Contenu connexe Plus de HCL Technologies (20) HCLT Brochure: Unleash Supply Chain Potential1. Supply Chain
Visibility Roadmap
Author
Ranjan Arora
WHITE PAPER
J U LY 2 0 1 2
2. Supply Chain Visibility Roadmap | July 2012
TABLE OF CONTENTS
Abstract 3
Supply Chain Visibility: Definition and Key Trends 3
SCV Framework: The Need 4
Supply Chain Visibility: The Key Challenges 5
Supply Chain Visibility Solution: Deployment Methodology 6
Business Benefits 13
Conclusion 15
About the Author 15
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3. Supply Chain Visibility Roadmap | July 2012
Abstract
The benefits of Supply Chain Visibility (SCV) have been known for over a
decade. Enterprises have been deploying Supply Chain Visibility solutions
in their environment to reduce costs and improve services but often remain
dissatisfied as the existing solutions fail to deliver in today’s highly dynamic
business environment. A recent AMR research titled, affirms, this fact. The
report cites, “In the area of Supply Chain Visibility, what vendors provide
and what businesses need don’t match. As a result Supply Chain Visibility
projects to support agile supply networks are at high risk for failure.
Achieving Supply Change Visibility excellence has thus become a major
concern for supply chain leaders. Some of the major challenges faced by
supply chain leaders are:
1) Collapsing demand, unreliable forecasts and increasingly volatile risks
2) Increasing complexity of global sourcing and aggressive global
competition leading to longer lead times and more pipeline inventory;
and
3) The immediate need to control downstream and upstream logistics
To address the above-mentioned challenges organizations need a dynamic
and robust SCV framework that can enable quick response to change as
well as improve and strengthen the organizational supply chain by making
data readily available to all stakeholders, including the customer.
The need for Supply Chain Visibility framework is especially great for
manufacturing companies who are moving from a ‘push’ supply chain
model to a ‘demand-driven’ supply chain model. A SCV framework such as
that of HCL can address the needs of CPG manufacturers and retailers by:
• Synchronizing supply and demand while balancing inventory exposure
across the supply chain utilizing planning software;
• Streamlining and increasing effectiveness of global sourcing and supplier
management, including developing deeper supplier relationships with
more sophisticated integration; and
• Enabling real-time collaboration and data exchange between suppliers,
distributers & retailers
Supply Chain Visibility: Definition and Key Trends
Every business dependent on a supply chain needs SCV — as it is related to
business intelligence — to manage its increasingly complex supply chain. It is
not just the quantum of visibility that matters but also the kind of visibility.
SCV should provide appropriate and timely information to businesses to
take on the key challenges of the increasingly complex supply chain world.
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4. Supply Chain Visibility Roadmap | July 2012
Understanding the Key Trends in Supply Chain Visibility
• The supply chain organization needs to be treated as a single integrated
organization to effectively support all supply chain functions
• Risk and opportunity management should span the entire supply chain
– from demand planning to expansion of manufacturing capacity –
including the key partners
• End-to-end supply chain cost optimization is critical. Customer
requirements and competitors call for regionally tailored supply chains
and product offerings
• Securing growth requires truly global customer and supplier networks.
The future of global supply chains depends heavily on international
customers and customized products. An efficiently managed global
supply chain is the need of the hour
• Supply chain volatility and uncertainty have permanently increased.
Market transparency and greater price sensitivity have led to lower
customer loyalty. Product commoditization reduces true differentiation
in the consumer and business-to-business (B2B) environments
Businesses need to catch up with the above-mentioned trends and the top
pressures (depicted in the graph below) in SCV to achieve excellence.
Caption: Top Pressures to Improve Supply Chain Visibility
Source: Supply Chain Visibility Excellence: Mastering Complexity and Landed Costs,
MarchAberdeen Group
SCV Framework: The Need
In the prevalent dynamic environment, organizations are continually
striving to meet the ever growing demands of their clients and consumers.
They need accurate and constant visibility in their supply chain. The
transparency thus achieved can be passed on to the clients and consumers to
have an efficient supply chain.
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5. Supply Chain Visibility Roadmap | July 2012
Customers today are not only hopping channels, but are switching from
one retailer to another for better price and service. This has added to the
demand fluctuations making it vital for organizations to make real-time
adjustments in their supply chains or else they would end-up with unwanted
situations such as stock outs or excess inventory.
Most of organizations have adopted just-in-time (JIT) strategy to significantly
reduce their inventory costs. While JIT eliminates dependence on supply
chain partners, just-in-case (JIC) strategy does the exact opposite; it increases
the dependence. A delay of few hours or even few days in supplies by any
partner could potentially disrupt operations. To counter such challenges,
organizations must have the capability to spot the problems and take
appropriate corrective actions in real time.
