Strive 8 volume 4 Issue 2 by Operations Club IIM

Inside:Exclusive interview with Mr. Prashant Tuli, Senior Manager at Maruti Suzuki India Ltd.

Editorial

s said by a famous scientist "It is not the companies but the supply chains that compete in 21st century". The above statement emphasizes the role of supply chain in gaining competitive advantage. And of all the factors affecting supply chain, technology is prominent one which has changed the way supply chains operate over the years. Technologies like Information Technology(ERP,IoT) have made supply chains robust. There are slew of other trends and technologies(3D Printing, Supply chain Analytics) that are in nascent stage which are likely to influence the supply chains. In this edition of strive we will discuss the latest trends and understand their applications. Apart from the technological breakthroughs, the proactive steps taken by the government is hugely going to impact the supply chain in our country. The Goods and Services(GST Bill) which is in planned to come into effect from 2016, has the potential to revolutionize the way supply chains operate. The "Make in India" campaign launched by our prime minister also has an important role to play in the way supply chains operate. So."STRIVE",the bi-annual magazine of Operations and supply chain club(OPEP) of IIM Raipur in order to better know the future of supply chain management considered "Emerging Trends and Technologies in Supply Chain" as the topic of the present issue. It throws light on some of the technological breakthroughs like 3D printing which has

potential to alter the present manufacturing processes. Also, it concentrates on how the advanced RFIDs are going to improve the tracking of inventory. To bring out the current and future trends, we have an interview from the industry expert, Mr. Prashant Tuli, Senior Manager, Maruti Suzuki ltd where some insights on the trends in automobile supply chain and the way Maruti Suzuki is leveraging latest technologies to improve its supply chain is discussed. After a through understandings and analysis about various technologies and trends, we have students' articles starting with the role of RFID in simplifying supply chains. The emergence of 3D printing as a disruptive technology and its influence on supply chain is discussed. It is followed by discussion on the Goods and Services Tax that could be a game changer for the logistics in India regulations and also on government initiatives like "Make in India". There is a book review on the book "Supply chain visibility" written by Jonah Saint Hcint Re gives consolidates the uncoordinated published work on supply chain visibility and presents it with a practitioner's point of view. We are thankful to Prof. B. S. Sahay, Director, IIM Raipur for his motivation and support. We also thank Prof. Parkshit Charan and Prof. P.R.S. Sarma for guiding us throughout. We also thank all our authors for taking out time from their busy schedule and contributing to the magazine. Kiran kumar B Editor pgp14073.kiran@iimraipur.ac.in

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Directorâ&#x20AC;&#x2122;s Message It is estimated that over $40 billion is wasted by companies all over the world in a year, due to improper execution of supply chain practices. Over the years technology has empowered companies to make better planning and execution and it has always been crucial in changing the way supply chain operates. It is imperative for students and supply chain professionals to understand these technological trends and the profound impact they might likely to have on the design and execution of a supply chain. Apart from technologies, the government regulatory changes like proposed introduction of GST and government initiatives like "Make in India" are expected to bring significant changes in the area of supply chain management. The upcoming issue of strive will enable readers to have insights about the emerging trends in the area of supply chain management and also the way the government regulations and business friendly initiatives will affect the supply chain operations in India. I wish the Operations and supply chain club (OPEP) all the best for the 8th issue and hope the readers enjoy the publication as previous seven issues. B.S. Sahay Director, IIM Raipur

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Contents Features Exclusive interview with Mr. Prashant Tuli, Senior Manager at Maruti Suzuki India Ltd,

Specials RFID - A Historical perspective

-By Amar Garg

Tr e n d s 3 D Printing in Supply Chain Management - By Ravi Chandra

GST : A game changer for Supply Chain Management in India

- By Kiran Make in India : Supply Chain Perspective

Regular 16

Gurumantra Book review : Supply Chain Visibility written by Jonah Saint Hcint Re

- By Sameer Pandey Crossword

Interview

In Conversation With

MR. PRASHANTH TULI Senior General Manager-Maruti SuzukiLtd

Mr. Prashanth Tuli is the Senior General Manager at Maruti Suzuki ltd, Gurgoan. He has a vast experience in the automobile industry and has been working with Maruti Suzuki for over 17 years. He is a Graduate Student of Indian Institute of Technology Delhi, Department of Management Studies (DMS). He did his executive management from Management development Institute, Gurgaon. He carries rich experience in the field of supply chain management. He shares his experience in supply chain management with students through guest lectures.

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Interview How well big data can be incorporated in automobile industry. Automobile industry is the biggest subscriber to this technology. A car typically has more than 10,000 parts. More than 10,000 parts in car would necessitate huge data base. Now that huge data base is not a static data base. Why this is not a huge data base is that as our requirement of vehicles, the market requirement keeps varying. As the market requirement varies and our production plan varies, we need to procure multiples of those parts. So if you conclude how much is our requirement and how much data we render daily is likenumber of parts required and the number of variants that we are making daily(well above 150 variants).So 150 variants*10,000 parts all of different nature. You can imagine how much data it amounts to. So now why and how that big data comes into picture. One reason is this. This data also needs to be channelized to different suppliers which is a very big challenge.

How big data is used in consumer segment or marketing and sales? Maruti Suzuki has total records of all the consumers who have purchased MS cars in last 10 years. Suppose a customer purchases an alto in an year and with his/her

increasing revenue over years would purchase sx4 or swift. Now big data comes into picture to identify the buying behavior of consumers. Big data is used both on supply chain and in marketing & sales.

Maruti Suzuki has lot of suppliers. How does a small supplier get in line with technology up gradations (like information technology) of Maruti Suzuki? Maruti Suzuki has a home grown database system called e-nagaray which is based on oracle platform. All that any supplier needs to do is to buy a desktop and have internet connection to connect to the system through extranet. No other sophisticated system is needed. Maruti sends and receives the data through extranet. So with the extranet and a low cost solution, we are able to manage supply chain. The challenge here is lowest of the supplier in the supply chain should be able to integrate with the system of Maruti without making any b i g i n v e s t m e n t s .

