Lakshya is an initiative by Club Kaizen which is our monthly supplement designed for people who dare to think above the average and believe in connecting the dots. In an age where technology has taken over every sphere, information is abundant and data is omnipresent, we have conspired to bring to you a collection of thoughtfully created and carefully curated pieces of work by some bright aspiring minds of ICFAI Business School, Hyderabad on the current trends and hot topics in the field of Operations Management and their relevance in different Industries. Everything is growing at the pace of nanoseconds and hence it is quintessential to know about every minute change in the ecosystem. With Lakshya we aim to present our readers with compact yet explicit articles on vivid topics such as the Internet, Banking, IT, IoT, etc. A fair share of this edition focuses majorly on the banking systems and payment gateways. With the constantly evolving technology, it will be interesting to ponder over changes that could be seen soon. We look forward to providing the students with some valuable insights and inculcate the passion for reading once again within our readers. Lakshya is an amazing platform for readers as well as aspiring readers to showcase their talent and pen down their thoughts which in turn will be a gold mine for information for the students of not only IBS but from the outside world too.
1|K A IZE N’ S OP ERAT IO N S & RE SE A RCH EN T ITY
OUR KNOWLEDGE PARTNER
Club Kaizen is privileged to have The International Supply Chain Education Alliance (ISCEA, USA) as the Knowledge Partner from Lakshya’s 24th edition. To be a single source for Total Supply Chain Knowledge through Education, Certification, and Recognition is the mission of ISCEA. Many workshops/events are conducted by ISCEA to improve the knowledge of manufacturing and service industry professionals. ISCEA provides a platform to explore leadership potential to the aspiring leaders in the supply chain industry while developing the skill sets and knowledge desired by corporations, through SCNext (ISCEA Young Supply Chain Professional Association). Some of the internationally recognized certification programs developed by ISCEA include1. Certified Supply Chain Analyst (CSCA). 2. Certified Demand Driven Planner (CDDP). 3. Supply Chain Case Competition. To know more about ISCEA, visit http://www.iscea.net/india. We look forward to working with ISCEA in spreading knowledge and reaching greater heights together.
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EDITOR’S LETTER “If you have knowledge, let others light their candles in it." Welcome to the 45th edition of “LAKSHYA”, our monthly supplement designed for people who take that one extra step to reach perfection. To step above the average, one needs to strive for excellence. That is exactly what we aim to achieve here. Preaching continuous improvement since its inception, Club Kaizen brought forward this magazine, which enables young writers to garner a platform where they can learn, grow and re-learn new things every day. The magazine is a tool that aids students and professional managers to get deeper insights into the current trends and latest happenings around the world. Lakshya is an amalgamation of articles from corporate professionals, faculties, and students from reputed organizations and institutions all across the world. The articles published through Lakshya aims to provide a hands-on experience from great minds and business leaders who wish to inculcate theoretical concepts and strategies with a practical implementation. We all collectively wish to bring in the best, organic and fresh ideas from the young pool of budding managers as well. Also, the most important aspect of a magazine is that it provides a platform for students to enhance and improve their writing skills, it would also create an environment for them to enrich their thought process where they research and write articles. We hope that you like this issue and please let us know if there are any areas or topics that you'd like us to address in upcoming editions. Please write to us and become a part of this discussion. Email ID: kaizenclub.ibs@gmail.com
AARATRIKA LAHIRI VICE-PRESIDENT Club Kaizen – IBS Hyderabad Batch 2020-22
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CONTENTS
S. NO.
TITLE
PAGE NO.
1
From the Mentor’s Desk
5
2
Design Thinking: An Age-Old Approach
7
3
The Phygital Future: Evolution of User Experience
11
4
Operations Management – The SMART Way!
16
5
Is Big Data Revolutionizing Supply Chain Management?
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6
Successful Build-to-Order Strategies
22
7
Green Operations: The Circular Supply Chain
25
8
Operations and Logistics Management
29
9
Demand Forecasting
32
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From the Mentor’s Desk In the era of competition, students must be prepared for the ever-changing business environment. Knowledge creation plays an important role to learn to tackle the dynamic nature of business. I appreciate and congratulate the initiative of club KAIZEN for bridging the gap between the corporate world and academia through LAKSHYA which is an excellent platform where industry practitioners, academicians, and researchers can share their knowledge and experience, acting as a beacon guiding students to reach their goal. My best wishes to Club KAIZEN in their endeavor of knowledge creation through LAKSHYA.
Dr. Nishit Kumar Srivastava Mentor, Club Kaizen
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FACULTY’S INSIGHTS
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Dr. Sanjay Fuloria Professor, Department of Operations and IT, IBS, Hyderabad. Design Thinking: An Age-Old Approach Management professionals keep looking for frameworks and techniques to improve the quality of their work. In the 1980s, managers were smitten with total quality management (TQM). TQM had its own set of tools. The objective was to increase the efficiency of people across the board. If we think deeply, the client-vendor relationship is based on providing a product or a service to a client that excites her. Providing these on time and within the pre-decided cost are table stakes. As Steve Jobs, the magnetic former Apple CEO said, “The customers don’t know what they want.” So, if the vendor can provide something (product/service) that the client never dreamed she wanted, the client will be delighted. She can also realize what she got was what she wanted all the time. Human beings are born with design thinking as part of their cognition. All the civilizations that existed and the present traditions of art and craft are proof enough of design thinking. In fact, everything around us, which is not natural, has been designed by someone. The quality of the design affects our everyday life. There is a growing body of knowledge that suggests some people are better designers than others. Of late, there are attempts to identify the core aspects of design ability. As per Google, the 3 core design thinking principles are empathy, expansive thinking, and experimentation. Empathizing with the core users of your product or service is the first principle. Designing a useless product or service will not cut it. Discussing with the prospective users about their needs, feelings and motivations would lead to an effective design. Expansive thinking is all about discussing multiple ways to design a product or service. This would lead to one big idea though most such ideas won’t work. That one big idea is what one should strive for. Once you have multiple ideas, you need to test some of those ideas via experiments. These experiments could take shape as prototyping. An early-stage version of the product or service is prepared and tested with a small set of people. The testers could be internal or external. The testers are asked for feedback. All viable feedback is incorporated to refine the prototype before it is launched.