There is a critical business need to obtain real-time visibility across the
supply chain — to constantly monitor supply chain activities — to identify
problems and ensure business continuity.
Supply Chain Visibility: The Key Challenges
The emergence of the consumer-driven value chain and globalization of
supply chain networks have increased the complexity and the need for
supply chain-wide visibility. The key challenges witnessed by the retail
consumer packaged goods industry are:
• Rising Supply Chain Costs: According to the recent Aberdeen Survey,
growing supply chain complexity is the top business pressure leading
to increased supply chain cost. The manufacturing companies are
specifically facing this challenge because of their higher propensity
than other industries to outsource production and distribution; hence
tracking it becomes more critical. Without detailed and effective supply
chain visibility, it is difficult to control supply chain costs, inventory
levels and lead times, or react effectively to ever-increasing variability and
disruptions
• Demand Prediction & Synchronization: With rapidly changing trends and
consumer preferences, it has become a challenge to predict consumer
demands and consistently deliver higher overall service levels. The
demand planners rely heavily on Supply Chain Visibility to match
supply and demand. It is crucial for planners to get timely and accurate
updates regarding product availability
• Holistic Supply Chain Visibility: Today retailers & CPG enterprises seek
visibility from operational as well as strategic levels to have an efficient
supply chain. Though benefits of gaining Supply Chain Visibility into
critical elements across the end-to-end logistics network for improving
cost and service are evident to the industry, but the solutions till date
have not been effective. While, in recent past, warehouse management
systems may have been able to give inventory visibility for in house
stores, the true holistic Supply Chain Visibility is still a challenge for
most companies
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6. Supply Chain Visibility Roadmap | July 2012
• Supply Chain Metrics: A holistic supply chain visibility provides
real-time, accurate, and usable information about product, processes,
and flows. It streamlines the information flow by avoiding blind spots
and data-sharing delays. Seeking such information, which can be readily
accessible from anywhere on the supply chain flow for decision makers,
has been a challenge. The need of the hour is an effective supply chain
visibility framework that can provide timely insights into key supply
chain metrics
Supply Chain Visibility Solution: Deployment Methodology
To deploy a successful supply chain visibility solution, organizations need
to think through the best approach. In our opinion, a successful supply
chain visibility roadmap and solution must follow the 5-step methodology
detailed below.
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7. Supply Chain Visibility Roadmap | July 2012
Understand the Supply Chain Network
The first and the foremost step before deploying a Supply Chain Visibility
solution is: to understand the network and identify the nodes. For each
identified node, capture the list of processes executed by them. And then
document various activities/ tasks performed by the identified nodes to
facilitate the movement of goods and information within the network.
Proceed cautiously through the step to ensure that only the activities
pertaining to the supply chain are documented.
Identify Level-1 Strategic KPIs
Real-time information monitoring contributes effectively to decision
making. Thus it is important that the implemented Supply Chain Visibility
solution monitors the strategic key performance indicators (KPIs): the main
objectives of management; the nature of supply chain; the kind of business;
and the requirements of various partners.
The following table depicts top 5 KPIs of an effecint supply chain.
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8. Supply Chain Visibility Roadmap | July 2012
Performance
Definition Level-1 Metric
Attribute
Supply Chain The performance of the • Delivery
Delivery supply chain in delivering: Performance
Reliability the right product, to • Fill Rates
the right place, at the
right time, in the perfect • Perfect Order
condition and packaging, Fulfilment
in the right quantity, with
the proper documentation
to the right customer.
Supply Chain The velocity at which • Order Fulfilment
Responsiveness the supply chain provides Lead Times
products to the customer.
Supply Chain The agility of a supply • Supply Chain
Flexibility chain in responding to Response Time
marketplace changes • Production
to gain or maintain Flexibility
competitive advantage.
Supply Chain The costs associated with • Cost of Goods Sold
Costs supply chain operations. • Total Supply Chain
Management Costs
• Value-Added
Productivity
• Warranty/ Returns
Processing Costs
Supply The effectiveness of an • Cash-to-Cash
Chain Asset organization in managing Cycle Time
Management assets to support demand • Inventory Days
Efficiency satisfaction. This includes of Supply
the management of all
assets: fixed as well as • Asset Turns
working capital.
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9. Supply Chain Visibility Roadmap | July 2012
Study the Extended Supply Chain Issues
Identify the constraints and issues faced in the supply chain and devise
strategies to address them. Some examples on what are the typical constraints
and issues faced in the supply chain network and what customers really
want are listed in the table below.
