This document summarizes a presentation on disruptive digital innovations for responsive and sustainable global supply chain management. The presentation discusses four disruptive models: inventory information sharing systems between competitors to reduce stockouts; smart systems that allow product customization and remote upgrades; demand sensing using machine learning to improve short-term forecasts; and digital twins to continuously evaluate and optimize supply chain networks through simulation. The models aim to help supply chains sense demand shifts quickly and fulfill needs through altered processes, improving responsiveness in volatile markets.

1. Conference Theme : ”Digitalization Strategy for Responsive &
Sustainable Global Supply Chain Management“
Parasuram Balasubramanian, Ph.D.
Founder & CEO, Theme Work Analytics, Bangalore
&
Mr.Sandeep Kumar,
SVP and Global Head, Consulting Services, ITC Infotech, Bangalore
IIMM / SCALE 2019
Disruptive Innovations in Digital Supply Chains
August 22,2019

2. Session Coverage
v Responsive Supply Chain Definition
v Conventional Strategies to create RSC.
v Role of internet
v Start of the digitization journey from POS end
v What is a disruptive Innovation?
v Four disruptive models
o Inventory Information Sharing System
o Smart System Advantages
o Demand Sensing
o Digital Twins
v Summary & Q&A
Disruptive Innovations in Digital Supply Chains

3. Responsive Supply Chains
Responsive SC need to sense
t h e d e m a n d / s h i f t i n
demand, quickly and help to
f u l fi l l t h e d e m a n d b y
a l t e r i n g e x i s t i n g
manufacturing, distribution
and delivery processes.
Disruptive Innovations in Digital Supply Chains

4. Responsive Supply Chains
The Challenge Today?
• Supply chains have been built
for speed and efficiency …
today they are being
challenged by the needs of
responsiveness.
Why?
• Increased Demand Volatility.
• Omni Channel Fulfilment
• Dynamic sourcing strategies.
• Shrinking Product Life Cycles.
Disruptive Innovations in Digital Supply Chains
“The Three A's — agility, adaptability
and alignment. Beyond just efficiency
and speed, the three A's form the
basis on which superior value can be
created within the supply chain and
delivered to the market.”
- Prof. Hau Lee

5. Responsive Supply Chains: Role of Internet
• Internet has facilitated instant
connection of people and devices
• Automated, instant and accurate
sharing of information
• Seamless integration of supply chain
partners
• Aggregation of brick and mortar and
virtual store sales and inventory data
Disruptive Innovations in Digital Supply Chains

6. Responsive Supply Chains: Role of POS Systems
• Demand shift is perceived best from the
Point of Sale ( POS).
• Sale Data is captured electronically
through POS Devices.
• POS Devices today are no longer
constrained by physical location.
• This data is shared offline in batch mode
or online real time with the stores to
update item inventory records.
• When collected and analyzed in an
aggregate mode, the same data can be a
valuable tool to identify shift in demand.
Disruptive Innovations in Digital Supply Chains

7. Conventional Strategies to Create
Responsive Supply Chains
v Demand information sharing across the SC
v Integration of processes
v Inventory Pooling
v Move from Made to Stock to Made to Order
v Modular Design
v Last mile assembly
Disruptive Innovations in Digital Supply Chains
Demand Information sharing and Inventory Pooling are
methods usually adopted within a firm.
… At times with the supply chain partners.

8. Can Demand Information sharing
and Inventory Pooling be attempted
with competitors?
Disruptive Innovations in Digital Supply Chains
How?
Digital Strategies can
provide the solution
Virtual Inventory Pooling
with trusted competitors is a
viable option

9. Disruptive Innovations in Digital Supply Chains
v Digital records are merged
and updated instantly.
v High level of privacy and
security protection of data can
be ensured.
v Data sharing on the basis of
“need to know” can be
implemented.
Digital Strategies can
provide the solution

10. Disruptive Innovations in Digital Supply Chains
Digital Strategies can
provide the solution
v Establish an Inventory information
sharing system with trusted
competitors.
v They can be within your serviceable
territory, belong to an affinity group like
trade association, Chamber of
Commerce or Rotary Club.
v Agree on periodicity of Information
update.
v Agree on sales sharing process and
revenue sharing mechanism.

11. Disruptive Innovations in Digital Supply Chains
v Provide a gateway to link the POS
system at each firm to the Pooled
inventory System.
v If a demand is not met at the POS
of a given firm, seek to find if it is
available elsewhere.
v Then negotiate with the customer
for delivery and conclude sale.
Digital Strategies can
provide the solution

12. Disruptive Innovations in Digital Supply Chains
v Such a system leads to dramatic
reduction in lost sales.
v To reduce inventory carried by a
high order since impact of stock
outs can be minimized.
v Mismatch between items carried
versus ordered can be
minimized by periodic data
analysis
Digital Strategies can
provide the solution
This would indeed be a disruptive
innovation through digital SC.

