Collaborative Planning, Forecasting and Replenishment (CPFR) is a supply chain practice that aims to improve forecasting and reduce inventory costs through collaboration between trading partners. It involves a 9-step process of strategy and planning, demand and supply management, execution, and analysis. CPFR provides benefits like improved forecast accuracy, reduced inventory levels and out-of-stocks. While it has been widely adopted in Western countries, implementation in India remains limited. The article discusses examples of companies like Warner-Lambert, Kraft, and Godrej that have successfully implemented CPFR and realized outcomes such as higher on-shelf availability and lower inventory costs. Challenges to CPFR adoption include partner selection

2. VOLUME 2 ISSUE 2 FEBRUARY 2013 . http://opepiimraipur.blogspot.in/
EMERGING COVER STORY SPECIAL
AREAS
IT AND LEAGILE
COLLABORATIVE TRENDS IN SUPPLY CHAIN 13
PLANNING,
FORECASTING AND AUTOMOTIVE E-COMMERCE AND
REPLENISHMENT 1 LOGISTICS 17
INDUSTRY 20
C P F R
WORK
ENTERPRISE ASSET INTERVIEW EXPERIENCE
MANAGEMENT 6
WITH IMPLEMENTATION
OF CORE BANKING
E A M
PRAVEEN IN SBI 31
SINHA 24 ROLE OF IT IN
OPERATIONS 35
HUB AND SPOKE
MODEL 10
RFID
REGULAR
IN INDIAN
& GURUMANTRA 37
HUB
RETAIL 28 CROSSWORD 39
SPOKE
MODEL
ON THE COVER
The dispersion of light in the cover page shows the fast paced growth that
every sector is experiencing in their operations & supply chains with the
support of Information Technology. The blue-colored gear in the cover marks
the strong and much required presence of Information Technology in
Operations. In the background we have binary digits "1" & "0" to indicate
digitization in the corporate world
PHOTOGRAPH COURTESY: TEJIT MITTAL DESIGN: MANOJ H

3. EDITORIAL
In today's dynamic business world, Raipur has listed down the potential benefits
organizations are changing their way of of RFID technology in retail sector and the
functioning by relying more on information issues limiting its implementation.
technology - information systems and The students have also written articles about
operations management are critical to every some of the contemporary issues including–
organization's success. IT infrastructure and ‘Collaborative Planning, Forecasting and
operations leaders are facing new and Replenishment (CPFR)’. This article
unforeseen challenges everyday and hence explores the various advantages which an
are required to keep themselves updated so organization can gain from it and the
as to convert these challenges into challenges in implementing it. We have
opportunities. The need to develop and continued the column 'Gurumantra' from
manage a flexible infrastructure has Strive Issue 3 and Issue 2. Two 1st year PGP
emerged as a top priority. students of IIM Raipur have shared their
work experiences in role of IT in varied
OPEP, the Operations and Supply Chain fields.
Club of IIM Raipur, through its e-magazine
'Strive', serves as a platform for the We are thankful to Prof. B. S. Sahay, Prof.
Students, Faculty Members and Industry Vinita Sahay and Prof. Ajit Prasad for their
Practitioners for sharing their knowledge in motivation and immense support & to Prof.
the field of Operations and Supply Chain OmkarprasadVaidya and Prof. Sumeet
Management. Gupta for teaching us the relevant subjects
in the field of Operations and Supply Chain.
This issue of Strive magazine focuses on the
role of Information Technology in We also thank all our authors for taking out
Operations. The magazine begins with an time from their schedule and contributing to
article by Mr. S Srinivasan, the CIO of TVS the magazine. My editorial would be
Infotech, who has given his insights about incomplete without acknowledging the
the role that IT has played in automotive support of Manoj, Sujitha, and Thousif in
sector operations right from the time it was bringing out this issue and the whole Team
introduced to its contemporary issues. Mr. OPEP for their commitment and dedication
Praveen Sinha, Cofounder and Managing towards the club activities.
Director, Jabong.com, through an interview,
presents his outlook about the use of IT in
the online retail industry. In the academia Akshay Agarwal,
section, Dr. Sumeet Gupta, a faculty Editor
member of Indian Institute of Management Strive

4. DIRECTOR’S MESSAGE
From a humble beginning in 2010, Indian Institute of
Management Raipur has seen its pioneer batch
graduating and joining reputed corporate houses across
the country as well as abroad. Student-run initiatives
play a major role in the process of achieving such feats.
OPEP, the Operations and Supply Chain Club of IIM
Raipur, has played a significant part in setting up this
platform. The biannual e-magazine ‘Strive’ started by
Prof . B.S. Sahay our students has been successful since its launch last
year. Three issues of Strive have already been released.
In the current issue, the focus is on role of information
technology in managing operations and supply chain.
This has brought efficiency and transparency in the
entire value chain with significant impact on the
bottom-line.
I wish OPEP a great success in their endeavor and hope
that you enjoy reading this publication.
Prof. B.S. Sahay
Director, IIM Raipur

5. EMERGING AREAS
COLLABORATIVE PLANNING, FORECASTING AND
REPLENISHMENT (CPFR)
Functioning, Advantages and Challenges of Implementing CFPR
[BIR BAHADUR SINGH]
The purpose of this article is to explain the functioning of the CPFR (Collaborative
Planning, Forecasting and Replenishment) technique in supply chain management system.
The article also focuses on the various advantages which an organization can gain from it
and what are the challenges of implementing it. Finally the article ends by citing some real
life examples of how companies are using this technique.
After winning the 2010 FIFA World cup of rupees hence the business houses are
when Casillas was asked, what was their continuously trying to increase the degree of
winning mantra the answer was a single collaboration as much as possible in order to
word “Collaboration”. The point which I minimize the losses. In the pasts we have
want to stress here is that be it in business, seen many great initiatives in the field of
football or anything the success of the team supply chain like JIT (Just-in-time), ECR
depends how better they collaborate? (Efficient Customer Response) and VMI
(Vendor Managed Inventory).
In 80’s there was a huge cry for green
sustainable environment as a result Volvo
launched green cars but the market’s “It is a business practice
response was opposite as a result Volvo had which combines the
a green inventory. To reduce this campaign
was initiated which proved successful. The acumen of various
increase in sales was wrongly interpreted trading partners in the
and production department and started
producing more green cars. As a result the planning and fulfillment
company again had a growing inventory and of customer demand”
hence the whole motive behind the
campaign failed. This shows how important
it is for different entities in a corporation to
Collaborative Planning, Forecasting and
collaborate.
Replenishment (CPFR) is the most recent
In a football match it may result to a game concept which came into existence from
loss but in business houses it costs million 1995 that “aims to enhance supply
FEBRUARY 2013 1

6. chain integration by supporting and assisting Phase-I Strategy & Planning
joint practices. It is a business practice The initial step is to Develop Front End
which combines the acumen of various Agreement - this step mainly concern
trading partners in the planning and with the creation of the unstructured
fulfillment of customer demand.” The basic documents that define the agreement.
idea is to create an environment in which the The Business modules allow partners to
trading partners share the information which define and measure specific Key
results in benefit of both the parties. Also we Performance Indicators. Planning through
can see the added advantage in CPFR is that the use of Information Technology
it answers all the aspects of supply chain ensures that all partners will have access
problems unlike the earlier approaches to the information simultaneously, while
where one approach only answers one the Portal makes all the data and
aspect. information visible across the whole
CPFR is nine step processes which can be supply chain. The next step is to Create
represented by a picture and is summarized the Joint Business Plan, after making the
below agreement it is obvious that a lot of
information will start flowing between
FEBRUARY 2013 2

7. the partners, but the answers to the all existing forecast or import their own
critical questions like who will get what? forecast based on the most up-to-date
When? Where? How? How much? will be information. Multiple forecasts can be
prepared to allow using a dominant
given by the joint business plan which
algorithm that takes into report the
was created by the consent of both the historical accuracy of different forecast
parties. Joint Business Plan also defines contributors. Exceptions are easily
the roles and workgroups. identified and when these exceptions are
identified, messages are sent to reconcile
unusual items. Each provider (partner,
• STRATEGY & PLANNING supplier, and customer) is a very
1 important part of the real-time
collaborative process.
• DEMAND & SUPPLY
2 MANAGEMENT Phase-III Execution
Sixth step of the process of creating
• EXECUTION
3
“CPFR provides an
• ANALYSIS ample of opportunity
4
for the managers to
Phase-II Demand and Supply remove the
Management inefficiencies of the
The third step is to create the sales
forecast; Collaborative forecasting is the supply chain.”
engine which drives the success of the
whole CPFR if suppliers have better
understanding into the retailers’ sales
order forecast is mainly dependent on
forecast they can plan their operation
better. In the subsequent steps again the causal information POS data and
same procedure is followed for order inventory strategies in order to forecast
what was followed for sales. If the which supports the shared sales forecast.
suppliers have better understanding into
the retailers’ order forecast they can plan Seventh step is of identifying exceptions,
their replenishment better. By the same actual results very rarely matches with
token, retailers can lower the frequency the forecast so to determine what is the
of their OOS conditions and mitigate their reason and why there is a deviation this
consequences by getting continuous
step is must. The output of this step is a
information about the replenishment
position. The next steps of identifying the list of exception things that are
exception and the resolution begins with recognized using the criteria framed in
order Forecasting’s statistical forecast, the front-end agreement. After
companies can create changes to an determining the exception we need to
FEBRUARY 2013 3

