Pravaha 2014

Pravaha

COVER STORY

VOLUME 2

Cold Chain Logistics

From the editors desk Dear Readers,

Heartiest welcome to the spring season with the chill receding, it is an apt time to break the shackles of hibernation and walk up to a new promising season of freshness and bounty that’s awaiting us ahead. It’s time we refurbish ourselves with the latest that has taken place in and around us. As the great Albert Einstein once mentioned “‘Wisdom is not a product of schooling but of the lifelong attempt to acquire it”, Operations club IIM Shillong stays committed to the same and has taken yet another conscious attempt at broadening the horizon of operations with its Bi-annual magazine “Pravaha”. After a successful first edition, Pravaha launches its second edition which focuses on the different aspects of Supply Chain and Logistics.

Supply Chain has been one challenging field that has demanded cognizance. Current operational efficiency is defined by a risk free resilient supply chain. The current version of Pravaha aims at dwelling into the intricacies of Supply Chain Management, with focus on in vogue and challenging topics like, Cold Supply Chain, Sustainable Sourcing and resilient supply chain. Logistics has also been an important ingredient of the issue, with special focus on transport management system.

Besides, the magazine has focused on an in depth analysis of DHL, that envisages the success story of DHL and its dream run in China. Special attention has also been laid on learnings from the stalwarts in the field, both in terms of strategy and conceptual frameworks. The Robaroo section shall serve as a potential guideline to operations enthusiasts and professional who want to make it big in the long run, with insights from the best in the business. Robaroo aims at mapping the experienced to the youth. An ideal platform to learn and understand the business.

Pravaha aims at going beyond the four walls of the classroom and understanding the nuances of operations from a practical perspective. Often books and models may not speak as much as interactive learning can do, team Op-era, IIM Shillong has been committed to making the experience enjoyable and a bountiful one. Enriched with a huge gamut of learning to take home. The second edition of Pravaha has aimed at a more detailed spectrum of understanding.

Hope this magazine helps you traverse through a path fortified with practical insights and at the same time makes your reading enjoyable and enriching.

Happy reading!!

Please feel free to get back to us with your feedback, your feedback keeps us alive.

Table of Contents INSIGHT 2 5 8

11 13 15 17

Supply chain visibility - A case on reliance fresh Sustainable Sourcing Reverse Logistics - Towards Recovering Lost Profit Transport Management System Managing Risk With Resilient Supply Chain Minimize The Waste Risk Management

BLAZE-A-TRAIL 20 22

DHL – A Dream run Learning from the leaders

ROOBAROO 24

25

Mr. K. Vaidyanathan - Challenges and uncertainties in field of operations Mr. Vishwadeep Khatri - A simplified view of Six Sigma Practices

COVER STORY 26

India-The Food Basket Of World

VIRTUOSOS 29

30

Father of Statistical Quality Control - Walter Andrew Shewhart The Man of Fishbone - Kaoru Ishikawa

RENDEZVOUS 31 32

Optimus 3.0 - The most creative brain takes it all Oper8 - Operations Week, IIM Shillong

IIM Shillong • Pravha • 1

Article of the Issue

SUPPLY CHAIN VISIBILITY

VIVEK KUMAR SHROTRYA VIKAS KUMAR SIMS

A CA S E O N R E L I A N C E F R E S H

S

upply chain visibility, a term that like two sides

and ASN (Advanced Shipped Notice, Inventory) accuracy.

of coin brings with it potential for tremendously

Supply Chain Visibility Vectors – A case of Reliance Fresh

improved supply chain performance on one side and

Visibility vectors are basically the factors that affect the visibility

a level of vagueness & uncertainty on other side. The

of products and services across various layers of organization’s

concept of supply chain visibility in late 1990’s and

network. We will take the case of Reliance fresh stores as example

is still new to many organizations. Art Mesher, then

for better understanding of supply chain vectors. There can be

an analyst at Gartner gave the concept of “The 3V’s of supply chain”.

seven major vectors which are as follows:-

The 3 V’s of supply chain stands for velocity, variability and visibility.

(a) Demand Management

Corporates and companies have worked upon the velocity and

(b) Supply Management

variability of supply chain but still have very little understanding

(c) International Sourcing

of visibility.

(d) Domestic Sourcing (e) Inventory

Visibility not only means on-shelf inventory but also means inventory

(f) Distribution and Logistics

piled up at all levels of supply chain including in transit inventory

(g) Risk Management

and inventory piled up across company’s network. Visibility allows concerned people in supply chain to forecast problems before they

Demand Management

occur and taken necessary steps to avoid expense in the real time.

Proper demand management with proper demand forecasting based

Two drivers of this savings through visibility come from PO lifecycle

on time series analysis (Adaptive Smoothing technique) and casual

2 • Pravha • Op-Era

better supply management.

Questions

pertaining

to

capacities, capabilities and utilization should be asked in each and every stage of the supply chain starting from

supplier’s

supplier

to customer, logistics and sourcing partners. Emphasis should be laid on better utilization

of

exiting

capacities & capabilities and increasing them slowly with the business. It also depends on the financial conditions and profitability margins in dealing with the products.

Supply

Management

is

better done by real time order

status

tracking.

Demand supply mismatch analysis of Point of Sales (POS) data can improve the visibility of

can be reduced by real time

inventory along the entire supply chain of Reliance Fresh. Fruits and

order tracking and increasing the efficiency of the supply chain and

vegetables are seasonal products with very little shelf life which

reducing the bottlenecks in the supply chain.

makes it very difficult to keep a fresh stock of vegetables and fruits according to the actual real time demand. For example on the day

International Sourcing

of festivals there is sudden spurt in consumption of the fruits which

Purchase Order lifecycle / PO lifecycle is an important factor in

makes it very difficult to predict the actual demand. We should use

international sourcing and

double regression causal analysis technique to forecast in such

transportation as it is time

situations. Demand management should take into consideration

consuming. It is easier

the factors affecting each and every individual item. For example

in case of neighboring

the shelf life of Apple is more than Banana so it becomes easier to

countries

manage demand of Apple as compared to Banana.

Bangladesh, Sri Lanka and

especially

Pakistan etc. as in many

visibility not only means on-shelf inventory but also means inventory piled up”

There are qualitative factors relative to demand which affect

cases logistics cost is

demand, some of which are as follows:-

less from these countries

(a) morale of employees, internal factors & schedules

as compared to logistics

(b) relationship and commitment to & from suppliers

cost from other parts

(c) effect of present and future customers along their purchasing

of

patterns

progress

(d) Decision and business interest shown by management etc.

Shipment and container

Problems pertaining to each of the qualitative factors should

details should be put to

be resolved keeping in view the business interest and future

use for speedy sourcing and transportation.

country.

Milestone

and

PO

/

requirements.

On shelf availability and presentation of products which in case of

National Sourcing

Reliance Fresh is fruits and vegetables affect the demand of the

In case of national sourcing, emphasis should be laid on better

products. For example if vegetables are scattered then it gives a

integration of farmers, suppliers and all other stakeholders in order

feeling of product being from old stock whereas if vegetables are

to form a holistic environment. Emphasis should be given more on

kept systematically then it increases shelf life and increases the

local products and visibility should be enhanced. Efforts should be

appeal to buy fruits and vegetables.

made to tame the influence of inflation as vegetable and fruits are commodities which are affected most because of inflation. Regional

Supply Management

and local procurement centers should be established for better

Real time capacities, capabilities and utilization from top to bottom

integration of all the facilities. Real time integration of information

(from shipment to each individual product) should be known for

between all the major facilities will result in reducing inventory and

IIM Shillong • INSIGHT • 3

meeting demand. Real time delivery status should be maintained

One another balancing inventory in various inventories is to

and dock door schedule should be introduced in the system.

collaboration between various Reliance Fresh stores in city. CPFR should collectively be done for all stores in a city.

Inventory There are many problems pertaining to inventory in Reliance Fresh

Distribution and Logistics Partners

starting from low levels of inventory to high pilferage ratio to

One major problem because of there is a problem of supply chain

spoiling stocks of some of the products etc. Most of the problems

visibility is distribution and logistics partners. There are different

pertaining to freshness and unavailability are due to inventory

logistics partners even within the same cities. It makes difficult

mismanagement. In the initial days of Reliance fresh high stocks

to estimate the in transit inventory. There is no sharing of data

of vegetables and fruits were visible but now vegetables and

between logistics partners which makes demand and supply

fruits have been reduced to just one corner of the Reliance Fresh.

estimation more difficult.

