Reading about the Toyota Accelerator Pedal recall (around 2.3 million vehicles to quote a figure), one can’t help but wonder how a company with its squeaky clean quality and safety reputation, a temple of learning for supplier collaboration processes, could falter on such a grand scale.
In continuation with earlier blogs, we had an interesting set of conversations in the past one month within the project team. One of the ideas through the brainstorming and subsequent brain-streamlining session, was to provide capability in the tool to store realtime Allotment limits in the sales order. An interesting revelation was that one could arrive at this figure only if we use another parameter called the Checking Horizon.
Continue reading "Dilemma of Supply Chain Planning in an Allotment scenario - 4" »
I currently consult across multiple clients. They all are retailers, in different segments. At one retailer, we are defining a roadmap for a order management solution. In the course of our discussions, a question keeps getting raised about the sale made in the store: Is that an order?
You walk into my store, you pick something up, want to buy it, take it to the register, pay for it and take it home. In this entire transaction, you interacted with my company. You took something out of my inventory and paid me cash. In retail lexicon, this would be called a sale. However, if you were a business, and sent me a purchase order, and I responded by creating a sales order and then shipped it to you and invoiced you, the sales order is what would be called a order.
So, a customer transaction in store is a sale, and a B2B transaction is obviously an order. What about an e-commerce B2C transaction? Other than the fact that the customer's ship to address, payment information, and bill to address is available with me, how is this different from a sale? Should I encourage my sale to grow up and become an order?
Continue reading "My sale wants to grow up and become an order" »
Continue reading "Retail Customer Order Management Blog Series: Part 1 - An Introduction" »
One of the key objectives in the existing challenging environments is to develop long-term, productive relationships with the internal customers who are stakeholders within the procurement business team. This is interesting observation and SRM techniques can help organizations in building strong relationship with internal customers through foothold strategies that leverage long term relationship.
Continue reading "Leveraging SRM techniques to build business teams" »
So the “Report cards” of the automotive manufacturers in US are out!! There are contrasting realities and some startling facts!!!. Do the Japanese and American car manufacturers behave the same way in the face of recession? How do their manufacturing and supply chain strategies reflect on their overall performance? Are there any “dark horses” among the American manufacturers who would pose the biggest threats to the Japanese in future? Are there laggards among the Japanese who would have to face the threat of survival in future? The numbers convey their behavior!!
Continue reading "Automotive manufacturers of 2009: Numbers convey their Supply Chain behavior" »
Sterling Commerce recently announced mobile applications for their Order Management application. Sterling Mobile Store Channel and Sterling Store Associate Mobile app for iPhone allow customers as well as business employees to search for products, place orders and track shipments through their iPhones. While discussing these new developments with business users at my current client, i tried to scribble down a wish list from a Retail Store manager's perspective. The expectations are beginning to go beyond the traditional find inventory, find store and place order.
Continue reading "Multi Channel Commerce & Mobile Apps - Wishlist 2010" »
I had the opportunity to attend a seminar on "How to Gain Competitive Advantage with End to End Supply Chain Visibility" sponsored collectively by Sterling, Deloite and GS1 held at Oxfordshire, UK sometime in November last year.
Deloite presented how important it was to maintain focus on business operations, with a clear emphasis on working capital optimization.
GS1 (They design and implement global supply chain standards) delved on the need of standard based solutions that enable organizations to gain visiblity of specific assets and how this in turn is driving process improvement throught the entire supply chain.
It’s the beginning of the year and our campus here at Bangalore is abuzz with client visits, with sometimes the Bangalore campus alone hosting 4-5 client visits in a single day. Budgets are being cast, everyone is looking for the right drop box to put their IT dollars and wait for maximum magic for the amount spent. While I am not involved in a majority of these visits, there's one industry vertical where SCM practice consistently gets invited to present their point of view, viz., Retail. My reasoning for this is that there’s really no other industry where one encounters so many best-of-breed SCM packages strung together by each of these retailers in a collage uniquely their own.