8. sort out the issue in the eighth step of the lowest data level. Also, while sharing the
resolving exceptions by querying pooled data any weak link in one partner can be
data and submitting results to change in fully exploited by the other which again
the order forecast. calls for a great trust between the parties
before going to the agreement. Below we
Phase-IV Analysis will show how some companies
Fourth and final phase mainly concerns implemented CPFR system.
with the order generation and delivery.
To maintain or to increase the customer Warner-Lambert & Wal-Mart
base, the very important thing is to timely Warner-Lambert was a American
delivery which means that the company pharmaceutical company which was later on
should stand on their promise of delivery acquired by Pfizer faced a problem in the
it will not only generate trust in the minds demand fluctuation of its products. The
of customer but also sets the benchmark demand fluctuation was mainly the result of
for the company itself. Wal-mart’s promotion. The only solution to
the problem was collaboration. The partners
There are lots of benefits of this system if shared the weekly forecast and worked
properly implemented some of them are together to resolve any variation which
occurs. Optimal application of CPFR
a) Improved responsiveness to consumer
aroused when other retailers joined Wal-
demand because of reduction of out-of-
mart in sharing their weekly forecast. This
stocks and shorter cycle time.
helped Wal-mart to keep effective inventory
b) Greater forecast accuracy - sharing a levels. Also it helped Warner-Lambert to
single forecast throughout the supply chain gauge market demands more effectively.
enables participants to benefit from
synergies. Also increased forecast accuracy
Kraft food & J. Sainsbury Plc
Kraft is a worldwide famous food
facilitates decrease in safety stock as a result
manufacturer and J. Sainsbury Plc is world’s
inventory reduces which further helps in
leading retailers. Both the companies were
cost production.
facing a major problem of out of stock
CPFR provides an ample of opportunity for inventory which resulted in loss of sales and
the managers to remove the inefficiencies of high inventory level across Kraft and J.
the supply chain. Europe and other western Sainsbury Plc’s supply chain. Both these
countries have already realized its potential companies adopted CPFR as a pilot project
and are exploiting this system to its full. and the results were breath taking on-shelf
However, there is certain area which poses availability increased by 20%.
challenge for implementation of this
technique. One of them is the selection of Super Drug & Johnson and Johnson
trading partner with whom the information Superdrug operates more than 700 stores
sharing because the confidentiality has to be throughout the United Kingdom. J&J is a
maintained and the collaboration must be at global American Pharmaceutical company.
FEBRUARY 2013 4

9. Superdrug faced a major challenge of Thus, we can see how CPFR is helpful in
trimming the inventory as per sales also; achieving the desired results in the supply
they wanted to improve forecast accuracy so chain of organizations. Though, west has
they started a pilot project with J&J with the adopted it but it is not being practiced in
use of CPFR due to similar culture of two India on a large scale. The advantages are
companies. As a result of the unmatchable. With the increasing IT power
implementation many future issues were in India we can say that sooner all supply
avoided due to proper highlighting of the chain managers in India will also be
issues. Superdrug’s also got the access for enjoying the wonderful technique.
the first time to a range of data which were
unavailable to them earlier. Superdrug also REFERENCES:-
saw a heavy reduction of 23% in RDC 1. http://www.decisioncraft.com
Cover (Present Stock on hand/Last week’s /dmdirect/cpfr.htm accessed
sales). on 01.01.2013
2. http://web.mit.edu/sheffi/ww
Godrej Consumer Products Limited w/documents/genMedia.theVa
Godrej implemented CPFR as a part of its IT lueOfCPFR.pdf accessed on
initiative which included Customer 31.12.2012
Relationship Management and Business-to- 3. http://www.ecr.no/data/f/0/7
employee portal. Godrej implemented the 0/62/2_2401_0/2001_a_guide_
project with a name “Sampark”. The to_cpfr_implementation.pdf
company appointed Accenture to design the accessed on 02.01.2013
IT roadmap for the project. It addressed 4. http://www.sccori.com/SCM/
various issues like overstocked distributors COLLABORATIVEPLANNINGFO
who were looking to reduce service levels, RECASTING.pdf accessed on
out of stock scenario due to unexpected 30.12.2012
demand. All these issues were solved to a 5. https://committees.vics.org/co
very greater extent with the implementation mmittees/cpfr accessed on
of CPFR and one of the remarkable 01.01.2013
outcomes was the better integration between 6. http://en.wikipedia.org/wiki/
the distributor & C&F (Clearing &
Collaborative_planning,_foreca
Forwarding) agents. Company also achieved
sting,_and_replenishment
a reduction in working capital of the
accessed on 01.01.2013
distributors.
BIR BAHADUR SINGH is a B.Tech in Electrical Engineering from NIT Silchar, after a brief stint at
Schneider Electric Infrastructure Limited he took admission in IIM Raipur as a Post graduate student.
His academic interest includes areas of Operations and Marketing. He can be reached at
pgp12014.birbahadur@iimraipur.ac.in
FEBRUARY 2013 5

10. EMERGING AREAS
ENTERPRISE ASSET MANAGEMENT
Integrating & Improving with EAM
[ANAND SIVAKUMAR J]
This article briefly looks into how Enterprise asset management integrates all the principal
interface of an organization namely, physical, financial, human, intangible and information
assets to strategically reduce the operational costs and improving both the value of the
organization and value provided by the organization. It also analyses how the emerging
technology can also be integrated with the existing systems to improve the efficiency.
Industries like utilities, manufacturing, and than costs. The standard practice of
real estate are capital intensive and physical Terotechnology is concerned with focusing
assets like equipments, buildings form a on the reliability and maintainability of
physical assets of an organization like
considerable proportion of their total assets.
machinery, equipment, plant, buildings with
They operate in highly competitive markets their selection, installation, testing,
and they know the harsh realities of commissioning, maintenance and repair with
operating in such markets. They deal with compilation of information on design,
high value assets and equipments and performance and costs. Based on the data, it
whenever there is a failure of these assets it also involved feedback to the original
costs them a lot and also disrupts their manufacturer to improve equipment design
and development.
business. As downtimes and idle time
become more and more expensive, both in As the companies were very much interested
terms of loss in production and revenue loss,
it becomes imperative for the organizations
to maximize the productive life cycles of "a combination of
assets via optimized operations management, financial,
management. engineering, and other
practices applied to physical
Enterprise Asset Management emerged in
the 1980's in Europe as Terotechnology. BS assets in pursuit of economic
3811 defines Terotechnology as, Now, the life-cycle costs ".
companies are focusing on profits rather
FEBRUARY 2013 6

11. in achieving high reliability of operational management system has to be seen in the
assets it became imperative to replace the context of getting the most out of assets of
word 'Terotechnology' with the more an organization at lower operational costs.
acceptable term ‘Enterprise Asset This can be achieved only when Finance,
Management' or EAM. The phrase Engineering, Operations and Maintenance
'Enterprise Asset Management' implied that are working together across the life cycle.
the achievement is a result of involvement
of the entire company. Operational Excellence can be achieved
when there is improved asset reliability and
An organization’s strategic plan will be to performance. By whatever name it can be
increase the profit which involves low called Terotechnology, Enterprise Asset
operational costs and better customer
service. The principal interfaces of an
organization namely, physical assets, “An organization’s strategic
financial assets, human assets, intangible plan will be to increase the
assets and information assets have to be
managed holistically. These interfaces build
profit which involves low
the important relationships between those operational costs and better
who work on these assets and those who customer service.”
ensure their availability.
Management or Operational Excellence- it
Any organization will face the challenges
can be achieved only by a significant change
like provision of high asset availability
in thinking and attitude at all levels.
without increasing the costs of procurement,
Now a days, accounting, HR and
identifying the critical assets and an
optimizing the asset maintenance strategy, manufacturing information functions are
improving asset efficiency, reducing standardized and consolidated by most
reactive maintenance costs and finally to companies using enterprise resource
decrease the Total Cost of Ownership planning systems, but very few companies
(TCO). A well planned strategy along with have integrated their calibration and
implementing appropriate solutions will
equipment management systems. The
ensure high availability of assets at low
maintenance costs, improved efficiency and integration of systems involves various
low Total Cost of Ownership (TCO) of dimensions, like integrating the systems
assets. horizontally over time axis, vertically
between lifecycle functions or integrating
To build an effective system, asset the systems across the enterprise. But
management system and quality achieving this level of integration involves
management system have to be combined to
implementing a very comprehensive
focus on the process of continual
improvement by following Plan – Do – solution.
Check – Act methodology of Deming.
Real time analysis of data and reporting
The concepts and duties of finance, across different systems connect individual
engineering, operations and maintenance asset performance with the entire business
must not be seen in isolation. A good asset performance by enabling the users to find
FEBRUARY 2013 7

12. out the 10 assets out of 10000 assets which Workflow can be approved, rejected,
require immediate attention. This escalated to high level, can be paused until a
information provides an understanding and specific job is done. And remember this
some valuable insights to make quality workflow management can be applied to all
decisions about where the employees are modules like finance, human resources, and
spending more time and which resources are operations in a single application without
being used at what level. This system also going for different ERP solutions.
provides the option of notifications, through
which the concerned operator or shop floor Asset descriptive attributes have to be
manager will be informed automatically standardized and structured in consistent
about the preventive maintenance activities, formats and values. Equipment Cataloging
warranty services etc. Based on this, staff serves the purpose. Equipment cataloging
can identify more efficient ways to operate enhances the asset management process by
the equipment, utilize and manage the assets
to get the best business outcomes.
“An integrated information
Retrieving data from different computerized system will make the data from
management systems used in different
different business modules like
business modules will take long time which
will not help us much in taking real time
physical assets to finance easily
decisions. Using an integrated information available and analyzable”
system will make the data from different
business modules like physical assets to
finance easily available and analyzable. A automatically combining attribute data into
common language is particularly important useful management information.
in modern enterprise systems wherein the In any database, we can easily search for
user will be empowered to inquire on and equipment by attributes such as model
make selected updates to his equipment and number, manufacturer using modern search
machinery data. The technical solution is algorithms like SQL. However, unless the
straight forward-simply define a common data is structured very well in the database,
set of tracking attributes and establish searches are going to be slow, unreliable,
validation tables and logic to enforce the particularly as the data volume grows
values. beyond a few thousand items. Structured
cataloging methodology will solve this
EAM provides us a single database where
problem.
even Vendor details, previous transaction
details can also be included. We can design Now, mobility technology also becomes a
our own customized approval system part of EAM. Companies are implementing
through workflow management where mobility solutions as a part of EAM, to
routing the workflow through the enable their technicians to access and refer
application is enough to approve the task. data on-site. This helps the employees to
FEBRUARY 2013 8

