OPERATIONS & SUPPLY CHAIN MAGAZINE ISSN 2349-9427
STRIVE VOLUME 5 ISSUE 1
DIGITALIZATION IN OPERATIONS
INSIDE: CONVERSATION WITH NEIL WILSON
Editorial Digitalization is a growth imperative in today's fast moving era. It is a tool to convert digitized sources into channels of generating revenue. People today have increased awareness and are very much ready to go for next generation technologies of IoT, automation, 3D printing etc. The government initiatives like Make in India, Smart cities and jan dhan yojna will support the ongoing advancement. There is approximately 20% internet penetration in India and thus the potential for development is immense. With plethora of services and innovations that can canter the digital platform, people have the opportunity to get immense benefits in every aspect of life like healthcare, education, services, transport etc. The “digital India” is not far away. Our country is already blessed with natural resources including geographical advantage and excellent demography. With the advent of technologies like IoT and big data we have right set of circumstances to get onto next level. This is also one of the reasons why many global firms like Cisco are eager and keen to be a part of the Digital India program. John Chambers, chairman, Cisco, had thumped his support for the program by declaring that, "India is set to be the first large digital country in the world".
academia perspective through this ninth edition. The magazine has insights from Neil Wilson, Chief Operations Officer at PWC India, on the effects of implementing these technologies in various domains of industry regarding both its operations and supply chain management. From the view point of academia, Prof. Dr. Sumeet Gupta, shares mantras for success in Digitization of government operations. The students have also written articles on the contemporary topics of “Cloud Computing” and “Internet of things”. “Guru Mantra” talks about general operations concepts. In Book Review segment we have the “Introduction to Supply Chain Management” reviewed. We are thankful to Prof. B. S. Sahay, Director, IIM Raipur for his motivation and support. We also thank Prof. Parkshit Charan for guiding us throughout. We also thank all our authors for taking out time from their schedule and contributing to the magazine. This editorial would be incomplete without acknowledging the support of the whole Team OPEP for their commitment and dedication towards the club activities.
It is in this view that, OPEP, the Operations and Supply chain club of IIM Raipur, has come up with Strive – the bi annual e magazine to share the current trends in the digitalization in operations and
Kiran Kumar Bora Editor-in-Chief pgp14073.kiran@iimraipur.ac.in
Director’s Message I am happy to see Indian Institute of Management Raipur grow from its modest beginning to its present day. In this journey students have played a key role through various clubs activities. OPEP, the Operations and Supply Chain Club of the Institute has worked hard to make their presence felt in pan IIM operations arena. Our students have successfully launched eight issues of the biannual e-Magazine “STRIVE”. Since 2010, the Club is releasing its biannual EMagazine STRIVE with each edition focusing on one specific field. The ninth edition of STRIVE is focusing on Digitalization in Operations. I hope that this magazine will give you a brief insight into the current and future trends of development in this domain in India. I wish OPEP a great success in their endeavour and hope that you enjoy reading this publication.
Prof. B.S. Sahay
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Contents Features Exclusive interview with Mr. Neil Wilson COO PWC India 4
Digitization of Government's Operations: Mantras for Success 7
Tr e n d s Ÿ Cloud computing in supply chain management
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- By D. Santosh
Specials Ÿ Internet of things in Supply Chain
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by Gulshan Prakash Ÿ In conversation with Rahul Rajamuthiah
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Regular Ÿ Gurumantra Ÿ Book review: Introduction to Supply Chain
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Management - By Bora Kiran Kumar
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Ÿ Crossword
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Interview Digitalization in Operations
In Conversation With
MR. NEIL WILSON CHIEF OPERATING OFFICER- PwC
Mr. Neil Wilson is responsible for the internal operations of the PwC India business including HC, IT, Facilities and Office of General Counsel as well as working closely with the Chairman and CEO of PwC India to provide suport to him on the running of the PwC India business. He is experienced professional services firm partner with a background in serving clients in the corporate tax area but involved in management of all aspects of PwC's tax business for 11 years as well as the whole of PwC Australia as COO for almost 4 years. Following his term as COO of the Australian firm, he worked as a dedicated partner in setting and driving the business transformation agenda of the PwC Australian business.
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Interview Digitalization in Operations With digitalization in various Operational processes, the scope for automation increases. According to you how can companies in public sectors, gain the acceptance of trade unions? It is going to be a great challenge for many organizations. If you opt for “Make in India�, it's not going to be cheap labor or jobs that require a large number of unskilled people involved in the production of goods. It's going to be a situation where you effectively try your people to do jobs surrounded by robots and machines. But in this competitive world, India cannot rely on the sources of global invariables. This implies that trade unions have to understand the reality and allow people to be educated, to work in an environment of the mundane side of work. Because frankly that is what's happening globally. You know India can't stop the time and say ok, we can use labor to do these things. I see that this is India's one of the biggest challenges which is to move away from the concept of cheap labor to efficiency. When the percentage of educated workforce doing these jobs increases, will add much more value to the work completed. One of the stories that I tell, comes to be fascinating the way which Indian construction deals with bricks. Consider bricks manufactured in a factory in India. Here cheap labor loads the bricks
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individually onto the back of the truck. At the building site, more labor loads the bricks off the truck individually, which are ready to be used. Whereas the Western way of doing it is, you manufacture the bricks and put them onto a pallet. Then a forklift truck comes, lifts the pallet and puts it onto a truck. The truck takes it to a building site and another forklift takes it off the truck and then you lift the bricks from there. So the concept is all those people who were previously engaged in moving bricks are eliminated. So we have to think about where could we train them and place those people, so the whole process gets an element of value add. India doesn't have a choice, because the world has already gone that way and if India is not using the same source or techniques to manufacture, then people will buy the manufactured goods from elsewhere. If people wants quality they are not prepared to buy goods in second place. Whether its car manufacturing or any other sector, which does not use the latest techniques to manufacture will not grab the attention of customers. So people in the end will not buy the cars manufactured in India. Technologies like big data, cloud computing and analytics are emerging these days. How can manufacturing industries take leverage of these technologies?
Operations & Supply Chain Club, IIM Raipur
Data analytics to me, is really a fascinating place for India. Because I think data analytics will enable India to move away from the routine BPO and Call center activities, which are very basic clerical type activities. There are a huge number of really smart people in India. The education system here, turns out literally millions of smart individuals. You start training them in areas like data analytics and analyzing big data being part of that. That's where I think the next improvement, what I call outsourcing happens. It's not outsourcing Medio clerical tasks of call centers, it's having centers of excellence. So the global firms and in fact we at PwC are looking into that. We are going to have Center of Excellence for data analytics in India. Our global networks basically use our team in India to do that sought of work and that to me when you are looking at businesses at services side but not manufacturing. India is a service based nation, it's not yet a manufacturing based nation. If Modi can actually change that, that will be great. With the recent buzz around Internet of Things (IoT), how important is IoT in improving the operational process of an Organization? You guys are more advanced than me. IoT is the future. The real trick is you guys like you will come in and exactly be able to visualize what you do with things like that. Where
Interview Digitalization in Operations There is a lot of noise about 3D printing and the way it can revolutionize manufacturing sector. So is it going to be a disruptive technology? 3D printing just blows me away. The concept of producing goods from a printer is absolutely fas-cinating. So for me, the concept or ability to develop a particular product you want is so desirable. You got your 3D printer and you pay for the software and you can know how to do it and rather than going to a shop to buy the product. In your 3D printer at home, put in a particular cartridge and put a software in, then press a button and overnight, bingo your washing machine or kettle whatever it is, is just sitting there. To me, as a nondigital matic that is just wow!! That is amazing. But as you say, it moves away from the concept of factories, moves away from the concept of delivery. It moves away your logistics system, like how you get your raw materials to the factory, produce something and transport the finished goods to a shop and to a consumer. All of that is bypassed. So does it mean the entire middle men will be eliminated?
No it's a totally different perception. Let's assume you can 3D print a kettle, it's all those people who are involved in the value chain in getting the raw materials to make a kettle, before the kettle actually sits in your kitchen. All that fundamental changes will occur with something like 3D printing. We now consume digital media whether it is the movies or newspapers and all that middle stuff is being cut out. Today you don't need to go to the cinema anymore. You don't need to go to a book shop or a news agent to pick up the magazine. You basically consume it in your house and I think for me, 3D printing is taking it from services and media to actual product and that's pretty scary when you think about the whole industry that's involved in transporting the product.
