Supply Chain Fundamental Rethinking

In the days of absence of real time data, many Supply Chain decisions were probably taken late and quality of decision making could have been a challenge. So the emergence of the need for real time data which probably makes data virtually available any time and all the time. This probably is expected to improve the quality of Supply Chain decisions. I meet a lot of professionals and during the conversations what I realize is the probability of "Missing the forest for the bushes" has also increased.  I often remember the case of an Equity investor of the bygone days. He probably used to see the data of his shares only once a day that too with a delay of one day (As in the old days the share prices data used to get printed in the news papers which got delivered next day morning!). Many a times he used to refer to a delayed data set to make his purchase or sell decision. Also his precision of exact price to buy or sell never got executed. The number of touch points in the ...

While no Supply Chain professional likes Supply Chain variations, in reality Supply Chain variations is the only certain event of a Supply Chain. Supply Chain variations should be viewed positively to make the most of them. I personally believe that a system which is stable for a long time develops fragility. Over a period of time the basic immune system to handle variations gets completely eliminated hence when the variations occur, the Supply Chain system is not equipped to handle the variations. So some level of variations in Supply Chain is actually good. They keep the system well greased and oiled. Predictability kills and probably does it faster. As a Supply Chain professional if variations have occurred, I think, it gives a great chance for the professional to go back to the drawing board & redesign. e.g. If, in your Supply Chain, you never had shortages of material, it indicates a great Supply Chain for a practitioner. But for me, it represents a Supply Chain where un...

The need to offer higher variety to end customers is leading enterprises to design larger number of finished products. With customers expecting shorter conceive to commercialize times, the Design department is under continuous stress to keep the idea to commercialize life cycle to its shortest. Under those circumstances, ideally speaking, if Design department has re-utilizable knowledge assets, it is of great help. Every design doesn't need to start from scratch. This being implied in organizations, Design department has its own knowledge assets which it refers to for designing the product. What needs to be further emphasized is the integration of Supply Chain knowledge assets can be the only source for the enterprise to successfully commercialize the product over its life cycle. Else, typically what is observed is that Supply constraints in the growth stage of product create a bottleneck to achieve the full sales potential of the product. During that stage, unfortunately, the Su...

Supply Chain Practitioners appreciate the need to improve Supply Chain performance and in all probability the improvements focus on "hard" aspects of Supply Chain like Network Redesign, Technology Applications, Infrastructure development so on and so forth. Supply Chain best practices are introduced to leverage on those for enhanced Supply Chain performance. The trap here is the structure for improvements is in place, the enablers are identified and the "facilitators" of that improvement are "assumed" to deliver on those. The failure of Supply Chain improvements is not so much to do with "hard" aspects as much as it has to do with "Soft" aspects. From my experience i am penning down a few thoughts on this area. A Supply Chain practitioner landed in Supply Chain, mostly, by accident. It is not by design that a large cross-section of Indian Supply Chain professionals are in Supply Chain. By academics very few are Supply Chain qualif...

Supply Chain inherently have variations. Nothing that is of surprise or unknown to a Supply Chain practitioner. Huge amount of Supply Chain resources are committed to identify root causes of the variations with a primary objective to "dampen" the variations. I see a lot of Supply Chains professionals who dislike variations. They would like the make a detailed analysis to discover the root cause of the variation(s) leading to efforts of reducing the frequency as well as the amplitude of the variation(s). A Purchase person dislikes variations in Sales forecasts which lead to change in Procurement plans. Similarly a Production person dislikes variations in Supply Schedules. Above all the Sales person dislikes variations in Production or Logistics leading to consequences of customer relationship. Each of these links of the Supply Chain invest heavily to find ways of dampening the variations. Question really is - In an attempt to dampen variations, what has the Supply Ch...

When I work with the industry in the domain of Inventory rationalization, many a times Supply Chain practitioners feel that the easiest part of inventory which can be reduced is "Safety Stocks". By and large practitioners believe that Safety stock is the redundant inventory in the system which also is a cost without benefit. There is a prevalent practice to have Zero safety stocks or (in some companies as they are called) Buffer stocks. The target inventory norm for any SKU has to have consideration for Consumption during the Lead Time, Standard Deviation of Supply side, Standard deviation of the Demand side and expected Service Level. Statistically speaking, if one maintains enough inventory to cover average consumption during the lead time then the probable service level (% times the SKU is available on the first instance of being demanded) is only 50%. This point is missed in many instances of inventory exercises leading to on paper reduction of inventory but a drama...