13. capture more data which can be easily telecommunications and oil & gas. Now,
entered into the system, which can be Organizations like TCS, Mahindra Satyam,
accessed by anyone who is using the system Genpact, IBM are offering these solutions as
in the organization. Integrated Asset Management (IAM)
solutions.
Dubai municipality’s public transport
system, manages the maintenance and REFERENCES
procurement of components and to monitor [1]. Ricky Smith, CMRP, Ivara
all processes relating to periodic preventive Corporation. (n.d.). Connecting
and corrective maintenance, spare parts and reliability to EAM.
equipment for its fleet of 2000 light and
heavy vehicles using EAM solution. [2]. Kennedy, S. (n.d.). Innovations in
CMMS and EAM are making life
EAM maximizes the value of critical easier for the plant maintenance
business and assets over their complete department.
lifecycles with workflows by providing best
practices that yield benefits for all types of [3]. Philip M. Parker, P. (n.d.). The 2009-
assets, including transportation, delivery, 2014 Outlook for Enterprise Asset
facilities, production, communications and Management Systems (EAM) in The
IT. Industry-tailored EAM solutions are Middle East.
available for nuclear power, transportation,
utilities, life sciences, government,
ANAND SIVAKUMAR J is a graduate in Production Engineering from Madras Institute of Technology,
Anna University. He worked in Engineering and Industrial Services of TCS for 3o months. He is
currently pursuing post graduate from IIM Raipur. His areas of interest include Operations. He can be
contacted at pgp12007.anand@iimraipur.ac.in
FEBRUARY 2013 9

14. EMERGING AREAS
HUB AND SPOKE MODEL
In IT-BPO with INDIA as “HUB”
[SINDHUJA A]
India has a major share of IT-BPO. With the strong base it can now leverage the position to
turn into a “Hub” of global delivery. Hub and Spoke Model is new to IT-BPO but it has been
put in practice in many industries. Indian IT can analyze the cases of Hub and Spoke in other
industries, develop some necessary skills, put all its strengths to work and attain the position
of “Hub”. The Hub and Spoke Model has many advantages over other outsourcing model.
Though it is not completely without disadvantages, implementation of this model would give a
strategic advantage to our country.
Tertiary sector in India is the fast growing market for IT. India can leverage all these to
and most contributing of all the sectors. move from an offshore site to a global
More specifically, in this sector, Information “Hub” for IT.
Technology- Business Process Outsourcing
(IT-BPO) has grown remarkably in the past The outsourcing in IT has evolved over
decade and acted as a catalyst for the growth time. It has changed from onsite in 1980s to
of the country. The phenomenon growth in offshore in 1990s to near-shore in 2000s.
this industry can be attributed to the Each one of this has a special purpose to
perceived cost advantage of outsourcing to serve. Onsite is best when the desired
India. Demographics, geography and customer interaction is high. Offshore
availability of skill led to this IT revolution. reduces cost to a great extent. Nearshoring
Though initially outsourcing to India was moderately reduces the cost while still being
seen as a way to cut costs, over years the close to the customers. Each has advantages
customers are realising that it is turning to and disadvantages. The new model that is
be a strategic driver. The vendors now are emerging in the field of outsourcing of IT-
not just providing services at low cost but BPO is the Hub and Spoke Model. It is a
also providing high quality services by multi-tier operating model with a
building strong expertise in technology, standardized governance structure.
operations, business-knowhow and In the Hub and Spoke model, “Hub”
management capabilities. India has emerged provides a single face to customers with
as the leader in IT offshore outsourcing with each “Spoke” as an extension to it.
a share of 55 percent in global offshore “Spokes” are distributed across various
FEBRUARY 2013 10

15. regions and provide services to the the Hub integrates all the services and
customers. The Hub and Scope Model is not provides to the customers.
a new model to experiment with. It has
already been successfully implemented in “Hub” in the Hub and Spoke Model is
various industries like automobiles, responsible for customer management,
quality and performance management,
electronics, consumer goods and aerospace. training and development, man-power
management and regulatory compliance. On
In aircraft industry, this model helped to cut the other hand “Spoke” has to meet the
down the production timelines. Also it performance expectations, manage local
helped the companies to concentrate on their projects and support the “Hub” on legal and
core competencies like aircraft design and tax compliance.
assembling while outsourcing the
component manufacturing. Few major Initially it is good to keep management
players in Consulting and Technology also activities at “Spoke” minimal with a
use this model. They split the process “Spoke” working under only one “Hub”.
outsourced into various components like But as time passes, there would be “Spokes”
voice, data, etc and routes these processes to addressing multiple “Hubs” by developing a
locations that serve them the best. Finally, management layer and finally the evolution
FEBRUARY 2013 11

16. would lead to a closely knit Hub and Spoke structures and harmonized and standardized
Model of operation. delivery system. They must ensure
compliance with global information security
Hub and Spoke Model mitigates of risk by standards.
locating in different locations. It takes
advantage of favourable tax and legal With good base in IT-BPO, increasing
structures of various countries, cost quality regulations, emergence of Tier-II and
advantage arising because of emergence of Tier-III cities, government initiatives (like
Tier-II and Tier-III cities and the high tax benefits for IT-BPO), developing
quality talent available at these locations. infrastructure, India has every chance of
Above all it helps to be close to customers being a global “Hub” for IT services. Many
so that their needs are well understood. Also leading MNCs of the world are considering
the cultural affinity helps the vendor offer a India as a “Hub” in their global delivery
better customer experience. Centralized strategy and developing spokes in other
training coordinated by “Hub” ensures a countries like Philippines, China, Uruguay
consistent employee quality. and Mexico.
The model however faces some challenges
like ensuring data security, addressing tax
issues, integrating services and managing References
the difference in regulatory environment, [1]. Greenbaum, J. (2010, May). Inside
culture and time zone. the Hub and Spoke Model.
Managing Automation , 25 (4), p. 14.
The companies that are planning to employ
this model for their business need to [2]. KPMG, NASSCOM. (2012). Hub
concentrate of few aspects before the actual and Spoke Model: A new Paradigm
implementation. They must build a globally for Indian IT-BPO Industry.
consistent brand, advanced technology, pro-
active location strategy, flexible governance
SINDHUJA A is a graduate in Electronics and Communication Engineering from University
College of Engineering, Osmania University. She is interested in corporate banking. She can be
reached at pgp12001.sindhuja@iimraipur.ac.in
FEBRUARY 2013 12

17. SPECIALS
IT AND LEAGILE SUPPLY CHAIN
Emerging IT Trends in the Application of Leagile Technology
[PULAK JAIN]
The article deals with the application of the Leagile system in companies and the role IT in
aiding this system. It talks about the emerging IT trends in the application of leagile technology
to gain competitive advantage.
Adding value to the shareholder by waste, including time, and to enable a level
generating higher revenue is the main schedule.” On the other hand Agility means
objective of any firm that can be achieved using market knowledge and a virtual
by providing service or product that fulfils corporation to exploit profitable
the customer requirements. Therefore the opportunities in a volatile marketplace. In
objective of the supply chain of any short lean is ‘supply what, when needed, but
organisation would be to ensure that it do this perfectly’, whereas agile aims at ‘be
satisfies the consumer requirements. Going first, fast and best’.
through the history of supply chain, craft
shop was the first supply chain that High level of product quality as well as the
delivered exactly what the customer wanted, lead time is an important requirement for
but it was done at a very high price. Henry both the lean and agile supply chain system
ford introduced assembly line for mass in order to satisfy the consumer demands. In
production of model T at low cost, but no lean system the lead time has to be small
choice was given to consumers. In the recent because the time is considered as waste and
times in order to gain competitive advantage should be removed, while in agile system
the companies are focusing on mass shorter lead time is required to fulfill the
customization and flexible manufacturing. In volatile customer demand as quickly as
the light of this requirement, lean and agile possible to gain competitive advantage. The
supply chain management are heavily following matrix shows that the key order
studied and adopted across the winner for the agile system is the availability
organisations. of the product to the customer whereas in
lean system it is the minimization of the
Lean supply chain management, first created cost.
at Toyota, focussed on reducing cost by
eliminating wastes (muda). Leanness means Leanness and agility in a supply chain do
“developing a value stream to eliminate all not have to exclude each other. Combination
FEBRUARY 2013 13

18. of these two concepts within the scope of (Mason-Jones and To will, 1997) wherein
one firm or a single supply chain can be the visibility of demand; by means of timely
called as ‘‘leagility’. Naylor et al. defined information sharing reduces complexity of
leagility as “the combination of the lean and control. Harrison and Van Hoek presented
agile paradigm within a total supply chain an integrated model for enabling the agile
strategy by positioning the decoupling point supply chain in 2005. It consists of four
so as to best suit the need for responding to a elements:
volatile demand downstream yet providing
level scheduling upstream from the 1. Market sensitive (or customer
decoupling point.” The decoupling point responsive)
separates the part of the supply chain geared 2. Virtual (or IT-based sharing of
towards directly satisfying customer orders information)
from the part of the supply chain based on 3. Process integration (of business pro-
planning. The decoupling point is also the cesses)
point at which strategic stock is held as a 4. Networked-based (partners with a
buffer between fluctuating customer orders common goal).
and/or product variety and smooth
production output. On the downstream side
of the decoupling point is a highly variable
demand with a large variety of products,
where as upstream from the decoupling
point the demand is smoothed with the
variety reduced. As shown in the diagram
below, the lean paradigm can therefore be
applied to the supply chain upstream of the
decoupling point and thereafter the agile
paradigm can be applied downstream from
the decoupling point as demand is variable
and the product variety per value stream has
increased. Market winners and market qualifiers for agile vs
lean system, source: mason-jones et al.
Stalk and Hout in 1990 warned of the
dangers arising from slow information lead- Effective supply chain strategies combine a
times in supply chains stating that “the range of approaches from operational
underlying problem here is that once flexibility(e.g., postponement, assemble-to-
information ages, it loses value... old data order (ATO), make-to-order (MTO), and
causes amplifications, delay and lead time (LT) reduction), channel
overhead...the only way out... is to compress alignment (e.g., contracts, vendor-managed
information time''. Overcoming these inventories (VMI), and efficient consumer
problems leads naturally to the concept of response initiatives (ECR)), and joint
the ``Information Enriched'' supply chain decision making through information
FEBRUARY 2013 14