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Design thinking is most useful when the problem is unclear, and solutions need to be arrived at i.e., no ready-made solutions are available. It can also work when the process of arriving at a solution requires iterations. When the traditional approaches have not yielded results, design thinking should be tried. These characteristics tie up with Google’s principles of empathy and expansive thinking. A lot of consultations need to be done to get to a solution. These consultations are both internal as well as external. Apple products are a very good example of using the design thinking approach. The key theme Apple focused on was to reduce the complexity. The goal was to bring in simplicity in design and use. The products were supposed to be highly interactive. They wanted to be very clear about the distinction between ‘detail’ and ‘features.’ Too many companies conflate the two. The key differentiator between Apple and other competitors is their design-centric culture. As per the design principles, users’ experience is the key. Users’ behaviors are observed, and conclusions are drawn about what people want and need. Organizations with a design thinking culture focus on emotional value propositions. Such value propositions are promises of feelings. Another tenet of the design principle is to create models to examine complex problems. Then they use prototypes to explore potential solutions. Such organizations have a high tolerance for failure, and they exhibit thoughtful restraint. A very good example of Apple’s design thinking approach is the return of various ports in the latest MacBook Pro line of laptops. They removed many ports from their laptops in 2016. The thinking was these ports were not needed. This resulted in customers having to buy a lot of dongles to connect various devices. After customer backlash, they reintroduced all the ports in 2021. Getting feedback from customers and incorporating that feedback is a very important aspect of the design thinking approach. Organizations with a design-centric culture ensure that this culture permeates throughout the organization, operations department included. Operations management teams participate in the process right from conceptualization of the product or service. Though companies have followed some of the tenets of the design thinking approach for decades, using most of the principles has become a rage now. If the companies get just rewards for all their efforts in using a design thinking approach, it will flourish. Reference: https://www.thinkwithgoogle.com/intl/en-apac/future-of-marketing/creativity/design-thinkingprinciples
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About Author: Dr. Sanjay Fuloria has a total of 23 years of experience, including 12 years in the business world and 11 years in academia. His interests include analytics, machine learning, technology, strategy, and policy. He has worked in the business sector in the areas of analytics and research. He teaches business analytics, project management, operations management, R, and Python. He is an Ultra Marathoner with a strong interest in athletics. Through Carpentries, he teaches R and Python to PhD students from all around the world.
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CORPORATE ANGLE
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Mr. Anand Kumar Agarwal IT Analyst, Tata Consultancy Services The Phygital Future: Evolution of User Experience Technology progress is a never-ending ladder. We barely have enough time to get used to these latest modern technologies, and there is already something new biding for us right around the corner. At times, incorporating something “old-fashioned” can have an extreme impact on the way users experience a product or service. With customers’ digital expectations rising high, it convinces us to blend two different worlds and create a fusion named Phygital. Blending physical with digital is nothing new in this era. There is an integration of digital functionalities with the customer’s physical experience and vice-versa. In a time when the digital world is so omnipresent, wouldn’t omnichannel strategies lead the companies in the world? The Phygital Foundation This pandemic has provided businesses a chance to transform and elevate their approach to customer experiences by integrating online and offline channels and achieve a phygital strategy. Phygital - a term that originated in the retail space, lately has flown a new importance for B2B (and B2B2C) manufacturing enterprises. The Rise of Phygital Experiences Today: Phygital is a term coined to define omnichannel marketing, a strategy in which all marketing channels collaborate to give a completely seamless experience to customers. There are various ways to improve our current phygital experiences. Let's look at some real-world phygital examples to see how they help improve customer experience. 1. Kiosks: A classic example of phygital is the use of a kiosk. Whether in an airport, bank, or 11 | K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
restaurant, a kiosk allows users to perform routine tasks quickly and efficiently using digital technology in a specific physical space. Almost everyone has used one and it is getting so mainstream and accepted that most consumers don't even consider it a digital experience – it is just the way things are done. In the time of COVID-19, some customers may not feel comfortable using a kiosk rather than having an engaging face-to-face confrontation with another person. In a post-COVID world, there are also many ways to reconsider a kiosk to improve the phygital experience. Consider walking into a quick service restaurant and going to a kiosk that already knows you're there - thanks to geofencing. The kiosk greets you, recommends items you've previously purchased, and matches the information you have in your mobile app, such as payment information and dietary restrictions. This type of engagement simplifies the kiosk experience, making it so customer-centric that it has the best possible interaction with your brand, increasing customer loyalty. 2. Mobile Apps, Curbside Pick-up and Delivery, and BOPIS: The convenience that the curbside, mobile apps, and buy online pick up in-store (BOPIS) offer customers is being embraced more and more every day. As more people get the COVID-19 vaccination and head back to convenience stores, restaurants, banks, and retail stores, the companies that have spent time thinking about how to offer the safest, most convenient experiences will win. Take for example, the introduction of QR codes in restaurants. Using your mobile device, you can scan a QR code on your table and view the menu or drinks on one-tap without having to touch a physical or printed menu. These kinds of technologies will continue to emerge even after social distancing subsides - thanks to the convenience and safety that it offers. But not every customer will want to rush back to a store or restaurant. And not every customer will want to use technology. Therefore, a phygital experience must account for the various types of customer’ experience. 3. Websites and customer portals: When it comes to developing website portals, the insurance and healthcare industries are undoubtedly the most crucial. Both must be easy to use so that customers can do self-service activities such as paying bills or getting prescription refills at their convenience. This criteria, however, is not met by all websites. Some are quite difficult to browse, and customers must rely on customer service to obtain the information they require. Syncing the Supply Chain with Phygital Manufacturers should prioritize resilience, real-time intelligence, and transparency in their existing supply chain systems, if the last 18 months have taught them anything. Customers today want not only quicker shipping and delivery periods, but also faster, more detailed, and more accurate information on the whereabouts of the products they need. They also demand a unified, integrated phygital experience that connects the dots from request to configuration and option selection, 12| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
.