Cloud computing is widely used in service industry. But when it comes to manufacturing, there are certain constraints regarding security. What's your opinion on this? I think it's wrong. When Google put data into cloud and it's like a river of data, they break it up and throw it in a
data sea and at any given time, someone dips in and pulls that data. So if you can create your end to end point solutions secure, I'm personally more satisfied with data in cloud, than data sitting in my server room. If data is in a server room, someone can walk into a room and hack into my personal computer. This is a big debate going on within our firm. Our firm globally PwC, we are obviously very concerned about the client data, where client data is stored. Within five years no one will buy software or computers to store data. Basically you buy software as a service and the data is stored in the cloud. Your views on digital India campaign? It basically means all your products and services for consumers become more digital. The only concern is whether we in India can have the infrastructure to deliver these services. Digital India sounds like a great idea. One of the challenges to digital India is you got to have the infrastructure and that's problem we currently have. Companies have to tap in to improve this situation.
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Academia
Digitization in government’s operations: Mantras for success PROF. SUMEET GUPTA ; VIDUSHI PANDEY While digitization of Government operations has achieved good strides, there is a long way to go. Many e-Government projects fail to deliver and even see the light of the day. This article presents a few points that Government must consider before launching and committing to e-Government projects
Sumeet Gupta is currently affiliated with Indian Institute of Management Raipur as Associate Professor in the area of Operations and Systems. He received MBA and PhD (Information Systems) from National University of Singapore. He has published more than 100 papers in reputed International Journals and Conferences. This work is an outcome of his work on e-Government projects in the state of Chhattisgarh with his Doctoral Student, Ms. Vidushi Pandey. THE ERA OF E-GOVERNANCE Since last two decades there has been a huge upsurge in Governments throughout the world in providing electronic access to their services using ICT. Particularly with the advent of Internet, Governments all over the world have been attempting to make their processes efficient and remove the black mark of their being ineffective and bureaucratic. Apart from the effort to provide citizens with electronic access, Governments have also made efforts to improve their internal processes. Use of ICT is touted as key to bring 7
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reforms in the public sector by increasing efficiency of Government operations, bring transparency among Government processes, provide better and more versatile services to citizens and businesses (Coe et al., 2001; Ho, 2002; Watson and Mundy, 2001; Flak et al., 2008). Use of IT in Indian governance system goes way back to establishment of Department of Electronics in 1970. It was followed by formation of National Informatics Centre in 1977 giving clear indication of India's intent to keep information and communication in focus. The use of IT was mostly limited to government offices for
a lisa AScpaedcei m Digitalization in Operations word processing till the next few years. However, with advent of better software, other uses such as data management and information processing also began. The main thrust of e-governance was provided by launch of NICNET in 1987- the national satellite based computer network followed by launch of District Information System of the National In formatics Centre (DISNIC). This helped in establishing information infrastructure across all district offices in the country. By 2000, the government of India identified a 12-point agenda for e-Governance. It focused on various aspects such as setting up of Local Area Networks (LAN) in every department, use of Office Procedure Automation software for record keeping, websites for every department, electronic conversion of documents etc. On whole initiatives in e-governance in India can be categorized as: Government to Citizen (G2C) initiatives: Bhoomi project for land record digitization in Karnataka, Madhya Pradesh's Gyaandoot information kiosks, Lokwani project in Sitapur district, Uttar Pradesh, FRIENDS (Fast, Reliable, Instant, Efficient Network for disbursement of services), in Kerala and Public Distribution systems in Chhattisgarh are some of the well known G2C project in India. These are aimed at providing fast and efficient delivery of government services to citizens using information technology. Government to Business (G2B) initiatives: G2B initiatives cover various interactions that take place between government and business organizations. Aim of these services is to expedite such interactions, improve transparency and prevent leakage of resources. E-Procurement in Andhra Pradesh and Gujarat and Ministry of Corporate Affair's MCA21 online registry services are a few examples of such attempts. Government to Government (G2G) initiatives: Core motive of such projects is improving internal mechanisms of government and making them more efficient. These focus on processing of large-scale data and efficient decision-making. Prominent examples include Khajaane (online treasury computerization) in Karnataka and SmartGov
(workflow automation project) in Andhra Pradesh. In the recent budget of year 2015, Indian government has allotted funds of around 1 lakh crore towards Digital India program. The program aims at creating robust national information infrastructure, impart digital literacy to citizens, boost technology related industries and provide mass scale employment.
C H A L L E N G E S TO E - G O V E R N M E N T OPERATIONS Despite such long lasting efforts and humongous resource allocation, many e-government projects are not able to justify these investments. Success of these projects is often debatable and proportion of failed projects is large. Caseley (2004) assert that few people take time to ask the beneficiaries of the eGovernment effort as to whether or not the new effort has saved them time and money. Although reforms have been initiated in areas of Government's interaction, namely, G2C, G2B and G2G, most of such initiatives have failed to realize the goals (Hoegler and Schuster, 2002; Reddick, 2004), which they were expected to fulfill and consequently a number of them have to be abandoned leading to humongous wastage of taxpayers' money. The reasons for such failures examined by the literature can be categorized as follows: 1. The inherent complexity of the Governance system itself that makes the development and implementation difficult. The complexity may be due to the lack of standards that acts as barrier for eGovernment initiative, or due to lack of national and international interoperability standards (Missier et al., 2003), accessibility standards (Potter, 2002), security standards (Hof, 2002), and standards for online digital services (Kaylor et al., 2001). The
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complexity may also arise due to a number of stakeholders involved in the process with conflicting objectives (Boyne, 2002; Bretschneider, 1990; Hood, 1991). 2. End user involvement in designing the new system is one widely identified factor that can effect efficiency of an information system design . However, in case of e-government services the recipient itself would be so diverse that developing system requirement to address such vast majority may become difficult (Lenk, 2002; Wimmer and Holler, 2003). Disregard of the recipients also leads to difficulty in implementation. Moreover, there is a fear among many recipients of being rendered jobless or get affected by Government's efforts as a result of implementation of the new system. 3. A number of researchers have also questioned the use of top-down approach rather than evolving a bottom-up approach in developing the system (e.g, Caseley 2004) and argue that top-down ICT-based reforms are unlikely to lead to improved service delivery platform. 4. The prevalence of hidden motives also inhibits the success of Government initiatives. A number of such initiatives are taken to secure a vote bank or satisfying a clan of society (Walsham and Sahay, 1999; Caseley, 2004). Moreover, Prevalence of corruption among the stakeholders also does not allow either the project to take shape or the corruption becomes in-built into the new system leading to its failure (Caseley, 2004). The differences among the central and the state Government also leads to failure of the system as State Government tend to overrule Central Government or vice-versa as this may lead to the popularity of one over another leading to dilution in one's vote bank. POINTS TO CONSIDER FOR SUCCESSFUL E-GOVERNMENT INITIATIVES Although e-Governance projects are much more complex, a cautious attention to few important points can carry them to success both during development as well as during implementation and
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use. Here, we present some points that need to be understood before launching the projects.
If we make it, people will use it Not only e-Government, but also many IT projects are susceptible to this syndrome 'if we make it, people will use it'. Take the example of numerous apps developed for mobile phones. How many of them are used effectively? Barely a few! Why? Because many of them do not address the needs of a customer and many of them are not needed at all. It is not that if software is made, it will always be useful. The key here is to understand the needs of a customer. That customer may be the Government itself. The Digital Secretariat project, developed by Chhattisgarh State's IT wing was widely touted as a very successful paper less office project but endedup being used by the developing firm 'CHiPS' itself and the energy department because the two were headed by the same secretary. Why? The two major user departments in this project, namely, the Finance Department and the General Administrative Department were not taken into confidence and moreover they feigned lack of awareness of the project once it was delivered. They declined to use the system and the system remained underutilized. Gaining consumer's (and of key stakeholders) confidence is one of the most important steps in making the process digitized. It will not only help the developer firm identify and close the loopholes in their understanding of the process but will make the user feel as the important stakeholder in the project. Of course, too much involvement of user may stall the project, but not gaining their confidence is worse.