Second is about supply chain integration. Not as a concept but as a product. For example many suppliers need steel as a raw material to produce various parts. It would be more economical if we consolidate all requirements of all suppliers and integrate the purchasing perspective than each of supplier buying steel. This is supply chain integration in terms of product. Third would be policy level integration. We think suppliers as an extension of our business. If suppliers use same policies which are yielding good results for Maruti, then they would succeed from best practices and it would make policy level integration easier. So we transfer some of our best HR and administrative practices to them.s. These three integrationsinformation, supply chain and policy would lead to good integration of supplier as a concept.

W h at a re l ate st t re n d s in

Can you tell about integration of various suppliers at Maruti Suzuki? There is many connotations to integration of suppliers. Firstly integration in terms of information. We need to find common metrics to exchange the information without any asymmetry.

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automotive supply chain? Automotive supply chain as such is growing day by day. There is no end to employing good practices and no end to eliminating waste. Because for any process at any given point of time, there is always a scope of improvement. But one good trend that is catching up is

Cold Chain Logistics- A Historical perspective movement from individual purchase of parts to volumes. For example in the front end of the vehicle radiator, condenser, head lamp etc are used. We buy each of these parts from different suppliers and we assemble them at Maruti plant. During assembling there are catching up isome issues like head lamp not matching body which involves some reworking which is big dent to JIT philosophy and lean manufacturing. Now the latest trend is instead of getting various parts from different suppliers, an entire module is procured from responsible supplier and fit it on to the vehicle. So the change from individual component purchase to a module purchase is the huge wave that is happening now. So Maruti suppliers are no longer component suppliers instead they are system suppliers.

Is Maruti using 3D printer technology anywhere in manufacturing? This technology is not widely used but still catching up particularly in the interior design where the parts are visually appealing and less quality issues arise. For example in the dash board, a silver knob which is There is a speculation that Maruti Plant coming up in Gujarat is more automated than the Gurgaon and Manesar plant? Automation inside the plant has nothing to do with the location of the plant. As per philosophy of lean, there are some things which a machine can do easily. So it is better to use machines for some processes.

For example fixing the windshield requires lifting of the glass, fixing the glass at right place and pressing it with right amount of force so that it is bound firmly to its position. A robot does this task because a man may not do things as good as a robot does. But there are some cases where individual attention is required. Suppose a discrepancy in silver lining of an interior part may not be detected by a robot. So a right mix of man and machine is always required. Is Maruti using any new technologies in logistics? Yes there are lot of new trends happens with respect to logistics in Maruti. Among them concept of third party logistics is strongly catching up now. It is a concept which is widely used not only in

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Specials

3 D Printing Technology in Supply Chain Management Abstract: One of the most significant development in recent years in the area of manufacturing is the evolution of the 3D printing technology. Though this technology is still in evolution , it is being applied in medical and aeronautical industry. Due to its applications in different industries, this disruptive technology is likely to bring change in the way supply chain is designed and operated and this article discusses such applications.

Ravi Chandra is a PGP student at IIM Raipur. He completed his graduation in Mechanical Engineering from Osmania University,Hyderabad. He has 47 months of work experience with Tata Consultancy Services. He can be reached at pgp14117.ravi@iimraipur.ac.in

very Organization strives to imbibe innovative methods in the process of their daily operations to reduce costs, increase efficiency and effectiveness. Adapting to new technological advancements before peers gives an edge over the competition for a certain period, some technologies have a potential to disrupt the industry and 3D printing technology is one of its kinds which came into the limelight in this decade. 3D Printing technology is stimulating new advancements in the supply chain of industrial sector, with the advent of rapid prototyping of an object of any shape using a digital model; a multitude range of benefits has been recognised.

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3D printing is a form of Additive Manufacturing Technology where a three dimensional object is created by laying down successive layers of material by means of digitally controlled machine tools. Additive Manufacturing creates objects, models through a Sequential Layering Process i.e. taking a digital 3D design data and depositing material layer by layer to build the component. Mechanism starts by taking data from a virtual computer designed model and building that model slice by slice into the actual component, the objects build will be incredibly detailed with a great precision to limits and tolerances. The data is generated by images, computer aided drawings\designs, 3D scanning of the objects.Depending on the material used,

components can be manufactured using stereolithography, laser sintering or 3D printing.

a. A tank filled with liquid photopolymer b. A perforated platform immersed in the tank that adjusts the level of liquid c. An ultraviolet laser d. A computer that drives the laser and the platform When laser touches the photopolymer, the polymer hardens.

The 3D printing sector has seen a sustainable double digit growth in recent years, and it is forecasted that the sector will be a worth of more than $7.5 billion USD by 2020 (McKinsey & Company, 2013). This technology has the potential to change the traditional way of manufacturing process as well as to enable the emergence of new practices based on existing industry practices such as mass customization, user design. Clear view of vast range of opportunities for the adoption of this technology in key sectors such as automotive manufacturing, aerospace, medical devices and implants, power generation, and other industries is evident. Boeing is one of the examples of early adopters of this technology where it uses the laser tools and performs â&#x20AC;&#x153;additive manufacturing,â&#x20AC;? using resins, powdered nylon and even metal powders to build 3D parts and tools from scratch. To do this, a highpowered laser melts the powder together to form a solid layer. Each layer is then built upon the next to form the desired shape. One of the several methods used in Additive Manufacturing is Steriolithography. A stereolithograph apparatus has four important parts

In stereolithography, an infrared laser bonds layers of photopolymer liquid resin to produce detailed models and tools to tolerances within 1/5,000th of an inch. Boeing also has pioneered the use of a process called selective laser sintering to manufacture certified, flight-worthy aircraft parts. It creates parts and tools with less fine detail than stereolithography, but with more durability.Because the laser tools can create models and parts directly from computer drawn plans, there is no need for molds to be created. Choc Edge, a UK company aims to revolutionize the chocolate creation and consumption experience by amalgamating chocolate making with 3D printing technology so that users can have a high degree of personalisation, flexibility and control over their creations. Automotive Industry which pioneered in manufacturing automobiles is in the phase of new era. Local Motors is planning to launch world's first 3D printed car by 2016. It is working with Oakridge National Laboratory on 3D printing envisions to bring 3D printing technology in full scale to automobiles.