There are often cases of stock outs on one hand and stocks getting

Earlier Reliance had a dedicated Reliance Logistics as their logistics

spoiled on other hand. Basic techniques such as sprinkling of water

partner but it could not survive for long. There should be uniform

should be introduced in the standard operating procedure (SOP) of

dedicated logistics partner at least on city level as it will increase

Reliance Fresh. New improved products which are most often called

the response time and information can easily be shared about the

BT products should be introduced as they have better shelf life.

demand and supply.

Inventory in the supply chain should be maintained at minimum possible levels and most of inventory of vegetables and fruits

Risk Management

should be made available to customers.

Constant review of risk management and mitigation plan both

Inventories of other trading and logistics partners (In-transit)

at strategic and tactical level should be done depending upon

inventory should be kept at minimum possible levels. Advanced

the degree of risk involved in the business and the nature of the

shipping notices based demand and supply management should

product.

be done.

Based on the above mentioned secondary research, the following supply chain visibility matrix for Reliance Fresh has been suggested.

4 • Pravha • Op-Era

SUSTAINABLE SOURCING

HEENA MOTWANI

T H E E F F I C I E N T P RO C U R E M E N T T E C H N I Q U E I N S C M

IIM SHILLONG

ustainable Sourcing is a process of buying goods

is to make sure that the selected strategy should support company’s

and services that takes into account the long

core business strategy. The second step is the selection of minimum

term impact on people, profits and the planet.

criteria for sustainable sourcing and that is done by selection

The practice of sustainable sourcing demands

among the environmental, social or economic issues for the raw

full transparency of the supply chain, insights

material. That is effectually done by building the Input Issues

into the sustainable competences of the vendors,

matrix that holds the company-relevant agricultural raw materials

knowledge of the commodities used, and co-operation with

as one dimension and criteria (ecological, social, business) as the

other companies, governments and NGOs to secure the supply

second dimension.

of sustainable commodities. This is quite different to traditional

The third step is prioritization of raw material selected, by the

approach that focused on quantity, quality, price, lead times and

company while implementing the sustainable sourcing strategy. It

vendors. Organizations that excel in sustainable sourcing typically

can be done by choosing the raw material that:

have an integrated business model, which recognizes the integral

• Has high quantitative and qualitative importance for the company

connection between sustainability and the supply chain. Sustainable

• Are difficult to replace

sourcing considers how products are made, where and how they are

• With which noteworthy social and ecological issues are attached

S

transported, and are disposed of.

Post that the company should effectively build upon the program How is it performed?

goals that should be based on:

The first and the basic step towards sustainable sourcing decision

• High impact issues targeted by external stakeholders

IIM Shillong • INSIGHT • 5

• Improvement prospects 1. The Value Chain: It depicts all the activities a company engages

• Sustainable sourcing trepidations Next parameter that should be considered

in while doing business, and is used to identify the positive and

while forming the sustainable sourcing model

negative impacts of those activities. By doing this, the company

is Sustainability standard and more specifically

creates a set of problems and opportunities that should be

for it to be some external established standard

investigated, prioritized and addressed. Sustainable sourcing is

Sustainable sourcing considers how products are made, where and how they are transported, and are disposed of.”

or

internal

sustainability criteria that

company

used as a tool to decrease the companies’ negative impacts and offers opportunities for strategic distinction.

has

formed and has been

2. Company’s competitive context: It shows how the conditions at

following.

a company’s locations affect its ability to compete. The competitive

Somewhere between

context can be divided in four areas:

these two options

1. The Quantity and Quality of available business inputs, such as

lies an alternative

human resources or transportation

– adopting a set of

2. The Rules and Incentives that govern competition, such as policies

guidelines developed and used by a group of companies, such as

SAI

Principles

Platform’s and

Practices (P&Ps) for specific commodities. Within that organization, food and drink companies jointly develop P&Ps for the sustainable production of several crops on a pre-competitive basis.

Verification, certification, continuous improvement and direct investment are certain sustainable practices that a firm can follow for resource conservation and sustainability, considering the uniqueness and geographic location of each priority.

that ensure transparency 3. The Size and Sophistication of local demand, which is influenced

Porter and Kramer’s Model

by consumer rights and fairness in government purchasing

Porter and Kramer developed an interesting framework to analyze

4. The Availability of supporting industries such as service providers

the interdependence between business, environment and society.

and machinery producers.

This framework helps companies to set their sustainability agenda

These aspects can be opportunities for sustainability initiatives and

in line with their core business choices, and analyses the potential

serve as a framework for sustainable sourcing

of sustainability activities from two perspectives:

Porter and Kramer’s Model 6 • Pravha • Op-Era

IKEA’s Model of Sustainable Sourcing: Low Price, but not any price

wood supply chain audits for closer evaluation. The IKEA wood

IKEA has a very active approach to sustainability. It follows the

procurement group works to secure future price reductions and

following technique to achieve sustainability:

access to wood from sustainable sources. It has also established

• IKEA puts considerable effort in their ‘IKEA goes renewable’

co-operation with the pulp and paper industry and has long-term

programme which aims to have all of their products recyclable

agreements with governments, forest owners, and forestry-related

within the next two years

associations. Suppliers of wood are compliant with the IKEA

• It has estimated their entire carbon footprint to identify the full

minimum requirements and preferably be certified by the Forest

extent of their climate impact – from the extraction of raw materials

Stewardship Council (FSC), including the Forest Management (FM)

to customer transportation and the use of products

and Chain of Custody (CoC) standards

• The firm co-operates with companies, trade unions, and

Cotton: The long-term goal is for all cotton used in IKEA products

organizations to develop and reinforce the impact of their work

to be ‘better cotton’. The availability of sufficient volumes of ‘better

within the social and environmental field

cotton’ will affect how quickly IKEA can reach their goal. IKEA is one

• IKEA has taken considerable steps to engage in water conservation

of the founding members of the Better cotton initiative (BCI). This

projects and raise the awareness of their suppliers

global organisation aims to make cotton production effective for the surroundings it grows in, for the people who produce it, and for

Raising the usage of sustainable raw materials

the future of this sector.

Wood and Cotton are the basic raw materials used by IKEA. Let’s take a look at the sustainable sourcing techniques used in acquiring

Conclusion

them:

Like IKEA, every organization should use management practices

Wood: Wood is both renewable and recyclable and hence a sound

focused on sustainable sourcing technique that can align well

environmental choice. Documentation of wood usage by the

with the core values of their firm. This would not only serve as

suppliers is done in an annual basis that acts as a basis for a wood

an organization wide differentiating strategy but would also be

supply chain audit. Information collection from the questionnaire

beneficial to all the stakeholders in the supply chain ranging from

and risk assessment methods are used to choose a number of

supplier to the end consumer.

DID YOU KNOW?

• 7-Eleven, Inc. is the world’s largest convenience store chain with

and bread from the ice dock. Soon, the convenience store was born and

close to 51,600 stores in 16 countries, of which more than 10,200 are

became known as 7-Eleven to reflect the 7 a.m. to 11 p.m. hours of

in North America, and the company has more outlets than any other

operation

retailer or food service provider

• For more than 15 years, 7-Eleven has been listed among Hispanic

• July 11 (7/11) is the official birthday of the 7-Eleven convenience

Magazine’s Corporate 100, the top companies providing the most

store chain. The company celebrates its 87th birthday this year

opportunities to Hispanics

• In 1927, convenience retailing began simply enough when an

• 7-Eleven adds another store to its worldwide operations every 2 hours

employee of Southland Ice Company in Dallas started selling milk, eggs

IIM Shillong • INSIGHT • 7

REVERSE LOGISTICS

NISHANT KUMAR IIM SHILLONG

TO WA R D S R E COV E R I N G LO S T P RO F I T

R

everse logistic is not a new concept but it found

market

its place in greater canvas when industries faced

green product

changing economies and stiff global competition

and

also

which helped them in reducing waste and resulted

way

to

in improved profit. It is well known that almost every

material which

company looks for ways to increase revenue and

were going for

reduce risk and costs involved.

with a use

landfilling, for refurbished

Apart from this, most of company is trying to carve there path in field

product which

of greener supply chain and key to start supply chain sustainability

is

can be found in reverse logistic. By implementing reverse logistics

good as a new

strategies which mainly includes return management; repair and

one,

refurbishment; recycling of goods; and proper disposal of materials

manufacturing

from unwanted goods, companies are trying to move more toward

cost go down

sustainability along with cost cutting cost and making product of

and making a

longer shelf-life.

green image in

Reverse logistics has been around for long time but it was used after

market. So we can say that a properly executed reverse supply chain

usually asked question-“what we do with the material?” Now it is a

can yield both public image and monetary benefits.

forethought because it give companies a competitive edge of going

8 • Pravha • Op-Era

just

as

making

Reverse Logistic Pipeline Key Areas where companies can impact revenue with reverse logistics activities a) Returned Revenue: By means of repackaging and reselling of parts, reclamation and recycling of returned products, company can earn more from returned product because secondary discount market for products is continuing to grow. If company ensure timely delivery and processing of return company can save also. b) Protecting Profits by avoiding risk of regulation: By proper handling return and tracking all activities, a company can avoid fines and penalties from various government regulatory agencies such as Now there are many industries which are reaping benefits from this, but electronic industry was the first and most successful one of all. Thanks to growth in high tech gadgets and over changing technologies many devices like cameras, mobile phones, video games, television, computers etc. become obsolete in few years leaving manufacturers with mountain of unwanted products.

