensuring our children stay in schools, gaining that edge through education is a tough goal. Akshaya Patra – born out of a vision that no child should go hungry – is today the largest Mid-Day meal scheme in the world – feeding 1.5 million school children and growing. In this issue, we bring you an interview with Vinay N Kumar, Director Operations, The Akshaya Patra Foundation on their supply chain. We hope to see more of their kind. VinayN Kumar, DirectorOperations, TheAkshayaPatraFoundation Humanitarian Logistics 34 Supply Chain Management ProfessionalJune 2016 SCMPro_Pg_34_36.indd 34 29/06/2016 12:05:24 PM
  34. 34. Humanitarian Logistics 35Supply Chain Management Professional June 2016 norms compliance etc., and external factors like new request by teachers, sudden changes in prescribed menu of MDM department etc., ● In case of disaster relief kitchens – appropriate demand estimation is a critical success factor to reach out to as many beneficiaries as quickly as possible. ● If demand estimation goes wrong, then there could be situation of stock outs while the meal is needed the most of over stocking leading to storage and quality issues. 2. Road conditions could impact On- time Deliveries: The cooked meal needs to reach the schools on- time by lunch time of schools. And Akshaya Patra operates in areas where the road conditions range from good to worse. So, adequate time needs to be factored in for deliveries keeping a close watch on risks that exist. AkshayPatrasuppliesfoodinlargely rural India - how is your supply chain structured? ● Akshaya Patra’s present reach is majorly to primary schools in underprivileged areas in and around urbans like Bangalore, Ahmedabad, Hyderabad, Jaipur, Hubli, Bhubaneshwar and Lucknow. Akshaya Patra also operates centralized kitchens in ruralareaslikeBellary,Nathdwara, Puri etc., ● The procurement part of supply chain is kept simple and similar – Rice & Wheat are a grant from the Government, hence Akshaya Patra’s work is limited to picking up the allotted grains from the nearest FCI warehouses / state warehouses. For primary ingredients like Dals & Pulses, Edible Oils, Sugar; depending on the quantity required the procurement is done from millers / producers directly. For rest ingredients like blended spices, vegetables and dairy, the procurement is done from nearest markets to ensure local taste, to ensure fresh and good quality ingredients. ● Transportation of cooked meal is running against time as shelf life is just 5-6 hours. Hence, to reduce the cook-to-consumption time, Akshaya Patra has standard vehicle designs, stainless steel racks that hold the vessels in place in spite of many jerks. Few vehicles that go on longer routes have insulated containers so that food is still fresh after hours. What factors do you constantly evaluate to ensure food quality does not suffer during transit? ● Good Warehousing and Manufacturing Practices (GMP) – To ensure safe food ingredients and safe production. During transit too, the vehicles and vessel lids are sealed, food handlers and teachers are adequately trained to unload and serve food. ● ISO 22000:2005 – 13 out of 24 Akshaya Patra kitchens are ISO certified that has an evolved food safety management system. ● Monitoring cooked food temperature before transit and after delivery – Akshaya Patra adopts a mechanism of frequently checking the temperature of cooked food at various stages. In cauldrons, the Rice records 88-92 degree Celsius, while packing at least 82 degree Celsius is ensured so that while consumption it not less than 60 degree Celsius. Hot food, apart from ensuring taste and higher food consumption, also retains quality and nutrition. Indiadoesnothavetheinfrastructure for the farm to fork supply chain – how have you taken care of this? 1. For dry ingredients, though the infrastructure is not up to the standards, the impact can be alleviated through ● selection of right supply partners; ● employing progressive procurement strategy (buying from appropriate locations and at proper timing w.r.to harvests) and ● maintaining adequate inventory levels to counter the supply chain challenges 2. For Fresh ingredients with less shelf life (Vegetables / Dairy) ● Tie up vegetables supply partners in locations/districts where Vegetables are grown and with good road conditions ● Tie up with Dairy plants directly and placing orders ahead of time, to ensure planned production (flavored milk / curd etc.,) You are a part of the humanitarian supply chain - What benchmarks have you evolved? There are not many organizations that supply fresh food in the scale and network that we do. Hence, many of our