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c In January 2013, Nokia announced it is making the 3D printable files of its Lumia 820 phone case available to customers, so they can create their own designs and print them on any 3D printer is indicating how the industries can move from mass customization to mass personalization. With Burj Khalifa, UAE stood apart by building the tallest structure in the world proving its architecture mettle and again the nation is creating a new wave by building an entire using 3D printing technology. With this attempt UAE is yearning to be a world leader in technology and architecture. Looking at the tremendous opportunity for the technology in the future, Consulting firms are partnering with companies that are in 3D Printing technology. For example: Deloitte joined with 3D Systems is offering services to help companies to plan for and realize the potential impacts of additive manufacturing. Prototypes and demonstration units can be concocted quickly, with low investments. Production units could be produced on demand avoiding expensive setups and high inventory costs. Uses of this technology in Supply Chain are a. Prototype Building: Prototype building is the initial step in the development of a new product, though we can have a three dimensional view of the given objects on

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Local Motorsâ&#x20AC;&#x2122; Reload Redacted Swim a computer screen, touch and feel of the product gives a conviction before committing to a large investment for the management personnel. A second major advantage in prototype development is the ability of 3D printing to produce prototypes quickly and to make different versions, for consumer versus lab testing and for different market segments, without the need for costly retooling.

b. Small Volume Parts: Satellites and engines require intricately designed parts to reduce weight. These parts are produced in low volumes, the use of 3D printing technology made it possible to reduce cost and produce at a faster pace than traditional machining processes. For example LEAP jet engine fuel nozzle - this has intricate and very complex parts made by 3D printing technology. It has multiple components made into one single part. c. Processing Speed: Significant processing speed in prototype development and small product development has been observed with the adoption of this technology. For example: Timberland reduced the product development time by 33 percent by using 3D Printing technology.

Trends d. Replacement of Parts: when a product becomes obsolete and company is no longer producing it, even after many years there would be some consumers who will be using the product for which they might need replacement of parts, the company possess a great opportunity to produce using this technology without maintaining inventory of parts of obsolete products.

Utilization of 3D printers is not yet developed on a larger scale due to high Costs associated to move from existing manufacturing setup; lack of awareness about the usage of this technology in various disciplines; scalability of machines. These reasons are hindering the market growth in India and we are yet to witness the use of this technology in full scale.

One side, 3D printing is posing a disruption in the manufacturing sector. Other side it is implicating serious threats to intellectual property which needs to be given a serious thought.

http://www.boeing.com/news/frontiers/archive /2011/april/cover.pdf http://www.economist.com/node/14299512 http://www.outlookbusiness.com/article_v3.asp x?artid=293429 http://www.pwc.com/us/en/industrialproducts/next-manufacturing/3d-printingshrinking-the-supply-chain.jhtml http://chocedge.com/ http://computer.howstuffworks.com/stereolith.h tm http://yourstory.com/2014/07/3d-printingindia/ http://fortune.com/2015/03/05/ge-engine-3dprinting/

Though 3D Printing technology is revolutionizing the industrial sector, established industries are still willing to follow conventional approach of modelling through CNC machines as 3D printers for heavy products are expensive, which is raising a disinclination to opt for this technology. The 3D print market is in transition phase and yet to witness major transformation such as compatibility for mass production, manufacturing of large format objects.

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References:

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RFID - A Historical Perspective Abstract: RFID technology has made the operations of supply chain easy through better tracking of goods. This technology has been evolving over times and is crucial in simplifying the processes in warehouses. In this article a historical perspective of the RFID technology is discussed and also the changes that have taken place in this technology are discussed. Also evolution of advanced RFIDs is also mentioned.

Amar Garg is a PGP student at IIM Raipur. He completed his graduation in Mechanical Engineering from Dr. B.R. Ambedkar NIT Jalandhar. He can be reached at pgp14122.amar@iimraipur.ac.in

Supply chain covers all the possible processes involved in flow of goods from manufacturing to customer; including manufacturing, distribution and transportation. Thus, supply chain management covers all these steps in combination with marketing decisions, customer demand, in alignment with generally chain can benefit significantly from the implementation corporate strategy and goals. Usually considered as a complex and knowledge intensive process, management of suppof RFID technology.In 2014, the world RFID market is worth $8.89 billion, up from $7.77 billion in 2013 and $6.96 billion in 2012. This includes tags, readers and software/services for RFID cards, labels, fobs and all other form factors. The market value is expected to rise to

$27.31 billion by 2024. Radio-frequency identification (RFID) is the wireless use of electromagnetic fields to transfer data. It is a technology to record the presence of an object using radio signals. It is used for inventory control or timing sporting events. This technology has risen to become a revolutionary element in supply chain management. It is not just a replacement for barcodes. RFID ensures that the right goods are available in the right place with no diSupply Chainrepancies and zero errors. It makes the supply chain considerably more precise and improves the efficiency and reliability of the entire chain. As real-time information is made available also

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Specials administration and planning processes can be significantly improved. RFID tags are used in many industries. An RFID tag attached to an automobile during production can be used to track its progress through the assembly line. Pharmaceuticals can be tracked through warehouses. Livestock and pets may have tags injected, allowing positive identification of the animal.

included: ?