a lisa AScpaedcei m Digitalization in Operations End-to-End Automation‌? Partial automation is no automation at all. When eGovernment projects are partially automated, they end up meeting the same fate that they were destined to kill. Think of the widely touted and successful Public Delivery System (PDS) of public supplies in Chhattisgarh. It also won National award for public system delivery. The PDS system of Chhattisgarh is improved every year to bring transparency into the system and reduce the problem for citizens of Chhattisgarh, particularly those living below poverty line. However, the system is only partially automated. The registration, notification and payment part are automated and the public interface has been made transparent. But there are many loopholes, as the entire supply chain remains the same. The transportation and storage of milled rice is still done in dilapidated Godowns. The paddy procurement of Chhattisgarh itself is highly inefficient and Government has to spend around 50% of the amount it pays to the farmer for per quintal of paddy in procurement itself. The efficiency of a process is visible when the entire process is automated and digitized and not a small part of the system. The problems due to lack of transparency still remain. Consider another example of the e-procurement project of the Government of Chhattisgarh. An eprocurement system consists of six generic steps, namely, Request for proposal, Submission of Tender, Opening of Bid, Ordering, Invoicing and Payment. While first three of these six steps were digitized for e-procurement, the last three steps were not and the project became a failure. The last three steps left ground for lack of transparency to flourish. Public Works Department (PWD) is the highest user of procurement projects and is also infamous for elusive practices. Because of lack of end-to-end automation, Nextenders, who was awarded this eprocurement work in Chhattisgarh had to face criticisms from different Government departments for problems in e-procurement process and possibility of using back-end facility for favoring certain suppliers. Lack of Accountability towards end users
Various studies have repeatedly established the importance of a project champion in success of an egovernment project. A project champion is the official who is closely linked to the system right from its inception and most of the stakeholders are accountable to him. However, till the time thehe is present on the Chair, the project gains momentum. But as soon as he/she is transferred (a very common in Indian Administrative System), the project fails unless the incoming official feels the same drive to take it forward. This is because various stakeholder are accountable not to end users but towards the project champion. It is important to create such mechanisms so that end users can take account of projects performance. Only then would the project be sustainable in long run.
Project champion may have hidden motive such as to gather vote-bank or to develop populist measures. Indian Railway Reservation system has although made the life of people much easier with reservation and travel; its Tatkaal system has always been the bone of contention. While agents and touts earn money on tatkaal reservation, people find it difficult to book tatkaal tickets. The system was improved further with new facilities and newly installed servers. The system also ran well for few months but has again started posing problems with tatkaal reservations. Why do Government allow for such lack of transparency in its processes even during digitization. In such situations, it is important to give sufficient power to end users to question a systems performance and take account of his queries.
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No ERP without BPR Business process re-engineering (BPR) is one of the fundamental steps in implementation of Enterprise Resource Planning (ERP) software. Without BPR, the implementation of ERP will only help automate the very same processes that caused headaches earlier. Bhilai Steel Plant went ahead with implementation of ERP without much change in its process. Although it may have obtained return on its investment, but it did not gain as much improvement in its processes as it could have gained had it done BPR consciously. Most e-Government projects simply automate the current working system and hence do not gain much efficiency in their processes. However, those that consider their systems and processes more deeply gain much more in efficiency. The passport process of the entire Government of India was digitized and had made the entire process much more simpler and easier. The process will become further simpler if the Indian Police Systems are digitized and the records of people are available online that can be accessed all over the country.
a clear demarcation as to the systems that State Government should work upon and those systems that Central Government should work upon. In case of areas where both Central and State Government work upon, there would be conflicts of interest resulting in failure of the project before it can even effectively take off. W H O P AY S F O R T H E L A C K O F TRANSPARENCY? At this point, it is important to consider who pays for the lack of transparency. Ultimately the Government is run through taxpayers' money and the revenues it generates through its services, royalty and other taxes. The taxpayers' money or the revenues earned by the Government are supposed to be passed on to the citizens in the form of improved and effective governance, good infrastructure and security. If the money is siphoned off by any person in between, citizens cannot receive improved services from the Government which is unable to make serious investment due to lack of money. So, ultimately it is those who bring lack of transparency in the system who pay for the lack of transparency. New and improved systems whether electronic or otherwise should therefore focus on increasing transparency in government systems and reduce leakage of valuable public resources. Government of the Republic of Singapore has been rated the lowest among the corruption and it has been able to pass on to its citizens, the best in-class infrastructure, transport, egovernment services etc. CONCLUSION
Dual Governance System In India, Governance system itself poses different challenges. While the Central Government runs the entire country, the respective State Government governs the state. If the State Government is different from the one at the state, then it becomes further difficult for IT systems development and implementation. In a battle to prove mettle, Central Government and State Government projects are sometimes at odds with each other and end up gathering dust in Government files. There should be 11
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Digital India is a dream project of the Government of India. The success of projects under Digital India will depend upon how seriously they are developed and implemented. User involvement, need for transparency, redesigning of processes are important mantras that any Government should consider before conceiving, developing and implementing the projects. Some of the points mentioned in this article should help such projects become successful. REFERENCES Boyne, G. A. 2002. “Public and Private Management: What's the Difference,� Journal of
a lisa AScpaedcei m Digitalization in Operations Management Studies (39:1), pp. 97–122. Bretschneider, S. 1990. “Management-InformationSystems in Public and Private Organizations - An Empirical Test,” Public Administration Review (50:5), pp. 536–545. Caseley, J. 2004. “Public Sector Reform and Corruption: CARD Facade in Andhra Pradesh,” Economic and Political Weekly (39:11), pp. 11511156. Coe, A., Paquet, G., and Roy, J. 2001. “Egovernance and Smart Communities - A Social Learning Challenge,” Social Science Computer Review (19:1), pp. 80–93. Flak, L. S., Nordheim, S., and Munkvold, B. E. 2008. “Analyzing Stakeholder Diversity in G2G Efforts: Combining Descriptive Stakeholder Theory and Dialectic Process Theory,” E-Service Journal (6:2), pp. 3–23. Ho, A. T. K. 2002. “Reinventing Local Governments and the E-government Initiative,” Public Administration Review (62:4), pp. 434–444. Hoegler, T., and Schuster, T. 2002. “Quo Vadis eGovernment? - A Trap Between Unsuitable Technologies and Deployment Strategies,” in Proceedings of First International Conference on Electronic Government, Aix en Provence, France, September 2–6, pp. 403–406. Hof, S. 2002. “Arguments For a Holistic and Open Approach to Secure e-Government,” in Proceedings of First International Conference on Electronic Government, Aix en Provence, France, September 2–6, pp. 464–467. Hood, C. 1991. “A Public Management for All Seasons,” Public Administration (69:1), pp. 3–19.
Kaylor, C., Deshazo, R., and Van Eck, D. 2001. “Gauging e-Government: A Report on Implementing Services Among American Cities,” Government Information Quarterly (18:4), pp. 293–307. Lenk, K. 2002. “Electronic Service Delivery - A Driver of Public Sector Modernisation,” Information Polity (7:2), pp. 87–96. Missier, P., Lalk, G., Verykios, V., Grillo, F., Lorusso, T., and Angeletti, P. 2002. “Improving Data Quality in Practice: A Case Study in the Italian Public Administration,” Distributed and Parallel Databases (13:2), pp. 135–160. of the ACM (44:1), pp. 27-30. Potter, A. 2002. “Accessibility of Alabama Government Web Sites,” Journal of Government Information (29:5), pp. 303–317. Reddick, C. G. 2004. “A Two-Stage Model of eGovernment Growth: Theories and Empirical Evidence for U.S. Cities,” Government Information Quarterly (21:1), pp. 51–64. Walsham, G., and Sahay, S. 1999. “GIS for District Level Administration in India: Problems and Opportunities,” MIS Quarterly (23:1), pp. 39-65. Watson, R. T., and Mundy, B. 2001. “A Strategic P e r s p e c t i v e o f E l e c t r o n i c D e m o c r a c y, ” Communications of the ACM (44:1), pp. 27-30. Wimmer, M. A., and Holler, U. 2003. “Applying a Holistic Approach to Develop User-Friendly, Customer- Oriented e-Government Portal Interfaces,” in Universal Access: Theoretical Perspectives, Practice, and Experience, N. Carbonell, and C. Stephanidis (eds), Berline: Springer-Verlag, pp. 167–178.
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Trends
Cloud computing in supply chain management Supply chains 'in the cloud' are likely to initially take hold in those areas that are on the fringe of what many people consider core capabilities. Processes like global trade compliance, transportation route planning, freight bill audit and payment, and even basic product design engineering are all likely candidates.