19. deployment (e.g., point of sale (POS) data, Synchronizing all the essential IT activities
collaborative planning forecasting and to achieve supply chain agility is crucial. IT
replenishment (CPFR), and schedule enables a supply chain with a high degree of
sharing). The partners are cross-linked and visibility, connectivity, responsiveness, and
are all contributing to the value generated flexibility. Among different IT
for the final customer. competencies, IT integration and IT
flexibility are deemed to provide the most
Examples of IT that enhance supply chain obvious contributions to supply chain
capability are: agility.
 Mobile and wireless technologies for IT integration is defined as the extent to
real-time data collection which information systems are linked and
 Integration technologies (Web information is shared among different
services) for real-time monitoring of functions and supply chain parties, thereby
events through Portals effectively creating a virtual supply chain
 Business process re-engineering and (Knapp et al., 2006; Lin et al., 2006). IT
management tools for business integration helps coordinate supply chain
process automation and redesign of functions and partners through the sharing of
supply chain system or enterprise information related to demand forecasts,
system. production schedules, inventory, and
production quality that dictate supply chain
activities (Li et al., 2009). IT integration also
includes the exchange of knowledge with
partners up and down the supply chain,
allowing them to collaborate and to create
synchronized replenishment plans.
IT flexibility is defined as the ability of IT
infrastructure to adapt to both incremental
and revolutionary changes in the business or
business process with minimal penalty to
current time, effort, cost, or performance
(Conboy, 2009; Nelson et al., 1997). It is
characterized by
(1) Connectivity, which refers to the ability
of the information technology
component to attach to other
components within the organization or
with other organizations
(2) Compatibility, which pertains to the
Flow diagram linking Lean, Agile and Leagile
ability to share information across any
FEBRUARY 2013 15

20. information technology component financial, and information flows that need to
within the organization or with other be accurately and promptly delivered to
organizations reflect the status in the supply chain.
(3) Modularity, which denotes the ability to
add, modify, and remove information REFERENCES
technology components with ease and 1. Mason-Jones et al. (2000), Lean,
without negative effect on performance agile or leagile? Matching your
(Byrd and Turner, 2000; Fink and supply chain to the marketplace,
Neumann, 2009) International Journal of Production
research
2. Martin Christopher et al. (2000 vol.
5), Supply chain migration from lean
and functional to agile and
customised
3. Mason-Jones et al. (2000),
Engineering the leagile supply chain
4. Childerstone and Towel (2000),
Engineering supply chains to match
customer requirements
5. Moron, Haan (2011), Improving
supply chain performance to satisfy
Moderated by the effect of firm scale, IT final customers: ‘‘Leagile’’
competence acts as the foundation of supply experiences of a polish distributor
chain competence, in which IT integration 6. Eric W.T. Ngai et al. (2011),
supports a better supply chain integration Information technology, operational,
and flexibility, whereas IT flexibility and management competencies for
supports better supply chain advancement. supply chain agility: Findings from
Moreover, inter-organizational collaboration case studies
is important in achieving a complete IT 7. A. White et al. (2005), The role of
integration along the whole supply chain, emergent information technologies
which, in turn, supports supply chain and systems in enabling supply chain
integration and flexibility. IT has facilitated agility
the formation of global supply chain 8. Cheri Speier et al. ,The Role of
markets; changed the relationships among Information Integration in
customers, manufacturer, and suppliers; and st
Facilitating 21 Century Supply
accelerated and visualized the product, Chains: A Theory-Based Perspective
PULAK JAIN has done B.Tech in Electronic and Communication Engineering from IGIT, GGSIPU
Delhi. She is an avid reader of philosophy and fiction. She can be reached at
pgp12113.pulak@iimraipur.ac.in
FEBRUARY 2013 16

21. SPECIALS
E-COMMERCE AND LOGISTICS
Wind of change in the field of logistics
[POUSALI CHAKRABARTI]
One of the interesting definitions describes technology and starts using to its full
logistics as “having the right item at the potential, the stronger it makes it presence
right time at the felt in the
right place in the industry. IT-
right quantity to Operations
the right integration paved
customer” way for a faster
(Susan Mallik, and smoother
2010). The all- logistics industry
inclusive by reducing the
definition talks frequent errors
about the holistic and glitches.
nature of the
traditional business logistics – right from With the advent of e-commerce, nature of
production, procurement, distribution, business is undergoing changes. Along with
inventory management and of course it, the conventional logistics problems are
delivery across the entire supply chain. also changing. Earlier the process used to be
Logistics industry used to rely heavily on supplier driven, whereas now the drive
individual skill and dexterity of the comes from the customer. It is more of order
employees. Efficiency used to be thought as fulfillment rather than stocking. The good
an outcome of practice. However, with old logistics is getting changed. Typically, in
invent of technology, especially with Indian e-commerce industry, the back-end
information technology, revolution is operation is often outsourced to some
happening across the business sectors. logistics firm who would take care of the
Logistics industry also has become equipped physical supply-chain process with the e-
with new ways of doing things. In many commerce sites providing the user-interface
instances, manual labour has become with the front end operations. However,
eliminated or has been reduced significantly. there are a few players who do manage their
Skill requirement has enhanced as well, in own distribution network partially.
terms of grasp and capability around the In a conventional supply chain, there are two
new methodology. The new skill set distinct players in between the
required includes efficiency in using new manufacturers and the customers. In the e-
technologies; the faster one gets hold of the
FEBRUARY 2013 17

22. commerce business, the middle two layers available of the book. So, the various e-
are becoming more and more overlapping. retailers would eventually be competing for
In the conventional structure, the the share of an almost fixed pie. The more
warehouses used to be located in the the stock, the more profit a company would
distribution level of supply chain across make. The more profit a company foresees,
various places including both rural and the more discount it can offer. The more
urban locations. However, in e-commerce, discount is on, the more is the chance of a
the warehouses are often integrated with the money transaction by the customer.
manufacturing stage and are located in
outskirts of a medium to big city. According More and more e-commerce sites are now
to the order placed online, the goods are investing in strengthening their logistics.
moved to the exact locations in smaller They are cutting on the outsourcing. One
truckloads. The transportation has become prominent example would be Flipkart. As a
more frequent and less bulky. At the same start-up, it started in 2007 in the Amazon
time, the transportation need has become model. Becoming the most popular choice
more intensive because of the B2C for online book-retailers, Flipkart has
(Business-to-Customer) outlook. This shift ventured into FMCG, apparels and small
in the logistics eventually has impacted the and medium sized electronics as well. It has
whole supply chain. Since there is no now 7 warehouses across 25 cities to cater to
physical presence of retailers in e- the customers.
commerce, the retailing objective has been However, building your own logistics does
changed entirely. Instead of making a good not necessarily mean that you have to cut
physically available to the customer through down on outsourcing. Specially, in a
the intelligently planned retail layout, the country like India, where distribution has
retailers are attracting customers online always been an issue for some and also the
through pages. There too, competition is on competitive advantage for some others, it
for giving the customer more and more real does make sense to reach as many customers
life look and feel of a product. Order-to- as you can by all means. Naaptol has been
delivery time is also increasingly becoming following the same strategy of a mixed
a competitive feature for the various e- distribution. They are continuing to follow a
retailers. As a result, the onus is often on mixed model where they are outsourcing, as
these retailers so far the stocking or well as banking on the self owned delivery
inventory management is concerned for a mechanism for the last mile delivery.
particular product. For instance, let us take According to Naaptol, in Indian e-commerce
the example of e-retailing of a novel by context, the mix-model will rule for at least
Chetan Bhagat just before the launch of the a while as to have a fully self owned
movie made on it. It is expected that there logistics will need money and the revenue –
would be huge demand for the book. Since investment only manages to provide a slow
publishing rights would be restricted, there but steady support in the entire process.
would be a limit over the number of prints
FEBRUARY 2013 18

23. As far as the challenges are concerned, one also a supporting strong distribution so as to
major challenge in e-commerce lies in the minimize the order fulfillment gap.
geographically and demographically
dispersed traffic these sites cater to. In a It is true that e-commerce rejects many of
conventional retail based supply-chain the facets which were crucial for
system, it is comparatively easier to conventional logistics problems. For
understand your customers, their needs and instance you no more need to worry about
also to trace their purchase patterns. your physical shelf space, physical layout
However, in case of an e-commerce site, the design. But, at the same time, e-commerce
trend analysis could be difficult. Here comes also introduces many newer aspects to the
the demand of better analysis procedure. logistics problems. E-commerce calls for a
Often, the information provided by an online more dynamic, more versatile framework of
shopper is so minimal in nature, it is logistics. In order to achieve that, we need to
practically impossible to trace any sort of have an efficient data-collection and
correlation between his or her background analysis methodology. This, together with a
and purchase pattern. This problem qualifies dynamic and flexible implementation, will
to be a two-way sword as it puts you in a help us integrate the e-commerce and
dilemma whether to ask your customer logistics.
about personal information or to make the References:
process as hassle free as possible for the [1]. Susan Mallik (2010). Hossein Bidgoil.
customer. Bombarding the customer with ed. The Handbook of Technology
questions makes you lose to your Management: Supply Chain
competitors and otherwise you end up losing Management, Marketing and
the factor which connects your customer to Advertising, and Global Management,
you. We must also acknowledge the vol 2 (1 ed.). Hoboken, New Jersey:
dynamic nature of e-commerce in contrast to John Wiley @ Sons, Inc.. p. 104
the traditional business. Here, the customers [2]. E-commerce matures, players invest
are from varied background. Since, there is in logistics, warehouses, Business
no geographical boundary; the customer Standard
base is also continually changing. Challenge [3]. Anshoo Sharma, AEmerging Trends In
remains in correct prediction of the demand. Indian E-Commerce: On Logistics, No
One solution to mitigate the risk of faulty Poach, Payment Gateways & More,
prediction could be to switch to a dynamic http://www.medianama.com/2012/05/22
business model altogether. This model will 3-emerging-trends-in-indian-e-
ideally have zero or negligible inventory and commerce-on-logistics-no-poach-
payment-gateways-more/
POUSALI CHAKARBATHI is an Electronics and Instrumentation Engineer from Heritage Institute of
Technology. Her interest areas are Operations and Supply Chain. She can be reached at
pgp12032.pousali@iimraipur.ac.in
FEBRUARY 2013 19