Typical Voice of
Issues
Constraints Customer
Demand • Lack of visibility • Frequent • Decrease in
Planning into future promotions and inventory
customer needs markdowns obsolescence
• Lack of quality • Seasonal and mark
point of sale demands downs
(POS) data • Low forecast • Increase
accuracy customer
service levels
and fill rates
Supply • Planning assumes • Replenishment • Reduce
Planning fixed lead times & distribution inventory cost
• Simplistic • Inventory • Expedite global
inventory management supply chain
planning leads (trade off coordination
to overstock and between • Sharing
loss of sales safety stock vs information
customer service across the
level) supply chain
• Inventory
rebalancing
between
distribution
centres
• Manufacturing
• Product sourcing
• Seasonal build
ahead (for e.g.
high demand
during Christmas
season)
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10. Supply Chain Visibility Roadmap | July 2012
Typical Voice of
Issues
Constraints Customer
Collabora- • Not all entities • Collaborative • On-time and
tion are technically replenishment Responsive
mature panning for delivery
• Not all entities geographically • Reduction
are ready to share separate in inventory
information distribution through
centres and improved long
plants term visibility
• Collaborating on • Reduction of
demand which is costs – reduced
over a long lead obsolescence,
time better planned
• Collaborating for promotions,
joint promotions reduction of
markdowns and
expedites
Allocation: • Allocating • Tier structure/ • Increased
disag- material across partners tend customer
gregating multiple to get changed service and
expected dimensions (how to allocate retention
supply/ (customers, constrained • Increased order
commits product and supply in such a promising
against time) and also scenario) accuracy –
anticipated account for Hitting Promise
demand customer demand Dates in
fulfilment Execution
strategies
• Order promising
constraints
include
accounting for
real lead times
to customer,
accounting
for alternate
fulfilment
locations
and alternate
products
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11. Supply Chain Visibility Roadmap | July 2012
Diagnose the Issues and Frame a Solution Roadmap
Careful examination of the issues raised and information gathered reveals
that Supply Chain Visibility should have the capability to: track and trace
the entire supply chain; sense and respond to important events; conduct
predictive analysis; and analyze and decide the supply chain behavior. It
may directly address many of the supply chain management issues. Supply
Chain Visibility can improve delivery reliability, increase inventory turns
and reduce slow moving stocks.
Caption: Key components of an effective and efficient SCV solution
Supply Chain Visibility Solution Framework
Keeping in mind the challenges, HCL has devised a framework to build a
flexible, agile, reliable and responsive supply chain.
It covers the data flow that span across the entire network, events/alerts
generation, and measurement of various KPIs.
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12. Supply Chain Visibility Roadmap | July 2012
HCL’s Supply Chain Visibility framework enables:
• Collaboration across the departments and extended supply chain network
of multiple trading partners
• Information logistics related to inventory locations, shipments, actual
demand & potential demand, order status, manufacturing status available
in a dashboard across the extended supply chain
• Comparison of the planned, actual and projected (expected) inventory,
order status as well assales
• Administrators to generate alerts for supply chain events. The alerts will
prompt users to take proactive actions that would help in:
–– Reducing loss of potential sales
–– More efficient allocation and distribution of FG inventory
–– Proactive planning in case of potential non-availability of critical
components
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13. Supply Chain Visibility Roadmap | July 2012
• Intelligent reporting of supply chain behaviour. It facilitates supply chain
managers to take proactive actions for a responsive supply chain, better
delivery reliability and more efficient use of assets
Key Differentiators of HCL’s SCV Framework
• The framework is technology-agnostic and can be applied to all packages
available in the market
• It helps in improving visibility/ B2B connectivity into supplier-side
processes
• Streamlines processes for easier monitoring
• Improves internal cross-departmental visibility
• Improves timelines and accuracy of data exchange about supply
chain transactions
Business Benefits
The potential benefits of an effective & holistic supply chain visibility
framework can be observed at three different levels: operational level,
customer level and enterprise level.
At operational level:
• Collaborative demand planning
• Sales and operations planning (S&OP)
• Synchronizing activities through information sharing
• Increase operational productivity and accuracy through a system
enhanced by granular tracking and validation
• Increase supply chain responsiveness
• Reduce cost of inventory
• Increased order promising accuracy
• Efficient inventory turnover
• Reducing inbound lead time variability
• Dynamic reallocation of in-transit inventory
At enterprise level:
• Increase in enterprise efficiency through enhanced supply network
visibility and risk management around quality and time-to-delivery issues
• Leverage supply chain visibility for forecasting, tracking and tracing and
vendor managed inventory to ensure right products and inventory in
right place at the right time, ultimately helping an enterprise to deliver
high-quality customer service
• Enabling a collaborative framework for internal and external collaboration
across the supply chain
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14. Supply Chain Visibility Roadmap | July 2012
• Improve enterprise revenue management
At customer level:
• Increased customer service level
• Improved delivery
Success Story
Leading Global CPG Manufacturer Leverages HCL’s SCV Framework to
Achieve Supply Chain Resilience
About the Customer
The Challenges:
The client was not receiving its raw material at the right time and at the
right location, thereby leading to commitment failure.