D.Santosh is a PGP Student at IIM Raipur. He completed his graduation in Automobile Engineering from PSG College of Technology, Coimbatore. He has 22 months of work experience with Mahindra & Mahindra Ltd. He can be reached at 15pgp013.santosh@iimraipur.ac.in
Supply chain management typically involves supervising the transfer of products and goods, such as from a supplier, then to a manufacturer, a wholesaler, a retailer and finally to the consumer. Cloud computing refers to the practice of using a network of remote servers hosted on the Internet to store, manage and process data, rather than a local server or a personal computer.
services to the service user. These are as follows: 타
Software as a Service [SaaS]
타
Platform as a Service [PaaS]
타
Infrastructure as a Service [IaaS]
SaaS (Software as a service)
The cloud architecture includes a pool of virtualized computers, storage and networking resources that get aggregated and launched as platforms to run workloads and satisfy their Service-Level Agreement (SLA).
It features a complete application offered as a service on demand. A single instance of the software runs on the cloud and services multiple end users or client organizations. The most widely known example of SaaS is salesforce.com, Google Apps
Cloud services
PaaS (Platform as a service)
The service provider provides the following main
It encapsulates a layer of software and provides it as a
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STpreecni d a lss Digitalization in Operations service that can be used to build higher-level services. There are at least two perspectives on PaaS depending on the perspective of the producer or consumer of the services: Someone producing PaaS might produce a platform by integrating an OS, middleware, application software, and even a development environment that is then provided to a customer as a service. Someone using PaaS would see an encapsulated service that is presented to them through an API. IaaS (Infrastructure as a service) It provides basic storage and compute capabilities as standardized services over the network. Servers, storage systems, switches, routers, and other systems are pooled and made available to handle workloads that range from application components to high-performance computing applications.
SCM Cloud SCM Cloud offers - “a set of services that provide SCM functions to any cloud user in an efficient, scalable, reliable and secure way”. That is, Cloud masks all the heterogeneities involved in implementing various SCM functions and the tiers within each function and provides a purely functional view rather than having to deal with the inherent technologies. The view of the cloud makes us, the service providers the best ones to take the cudgel to implement the CLOUD. We must therefore prepare a pool of requirements and a pool of plausible technologies and create a layer of abstraction to free the user from choosing packages, best-of-breed solutions, databases, integration middleware, and infrastructure and think only about the required functionality and how much he can/should pay for it. Here is a simplified tiered-illustration of
SCM cloud components. Cloud computing is already making a significant impact on the supply chain management application market,and adoption is expected to continue to grow. Companies that provide SCM software applications – including e- procurement, warehouse management systems, transportation management systems, supply chain planning, and business intelligence & analytics – are either already offering 'software as a service' (cloud-based) solutions or are articulating a clear strategy to move to such solutions as more customers demand it. As this happens, look for the following supply chain processes to become particularly prominent venues for cloud computing: Planning and forecasting: Cloud-based tools are available for capturing itemized spends data, performing basic analytics; planning manufacturing runs and executing statistical demand forecasts. Applications focused solely on retail are also prevalent, with capabilities that include planning & allocation, assortment & space, pricing & promotion, and forecasting & replenishment. A primary reason is that planning and forecasting are rarely core components of companies' ERP systems. Clients therefore can run on manufacturer's ERP application, but leverage another's best-of-breed planning/ forecasting application via the Internet. Logistics: Cloud computing applications for functions such as network strategy, inventory management, warehousing and transportation will appear with increasing regularity in the near future. Processes such as global trade compliance, replenishment planning, order processing, and transportation load building, fleet management and transportation route planning are likely candidates. Some basic warehouse- and transportation-management applications are already available online. Sourcing and Procurement: Cloud computing represents a great opportunity to reduce 'total cost of ownership': the most commonly cited success metric in sourcing and procurement. A key reason is that cloud-based
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tools are inherently collaborative and accessible – a significant boon to companies that may deal routinely with thousands of suppliers. Take contract management: cloud-based collaboration allows multiple parties to jointly develop supplier contracts. Myriad sourcing and procurement capabilities are rapidly coming online, including procurement report generation, database centralization and supply chain visibility.
Markets: since supply chains in the cloud will be characterized by a more efficient way to use services, the most likely early services could emerge in countries with less developed infrastructures. This could be a big boon to companies in Asia as well as to developing economies in areas such as the Arabian Peninsula and parts of Africa, where companies look for ways to leapfrog development cycles and have minimal access to capital. —
The future Cloud computing in supply chain management is a paradigm that is still in its early stages. Thus it is likely to develop at different paces in different process areas, industry sectors, and markets: Process areas: supply chains 'in the cloud' are likely to initially take hold in those areas that are on the fringe of what many people consider core capabilities. Processes like global trade compliance, transportation route planning, freight bill audit and payment, and even basic product design engineering are all likely candidates. Industry sectors: early adopters will likely be industries with products
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References: 1.Analysis of Supply Chain Management in Cloud Computing by Animesh Tiwari, Megha Jain. 2.Cloud Computing For Supply Chain Management by Harshala Bhoir and Ranjana Patil Principal 3.http://www.forbes.com/sites/louiscolumbus/2014/02/ 12/where-cloud-computing-is-improving-supply-chainperformance-lessons-learned-from-scm-world/
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Internet of Things in supply chain management: The possibilites With ever increasing data being captured, businesses delivering real customer value through creatively connected products will have sustainable competitive advantages. The 'Internet of Things' (IoT) - a connection between physical objects and the web via sensor technology has huge potential to help deliver more efficient and transparent supply chains. Creating value from information can provide novel business opportunities with potentially profound implications. The IoT is a technically complex concept bringing regulatory, process, and relationship challenges to every aspect of a business. And as an emergent technology with competing standards and platforms, the IoT is still a risky investment to many companies. In this article, we shall examine the opportunities IoT brings in the context of supply chain management
Gulshan Prakash is a PGP freshman at IIM Raipur. He completed his graduation in Electronics and Communication Engineering from Birla Institute of Technology Mesra. He has 34 months of work experience in the financial services industry. He can be reached at 15pgp078.gulshan@iimraipur.ac.in
As a complex network of suppliers, factories, warehouses, distributors, and retailers, the highly effective and efficient operations of a Supply Chain depend on the speedily moving of information flows and material flows. The rapid advances in information technology (IT) have always resulted in innovation, such as the Internet, that is terms of its potential as a channel for collecting, transmitting and storing information.
However there exists a gap between the material flows and the information flows in a supply chain because of the information flows always can not reflect the wave of material flows in a real-time manner, as well as it is impossible to understand the process of a supply chain execution real-timely. Being the next generation networkof the Internet, the Internet of Things (IoT) is a comprehensive extension of the Internet which can Volume 5 issue 1 December 2015
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Specials Digitalization in Operations .achieve the pervasive connections between various objects or things, information automotive collecting and real-time processing, as well as ubiquitous computing, close the gap between objects in the material world and their representation in information systems. Today, consumers expect faster and more flexible fulfilment options that provide full visibility into product information, availability, and lead times. With billions of networked devices—from cell phones and laptops to equipment sensors and wearable technology—the opportunities for significant innovation are vast. But so are the possibilities for exposure to risk and inefficiencies. The business battleground is moving, and the value chain is at the forefront of success or failure. The implementation of modern best practices and architecting a digital, IoT-driven supply chain, organizations will be able to realize a number of benefits. As IoT makes its way into commercial over-the-road assets, these assets will have information about road conditions, weather conditions, traffic congestion, and pick-up and delivery availability that will allow for more dynamic route, driver, and tractor management thus enabling responsive networks in the process As more data is captured, businesses who deliver real customer value through creatively connected products will succeed over those who follow the hype. The challenge will involve sorting through ideas, selecting those with the highest value potential, and then translating them into innovative and profitable product offerings. DHL and Cisco's study said the 'Internet of Things' (IoT) – the connection of physical objects to the web via sensor technology - has huge potential to help deliver more efficient and transparent supply chains. Further, the Internet of Things in Logistics estimated there will be 50 billion devices connected to the internet by 2020 compared to 15 billion today, and looked at the impact of this expansion on business. The Internet of Things is estimated to give supply chains a $1.9 trillion (£1.3 trillion) boost. It claimed for any organisation with a supply chain or logistics operations, IoT will have “game-changing consequences”, from creating more “last mile” delivery options for customers, to more efficient warehousing operations and freight transportation. Internet of Things (IoT) is among the preeminent challenges of the 2010s. A technically complex concept, 17
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the IoT brings regulatory, process, and relationship challenges to every aspect of a business. And, above all, as an emergent technology with competing standards and platforms, the IoT is still a risky investment to many companies. True to form, many companies have focused their IoT strategy on how the technology can cut costs and improve efficiency. A simple Internet search for “IoT” and “supply chain” yields numerous articles about how the IoT can help a company do things faster or with fewer personnel. And, yes, the IoT can certainly do these things. But it can also be a transformative force in a supply chain, opening new possibilities not only for improved efficiency but for greater differentiation and innovation as well. From the term's first use in 1982, the very words “supply chain” have implied a linear process. The Internet of Things with its suite of technologies—sensors, communication devices, servers, analytics engines, and decision-making aids—has the ability to link the physical and information worlds more closely than ever before. Using a closed loop based on bits, it creates fundamentally new, non-linear ways to manage what has traditionally been a linear sequence of steps, expanding options for managers looking to create value. With the IoT, information that a product generates is becoming a critical component of that product's value, and the information continues to be created and communicated after delivery. The supply chain ends when a product has been delivered to a customer, but the flow of data persists, continuing to create value. .
