Module -3-4 Supply Chain Strategy

End to End Integration

Organization & Alignment
Step by Step Guide
Saturday Night: 22nd May

Saturday Night
Procyon Mukherjee
How do you develop end to end supply chain process architecture?

What are the four tests of good Supply Chain Architecture: Strategic Fit, End to End Focus, Simplicity of
implementation, Test of Integration (Results & Metrics)

What is architectural toolkit? Just like a building how every element is aligned to the making of the whole

How top 3 levels of SCOR helps in building end to end supply chain architecture: Process, Sub-Process & Activities

What are the five key processes for end to end supply chain management: Plan, Source, Make, Deliver, Return
Supply Chain Success would need a Blue Print for success

- Fit for Purpose: What purpose?

- Process & Facilities: Aimed to deliver what?

- Applications & Objectives: To facilitate what processes & sub-processes?

- Information Systems: To align what?

- Partnerships: To facilitate what?

Case Study: Amazon

 The Old World of Physical Retail

Manufacturers & Suppliers connected through their own selling channels or through organised Retail

Whole sellers & Retailers connected through warehousing & transportation Area of Play
for Physical
Own and private logistics service providers in the transportation business Retail is
Inbound
Information is fragmented and masked Logistics

Technologies are not shared, benefits are derived by each in their own areas

The success of each firm in the echelon depends on their ability to create unique products that can be
priced such that all costs can be absorbed; led to economies of scale- mega store networks connected Success
with transportation efficiencies to the OEMs hinged on
proximity
Efficiency stemmed from individual contributions effects,
density of
Economies of scale, new locations, and changes in sourcing and distribution strategies led to success of stores in a
Walmart & Target geography
Conventional Distance Decay Curves
 Amazon
Cataloguing led to E-Commerce with increase in courier & parcel services which lowered logistics cost

Creation of Distributional hierarchy that can reduce cost significantly:

Facility
Area of play is in-bound &
Mode outbound logistics

Channel - Partnerships

The challenge: 1. Physical Retail is for local engagements for a small geographic area, whereas On-Line is for a very large
catchment area, could be the entire nation 2. The last mile distribution is a critical challenge as essentially it would entail
less than truck loads and smaller parcel carriers adding to the cost. 3. The itemised orders cannot be consolidated easily
because of the demand characteristics
 New Purpose Designed Facilities: The DC is the anchor not a mere support structure as in Physical Retail

Low Density
Distribution Center
Postal Services, 3PL, Associate Channels
Processing

Picking
High
Sorting Efficiency

Packaging Distribution Centers hinged on Low density in

peripheral areas to the market coupled with
Decomposing exceptional logistics networks connected by rail, road,
High airways to facilitate evacuation
Ful-fillment center
Density

Last Mile City Logistics Creating an avenue of additional demand

Strategy
 Creating the Foot print Strategy for Distribution

Increase in the Distribution Footprint instead of Physical Store foot print, the cost dynamics favors such a transition
Logistics Facilities supporting E-Commerce
Positioning of the right inventory
at the Fulfilment centre
Foot print and average size of Facilities
Foot Prints added in Amazon Distribution Facilities
In-Bound Cross Dock Facilities
E-Fulfilment Center Network
 E-Fulfilment Centres by Item: As the Diversity of items increased

Closer to
markets
Such as Locational
footwear, Flexibility
apparel,
electronics
Amazon Air-hubs Network
Amazon sortation centre network

First entry point to

local

Highly dispersed but

connected to local
delivery hubs & regional
parcel distribution
center
 Amazon Prime Network for the Last Mile

Selected items
having a high
turnover rate, Located within
co-located with large
delivery metropolitan
stations areas

Trade-off between high market accessibility and its reduced

delivery lead time with high rent costs
Amazon Delivery stations network
Location of Amazon’s E-Commerce facilities in
Los Angeles & New York
Channel Partnerships
& Acquisitions
Information
System at
Amazon
End to end business process flow integrated through platforms and applications
 Strategy Formulation for the Vaccine Cold Chain Network

Prepare a roadmap :

1. Purpose Safe, temperature & quality protocols, less waste, timely, no discrimination, rule
based, completion following a plan, cost effective, centralised
2. Facility Manufacturing to primary, secondary & tertiary storage, mobile facilities, refer trucks,
vans, community, health centers
3. Information systems Demand aggregation, order generation protocols, procurement and ordering protocols,
planning & logistics flow capturing, inventory linkages, replenishment
4. Partnerships Storage systems, mobile systems, logistics systems, procurement, IT and technology
enablement
5. Integration Centralisation of demand to supply planning at the macro to the micro,
regional centers, states, district and municipal admins, health center, IT
system simplification
Puzzle: End to End Visibility Fragmented is inefficient

Insights
Prepare a - Linear structure
Push-Pull - No feedback
loop
System and - Supply-
locate the Demand
Planning?
decoupling - Is the existing
points. structure of
flows
adequate?
What flow of - What are the
inter-
information connected
will be flows?
- Collaboration
required with other
between networks?

stakeholders?
https://resources.cleo.com/burris-logistics-case-study
 The Supply Chain of Pencils: What are the input output data links for each
Puzzle
block in the chain? What digital handshakes will be required?
Puzzles for a Supply Chain of Pencils: What will be your supply chain planning structure of inputs

