Tuesday, January 31, 2012

Supply Chain Management Solutions: An extract from personal experience

Supply chain was one of the key market verticals for my ex employer - Motorola Solutions, which has an array of technical gadgets to manage and optimize supply chain. Mobile computers, RFID, WiFi infrastructure in the manufacturing plant, warehouse and even in retail shops ‘attempts’ to provide an integrated approach to supply chain for any business.
Even within the developing market there has been increasing demand for tools and processes to manage the supply chain of businesses ranging from medium scale to large scale operations. To quote from my own experience there have been instances of very interesting deployments of technology for supply chain improvements such as, a mining company in India employed RFID tag based truck and load tracking to have transparency to the fleet operation, Indian arm of Unilever has empowered its distributor’s agents with mobile computers to better track the inventory at mom-n-pop shops and feeds this data back to the ordering system and sometimes even funny attempts such as to RFID tags in a restaurant to track the meals sold! (thankfully, this one never passed the Proof-of-Concept stage).

A deeper look at these sorts of technology and tool deployment suggests that businesses are keen on investing to improve the supply chain processes. Client meetings and system studies conducted by me during my tenure at Motorola Solutions projects a clear idea that motivation for supply chain improvements is not mere ‘getting the product fast to customer at the cheapest cost possible’. The articles ‘Outcome driven supply chain’ and ‘Best value supply chain’ provides the backdrop for this surge of investments in supply chain improvements. As supply chain gets more integrated across functional areas and even more importantly across enterprise involved in delivering a product/service to customer it is imperative that collaborating organizations synchronize their production, ordering, dispatching and storage cycles. For doing so, supply chain information systems are an absolute necessity. Considering the Unilever example: The confectionery division of the conglomerate had started to face severe competition in the Indian tier-1 and tier-2 cities. The pricing and quality was just right and in fact the brand name still commanded respectable lead in terms of market share. However, declining market share meant that Unilever had to take actions on the lines of market mediation to make sure that retail shelves are filled with its products without giving a chance for the competitor to overload the retail shop owners with their products. To achieve this goal, Unilever had to obtain the real time inventory figures and feed the data back into their ERP systems to sync their warehouse operations. Motorola Solutions proposed a solutions where in mobile computers were used by sales agents to collect the inventory details and feed the data in real time to Unilevers ERP system. The outcome of this deployment was multi folded. Firstly it increased the visibility, which in turn led to increased revenues. But beyond that this activity also stimulated flexibility in the warehouse operations of Unilever, in response to varying demand. However, while we were enjoying the success of this project, the irony stuck. Motorola solutions own supply chain was in bad shape. With delivery time standardized at 6 weeks (sometimes stretching to even 12-15 weeks) it was time for us to look internally. The same set of tools, gadgets and systems were in place within Motorola, but then we still have this ridiculous delivery times! That calls for an investigation. The devil was in the system for sure. The systems used to track orders from partners, to distributor to the vendor company was entangled that the end gadgets, tools and processes couldn’t offer any help. So in essence, the tools are just that - tools. As indicated in the reading material, out of the 6 possible outcomes of supply chain optimizations, one value should stand out that would be the main focus area and driving factor for the project. And, tools and processes have to aligned to achieve the desired goal. In Unilever case the key focus area was responsiveness and the solution was built around it. But in Motorola’s own case there was no single focus area which resulted in chaos and sub-optimal performing structure.

As consultants, we need to ensure that the supply chain issues which we are trying to solve are clearly defined and more importantly the expected outcomes are unambiguously listed down. But the question is how? I am wondering if there are any frameworks for the same. If so, I hope to bump across them during the course study.

1 comment:

  1. I guess sometimes it is hard to control even if you have what you would expected in mind. There are too many loops and parties involved in this chain. Unlike Apple who basically manages and controls the whole process itself, most companies don't have that many resources and need to depend on others. Looking forward to the discussion on lectures too.


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