Information's “value loop” consists of stages, each enabled by specific technologies . An act is monitored by a sensor that creates information; that information passes through a network so that it can be communicated; and standards—be they technical, legal, regulatory, or social—allow that information to be aggregated across time and space. An enterprise uses augmented intelligence, or analytical support, to analyze the
Specials Digitalization in Operations information, and the loop is completed via augmented behavior technologies that either enable automated autonomous action or shape human decisions in a manner leading to improved action.
Just as “better, faster, cheaper” are the value drivers of traditional supply chain management, their analogs—magnitude, time, and risk—determine the value of the information content within a supply chain. More information (scale) is valuable to supply chain managers because it allows them to know about more specific objects and make more informed decisions. Knowing more about more objects involved in a process (scope) and refreshing that information more often (frequency) also increases value. In short, modern supply chain management can be not only about getting products faster, cheaper, and of better quality but also about getting managers the right information at the right time, so that they can better make informed supply chain decisions.
Creating value from information in these ways can have potentially profound implications. Traditionally, a central objective of supply chain management has been to minimize variation in the supply chain. Variation has long been the enemy of efficiency because when variation in upstream links was revealed, it was typically too late for downstream links to respond—a concept referred to as the “bullwhip effect.” Now, however, the information provided by IoT deployments allows supply chains to invest less in eliminating variation because timely and effective responses are now possible, and instead to use variation as a foundation for new types of competitive advantage and even as a driver of innovation.
Advanced technology is not new to supply chains: Robotics, machine to machine, and other connected systems have reduced waste and improved supply chain efficiency for decades. However, even with these high-tech aids, the location of an item within that chain at any point in time, or about the status of a piece of processing equipment could not be accurately determined. That is not necessarily a failing: In the traditional context of supply chain management, that level of information was, unavoidably, relatively uncommon. As a result, management processes emerged to limit variation and so improve efficiency without on-demand knowledge of every item's location. IoT solutions can make supply chains less dependent on smooth, even flows. An example is General Motors' monitoring system. The company has deployed a standardized, Internet Protocolbased communication system across many of its manufacturing facilities, allowing it to integrate a variety of operational and enterprise processes, which have reduced both repainting and downtime on the line. The reductions in repainting alone have saved GM millions, and the whole program is slated to realize a 166 percent return on investment (ROI) within five years. Another example, is from Whirlpool. The world's largest washing machine factory, in Clyde, Ohio, used manual processes to read paper tags and manage inventory as washing machine lids flowed from initial stamping into finished, painted products for final assembly. The process was cost-intensive and error-prone. Instead of using bar codes, Whirlpool opted to deploy radio frequency identification (RFID) tags and networked readers across the plant. This enables decisions on the fly. The result is that inventory is down, quality is up, and Whirlpool is now using RFID to schedule inbound logistics to the paint line and introduce a true “pull” production system. The system exceeded expected ROI based on the reduction in the cost of paper tags alone. Very often, when pursuing these sorts of “within-the-walls” IoT deployments, it can be difficult to do more than increase the efficiency of existing processes. To realize still greater value from
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Specials Digitalization in Operations the IoT, it is frequently necessary to deploy IoT-enabled capabilities across a greater length of the supply chain and include either or both upstream and downstream segments—and, at those limits, to go “end to end.”
can then emerge, turning information from the supply chain into a service that companies can sell, creating new value and generating additional revenue.
The Whirlpool example illustrates how the visibility of supply chain operations gained within a company's four walls can create greater value through greater scope. As with any organization facing broad product manufacturing across a small network, Whirlpool has as lean a supply chain as possible but faces complex supplier, inventory, and materials management issues—both internally and externally—to produce washers at its flagship Clyde plant. Using IoT-enabled capabilities to create a value loop that stretches across the affected links of the supply chain alleviates this tension. Sensors give managers a clearer view of products moving through a supply chain and visibility into customers' habits. Not only does this increase the company's recognition and brand compared with competitors', it offers demonstrably better results than do undifferentiated supply chains. One study found companies with supply chains segmented by customer delivered goods faster for a third less than those that did not segment. By allowing for the adoption of knowledgeas-a-service models, the IoT is creating new value in supply chains. But with a whole ecosystem competing for that value, the spoils will likely be split between companies, suppliers, customers, and even third-party carriers. The IoT allows companies to shift their supply chain management priorities from suppressing variation to exploiting it. In its fullest expression, this allows a company to transform its supply chain from a cost center into a revenue generator. Doing so, however, can require that companies go beyond their own four walls, beyond even the extent of the supply chain, and integrate their customers and supply chain into a full-fledged ecosystem. If IoT applications allow companies to stock only the inventory they need when they need it, companies can go further still and do the same for customers, integrating them into the supply chain—since, unsurprisingly, customers are willing to spend money to get what they need when they need it. Pervasive IoT applications that stretch across the product ecosystem will collect valuable customer information, and innovative business models 19
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For example, a leading logistics and delivery company shows how IoT-based supply chain information can quickly grow into a new offering. For years, the company has tracked packages to make its delivery system more efficient. It stands to reason that corporate customers with sensitive supply chain needs might value even more detailed information—and the ability to act on that information. In 2009, the company introduced a set of configurable sensors that can monitor a range of factors: location, temperature, humidity, barometric pressure, and even light exposure. Data from these sensors are collected live and aggregated on central servers, where analytics send push alerts to customers if preset criteria are met.9 For the customers shipping packages, the knowledge that a shipment of frozen food has begun to thaw allows them to take action and order a refreezing, saving the shipment and revenue lost to spoilage or other damage. For the logistics company, this has opened another avenue to generating revenue beyond simply moving packages across the country. This type of knowledge-as-a-service model appears to be catching on. According to a survey of business leaders, 74 percent of those who implemented initiatives such as sensor-based logistics saw increases in revenue. In fact, the average supply chain contribution to a company's bottom line increased from 4 percent to 8.5 percent in only one year, with industry leaders seeing supply chain revenue contributions on the order of 10 percent. Traditional supply chain management techniques focused on one path through that forest, relying on controls to minimize variation. The IoT offers the ability to see and react to sudden variations, effectively opening up new paths to supply chain management. The IoT's
Specials Digitalization in Operations
ability to make visible previously unseen information about a supply chain allows for greater efficiency than process controls alone. By expanding within-the-walls IoT applications to include suppliers and distributors in an end-to-end supply chain, companies can transform push-driven order systems to pull-driven ones. These applications can have the same efficiency gains as withinthe-walls applications, but they can also improve customer experience, providing for greater differentiation. Pervasive IoT applications that integrate customers and the end-to-end supply chain into a single product ecosystem open the possibility of new, innovative business models. Among the most interesting of these new business models are those that transform the supply chain from a cost burden to one that can generate revenue itself. There is no magic bullet or single answer for IoT applications. However, the transformations that the IoT can bring do open up the possibility for new improvements and allow companies to find new paths to supply chain management. The IoT presents unprecedented opportunities to digitally enable the supply chain, and to create solutions that combine digital and physical products and services. How many times have you been late for a meeting only to find that the elevator is ”out of service” meaning you had to take the stairs? The good news is that companies can leverage the Internet of Things (IoT) to make this a thing of the past. Embedded sensor technologies can be
used to allow for bidirectional, remote communication with over one million elevators worldwide. Based on captured data, technicians can run diagnostics and remotely initiate repair options or guide on-site technicians to make the appropriate decisions, resulting in increased machine uptime and improved customer service. Unlike previous generations of passive sensors, the IoT will allow a supply chain to control the external environment and execute decisions. With the IoT, sensor-embedded factory equipment not only can communicate data about parameters such as the temperature and utilization of the machine, but also can change equipment settings and process workflow to optimize performance. References: Agile Supply Chain Management over the Internet of Things - Lou Ping, Wuhan University of Technology China ; Quan Liu ; Zude Zhou ; Huaiqing Wang Ÿ
IoT and the Modern Value Chain - Gaurav Palta and John Murphy, August 2014 Infosys Management Consulting practice Ÿ
Forging links into loops: The Internet of Things' potential to recast supply chain management : Deloitte Review Issue 17 - by Joe Mariani, Evan Quasney, & Michael E. Raynor Ÿ
'Internet of Things' will give supply chains trillion dollar boost by Marino Donati Ÿ
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Gurumantra
Gurumantra - Know More
Sir, How Cloud computing is transforming Supply Chain Management?
one to automate tasks and more easily combine moves.