Continue reading "Decide where you integrate: MCO does not equal MCC!" »
The way applications are resourced these days have a number of applications on a single virtualized bed of infrastructure be it private, public or hybrid deployment models. Application vendors are talking about multitenant models. Service providers are hosting tailored application platforms for their clientele. The dynamics of hosting, appropriation of resources, and application customization is quiet different. In my previous blog here I urge on a stronger and proactive production environment. So what is necessary ingredient to bring that level of sophistication? The answer is the ‘profiling horizontal’. So how and why is it relevant to particularly SCM and generically packages. I take Sterling OMS as a case study to convey my view points.
Continue reading "Profiling Paradigm Shift in the Package World" »
One of the most interesting business discussions in any Available-To-Promise (ATP) project is that on Checking Horizon. This seemingly unassuming horizon, determines the timeline within which supplies are actually assessed against demands. The supply within the horizon is valuated as feasible, and thus a Sales Order within this horizon can be truly promised. A Sales Order outside of this horizon is deemed always feasible assuming that the supply chain can always react to the demand without any constraint.
Continue reading "Checking Horizon: The confluence of ATP and Planning" »
Well, this blog of mine is different in many ways, from the ones that I have posted so far. I am not going to write too much to describe this topic but I am more interested in knowing what you all know. I want to reach out to each one of you to know what you have seen in industry either as an operations guy or as a consultant. Even if you have not seen it being practiced in real life, I am sure you would have some serious opinion on this matter.
The topic is very simple and well-intuitive. My question is: Have you seen “lean principles” being practiced in supply chain in any industry (preferably consumer goods/discrete manufacturing). I know the term “lean” has been used or mis-used very often, but I am open to hear anything from you – just take a pick, think and find out instances from your experience, that you can bucket under being “lean in supply chain”. Do not just restrict yourself to manufacturing...
Let me give you one example: recently, I had a discussion with a Supply Chain Head of a leading consumer goods organization and they intend to implement a “pull based” system in their supply chain.
Consumer goods companies have been pioneers in supply chain and their performance in supply chain has been best-in-class by any standards. Traditionally, we have seen organizations especially, consumer goods, running a typical push model where sophisticated forecasting is done to predict demand, goods are manufactured and distributed to various POS locations as per the dispatch plan. The product is actually pushed down in supply chain and focus is to improve forecast accuracy because that really drives everything else.
On the contrary, here is this company that would like to implement “pull system” and do away with forecasting to the maximum possible extent. To me, this is one true example of being lean in supply chain. I have always seen companies focusing on improving traditional push model that I described, but I have never seen a “pull model” running anywhere and hence this blog…
Going back to my question to all of you:
Do you think such practices exist in companies (esp. consumer goods)? I don’t know any company implementing a pull methodology in supply chain (please provide examples other than Toyota)? How do you marry push and pull in the supply chain, and where does it exist? Where is the Customer decoupling point? What tools do you use? How do you drive this initiative – what are the critical success factors?
Please share your experiences and insights – looking forward to hear from this great group of supply chain leaders…
Continue reading "2010s - OMSs and WMSs About you, and me, and them, and..." »
Over the last few years supplier collaboration is gaining prominence and lot of data sharing is happening with the suppliers helping them to plan their manufacturing capacity better. It has helped the suppliers meet the requirements and ensuring adequate inventory control. Supplier collaboration has become an important supply chain initiative across different industries and corporations have realized the benefits. Of late there seems to be surge in the supplier collaboration initiatives as organizations want to follow the example of others who have done it and have achieved significant benefits.
Organizations who have gone ahead with supplier collaborations- have not done so on the customer collaboration side (or the number of organizations who have done is far less- I am referring to non VMI scenarios)- sharing replenishment data with their customers.
Customer collaboration can be at a strategic level whereby an organization can work with its customers’ long term plans to develop new products & services, enhance its capacities and thereby ensuring strategic customer relevance.