execution, and service difficulties throughout use. Meeting this expectation in the supply chain will necessitate a wide range of capabilities and smart Industry 4.0 initiatives. The recent supply chain disruptions have revealed fundamental supply chain flaws such as poor communication and lack of transparency. B2B customers throughout the building products supply chain are frequently unaware of what products will be available, when they will be available, and in what quantities. As a result, contractors have had to go to many distributors to get the materials they need for their projects, and distributors have been hesitant to take on additional inventory for fear of it going unsold. This assumption could be contradicted if the supply chain's various parts were more strongly networked, allowing them to share real-time information on product availability and material demand with each other. This collaborative and digitally wired strategy might synchronize diverse supply chain components with real-time shared data, increasing transparency and responsiveness while also enabling visibility into alternate logistics and supply routes. This, in turn, would strengthen planning, decisionmaking, and ultimately communications and results delivered to clients. Omni Channel Experiences vs Phygital Strategy Before phygital became a thing, retailers talked about omnichannel marketing strategies, where they increased the platforms customers could shop on. In-store, online, mobile, and social media are just a few examples. The purpose of this strategy was to give customers as many options as possible so that they may purchase products through their preferred channel. The distinction between physical and digital retail platforms does not exist for millennials and younger shoppers. This is why a phygital strategy goes beyond multichannel marketing and connects and merges the online and offline worlds altogether. So, what is a phygital strategy? Well, adopting a phygital retail strategy is not just a marketing strategy. It has to begin with a revolution in how you conceive about the customer journey. Businesses must integrate both digital and physical data into their CRM systems to accommodate a non-sequential customer experience where customers hop between online and in-store touchpoints. The consumer should be able to interact with the brand in the actual world just as easily as they do online. As a result, businesses must seek for ways to incorporate automation, artificial intelligence, augmented reality, and other digital technologies into showrooms that connect the physical and digital domains and improve consumer experience. Initiatives to adapting a phygital strategy Any business, regardless of its size or industry, seeks to acquire loyal and engaged customers. Consider everything that can go wrong with the customer experience and adopt solutions that prevent reoccurring issues at a preliminary step. The primary goal of phygital strategies is to improve the user experience. 13| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
1. Keen focus on your omnichannel strategy: Use an omnichannel strategy across all communication channels. This strategy aims to connect your customers across all channels with a unified objective: to engage your audience. 2. Promotional actions that combine the two worlds: Promotional strategies should be coordinated with one another. Regardless of the platforms' differences, successful efforts can be promoted in both the real and digital worlds by combining creativity and planning. Promote quality experiences to bring the brand closer to the customer; Stimulate sales; Develop relationships with customers are some of the major objectives of integrated marketing operations. To do so, you will have to be familiar with the various types of channels that may be used to build a relationship with customers, understand their preferences and behaviours, and employ the technology that can help businesses do so. The growth of integrated marketing and sales can be enhanced by focusing on these essential factors. 3. Utilize technology as a resource: Smartphones, QR codes, and artificial intelligence devices and technologies not only foster the connection between the real and the digital, but also the immersion required to keep your customer engaged in buying from you. It is a misconception that designing a physical strategy demands large sums of money or access to inaccessible technologies. It is already possible to provide a better consumer experience with subtle elements, such as customising your website for mobile phones. All of this is only feasible if we use the technology we have wisely and strategically. The final understanding... By revamping the front-end with a phygital strategy, businesses can enable safe and seamless shopping experiences. Ultimately, this means melding the physical and virtual worlds with channelspecific product lines, customer-centric procedures, efficient supply chains, and targeted marketing, all of which can be aided by a technology-ready architecture. Thus, the pandemic has presented a once-in-a-lifetime opportunity to boost sales, and the remedy is to go phygital. About Author: Anand Kumar Agarwal is an IT Analyst currently working in Tata Consultancy Services. He has over 6 years of work experience in the Information Technology sector. He previously worked in Tech Mahindra for the client GlaxoSmithKline. His functional work domain is Business Intelligence and Data Warehousing wherein he served various roles and projects like Supply Chain DW, Pharma Supply Chain Key Performance Indicators with technologies like ETL, Power BI, Azure, and Cognos.
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EMERGING MANAGERS
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Mr. Monik Ghosh MBA, 2021-2023 Indian Institute of Management, Ranchi Operations Management – The SMART Way!