According to a survey by Aberdeen Group, Aerospace and defence firms represent the highest proportion of respondents that consider reverse logistics extremely important to overall company

the Consumer Product Safety Commission, FDA and other state and federal agencies. c) Customer Loyalty: According to a survey conducted in USA, 95% of customers will not buy from a company if they have a bad returns experience. That’s why companies considered best-inclass in reverse logistics enjoy a 12% advantage in total customer satisfaction over their competition. d) Disposal Benefits: A company who knows what is returned and

performance.

where it end up makes it easier for companies evaluate returned

Key activities in the reverse logistics ecosystem

regulatory issues. It also creates other benefits like by-products,

stock for possible secondary sales channels and to deal with avoiding excess inventory carrying costs, minimizing taxes.

Profit generated by Reverse Logistic in High Tech Industry Electronic industry spends annually over $14 billion on return.

Without a well-managed reverse logistics process, a high tech manufacture could lose over 50% of the returned inventory value since the majority of returned products can be sold in secondary channels. As per Best Buy CMO Barry Judge secondary market electronics sales represent an estimated $15 billion market in the United States. a) Reselling in secondary Market One of the best example of secondary market opportunity is mobile phone industry. Every year about 1.2 billion cell phones sold

IIM Shillong • INSIGHT • 9

worldwide. In 2011, return rates of mobile phones was 8% which is

IT strategy. Apart from IT, other investments are

96 million in count. The average retail value for refurbished mobile

people and process and both decisions (IT, people

phones is approximately $150 from which manufacturer would

and process) are cohesive in nature and must

recover $82.50 per phone. By this, a manufacturer can easily reduce

be timed together because neither can succeed

the cost of production, increase revenue and improve customer service at the same time. b) Rare Materials Reclamation Large chuck of cost in manufacturing electronic goes to procure rare earth metals, parts and subcomponents. Manufacture can take advantage from reusing such parts, components and metals from the millions of discarded units. For example, mobile phone manufacturers could extract and reclaim the gold, silver, palladium and copper from discarded units. According to the Environmental

without the other.

....every company looks for ways to increase revenue and reduce risk and costs involved.”

2. Logistics Operations (Realizing 3PL as a solution) One of the problem even

faced

by

companies with best in class supply chain function and global

Protection Agency, from every million cell phones recycled, 35,274

network, is lack of

pounds of copper, 772 pounds of silver, 75 pounds of gold, and 33

expertise within their management ranks to run the backward

pounds of palladium can be recovered which would be worth of

supply chain. In current scenario also manufacturers often dedicate

over $2.8 million at 2011 metal prices.

their top talent to run manufacturing plants, working with customers or managing imports, marketing — not focusing on returns.

KEY CHALLENGES 1. People, Process and Technology Strategy in Reverse Logistic

Reverse logistics is often outsourced to 3PL providers. The core

Many companies are leaders and superior in forward supply chain

reasons for outsourcing are: obtaining expertise quickly, achieving

and have well established processes and practices, it is not same

flexibility and speed to market and creating a shielding against

in reverse logistics. Most of the company continue to manage

outside forces to limit potential liabilities.

return and AMS services without incorporating people, process and IT component in an efficient manner. The problem of most

With help of 3PL provider, manufacturer receives the motivation,

of companies is broken link between “customer contact” and

experience, technological knowledge and resources like capital and

“resolution of issue”. It is evident that a reverse supply chain requires

staff to hit ground running. Many companies have seen immediate

critical combination of people, process and technology to drive

and significant positive impact, when hired a professional and

value because poorly managed transactions can cost you money.

qualified 3PL simply because of its experience in developing start

To resolve this problem, companies are adopting company-wide

us process and operations.

10 • Pravha • Op-Era

TRANSPORT MANAGEMENT SYSTEM

ANKIT NARSARIA

K E Y TO F U T U R E I N S U P P LY C H A I N M A N A G E M E N T

I

IIM SHILLONG

nventory Management is the lifeline of the supply chain

provided by the ERP, TMS selects the least costing service provider

management. It varies with the demand. If not managed

and the optimum path for the delivery. These helps in improving

properly, piling up of inventory will take place which will

reliability, reducing crashing time, improving transit on-time arrival

lead to increase in cost. Thus, organizations are moving

and increases customer satisfaction.

towards JIT model looking for ways to better manage the inventory. With these arises the question of ‘What is

Today, almost all the companies are turning their attention to

Cross Docking?’ It is the process of basically synchronizing inbound

logistics, which has led to the double digit growth

material movement with outbound deliveries, seamlessly through

of TMS sector. According to the Steve Banker, ARC’s

distribution facility to retailers thus eliminating storage. It helps

service director of Supply chain management,

in significant reduction of the inventory carrying cost and holding

TMS saves money by lowering their freight spend

cost.

because

it

provides system In recent times, lifeline or a critical part of the supply chain

for

freight

management is the Transport Management System (TMS) because

moves involving

it bridges ERP and inventory/distribution model. What ERP does is,

carriers as well

it integrates both internal and external information that flows in

as for freight

the organization, thus helping in managing various functions of an

moves involving

organization such as planning, inventory/materials management,

transportation

accounting, marketing, sales etc. With the help of the solutions

assets

TMS bridges the gap between ERP and inventory/distribution model”

(fleet

IIM Shillong • INSIGHT • 11

management).

The key processes handled by Transport Management System are: o Identifying the most feasible and optimum transport patterns according to the parameters like lead time, transport cost, order quantity etc. o Helping in administrative operations like traceability of the transport, recording and predicting unforeseen events, invoicing and documenting bills etc. o Assisting in identifying the KPI of logistics necessary for smooth and seamless operations of any organizations like productivity w.r.t shipping units/order, $/shipping unit, percentage

•

of on-time delivery etc.

logistics? Why more and more logistics specialist are putting their efforts

into

making

TMS work?

The answers to these questions are: • OMNI - CHANNEL DISTRIBUTION – Retailers need support: Bringing all types

of

businesses

like brick and mortar, click and mortar, click and click , catalogue etc. under a single umbrella faces lots of logistics problems. To run the operations seamlessly and smoothly, the streamlining of transportation plays an important role, and this is where TMS comes into play. TMS helps in creating transportation efficiencies, providing real-time data, helps in making better decisions and handling innumerable other tasks that cannot be addressed using fax, telephones or even spreadsheets.

• TRANSPORT MANAGEMENT – Everyone is looking for: Because of increased TMS use, its footprint has increased globally and across industries. Major software markets are looking toward this as a business opportunity, as a robust technology system in complex business environment which can address the needs of large number of exporters and importers. Continuous innovation by software vendors, increased optimization needs by suppliers and improving economy are the key factors that are leading to the growth of TMS. • STRATEGIZE AND PLAN TACTICALLY - The need for best deliver demands for the products can be addressed by other supply chain tools, but an overall planning to avoid unplanned accidents or impact of small things on overall business can be successfully

12 • Pravha • Op-Era

FREIGHT

FORECASTING

WITH

TRANSPORTATION MANAGEMENT - Unavailability of transport,

So, what are the trends that are making the TMS – the future of

addressed by TMS.

ACCURATE

empty carriers, and wrong shipments add a lot of dismay for the companies. With the help of TMS freight forecasting can be done.

TMS promises to deliver accurate prediction of demand, optimizing the inventory as well as transportation forecasting to reduce the impact of market volatility.

• DEMAND OF ANALYTICS - Meaning patterns in data needs to be identified for TMS to work accurately. Companies are flooded with terabytes of data daily, but to identify the most important information which can help in best transportation decisions is like finding a needle in a haystack. And, this is where TMS comes to rescue which helps in identifying important KPIs and utilize the data in the daily operation.