Supply Chain is at a Strategic Inflection Point. It's not going to suffice to just make tactical changes to the existing way of perceiving but a fundamental and radical change in way of thinking is what I think is the need. Many a times in the life of an organisation or an individual, a deep fundamental understanding of what he or she does everyday has to be changed. This is not a change in "jargon" so that old jargon is replaced with new one without changing the underlying premises and beliefs. Supply Chain I would imagine is at that cross road where, to sustain in future, Supply Chain Leaders have to make an "non-elastic" change . Supply Chain as a term for me has an implied meaning of being a "Chain which focuses on Supply(ies)." The major issue here is if we go down the level of the belief system of a practitioner, "Chain" means inter-linkages with lesser degrees of freedom. Each link of the chain is tightly integrated with the ...

Supply Chains have always relied on the Western World models and in certain instances - Japan. So the configuration of Supply Chains draw a lot from the practices in that way of working, including the approach to improvement initiatives of Supply Chain.  A close analysis of the yesteryear's Supply Chain Improvement models lead me to three conclusions - they are resource heavy, the wish to always be very structured and are unclear of their ROI. Lets take an example of an organisation which wishes to create a Supply Chain Improvement. In all probability it creates a Steering committee which in turn creates a sub-committee which in turn leads to Team players who in turn will ask people to generate ideas. This idea collation leads to idea screening & by the time one implements the idea the time consumed in the  life cycle of an idea, cost of Management time involved in decision making & more importantly assumption about the market environment (which is dynamic)...

FY 18 has been a year so far, where each quarter results have been shifting the pendulum for Supply Chains in India. From emerging growth prospects to policy changes impacting demand its been a period of time where Supply Chains have not had a consistent image of market. Q1 FY 18 was impacted due to roll out of GST. (Day 1 of Q2 - 1st July). Channel partners had to go light with Q1 end inventory hence most of the organisations experienced a lesser channel partner demand in Q1. While the retailers recorded one of the highest June sales, contrast was the case for Manufacturers of the products. Q2 FY 18 was attributed to GST implementation issues. The lack of awareness of the systems & other teething problems. Organisations still found a way to encash with  festive season and e-tailers having one of the best times with discount sales. Some celebrated with rural demand for 2 wheelers, tractors recording higher sales indicating good rural demand. Confuses with other data ...

For many of us associated with Supply Chains in India, it is an interesting period of time. There is a realization that environment is shaping up to offer opportunities but Supply Chain Practices are a step out. It can be a late realization of an opportunity or simply an sub-optimal network or a Supplier relationship which is surrounded with uncertainty.  One of the step out is "Technology" adoption and adaption.  My work across many clients makes me realize that Technology applications are evolving in Supply Chains of India. Either it is a natural journey of the organization which has had technology support its back bone of Supply Chain over years hence the applications are seen in practice & utilized for better decision making. But for many, an ERP, is the highest level of an integrated IT implementation. For these Supply Chains of India the sudden advent & need to implement array of Supply Chain applications is like awakening to a frenzy of wind followed ...

What I and probably all folks in India are experiencing is something very divergent to how we grew up in Supply Chain & saw it getting shaped in India. My father tells me that when he bought his first Scooter, good 45 years back, he had to pay INR 5,000 & still wait for the scooter to be delivered at the convenience of the manufacturer. The Demand - Supply gap in Indian context of business favoured the Supply side. He did wait for 6 months to get the delivery of his scooter. Many of us have such stories to remember. A cultural pattern where supply was always constrained hence demand used to get tapered off. I think what Amazon or any e-tailer has done to Indians is that its permanently changed customers "Value System". And its happened way too fast! And Indian Supply Chains are yet to explicitly acknowledge it.   Indian customer traditionally has been unpredictable in his demand patterns, frugal in his budgets & very demanding on his delivery expectatio...