Prahlad Karnam

2020
 Prahalad Karnam
21+ years of Global Experience

Columbia Business School, Strategic Leadership - Harvard Business School

Strategy & Operations Consulting Global Leader, CPG Industry Leader
Leader as Coach - Columbia Business School (Mentor Board)
People Strategist, Managed Global Change rollouts.
Setup and Ran Multi-M$ global business units,

Visiting Professor - IIMs and other reputed Universities
Strategic Advisor and Mentor to Entrepreneurs
A fervent believer that ‘People’ is what matters and to help Organisations leverage this competitive
advantage started the company ‘www.Peoplecube.ai’ (yes, we do use AI in its truest sense)

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What are we covering today…

Session I

Challenges faced - 15

SC Strategy - 15

Procurement - 15

Logistics - 15

Inventory - 15

Session II
S&OP - 15
Analytics - 15

Marketing -SCM - 15

Social Media - SCM - 15

BlockChain - 15

IoT - 15

AI - 15
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 SESSION I

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Let’s understand what Challenges the Supply Chain today

Demand volatility

Increased product
and distribution
complexity

Rising material &

operations costs

Expansion pains

Reactive supply
chains
& high inventory

Poor ownership
of consumer
relationship

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 Business – Supply Chain Strategy

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The Framework that helps execute the SC Strategy

▪ The Supply Chain Strategy Framework:

- In developing a supply chain strategy we should ask and answer a number of questions.
- There are ten questions, in four logical groups:

External Operating Structural Organisation

(to SCM) philosophy design & measures

Customers Inhouse vs Supplier Performance

Product Life Cycle Outsource Manufacturing HR & Org
Macroeconomics Configuration Distribution Structure

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Some KPIs

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Procurement
 IBM Integrated Supply Chain

Procurement is the process of managing external

spend to create maximum value for the organisation
The Procurement Cycle can be grouped into 6 segments across strategic, tactical and operational
activities

Strategic Tactical Operational

10 Rodolfo Casillas | 12/16/16 © Copyright IBM Corporation 2008

 IBM Integrated Supply Chain

Category Management - the key components

Building the category plan – understanding the business & using demand management, total cost management,
sourcing & contracting and managing supplier relationships to create value

Demand management Total cost management Sourcing SRM

- Controlling what we buy & - Optimizing total acquisition - Determining who we get it - Improving the way we work
how much of it and lifecycle costs from and how we contract with the key suppliers
for it

11 Rodolfo Casillas | 12/16/16 © Copyright IBM Corporation 2008

Spend Analytics - Opportunities

Spend level Opportunities

1. Supply rationalization
o Vendor fragmentation per commodity
2. Demand aggregation
o Commodity/business unit fragmentation per supplier
o Contract consolidation across business units
3. Preferred purchasing process bypass
o Purchases from nonpreferred/unapproved suppliers
o Non-PO purchases
o PO limit approval violations
o On-boarding for e-procurement and P-cards
o Off-contract spend
4. Diversity spend compliance
5. Supplier performance
o Spend with poorly performing suppliers
o Spend with suppliers with bad credit ratings

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Logistics Management
Introduction
• 80% of the costs of the supply chain are locked in with the location of the facilities
and the determination of optimal flows of product between them.

• The discipline used to determine the optimal location and

size of facilities and the flow through the facilities is
called Supply Chain Network Design.

• Specifically, we will focus on modelling the supply chain to determine

• the optimal location of facilities (warehouses, plants, lines within the plants,
and suppliers) and
• the best flow of products through this facility network structure.
• Candy Bar maker vs Laptop maker - Network design??

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 Logistics Management

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Warehouse operations

Receiving
Material / Product
Control Information movement

Planning

Storage Picking,
& Sorting &
Retrieval Shipping
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 Inventory Management

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 IBM Global Business Services

How inventory is expressed

▪ Cash value “We currently hold $20m of inventory”

▪ Stock cover “We hold 30 days of cover”

– (i.e. future sales are forecast to be $240m per year, so our $20m of inventory would last 30
days if we didn’t make or buy any more).
– Typically used in retail organisations
– Watch for the distinction between cover calculated on a 7 day week, and that calculated on a
5 or 6 day week

▪ Stock turns “We turn our inventory 12 times per year”

– (ie future sales are forecast to be $240m per year, so we would have to replace our $20m of
inventory 12 times during the year).
– Typically used in manufacturing organisations

18 18 Principles of Supply Chain Management: Inventory Management | 12/18/16

 IBM Global Business Services

Understanding the stock service trade off

▪ There are two elements to the stock service trade off:-
– Cost of Lost Sales (COLS), which rises as service levels decline
– Cost of Stock (COS), which decreases as service levels fall