• HOW TO UTILIZE BACKHAULS - Once the goods are delivered to the respective retailers, hauling empty trucks to distribution centres are not profitable. Utilizing the networks efficiently, tying carrier contracts, can help shippers get through these hurdles and ultimately enjoy a lot of savings and that is why they are looking towards TMS. • HOLISTIC TMS - Cloud based solutions requiring minimal IT infrastructure with end-to-end support and out-and-out fleet management tasks are what is termed as Holistic TMS and is still in the growing phase.

In fact, rising fuel cost, importance of logistics, demand variability, market volatility, capacity crunch, increasing competition, makes the TMS supremacy as the backbone in Supply chain management and planning.

MANAGING RISK WITH RESILIENT SUPPLY CHAIN

SHAILENDRA KUMAR SIOM

R E S I L I E N C E T H E D R I V E R F O R O P E RAT I O N S E XC E L L E N C E

R

ecent years have witnessed an increase in mergers

supply chain network. Few reasons behind the inability to handle

and acquisition, more of globalisation which has

disruptions in supply chain are lack of clear contingency plan, roles

resulted supply chain to be longer and complex,

of an individual department.

meanwhile increasing the risk of disruptions in supply chain, operational activities. A research

FORMING A RESILIENT SUPPLY CHAIN

conducted by World Economic Forum along with

Theoretically resilience is the property of a material that enables

Accenture shows industries that are affected by supply chain

it to recover its original shape after it has been stretched or

disruptions experience a 7% average drop in share price. Recent

compressed. A resilient supply chain is an ability of a supply chain to

studies conducted across the globe have shown that 75% of

resume its original shape after disruption, this however is measured

industries faced supply chain disruption. Hendricks and Singhal

how quickly a firm bounce back post disruptions. Disruptions could

(2003) have figured out the effects of supply chain disruptions in

be internal or external. Reasons for disruptions could be:

terms of operating income, sales growth and long term effect on

• Natural disaster

firm performance. Few years down the timeline, there has been an

• International conflicts

increase in natural disaster across the globe which has a positive

• Political unrest

correlation to supply chain disruptions, and this is having a severe

• Crimes

impact on economic conditions.

• Incomplete information

Recent Japan tragedy (2011) had a severe impact on global supply

• Service failures from third party or outsourcers

chain network, which has raised eyebrows amongst the supply

• Lack of commitment from top management level

chain analysts across the globe to rethink and re-strategise the

• Tradeoffs between countries

IIM Shillong • INSIGHT • 13

FLEXIBILITY It is possible to minimize these disruptions and develop resilience by

A flexible supply chain responds quickly to disruptions. Flexible

building flexibility and increasing redundancy. However increasing

supply chain has an added advantage of meeting up with the

redundancy varies from firm to firm and adds an extra cost to to the

sudden spikes or fluctuations in demand curve. For a flexible supply

organisation. With industries following Japanese philosophy, single

chain more collaboration with suppliers is needed. Standardization

sourcing has become a cult. It has its advantage over multiple

of production, concurrent process, identical or similar parts, cross

sourcing in just in time manufacturing, lower inventory level, cost

training of employees are some of the measures which a firm

and quality consideration. Meanwhile single sourcing carries a

could adapt. These measures will also help a firm to meet sudden

highest risk. For a supply chain to be resilient it has to increase

fluctuations in demand.

redundancy to mitigate the risk factor. For this a firm has to hold • INFORMATION TECHNOLOGY is another crucial step for a firm

extra inventory, multiple sourcing.

towards flexibility. Information, data sharing can increase resilience REDUNDANCY

in supply chain. Information technology helps gather data which

Increasing redundancy is very effective in increasing strength of a

can further be used to analyse to form a pre programmed responses.

weakest link. A model for redundancy and how it increases strength

Data and information sharing forms a basis for flexible supply chain

of the weakest link is shown below. Reliability of different levels is

hence a basis for mitigating disruptions in supply chain network.

• REAL TIME VISIBILITY of an organization helps a firm to form

Level 1

Level 3

Level 2

R1=0.99

R3=0.99

R2=0.95

a flexible supply chain. Addition of real time visibility and event

Level 4

processing system along with automated decision making helps in

R4=0.99

counteracting disruptions rather than following a historical method.

denoted by R.

CHANGE IN ORGANIZATIONAL CULTURE

Reliability of the supply chain can be calculated by:

If an organization faces a disruption and if there is no transparency

R(supply chain)= R1*R2*R3*R4

between departments and different levels then this organization

R(supply chain)= 0.99*0.95*0.99*0.99 = 0.9217

will face maximum hindrance in resilience. A traditional culture

In the above model level 2 is acting as the weakest link, if we add

needs to be changed, communication information sharing among

an extra level in parallel to level 2 the strength of this link will

the employees should be enhanced and transparency throughout

be transformed and during disruptions or unwanted conditions

the supply chain network should be enhanced. Distribution of power amongst different levels of management and individual so that they are empowered to act accordingly to situations if a disruption occurs.

Steps for the formation of resilient supply chain: • Real time visibility of supply chain network • Information sharing throughout the supply chain network • Diversification in supplier, distributor

redundancy will mitigate the risk. The new model is shown below.

• Risk sharing between supplier, distributor, players of supply chain

Reliability of the supply chain can be calculated by:

network

R(supply chain)= R1* (1 - (1-R2) * (1- R2’) * (1- R2”)) * R3 * R4

• Removal of bottlenecks

R(supply chain)= 0.99*0.99*0.99*0.99 = 0.9605

• Change in culture • Adaptability and agility throughout the supply chain network

Due to redundancy the reliability of supply chain has increased from 0.9217 to 0.9605, though this extra chain makes it complex

Resilient supply chain enhances competitiveness. Firms that accept

and adds an extra cost, but if disruption is there in level 2 then

and adapt resilient supply chain are substantially better in shape

sourcing can be done through level2’ and level2” which will not

and posses a competitive advantage over other firms. Overlooking

disrupt supply chain operations. Hence a simple supply chain

resilience can have a severe impact on economic condition of a

network with redundancy will look like this.

firm. Study reveals firms performances are enhanced by adapting

Supplier1

C 1

Transporters Supplier

Manufacture r

Supplier2

Distributor

C 1

Transporters

supply chain will incur cost but has a long term benefit and a competitive advantage over other firms. However redundancy offers mitigating risk by sharing risk among the different levels of supply chain network but at the same time a firm should be able to part with the profit amidst the risk sharing firm.

C

14 • Pravha • Op-Era

resilient supply chain. Adding redundancy and flexibility to your

MINIMIZE THE WASTE

HARSHA DEEPAK RVS IIM SHILLONG

B U T WA S T E I S A L S O U S E F U L

n the Indian Subcontinent, on the soils of Andhra

India’s diverse climate enables the production of a wide variety

Pradesh there lived a farmer called Kotaiah whose

of fresh fruits & vegetables. The sub-continent stands second in

occupation was farming. He harvested the tomato crop

fruits and vegetables production after China producing 45.5 Million

and sold at ₹ 8 per kilo to the distributors. One day

tonnes and 90.8 Million tonnes, contributing 10.23% and 14.45% of

farmer visited his relatives in the capital city, he went

the total world production respectively. Mushrooms, Potatoes, Bitter

to market to buy fruits and vegetables and there to his

gourd, green chillies, Pomegranates, Mangoes, Walnuts, Grapes,

surprise the farmer found tomato being sold at ₹ 25 per kilo to the

Bananas, Onions and Green Peas constitute to form the majority of

customers. Farmer started scratching his head as he was unable

export basket. Major importers of Indian fruit and vegetable exports

to understand this price variation. What is the reason behind this

are Bangladesh, Malaysia, Nepal, Netherland, Pakistan, Saudi Arabia,

disparity in prices? The answer is below.

Sri Lanka and UK.

Fruits & Vegetables in India

Logistics network in India

A major drawback for low export for fruits and vegetables from

A lot of produce every year is wasted in India. As a consequence,

India is due to the poor post-harvest logistics framework. As Dr.

despite the production quantities, prices sour high in markets and

M. L. Choudhury, former Horticulture Commissioner in the Indian

making farmers further poorer due to wastage.

Ministry of Agriculture once commented, “It is unfortunate that

Logistics adds the value to the goods by making them available

in India, policy makers and planners set targets for increased

at the right place and at the right time to the right consumers.

production without making any effort to reduce postharvest losses.”

In fact possessing a logistic network is a core competency.

I

IIM Shillong • INSIGHT • 15

Logistics is most commonly misconceived as only transportation

fibre board (CFB) and moulded trays or partitions reduces damage.

of goods, which is just a part of it. It also constitutes integration

Finally, a better coordination among supply chain partners will be

of information, transportation, inventory, warehousing, material-

possible with better infrastructure and better skills, training and

handling, packaging and clearing. Logistics is usually misinterpreted

information sharing.

as only transportation of goods, which is just a part of the logistics.