24. FROM THE INDUSTRY
TRENDS IN THE AUTOMOTIVE INDUSTRY
The Journey of Automotive Industry with Information
Technology
[S SRINIVASAN]
Mr. Srinivasan S (Chief Information officer – TVS InfoTech) has over 38 years
of experience in materials management, corporate planning, manufacturing
planning, logistics and information technology in leading organisations in
India and Oman. In his tenure at Sundram Fasteners Ltd., he implemented
SAP at a dozen plants of various types and sizes and also handled all aspects
of IT, ranging from hardware and software to connectivity and special
applications.
Srinivasan is a B Tech from IIT Madras and an MBA from IIM Calcutta.
He was nominated by the Automotive Component Manufacturers Association
(ACMA) to discuss the methodology of data exchange with vehicle
manufacturers and was deputed by the Ministry of Commerce to UN-ESCAP
for understanding EDI and data exchange issues.
In the Indian context, while computers made If we were to broadly analyze the impact of
their mark in operations as much as half a Information Technology on business in the
century ago, there has been a profound shift automotive industry, we would see the
in their role in business. Earlier they were following phases. In the opening phase, the
confined largely to processing data in role of IT was almost exclusively to save
commercial areas such as payroll and clerical effort. This was marked by
purchase where their utility was seen in applications such as payroll and billing in
number crunching operations. On the other large organisations, where large mainframe
hand, today they are integrated to such an systems could compress the time for such
extent into the operation that the line documentation and bring high levels of
separating business and Information accuracy in mass scale work. The style of
Technology, is fast disappearing. doing business was however, completely
FEBRUARY 2013 20

25. unaffected. Next, with the advent of desktop number of users at different locations and all
systems in the eighties, the emphasis shifted could share information from the same
to empowering individual users to create database. Real time systems became the
their own local applications, which would norm and across the organization, the
bring relief to the user. This was based more integrity and consistency of information
on individual creativity and hence users were enhanced substantially.
developed applications more from the
viewpoints of their interest and ability. It is significant to note that through all these
Typical applications revolved around transformations, several areas were being
information that had to be submitted addressed such as cost reduction,
periodically to some authority such as daily information reliability, rapid developments,
material receipt or cash collection data. quicker processing and enterprise wide
Some relief was available to individual users participation. However a key aspect was still
but again, these were in pockets and did not missing. Information Technology is a very
materially alter the business scenario or the powerful tool and the ultimate benefit can be
overall working environment in any extracted only when the application directly
significant way. impacts business. One index is that final end
customers, outside parties, agencies and
institutions with whom the business
"Information Technology is a enterprise has a relationship should perceive
very powerful tool and the the benefit of technology and two, business
ultimate benefit can be extracted itself needed to go through a change, in
order to be relevant in the changing world.
only when the application From these viewpoints, several changes are
directly impacts business" occurring in the business environment that
can be traced to the powers of technology.
In the nineties, the emphasis shifted to the Having seen the various phases of IT
use of IT over a wider horizon, marked by applications in the industry, it would be
the introduction of larger applications such useful to examine in depth, some of the
as Enterprise Resource Planning and the use developments taking place as of now.
of advanced software in technical areas such
as planning, design, quality and The business process starts logically from
manufacturing. These helped to tackle some the customer and it would be interesting to
of the chronic issues such as, suboptimal see the developments taking place here.
decision through the use of inappropriate Customers demand immediate and complete
local applications, or, difficulty in churning information. In the automotive industry
out drawings and developments unlike the old days, this takes the shape of
expeditiously, with changing customer enormous choice of models, variants,
requirements. In addition, with the shift to colours and products, each of which is
larger servers with wide area connectivity, it processed appropriately so that the customer
became possible to give access to large gets delivery on time. This backward
FEBRUARY 2013 21

26. scheduling of customer deliveries is automation through either hand held devices
facilitated by complex dealer software that or through SCADA and similar technologies
absorbs inputs in the form of customer help to control groups of machines and their
preferences and translates these into outputs, as also to report production. Also
shipping schedules from the manufacturers. machine performances, downtimes and
In turn these are exploded further into part reasons are being captured through such
requirements from various suppliers so that avenues. Vehicle manufacturers insist on
they get a schedule for delivery of parts in a systematic documentation of production
seamless manner. through well defined processes and IT plays
a part in the generation of such documents.
Engineering and design software play a key
role in product development and in ensuring “Vehicle manufacturers insist
rapid turnaround of new products to gain on systematic documentation
competitive position in the market place. In
of production through well
addition to providing a design platform,
such tools are performing a range of defined processes and IT plays
comprehensive functions. These include a part in the generation of
a) Search mechanisms for locating similar such documents.”
products or tools to avoid reinventing the An area that is well addressed is planning at
wheel during a new product
the shop floor level as well as the enterprise
development,
b) Providing a framework for traceability level through advanced planning software
so that the complete history of design and Manufacturing Resources Planning
changes, their impact on the inventory of software. At the shop floor level, the
products, remedial action taken and final challenge is to optimize a deliverable such
resolution of inventory are all preserved, as customer satisfaction and to arrive at the
to enable future investigation. best manufacturing plan for the week,
Collaboration between suppliers and vehicle
month, quarter or the year. Complexity
manufacturers is the name of the game and
arises since the best plan to maximize sales
increasingly business processes are
may not maximize other parameters such as
becoming collaborative in nature. Areas
profits or customer deliveries or satisfaction.
include design and development where
While scheduling looks at these issues, MRP
customer and supplier cooperate over the
goes beyond, to generate or regulate orders
web electronically for product design and
for supply of materials and requirements for
development, submission of product data,
all the inputs necessary to make the final
display by manufacturers of supplier
product. Other developments that are
performance parameters and conducting
helping to bring sophistication in shop floor
transactions through portals.
operations include
Being the heart of an automotive enterprise,
a) Supplier portals that assist in interaction
manufacturing has evolved significantly in with suppliers through electronic mode
the use of technology. Use of shop floor for all transactions
FEBRUARY 2013 22

27. b) Quality control tools such as in- process material. To enable tracking of products
gauging, calibration software to monitor with high level of accuracy, several aids
the quality of gauges and statistical such as barcodes and RFID tags are being
quality control software for real time
employed in the dispatch and warehousing
quality analysis.
Shop floor material management and control process.
is a crucial area since day to day shop floor Finally we come to current developments
scheduling has to be based on the position of where technology and products have started
material availability. Demands by various to merge. With a view to vastly enhance the
agencies such as auditors, excise authorities reliability of vehicles, developments are
and customers are compelling organisations taking place wherein software will reside in
to have clear data on material movement the vehicle and operate, to close a vital need.
between manufacturing organisations and The simpler examples are where vehicle
their subcontractors and customers, as also controls can be made to respond to
accounting of rejections, scrap, individual drivers based on say fingerprints
reconversions and dispatches. With large or biometrics and everything from seat to
volumes of transactions involved, stock mirrors can be automatically adjusted based
status and monitoring has become a concern on the driver. The more advanced involve
area and this is a focal point for every applications using software embedded in
commercial and enterprise software. components such as engines or brakes so
With customers demanding Just in time that the component behavior can be
(JIT) based deliveries, there is a major need transmitted directly to say service centers,
to build complete transparency in the final which can diagnose faults and prescribe
delivery. This is required to empower field remedies.
personnel who interact with customers, to Thus, the impact of information technology
apprise them of delivery position. This calls in automotive organisations spreads not only
for total integration of data between into the management of its operations but on
manufacturing, transport and warehousing to the end product itself. Success of
organisations. A well executed integration organisations depends on their ability to
facilitates the tracking of consignments with foresee customer preferences, emerging
clear geographical location, from the business processes and other changing
moment they leave the manufacturing unit, requirements and adopt technology to
till the time the customer accepts the suitably close the gaps.
FEBRUARY 2013 23

28. FROM THE INDUSTRY
INTERVIEW WITH PRAVEEN SINHA
Co-founder and Managing Director at Jabong
Founding Jabong.com in the autumn of 2011, Praveen Sinha
envisions an online E-commerce portal that delivers the trendiest
and the fastest, while inducing a memorable customer experience.
The present sees him as MD and Co-founder of Jabong.com,
however, his past achievements bring to light someone who is considered a maven in
start-ups and a turnaround specialist. Having worked in companies like Microsoft, Maruti
and Mckinsey, he has also played a pivotal role in effectuating energy conservation
initiative across the span of Asia. In addition, known for a keen interest in new business
initiatives, like establishing Aquabrim, he exhibits an immense passion for
entrepreneurship that is highlighted in his frequent sharing of work experiences and
insights at various institutes like IIMs, XLRI, Great Lakes to name a few.
ENTREPRENEURSHIP investing in a start-up is a huge bet on
the team.
1. What were the reasons behind
taking up an entrepreneurship route 3. Could you please tell us about the
when you had the safety of a corporate idea that resulted in establishment of
life? Jabong.com?
The idea to start business was there After assessing the utility and popularity of
since my College days, during my MBA e-commerce in electronics market, I realised
in IIM C I started my first venture - that there was a huge scope in the arena of
Aquabrim.com which is still active and fashion and lifestyle. Given the economies
present in NCR and has plan to go to of changing lifestyle patterns, e-commerce is
national level. However finally, I left the future of retail and Jabong.com was
Mckinsey and got full time into start
established to capitalize on this huge
ups with Jabong.com as opportunity
was huge and I was prepared to take opportunity as I had a firm belief that India
the required risks and challenges was ready for it.
2. What are the factors that you would
look into while investing in a start-up? “One of the major challenges
that we faced was scaling up
I think investing in a start-up is about
believing in the quality of the team, the really quickly while
size of the opportunity and the maintaining the high service
scalability of the idea. While the idea
can be worked upon or pivoted, the core levels.”
team cannot be changed; hence
FEBRUARY 2013 24

29. WORK EXPERIENCE The scale of operations cannot be managed
without strong IT backbone. Maruti has a
4. Could you please explain the work strong IT system to support all its
culture at Maruti and McKinsey? Also, operations. In fact, IT has helped in multiple
what was your most important froms by not only bringing in efficiency in
learning from your experience in these operations but also reducing overall cost of
companies? operations.
Maruti as an organization takes pride in
OPERATIONS AND SCM
some of the best practices prevalent in the 7. What have been the major issues in
industry. The operational excellence and 5S the Operations and Supply Chain of
processes are the way of life at Maruti. Jabong.com and how have you resolved
Working with large teams under stiff them?
timelines and disciplined execution are the
key learnings for me.
One of the major challenges that we faced
Mckinsey, on the other hand, gave me an was scaling up really quickly while
opportunity to work on a varied set of maintaining the high service levels. From
assignments across industries. The challenge day one, we were clear that whatever we
was to walk into a company, understand the build has to be scalable. To achieve this, we
problem and turnaround quickly with adopted modular approach so that processes
workable solutions. Developing the ability could be replicated and scaled easily. We
to add value and create a significant impact designed the capacity on base load but
was the key takeaway for me. developed flexibility in the system to take
care of peak demand situations. We
5. What were the major supply chain leveraged technology wherever possible to
challenges faced by you while working automate or semi-automate the processes.
in Maruti Suzuki Limited? We also made adequate checks and took
measures through detailed and intelligent
Maruti’s operations thrive on efficiently run MIS reports which helped us in identifying
supply chain. One of the major challenges
our areas of improvement.
was to maintain the service level, given the
involvement of multiple stake holders and
operational complexities. “We have also built
6. Could you please give us some strong, cross-functional
examples on how IT is leveraged by
Maruti Suzuki to solve their issues in teams to ideate and
Operations and Supply Chain? improve processes.”
FEBRUARY 2013 25

