ISSUE

Udbhava
Demystifying Lean!
02
MAY
2011

Dear Readers,

This month’s issue focuses on ‘Value Creation in the Supply Chain’ as its theme.

Realizing how firms create value throughout their supply chain is crucial for the understand-
ing of how competitive advantage is achieved. With this end in mind, the articles within
touch upon a variety of topics ranging from Integrated SCM and e-Commerce to a special
feature on how the disaster in Japan can ultimately lead to changes in supply chain thinking.

The next issue will be focusing on ‘Technologies in Supply Chain Management’ as its theme
and will be released in the first week of July. We hereby take this opportunity to invite contri-
butions for the forthcoming issue.

Happy Reading!

Team Udbhava

Contact Points:
Anjali Sardar : anjali.sardar@mba.christuniversity.in
Vinu Wilson : vinu.wilson@mba.christuniversity.in

udbhava@mba.christuniversity.in
 Integrated SCM Solutions
Vinu Wilson, MBA-C

Although technology absorption rate among Indian

supply chain managing companies is quite slow
even today, the need for customized solutions is
growing with ever increasing complexities of SCM.

According to Mr. Devendra Deshmukh , director and

founder of e-Zest solutions, a customized enterprise
application firm , some of the typical SCM issues for
which manufacturers is seeking customized solu-
tions include – e procurement, vendor integration
solutions, supply chain executions ,demand fore-
casting and integrated supply chain management
solutions.

Some of the key global SCM trends includes Green
SCM, Cloud based SCM solutions delivery, use of
RFID , GIS and GPRS technologies.
India is a slow adopter of SCM solutions. Currently,
there are some large enterprises that are using spe-
cialized SCM solutions, but penetration in small and
medium enterprises is very low. The high cost of
licensed software, and lower returns from SCM so-
lutions due to implementation failures have affected
SCM adoption in India. SaaS / Cloud-based deliv-
ery and performance linked business models will
hopefully help in improving SCM solutions adoption
in India.
Integrated SCM solutions, which can address de-
mand for group of companies in specific industrial
areas. In addition, where previously customers
used to be happy with limited SCM capabilities pro-
vided within ERP solutions, but now they can ac-
cess range of specialized software that can address
their SCM needs. It provides integrated spend
management for all categories of goods and ser-
vices. It facilitates to adjust as conditions and
business goals shift.
Integrated SCM offers small and medium enter-
prises (SMEs) specialized SCM tools using sub-
scription models. Also, cloud-based deployment
which significantly reduces IT infrastructure
management cost for small and medium size
businesses
While choosing supply chain management solu-
tion, areas such as features provided by software
and ability to link those with business goals of an
organization are very essential. Apart from that,
technology platform of the product, reporting ca-
pabilities provided by solution, licensing model of
the software provider along with maintenance and
support cost of the solution—need to be evalu-
ated

Udbhava Issue 02 May 2011 2 2

 Supply Chain Strategies
Businesses are confronted with a variety of lead-
ing edge supply chain strategies, such as:
VMI (Vendor Managed Inventory)
Lets the vendor manage the replenishment for a
company.
BTO (Build - to- order) or ATO (Assemble - to-
order)
Present ways to organize production and order
fulfillment process from Push to Pull. These
'demand-pull' supply chains anticipate and re-
spond to changes in real time. The internet en-
ables new velocities of execution, helping firms to
be instantly responsive to the changing demands
of their customers.
Mass Customization
Aims at building products and services tailored for
the unique needs of the customers.
Information Integration
Covers three dimensions – sharing information
and knowledge, coordinating roles and establish-
ing organizational linkages across a supply chain.
Postponement
It is a concept about delaying the point of product
differentiation at a later point in a supply chain.
4PL (Fourth Party Logistics)
This extends the traditional third-party logistics
concepts to include the planning and manage-
ment functions provided by a third party.
APO (Advanced Planning Optimization)
Introduce scientific optimization techniques to
Udbhava Issue 02 May 2011
Venu Puttamraju, MBA - D
to plan production and distribution.
CPFR (Collaborative Planning, Forecasting & Re-
plenishment)
Advocates collaborative efforts between a supplier
and a customer to plan replenishment.
Electronic Supply Chain or E-business Supply
Chain
Leverages the Internet to collaborate, exchange criti-
cal information and execute key functions like pro-
curement, order fulfillment, logistics and invoicing.
Intranets are used within the boundaries of the com-
pany to link their ERP systems. Extranets connect
the companies to their customers and suppliers. The
internet is used by companies to give publicity to their
products and services offered and accept orders from
customers online.
RFID Technology
A common method of identifying objects using Radio
Frequency Identification or RFID, is to store a serial
number that identifies a product and perhaps other
information, on a microchip, which is attached to an
antenna. The antenna enables the chip to transmit
the identification information to a reader. The reader
converts the radio waves returned from the RFID tag
into a form that is computer-readable. Tags can typi-
cally store a unique 64-bit identifier, which are about
300 words of description. The reader sends out elec-
tromagnetic waves that form a magnetic field when
they 'couple' within the antenna on the RFID tag.
The agile manager will embrace all the concepts to
arrive at the optimal strategic mix. Successful compa-
nies understand that the ideal supply chain strategy
is dependent on not one but a variety of factors.
34 3
 Realizing the Benefits of Trading Steel Via Internet