It involves the integration of information, transportation, inventory,

Waste management

warehousing, material handling, and packaging and clearing.

India wastes about Rs 13,300 crore worth fruits and vegetables per year, according to a report by US-based technology firm Emerson.

Post- Harvest Problems in Fruits and Vegetable Logistics

When fruits and vegetables are processed employing various post-

Despite 11% contribution to GDP the high cost of logistics in India

harvest technologies, they yield bio-degradable wastes. As per

when compared to developed nations may be attributed to poor

FAO report, 2011 40% of fruits and vegetable wastes are obtained

quality of infrastructure and inadequate service quality than in its

at Post harvest and processing levels. Most popular technique of

counterparts such as US and Europe. Logistics in India is dominated

processing into concentrates, syrups and canned foods constitutes

by the unorganised segment -the organised segment accounts for

about 89% of fruits and vegetables. Hence these post processed

less than 10% of the total logistics in India. If this problem can be

wastes can be used as the raw material in the production and

successfully addressed, a vast amount of additional food can be

manufacture of Animal feed, Alcohols, Ethanol and biogas.

brought to market with no increase in production output.

Largest amount of waste produced in food processing industry is

As per estimates, a third and a half of food is lost postharvest,

waste water from skin, washing and rinsing vegetables that can be

between farmer and consumer in developing

treated and used for gardening and watering trees and agriculture

countries like India. Most fresh produce is

which is reverse supply chain. Wastes from apple pomace, peaches,

transported in an unpackaged form which

potatoes, Citrus, pine apples and other fruits and vegetables are

reduces its shelf life of the produce dramatically.

rich in cellulose, fibre and low protein. So these can be used as

Another major reason behind the wastage is the

animal feed by properly processing them for enriching proteins

complex system involving

and good digestive elements. Fermented potatoes can be used as

traders,

middlemen

and Wholesalers, which leads

to

enormous

inefficiencies.

Improvising Logistics By

improving

infrastructure

the building

a robust road network, an essential element in transporting to

market,

products Investment

in India, policy makers and planners set targets for increased production without making any effort to reduce postharvest losses.�

animal feed either.

Alcoholic beverages like Cider, beer, rum and brandy are produced from fruit wastes. Cider and brandy are made from fermenting dried, milled apple pulp, oranges. Similarly wastes are pre-treated to remove lignin and other inhibitory materials. When these lignin free bio-degradable wastes when subjected to microbial fermentation result in ethanol formation. Apple, Cherry ad Apple wastes are most commonly used processed wastes for ethanol production. The wastes of fruits and vegetable processing industries are subjected to anaerobic treatment for bio-gas production. These wastes include waste water as well.

This process of re-using of wastes by recycling or re-processing of

in better trucks would

materials to produce useful finished products forms an important

improve the condition resulting in better logistics. Improvising cold

sustainable operational practice in the reverse supply chain

storage facilities which are still rare in India is necessary. Shelf life

management. This reverse supply chain management can be

of produce properly cooled can be extended from 3 days at room

achieved even at the lowest level like in a house-hold kitchen in

temperature to 90 days.

the form of an organic compost pit for plant manure formation over

In India, most produce are transported loose, the use of corrugated

a few days to formation of black gold i.e. coal over a few centuries.

16 • Pravha • Op-Era

A top- down approach of risk assessment wouldn’t work efficiently alone, until it is complimented by a bot-tom up assessment process”

RISK MANAGEMENT

ACHINTYA XIMB

A S T RAT E G Y L E A D I N G TO B U S I N E S S T RA N S F O R M AT I O N

T

here is a very popular saying “ No risk No gain”. This

should be minimized . In recent years , after the involvement of

saying is very apt for today’s dynamic world, where

shareholders in the business process, many organizations are

it is unpredictable, volatile and full of the enigmatic

forced to expend their resources to address the issue of risk.As a

situations. Still the organiza-tion thriving for profit

result of this, risk assessment has become increasingly important to

and excellence are taking the risk- a calculated one.

the com-petitive advantage for any business.

Nowadays organiza-tions which are trying to elevate

their strategies for sustainability through green field expansion or

Let us first see the process for capturing and analyzing risks. Risk

brown field expansion or by some other means, calculate the risks

assessment basically depends on two factors

they may face in order to find the solution of the problems before

•

Nature of the organization

they happen.Businesses have viewed risk as a neces-sary evil- that

•

Types of possible risks

IIM Shillong • INSIGHT • 17

Considering

the

organization-wide

Strategic, operational and compliance requirements, objec-tives may be broad or narrow. In the same way possible risks may cover many areas like mar-ket, credit, product, liquidity, accounting etc.

So it depends on the nature of business and scope of discussion whether it is enterprise-wide or limited to a business unit or a small start up organ-ization.

Risk assessment provides clarity in the perception of the management regarding the events that could have an impact on the target achievement of the organization. A top- down approach of risk assessment wouldn’t work efficiently alone, until it is complimented by a bottom up assessment process. Boards of directors, executive bodies and different head of the de-partments first analyze the risks through enterprise-wide risk assessments to ensure that the key risks are identified and that the back up plans for that risk are designed well in advance.

Once the scope is defined , our discussion of possible risks likely to occur will be rated in terms of severity and probability.

The organization then will be able to visualize the impact of the possible risks . This enables them to develop their response and take critical decisions on differ-ent related aspects like resource allocation. Risk management discipline will ensure that in an ongoing process of risk assessment, objectives, risks, risk, response, measures and controls are regularly re-evaluated.

Although there is a big difference between knowing the risk management and implementing it. In the recent past, it has been the good learning experience for the people like Chief risk offic-ers and board members from the recent turmoil in the business. However, there are very few companies,who tend to use risk assessment as a source of their

competitive

organisations,

instead

advantage.These of

taking

a

defensive stance , go very aggressively to risk assessment. They know that their risk management approach can be leveraged as a source of competitive advantage.

They are not in a mood to just stick to compliances and cost controlling and

18 • Pravha • Op-Era

thus jeopardizing their risk management capabilities. Here are

Let us see some of the ways where a company’s risk management

some ways through which risk man-agement approach can be a

capability can be a source of com-petitive advantage.

competitive advantage to those organisations:

1. Search for the opportunity in the uncertainty: There are times

1. The objectivity in view

when there is natural dis-aster, economic slow down,government

2. Supply Chain Management

policies,etc.So instead of being defensive, one should analyze the

3. Risk management

risk factor and try to handle the disruptions and thrive to get the market share.They should treat the uncertainities as an opportunity

Let us see the example where the risk management approach

where their risk management capabilities would be tested and if

of some companies has proven to be a source of competitive

they pass they will be the winner

advantage. The famous case of Nokia vs. Ericsson, two major cell phone manufacturers at the beginning of the new millennium.

2. No risk- no gain attitude: There are higher potential profits in

When their common supplier, Royal Philips Electronics, disrupted

riskier venues. There are chances where the competitors hesitate

by a fire on 17th March 2000, the two different approach of

to enter into the riskier ventures, that time the one who handles

these two companies towards the same realized risk resulted in

the risks better than his competitors, can enter riskier ventures

different outcomes. After both of thecompanies were notified of

with higher potential profits. Risk management capabilities justify

the disruption, Ericsson trusted the words of Royal Philips and

taking the extra risk and that can be a great differentiator.The best

believe that the supply would be resumed within a week. Nokia,

example is the movie Avatar-the most suc-cessful movie ever made

however, took this disrup-tion much more seriously and jumped into action. The company proactively started to closely monitor the development of the recovery process in Royal Philips. It realized that the damage is not a small one and the supply would not be resumed within a month too. Nokia took the deci-sion and quickly booked all the available capacities of other potential suppliers.

Ericsson alt-hough found out the real magnitude of the disruption, but it was too late.Ericsson faced a sec-ond-quarter operating loss of $200 million in its cell phone division. The vow of the company continued and in 2001 Ericsson merged its cell phone division with Sony.