13. Disruptive Innovations in Digital Supply Chains
Smart Systems and their Advantages
v The Artificial Intelligence ( AI )
Revolution encompasses both
IIoT and ML.
v Machine sensing of process
parameters and sharing them
instantly with processors is an
ever spreading phenomena.
v Dramatic reduction in price of
sensors and processors is
fueling the shift to smart
systems

14. Disruptive Innovations in Digital Supply Chains
v Pure Hardware is yielding place to
Smart Systems that carry embedded
software.
v Most products, devices and solutions
in future would be a combination of
hardware, sensors and software.
v Such a smart system product can be
fully self contained in function or
can be linked to a network for data
exchange and control action.
Smart Systems and their Advantages

15. Disruptive Innovations in Digital Supply Chains
v Firms can embark on a digitalization
journey for their products by
converting them to be smart
systems.
v It can bestow many significant
business advantages to the firm.
v Product functionality can be
customized to suit the needs of each
individual customer.
v Functionality upgrades can be
carried out remotely and instantly.
No need for site visits.
Smart Systems and their Advantages
a self driving car
a smart TV

16. Disruptive Innovations in Digital Supply Chains
v Service and Maintenance
monitoring can be done
remotely and can be
continuous.
v Some of the rectification
measures can be carried
out remotely.
v Product usage information
can be regularly updated
from far.
Smart Systems and their Advantages
a smart Elevator

17. Disruptive Innovations in Digital Supply Chains
v Firms can embark on a digitalization
journey for their products by
converting them to be smart systems.
v Above all, product design can be
radically altered to reduce variety
without compromising on
functionality
v Variety reduction is achieved by
optimizing built in hw features and
activating required functionality at
site through sw.
Smart Systems and their Advantages
a smart Phone
This would indeed be a disruptive
innovation through digital SC.

18. Inventory
Bench Staff
Unutilized
funds
Lost Sales
Opportunity
Retail
Firm
or
Outlet
Bank
I.T.
Services
Firm
The most significant problem for any firm is to sit on unsold
inventory while a sales opportunity is lost.

19. Other Contemporary Strategies to
Create Responsive Supply Chains
Disruptive Innovations in Digital Supply Chains
DEMAND SENSING
DIGITAL TWIN
AGILE
ADAPTIVE
ALIGN
Improved Supply
Chain Performance
• Improve Demand
Forecasting Accuracy
• Better Plan Execution
• Reduce OOS & lost sales
• Reduce Inventory Write Offs
• Optimize working capital

20. Disruptive Innovations in Digital Supply Chains
Daily sales
Consumer Promotions
Holidays
Weather (Temperature)
Festivals
Competitor actions *
Demand Sensing
The Need
Short Term
Events & Factors
Can
Disrupt
Supply Chain
Performance

21. Disruptive Innovations in Digital Supply Chains
The current method (Disaggregation)
typically assumes equal sales everyday
or a constant split
Demand sensing facilitates
giving a much more accurate
sales trend for a shorter horizon
An improved near term forecast facilitates …
better Inventory Management, reduced Out of Stock and improved
Fill Rates
Sales forecast Sensed Demand
Demand Sensing
Advantages

22. Disruptive Innovations in Digital Supply Chains
Demand Sensing
The Solution Approach
Traditional
Forecasting
• Past as a predictor of
future
• Stochastic Models
Demand Signal
Repository
• Demand Events (DE) &
Causals
• Internal Vs. External
ML Based Demand
Sensing
• Integrate Near Term Data
(DE led) for better demand
forecast accuracy
• Approaches – (1) Tweak
Near Term Forecast (2)
Adjust Near Term Plan
Demand Sensing …
Helps incorporate impact of near term demand events into forecasting or plan execution
... thereby helping move towards
... more hybrid models of demand forecasting & planning

23. Supply Chain Digital Twin –
The Need
Disruptive Innovations in Digital Supply Chains
SUPPLY CHAIN EXPECTATIONS
Continuous
Evaluation
of Supply
Chain
Changing
Socio-
Economic
Factors
Globalization/
Localization
Statutory
Changes
Proliferation of
SKUs and
short life cycle
Fast Paced
Technological
Innovations
Changing
Customer
Demographics
Rapidly
Changing Business
Dynamics
In today’s dynamic world of Supply Chain, it is imperative to
create a Supply Chain Digital Twin that can help keep the
Supply Chain Current, Contemporary and Optimized.

24. Supply Chain Digital Twin –
An Integrated Decision Support System
Disruptive Innovations in Digital Supply Chains
Strategic Network
Decisions
Multi Echelon
Inventory Optimization
Transportation
Optimization
Sourcing Advisories
& Decisions
§ SKU Profitability Analysis across Outlets
§ Cost to Serve Analysis & Simulations
SKU Segmentation
§ Sourcing Decisions based on Landed Cost Models
§ Dynamic Supplier Allocations based on LCO
§ Route To Market Decisions
§ Cost To Serve Analysis and Simulations
§ Truck Type determination
§ Dynamic inventory norms for product-site combinations
§ Simulation to validate the inventory policies and take
corrective actions
§ Add/ Remove Network Capacity (W/H, Plants, etc.)
§ Location Decisions
§ Contract Vs. Build Capacities
Decision Areas Typically Addressed by Supply Chain Leaders
Through Supply Chain Digital Twin

25. Supply Chain Digital Twin –
Solution Concept
Disruptive Innovations in Digital Supply Chains
Digital Mock Up Of The Supply Chain !
• A way to digitally master your supply chain
• SCNDO Tools like Llamasoft, JDA
• Digital Supply Chain Network Models with Associated Supply Chain Data
• COE Model – Central Team of Supply Chain Visualization, Optimization &
Simulation Expert

26. Conference Theme : ”Digitalization Strategy for Responsive &
Sustainable Global Supply Chain Management“
Thank You
IIMM / SCALE 2019
August 22,2019
Disruptive Innovations in Digital Supply Chains