Vinu Wilson MBA-C

Introduction of e-commerce has provided steel The online participation of buyers and sellers
with a unique avenue—through which it can of steel has brought about various unique
reach out to the end consumers directly, elimi- advantages to them which they could not
nating third parties in the form of retailers and avail of in the real or physical steel market,
intermediaries. The concept of selling online or since these benefits are an inherent part of
conducting business in general through the the e-business model.
Internet was initially not received well by a con-
siderable number of people. So, when it came
to selling steel via the same media it was re- E-business has cre-
garded as just another whimsical idea. ated a platform where
“ Buying steel online
helps eliminating not just the big names
hassles of managing from the steel indus-
Moreover, Indians in general are not very ex- logistics, risks of cost
escalation due to
try, but also the frag-
perimental by nature. Though, this behavioral delay in delivery and mented, small and me-
trait might be changing as far as the newer product tampering.” dium sized companies
generation is concerned, yet it is marginal and can participate and
does not account for a huge difference. Even enhance their efficien-
though the entities who launched the idea were cies in online transac-
sure in their minds of the kind of impact it tions for spot buying or selling of steel. This
would create, for the skeptics it was nothing integration of the entire segment comprising
more than a trial and error methodology to es- big, medium and small sized companies
tablish something—which was not suited to the brings in a high degree of competitiveness
way we Indians choose to conduct business. resulting in better quality and hence, pric-
ing— which is based on current market price.

Steel was introduced into the e-business arena

sometime in the beginning of the decade and in
the past five to six years all speculations re-
garding its failure have been rightfully put to
rest. There are a number of companies which
work as e-commerce service providers for the
steel industry in India.
The e-sales process provides steel consum-
ers quality assurance for the product in the
most simple, efficient and transparent man-
ner anywhere in the country. E-sales, which
does away with long drawn negotiations and
Continued on Page 5…….

Udbhava Issue
Issue 01
02 Mar
May2011
2011 4 4
 Continued from Page 4…….

meetings with company executives, help

in saving precious time for both entities,
the buyers and the sellers of steel.

Logistics is no longer the worry of the

consumer. Buyers who purchase steel
online are assured of on time delivery of
goods at their doorstep, without any cost
escalation or tampering.

Therefore, right from material inspection

to listing of lots, from offer for sale to
payments and from lifting to delivery, the
advantages brought about through e-
business in steel sales, clearly spells in-
creased convenience with complete
peace of mind for the consumer.

For online sellers of steel, the margins have been escalating with increased reach in the market,
and discovery of new buyers for their products over the Internet. So, automatically this has im-
pacted the realizations which have gone soaring

With the e-selling process of steel the volumes sold online will only keep multiplying in the years
to come.

Siemens has launched the industry’s first automation software with one engineering
environment and one software project for all automation tasks.

Combining logic control, HMI, drives, safety, and networking, the TIA Portal enables you to
efficiently manage all software development within one engineering framework throughout the
complete life cycle of your automation system.

The TIA Portal helps to increase competitiveness by reducing the complexity of software development
and maintaining multiple software packages, making the engineering process more efficient.