All suppliers were to tag cases/pallets by the end of 2006;

Ultra-High Frequency tags were to be used;

For each current Electronic Product Code (EPC) global, class 0 and class 1 tags were to be used initially, with a shift to Electronic Product Code Generation 2 tags. Data was to be communicated to and from Wal-Mart via Retail-Link and Electronic Data Interchange, with no use of the Electronic Product Code global Network because the standard was still under development;

A mandatory 100% read accuracy was specific for tagged goods within 10 feet of the reader;

Cases containing one item must be tagged (Bhuptani & Moradpour 2005, pp. 144â&#x20AC;&#x201C;145).

RFID IN RETAIL SECTOR RFID applications at the retail level have reduced stockouts, improved inventory accuracy, increased sales, and speed up the goods receipt process. Table illustrates the empirical evidence of RFIDs in the retail sector.

In the end of 2006 Wal-Mart announced that by January 31, 2007, another 500 of Wal-Mart's 3,900 stores would have RFID readers installed (Supply Chain Digest 2009, pp. 1â&#x20AC;&#x201C;2). Figure illustrates the RFID implementation timeline. According to Bhuptani and Moradpour (2005, p. 143) Wal-Mart is the largest retailer around the world which uses IT to improve its operations and also to gain competitive advantage. Because of that, Wal-Mart looked to RFID technology to further improve its operations, and further advancements such as reducing labour cost, improving inventory control and advancing market intelligence. Wal-Mart, the largest retailing company around the world, started the plan to deploy RFID along its Supply Chain on June 2003, when Linda Dillman, the CIO of Wal-Mart, revealed that it's top 100 suppliers would be required to put RFID tags carrying Electronic Product Code on pallets/cases starting in January 2005 (Seideman 2003, p. 1). By the end of the same year the company began a pilot project. As a result of that Wal-Mart's distribution centre near Dallas and Texas were selected as the site for the pilot. In November 2003 Wal-Mart organised a conference for its top 100 suppliers in Bentonville to show more details of its RFID program, and to provide further clarification on the mandate which included specification for the tags to be used. This 12

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According to Bhuptani and Moradpour (2005, p. 147) improvements resulting from the Wal-Mart RFID implementation were as follows: ?

Wal-Mart eliminated many manual processes including those in receiving, inventory management, shipping and payables; 80

Wal-Mart was able to reduce inventory shrinkage and OOS situations by automatically tracking product movement;

Reduced number of data entry errors;

Cold Chain Logistics- A Historical perspective

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RETAIL STORE

RFID based solution for Retail Store helps retailers in improving customer satisfaction and increase sales. This system gives real time visibility over inventory and item movement to improve store productivity and loss prevention. System improves shelf level visibility thus helps in reducing number of out of stock items in store. RFID Tags items helps in automatic and fast billing process along with theft prevention. If the user is already the member of the retail store, he/she can directly leave the store and scanners will scan the product list and the amount will be deducted from the user's account.

DOCUMENT TRACKING Locating Critical Files and Documents is one of the greatest problems in offices today. Time is wasted chasing misplaced files and deadlines are missed while searching. RFID technology enables a break-through revolution in tracking documents. It is especially beneficial in those environments where the documents are of high value to the organization, and the temporary or permanent loss of a document would have significant negative impact, such as intellectual property, key medical records, property ownership, financial documents or documents vital to e-discovery. Our Document Tracking Solution provides tracking, workflow, and records management features that leverage the latest RFID technology to streamline processes, save labor, and reduce operating costs. Unlike Bar-Coding, RFID does not require line-of-sight, does not require manual scanning at close range, specially designed tags are more durable and longer lasting - which can be reusable, and tags do not require time consuming alignment to the reader.

E-TOLL SOLUTION RFID based Electronic toll collection enables electronic collection of toll payments at various highways, bridges and tunnels. This system designed to answer complaints from motorists regarding the inconveniences involved in manually making payments at the toll booths. It is capable of determining if the car is registered or not, and then informing the authorities of toll payment violations, debits and participating accounts. Most obvious advantage of this solution is the opportunity to eliminate congestion in tollbooths especially during festive seasons when traffic tends to be heavier than normal.

P R O B L E M S IMPLEMENTATION

I N

The implementation of RFID technology presents two problems. The first involves the cost of implementing the technology and the second involves the potential misuse of customer data. The component costs of using RFID technology are as follows: ? Individual tags range from $0.20 to $50 while tag readers can cost $500 to $3,000. ? The largest cost, however, comes from the computer software necessary to run an entire system effectively. These can cost up to $200,000

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Cold Chain Logistics- A Historical perspective ?

Though these three items contribute towards the majority of cost, other costs result from testing tags, the cost of data misinterpretations, and the cost of training employees in the proper use of the technology.

Ethical concerns also constitute a problem. Consumer advocacy groups are concerned about the potential

misuse of data collected by RFID tags. Privacy groups are concerned that retailers will begin to use data to profile customers by linking purchases with other personal identifiers such as credit cards and drivers licenses.

References: http://www.danielmillsap.com/research/rfid-in-wal-

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Gurumantra

Gurumantra - Emerging Trends in Supply Chain Management

What are some potential technologies that can alter the way a supply chain function? 3D Printing 3D printing is a process of making three dimensional solid objects from a digital file. Additive processes are used creation of a 3D printed object. In an additive process an object is created by laying down successive layers of material until the entire object is created. 3D printing has the potential to completely alter the manufacturing industry. Usage of 3D printing is in nascent stage and at present it is used in aerospace & aviation industries, Automobiles and in medical industry. Internet of Things (IoT) Internet of Things (IoT) mainly helps to keep track of various products in supply chain. One area that will play a prominent role in the future supply chain, as it's impacted by IoT is in-transit visibility. The logistics ecosystem has many players, and thus,

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many moving parts. Products are handled and transferred between the manufacturer, suppliers, the distribution center, retailer, and customer. This many nodes in the supply chain call for an agile and informed supply network in regards to product whereabouts and other specifications. Big Data Big data is providing supplier networks with greater data accuracy, clarity, and insights, leading to more contextual intelligence shared across supply chains. Forward-thinking manufacturers are orchestrating 80% or more of their supplier network activity outside their four walls, using big data and cloud-based technologies to get beyond the constraints of legacy Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) systems. One of the main challenge in the big data is the harnessing the numerous amount of the data.Once tools and techniches are developed in this area to harness the numerous data, it will witness still more usage by companies.

