INDIAN INSTITUTE OF MANAGEMENT BANGALORE

Supply Chain Management

Case study on

TelCo: Supply Chain Resilience in Telecom Industry

 
Post Graduate Program 2021-23  
  
 
Submitted to:

Prof. Amar Sapra

 
Team Members

2111004
2111028
2111041
2111049
2111055
2111060
Part 1)

Ans 1)

There can be a number of configurations requiring each component, and each configuration
can be deployed in a number of markets. The mapping summary of 5 components in
question with respect to number of configurations, markets and components is depicted
below. The full mapping can be found in the attached Excel. (Refer sheet “Q1”)

Item ID Configurations Markets Required #Conf

CFG 1 1,2,3,4,5
ABN002 CFG 2 1,2,3,4,5 781
CFG 3 1,3,4,5
CFG 1 1,2,3,4,5
ABX001 CFG 2 1,2,3,4,5 781
CFG 3 1,3,4,5
BBR474 CFG 1 1,2,3,4,5 540
BLY283 CFG 2 1,2,3,4,5 220
CFG 1 1,2,3,4,5
CFG 2 1,2,3,4,5
BNT172 792
CFG 3 1,3,4,5
CFG 4 3,4

Ans 2)

(Refer to Table 1 in the Appendix for the results. Detailed working has been given in Sheet
“Q2” in the attached Excel)

Based on this assumption that all CAS within a market served the same number of
customers, we first calculated the number of customers that each configuration served in
each market using Tables 3 and 4 of the case.c
Example calculation: For Item ID BBR474 Market 1, it caters to 4,569,895 customers with 86
CFG1, 33 CFG2 and 2 CFG3 components. Therefore, the number of customers using CFG1 in
Market 1 is = (86/121) * 4,569,895 = 3,248,025.
For all Markets and Configurations, the number of customers is computed similarly. Lastly,
as CFG 1,2, and 3 use Item ABN002, hence it is used by all customers in Market 1. The values
for the other four markets are calculated in the same way and finally, their sum provides us
the total number of customers that will be affected by a supply chain disruption of that
item.

Ans 3)

(Refer to “Q3” sheet of excel)

The most critical components are those whose failure would result in a system failure and
for which there were few alternative sources. The following two criteria are used to
determine the most crucial components:

1. From a technical standpoint, the criticality factor must be 1; Based on this, the
following have been marked as most critical in terms of criticality factor: BNT172,
GHY456, JK1984, MBR034, PRT847, RVN493, TTN332, TYN932.
(Refer to Table 2 in Appendix for the results)

2. The number of consumers affected is the maximum across all markets.

The maximum number of customers that can be affected by disruption is the entire
market size of Telco i.e. 22,084,936 customers. Thus, based on the criticality,
shortages of 9 components- BNT172, GHY456, MBR034, PRT847, RTV213, RVN493,
TTN332, TYN932, and ZVY568 would affect the largest number of customers.
(Refer to Table 3 in Appendix for the results)

Ans 4)

(Refer to Table 4 in Appendix for the results and “Q4” sheet of excel for detailed analysis)

The demand rate and “Time to survive” are computed for the current operations as well as
for the planned projects. (For Detailed calculation see tab Q4 in the excel)

Ans5)

Assuming after disruption TelCo will switch to an alternate supplier as its time to recovery is
3 weeks less than the incumbent supplier. So, all the components which have “Time to
Survive” less than 9 weeks will face disruption.

From Q3, we have identified several critical components, only BNT172 & MBR034 have
“Time to survive” less than 9 weeks.

Given BNT172 “Time to Survive’ is 1.6 weeks and MBR034 “Time to Survive’ is 2.5 weeks.
So, Disruption would last for [9 – min (1.6, 2.5)] = 7.4 weeks

Revenue lost due to disruption (in Dollars):

= Disruption period x total customer affected x revenue/customer
= 7.4 x 22084936 x 200 (total customer affected = 22084936 from Q3)
= 32685705280
Holding cost of inventory (in Dollars):
= 0.20 x (of inventory holding (BNT172) + cost of inventory holding (MBR034))
Where cost of holding inventory = disruption period (weeks) x demand/week x cost/item
= 0.20 x ([ 7.4 x 75 x 99] + [ 7.4 x 45 x 0.10])
= 10995 approx.
Inventory holding cost is almost negligible in comparison to the revenue lost, it is
recommended to hold the inventory for the components.
Part 2 Q1)

The challenges associated with the approach described (consequence-driven) in the case
are:

1) MTTF metric differs from practical conditions: For the components where demand
rate is not measured, theoretical MTTF is used for the calculation of replacement
rate. Since this is calculated using the lab conditions, it will be different from the
conditions in practice and can lead to varied answer.

2) Extra emphasis on black swans events where probability could be very low: This
approach identified strategic component based on potential impact on maximum
number of customers and substitutes availability, so it put extra focus on black
swans which have very low chances of occurring. It may distract company from
focusing on small scale disruption which may have very small impacts based on total
number of customers impacted but they happen at regular interval create customer
churn at regular period or within a small region

3) Safety inventory based on mean TTR of vendors: Vendors TTR might be dynamic
and can change with respect to external conditions. Some disruptions are more likely
to occur than other as well as some disruptions will last more than others, current
method doesn’t account priority based on events. It also takes mean time to
recovery for calculating safety inventory, which may highly skewed depend on
vendor’s distribution and it lasting periods.

4) Inaccuracies in data calculation and interpretation due to complex supply chain:

Today supply chain becomes highly complex. The process from raw material to final
parts can easily pass through more than 100 actors and few managerial qualitative
decisions in the supply chain with the possibility of multiple feedback loops. So it will
nearly impossible to manage and monitor and data computation for the complete
supply chain for the sourced components.