On the other hand, the proactive response of Nokia to this realized risk not only protected the company from any damage, but also resulted in an increase in its market share. While Nokia’s market share increased to 30% up from 27% a year earlier, Ericsson’s

in terms of its box-office revenue was very risky investment initially

market share dropped to 9% down from 12% a year earlier. This

with high cost of $237 million.

case exemplifies how faster response of any organiza-tion to the

3. Brand the risk management capabilities: When a company

realized risk can turn the disruption into an opportunity to increase

gains others’ trust in having strong risk management capabilities,

their market share. Bain & Company analyzed the performance of

and hence being dominant and adaptable during the situation

more than 250 companies from 2001-2009 . They showed that with

of volatilities and disruption, it can play more competitively in

the same amount of risk, the number of organizations with best

the marketplace. It will be able to attract more business as many

performance quartile increased by 24% during the 2001 recession

corporate entities will be judgmental of its brand and will be more

as compared to the stable period of economic growth. Thus it can

confident that it will deliver in the crisis.

be inferred that downturns present not only risk factor but also the strategic opportunities. This result emphasizes when there is

In today’s competitive world where there is a cut throat competition,

a downturn, those or-ganizations who can manage the risks and

the volatility in the busi-ness due to more uncertainties have placed

uncertainties better than the others can use this as an opportunity

the risk management in the top of the priorities in the organization.

to improve their market position, which seems to be much difficult

When the business leaders look at their risk management

during stable conditions.

capabilities, they should be objective to gain the competitive advantage.But before an organization can use the risk assessment

The need for implementing risk management in a company and the

as a source of competitive advantage,it should make sure that it is

level of its involvement de-pends on uncertainties the organization

capable to analyze and manage the risk effectively and align them

faces. As the level of uncertainties and their impacts on our business

with its strategies.

increases, our need for managing them and the level of attention they require rises as well. Today’s business world is facing the challenge of more uncertainties and thus risky. Now, the question is how risk management could be a source of competitive advantage.

IIM Shillong • INSIGHT • 19

DHL A DREAM RUN TA RG E T C H I N A

D

ANSUMAN MISRA IIM SHILLONG

HL has been aptly conversant and capable enough

value of 1.15 litres alcohol/ person annually. However with the

to encash upon opportunities that have come its

increasing appetite for luxury wines Hong Kong has become a

way. This stalwart company has identified a booming

luxury wine hub and caters to near about 60% of the wine market.

market in China.

DHL has pioneered in storing and handling of wine bottles. The DHL has aimed at the Chinese wine market which

numerical dealt with are enormously handsome. DHL wine hub in

stands untapped yet. The Chinese population is

Hong Kong stores about 230,000 wine bottles of which 180,000

a major boost to the fact that this market is on

wine bottles are used annually. 2008 witnessed the slashing of

the verge of witnessing a tremendous growth.

taxes on wine which saw its demand escalating.

The Chinese population is still contained at a DHL, the logistics experts claim to have a trained pool of workers who

DHL wine hub in Hong Kong stores about 230,000 wine bottles of which 180,000 wine bottles are used annually.”

have been instrumental in facilitating the wine logistics business in Hong Kong. Wine bottles have two important aspects to delve into; the first being packaging and the second being temperature and DHL has been aptly catering to the above mentioned parameters.

Wine merchants, wholesale dealers/distributors and bulk buyers are not the only interested parties who want to buy from DHL, but DHL has been successful in bagging loads of private orders where customers do not feel the need to maintain their own wine

20 • Pravha • Op-Era

cellars, instead order their requirements from DHL, who are more

shareholders.

than happy to serve the best at the right time and at just about the perfect temperature.

Now the transition from 2011 to 2012 saw some handsome improvements in the financials. Talking about basic reflective

Similarly the Dairy Packaging industry has also been something

parameters like Operational profit margin and net profit margin saw

worth interest. Consumption of liquid milk products as estimated

significant escalation of 9.4% and 40.6% respectively. This rise can

shall increase from 144.5 billion litres in 2011 to 165.3 billion

be attributed to the innovative encashment of opportunities and

litres in 2014. China being one prominent hub for this demand.

efficient practices DHL has incorporated into its system. Significant

According to the Chinese Academy Of Social Sciences, 230 million

impact has been recorded from the activities taken up by DHL in

people near about 37% of the total urban population constitute

China and Southeast Asia in specific.

the middle class whose inclination towards sophisticated and well packaged food items has increased. Hence the packaging industry

Some interesting, involving and positive news for the shareholders

in China has been under tremendous amount of pressure. Talking

has been the increment in earnings per share which has been

specifically of the milk packaging industry where the daily demand

handsome at 42.7%. Dwelling into the intricacies of the income

is enormous and variable.

statement the company registers a very handsome current ratio and

In this context the Tetrapak and DHL story is worth taking a note.

acid test ratio. The current assets outweighed the current liability

Tetrapak has been globally recognized since 1950 for their famous

by 1.04 times in 2011 and to the utmost happiness and satisfaction

hygienic four layered packing, often associated with liquid food

of potential and interested investors who plan to invest in this

products and other perishables. However rising demand in China

logistics giant the current ratio in 2012 has shot upto 1.12 with

and beyond everything rapid demand variability has been a huge

a YOY increment of 7.57 %. Similarly acid test ratio significantly

impediment. The major problem being availability of spare parts to

increased YOY from 2011 to 2012 by 6.44%. An outweighing current

the packaging machines. Thus this is when Tetrapak decided to take

assets is indicative of excellent liquidity conditions owing to an

the help of DHL as its third party logistics provider. DHL entered

excellent cash management cycle.

the Chinese market in 1980 and is the only express provider. DHL is licenced to store both bonded and non-bonded goods. Moreover

The company certainly promises a handful to interested and

of late Tetrapak instead of ordering for the Asian warehouses

existing shareholders. They have been absolutely spot on in

from Europe now sends directly from Shanghai through DHL to

terms of identifying market opportunities and encashing upon

the consumers. Centralizing the entire Supply Chain in China has

them. This goes without doubt that DHL as a logistics company is

been a profitable ordeal for Tetrapak. With DHL’s help Shanghai is

certainly having a dream run and the years ahead do hold excellent

Tetrapak’s best performing delivery centre and number one in terms

opportunities for logistics companies to maximize grow and benefit.

of end customer deliverance.

DHL’s innovative practices have infact brought happiness to its shareholders. Let’s understand where and how this company has encashed upon its opportunities to reach out to its stake/

IIM Shillong • BLAZE-A-TRAIL • 21

LEARNING FROM TH

The world’s largest online retailer has been continually using its The brainchild of the visionary Steve Jobs, Apple has consistently supply chain to set the benchmark for delivering great customer been ranked No 1 by Gartner in the list of best supply chains experiences. Its service embodies the key components of its DNA; systems for the last three years. Apple was named the most admired customer focus, frugality and innovation. So what is it that Amazon firm in the world from 2008 to 2012, by Forbes. Revealing its supply does differently?

•

•

•

chain secrets:

Amazon engages with only the superior suppliers who are •

The first secret is the model of vertical integration embedded

willing to accept and adhere to Amazon’s Supplier Code of

in the firm with Apple itself designing hardware, software and

Standards and Responsibilities which enlists various do’s and

other services rather than relying on third-party manufacturers

don’ts that the firm expects from its vendors

for design

They stock their inventory keeping in mind the customer •

Apple has come up with a standardized list of expectations from

preferences rather than stocking any and every product

its suppliers to ensure that they comply with the requirements

possible.

of Apple products. Moreover, the employees spend a lot of time

Another differentiating strategy is that they maintain and

with their suppliers to ensure the quality of Apple’s cutting

manage not only their own inventory but also of other retailers

edge products

such as Eddie Bauer and Target, giving it an economy of scale.

• •

•

•

•

Amazon with its real-time links to manufacturers manifests

The firm believes in establishing strategic alliances and exclusivity agreements with manufacturers and suppliers that

drop shipping at its best

enable Apple to scale its operations as and when required

Considerable investment in back-end infrastructure like

according to customer demand

warehousing facilities that are nearest to the largest customer •

The firm places high volume pre-orders with suppliers, which

hubs, maintaining thousands of store-fronts etc. ensure cost-

not only ensures that it has enough production capacity but

effective and smooth operations

also sometimes leads to its main rivals losing access to same

The firm spends about $200 million a year on business

manufacturing resources

technology and has utilized technology to such an extent that •

Due to owning its own retails stores, It becomes easier for the

if a customer orders a book, the order-management system

firm to forecast demand and hence decreasing the average

itself interacts with the inventory and warehouse management

level of inventory does not pose a threat to availability

systems to find the best possible distribution centre to fulfil •

Use of air freight instead of ship serves as a cost cutting

the order, thus intimating the user about the shipment details

solution and renting the entire fleet space yet again compels

in no time

the competitors to take the back seat

It

has

pioneered

technologies

like

Radio

Frequency

Identification (RFID), Electronic Data Interchange (EDI), data warehousing etc. thus giving it a leading edge over its rivals