The design of a network that needs MRP 2: Economies of Scale

to factor in economic and
sustainable wood on one hand and Economies of Density
the availability of technology of
wood cutting, kiln drying and Demand-Supply Planning
milling to the availability of shaped
graphite and assembly operations Integration
of the pencil to the connected
distribution and logistics challenges Network Optimization
to reach consumption points.
Demand shaping and planning

Sales & Operations Planning

Logistics: Infrastructure, Efficiency, Return

loops, Waste management, Sustainability

Distribution and Retailing

 The Origin of the End to End Supply Chain as a concept

Puzzle 2: How do the hand shakes happen? What SLAs? What joint KPIs? What document handovers?
What objective functions clash against each other? Is it the same data or different data?
End to End Supply Chain means different things

Several concurrent
programs criss-cross

What impacts which

results?
 John Deere Supply Chain
Case Study

Thousands of parts have to

shipped to dealers and direct
customers
INTEL CASE STUDY OF MAKE TO ORDER
Reducing Cost to Serve
 Global Supply Chains have to create new reinforcements

Disruptions make this process more

important

Create a Matrix for capturing real time data to service a global supply chain go through disruptions
Taken from the world’s
best logistics planning
company
Saturday Night: 22nd May

Saturday Night
Operating Environment: Competitive Forces I Regulations & Government I Customer Processes I Business Sustainability

Business Profits need Optimality of Customer Service, Manufacturing Cost, Inventory Cost & Distribution Cost

Saturday Night: 22nd May

Marketing results need high sales, high inventory, wide distribution systems, quick change-overs and production
runs, high service levels

Manufacturing needs long production runs, high throughput rates, high capacity utilization and high
inventory levels

Finance needs low investments (reduce

Saturday
plants
Night
& warehouses, low costs (low inventories, low cost of
output, production of only customer orders (made to order).
 Supply Chains as Gatekeepers

The need for

coordination of
several functions,
collaboration and
common KPIs to
Best Use of Saturday Night: 22nd May deliver common
Firm’s objectives
Resources

Supply Chain in
Provide modern times have
Required taken over the
level of responsibilty for
Service the efficient flow
of materials from
sourcing to
customer
Saturday Night

Puzzle-1: The case of the conflicting objective functions

Saturday Night: 22nd May Structures, Links, Organogram
and Skills need to be organized
based on specific structures of
roll out

Saturday Night
Saturday Night: 22nd May

Saturday Night
 End to end spectrum
Metals, Mining, Cement, Core Sector Logistics Services enterprise
Source Source
Section -1
End Consumption End Consumption
Growth as a Strategy
Orchestration of supply-demand Orchestration of supply-demand

Information, Capital, Physical, Saturday Night: 22nd May

Information, Capital, Physical,
Assets, Capabilities Assets, Capabilities
Example: Galvanized Iron Roofing Sheet Port Road Traffic

Industrial Equipment FMCG & Consumer Products

Source Source
End Consumption End Consumption

Orchestration of supply-demand Orchestration of supply-demand

Saturday Night
Information, Capital, Physical, Information, Capital, Physical,
Assets, Capabilities Assets, Capabilities
Mining Equipment Packaged Cornflakes
 End to End Transformation: Step-1:
Establish Systems that Offer
visibility
- Freight Capacity
- Mode specific visibility
- Customs transit
Real Time Inventory or order Track and Trace systems to garner
status Tracking accurate view of end to end
supply chain in real time
- Batch processing or back
flushing is more a
desirable choice
- Tracking inventories,
costs and demand-supply
data in real time is the
need of the day
 Step-2 Deepen Integration among Departments and functions

Install ERP systems Real time same

Extend ERP to outsourcing Analyze risk: Internal and external though
truth across
as well collaboration among departments
departments
 Step-3: Improve Collaboration

Integrate with ERP online Have a dedicated portal Identify KPIs for all stakeholders:
updates for supply chain to Benchmark visibility
collaborate with
customers, suppliers
and partners
 Step-4 Overhaul the Value Chain: Outside In Vs Inside Out

Eliminate middlemen Identify PDCA Streamline and

and value destroyers Bottlenecks standardize: Digital
Transformation

Improvements as a continuum
 Step 5: Implement Right Technology

Analyze existing Implement new Introduce automation

Shun manual processes
systems systems with right ROI
Integrate ordering to invoicing

Auto-alerts and notifications

Exercise:

Each Group to select an Industry where transformation of supply chains to cater to on-line sales is being
attempted. You are engaged as a consultant, how would you plan your road map.

Map the Source to End consumption space

Identify the scope of end to end integration of physical flows, information, capital, Assets & Capabilities

Create a quick map of the journey: Internal focus to External

One chart each group

Scaling up an on-line
platform:

- Digital Tools & the

supply chain
connection

- Scaling up the supply

chain using digital tools

- Joining the missing

links

- Talent and people

Example of the
macro, regional and
micro markets in
Cement Sales
Category
management

Tying Logistics
support

Demand Supply
mapping in micro
markets
Digital touch points in Omni-
Channel Retail:

- Prepare a schematic for

touch points in physical
retail chain

- Same for on-line retail

- How does the Omni-

channel touch points look
like across the entire
supply chain network
- Logistics Efficiency & Accuracy
- Furthering the effect of movement
- Assisting in Supply Chain Flexibility
- Pre-ponement & Postponement
- Uncovering untapped areas of opportunity
- Shelf-life, spurious supplies, quality assurance
- Connectivity with accuracy through cloud platforms