Self-Monitoring, Analysis and Reporting Technology or S.M.A.R.T is the new way forward in any field. Be it wristwatches, mobile phones, electric vehicles, refrigerators or even dustbins; ‘smartness’ is being incorporated in every way possible. Even a decade ago, activities which could be exclusively carried out by humans, are now being automated in a much smarter way. From recruitment to appraisal in the department of Human Resource, from advertising & promotion to sales report in the fields of sales and marketing – are taken up by automated bots in a much faster & error-free way. In financial domain, investment decisions, reports analysis & even budget projections are being taken up by Smart automation tools to make the work-life easier for accountants. Operations management in one such domain which saw the advent of Automation Technology much earlier than the other fields. Starting from the Industrial Revolution in 1800s followed by task scheduling & division of labour in the early 1900s; operations have seen its fair share of advancement. We have come a long way from assembly line concept given by Henry Ford to modern day car manufacturing which barely requires human intervention. Let us look at some of the new upcoming technologies, which can usher a new era in Operations Management Domain. 1. IIOT (Industrial Internet of Things): As part of Industry 4.0, IIoT is a technology which comprises of interconnected sensors, network instruments, devices & industrial appliances connected to a network of computers which enables smart administration of all operational activities. For example, the absence of any particular product in shelf of a store triggers the mechanical arm to re-stock the item. This may be followed by an triggered email sent to the corresponding supplier at end of day or week to re-order the product which might be selling fast.
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2. Deep Learning: We all have heard about Big Data & Machine Learning and how these have disrupted the world as we see it. Going a step beyond that is Deep Learning (or DL), which is slowly becoming a silent inclusion into our lives. ML is mainly enclosed within the purview of the available data. The ‘big data’ collected gets interpreted by ML to determine what can be the next step. But DL is one step ahead of it, as it learns new things by using each new data. For instance, when we are in a car driving to a destination, ML algorithm learns all the real time road data & proposes the optimal route for the journey. Well DL, which in mainly used in driverless vehicles, used every available data available off & on the net to drive through. Tesla cars learning new road signs once & acting accordingly every time it encounters next is a prime example. 3. Smart Sheet: Smart sheet is a collaboration, project management & crowd sourcing tool which can be integrated with any existing system to aid collaboration in companies. It can be compared to an advanced version of Microsoft office solutions (which consists of word, ppt, one note, excel, visio etc), with the added advantage of real time multiple ‘sheets’ updating. It supports VMware Zimbra and Sales force CRM for application integration and for crowd sourcing, it uses Amazon Mechanical Turk. 4. Nanotechnology: Nanotechnology (or nanotech) is a field which is yet to de exploited to its full capacity. Although, it is mainly associated with invention & product development, future can also see its inclusion in Ops Management field as well. In the domain of food processing & packaging, nanotech can play a very significant role in upgrading the quality management of products. A hypothetical situation can be, a packaging material made up of nano-sensors which are capable of sensing food quality. From manufacturing to delivery, the product can be throughout monitored & red flagged if an anomaly is detected. What’s in the future for Smart Operations Management? • Employment generation in fields like IIoT, AI & Data Science. With introduction of every new aspect in any industry, it is bound to generate employment opportunities in the relevant fields. People with correct skill set will be required for making advancement in the existing technology & development of newer techs. •
Smart Processes aided with pipeline optimization. Consider a hypothetical world where the AI is able to sense the new requirement & suggest how the product should be featured like. The entire project from need identification, target segmentation & market/sales strategy will be guided & driven by deep learning.
• Smart Development: With inclusion of smart technology in every field, the vision of a total smart city incorporated with smart governance, smart business & smart administration. 17| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
Operations domain has seen evolutions all throughout history, be it Industrial Revolution, Business 4.0 or even Industry 4.0. The future is here now & it is already happening!!
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Ms. Meghna Shahi MBA, 2021-2023 IBS Hyderabad Is Big Data Revolutionizing Supply Chain Management? Big data is a collection of data that is large and complex. It can be described as a data that has huge size and complexity. Big data can be described by the following characteristics: •
Volume- Big Data is often referred to as a massive collection of data due to its size. The concept of volume is very crucial in determining the value of a particular data.
•
Variety- Variety refers to the types of data that can be collected and analysed using different methods. During the earlier days, databases and spreadsheets were the only sources of data used by most of the applications.
•
Velocity- The speed at which data is generated and processed plays a crucial role in the success of the analysis. The velocity of data flows depends on the source of the data. It can be a huge and continuous collection of data that's generated from various sources.
•
Variability- The variability in the data can prevent the effective handling and management of the data.
Big data analytics play an important role in improving supply chain management. Solve multiple issues at the strategic, operational, and tactical levels. Big data affects all activities in the supply chain. It ranges from improving delivery times to identifying ways to close the communication gap between manufacturers and suppliers. Analytical reports enable decision makers to achieve operational efficiency, monitor performance, and increase productivity. Supply chain analysis complements datadriven decision making to reduce costs and improve service levels.
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How Big Data Is Revolutionizing Supply Chain? •
Consumer behaviour and usage patterns: Leading telecom business are actively investing in big data analytics to analyse customer usage patterns and habits. The information gathered from the analytics reports allows businesses to retain subscribers and significantly increase sales.
•
Improved inventory management: Large retailers and top online stores with large inventories face some challenges. Big data analysis allows operations managers to gain up-to-date visibility into operations and identify bottlenecks that are slowing down supply chain processes. In addition, consumer trends allow businesses to promote best-selling products and optimize inventories. For example, Amazon uses big data analytics for inventory management. Choose a warehouse based on the proximity of your suppliers and customers to reduce distribution costs. Amazon uses big data analytics to allocate inventory according to customer preferences in a particular region.
Applications of Big Data in Supply Chain Management Solution: •
Improved traceability in supply chain processes: Product traceability is the key to successful supply chain operations. Supply chain managers can easily track products using barcode scanners and attach radio frequency identification devices to specific products. Big data analysis allows companies to collect accurate product information so that operators can track sales cycles. For example, F & B (food and beverage) managers can easily find out when food spoilage can occur. Enhanced traceability allows goods to be tracked from production to retail. Improved traceability allows enterprises to better work with supply chain stakeholders to optimize distribution.