22 • Pravha • Op-Era

HE LEADERS

PRIYAM FMS DELHI

McDonald’s is the name that has become synonymous with fast The world’s third-largest consumer goods company by revenue, food today. It is world’s leading global foodservice retailer operating Unilever, is also one of the most trusted brands worldwide. Often at more than 33000 locations in 119 countries serving almost 64 adjudged to possess the best supply management system in Europe, million customers each day. Though the firm upholds its mission of the FMCG giant has consistently remained in Gartner’s global top “One World, One burger” everywhere keeping the quality and cost ten list. Here are some of practices that justify the competitive consistent throughout, it develops a different supply chain in each advantages that Unilever has over its competitors: country. Here is an example of how it does it in India: • •

It sources all the raw materials from India only and promotes

from the countries offering low-cost thereby using its global

small businesses for long term to meet its requirements with quality products and at affordable cost •

•

•

scale to achieve cost-efficiency •

The firm adapts to differentiated supply chains in different

It has adopted a supply chain system with an unbroken

markets thus being locally agile and serving more than 160,000

and uninterrupted series of steps including procurement,

points of sale. In India, for example, it is equally convenient

warehousing, transportation and retailing, all maintaining

and hassle-free to get Unilever products in a supermarket and

the temperature of products within a stipulated range. This

other modern trade outlets as it is in traditional kirana and

kind of supply chain named as the ‘cold-chain” enhances

mom & pop stores even in semi-urban and rural areas

the shelf-life and longevity of the products by retaining the •

The organization has incorporated lean manufacturing

desired nutritional value and moisture content and benefits

strategies and has been successfully able to optimize demand

both farmers and consumers. It enables McDonald’s to ensure

forecasting and decrease in inventory levels with simultaneously

freshness, reduce wastage and hence save a lot during the

accomplishing better shelf-availability of products. It has

process

redesigned and revamped some of its transportation processes

The firm has put to use both push and pull strategies to create

to cut down on shipping and handling expenses

and instigate demand and has invests a lot of effort in its •

The FMCG market leader forms strategic alliances and

demand forecasting, budget finalizing and accordingly, supply

partnerships with suppliers to form a long term relationship.

chain planning

An apt example would be that it has linked many small farmers

A lot of automation has been integrated with the existing system to cater to burgeoning demand

•

The firm has adopted the policy to procure materials globally

in India with its value chain •

The firm has embraced the concept of sustainability and

McDonald has adopted a highly sustainable supply chain which

incorporated it in its value chain. To cite a recent example, the

rests on three primary pillars namely ethics, environment and

firm has launched a rail service called the ‘Green Express’ in

economics

Italy to procure ice-cream from its factory in Maples that has environmental advantages over using roadways and moreover, it leads a 6% cost reduction for Unilever

IIM Shillong • BLAZE-A-TRAIL • 23

ROOBAROO Mr. K. Vaidyanathan, B. Tech serves as the Chief Operating Officer of HEG Ltd., and served as its Executive Vice President since March 2009. Mr. Vaidyanathan served as Vice President of SRF Ltd., for 3 years. He also served at Grasim Industries. He holds BE-Chemical Engineering. His areas of expertise are TQM, Supply chain management, Six Sigma and Lean Manufacturing.

Pravaha team: Sir, what have been the most formidable challenges

Mr. Vaidyanathan: Managers are required for decision making.

you have faced in your field of interest, please share your experience/

Decision is a choice made in a grey area. When things are black or

experiences.

white, manager is not required as choice is automatic. A manager

Mr. Vaidyanathan: When I started working the Indian Industry was

has a choice to act or not to act. And then where and how much to

different. Manufacturing was licenced. Licenses were released

act when. The biggest problem in Indian managers is that they look

based on perceived demand by the government. That time Indian

for quick fixes. Managing a gradual, slow cultural change is the real

manufacturing units focus was on production and cost. A huge

requirement. Another issue is that many Indian managers attach

change started in 1990’s when the supply outstripped demand and

their prestige to a decision. They find pride in saying ‘I’ did this. They

imports were freed. In every Indian industry the focus changed.

are not comfortable saying I am managing this. And that this has

Many managements desperately changed. That phase was I think

many choices I have made. I hope you are prepared to say this.

the most challenging period for Indian Industry and the people working in them. The change in focus to making a marketable

Pravaha team: Sir, please shed some light on the different methods

product instead of produce more at all costs was a formidable one

adopted by your company to risk hedge the uncertainty in supply and

and the most traumatic for all in Indian manufacturing industry.

demand?

Mr. Vaidyanathan: You cannot hedge against any uncertainty. As the

Pravaha team: What is the current role of MIS (Management Info.

cost of hedging will reduce competitiveness. Doing business is like

System) in enhancing operational efficiency and effectiveness?

being in a race. You have to stay ahead of competition. More the gap,

Mr. Vaidyanathan: While working day to day, we are moving from

safer you are. More ‘hedged’ you are. It is like when you run away

problem to problem. There is little scope for future thinking. A good

from a tiger, you only have to run faster than your mates, you are

management information system report allows the manager to

safe. Trying to outrun the tiger will weaken your capability for a long

think back and try to answer why, what, when and how. A good

run. You have to keep improving your competitiveness compared to

MIS report focuses on the actionable points. It is important to

competition all the time. When you have more resources than what

remember that you don’t act everywhere and a decision ‘not to act’

you need to outrun, add business.

is as important.

Pravaha team: Reverse logistics has been an emerging trend, what is Pravaha team: Speaking about changes in the Indian context, with

your take on the same, in days to commence is reverse logistics going

employees resistant to change, how much of a role does HR play in

to bring about radical changes in the domain of operations?

implementation of operational changes/efficiency in a system?

Mr. Vaidyanathan: Reverse logistics works on the principle that

Mr. Vaidyanathan: Any change is a challenge. It is important to

there is competition to providing you services. If there is, it will

know that a large part of an organisational working insists that

work. There will be competition if your business is attractive to your

you don’t change. The line between what you can change and what

potential service provider. Obviously the supplier should be able to

you cannot is vital. Employees normally give both the problems

competitively do something of value. Whether it will be a radical

changing where they should not; and not changing where they

change has to be seen.

should. Unfortunately there are no rules/guidelines specifying where all you must act and where you must not. It is experience.

Pravaha team: What is your view on the future of graphite industry?

More than HR it is the capability of the manager. As the ‘need’ to

Mr. Vaidyanathan: Graphite is an industry going through a flux

change also shifts. Sometimes you must change and sometimes you

where it was cartelised to a free market dynamic industry where

must not.

some shakeout is likely. It will come out as a consolidated strong industry.

Pravaha team: As budding managers, how should we prepare for the future challenges?

24 • Pravha • Op-Era

Mr. Vishwadeep Khatri is the CEO & Principal Consultant at Benchmark Six Sigma. Mr. Khatri has been into business improvement roles as a consultant, auditor and trainer for manufacturing and service industry for over 15 years. He has been driving consulting assignments with leading organizations like France Telecom, Airtel, Syngenta, NIIT, William Hare, Siemens, Schneider Electric, and American Express. Mr. Khatri is a B.Tech, M.B.A, Certified Lead Auditor (IRCA, UK), RLA (RABQSA, Australia), Lean Six Sigma Master Black Belt (AMT, USA).Six Sigma Black Belt (Moresteam University USA), Senior Member of ASQ. Team Op-Era through its interaction with Mr. Khatri explores a simplified view of the six sigma practices and how they could be implemented into businesses as well as day to day activities in our respective organizations Pravaha team: How should we, the MBA students, prepare ourselves by

delivery and meeting the customer expectations and requirements.

being well-versed with the concept of six sigma and its practices to suit

The process is so complicated that efforts to improve one aspect

the industry requirements and move up the career ladder?

leads to the inevitable degradation of the other. This is what is

Mr. Khatri: Focus on three things: problem solving, data driven

called primary metric and secondary metric in six sigma. So the idea

decision making and extra ordinary process building. For example

is when you are improving your primary metric you don’t want your

Google adwords is a very powerful advertising tool where an

secondary metric to go bad. In addition, the Mumbai Dabbawalas are

advertiser may like to test numerous hypotheses and he would

not a complete entity in itself. They use an excellent transportation

like to know which parameters, if controlled well, would lead to

that the Mumbai locals are renowned for. They have a 125 years of

more clicks. This, therefore makes much sense to a marketer. Even

tried and tested methodology that has helped them reach this level.

in HR, you would like to check whether the psychometric testing

They are not the only one for that matter. If you take the example of

is correlated well with the on-the-job performance. So when you

the Indian Army they are said to have the best pay-roll mechanisms

are selecting a candidate you would like to really check whether

in place. And this has been the same even during the 1971 war.

that testing makes sense and you may like to therefore use some statistical tools usage and data driven decision making. Basically

Pravaha team: How can a start-up which hasn’t established its

for the senior management roles, you would like to use it for sense

processes in a concrete use lean six sigma methods to transform its

making followed by decision making and subsequently by policy

processes from the beginning?

making. So that’s how it would work for any B-school graduate.