Customer collaboration can also be at an operational or tactical level wherein customer forecasts, promotions and short term demand signals can be used to recalibrate the supply responses providing better service levels, lead times and flexibility.
In operational customer collaboration it will be the vendor who will inform the customer of the supply quantity that needs to be delivered as against the order quantity- this will help in demand supply balancing keeping inventory levels low. If we take a VMI scenario, the situation is different. The common issue in VMI is less transparency with respect to the SKU and quantity being replenished by the vendors- this is primarily because very few companies share the forecast data and leave it to the vendor to replenish the SKUs based on the inventory position at the time of delivery- may be because they do not forecast for VMI items.
Customer collaboration would help in fine tuning the VMI process – for VMI to be effective, the retailer should share its SKU level forecasts for the VMI items with the CPG manufacturer and the manufacturer can share the data in terms of what will be replenished in the next delivery schedule. This will help smoothen the process and the customer can plan appropriately for the SKUs being delivered with respect to promotions, space management and warehouse management.
However the customer collaboration has still not caught up- as much as it is being done on the supplier side.
Probable reasons would be that organizations are not tuned to tell their customers
what quantity they would deliver which would help customers ensure proper inventory control- this would be possible if they look at the ordering pattern from their customer. It is still working based on an order from the customer about the quantity based on their business plan and the supplier supplying that quantity.
Having both supplier and customer collaboration would ensure that the extended enterprise works in a real partnership model and that there is free flow of information which will help in effective decision making and inventory control and cost savings. Hence I strongly feel that organizations should not restrict their collaboration on one side but should do it both at the supplier and customer end. Organizations which have had experience say in supplier collaboration- should focus on extending it to customer collaboration end- this will be more effective as they can bank upon their learning while doing supplier collaboration.
It would be interesting to understand from you if you have done both supplier and customer collaboration and how has it benefited your organization and also the challenges faced.
Continue reading "Order Management Hubs: Reigning in Complexity" »
I wish the readers a very happy new year and a happy new decade. This morning, I was reminiscing on my journey through the past decade, on how during the last 10 years I saw myself transition from a student to young professional to a doting husband to a responsible father. I concluded that life seemed much simpler 10-20 years back, in retrospect that is. Well, how is it connected to demand planning in the CPG industry (the topic of this blog)? You are right; there is no connection, except that demand planning in the CPG industry also underwent a transition during this decade, just as I did.
Continue reading "Demand Planning in the CPG industry- The decade that was" »
Continue reading "Tesco to Less CO: Can Tesco save the world?" »
While on the topic of Walmart and Marketplace, I just read two pieces of news which got me excited.
Times UK had published an article a few days ago about Amazon being in secret plans to open High Street Stores in the UK.
Continue reading "Applying Warehouse Operations in a Store" »
Last year brought in difficult times for everyone. From individuals to small, mid size and large global companies’ echoed one sentiment – reduce costs to survive. We saw large scale layoff’s as knee jerk reactions. Not sure why companies saw their people costs as the first level opportunity to tackle and their only scope for survival. Buyers were beating down their suppliers to get the best price against target goals, 10% per annum over their scope of supply or haggling over the increasing the payment terms, not realizing that the suppliers were also going through the same issues on liquidity crunch. Net result, suppliers went bankrupt and along with them the entire industry started collapsing, e.g. automotive industry.
Things have started turning around now and we felt it was time to take the learning’s from these experiences and reactions to prepare a strategic response approach to the situation. Surely we need not wait for the next recession but get started on a systematic process of quick wins, tactical and strategic initiatives that can keep the organizations going strong at all times.
Continue reading "Part one – Strategic Cost Reduction: What is strategic about cost reduction?" »
Recently I placed an ‘Online’ order from one of the Kiosks inside a retail outlet. Used a couple of coupons to get $10 off while making the payment at the POS. The customer service was great and the order was delivered in time. As it happens sometimes with orders placed Online, the actual product was not exactly as I expected it to be, so I called up the call center to return it. To my surprise the service representative returned me $10 more than the actual amount I paid!!! So this is what happened: The order I placed at the Kiosk went through to the ‘Online’ system, but the coupon that I used while making the payment at the POS never did. The Customer Service Representative, who was looking at the order in the ‘Online’ system, never saw the coupon and simply returned me the amount that the Kiosk showed.