•
Accurate forecasts to meet customer demand: Large datasets are useful when companies apply the information, they collect about their products to predict customer needs. Accurate forecasting allows businesses to improve profitability, anticipate customer needs, and reduce supply chain waste. Companies are now using big data to predict customer preferences while also taking into account external factors in the market.
•
Advanced relationship management: With big data, businesses can better serve their customers and improve their overall relationships. If supply chain managers have access to accurate customer information at all stages, they are more likely to meet their requirements. Big data analysis also enables companies to troubleshoot problems that occur in the sales process.
How Amazon uses Big Data to transform operations? Ultimately, data can help businesses make better decisions and be more efficient. One of the biggest ways Amazon uses data is to use the recommendation engine. When a customer is looking for a 20| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
particular item, Amazon can more accurately predict what else the customer is interested in. This allows Amazon to streamline the process of asking customers to make a purchase. Personalized recommender systems are said to account for 35% of the company's annual sales. And it doesn't stop there. Amazon collects individual data about each customer as you use the website. Amazon tracks what the customer purchased, as well as the items displayed, the shipping address, and whether the customer left a review. Big data helped push Amazon to the top of the e-commerce stack. The company contacts the manufacturer to track inventory and ensure that orders are processed quickly. Thanks to big data, you can choose the warehouse closest to your customers and reduce shipping costs by 1040%. Amazon's influence in this area is showing no signs of slowing, and data and how it's used are more important than ever because of the risk of being left behind by the company's long-term future or rivals. We may conclude that Big Data is indeed transforming supply chain management.
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Mr. Pranay Salveru MBA, 2021-2023 IBS Hyderabad Successful Build-to-Order Strategies
Build-to-order manufacturing has been touted as a win-win situation for both businesses and consumers. Companies and their suppliers, on the other hand, must first grasp what customers want in order to be effective. Build to order (BTO), in which organisations analyse responsiveness holistically across the value chain, is a more successful method for both parties. At each level, the focus is on how to efficiently satisfy client requests. Companies are compelled under BTO to consider the overall cost of an optimization. It's a comprehensive, customer-centric approach that allows businesses to respond swiftly to demand shifts, cut inventory costs, and eliminate discounting. Because it requires income to cover bulk-production expenses, any firm that sells customised highvolume items — such as vehicles, furniture, and electronics — would be inclined to rely on techniques that rush completed goods into the market. Too frequently, the focus is on making the shop floor more efficient rather than optimising the entire system. Push methods are part of a wider issue of manufacturing items to fulfil forecasts, which sets in motion two vicious cycles. (See "Make-to-Destructive Forecast's Cycles.") To compensate for deteriorating profit margins, the corporation must first expand volume, which entails a further demand on resources. Second, even when a client requests a non-standard product, he will have to wait considerably longer than in a build-to-order system since the unique product will compete for manufacturing resources. Customers often do not want to wait so long and opt for pre-made items. The more things a corporation sells from stock, the more distant it becomes from actual consumer demand, and the less likely its sales estimates are to meet actual customer needs. As the cycle progresses, the corporation finds itself producing an ever-increasing proportion of items to anticipate, making it much more difficult to employ the more profitable BTO tactics. The rapidity with which a corporation may make choices, change timetables, or revise current orders to fulfil client demands is referred to as process flexibility. It influences how rapidly the corporation can convert information from the user interface into organisational choices and operating directives, for example. Process flexibility necessitates the participation of suppliers and distributors since it cuts throughout the 22| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
whole value chain. It's especially tough to achieve if the supply-chain climate prioritises short-term, cost-cutting activities above collaborative efforts to maximise mutual benefits. Companies are unable to implement BTO. Every participant must believe that a BTO approach will benefit them all. Most businesses contemplating BTO are concerned about capacity. They are concerned that plants will be underused, particularly if demand falls below ideal supply levels. However, whether a corporation stocks things or produces to order, any manufacturing strategy will collapse if demand falls. The capacity to manage short-term demand fluctuation should be the main focus. A corporation may either improve the factory's responsiveness or regulate the demand flow. Existing products are eligible for BTO. Offering BTO for pre-existing items is a high-risk approach. Customers used to buying from current stock may acclimatise to the notion of picking unique items, resulting in a significant decline in demand for the firm. In reaction, production volume may decline, resulting in a decrease in capacity utilisation. The plan of action However, it produces the quickest returns, especially in fast-moving markets. It works well in situations when fixed costs are minimal and response time is more essential than manufacturing cost. BTO for New Products should be introduced. BTO for new goods is a strategy that appeals to businesses whose products are positioned in the top market segments. The term "custom" is then used as a marketing technique to bolster a company's image. BTO benefits, on the other hand, are limited to the new product. Combine BTO with forecasting to get the best results. Companies use a hybrid method in which they predict consistent high-volume product requirements while building specifications to order less regularly. Hybrid BTO works effectively for modified standard items. Rather from keeping stock at the dealer, a vehicle business would employ a consolidated central-stock or distribution centre. Not only would this reduce dealer inventory, but it would also encourage a cultural shift. Dealers would place orders for any product, whether it originated from a distribution centre or was custom-built. Nothing would be kept in stock. A company's build-to-order items would steadily rise as the quantity of high-volume versions maintained in central stock was reduced, until all products were manufactured to order. Managers should not, however, grow comfortable after partially decreasing inventory dependency. They would still be carrying finished-product stock in the hybrid method. If projections are off, inventories may pile up, increasing the pressure to switch to a push strategy. Although switching to BTO is difficult, there are significant benefits to be gained. Eliminating overproduction and inventory waste at the most expensive point in the value chain can result in significant cost savings. Personalization is made possible by increased market sensitivity and reaction speed, which not only improves unit profitability but also allows for further customization. The most significant benefit of BTO, however, may be that it reconnects the firm with its customers, allowing it to get the insights needed to improve the entire organization's responsiveness. The electronics industry appears to be the most near to achieving BTO. Dell has demonstrated how BTO can provide a significant competitive advantage in terms of not only product delivery but also time to market. With tactics like assemble-to-order, the industry as a whole has achieved product and 23| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
and volume flexibility, as well as process flexibility at the front end. Even Dell, though, has to do more. Its order-fulfillment methodology is certainly efficient, and its assemble-to-order technique is closer to BTO than that of other organisations. It has fulfilled the critical first stage of determining consumer need, but it has yet to address all of its processes. It still keeps a lot of component inventory in the factory, which it replenishes with forecasts. However, regardless matter that arrives first, BTO is much too precious to stay a wish. Most firms can reconnect the consumer to the whole supply chain with a sound plan, tenacious persistence, and clear communication.