Also, the traditional approach (cause-driven) works well for foreseen uncertainties in the
supply chain, but it will become problematic for unforeseen circumstances like black swan
events for the following reasons:
1. Old school method focuses on listings all possible options and calculating probabilities of
each event. It drastically increases the complexity as such an event could be infinite and
calculating the probabilities will be an impossible task. It is much better to follow the Pareto
80/20 rule, in which 80% impact of disruptions will come from 20% strategic component,
which must be the core focus of the company.
2. It became harder to prioritize we analyze things from the perspective (domain) of the
events that cause the disruption. It will be hard to create a structured approach to tackle
the issue as the number of possibilities will be enormous & hard to create isolated different
criteria for prioritization.
3. There will be always some extrapolation errors in our estimate as they are extrapolated
from the past historical data.
APPENDIX:

Table 1

Customers
Item ID Market 1 Market 2 Market 3 Market 4 Market 5 Affected
ABN002 4569895 1254896 11166510.46 2297677.521 2456896 21745875
ABX001 4569895 1254896 11166510.46 2297677.521 2456896 21745875
BBR474 3248024.5 953721 7809975.883 1507850.873 1466212.129 14985784
BLY283 1246335 301175 3115215.099 753925.4366 713292.3871 6129943
BNT172 4569895 1254896 11254263 2548986 2456896 22084936
FBT937 3248024.5 953721 7897728.421 1759159.352 1466212.129 15324845
GHY456 4569895 1254896 11254263 2548986 2456896 22084936
JKI768 3323560 953721 8139047.901 1795060.563 1743603.613 15954993
JKI984 1246335 301175 3115215.099 753925.4366 713292.3871 6129943
JKI990 3248024.5 953721 7809975.883 1507850.873 1466212.129 14985784
KJU879 3323560 953721 8051295.363 1543752.085 1743603.613 15615932
KTY476 3248024.5 953721 7809975.883 1507850.873 1466212.129 14985784
MBR034 4569895 1254896 11254263 2548986 2456896 22084936
MNA923 75535.455 0 241319.4795 35901.21127 277391.4839 630148
NDH563 4569895 1254896 11166510.46 2297677.521 2456896 21745875
NMU839 3323560 953721 8051295.363 1543752.085 1743603.613 15615932
PFR934 3323560 953721 8051295.363 1543752.085 1743603.613 15615932
PRT847 4569895 1254896 11254263 2548986 2456896 22084936
RTV213 4569895 1254896 11254263 2548986 2456896 22084936
RVN493 4569895 1254896 11254263 2548986 2456896 22084936
TTN332 4569895 1254896 11254263 2548986 2456896 22084936
TYN932 4569895 1254896 11254263 2548986 2456896 22084936
YRE374 1321870.5 301175 3356534.579 789826.6479 990683.871 6760091
YTH478 0 0 87752.53801 251308.4789 0 339061
YTH789 3323560 953721 8051295.363 1543752.085 1743603.613 15615932
YTH934 1246335 301175 3115215.099 753925.4366 713292.3871 6129943
ZVY568 4569895 1254896 11254263 2548986 2456896 22084936
Table 2

Item ID Item Name Criticality Factor

BNT172 Switch Board 1
GHY456 Grounding Unit 1
JK1984 Connector J984 1
MBR034 Fuse Unit 1
PRT847 Power Supply Unit 1
RVN493 Receiver 1
TTN332 Timer Unit 1
TYN932 Transmitter 1

Table 3
Item ID Item Name Criticality factor Customers Affected
BNT172 Switch Board 1 22084936
GHY456 Grounding Unit 1 22084936
MBR034 Fuse Unit 1 22084936
PRT847 Power Supply Unit 1 22084936
RTV213 Power Distribution
Panel 2 22084936
RVN493 Receiver 1 22084936
TTN332 Timer Unit 1 22084936
TYN932 Transmitter 1 22084936
ZVY568 Front Panel 3 22084936

Table 4

For Current Operations For Planned Projects

Time to Time to
Demand per Demand per
Item ID Survive (in Survive (in
week) month
weeks) Months)
ABN002 23.00 2.8 144.5 1.5
ABX001 52.00 0.8 144.5 0.6
BBR474 1.71 12.9 74.5 1.0
BLY283 1.74 6.9 34.5 12.6
BNT172 75.00 1.6 151.25 5.1
FBT937 5.00 24.8 487.5 1.6
GHY456 13.31 17.6 151.25 1.6
JKI768 19.57 2.8 269 0.4
JKI984 11.09 2.1 103.5 3.0
JKI990 16.01 27.0 223.5 0.5
KJU879 18.85 34.7 110 4.8
KTY476 9.07 50.4 74.5 4.3
MBR034 45.00 2.5 151.25 2.3
MNA923 1.76 72.6 213 1.0
NDH563 13.12 42.1 144.5 1.6
NMU839 18.50 1.2 184.5 3.5
PFR934 6.73 5.1 110 1.1
PRT847 13.31 41.7 151.25 1.7
RTV213 8.87 1.4 151.25 0.8
RVN493 23.00 23.7 151.25 1.5
TTN332 12.00 36.0 151.25 8.2
TYN932 24.00 9.6 151.25 4.3
YRE374 10.56 71.9 420 0.5
YTH478 0.31 1733.8 13.5 56.7
YTH789 3.48 99.2 220 3.0
YTH934 3.16 273.5 69 3.4
ZVY568 4.00 130.8 151.25 0.8