Trends What are various future trends in supply chain management? Manufacturing Developments Additive manufacturing or 3D printing is a technology that allows the manufacturer to make a wide variety of components using different materials one layer at a time, thereby effectively “printing” a part or finished good without the need for labor and asset-intensive processes. Big Data Big data is changing how we collect and analyze consumer, customer, supplier and our own internal data. It facilitates better planning and forecasting with much of the data collection. IT can also be used to geographically disperse various players of a supply chain

? By amalgamating a large number of Central and State taxes into a single tax, it would mitigate cascading or double taxation in a major way and pave the way for a common national market.

Make in India ? "Make In India" campaign envisages drawing funds from foreign players for manufacturing in India. The proposed infrastructure investments will have a significant impact and lasting consequences on the supply chain. ? The ultimate goal of “Make In India” is to raise manufacturing's contribution to the country's GDP from 15 % to 25 % which will have significant impact on supply chain as lot of sourcing can be done within the country. Improvement of Ports ? Construction of new berths and terminals to

Supplier and customer collaboration As organizations integrate more closely with suppliers and customers, supply chain visibility can be enhanced.Deeper and broader collaboration will occur as technology makes the job of dealing with extended supply chain partners easier. Be careful around the activities that are being passed to suppliers and customers. Enhanced procurement Many companies have implemented sourcing or procurement entities that undertake strategic sourcing, supplier relationship and procurement risk management. Many companies have implemented sourcing or procurement entities that undertake strategic sourcing, supplier relationship and procurement risk management. Supply Chain Segmentation Designing and operating distinctly different end-toend value chains (from customers to suppliers) optimized by a combination of unique customer value, product attribute, manufacturing and supply capabilities, and business value considerations. What measures are being taken by government of India take to resolve the supply chain issues? Goods & Services Tax (GST) Bill ? The GoI is planning to bring the GST bill into implementation from fiscal year 2016. GST would revolutionize the logistics movement in India.

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enhance port capacity to minimize pre-berthing detention time and reduce turnaround time of vessels calling on the ports. Also Simplification of processes to reduce transaction time at Ports. ? Modernizing berths with state of the art loading/unloading equipment to improve operational efficiency. Sagarmala Project ? Sagarmala project is a strategic initiative of the GoI to modernize India's Ports so that port-led development can be augmented and coastlines can be developed to contribute in India's growth. ? It envisages port-led development at the 12 major ports as well as 1,208 islands identified for development as part of the project. Road infrastructure ? GoI has ambitious plan of constructing 30 km of highways a day from the present 3 km a day. ? In the last one year, the government has managed to achieve an average target of 11 km per day after awarding 7,972 km of roads in Fy15. Inland waterways ? 101 water bodies with a minimum length of 25 km are proposed to be declared as national waterways. ? About 20 states have shown interest in setting up inland waterways corporations, where the central government would have a stake of 74 per cent and the rest would be with the state government.

Trends

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Trends

GST : Game Changer for Supply Chain in India Abstract: Regulatory changes play a important role in altering any supply chain. One regulatory change in India that is going to tremendously affect the supply chain management is introduction GST bill. Many supply chain professionals see the Goods and Services tax is seen as panache to all the issues of logistics and supply chain.The article explains some changes that this tax may bring.

Kiran is a PGP student of IIM Raipur. He completed his graduation in ECE from Acharya Nagarjuna university He has worked for 45 months with virtusa and sapient corporation. He can be reached at pgp14073.bora@iimraipur.ac.in

ax Regulations is one of the important factors taken into consideration by supply chain managers while designing a supply chain. Though logistic infrastructure of India is considered as a bottleneck for a robust supply chain, Tax structure of the country is equally, if not much bigger problem. India has a dual tax system (Taxation by both central and state governments) and there is no clarity over the imposition of taxes. To solve this ordeal the Government of India is planning to bring a new tax system called GST which will replace the secondary taxes. The proposed GST(Goods and Services tax) will have a single tax rather than the present dual tax system. This tax once imposed will bring the transparency in tax system and may end the tax terrorism. The proposal of introducing the GST bill has brought

cheers among the Indian inc. GST is expected to be the next big bang fiscal reform in the Indian context. GST, if implemented in the true spirit of its intent, will bring about major change and result in rationalizing and simplifying the tax structure at both the Central and State levels (even across state borders).The GST may mean many things to different industries but one industry that will witness a sea change after introduction of the tax is logistics and hence it will have a heavy impact on supply chain. In this article we will discuss how GST will bring changes the way companies manage their supply chain in India. GST: Introduction Under this, a value added tax would be levied at Volume 4 issue 2 April 2015