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Mr. Mustafa Maqbool MBA, 2021-2023 IBS Hyderabad Green Operations: The Circular Supply Chain
The supply chain structure has mostly been unaltered since humans started manufacturing and delivering items to each other. Raw materials are transformed into a product, and are subsequently transported and consumed until they are eventually disposed. This linear supply chain has kept economies running, but perhaps a newer, highly efficient supply chain strategy, the circular supply chain, is gaining ground. The circular supply chain is a model that motivates producers and distributors to recycle waste items. Companies are reusing obsolete parts or melting down items to return them to their raw material form rather than developing them for one one-time-use. Manufacturers are constantly choosing to loop their supply chains rather than using a straight model to reduce costs and waste. This approach is more cost-effective for business over the long run. Organizations often overlook possibilities to recycle materials because of the initial investment for the recycling of waste products. Companies will be spending less money on raw materials once procedures are in place and will also benefit the environment, vulnerability to price fluctuation would also reduce substantially, and this will therefore reduce the carbon footprint of the consumers who will be using these products/services.
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Reasons why Businesses should shift to the Circular Supply Chain Model: 1. Value and Money: The circular supply chain may appear to be merely a strategy for businesses to lessen their environmental impact, but because of it businesses can get the most value out of the raw materials by recycling them. Instead of wasting products at the end of their useful live, they can be repurposed for profit at a cheaper cost than creating an entirely new one. Discarding things destroys the money that businesses had already invested in them, such as land, labour, raw materials, etc. Recycling materials into new things is cheaper. Therefore, businesses can save money be making their supply chains into a circular one, in which there are no loose ends, because of the circle. 2. Social: In almost every industry, going green is still seen as a daunting task. The Environmental protection agency reported that People in the United States produced 262.43 million tonnes of trash in 2015. That's an increase of about 3.5 million tonnes from 2014, and a total of 54.1 million tonnes since 1990. As the amount of waste generated by consumers increases every year, it is up to consumers and businesses to choose items with a low environmental impact. People are becoming increasingly aware of their buying choices. As per a Nielsen survey, 66 % customers are ready to pay more for environmentally friendly goods. Furthermore, millennials are prepared to spend more for sustainable items over their traditional counterparts. Businesses that wish to stay competitive and expand their market share must adapt to consumers who are becoming increasingly aware of their influence on the environment. 3. Hedging Price volatility: Many businesses are impacted due to the constantly changing prices of raw material prices as they need to plan their budgets and keep total costs of items under control. Many kinds of virgin materials regularly fluctuate in price, specifically metals, that have now witnessed more volatility in the last decade than any other decade in the 20th century. Businesses could more accurately determine their expenditure and keep expenses under control by estimating the number of reused and recycled materials that can be employed in the creation of new goods. 4. Government Mandates and Regulations: Most governments have business operating requirements, such as rules and regulations governing recycling and trash disposal, which is pressuring firms to implement the circular supply chain. Others are rewarding business who make active attempts to “become green”, regardless of whether their ultimate goal is to lessen environmental impact or merely increase profits. Here are some examples of laws around the world: 26| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
• • • •
The EU Packaging Directive mandates that all EU countries recycle 50% of their packaging waste. Japanese recycling laws compel enterprises to convert packaging materials into reusable items. Recycled Content Laws in California says that no plastic bags, 25% of all plastic containers must be recycled, and more. UK Landfill Directive says that regardless of size or sales, all UK-based businesses must recycle or treat their waste products.