1.
6.
Scalability.
Cloud services provide an opportunity to scale without getting an entire system into overhaul. It has the ability to satisfy all the upcoming needs of a rapidly expanding business. 2.
Immediacy.
Implementation of new cloud service is easier and completed within couple of weeks. On the other hand, implementing new software within existing IT systems may take months together. 3.
Efficiency.
As cloud service takes care of the information management, the resources earlier associated with this work can be shifted to other departments such as research and product development. One can expect product innovations and improvements to happen at a quicker rate with less number of employees. 4.
Accessibility.
Cloud service provides an opportunity to conduct business from anywhere as employees can download all the required files on their devices, eliminating the limitation of a physical system. There is no need for the presence of employees on site in order to access information. 5.
Flexibility.
Cloud-based services can connect everyone in the supply chain, providing a more strategic approach for inventory deployment. Delivery networks can be monitored through cloud computing. It also allows
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Optimization.
Greater collaboration can be achieved across all parts of organization through tailor made solutions provided by cloud services, which in turn leads to problems being solved twice as quickly. This can help optimize delivery times, product development and market expansion, while reducing overall costs by improving the agility of the operating model. How will IoT benefit the supply chain system? In real time delivery systems, the key to in-transit visibility are cloud-based GPS and Radio Frequency Identification (RFID) technologies, which offer identity, location, and different tracking information. These measures are the backbone of IoT as it relates to the supply chain. By tapping the data gathered by these technologies, detailed visibility of an item is provided all the way from the manufacturer to the retailer. Data gathered from GPS and RFID technologies not only allows supply chain professionals to automate shipping and delivery by precisely predicting the time of arrival; they can monitor significant details like temperature control, which impact the quality of a product in-transit. With enhanced connectivity, supply chains will feel the impact of intelligence on every area of their business, including financial, customer support, marketing, sales, and operations. By boosting forecasting accuracy and demand planning capabilities, organizations will be able to focus on the right tasks at the right times, leading to significant cost and time savings.
Gurumantra Digitalization in Operations
Where is the Internet of Things headed to? IOT focuses on being able to more or less control things remotely. Turning the lights of your house off from work through your smartphone, being able to pre set your thermostat of your house, etc.there are apps that track the ins & outs of your daily life. IoT can recognize the important people, places, and devices within your life, compile this data visually for you, recognize patterns within your life, and then create shortcuts for you based on these patterns. The future and direction that IOT is going is provide is a technology that knows you and is able to predict you & adjust to your needs automatically. Sir, what is the Difference between 1PL, 2PL, 3PL, 4PL and 5PL logistics ? Is it differentiated based on number of parties involved? Ÿ A first-party logistics provider (1PL) is a firm or
an individual that needs to have cargo, freight, goods, produce or merchandise transported from a point A to a point B. The term first-party logistics provider stands both for the cargo sender and for the cargo receiver. A 1PL can be a manufacturer, trader, importer/exporter, wholesaler, retailer or distributor in the international commerce field. It can also be institutions such a government department or an individual or family removing from one place to another. Anyone having goods moved from their place of origin to their new place is considered to be first-party logistics provider. Ÿ A second-party logistics provider (2PL) is an
asset-based carrier, which actually owns the means of transportation. Typical 2PLs would be shipping lines which own, lease or charter their ships; airlines which own, lease or charter their planes and truck companies which own or lease their trucks. Ÿ A third-party logistics provider (3PL) provides
outsourced or 'third party' logistics services to companies for part or sometimes all of their supply chain management function. Ÿ A fourth-party logistics provider (4PL) is an
independent, singularly accountable, non-asset based integrator who will assemble the resources,
capabilities and technology of its own organisation and other organisations, including 3PLs, to design, build and run comprehensive supply chain solutions for clients. Ÿ A fifth party logistics provider (5PL) will
aggregate the demands of the 3PL and others into bulk volume for negotiating more favourable rates with airlines and shipping companies. Non asset based, it will work seamlessly across all disciplines.The central ethos of 5PL is its commitment to collaboration and to obtaining a higher degree of resource utilisation in order to achieve savings and open up opportunities to secure the best possible solution at minimum cost/carbon etc. What are the advantages in digitizing the banks back office? Digital technologies can help banks effectively streamline their processes and achieve substantial cost savings. Digitization and banking go hand in hand through which there would be a positive impact on banking industry. Many U.S and European retail banks have struggled to fund the projects necessary to mordenize all front and back office operations according to a recent report. There are certain reasons for the slow rate of digitization and the continued reliance in core legacy systems. Challenges Ÿ Replacing systems without impacting running
operations Ÿ Expensive to upgrade Ÿ Mergers and acquisitions across the industry
However, if banks digitize back office operations, they would enjoy many advantages like data management and maintenance. Advantages of Digitization: Major advantage of digitization of back offices in banks is possession of an efficient information management with digital scanning and imaging, document sealing and encryption in addition to document indexing and bar coding.
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G uS rpuem c iaanl st r a Digitalization in Operations Ÿ The system can reduce the time spent to locate,
2.
Lean Adoption
retrieve and file documents by 75%
3.
Globalization
Ÿ 'Digital signature' is another advancement
4.
Consolidation
5.
Digitization
through which the delays in collecting signatures can be considerably reduced. This improves fileprocessing efficiency and reduces paper cost. Ÿ Scanning and converting paper documents into
electronic format can accomplish centralization of back office operations quite accurately. Ÿ Moving common activities into central system
controls and manages this shared service model efficiently allowing easier reporting and better management. Ÿ Conversion of documents into digital format
saves storage space and reduces operational cost. Ÿ It automates business processes such as account
opening, lending or payments which in-turn reduces operational costs Ÿ Bottlenecks in the processes if any can be
detected easily and corrected immediately Replacing the systems and setting up technology infrastructure are major constraints for banks to digitalization and banks would eventually lose customers if they do not upgrade. Outsourcing digitization of back offices of banks to a reliable document conversion company is an ideal option to achieve digitization goal.
As the differentiation amongst players started narrowing, the search was on for a new source of competitive advantage. The emerging technologies provided the impetus for a digital wave. The current wave of digital disruption-led consumerization is a result of the power and impact of converging technologies like big data, high performance computing (HPC), cloud, mobility, and social media, enabling automotive enterprises to explore new business models and differentiation opportunities, both on the production side as well as the customer engagement side of the business. Impact: In the automotive industry, digitizing especially in manufacturing operations, has immense potential to provide high impact results over a period of time, as the integration of machine to machine communication capability with analytics and mobility will provide levels of reliability and quality. Advantages:
How important is digital disruption in Automotive industry and what are the advantages?
Ÿ Real time Dashboard/Scorecard with all
The automotive industry has always been at the forefront in defining new paradigms for the manufacturing industry. Based on our internal research and experience gained over multiple engagements, our analysts have defined five such defining moments in the history of this industry:
Ÿ Real time sync and there fore real time
1.