Udbhava Issue 02 May 2011 55

Simplifying Back - Office Workload United Courier Services
(UCS), based near
Vinu Wilson, MBA - C Basildon, UK, offers
services for courier and
light haulage. More
specifically, they
“Contrary to the traditional practice of car- provide traditional same-
bon-traced PODs, use of networked PDAs day transport along with
increases business efficiency.” specialist
delivery for garment and
print or display
companies. The company
Like several small companies providing same-day courier uses a mixture of
services, in the early days of the business, in UCS too ac- permanent and
counting was carried out on Excel spreadsheets and PODs subcontracted staff to
were paper-based. Many man-hours were spent on scan- deliver a personalized
ning or faxing PODs to customers, which took senior man- service to customers via a
agement away from the lifeblood of the business—new mixed fleet of vehicles
sales. from motorbikes to 17
tonne artics (articulated
vehicles), including
In the words of Managing Director of UCS Kevin Davies, customized vehicles for
―We used to use traditional carbon paper PODs, by the delivering 3,000 garments
time they got back to the office, many of them were either per load.
unreadable from bad weather or torn. We were unable to
invoice until this hard copy POD was received, which, for Application of technology
drivers who are based on the other side of the country, has simplified their
sometimes meant days. This led to delays in us receiving mammoth task of POD
payments from customers.‖ (Proof of Delivery)
management and
customer integrated
Action Plan
Having seen the big players in the logistics markets using tracking.
handheld computers, UCS searched the internet for a simi-
lar system for smaller companies and found The POD Fa-
ther. After trialing the system using Orbit XDA PDAs, they
quickly began to realize the benefits.

Continued on Page 7…..

Udbhava Issue 02 May 2011 6 6

 Continued from Page 6…..

However, during their trial—They had to key each

job via a desktop PC in the office. As they were a
growing business with new contracts to be fulfilled,
sometimes everyone is out on the road, which
makes keying jobs on a PC difficult.

Implementation
Everything changed when their account manager,
Tony Ward, demonstrated a module of the POD-
Father, which allowed the drivers to create new
jobs on the handheld computer while out and
about. So, not only were the drivers returning elec-
tronically signed PODs with photographs attached,
but also if a customer needed a new job carried
out in a rush, the driver could create the job on the
PDA then and there.

Benefits
According to UCS, The PODFather is more than proof of delivery, in that the back - office system
has a number of powerful modules, which not only let you import and create delivery jobs, but allo-
cate them to run or driver in a number of ways, including visualizing the jobs on a Google map.
There are vehicle, product and tariff databases allowing vehicle or job rates to be stored per-
customer, meaning quotes can quickly be prepared. And the invoicing module allows batches of
PDF invoices to be created from PODs on a per-customer basis, which can be emailed out— thus
saving paper, administration time and postage expenses.

The feedback they have received from clients is excellent. The Customers have logins to the POD-
Father’s customer portal so, should they accidently lose one of the PODs that is automatically
emailed to them, they can log into the portal and retrieve a copy themselves, thus saving us admin
time and expense.

Udbhava Issue 02 May 2011 7 7

 Will Japan Supply Chain
Disruptions Really Cause
Changes in the Approach to
Supply Management?
Vinu Wilson, MBA-C

The earthquake, tsunami and now radioactivity crisis

that have hit Japan in the past few weeks are caus-
ing severe supply chain disruptions and leading
some pundits at least to call for companies to rethink
their sourcing strategies.

One thing that many observers agree on is that the

disruptions from Japan are driving many companies
to realize that their supply chain risk profile is not
driven only by the direct supplier network, but their
suppliers' suppliers and perhaps even the suppliers
of their suppliers' suppliers.

Case in point: It turns out that just two Japanese

companies, Mitsubishi Gas Chemical and Hitachi
Chemical, control about 90% of the market for a
specialty resin used to bond parts of microchips that
go in to Smart phones and other devices. The facto-
ries of both companies were damaged in the quake.

Another: The compact battery in Apple’s iPods relies

on a polymer made by Japanese company Kureha,
which holds 70% of the market, and whose factory
was damaged. While the battery producer is fine, its
ability to manufacture is threatened by the troubles
at its supplier.