30. 8. Jabong.com claims to deliver logistics management systems for in-house
products in top 10 cities within 48 operations. In addition, we have introduced
hours and to other places within 1-3 Mswipe facility at the point of delivery and
developed content management system for
days, while it is delivering products on
production.
the same day in metros like Delhi.
Could you please explain how 11. Wal-Mart has the largest
Jabong.com has achieved this information technology infrastructure
remarkable feat within one year of its of any private company in the world.It
inception? helps Wal-Mart to accurately forecast
demand, track and predict inventory
We have actually revolutionized the industry levels and create highly efficient
by offering same day delivery in Delhi NCR transportation routes. Is Jabong.com
and next day delivery in metros. It has been using any Demand forecasting tools so
a team effort and has been achieved by
strong co-ordination across functions like; that it can reduce inventory levels and
customer care for order confirmation, forecast demands effectively?
warehouse for order processing and logistics
for delivery. We have also built strong, Being in the e-commerce industry, we
cross-functional teams to ideate and improve have access to consolidated data
processes. involving clicks and page views on our
website. We have also gone granular in
9. Flipkart has started its own courier our customer segmentation. We have a
service, perhaps to reduce their dedicated forecasting team which uses
dependence on third party courier state-of-the-art methodologies and tools
to predict the demand based on the
services. Does Jabong.com have any
huge chunk of data as well as industry
such plans? trends.
JaVAS, which stands for Jabong Value JABONG.COM
Added Services has been operational for
almost as long as Jabong.com has been 12. Jabong.com is now the most
taking orders from customers. It is currently trafficked e-commerce site in India.
present in close to 50 cities. The same day What are the steps taken by
and next day deliveries mentioned have been Jabong.com to achieve this?
achieved through JaVAS.
10. Could you please let us know how We always believed in big bang approach to
enter the market and went for online
Information Technology is leveraged
advertising aggressively at the start of last
by Jabong.com in its Operations and year, which was complemented by presence
Supply Chain? in traditional advertising channels like
television and radio. We have strong focus
Information & technology is the backbone on organic growth through Google and
of our warehousing, customer care and Facebook which helps in driving hits to our
logistics operations. We have implemented web shop. Aligning all our operations with
ERP at warehouse and built CRM and these steps, we ensure customer delight
FEBRUARY 2013 26

31. which is a result of high standards in service Jabong.com believes that in the long run, e-
and product quality to help spread the commerce is a scalable and cost efficient
customer base and loyalty. way to reach out to maximum customers.
We do not plan to enter into offline retail.
13. How do you see the future of However, we have and may continue to have
online retailing in India, given the some strategic, located touch points to create
tough competition and thin profit awareness, establish customer connect and
margins? build trust.
E-commerce is still evolving in India and
the current players are focusing on “E-commerce is still
expanding the market i.e. getting more and
more end users to transact online. This is a evolving in India and the
long drawn process as it involves changing
habits. In this quest for new customers,
current players are
companies are offering free shipping, focusing on expanding the
returns, COD, etc which are impacting the
margins. In our view, after a few years, there market - getting more and
will only be a few large players and a set of
few niche players who would successfully more end users to transact
maintain profitability. online.”
14. How does Jabong.com
differentiate from other players in the GENERAL
e-retail segment?
16. What is the one advice that you
The DNA of Jabong.com is all about widest would give to young managers aspiring
assortment, speed, efficiency and process to join the supply chain management
excellence. We differentiate ourselves in sector?
being the first to get new styles and options
on our website, first to get the products Supply chain is about continuous
shipped to the customers and the first to improvement and operational excellence. In
refund customer’s money in case of returns. order to bring in significant improvements,
In the process, we have redefined the market it is important to get into the details of each
by introducing options like instant returns process, understand the involvement of
(open delivery), same day delivery in NCR stakeholders and work on incremental
and next day delivery in metros, instant improvements. It is very easy to fail in this
refunds, etc. And we have done it on a large sector; however, to be successful, one needs
scale. to work diligently and have strong checks
and balances. This sector gives huge
15. Does Jabong.com have plans to opportunity to create next level of service
enter into Brick and Mortar models of experience.
retail?
FEBRUARY 2013 27

32. ACADEMIA
RFID IN INDIAN RETAIL SECTOR
[PROF. SUMEET GUPTA & AKSHAY AGARWAL]
Prof Sumeet Gupta is a professor in the area of Information and Technology
Systems. His areas of research includes Management Information Systems
(Technology Adoption), Virtual Communities, Supply Chain Management. He Is a
member of Association of Information Systems, USA. He has numerous paper and
publications in the field to his name.
It was in the year 2005 that Wal-Mart made 1. Collision: RFID tag readers face
it mandatory for its suppliers to use RFID. problems when they 'collide' with each
In 2008, the Future Group incorporated this other. The signals from one reader may
technology in their operations through a tie- interfere with those from another, especially
up with Cisco Systems. Given that the when their physical coverage overlaps.
technology isn’t new, and has huge potential
to tackle many issues in modern retail 2. Lack of allotted frequency band: RFID
sector, its penetration has been rather slow. works on radio waves, which are regulated
by the governments all over the world.
RFID tags were first used commercially in There exists no international agreement on
1960s by Sensormatic, Knogo and the frequency band to be allotted for RFID.
Checkpoint which developed systems to Given that this technology can heavily
counter the theft of merchandise. At that change the face of supply chains globally,
time, they could only detect the presence or this is a huge hindrance in the way of its
absence of tags; however the tags could be global adoption.
made inexpensively and hence were quite 3. Signal detection and interference: The
effective in reducing pilferage. These RFID tags also have a tendency to interfere
systems were known as Electronic Article with each other's signals, thus making it
Surveillance (EAS).Over half a century difficult for the tag readers to detect them.
later, widespread application of this Adding to the difficulty, the signals are
technology is still in its nascent stage. partially blocked by certain types of
packaging materials, metals and liquids.
Issues
The various hurdles on the way of wide On the other hand, the following are the
acceptance of RFID systems can be managerial issues:
categorized as either technical or
managerial. The major technical issues are
FEBRUARY 2013 28

33. 1. Lack of Technology Standards: Many on pellet-level, box-level or container-level
organizations prefer to have their own in such cases, thus limiting its capabilities.
proprietary RFID systems because of the
fear that their RFID tags could be read by
their competitor, leading to a serious leak of APPLICATIONS
sensitive information. Thus it has been very
difficult to reach a consensus on a universal Now let’s have a look at some well-known
technology standard for RFID. applications of RFID in retail sector:
2. Lack of Acceptance by Supply Chain 1. Out-of-stock Warning: Stock out is a
Partners: Even a giant like Wal-Mart had bigger evil than excess inventory in retail.
faced some difficulties in implementing RFID tag readers can detect the number of
RFID in its supply chain due to resistance units of each SKU on the shelf in a retail
from some of its supply chain partners. store in real time. This enables the
RFID might not make sense to everybody, implementation of an out-of-stock early
especially given the high initial costs of warning system. This system can also be
implementation. integrated into a vendor-managed inventory
platform. The same concept would work in
3. Returns on Investment: Implementation warehouses, thus benefitting the whole retail
of RFID usually costs a lot and the break- supply chain.
even period and returns on investment might
not be acceptable for every retail business. 2. Shoplifting: Shrinkage, i.e. unaccounted
losses in retail, is perhaps the most daunting
4. Customer Privacy: Some of the reality for retail businesses, and its major
applications of RFID come with a baggage – cause is shoplifting. It should also be noted
customer privacy issues. Hence a lot of that the RFID usage mostly seen around us
contemplation has to be done on these relates to security of the merchandise, which
aspects. shows that the benefits of RFID in this
aspect already exceed the investments.
5. Data Management Problems: RFID
systems generate a lot of data in real time. 3. Supply Chain Visibility: The ability to
Managing this data would require major detect each unit or pellet of each SKU in
changes in the data structures of master files retail setup as well as warehouses and even
to maintain consistency across the firm and during transportation (RFID readers can be
its value chain participants. placed in the vehicles and connected to the
GPS) can be translated into very high
6. Expensive for Low-Value Merchandise: visibility across the supply chain. This helps
The cost of RFID tags varies from Rs.5/- to in combating the dreaded bullwhip effect,
Rs.100/-, largely depending on the type – making better forecasts and avoiding
passive (not self-powered, derives power shrinkage and other losses in the supply
from the signals of the tag reader), Active chain.
(completely self-powered) and Semi-
passive. Even the cheapest RFID tags would 4. Rapid Inventory Counting: Inventory
not justify their item-level application on counting is an essential exercise in any retail
low-value merchandise like small toys, business to avoid or at least detect
chocolates etc. Currently, the tags are used shrinkage. It is executed very frequently in
FEBRUARY 2013 29