operations are unique; however, we do benchmark a few areas like procurement with large buyers of similar agro products, production with some of the large south Indian temples, mass caterers like Sodexo, Compass etc.; distribution is an area where we are unable to benchmark with comparable players; yet we compare our supply chain with the urban goods supply logistics companies, diaries etc. How do you use technology in your supply chain? How does it change your supply chain strategy? All the inward supply chain is recorded on the ERP system and hence is available digitally for all reports, analysis, comparisons and decision support. The outbound supply chain is tracked through GPS for most of our vehicles, coupled with fleet cards for fuel tracking. We are on the verge of digitizing all the outbound supply chain data by way of smart phones/ hand held devices that would be given to field force. SCMPro_Pg_34_36.indd 35 29/06/2016 12:05:25 PM
  35. 35. Humanitarian Logistics 36 Supply Chain Management ProfessionalJune 2016 What key supply chain metrics do you track? ● Spot Market Price Vs Purchase Price for commodities. ● % of CSS Team cost w.r.to the total purchase value. ● % share of orders of premier supply partners, supplier ratings thereof. ● On Time Delivery ● Route distances, average mileage Improving food freshness at the school is a complex challenge – especially with major climate changes in a region. What innovations have you brought in to ensure this? We have recently adopted the use of Insulated Vessels in which we send food to schools that are far flung and also to more schools in winters. How would you define the relationship with your suppliers? What guides this relationship? ● Akshaya Patra views all its suppliers as ‘supply partners’, not just vendors. The stock plans are shared periodically and adequate time and scope is given to all partners to add value to the supply chain. ● Preferred Supply Partners – who are innovative in their business model, who provide steady price advantage and services, who upgradetheirscaleandtechnology to suit the increasing demands of Akshaya Patra. “Zero Waste” is a concept that is gaining currency in supply chain management – what are your efforts on zero waste? Many of our kitchens work on ‘zero waste’; we have recently adopted biogas plants in many of our kitchens which helps consume all the food waste and produces gas that is used in cooking; the water from our plant is treated using ETP/STP and reused in the kitchens for non-cooking purposes; in kitchens where we don’t have biogas, we give out the solid food waste towards animal feeding. We do not contribute to the waste of the municipalities. What is your expansion plans for over the next couple of years? How do you plan for the supply chain in these areas? We have plans to add 10 kitchens in the next 2 years; the growth is likely to happen in states that we are already present; the supply chain in the new areas will also be serviced from the central team which has been servicing the existing kitchens. What are the steps towards sustainability you have taken in your supply chains? We are moving every year closer to the model of buying the raw materials from growers/ processors. We are penetrating the supply chain and moving closer to the growing markets. We are striking long term deals with our suppliers; we are entering into long term partnerships with some of our trusted vendors to ensure sustainable, quality supplies. We are also planning to have a few large regional warehouses of our own to support the supply chain team in procuring large quantities when the markets are favorable. Your program needs uninterrupted service. How resilient is your supply chain? What parameters do you track to ensure there is no disruption – both raw materials and cooked food? ● For Raw Materials – all the risks are assessed through a thorough risk management exercise. Akshaya Patra secures 14 days of inventory to counter any food shortage that may occur due to disasters. For additional requirements to counter steep price rise and shortages, Akshaya Patra has corpus to block / buy / contract for higher quantities of ingredients from reputed national brands at designed specifications. ● Akshaya Patra’s supply partners are from across 19 major markets that cater to major part of nation. Hence, though few markets are impacted by shortage, the supplies can still be bought from stand by markets / stand by suppliers. Looking ahead – what are the major forces that will shape your supply chain? The major factors that will affect our supply chain are the quality of the goods from the Government