The supply chain planners did not have real-time visibility into supply
chain events, and couldn’t plan alternative means to get the requisite
inventory and ensure order completion. This adversely impacted on the
customer’sdelivery reliability.
The HCL Solution
The HCL team developed a supply chain dashboard on top of the legacy ERP/
inventory systems. The dashboard provided customer with the visibility
and projected inventory calculations of the material in a tabular format.
This enabled the supply chain planners of the organization to understand
and manage likely shortage of material. The information extracted through
the dashboard enabled the supply chain planner:
• Expedite the supplier
• Look at alternate sources
• Re-look at priorities
• Provide advance intimation to customer with new commit dates
The supply chain dashboard provides insight into potential material shortage
in future and thereby alerts the planner to to fix the potential problems.
Below has been shown one of the views of Supply Chain Dashboard, where
• d1, d2, depicts Day1, Day2 respectively
• w1, w2 depicts Week 1, Week 2 respectively
• Expected receipts is the commits made by the supplier
• The Red color indicates that the Inventory Level is either zero or below
zero and an alert is generated to the respective Planner to take appropriate
action
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15. Supply Chain Visibility Roadmap | July 2012
• The yellow color indicates that the Inventory Level is above maximum
stock level (it is having extra material than what is required and is thus
locking money and space) and an alert is generated to the respective
Planner to take appropriate action
Conclusion
The retail and consumer packaged goods industries are adopting Supply
Chain Visibility as a concept. An SCV framework can add value through
the addition of standardized supply chain metrics, increased continuity in
definitions and terminology across the supply chain, and is helping industries
increase their ROI leveraging existing investments in the currently deployed
IT environment. The SCV framework developed by HCL can enable
organizations achieve supply chain resiliency and the below mentioned
benefits:
• Synchronize the details of promotional events to alleviate out-of-stock
and excess inventory situations
• Co-ordinate demand planning between retailers and suppliers to increase
forecast visibility; improve forecast accuracy results; and the overall
trading relationships; and
• Carefully plan prior to release and close monitoring of sales results, to
have higher supply chain responsiveness, increased sales, and reduced
inventory
About the Author
Ranjan Arora
Associate General Manager
Ranjan Arora is an expert in supply chain management
who has led supply chain transformation projects for
many Fortune 500 companies in his career span of over
12 years. He also holds a Production and Inventory
Management (CPIM) certification from The Association
for Operations Management(APICS), USA.
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About HCL
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OUTSOURCING About HCL Technologies
HCL Technologies is a leading global IT services company, working with
clients in the areas that impact and redefine the core of their businesses.
Since its inception into the global landscape after its IPO in 1999, HCL
focuses on ‘transformational outsourcing’, underlined by innovation
and value creation, and offers integrated portfolio of services including
software-led IT solutions, remote infrastructure management, engineering
and R&D services and BPO. HCL leverages its extensive global offshore
infrastructure and network of offices in 26 countries to provide holistic,
multi-service delivery in key industry verticals including Financial Services,
Manufacturing, Consumer Services, Public Services and Healthcare. HCL
takes pride in its philosophy of ‘Employees First, Customers Second’ which
empowers our 84,319 transformers to create a real value for the customers.
HCL Technologies, along with its subsidiaries, had consolidated revenues
of US$ 4.2 billion (Rs 21,031 crores), as on 30 June 2012 (on FY’12 basis).
For more information, please visit www.hcltech.com
About HCL Enterprise
HCL is a $6.2 billion leading global technology and IT enterprise comprising
two companies listed in India – HCL Technologies and HCL Infosystems.
Founded in 1976, HCL is one of India’s original IT garage start-ups. A
pioneer of modern computing, HCL is a global transformational enterprise
today. Its range of offerings includes product engineering, custom &
package applications, BPO, IT infrastructure services, IT hardware,
systems integration, and distribution of information and communications
technology (ICT) products across a wide range of focused industry
verticals. The HCL team consists of over 90,000 professionals of diverse
nationalities, who operate from 31 countries including over 500 points
of presence in India. HCL has partnerships with several leading global
1000 firms, including leading IT and technology firms. For more on HCL,
please visit www.hcl.com