Ÿ Capturing of issues which otherwise were
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Growth
Operations & Supply Chain Club, IIM Raipur
updated KPIs and metrics on mobile device. Decision Making Ÿ Better managed plant floor space Ÿ Easy access to dashboard via mobility to the
decision makers
Regular Book Review
INTRODUCTION TO E-SUPPLY CHAIN MANAGEMENT
The book review is written by B.kiran kumar. He is currently a PGP 2nd year student at IIM Raipur. He has 3.75 years of work experience in IT industry. He has worked at virtusa and Sapient Corporation.He can be reached at pgp14073.bora@iimraipur.ac.in
T
he first years of the 21st century have been dramatic ones indeed. The new century began with unprecedented prosperity, record employment, relative security from war, and massive governmental surpluses at all levels. The business and financial communities and, indeed, almost all aspects of life from entertainment to shopping were caught up in the excitement of a computerized tool called the Internet that was cast as the destroyer of the old industrial economy, the harbinger of a whole new economy, and the digitization of all forms of human endeavor. By the middle of 2002 the good times had not only soured,
but the specter of financial recession, massive layoffs, and corporate scandal had rocked the U.S. economy. The overhyped e-business revolution fizzled into bankruptcy, ruined stock portfolios, and disillusionment when the dot-com bubble burst. The computer software/hardware industry saw sales plummet as companies looked inward to costcutting initiatives and to conserve cash. A vicious and deadly terrorist attack on 11 September, 2001 reminded the country that the world was not rational and peaceful after all, that there was a specter that could with one blow topple what had been considered a rock solid and prosperous economic Volume 5 issue 1 December 2015
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Regular Digitalization in Operations environment. And, finally, corporate greed, arrogance, abuse of power, and lack of stewardship ó the dark side of management that, in the hands of morally weak and intellectually dishonest corporate executives, destroys businesses and human lives ó just about applied the knockout blow as the Dow dropped below 8000 and the NASDAQ sank to around 25 percent of its former highs. While traumatic, the new realities of the economic environment have served to reveal not how overhyped, although a good deal was indeed just vapor, but how important the effective convergence of technology and the supply chain are to corporate survival. The plummeting economy and the disruptions to the supply chain, while negatively impacting business, have simply accelerated the changes to how companies were internally organized and measured, how they dealt with each other, how assets were to be transacted through the supply pipeline, and what was to be the role of technology, which were already in the works without the intervention of the folks at al-Qaida and WorldCom. The Kmart bankruptcy, for example, illustrated that the company's inability to master supply chain technology and, consequently, benefit from supply chain efficiencies, could cause disaster to even the largest of companies. Far from causing executives to place supply chain management (SCM) and Internet concepts and technologies on the back burner as they rode out the decaying economic times, the tightening of the economy and heavier restrictions and security measures placed on channel flows have rendered access to real-time, accurate supply chain information more critical than ever. Connectivity, messaging, and collaboration have become today's foremost buzzwords, as companies compete for survival in an environment where cycle times and permissible margins of error continue to shrink. According to an Accenture survey (March 2002) on the impact of SCM and the Internet on the worsening economy and restrictions in the supply chain, SCM/Internet initiatives were credited with cost reductions, improved efficiencies, better customer service, more revenue, and greater competitiveness by over 80 percent of the companies responding. Also, more than 70 percent felt that the 25
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application of Web based applications providing end-to-end visibility to the supply chain were the single most important enabler of collaboration with top trading partners. While the survey indicated that the prime reason why companies increasingly were turning toward supply chain partners to outsource functions was to cut costs in the short run, 70 percent of executives saw the long-term creation of partnering agreements as a major strategy in achieving corporate objectives. The mission of this book is to provide a window into the concepts, techniques, and vocabulary of the convergence of SCM and the Internet so that companies can continue to leverage and expand on these exciting business tools to maintain, in these uncertain times, the momentum in supply chain savings and competitive advantage detailed in the Accenture survey. As will be detailed in the pages to follow, what is termed e-SCM provides today's enterprise with the business concepts and technical toolsets to activate supply chain capabilities that will enable executives to architect: Ÿ Process-centered, technology-enabled organizations composed of networks of knowledgeable and highly skilled teams capable of assembling the competencies and resources to be found within the business and outside among trading partners into virtual organizations focused on activating strategies designed to continuously pursue total customer satisfaction. Ÿ Collaborative communities of supply chain partners integrated together by concurrent access to databases and information flows that permit them to closely synchronize day-to-day operations and longterm strategies, so that they appear as if they were a single logical enterprise providing seamless, optimized capabilities to the customer. Ÿ Inter-enterprise, Web-based technologies engineered to provide cross channel teams access to interoperable computerized business components that empower them to interweave common and specialized knowledge to form collaborative supply chain nodes capable of integrating and networking channel processes to achieve optimal productivity. Today's computer architectures and business applications are truly exciting, and they do portend the coming of a new age of business-to-customer
Regular Digitalization in Operations connectivity based on the communication and enrichment of digital information. While the shape of these architectures is still in the process of development, one conclusion, however, is clear: the actual practice of SCM today has moved far beyond its original definition as a technique for optimizing a collection of logistics operations. Today, SCM is a dynamic, evolutionary concept that encompasses not only operational objectives but also interenterprise strategies determining how the whole supply chain will compete in the twenty-first century. Each chapter in this book attempts to explore and elaborate on the many different components of the combination of SCM and today's Internet technologies. The first chapter focuses on defining Web-enabled SCM and detailing its essential elements. The argument that unfolds is that e-SCM is a management model that conceives of individual enterprises as nodes in a supply chain web, digitally architected and collectively focused on the continuous evolution of new forms of customer value. Among the topics discussed will be the function of Internet-based information in e-SCM, the utilization of supply chain trading partners, and understanding the role of supply chain synchronization. Chapter 2 is devoted to a detailed discussion of the economic revolution driven by the Internet. The analysis begins with a review of the business dynamics of what is being termed the first stage of the new economy. Among the areas explored are the changes brought about by the Internet to customer management, product cycle management, the basis of information technology, the creation of global businesses, and logistics management. After, the discussion centers on the fundamental principles of e-business: e-collaboration, the rise of new forms of e-business, and the impact of the Internet on human resources. The chapter concludes with a review of the major trends impacting the development of ebusiness, ranging from the continued migration from vertical to virtually integrated enterprises to the changed role of logistics. In Chapter 3, the systems foundation of eSCM will be explored. Discussion begins with an overview of the enterprise systems governing
internal computing. Following, the analysis shifts to a review of business-to-business computing, beginning with electronic data interchange (EDI) and continuing with a review of the four phases of Internet commerce. Key topics detailed are utilization of the Internet for marketing and sales, Web applications targeted at activating e-commerce possibilities with customers and integrating supplier networks, and the possibilities inherent in ecollaboration and the generation of real-time, agile, and scalable supply chains. The chapter concludes with a brief review of the integrative architectures necessary to assemble into a single framework the mixture of enterprise resource planning (ERP) applications, business-to-business (B2B) and business-to-customer (B2C) point solutions, and business processes and work flows. Chapter 4 seeks to explore how companies can build effective market-winning business strategies by actualizing the opportunities to be found in SCM and the Internet. Structuring effective business strategies requires companies to closely integrate the physical capabilities, knowledge competencies, and technology connectivity of their supply chain networks alongside company-centric product, service, and infrastructure architectures. Building such a powerful e-SCM strategy requires strategists to carefully craft a comprehensive business vision, assess the depth of current e-SCM trading partner connectivity, and identify and prioritize what initiatives must be undertaken to actualize new value chain partnerships. The chapter concludes with a detailed discussion of a proposed e-SCM strategy development model. Defining the concepts and computerized toolsets associated with customer relationship management (CRM) will be explored in Chapter 5. The chapter begins with an attempt to define CRM, detail its prominent characteristics, and outline its primary mission. Next, the discussion shifts to outlining a portrait of today's customer. The profile that emerges shows that customers are value driven, that they are looking for strong partnerships with their suppliers, and that they want to be treated as unique individuals. Effectively responding to today's customer requires a customer-centric organization. The middle part of the chapter attempts Volume 5 issue 1 December 2015