And guess what, this is not unique to the store I went to. There are many organizations that embraced the pre-paid Kiosk ordering (order Online at the Kiosk and pay at the POS) model so that they do not lose a sale; but they did not do a very good job integrating the ‘Online’ and Retail channels.
Over the last few months, a couple of my clients asked me if Order Management is passé now that every retailer might start logging onto the Marketplace mantra given Walmart's foray into the Marketplace arena.
While I see some dilution in terms of focus on Order Management Systems, a Marketplace does not necessarily replace the need for a core Order Management system. Actually, I see more work in the existing Order Management implementations. Let me elucidate.
I have always wondered about how a Supply Chain head is able to manage multiple strategic issues simultaneously and what could be the approach that he/she could be taking to drive critical projects or initiatives to tackle most of such issues. There are various questions that I have in mind and would like to seek your opinion for each of them. Questions like:
I am not sure if I have answers for all of them and I do believe that the answer for each question will vary across companies since every single company differs in the way it is structured and the way it operates. But these questions are equally valid for all companies. Generally speaking, what has been your experience? Put yourself in the shoes of a supply chain leader and then think about your approach within a set of constraints, uncertainties and performance pressures that a CSCO has to deal with.
One very interesting aspect in an Allotment scenario is that of Price increases and decreases. In the last two blogs we saw the interesting phenomena of how Allotment situation works in a supply chain scenario. Price change is essentially done in two ways - one possible way is by informing the retailer in advance of an eminent price change at a pre-destined date. The other is by doing a mass inventory revaluation of the stock-on-hand that the retailer is carrying at that point in time- and then making a price adjustment of the existing stock across the board both in the books of retailer and that of the CPG organization. This might result in an accounts payable or receivable to/from the retailer to the CPG organization. The former is mostly done for price increases, while the latter for price reductions.
Continue reading "Dilemma of Supply Chain Planning in an Allotment scenario - 3" »
I thought we would be nearer to the end my blog series on SRM with this one hoping to get onto the solutions, but it was not to be. I was in a couple of solution discussions in SRM implementation situations over last week and realized we were far away from getting to the solution discussions if we do not do more to confirm our understanding on this topic.
What is Supplier Relationship Management for you?
While in the checkout line of one of the bigger departmental store chains of US, I overheard one of the customers querying the sales associate on the difference between the price of the same item in the store and on the Store’s website. This particular customer, using a smart phone, had found that the price on the website was 20% lower than that in the store and wanted to pick up the item in the store right away, at the price on the website.
That was not going to happen; the brick-and-mortar business and the online business for this particular store are independent mini organizations of their own. They do not share inventory and their sales channels are different silos in themselves. A reflection on the way the online organizations were set up in the heat of the internet revolution; independent of the brick-and-mortar business.
Another unique challenge is Pricing of CPG products in an allotment scenario. As mentioned in the last blog, allotment of products to different demand streams is done under unique business situations i.e promotions, a genuine supply constraint or for doing very focused test-marketing. Pricing is a CPG context is very complex and is proportionate to the order volume and the tier of the customer. Customers who order in Full-Truckload are passed on logistical benefits by pricing a unit in conformance with the best possible price. Likewise, the Mom and Pop stores or small time retailers, who may order in less-than truckload may not get the best unit price.
Continue reading "Dilemma of Supply Chain Planning in an Allotment scenario - 2" »
The Supply Chain tool of SAP is being implemented in one of the leading CPG organizations of the world by Infosys. While most of the capabilities of this tool meets business requirements, there are a few critical business requirements that have not been met and this is a first hand account of what the issue is and where we can potentially go from here.
Continue reading "Dilemma of Supply Chain Planning in an Allotment scenario - 1" »