Three examples of how these companies benefitted from implementing the circular supply chain into its business operations: • Renault, a French automotive manufacturer located outside of Paris, was one of the first companies to use the circular supply chain model before the phrase was created. The company was looking for solutions to recover from the disastrous impacts of WWII when it was founded in 1949. They started selling old automotive parts at a 30% to 50% discount, with the same warranties and guarantees as new parts. Their sole purpose was to maximise earnings and build a company that could thrive in a low-raw-materials environment. Today, that same plant outside of Paris earns almost $270 million in annual sales! For even more profit, it now builds its primary car components to be easily disassembled. • The strength of the circular supply chain is demonstrated by Nike's "Reuse-A-Shoe" campaign and Adidas' partnership with Parley for the Oceans. Customers are encouraged to recycle their old Nike shoes at local Nike retailers. Those old shoes are then recycled into Nike "grind material," which is subsequently repurposed into new sneakers for sale. This not only keeps old sneakers out of landfills, but it also enhances Nike's image and saves them money on materials. • Adidas' circular supply chain project is arguably even more well-known. They've promised to produce 11 million pairs of sneakers using recovered plastic from the ocean. They've already had a lot of success with their recycled shoe line, and they're on course to make $1 billion while helping reduce the ocean plastic problem. The Road Ahead: Sustainability will lead to the Circular model As restrictions on recycling and safe disposal of production leftovers tighten, circular supply networks turn waste into possibilities. By-products are frequently reclaimed and re-used within the manufacturing process, allowing organisations to establish new revenue streams for previously wasted products. Companies that want to stay profitable in the future will look for ways to save expenses while also pleasing their customers. As a result, using the circular supply chain methodology is the way ahead. 27| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
References: 1. https://www.kuebix.com/circular-supply-chain-missing-link/ 2. https://www.reddit.com/r/circular_economy/comments/l5ri8y/feedback_on_this_circular_supply_ chain_model/ 3. https://www.forbes.com/sites/stevebanker/2021/06/29/the-circular-supply-chain-a-push-forsustainability
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Ms. Shruti Patil MBA, 2021-2023 IBS Hyderabad Operations and Logistics Management
Operations and logistics management are critical components of any company's operations. From obtaining required raw materials to the manufacturing process and finally, to consumption, the company's supply chain process is dependent on operations and logistics management. The management's mission is to ensure that goods and services are produced in sufficient quantity and quality and then distributed at the appropriate location and at the appropriate time. It also includes management and implementation systems for competent personnel employment, inventory in-process, and company design to produce finished products. A company's supply chain is the series of steps it takes to transform raw materials into a finished, consumable product. The steps begin with a plan to determine how the given service or goodwill satisfies the consumers' needs. It is followed by the development stage, which entails locating raw material suppliers and determining how to obtain the necessary raw materials. The other stage is the manufacturing stage, which involves the production of the final product as well as testing and packaging. It prepares the way for the final stage, delivery, in which the finished products are delivered to the customer. Customers may also be dissatisfied with a product and return the defective item, which is a part of the chain supply stage. Advantages: •
Better distribution network utilization: When you have a good logistics system in place, with multiple logistics operators, you can optimize the distribution chain as well as the times. This means that there are a variety of companies dedicated to logistics and distribution on a national and international scale.
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Cost savings: This is made possible by the various globalized distribution systems, which reduce transportation costs.
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A more efficient logistic chain: If a more efficient logistic chain can be implemented, it will improve both final customer satisfaction and service.
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Transportation and express delivery: Systems that allow for urgent transportation are being implemented now more than ever. Orders can now reach their final destination in a fraction of the time it took just a few years ago.
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Information technology: Technology is assisting the sector's evolution by reducing turnaround times and streamlining processes.
Disadvantages: •
Coordination: There may be some failures in international coordination, particularly in cases of international logistics; the most common issues are language, schedule, cultural change, and so on.
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Multinationals and large corporations: Typically, the sector is dominated by very large corporations. Access is extremely difficult for both medium and small businesses.
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Transportation costs: The longer the journey, the higher the cost. This makes obtaining a competitive price difficult.
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Legality: In logistics, laws, customs policy, and product entry and exit all have a lot to say.
Inventory control is the process of ensuring that the items are available to the customer, and inventory logistics aims to contribute to the company's profit by meeting its market and financial requirements. It also aids in the achievement of the goal of optimization and meeting the three company objectives of customer service, inventory costs, and operating costs. The size of the logistic inventory is primarily determined by the mode of transportation chosen and the size of the delivery batch. Company Reference One of the determining factors in inventory management is the company's location and its ability to reach the customer's location. Coca-cola has devised a distribution strategy in which they deliver their products to customers' homes. Coca-Cola has had to invest more in its fleet of vehicles and personnel to achieve this, even though it is a good strategy. Inventory management also aids in the detection of a sudden drop in demand due to sales, which can 30| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
help to avoid stockouts or excesses. Coca-Cola frequently employs forecast distribution to obtain the necessary inventory to meet fluctuating customer demand. In a company's supply chain, the logistic network is critical. A sophisticated and well-designed logistic network, according to Ling (2003), allows for a quick response to a supply chain. This quick response leads to better demand forecasting, shorter cycle times, and higher profits in supply chains. The main links between manufacturers, suppliers, distributors, retailers, and consumers are distribution and logistics centers. The Coca-Cola Company has used a tool called the Supply Chain Operations Reference Model to reduce its production costs. It has also improved strategic competition among competitors, which has contributed to an increase in profits and revenues. A supply chain can slow down if there isn't a proper logistic operation in place, the supply chain is a part of the logistic operation's planning and implementation, and poor planning can lead to a supply chain breakdown. Road Ahead and Future Directions First and foremost, the logistics issue of people's livelihood becomes a heated topic. Traditional study in this area has focused on perishable, fashion, and electrical products, all of which have a limited life cycle. City logistics, emergency logistics, and agriculture supply chain are examples of current subjects. Second, as the market and technology advance, new directions in logistics and supply chain management may emerge. Information technology is a good illustration of this, as it leads to e-business study and the selection of relevant distribution channels. RFID, cloud computing, and big data are all popular today and could be key research topics in the future. Third, environmental research will continue to be a major concern. Resource scarcity, ecological devastation, environmental pollution, and other challenges have sparked widespread concern as the world's population and industrial-scale continue to grow. The global community has agreed that a greener economic pattern and lifestyle is the best way to achieve socio-economic sustainability. By boosting investment in green logistics and distribution channels, devising and implementing various bills, plans, and strategies, and improving the implementation of sustainable economic development policies, many countries generate a new vision of industrial and technical rivalry. The scope of this topic will expand in the future to include more than only remanufacturing, reverse logistics, and closedloop supply chains. Low-carbon issues could be a promising study area.