Market Trends in Food and Cold Chain Logistics

every point of the supply chain providing for credit for any or all taxes paid previously. Keeping in line the governance structure of the country GST would be levied simultaneous by the Centre and State (CGST and SGST respectively). All essential characteristics in terms of its structure, design applicability, etc. would be common between CGST and SGST, across all states. The following are the taxes GST will likely replace: Central Taxes Central Excise Duty Service Tax Additionals Custom Duty Surcharges & Cess State Taxes VAT/Sales Tax Entertainment Tax Entry Tax Other Taxes and Duties. Impact of GST on pricing the product: With a single rate being applied to all goods and services there will be a significant redistribution of taxes across all categories resulting in reduction in

taxes on manufactured goods and hence impacting the pricing of the product. The integration of tax on Goods and Services through GST would provide the additional benefit of providing credit for service tax paid by manufacturers. Both CENVAT & VAT which are in practice now, give tax credit to the manufacturer for the tax paid for raw materials (hence a tax is charged only on the value added by the manufacturer). More often than not, there are various services including logistics involved in getting the input material to its final customers. Service tax is paid on the cost of such services. With the implementation of GST, cost of any services, including logistics, will be considered a value add, and the manufacturer will get tax credit for the service tax paid. Impact on Interstate Transactions: Under GST inter-state sales transactions between two dealers would be cost equivalent compared with stock transfers / branch transfers. According to the proposed model, Centre would levy IGST which would be CGST plus SGST on all interstate transactions of taxable goods and services. The inter-state seller will pay IGST on value addition after adjusting available credit of IGST,

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Trends CGST, and SGST on his purchases. Similarly the importing dealer will claim credit of IGST while discharging his output tax liability in his own State. This will result in inter-state sales transaction becoming tax neutral when compared to intra-state sales. India wouldbecome one single common market no longer divided by state borders. Logistics and supply chains will therefore see a major change; sourcing, distribution and warehousing decisions which are currently planned based on state level tax avoidance mechanisms instead of operational efficiencies will be reorganized to leverage efficiencies of scale, location and other factors relevant to the business. GST would eliminate the existing penalties on interstate sales transactions and facilitate consolidation of vendors and suppliers. This will eliminate the need to have state wise warehouses to avoid CST and the associated paperwork, leading to elimination of one extra, redundant level of warehousing in the supply chain. This will result in a reduction in the number of warehouses (Exhibit 2), improved efficiencies, better control and reduction in inventory due to lesser numbers of stocking points and cases of stock outs. This would allow a firm to take advantage of economies of scale and consolidate warehouses at the same time reduce capital deployed in the business. Larger warehouses can benefit from technological sophistication by deploying state-of-the-art planning and warehousing systems which are not feasible in smaller, scattered warehouses. At the same time IT costs of having ERPs deployed at many small warehouses can be saved. This will pave the way for improved service levels at lower cost in the overall supply chain. A rationalization similar to warehousing can also be done in distribution and transportation routes as tax ceases to become the deciding factor. Since the tax rates across states are envisaged to be uniform, state boundaries will no longer be the parameter for deciding routes. At the same time, with larger warehouses, transportation lot sizes will automatically increase, making way for more efficient bigger trucks. The optimization and rationalization that these options can bring about in the supply chains of a firm on account of GST will provide a competitive advantage to the business through better service and faster turnaround times at lower costs. 21

Operations & Supply Chain Club, IIM Raipur

Alternate Distribution Systems Organizations will now be able to explore different distribution models such as setting up mother warehouse and regional distribution hubs and possibly step away from traditional C&F and distributor based models currently adopted. This will lead to logistics and distribution to evolve more strongly as a competitive advantage. The government has already begun the process of amending the constitution and getting the necessary consensus from all the stake holders. Though the exact details are still sketchy, the structure and deliverables have been clearly laid down for all to see. Example Let us take the example to understand how Goods and Services tax (GST) will help companies optimize their supply-chain using taxation and warehouse location strategy. Consider the example of a company whose manufacturing facility is present in Delhi, and it moves its goods down to South India. As the company sells in South India, it has to transfer its manufactured goods across the States. According to the current taxation, if you're moving the goods from one State to another and selling it in the other State, then you're liable to pay the Central Sales Tax (CST). The important point to note here is that you're liable to pay the tax only if you're transferring the goods for a sale. However, if you're transferring not for a sale but for a stock transfer, you don't need to pay the CST.

Figure 2.A map of karnataka and Tamil Nadu. Hosur can be seen at the border of both states.

Trends So, to avoid paying the CST, companies show the goods movement as a stock movement than a sale. But, to do this, they have to have a warehouse within the State where the goods are going to be transferred and stored. As a result, currently companies have warehouses within each State and show their goods movement as stock transfer than a sale. This essentially means that the current locations of warehouses are chosen to avoid the taxation, rather than to best service the customer. For example, let us take the case of a city Hosur, which is a part of Tamil Nadu but it just 30km from Bangalore. So, geographically speaking, to service the customers in Hosur, the goods have to be shipped from the Bangalore warehouse. But unfortunately Hosur is a part of Tamil Nadu, which means the company has to pay the Central Sales tax (CST). So, instead of shipping the goods from the Bangalore warehouse, they are forced to have a warehouse in Chennai and ship from Chennai,

which is 250km from Hosur. With GST coming in, companies will be freed from this problem and they can setup their warehouses to optimize their costs and best service the customers. This is going to save considerable costs for companies and improve the servicing levels. Thus GST offers a great opportunity to revisit your Supply Chain & Distribution strategy, and identify what is required to become GST ready. Those who move early are likely to gain an advantage on cost and service levels over their competitors and deliver a better value proposition to the customer. References: http://www.tsmg.com/download/article/GST%20An%2 0Opportunity%20to%20reassess%20your%20Supply%2 0Chain https://brandalyzer.wordpress.com/2011/12/02/impac t-of-gst-on-supply-chain/

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Trends

Make in India : Supply Chain Perspective Abstract: In order to boost the manufacturing sector in our country, the prime minister Narendra Modi has launched â&#x20AC;&#x153;Make in Indiaâ&#x20AC;? campaign. Apart from manufacturing, the campaign has lot to do with the supply chain as it is through supply chain, raw materials can be sourced or finished goods can be transported. We have discussed from supply chain point of view, the enablers and some challenges that may confront the camapign .