All this, many say, is leading to a rethinking of a

global production and logistics systems in which a
natural disaster in a small part of Japan's industrial
base could have such broad effects around the
world.
Continued on Page 9…….

Udbhava Issue 02 May 2011 8 8

 Continued from Page 8…...

Automotive and electronics manufacturers appear to be the hardest hit. While companies might normally
have expected suppliers with modest damage to get back to speed quickly, continued aftershock quakes
and now the fear of radioactivity contamination could extend the supply disruptions for some time. About
13% of worldwide auto output has been lost due to parts shortages, and IHS Automotive has recently esti-
mated it may cut output by as much as 30% within six weeks in a worst-case scenario

Shin-Etsu Chemical Co. is the world's biggest producer of advanced silicon wafers, a key material needed
for the producing semiconductors. Its factory in Shirakawa Japan received heavy damage from the quake,
and represents about 20% of the globe's capacity to produce key components for several high tech prod-
ucts. The disruption could prove to be a big problem for chip makers such as Intel Corp. and Toshiba Corp.
that buy wafers from Shin-Etsu, and then in turn OEMs that buy chips from those companies.

Chinese computer maker Lenovo Group recently informed that a shortage of components from Japan could
have a impact on output, among others citing the same concerns. The likelihood of more disruptions to
come has touched off a scramble for alternative suppliers, and triggered a run-up in the price of memory
chips and other parts.

One interesting fact: those companies that had the largest inventory buffers are able to manage
through the crisis better than those operating just-in-time. " Just-in-time "is a good plan for normal
times, not for emergencies," said Tetsuji Morino, a managing director at Dai Nippon Printing Co., a $19-
billion company based in Tokyo.

Some large Japanese electronics manufacturers have their plants back up and running but are operating at
only 50% capacity because of their own supply chain disruptions. The automotive industry especially may
need to rethink its supply chain model, according to one expert.

"What this says is that there might be some cracks, some inefficiencies, some unplanned-for problems not
only in nuclear power plants, but in our global supply system for the auto industry," Sean McAlinden, chief
economist for the Center for Automotive Research, said at a conference near Detroit last week.

But will these lessons really lead to changes in supply chain thinking, or will the short term pain some com-
panies are experiencing from the current Japan disruption quickly be forgotten once things have returned to
normal? "Many pundits are over-exaggerating impact from this," says Gene Tyndall, an executive vice
president at Tompkins Associates and long time observer of global supply chains. "The primary impact on
businesses will be to reinforce, or expedite, their supply chain risk management strategies and contingency
plans." Tyndall says that some 50% of companies still do not have adequate risk mitigation plans and/or
clear action steps if a major supply chain disruption of any type occurs.

"Companies are just not prepared for the key questions of What if? and What will we do?" Tyndall
added.

Udbhava Issue 02 May 2011 9

 The Top 11 Positive
Supply Chain Value Creation
Opportunities for 2011

Sunil Kagalkar, MBA - B

The increased complexity of today’s supply chains highlights the impact that these operations
can have on shareholder value - positive or negative.

So, here are the ―Top 11 Positive Supply Chain Value Creation Opportunities for 2011‖

Profitable Growth
Not all growth is profitable, and therefore, not all growth is good. View the supply chain not just
as an opportunity to impact the bottom line by reducing cost, but also as a way to increase the
top line by capturing new markets, new customers, providing new services and / or increasing
market share.

Procurement
Procurement in many firms is really little more than purchasing. Procurement needs to accept a
much broader responsibility beginning with strategic sourcing, to include all supply chain mega-
processes (Plan-Buy-Make-Move-Store-Sell) and encompassing responsibility of supplier rela-
tionship management

Outsourcing
Focus on tasks that are your core competency. All other tasks should be outsourced, as we all
need to enhance our performance on our core competencies.

Inventory
Increase inventory turns and fill rates simultaneously. Advanced Sales Inventory and Operations
Planning (SIOP) must be put in place to unleash working capital and drive customer service.

Transportation
Put forth efforts to develop core carrier programs, implement TMS, decouple inbound freight,
and enhance shipment planning and execution opportunities.

Continued on Page 11…..