34. high-value retail businesses, eg. once every It is also technologically possible to identify
24 hours in some jewelry retail outlets. But how customers observe and react to different
even in FMCG retail, it is done once every items on offer in the retail store. For
few months. Needless to say, inventory example, for a particular SKU’s trial pack,
counting is heavy on both manpower and the number of times it is picked up and
time. RFID can make this process very placed back on the shelf can be determined.
quick and easy.
2. More Efficient After-Sales Services:
5. Rapid Check-out: Though shopping in The ability to uniquely identify a particular
an organized retail setup has become a product can be used to create a history of its
means of social interaction and recreation service which is easily accessible. This
for many consumers, it also has some trade- would be something similar to sharing of a
offs, and the worst, undoubtedly, is waiting person’s medical history across different
in a queue for checking out. The currently hospitals for better diagnosis.
popular UPC (Universal Product Code)
barcode system makes a particular Though we have a long way to go before the
alignment of the barcode with the barcode huge potential of RFID is identified and
reader necessary for proper detection and utilized by the retail industry, the hopes have
reading. This, and the fact that each item in gone up owing to the recent developments in
the shopping cart must be read individually, “FDI in Retail” and the efforts of
constitute a major part of the waiting time of organizations like EPCglobal Inc.
the customers. RFID system would allow
almost immediate check-out and virtually Acknowledgement: The author
zero waiting time by reading all the items in acknowledges the help and support from Mr.
the shopping cart instantaneously and in one Akshay Agarwal, a student at IIM Raipur.
go.
References
There are also some potential applications of
RFID that are not so obvious, like: 1.Sumeet Gupta, Sanjib Pal; An Analysis of
Issues and Possible Remedies in the
1. Identifying Consumer Behavior Adoption of RFID in Retail Chains of India,
Patterns: This is already being done with in Cases on Supply Chain and Distribution
the help of membership cards by recording Management, IGI Global, Eds.
and analyzing the buying patterns of the MitiGarg&Sumeet Gupta, Pgs. 387-400.
respective customers (card-holders). To go
further, RFID tags can be embedded in the 2.http://articles.economictimes.indiatimes.co
smart shopping cards, and then the presence m/2008-03-25/news/28387628_1_retail-
or absence of the respective customer in the biggies-future-group-future-in-hypermarket-
store can be detected. In fact, it is possible to format
track even the movement of the customer
within the store. This data can throw up 3.read.pudn.com/downloads165/doc/comm/
new, fruitful insights in consumer behavior. 755010/RFID.doc
FEBRUARY 2013 30

35. WORK EXPERIENCE
IMPLEMENTATION OF CORE BANKING IN STATE BANK OF
INDIA
[SHWETA MALLICK]
A graduate in life sciences from Patna University and has an experience of working with both SIDBI -a
financial institution and SBI for more than five years. She is presently pursuing her PGPM from IIM
Raipur. Her areas of interest are corporate banking and business strategy. The author can be reached at
pgp12041.shweta@iimraipur.ac.in
With the advent of private-sector banking, centralized core system implementation ever
banking sector witnessed implementation of undertaken. It included the conversion of
modern centralized core banking systems approximately 140 million accounts held at
and electronic delivery channels that 14,600 domestic branches of SBI and later
allowed introduction of new products and also at its affiliate banks. Unlike private-
provide greater convenience to customers. sector banks, SBI has a dual role of earning
Due to which, the private-sector banks profit and expanding banking services to the
attracted the major chunk of middle and population throughout India. This tradition
upper-class customers at the expense of of "banking inclusion" later posed a major
existing old public-sector banks. Foreign challenge to core banking implementation.
banks such as Standard Chartered Bank and
Citigroup used their advanced automation SBI had undertaken a massive
capabilities to gain market share in the computerization effort in the 1990s to
corporate and high-net-worth markets. To automate all of its branches when it
remain competitive with its private-sector implemented a highly customized version of
counterparts SBI began the implementation Kindle Banking Systems' Bank-master core
of a centralized core banking system in banking system. However due to the
2002. The State Bank of India selected Tata extensive use of local processing and the
Consultancy Services to customize the lack of reliable telecommunications in some
software and to implement the new core areas, it deployed a distributed system with
system, and also to provide ongoing operations located at each branch. In 1992, it
operational support for its centralized had just one fully-computerized branch - at
information technology. Nariman Point. During next ten years, it
computerized about 4,000 branches. By
The implementation of the Tata Consultancy 2004, it managed to complete its
Services (TCS) BaNCS-24 Core Banking computerization drive by connecting all of
software at the State Bank of India (SBI) its 9,000 branches (then). The
and its affiliate banks represents the largest computerization task has often been
FEBRUARY 2013 31

36. compared to something like repairing a car bank in the world was processing on a
engine while it is running. SBI now boasts centralized basis. Also, the bank lacked
of 14,000 plus computerized branches, apart experience in implementing centralized
from a heavy balance sheet to the tune of Rs systems, and its huge employee base took
13.35 trillion. It now has about 8.96 million great pride in executing complex
Internet banking customers out of the 154 transactions on local in-branch systems. This
million savings bank account holders. More practice led to a doubt whether the
than 22,000 SBI ATMs across the country employees would effectively use the new
today serve customers. In 2011-12, SBI system or not. Another challenge was
again topped the charts in terms of growth in meeting SBI's unique product requirements
operating profits at 24% as against 14-16% that would require the bank to make
recorded by ICICI Bank and HDFC Bank extensive modifications to a new core
Ltd. banking system. The products range from
gold deposits (by weight), to savings
In 2002, it approved the KPMG- accounts with overdraft privileges, and
recommended strategy for a new IT activities like posting of extraordinary
environment that included the number of passbook savings accounts
implementation of a new centralized core amongst others. The services it provides
banking system. This then encompassed the vary between extremes from boutique
biggest 3,300 branches of the bank that were banking to mass banking in rural areas.
located at major places.
“In 2005, the bank suffered a
The main objectives were:
 Delivering of new product capabilities
loss of transactions for about
 To unify the processes across the bank to three days, when the nation
realize operational efficiencies and fell prey to the Tsunami as no
improve its customer service
 Provide for a single customer view of all
separate hubs were established
accounts and there wasn’t any disaster
 Ability to merge the affiliate banks into recovery plan in place.”
the State Bank of India
 Support for all SBI existing products and The migration of existing software Bank
provide for developing new ones Master and Credit Information System for
 Reduced turnaround time and controlling Loan & Advances (CISLA) to single
the customer attrition software of BANCS – 24 was a challenge.
The bank faced several extraordinary The branches were migrated from local
challenges in implementing a centralized server to servers situated at CBD, Belapur. It
core processing system. These challenges was difficult to manage as now the branch
included finding a new core system that had to deal with the suspense/dummy
could process approximately 75 million accounts managed at central as well as local
accounts daily — a number greater than any level. There was a lot of duplication of data.
FEBRUARY 2013 32

37. ATMs which were initially connected with Tsunami as no separate hubs were
the local server at branch were now to be established and there wasn’t any disaster
connected with the central server and entries recovery plan in place. The organisation was
pertaining to disputes now to be handled by midway in the transition between
the central team. The basic transactions of Bankmaster and BaNCS -24 and thus
clearing and funds transfer to other branches suffered huge loss in business and repute.
which initially would have been done Also, as the employees were not fully
through suspense accounts and taken acquainted with the technology, frauds took
days/months to reconcile were now online place in the branches wherein the funds
and any wrong entry would have created from internal accounts of Bank were
havoc for the customers. Account opening misappropriated due to lack of track and
process which was best at the local level as supervision of suspense accounts (inter
branch was sure about the credentials of the branch funds transfer, charges accounts,
customer, now needed a thorough interest payable/receivable accounts etc.).
verification as customer could transact from The banks were not only supposed to train
any part of the country. Overall, the bank staff on IT security, but also to educate their
was now more vulnerable to mistakes customers on compromise of passwords and
caused by non-reconciliation of entries, any ATM pins. Phishing, spam attacks and
erroneous data entered and the risk of fraud cloning of cards were now the challenges
was higher than in the earlier system and faced by the banks.
could send a panic wave across the The contract for the initial project was
organisation and a bad repute among the completed in May 2002 and the target was
customers. Apart from this, branches which to complete converting 3,300 branches by
migrated from manual transactions to mid-2007. TCS then began a gap analysis
computerized environment faced lot more effort to determine the required software
challenges in installation of hardware / changes to the BaNCS-24. The changes
software, training of employees and included installing required interfaces with
managing network – WAN/Leased Lines more than 50 other systems as well as
were major challenges. As the branches making enhancements to support the bank's
were spread across country ranging from product requirements. They placed a priority
planes to hilly terrain, geographical on the needed changes that would allow
constraints came across as one of the factors branches with high-net-worth individuals
that the bank kept in mind while setting up and then corporate accounts to be converted
its branches and ATM network. Constraints as soon as possible. The primary data centre
ranging from installation of V-SAT to was established at Navi Mumbai and a
arranging the leased line in interior parts of backup centre was established at Chennai.
the country for smooth banking experience The bank then also decided to extend this
to the locals were severe. In 2005, the bank core banking implementation to include all
suffered a loss of transactions for about of its (then) eight affiliate banks. TCS
three days, when the nation fell prey to the created a separate processing environment
FEBRUARY 2013 33

38. within the Mumbai data centre used to Several critical factors contributed to the
provide support SBI. The conversion effort success of the SBI core banking
for each of the affiliate banks spanned 18 to implementation:
24 months. The branch conversions • Senior management commitment
overlapped among the banks, allowing all • Staffing and empowerment of project
the affiliate banks to be converted in 30 team
months. • Ownership by business heads
No matter what application/technology an The bank has further launched various
organisation adopts, it is the people who will platforms to reduce human intervention and
be required to enable the effective provide for increased automation to serve
implementation and smooth transition of anywhere, anytime like mobile banking
products and services toward new systems. (though, IMPS (Inter Bank Mobile Payment
Employees need to gain education and Services) facility is yet to be fully
expertise in these systems to enable the functional), internet banking, offering
banks to leverage on the investments and several value-added services through their
convert them to returns. It has been observed electronic channels such as tax collections,
that large technology initiatives usually face trading, bill payments, and viewing demat
a lot of resistance to change and low accounts, electronic funds transfer etc.
acceptance by the employees and therefore The various electronic delivery platforms
become the main reason for the failure of have helped the bank to reduce the crowding
such implementation. Bank needed to focus of lobbies, transactional cost of branches
their efforts on the training and education of and also the stationery cost of vouchers &
employees to enable the successful instruments incurred. The technological
implementation of their information advancement has helped in reduction of
technology and convert the heavy cost customer complaints. The new core system
incurred into returns. In SBI, where many of has resulted in benefits throughout the bank
the employees were about 50 + years, for both the customers and the employees of
adoption of technology and its SBI. The new core banking system has
implementation been a major challenge. allowed the bank to redesign processes,
Apart from the employees, the bank is still establish regional processing centers, and an
facing an uphill task in convincing its increase in employee productivity.
customers to increase the usage of net Implementation of the TCS BaNCS system
banking/mobile banking services offered by has provided the bank with the ability to
the Bank. consolidate the affiliate banks into SBI.
FEBRUARY 2013 34