Warehouses, strengthening of rupee where the commodities are dependent on imports, strict government policies to curb hoarding, concessions on storage facilities of fresh food, improved agricultural produce in the country. We will also have to watch the fuel prices as the same affects our inbound and outbound supply chain. Therewouldbeanumberofinspiring moments – can you share a few? In 2012 Akshaya Patra celebrated serving of 1st billionth meal, and in 2016 we are celebrating the 2 billion meal mark and 15 glorious years of Akshaya Patra. Recently our Chairman Shri Madhu Pandit Dasa was conferred upon Padma Shri in recognition of the distinguished service rendered by Akshaya Patra for the children of India. In another occasion, The Akshaya Patra Foundation (TAPF) was bestowed upon the Nikkei Asia Prizes, in recognition of its contribution in the field of Economic and Business Innovation. It is the one of the most prestigious awards in Asia. The Akshaya Patra Foundation has been awarded with the Gold Shield by the Institute of Chartered Accountants of India (ICAI) for Excellence in Financial Reporting for five years in a row from 2008-9 to 2012-13, making it the only NGO to be inducted into the Hall of Fame. SCMPro_Pg_34_36.indd 36 29/06/2016 12:05:25 PM
  36. 36. SCMPro_Pg_37.indd 1 29/06/2016 12:47:05 PM
  37. 37. Feature 38 Supply Chain Management ProfessionalJune 2016 Aisle-Master Articulated Electric Forklift Truck for Cold Stores Problem Statement: Hatsun has to maintain their products in a cold store at -40 C. One of the main operating cost is electricity to run the refrigeration units to cool the cold store. The Hatsun team wanted to minimize the refrigerating cost per pallet, while maintaining the ability to select any 2 pallets in different aisles at the same time. The peak throughput required was 45 pallets per hour. In order to increase labor productivity & equipment uptime, Hatsun wanted to maximize the time the driver could spend in this -40 C cold environment between breaks. Solution & Advantages: The Nilkamal MMSS (Material Movement & Storage Solution) team carefully studied the application, and teamed up with the Combilift team to offer an Aisle Master (AM20WHE) electric articulated forklift truck with a heated cabin in a narrow aisle pallet storage system. ● Lift height 9050mm, capacity 2000 Kg, and de-rated capacity at height 1235 Kg. ● Aisle-space 2200mm (P/P). Pallet dimension 1200 x 1200mm. With the use of a Normal Reach Truck the Aisle Space required would have been 3200mm. Using our truck allowed the customer to store & cool 22% more pallets with the same operating cost. ● The Heated Cabin allows the driver to comfortably operate the truck in the -40 C environment for 4 continuous hours without breaks. This would have been 30min without the heated cabins. This has increased labor productivity & equipment uptime. Customer: Hatsun Agro Products Ltd, Tamil Nadu, Industry: Private Dairy Products: Milk, Ghee, Butter, Curd, Paneer, Buttermilk, Dairy Whitener, Skimmed Milk Powder, Ice Cream. This Case study is provided by Nilkamal on Aisle-Master for Cold Storage Advertorial 38 Supply Chain Management ProfessionalJune 2016 SCMPro_Pg_38_39.indd 38 30/06/2016 2:47:46 PM
  38. 38. Feature 39Supply Chain Management Professional June 2016 For more Information: mhe@nilkamal.com | Toll Free-1800 1219 115 *All application images are for representation purpose only ● Heated Bar Code scanning window. The glass of the cabin at -40 deg C gets covered with ice which obstructs the laser from reading the bar-code. The heated window provided in the Aisle Master truck prevents ice-buildup, and allows the laser to read the designated barcode without the driver having to step out in the cold. ● Battery capacity: (i) The discharge rate of a battery is steep at cold temperatures. The Nilkamal team carefully studied this application, and teamed up with Combilift to offer a 930 Ah high-capacity battery. The higher thermal mass of this larger battery through the 4 hours of continuous operation prevents quick discharge. (ii) To further extend battery life, we offered low-power consuming LED lights for visibility & safety. Both these options increase the time between battery changes & re-charges, extend the life of the battery, & improve equipment & worker productivity. ● The battery is quickly & easily changed at the rear of the Aisle Master with a hand-pallet truck. This increases equipment uptime & productivity. AdvertorialAdvertorial 39Supply Chain Management Professional June 2016 SCMPro_Pg_38_39.indd 39 30/06/2016 2:47:46 PM

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