Udbhava Issue 02 May 2011 10

10
 Continued from Page 10…..
Network
The uncertain economy, globalization of business, M
& A and the evolution of your marketplace all demand
an annual review of your network. Evaluate the num-
ber of and justification for your locations, along with
the operation strategies, in order to establish the
highest cost / highest customer service network for
current requirements.

Service Supply Chain

View this as a profit center. Reverse logistics and
end-of-life product opportunities need to be assessed
with an eye towards enhancing profitable growth.

Speed, Agility & Productivity

Shareholder value will often be determined by how quickly the supply chain can bring prod-
uct to market and fill orders. It will also be determined by the agility of the supply chain to re-
spond to changing market conditions and by the elimination of waste to enhance productiv-
ity. Successful organizations will be innovative in boosting speed, agility and productivity
across the processes of Plan-Buy-Make-Move-Store-Sell-Return.

Tax-Effective Supply Chain

Include the Effective Tax Rate (ETR) in supply chain decisions and perform the analysis ―pre
-tax‖ to avoid making bad decisions. Since the ETR for multinational corporations is often in
the 25 % range, supply chain managers need to understand the ETR and tax managers
need to understand the supply chain. ETR and the supply chain is a big deal and it is often
overlooked.

Cash-to-Cycle Management
Consider the C2C cycle in all supply chain improvements. At a ba-
sic level, the C2C cycle is the length of time a company’s cash is
tied up in working capital before it is returned in the form of collec-
tions of receivables. Like all assets, cash is useful when it is avail-
able, so you can see how it has a major impact on the supply
chain.

Technology
Move forward with technology upgrades that have a strong busi-
ness case. The business case for supply chain technology applica-
tions is compelling and helps achieve supply chain excellence.

Udbhava Issue 02 May 2011 1111

 The Sustainable Supply Chain:
Creating Value Through Sustainable Packaging
Ashish Nayak, MBA - A

The trend to sustainable consumption gives high performance businesses the opportunity to place sus-
tainability at the heart of their supply chain strategy.

Packaging is a highly visible consumer marketing tool, but it is also a significant cost to the supply
chain, accounting for up to 12 percent of the cost of many typical consumer goods. This combination
creates an ideal opportunity for businesses to drive both brand growth and supply chain cost reduction
by moving to a more sustainable approach for packaging strategy. Consumer goods firms and retailers
can use sustainable packaging programs to create value in four main ways:

1.They should try to reduce supply chain costs by using

smaller amounts of fewer complexes packaging, thereby
cutting sourcing, and production and distribution costs.
For instance, Wal-Mart plans to reduce packaging by 5
percent by 2013, with an expected net saving of $3.4 bil-
lion. The retailer predicts that if 10 percent of the US re-
tailers cut packaging similarly there would be a net indus-
try saving of $11.0 billion.

2. They should achieve sustainability targets through sig-

nificant reductions in raw material consumption, carbon emissions and waste. This is especially relevant
at a time when new standards such as the Climate Change Act in the United Kingdom, the Carbon La-
beling Standard in Japan and California's AB32 legislation are beginning to impact.

3. They should enable customer intimacy by refocusing brand identities towards sustainability. The afflu-
ent and growing LOHAS consumer segment is worth more than $500 billion a year globally. Consumers
in other segments also increasingly prefer more sustainable products.

4. They should create goodwill for key brands with consumers, retailers and wholesalers as well as in-
ternally within the business. Accenture research has shown that 64 percent of consumers are prepared
to pay a premium for products and services that help reduce carbon emissions.

The Value of Sustainable Packaging

Packaging plays a vital role in the commercial strategies of the consumer goods and retail
sectors. Transit packaging such as pallets and cartons mitigates product damage through
the supply chain and enables cost-effective handling. Consumer packaging has a more complex

Continued on Page 13…..

Udbhava Issue 02 May 2011 12

12
Continued from Page 12….

role, additionally supporting brand development on the retailer's shelf, communicating information and making
consumer access easier. Examples include portion or gift packs.

Both types of packag-

ing come with both a
financial and environ-
mental cost. Put sim-
ply, either too little or
too much packaging
can waste money,
send the wrong mar-
keting messages and could potentially impact sales. Firms must know both what they need their packaging to
do for them and what their customers expect of their packaging.