ver the last 2 decades India has progressed well in services sector and it is the main contributor to GDP (more than 50%). But manufacturing sector has not witnessed so much progress in India and its contribution to GDP is very low (around 16%) compared to services sector. It is reported that the government has an ambitious plan to locally manufacture as many as 181 products India currently imports. But manufacturing sector is the backbone of any country and realizing its importance our prime minister Narendra Modi has been emphasizing a lot on growth of manufacturing sector and to attract foreign and Indian companies to manufacture in India , he launched Make in India campaign. The after effects of campaign will directly have an impact on manufacturing and therefore it also affects the supply chain management of various companies. The proposed

investments are largely focused on bolstering and in some geographies building reliable and robust infrastructure to handle the supply chain challenges that will accompany a massive influx in manufactured goods. Though it may take some years to see the effect of the campaign, we will look into some of the changes that it may bring. Factors that may lead to success of Make in India: ? Ever improving logistics infrastructure in India

will help in transporting the output produced through manufacturing. ? As the highway sector shows signs of revival and private investment interest in projects on PPP mode gathers pace, the Narendra Modi government is confident of achieving the target of

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I n d u sTt rrieanl dTs r e n d s of building 30 km per day. In fact, per day construction of highways was close to 16 km until August-end against last year's record of 13 km. The ambitious target is definitely seen to be triggering investor appetite for road projects in the country. ? The railway department has earmarked routes for dedicated eastern and western freight corridors where trains will ideally move at speeds of 100 km/h or more; this move should revive the logistics industry and decongest the traffic on main tracks that cater to passenger trains. The government is trying to change the 'chronic under-investment' in the railway sector through market borrowing, internal generation and PPP. ? The government is strengthening the maritime sector as part of the Make in India program. It is incentivizing a shift towards coastal & inland water transportâ&#x20AC;? and the 'Sagarmala' project is huge step in this direction. It is also planning to use the inland waterways heavily. ? As the GST will have a huge positive impact on supply chain by removing various bottlenecks such as time lost at interstate borders, centralized warehouses rather than warehouses in warehouses in several states and clarity in tax structure. ? India's immense potential in terms of profits continues to lure global auto giants despite the market having been sluggish in the past. They are willing to take a leap of faith and pump capital for indigenization. Auto companies are betting big on the Make in India initiative by increasing production capacity and trying to make India a global export hub. Challenges to Make in India Initiative: ? Logistics infrastructure itself may become

bottleneck for â&#x20AC;&#x153;Make in Indiaâ&#x20AC;? campaign as our country's logistics are very poor. ? A 2014 World Bank survey ranked India 46th in global trade logistics performance, placing it behind some of its biggest competitors for foreign manufacturing investment like Mexico and Turkey. Perishable and cold supply chains face a 20% spoilage rate on average due to inefficiencies in India's domestic freight infrastructure. Planned domestic infrastructure improvements will be costly, especially freight rail expansion. As there is lot of hue and cry about private investment in railways and government investment into this sector nowhere sufficient to make it a robust transportation option. Also there

Operations & Supply Chain Club, IIM Raipur

may not be high increase is passenger fares which means the costs of transportation lead to higher freight tariffs. ? India lacks a developed supply base: raw materials and parts are still often imported for production ? The import process to the country remains complicated and non-standardized, causing higher than normal requirements for inventory to offset unpredictable delays. ? A major concern of supply chain managers in India is acquiring skilled supply chain talent to fill their needs to meet their firms' supply chain needs today. The government's 'Make in India' program is likely to grow that need and firms will be faced with the challenge of filling their supply chain talent needs in order to compete in the new environment or be left behind. ? 3D printing technology though nascent is likely to change the way manufacturing is carried Throughout the world. It is basically manufacturing of a complete product by means of a single, automated machine, right from blueprint, prototype design, assembly and finished item. A 3D printer can make almost anything it may seem to take days, months and large skill force. Once the technology becomes famous, it may be a disruptive technology that will change face of manufacturing. Strategy of Manufacturing in low cost counties like china and India may lose importance. ? India is approximately two weeks farther from the United States by shipping line than China. ? Frequent power outages may cause delays in manufacturing schedules and an increased likelihood of defective parts. ? The Indian bureaucracy itself poses a challenge: government processes are complex and confusing, and have the potential to cause further delays and frustrations. ? Labor laws, land rules, environment regulations pose a very big challenge. References: http://indiatransportportal.com/transport? sector-becomes-modis-top-priority-make-india32308 http://economictimes.indiatimes.com/news/e ? conomy/infrastructure http://www.cfo? india.in/articles/1003735/the-key-to-success-formake-in-india http://news.elementum.com/make-in-india? reinventing-indias-supply-chain

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Book Review

Supply Chain Visibility

Sameer Pandey is a PGP student of 2013-15 batch at IIM Raipur. He has done his bachelors in Mechanical Engineering from the Indian Institute of Technology, Guwahati. He has 38 months of pre-MBA work experience with Tata Consulting Engineers Ltd. as an Engineering Consultant. He can be reached at pgp13047.sameer@iimraipur.ac.in

uthor of the book, Jonah McIntire, is a

on supply chain visibility and presents it with a

veteran in the field of supply chain

practitioner's point of view.

management with a career spanning

Content of the book is presented in a way to cater

across consulting, product management, change

readers from diverse backgrounds in supply chain

management, supply chain information systems,

management, system integration, strategy / IT

process re-engineering, and outsourcing. Though

consulting and enterprise solutions. The book is

there is a lot of buzz in the industry around the

broadly divided into two sections with each

construct of 'supply chain visibility', the subject

dwelling on visibility in theory and visibility in

itself remains abstract with very few detailed

practice respectively. The first section provides in

studies available as guides for new managers

depth analysis of how the theoretical models of

embarking on supply chain visibility initiatives.