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Regular to detail the steps for creating and nurturing such an organization. The balance of the chapter is then focused on the e-CRM technology applications, such as Internet sales, sales force automation, service, partnership relationship management, electronic billing and payment, and CRM analytics. Chapter 6 is concerned with exploring the application of e-SCM practices and Web-based tools to the management of manufacturing. The discussion begins by reviewing the role of manufacturing in the age of e-business. Of particular interest is the availability of an almost bewildering array of technology tools to assist in the management of almost every aspect of manufacturing from transaction control to Internet-enabled B2B exchanges. The chapter discusses one of today's most important drivers of productivity 贸 the ability of manufacturing firms to architect collaborative relationships with business partners to synchronize, through the Internet, all aspects of product design and time-to-market. The chapter concludes with an analysis of today's advanced manufacturing planning functions that seek to apply the latest optimization and Web-based applications to interconnect and make visible the demand and replenishment needs of whole supply network systems. In Chapter 7, the functions of purchasing and supplier relationship management (SRM) will be explored. A critical observation is that the strategic importance of SRM is not to be found in the optimization and automation of purchasing functions, but rather in the nurturing of buy-side partner relationships. The application of Web based functions have opened an entirely new range of SRM toolsets, enabling companies to dramatically cut costs, automate functions, such as sourcing, request for quotation (RFQ), and order generation and monitoring, and optimize supply chain partners to achieve the best products and the best prices from anywhere in the supply network. The chapter concludes with a full discussion of the anatomy of today's e-SRM system followed by an exploration of the e-SRM exchange environment, today's emarketplace models, and the steps necessary to execute a successful e-SRM implementation. Chapter 8 is concerned with detailing the elements of 27
Operations & Supply Chain Club, IIM Raipur
Digitalization in Operations logistics management in the Internet Age. The discussion begins with a review of the function of logistics and its evolution to what can be called logistics resource management (LRM). After a detailed definition of the structure and key capabilities of LRM, the chapter proceeds to describe the different categories of LRM available today and the array of possible Web-based toolsets driving logistics performance measurement and warehouse and transportation management. Afterwards, strategies for the use of third party logistics services are reviewed. The different types of logistics service providers, the growth of Internetenabled providers, and the challenges of choosing a logistics partner that matches, if not facilitates, overall company business strategies are explored in depth. Grappling with the content and selection decisions surrounding today's Web enabled technologies is the subject of the last chapter. Discussion opens with a review of the internal, inter organizational, and technology architecture requirements for implementing e-SCM. Converging SCM and the Internet will require companies to make the transition from company-centric to supply chain process-centric organizations that are customerfocused, flexible, and capable of metamorphosing to be more responsive to the needs of trading partners and customers, and that they are driven by an empowered cross-functional, cross-enterprise work force. The analysis next moves to the construction of inter-enterprise architecture. The argument voiced is that internal organizational reengineering is insufficient, and that the only way in today's business environment to build sustainable competitive advantage is to architect a collaborative community of trading partners collectively driven to deliver the highest level of customer service possible. The discussion of the third area, technology architecture, attempts to describe the hardware and software frameworks necessary to ensure the interoperability and integration of the business applications found at each trading partner node in the supply channel. The chapter ends with a review of the future of e-SCM, new technology developments, and the steps necessary to transform the organization to the e-SCM environment.
Interview Digitalization in Operations
In Conversation With
MR. RAHUL RAJAMUTHIAH Chief of Operations Future Value Retail
Mr. Rahul Rajamuthiah is a retail professional with 18 years of experience in Merchandising & Buying, Operations, Business Development, Logistics, Process Design, ERP implementation, and Training
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Interview Digitalization in Operations Talking about the e commerce players like Amazon, Flipkart and Snapdeal, Big bazar is the main brick and mortar competitor to these players. How is Big Bazar planning to take on these players? Honestly I don't take this word “Eating Market Share�. Yes online players have got a large visibility and large noise in the market, people like us talk about it. I have 3 different points which will answer the question in summation. The categories which are impacted by online are different. For example electronics got largely impacted and a certain amount of fashion and footwear. So the first one is which categories the online players have taken a bit of market share. Second is the penetration, which is not more than 4% or 3%. So there is an immense opportunity sitting for everyone. We believe that any disruption which happens, finally have to settle down and the later the disruption, the faster the settle down. We believe that it cannot be for too long, that these e-commerce players can continue to do, what they do. So the tech savvy people might be picking up products on ecommerce sites, but there is a certain amount of fun in visiting a store, making it a family outing, enjoying the customer interface feel of the products. All these are advantages which physical stores gives to the customer. But nevertheless it's not competition. We don't believe that they have taken the market share away. They are
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growing their market, we are a player in that market, there is a disruption and we also participate. For example you will soon see that we also have an online channel and we are going to do that. We will also evolve along with the customers and the market. So there will be offerings which will be in the online space for even us to. Do you think Internet of Things will impact the retail stores more or the consumers? I personally believe IoT benefits us immensely more than anyone else. For example in the case of online stores all the action happens on the website, sitting in a central server, irrespective of where the customer is sitting. But for a retailer like us, the action is actually where the customer is, which means the stores spread across geographies. The IoT helps us to pull all the information to the central location. So sitting in one central location I can see what happens in store X and store Y. If there is a break down, I can see it, sitting in central location and responses become faster in such situations. I feel IoT is much more beneficial for brick and mortar stores, because we need it more as the sites are remote, they are in different locations and collating information becomes a challenge. Internet of Things help us do that in a much better way. Infact I'm personally leading some projects, where we have chillers and freezers in our stores, they break down
Operations & Supply Chain Club, IIM Raipur
and the rectification takes time. We are using IoT, so that we know which chiller and at which location has broken down, collect the responses and correct it quickly. We are working on projects which help us using Internet of Things. How is future retail planning to take on GST bill, since it is going to have a major impact on supply chain systems of the businesses? We are one of the early retailers to have a central warehouse in Nagpur. So all our products get shipped from Nagpur, except for products like food or some technology products where there is a challenge even today. Most of the products we don't keep it in remote locations rather we keep them in central locations and move it. We know that GST is going to happen some day or the other and there are immense benefits of having a central warehouse getting stock moved from a central location because it increases efficiency and reduces inventory holding. So there are lot of advantages which we see and future group is infact one step ahead and we as an organization will benefit immensely once this GST bill is available. With the Digital India campaign coming into picture, the penetration of internet increases. Can companies like future retail take leverage of this digital revolution?
Interview Digitalization in Operations We are already there and if you look at any of our operational processes, we are digitally ahead. All our stores are connected through broadband and we know what's happening in remote locations, information flow is happening through servers, edited and hostage happens in a cloud. If you look at digitally, we are way ahead. I don't believe that whatever Digital India is talking about that technology is not available, it's available today and we are already leveraging it. What it might help is bring more retail customers onboard. From a business perspective, we use technology extensively in anything we do on a daily basis. Coming back to the specific question on vendors, we are working with government bodies like GS1, where what we are doing is information which the vendor generates, that information is digitally available to us. So that we don't have to physically create an information again in
our systems. It helps us avoid duplicacy and avoids human errors. So we are already working on all this stuff. Some are work in progress and some we have already done it. Government has increased the FDI investment to 51% in multi brand retail. How is future brands planning to compete with Walmart and Tesco? India is a competitive market and there is an immense space available for all of them. It is good if they come in, because it will help all of us, efficiencies will come in and will get good quality people. Today only people like us are investing in educating or training people, so they might also invest into this. There are advantages, malls will shape up better. So there are good things that are going to happen. Secondly, I think the law is still not clear and the state governments can allow but it's not clear. So I cannot say whether really multi brand
retail is going to see that kind of an upsurge immediately. Inevitably someday or the other it might happen but not immediately. Many retail companies are directly procuring the materials from farmers by eliminating the middlemen and hence providing products at low cost. Does future retails has any such plans? Yes we already do and we have large food parks in Bangalore and one in the North. So we also procure directly from many places we can, but many times it is not feasible both economically and logistically, but we do. We have major initiatives and probably we are the largest procurer of many of the fresh food items across India. We also take from the farmers and convert it into value added food consumption process and we are also a participant in that chain process. As the country evolves more and more people will be doing that.
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Operations & Supply Chain Club, IIM Raipur
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Volume 5 issue 1 December 2015
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Operations & Supply Chain Club, IIM Raipur
About Us OPEP, The Operations and Supply Chain Club of IIM Raipur endeavors’ 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.
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TEAM OPEP
RAHUL RANJAN
CHARLES VASANTH K
ANISH KUMAR
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KIRAN KUMAR BORA
CHOPPALA VENKAT ANUDEEP
AKANKSHA RAJPUT
SAUMYA GUPTA
ABHISHEK K
ABHINAV PEDDINTI
NITHIN
NABIL ABDULLA
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MANUKA
As the Internet of things advances the very notion of clear dividing line between reality and virtual reality becomes blurred, sometimes in creative ways. ---Geoff Mulgan---