39. WORK EXPERIENCE
ROLE OF IT IN OPERATIONS
Learning from the IT industry
[VIRINCHI ACHARALU M]
As time passes, it can be observed that a Russian data was not integrated in to this
luxury becomes necessity. Telephones for application till then. If it is done data size
example which once were luxury is a increases up to to 10-11 terabytes. The
necessity now. Imagine a company which current application does not have capacity to
operates millions of transactions and handles handle such a huge data. A huge investment
terabytes of data every day. You can simply is needed to increase its hardware capacity.
state that there is no choice. Information However, an innovative solution was
Technology has a huge role to play in day- proposed. The requirement would be
to-day operations of such a company so fulfilled with a small change in report
much so that, you have to change your way design. However, this needed a change in
of operation in accordance with its Business process. A new way of classifying
limitations. its retail stores had to be done. This solution
Based on my experience in an IT company I reduced data by 85% saving huge amount of
would like to share some insights in to how money. The company adopted it.
IT plays an important role in day to day
Operations of a company like its Business The learning is that there can be a situation
Process, investment on IT infrastructure, where Business process of a company was
negative aspects and new trend that is changed to accommodate the limitations of
emerging. IT, thus illustrating how important its role is
in Operations.
1. IT & Business Process
During my tenure in an IT company, I was 2. Investment in IT
managing data warehouse system of world’s The same company reduced spending in IT
leading manufacturer of sports goods. It has during 2008 recession. A huge IT system
operations all over the world and all was initially not maintained and later
transactions were handled by tailoring managed by only 5 engineers because of
systems to the local way of doing business. lack of budget. The result is that 50% of data
However, senior management needs reports was not useful. But when the economy
that integrate data from all over the world in recovered the company had to spend huge
a predetermined format. This was amounts of money to make use of it
implemented using SAP Business effectively. Today the same system is
Intelligence. This application used to handle maintained by 30 engineers. It is used for
7-8 terabytes of data. many activities like replenishment of stores,
FEBRUARY 2013 35

40. decision on offering discounts, planning for inflated bills. The main reason was company
opening new stores, comparing various did not pay proper attention to data
stores etc. The conclusion is even though migration from legacy system to new
company ignored some of its IT system. There was a script that ran for hours
infrastructure in short term, they came back to migrate data which stopped abruptly
rescuing it as soon as they can emphasizing because of insufficient hardware
its importance. infrastructure and loaded inconsistent data.
So much effort was invested in to load the
IT is also used for very short term purposes. data while the solution was simply to
For example this same sports manufacturing implement effective code in the script. By
company had a huge investment opportunity the time it was identified junk data was
during 2012 London Olympics. They already live in production system.
expected a sudden surge in the sales but for
a very short term. To tackle such a situation The learning is that you can’t ignore any
they developed IT solution for a very short step of IT development and it is very crucial
term. The investment proved to be useful. to identify the underlying reason for a
Sales as expected were so high that existing problem.
infrastructure would have never supported it.
4. Emerging trends of IT in
The learning is that IT plays a vital role operations
while trying to exploit an opportunity. IT product developers have been releasing
standard Industry specific packages so that
3. Negative effects of IT on
you can just do little customisation and start
operations using it. Today companies are a step ahead
While working for Energy Utilities wherein they are forming strategic alliances
Company in US our team was called for an with IT product producers, where even
emergency meeting early in the morning. before the product is released it is tested for
Issue was, Employees had their salary adaptability for their organisation. Recently
credited one day in advance. Reason was I have seen a major manufacturing
that the newly implemented HR solution company, IT product Development
was not tested properly. Imagine the impact Company and IT consulting company all
of it for a multibillion dollar company with were working together for the release of the
more than 10000 employees. The conclusion new version of the packaged software.
is if not properly handled in all steps IT
implementation will seriously hamper your The learning is that IT is expanding its role
operations. in operations across industries.
A government sector company in India once I would like to conclude that IT has multi
implemented major changes in its system dimensional affect on operation of any
architecture for efficient billing mechanism. major player in any Industry across the
They received many complaints about world
FEBRUARY 2013 36

41. GURUMANTRA
CLOUD SUPPLY CHAIN
THE GURU ANSWERS
Q) Sir, the term Cloud Supply Chain has Q) Why is there so much furor around
generated a significant interest among cloud computing?
supply chain enthusiasts in the recent A) Cloud computing offers many
times. What does it refer to? advantages over the traditional IT models.
A) To understand the underlying concepts of Some prominent ones are:
Cloud Supply Chain, let’s begin with an
1. Very low initial investment since
introduction of cloud computing. Cloud
developing the IT infrastructure and
computing refers to the use of computing
manpower is not required to a large
resources as a service, that is delivered over
extent. Also, the need of buying
a network, usually the internet. Supply chain
expensive software is eliminated.
has emerged as one of the biggest
2. Very flexible model, and hence easy
applications of this model, and a supply
to for expansion and reap the
chain using this model is called a Cloud
benefits of economies of scale.
Supply Chain.
3. Very convenient payment options,
Q) Interesting, but can you explain in like one-time-payment and pay-as-
simpler terms? you-go.
A) Imagine that you are operating a 4. Easy access to the data as well as
computer or a mobile handset with an monitoring of projects on the cloud.
internet connection. You can run a program 5. Low manpower investments – less
or store a file on the internet without using training and less number of people
the computing power or disk space of your required.
device. For example, any online service that
Q) And where does Supply Chain come
convers a document from one format to
in?
another is called as SaaS (Software as a
A) A usual problem in any supply chain is
Service). Google Drive allows you to store
that the different partners – suppliers,
your files on Google’s servers. It can be
manufacturers, distributors and retailers, use
categorized as STaaS (STorage as a
different software platforms to collect and
Service). Both of these are different types of
analyze various kinds of information and
cloud computing services.
data. This makes the integration of the
supply chain data a difficult task. On the
other hand, when all the supply chain
FEBRUARY 2013 37

42. partners are on the cloud, the relevant data specific part of the supply chain. This has
from each other is accessible to them. The worked in favor of some companies who
improved supply chain visibility makes it specialize in and are reputed for such
services. Some examples are Salesforce
more efficient and well-armed against
(Customer Relationship Management),
bullwhip effect and other such problems. AMAC Logistics (Transportation
Management), Lighthouse Systems
Q) Please elaborate on the benefits of
(Manufacturing Execution Systems) and
cloud to a supply chain. eBizNET (Warehouse Management).
A) The data-accessibility and high degree of
visibility in a supply chain allows it to Q) Is there any pitfall of cloud supply
chain?
1. Make better forecasts
A) There are some concerns regarding the
2. Identify gaps and react quickly to security of the data stored on cloud. Since
plug them the leakage of the supply chain data, say
3. Better and quickly identify the shifts through hacking, can be highly detrimental
in customer demand to a company, many organizations are still
4. Minimize bullwhip effect “on the fence” when it comes to
5. Work with lesser inventory and implementing cloud in supply chain. They
don’t trust a third party service provider
higher service rate
with the sensitive data.
Besides, as discussed before, the cloud Another risk is that any technical fault in the
model benefits each partner by rationalizing system would do more damage to the entire
the IT resources and providing a lot of supply chain than in case of the traditional
flexibility. IT models. High degree of maintenance is
Q) Can you name some companies who required to avoid such problems.
are operating on cloud supply chain? References
A) The list would be huge, but some 1. http://finance.yahoo.com/news/renau
prominent organizations who have recently lt-moves-export-supply-chain-
moved their supply chains to cloud are
110000711.html
Pfizer, Renault and P&G. Nonetheless, there
are ample media reports suggesting 2. http://www8.hp.com/uk/en/hp-
significant improvements in their supply news/press-release.html?id=1330013
chains and hence competitive advantages 3. http://www.verio.com/resource-
that cloud has brought to them. center/articles/cloud-computing-
benefits/
Q) Who are the major players
4. http://mobiledevices.about.com/od/a
providing cloud services for supply
dditionalresources/a/Cloud-
chains?
Computing-Is-It-Really-All-That-
A) Some well-known players are Oracle,
SAP and JDA. Also, since each supply chain Beneficial.htm
is different from another, many companies 5. http://en.wikipedia.org/wiki/Cloud_c
prefer to use cloud services for some omputing
FEBRUARY 2013 38

43. REGULARS
CROSS WORD
Across
3. The registering and tracking of parts, processes, and materials used in production, by lot or
serial number.
4. This allows you to expand your wireless local area network into an asset tracking system
6. Type of analytics software that tells a manager what's going on in his supply chain now
7. First Indian company to create a hub and spoke distribution model in the express package
industry in India
11. A wireless locator device for high-value cargo that provides real-time tracking data for
increased security and is the first device of its kind to meet FAA specifications.
FEBRUARY 2013 39

44. 12. Systems link management functions with engineering, manufacturing, and support
operations.
13. A computer software system used in a number of industries for order entry and processing.
16. Type of warehousing which refers to the use of the voice direction and speech recognition
software in warehouses and distribution centres.
17. Software system which aims to control the movement and storage of materials within a
warehouse and process the associated transactions.
Down
1. The system that allows suppliers to access large amounts of online, real-time, item-level data
to help those suppliers improve operations
2. DHL's temperature monitoring technology device piloted to customers from the food and
pharmaceutical companies to ensure every shipment is kept at a specific temperature without the
need of opening the packages.
5. Management software systems that enable shippers to automate planning and execution,
connect electronically with carriers, and reduce freight costs though optimal mode selection and
optimal carrier assignment
8. A type of two-dimensional bar code initially introduced in automobile industry. It has become
very popular due to its ease of use and storage capacity
9. Type of Analytic software that tells the supply chain managers of the future risk,Example-
Alternatives to be followed when price of oil changes from $50 to $100
FEBRUARY 2013 40

45. SOLUTION TO CROSSWORD
TEAM STRIVE
FEBRUARY 2013 41

46. FOR DETAILS CONTACT
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Indian Institute of Management Raipur
GEC Campus, Old Dhamtari Road, Sejbahar
Raipur 492015, India
Mail us: opep@iimraipur.ac.in
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