visibility have evolved since the term first started

The author, leveraging his vast experience, has tried

gaining importance in late 1980s. The book refers

to consolidate the uncoordinated published work

extensively to the prominent researches in field to

Volume 4 issue 2 April 2015

Regular to present a clear understanding of different theoretical models. The section describes how the technological advancement of 90s in the form of EDIs and barcoding helped visibility being adopted by practitioners rather than being limited to researchers. A clear distinction between the pre and post 2000's theoretical models exist, with earlier models focusing on visibility as a 'quality' aspect of the supply chain and later models shifting their focus to visibility as the 'solution' or 'goal' of supply chain management. While covering the theoretical aspects, the book highlights the ambiguity in the definition of 'visibility' among researchers and presents the common threads around the construct relating to connectivity and traceability. Through his critical analysis, the author is able to highlights three main pain points of modern day practitioners â&#x20AC;&#x201C; ambiguity in definition, pre-requisites for visibility and measurement system. A whole chapter is dedicated to a novel supply chain visibility framework where the author presents a review of the prerequisites needed for a successful visibility solution and a visibility fitness scorecard is introduced, which enables managers to measure the performance of a visibility solution. In the second section, the book looks at the practical aspects of supply chain visibility solutions. It begins with detailed reviews of the eight most common types of supply chain visibility. For each visibility type, author has offered a set of discovery questions, and have listed indicators of potential fit. The second section further addresses the question of how to acquire visibility and in particular technology required for visibility. It begins with a review of the options available for acquiring

Operations & Supply Chain Club, IIM Raipur

visibility technology, including the benefits and risks for each option. Since private development is a major approach to supply chain visibility software, the book also goes into detail with guidance on best practices for in-house designed systems. In particular, an object-model and key technical suggestions are provided for the types of supply chain visibility discussed. The second section provides key details, which would typically only be available to very experienced consultants who have worked in the supply chain visibility solution space across industries and global markets. The book closes with a look at the cutting edge of supply chain visibility technology, although not yet widely adopted, will revolutionize the visibility solution space . Overall the book is a balanced mix of theoretical frameworks and practitioner's point of views. The research coverage done by the author is exhaustive which helps orientate readers. Interviews from industry experts are presented throughout the book and case studies describing real life problems faced by managers are used to elucidate the construct. Examples are included from diverse industries to cater to a wider readership. Implications of simple excel based technological models to complex enterprise solutions are included to facilitate decision making at transactional to strategic level. This book is a serious effort of the author to equip its reader, who would come to this book with a purpose and not as a casual interest, to get the most out of the visibility construct. This book will bring a supply chain professional as far up to speed as possible without direct work experience in the domain, and leave them prepared to be a savvy participant in critical planning and implementation activities.

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Crossword

Across 1. which famous world's leading information technology research company publishes the top 25 supply chain companies for their best practices supply chain every year? 3. _________is considered to be one of the Face book equivalent to supply chain and logistics world 5.

After the .com era which has revolutionized the way of doing business, we are entering into a new era which uses ____________and is expected to make supply chain more effective and responsive(2 letter word)

10.

Amazons Drone technology is called as ___________

11.

Which e commerce firm's logistics arm in India is called "fabone" ?

12.

Which company used kiva robots for faster delivery of products during Cyber Monday in December 2014?

13.

Which major sporting event held in 2012 was hailed to be the best logistics network delivered? Volume 4 issue 2 April 2015

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15. This bill which is propsed to be implemented from April 1,2016 has potential to revolutionize supply chain in India. 17. The ability to transfer data over network without human interactions by providing unique identifiers to objects, animals or people are called ____________. 18. DHL has been pioneering a project to deliver products to customers at their required location. This project is called _____________. 19. ------------ is the process of cutting out the middlemen in a supply chain. Down 2.

"If you can't describe what you are doing as a process, you don't know what you're doing". This is a famous quote of a famous management consultant.Name him.

---------------- is a part of Mahindra group and is a leader in advising clients on how to maximize the strategic value of their supply chains.

This concept suggests that demand variability is reduced if one aggregates demand across locations.

________ technology in analytics supply chain is said to be the in-memory technology.

This reference model enables users to address, improve, and communicate supply chain management practices within and between all interested parties in the extended enterprise.

__________is said to evolve to reduce the lead time and carrying cost.

14. To get access to data for everyone in the supply chain there is an extensive use of social networking. In June 2012 Microsoft acquired _____________ for this purpose. 16.

____________ retail is one among the most popular retail brands in India which uses Electronic Data Interchange (EDI).

17.

â&#x20AC;&#x153;Cognos Supply Chain Performance Procurement Analyticsâ&#x20AC;&#x153; is a packaged supply chain management (SCM) solution to help organizations lower costs and improve margins.Which IT gaint owns this software?

Operations & Supply Chain Club, IIM Raipur

Crossword

Answer Key

Volume 4 issue 2 April 2015

About Us OPEP, The Operations and Supply Chain Club of IIM Raipur endeavorsâ&#x20AC;&#x2122; to facilitate sharing of knowledge on fields related to Operations and Supply Chain Management through Guest Lectures, Articles, Newsletters, Field Visits, Live Projects, Book Reviews, Quizzes, Case Studies, Simulation Games and through Bi-annual Magazine -STRIVE OPEP club at IIM Raipur tries to put forth a broad sharing platform for operations Management and Supply Chain management. The team also plans to initiate an interaction forum to discuss relevant problems, industry paradigms and knowledge. OPEP members are a mix of experienced students from diverse backgrounds providing traction test to their theoretical knowledge and lectures with the tight rope walk of projects often converging the virtual and real. Cover Page Credits : Rajesh Jangam OPEP ClubBlog Strive Team : OPEP ClubKiran Kumar B Charles Vasanth

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In 21st Century, Companies donâ&#x20AC;&#x2122;t Compete, Supply Chains Compete

For More Details, Please Contact: Operations and Supply Chain Club (OPEP) Indian Institute of Management Raipur, GEC Campus, Sejbahar, Raipur - 492 015. Email Id : opep@iimraipur.ac.in Website: www.opepiimraipur.com

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