COLS + COS

COS
COST

COLS
80.0% 85.0% 90.0% 95.0% 100%
SERVICE LEVEL

19 19 Principles of Supply Chain Management: Inventory Management | 12/18/16

 Classification of Inventory

• ABC Classification
• HML Classification
• XYZ Classification
• VED Classification
• FSN Classification
• SDE Classification
• GOLF Classification
• SOS Classification

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 Sales & Operations Planning

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 IBM Solution Management

S&OP importance in the value chain

Organisations without an S&OP process typically sub-optimise supply chain performance

Customer Driven Demand

▪ Sales and Operations Planning is the process that Sales\Marketing
formally links the demand signal from customers with
the operations side of the business.
▪ Without this process linkage the Operational and S&OP
Sales\Marketing ‘gears’ spin independently creating
separate plans for their respective areas. Production and Inventory
▪ “Islands of planning” result in supply chain Planning
inefficiencies, shown in lower customer service,
higher inventories and generally a higher cost to
operate the supply chain.
▪ Engaging the S&OP gear creates a single plan to Mfg.
balance customer demand with the supply Materials Planning Plants
capabilities of the organisation.

Suppliers

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Integrated planning for a demand driven supply chain
Leading principles:

• Demand driven, pull based.

• Consistent, accurate end-

to-end visibility of inventory
and replenishment
requirements

• Integrated cross-functions

• Integrated decisions across

multiple time horizons

• Decision support tools that

enable fast and effective
evaluation of supply chain
trade-offs

• Integrated run strategies

with responsive
manufacturing and
distribution

The Integrated Planning team is aimed at owning the planning process to enable a Demand Driven
Supply Chain
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 SESSION II

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 Analytics

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 High level scope of Analytics in Supply Chain
Spend Analytics D
Vendor management
Performance Management Account receivables/ payables
Cost minimization
D Sourcing optimization
Profit Maximization Catalog optimization
PR Pricing / buying decisions PR

- Maximize Profits ,
Revenue (sales) …

- Minimize Costs ,
Working Cap
PR
- Optimize Inventory,
Inventory optimization
Schedule, Workload
Assembly Run / process
(key constraint –
optimization (Capacity
Serviceability & Cost)
optimization)

PD PD
Forecasting/ Demand Warehouse optimization
Planning Fleet Optimization
Forecast Accuracy / Route Optimization PR
Variability PR

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 Marketing and SC connect

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 Marketing Processes linked to SCM
Marketing Process
Competitive Intelligence
Creative Advertising & Media Planning
Customer Life Cycle Management
Customer Program Management
Event Management
Lead Management
Market Management
Multichannel Campaign Management
Promotion Management
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Supply Chain Linkage
- Competitive Analysis - Demand Planning, KPI - Benchmarking, Ops & SC
Strategy
- Campaign Management - Demand Planning, Trade Promotions, Pricing, ROI
on advertisements / channels etc.
- Customer segmentation, Customer profitability analysis - Demand Analysis,
S&OP, Allocation of resources based on life cycle stage, Inventory turnover
- Campaign Management, Sales force automation, Sentiment Analysis
Customer feedback - Demand Analysis, Order2Cash, Accounts Receivable,
Quality
- Event planning, Revenue generation - Campaign Management, Network
design, last mile connectivity, demand planning.
- Opportunity Analysis, Lead process measurement - Campaign Management,
Demand planning
- Market Analysis, Market share, Scenario Simulation - Demand Forecasting,
Operations & SC Strategy, Promotions management, etc.
- Campaign Mgmt, E-commerce - Trade Promotions, Network Design, Last mile
connectivity, Multi Echelon Inventory Management
- Trade Promotions, - Promotion Planning, Demand Forecasting, Pricing
Analysis, Promotion measurement, etc
 Social Media
Analytics

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How Oreo sales increased because of a Social media
campaign!

15000 Retweets

200,000 FB Likes

36000 Instagram pictures

20% Estimated Sales

Increase

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 BlockChain

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 Blockchain works on a consensus system, where
each transaction has to be approved by the nodes

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 Emerging Use cases for Blockchain

Industry Use Cases

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 Internet of Things

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 IoT Applications

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 IoT Impact

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 Artificial Intelligence

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 Introduction

Artificial Narrow Intelligence - Existing model

Artificial General Intelligence - Human like by 2040 and
Artificial Super Intelligence - Better than Humans.

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 A Case of AI in SC

• At the POS, items are not getting

scanned properly. This is a loss
because of: • Implemented a system on the
- Pilferage, foundation of AI called ‘Missed Scan
- Missed Scan and Detection’
- Unchecked storage • The cameras detect whether
- People have put items in their bags,
purses or clothing without scanning
Loss of sales $50BN - People have consumed the item
+ without scanning
- The POS person missed scanning an
item(s).
- Items are kept in corners or under the
shelves and tables
• Once it detects, the system informs a
person on the floor to check with the
customer or the POS personnel or aisle
incharge.
• Attempts are made to recover so to
avoid losses.

This AI project has been so successful that this is being

implemented in more than 1000 stores.
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