The challenge for a firm is to find the optimum balance in its packaging strategy .

They are:
 Cost.
 Product protection.
 Consumer marketing.
 Communication.
 Environmental impact.

Well-designed sustainable packaging programs should create commercial value while

simultaneously helping to achieve corporate social responsibility targets, especially the
reduction of consumer waste and life cycle carbon emissions from the product.

Value creation in a sustainable packaging initiative comes from collaboration across

several areas of the organization and wider supply chain. The areas may be:
 Research and development
 Product and packaging design
 Marketing strategy
 Supply chain process design

Responding to customer feedback, Amazon has teamed with suppliers to design out
plastic wrapping across the end-to-end supply chain, substituting with recyclable card-
board boxes. The world's largest online retailer expects to see significant benefits, in-
cluding increased customer satisfaction, a more sustainable corporate profile and a
direct boost to the company's bottom line.

Udbhava Issue 02 May 2011 13

13
 How Apple Blocks It’s Competition
Apple is a force to be reckoned with when it
comes to the supply chain for gadgets. It
gives buyers what they want faster than its
rivals, and in the process, it sometimes de-
lays the competition’s products from com-
ing to the market.
The natural disasters in Japan slowed pro-
duction of hundreds of components that are
found in consumer electronic devices, in-
cluding the iPhone and iPad. Yet Apple
sold a remarkable 18.7 million iPhones and
4.7 million iPads last quarter. COO, Tim
Cook said that the company would suffer
“no material supply impact” despite what
he called ―the mother of all backlogs‖
thanks to very strong demand for the iPad.
Not only has Apple been able to beat com-
petitors to the market with devices, it also
sells them more cheaply. Despite having a
year to catch up, no major tablet competi-
tors have been able to match Apple’s $499
entry point for the iPad.
How does Apple do it?
Apple aggressively uses its size and vast
array of resources - including its very deep
pockets - to get the deals it wants with com-
ponent makers. The company sent execu-
tives to its Japanese suppliers literally with
cash in hand to make sure supply remained
adequate, Brian White (Supply Chain &
Apple analyst at Ticonderoga
Udbhava Issue 02 May 2011
TCS has launched its
Anjali Sardar, MBA - A business solutions on
cloud (iON) for SMB.
This is a significant step-
Securities) said. But part of the reason ahead addition in the IT
Apple wins in the supply chain is sim- as a Service (ITaaS)
ply because it is successful overall. ―In segment, especially for
times of a shortage, suppliers are going Indian SMB.
to sell to their biggest customers first,‖
said Tom Dinges, senior electronics
manufacturing consultant at IHS iSuppli. The integrated solution
facility will enable SMB’s
Sales of Apple’s devices have risen astro- to enjoy the advantage of
nomically over the past several years, Pay- per-use business
and the company has grown to become model, which will bring
one of the world’s biggest component them a great relief from
purchasers. What separates Apple from incurring huge expenses
the other big companies out there is its to adopt technology. Also
ability to sell a lot of products while selling they will be relieved from
remarkably few different kinds of prod- the burden of frequent
ucts. upgrades and product
replacement because of
Apple predominantly sells just 5 different
gadgets - iPad, iPhone, iPod, Mac and fast technology obsolence
Apple TV - and a combined total of 15 in the IT sectors.
different variations of those devices, ex-
cluding modifications like the amount of
available memory. That small handful of
products shares many parts common
to all the devices. That makes Apple’s
supply chain among the most pre-
cisely honed in the world.
―For a company of Apple’s size, no one
out there sells so few different products,‖
Tom Dinges (senior electronics manufac-
turing consultant at IHS iSuppli) said. ―As Team Udbhava
a result, Apple’s sourcing strategy can be
much more finely tuned than other com-
panies with very disparate products.‖ Abhijat Bharadwaj
Anjali Sardar
All of that adds up to a very well-oiled
machine. Despite ongoing worldwide sup- Ashish Nayak
ply constraints, Apple’s COO said the
company is ―so confident in its ability to Nitin John
supply‖ that its launching the iPad2 in 13 Sunil Kagalkar
more countries in May.
Vinu Wilson
Source: CNNMoney.com / Technology
1414