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Ms. Swetha J Nair MBA, 2021-2023 IBS Hyderabad Demand Forecasting Demand Forecasting is the procedure of analyzing the data to understand the future demand of products according to the customer needs. It is really helpful for supply chain management since it will assist the company in making better-informed supply selections by estimating total sales and revenue for a future period. Critical business assumptions such as profit margins, cash flow, capital spending, risk assessment, and mitigation strategies, capacity planning, and other essential business assumptions are all taken into consideration. Types of demand forecasting Demand forecasting can be classified based on factors like seasonal demand highs and lows, the scope of the market considered, level of detailing, and economic patterns. Short–term demand forecasting: For the short – time, demand forecasting is done for a period of 3 to 12 months. The seasonal pattern of demand and the impact of tactical decisions on customer demand are considered in the short term which results in a higher level of forecast accuracy. Long–term demand forecasting: For the long term, demand forecasting is done for more than a year. Long-term forecasting is used to plan corporate strategy, sales and marketing, financial planning, capacity planning, capital expenditure, and so on for a longer period. Active demand forecasting: Active demand forecasting is effective as it is carried out for expanding and diversifying businesses by using predictions of market trends and product portfolio expansion and considering the competition and external economic environment to create an aggressive growth plan. Passive demand forecasting: Passive demand forecasting depends mainly on the historical data with the least assumptions. It is carried out for businesses that have consistent demand and a well-established market with very conservative growth plans. 32| K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y
External demand forecasting: External demand forecasting is a macro-level demand which deals with broader market movements. It is used by considering the effects of economic and market trends according to the future demand and then evaluating objectives like expansion of the product portfolio, entry into new customer sectors, technology disruptions, a paradigm shift in consumer behavior, and risk mitigation methods. Internal demand forecasting: Internal demand forecasting is a micro-level demand which deals with internal matters of the supply chain and personnel. Internal matters can include sales and financial division, manufacturing group, and product category. It is specific to certain businesses, industry or customer groups. Importance of demand forecasting Without knowing and understanding the requirements of future demand no business could make correct decisions about market trends, staffing, product portfolio, etc. Demand forecasting is a critical business process for developing a company's strategic and operational plans. It also helps in crucial management activities like decision making, performance evaluation, allocation of resources, and so on. Demand forecasting is crucial for supply chain management as it provides the supply chain managers more scope for planning logistics and transportation for maximizing efficiency and to organize the inventory levels according to the future demand. The most successful supply chain managers are those who can use demand forecasting to help them set targets and achieve them. The basis for forecasting accuracy is a solid understanding of supply chain analytics. Factors that influence demand forecasting a. Seasonality: Seasonality refers to fluctuations in order volume over some time. A very seasonal brand may cater to a certain period, event, or season, resulting in fluctuating demand throughout the year, with huge surges during peak season. Seasonal demand typically necessitates a company's inventory being reduced during the slow months and then ramping up production and staffing during peak season.
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b. Competition: Demand is affected by the competition in the market since the customers have more options to choose from. This will result in a lessening of demand, so an agile demand forecasting model will be really useful to respond quickly to the changes. c. Geography: Geographical factors such as where your customers live and where you manufacture and deliver the product can have a big impact on inventory forecasting and how quickly you can fulfill customer requests. Using fulfillment centers near your consumers can help you meet customer demand more quickly and cost-effectively since it transports from the nearest warehouse. d. Types of Goods: Demand forecasting will be quite different for different items and services. To improve demand forecasting, it's critical to know your customers' lifetime value, average order value, and product combinations ordered. Examples of demand forecasting A fast-growing direct-to-consumer cosmetics company is gaining traction. They expect to increase their orders per month, based on prior sales statistics, planned ad campaigns, and general industry market circumstances. Their order volume varies a lot depending on their replenishment cycle, and they refresh inventory by SKU level every 90 days or such. The average number of units they store will rapidly increase, while the cadence will remain constant. They intend to keep growing at that rate, so they're considering whether to buy land, lease a warehouse, or outsource fulfillment to meet demand. A large food manufacturing company refers to the actual sales of highly seasonal commodities like soups and mashed potatoes during the previous 24 months. At the flavor and packaging size levels, an analysis is performed. The demand for essential ingredients such as tomatoes, potatoes, and other vegetables is then anticipated for the following 12 to 24 months based on market potential, as well as capacity planning and analyzing the requirement for external co-packing. Conclusion Demand Forecasting is really necessary for businesses to analyze the market trends, product portfolio, and risk assessment methods to understand the customer needs and plan accordingly to meet their demand. Demand forecasting can never be 100 percent accurate, but there are methods you can do to reduce production lead times, improve operational efficiencies, save money, launch new goods, and improve customer service.
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ABOUT US The word “Kaizen”, where “Kai” = change, “Zen” = good, signifies change for the better. In its birthplace Japan, the word Kaizen is imbibed as a process that many small continuous changes in systems and policies bring effective results than few major changes. This methodology applies to every department across different sectors. Kaizen – The Official Operations Club of IBS Hyderabad has always been aspiring “Constant Change ad Evolvement”. We, as an organization work to inspire and aspire to the student community for the betterment of the future. KORE – Kaizen’s Operations and Research Entity, one of our primary wings provide the students with a platform to improve and hone their technical competencies to meet the changing demands of the organizations. KORE’s sphere of influence includes Case-Based Research, Consultancy, Live Projects, and Workshops. LAKSHYA, an initiative of KORE focuses on improving the reader's knowledge about Operations Management by providing insights in the form of articles on various operation techniques followed by different companies and also updating the emerging trends in the communities.
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