Mr. Khatri: Let me give you an example of a Father Daughter company dealing in a product category called Plasticizers. Plasticizers is a

Pravaha team: Having handled consulting assignments both in India

product which is used in a tyre for bonding of rubber with the metal

and abroad, how would you differentiate the nature of problems faced

mesh, so it’s a chemical. This specialty chemical was developed by

in these assignments?

them using six sigma methods, and not by using DMAIC, but by

Mr. Khatri: They are very similar in certain industries for example the

using DMADV, which is a product development approach (Define,

knowledge industry like BPO, KPO and IT, you will see challenges

Measure, Analyze, Design, Validate) and is another very powerful

like pressure to be on lowest cost or the highest speed provider

format by which even a small company or start-up can beat a

or both, and that is applicable for all the global companies. If

well-established company using latest technology and some

we consider specific industries for example, the textile industry

unconventional designs.

where India has a distinct advantage of cheaper labor, but if along with cheaper labor you don’t create extraordinary processes then

Pravaha team: Which is the real thrust area today where lean six

you will have tougher times in future. There is a myth, that if you

sigma is contributing, or the area which is going to revolutionize the

are working with considerable amount of labor you can’t use six

way people work?

sigma, which is completely untrue. In fact if you are working with

Mr. Khatri: The DFSS or DMADV approach which is about developing

more manual processes you must have increasingly extraordinary

new products so that they function in a defect-free manner is the

processes.

thrust area, in services as well as manufacturing. It all started with DMAIC, but the way change has become faster now, industries are

Pravaha team: The Mumbai Dabbawalas have been well known for

changing fast, for e.g. if a mobile phone is launched, within days,

having error free processes even though they claim of not having

you know whether it is a flop or a hit. It’s become like a movie

implemented lean six sigma into their organization. So what do you

now. Things are so fast that companies have to focus more on

think differentiates them and how have they been able to achieve such

better designs rather than only improving existing processes,

results?

which means their process change is getting faster and faster, new

Mr. Khatri: There are some unique things happening with the

products are getting introduced. In service sector, this is even more

Dabbawalas. One is that they don’t have any serious competition

dynamic. Because you have the ability to change processes faster.

because they are unique in themselves and no one has been able

In manufacturing you get stuck with your plant and machinery

to build the kind of infrastructure they have. Also their processes

for some time. In services, this is not the case since most of the

do not have that kind of complexity like the one that emerging

architecture of systems are open-ended. You can connect with

e-commerce organizations have. There will be complexity in the

newer things, anytime.

processes in the e-commerce companies, from order picking to

IIM Shillong • ROOBAROO • 25

Cover Story

INDIA-THE FOOD BASKET OF WORLD

NISHANT KUMAR IIM SHILLONG

I S I T P O S S I B L E TO AC H I E V E T H RO U G H CO L D S U P P LY C H A I N?

I

ndia is an agricultural-based economy. More than 50

Current State of Indian Agricultural and Food Retail Industry

percent of India’s land is cultivable, compared to the

Each year, India produces around 79 million tons of fruits which

worldwide average of 11 percent. It has the cultivable

includes 15 million tons of mangoes, 29 million tons of bananas

land, good climatic conditions for production of all

along with 160 million tons of vegetables. India produces

varieties of fruits and vegetables, an agribusiness

approx.6.5 million tons of meat and poultry, largest exporter of beef

system that works though it is ineffective and need

(1.52 million tons), as well as 8.3 million tons of fish a year. India

vast improvement. The single most important problem facing the

is also the largest producer of milk (135 million

Indian agricultural industry is the highly inefficient supply chain

metric tons per year). The perishable products

(cold supply chain). Because of lack of cold chain infrastructure and

transaction volume is estimated to be around 230

also a food processing industry about 20% of all foods produced in

million metric tons.

India (Rs.500 billion) are wasted. There is a major shift happening in Indian agricultural sector from traditional farming to horticulture, dairy products and meat, poultry all of which are perishables.

Due to this increase in demand because of growing population, value addition and diversification are the key words in the Indian agriculture today. Because of this, Foreign Direct Investment are looking for opportunities in the domestic food industry, which includes the cold chain sector as one of the lucrative industry to grow.

26 • Pravha • Op-Era

India has 6500 cold storage facilities, with a cumulative combined capacity of 30 million metric tons that can store approx. 11% of what is produced.”

refrigerated

transport

vehicles are available for all other commodities. According to

industry

estimations,

approximately 104 million metric tons of perishable produced

is

transported

each year. Of this figure, only 4 million metric tons of goods are transported by reefer. When compared with world standards for cargo movement

through

cold

chain, India is still far behind.

In U.S., the percentage of movement vegetables

of

fruits

through

and cold

chain is around 80 to 85 percent, for Thailand, it is around 30 to 40 percent and The Indian food retail market has witness very strong, double

India is negligible.

digit growth in recent years. This is predicted to continue at an

More than 25% of cold storage unit (approx. 10 million tons) have

accelerated rate in the forecast period. The Indian food retail market

been built past 2004. Number of cold storages increased at the

generated total revenues of $363.7 billion in 2012, representing a

CAGR of 3.57% from 2004-2012 and capacity at CAGR (2004-2012)

compound annual growth rate (CAGR) of 10.2% between 2008 and

of 5.19%. The total value of the cold chain industry is estimated

2012. Sales generated through convenience stores and gas stations

to be as high as USD 3 billion and growing at 20-25 per cent a

are expected to be the most lucrative for the Indian food retail

year. The total value is expected to reach USD 8 billion by 2015

market in 2012, with total revenues of $227.1 billion, equivalent

through increased investments, establishment of new ventures

to 62.4% of the market’s overall value. Also sales through food and

via private and government partnerships and modernization of

drinks specialists generated revenues of $126.8 billion in 2012,

existing facilities.

equating to 34.9% of the market’s aggregate revenues.

Drivers and Challenges in implementing Cold Supply Chain Current Scenario of Cold Chain in India

DRIVERS:

According to government estimates, India has 6500 cold storage

Growth in organized food retail sector: The Indian food retail market

facilities, with a cumulative combined capacity of 30 million metric

generated total revenues of $363.7 billion in 2012, representing a

tons that can store approx. 11% of what is produced. The majority

compound annual growth rate (CAGR) of 10.2% between 2008 and

of cold storage facilities are utilized for a single commodity, such

2012. The market is forecasted to accelerate, with an anticipated

as potatoes and fruits and vegetables. Most of these facilities are

CAGR of 11.1% for the four-year period 2013 - 2017, which is

located in the states of Uttar Pradesh, Uttaranchal, Maharashtra,

projected to a value of $616.1 billion by the end of 2017.

Punjab, and West Bengal. Below are the list of commodities which are

Shift toward horticulture crops: Due to increasing risk and

majorly stored:

investment in grain crops, farmers are cultivating horticulture

India has about

crops. As horticulture crops need refrigerated storage, demand of

250

cold chain is likely to increase.

reefer

t r a n s p o r t

Demand

operators

pharmaceutical

including

sector: As most

independent

of biotech drugs

players

and

which

from

vaccines

t r a n s p o r t

are temperature

perishable

sensitive

p r o d u c t s

depends on cold

all

over

the

and

chain

network

country. Of the estimated 25,000 vehicles in use, 80% are being

for

storage,

used for transporting dairy products (wet milk) and only 5,000

thus

Indian

IIM Shillong • COVER STORY• 27

pharmaceutical companies are

increasingly

seeking

opportunity in cold chain.

Also demand of these drugs are

increasing

globally,

cold chain management is playing an important role.

At present, cold storage capacity

is

leading

to

integrated

inadequate, urgent

need

cold

chain

facilities.

Growth in processed food sector: Because of changing consumption pattern and trend

towards

processed

food items, there is future for greater storage capacity.

Changing lifestyle has led to

consumers

spending

less time in cooking and as

which is leading to continuous power shortage.

result demand of packaged food is rising.

GOVERNMENT INITIATIVES CHALLENGES:

The Government of India now recognizes that development of cold

Lack of Infrastructure: Procurement system has failed to cover the

chain is an essential next step in upgrading India’s food processing

entire country evenly. On an average a farmer needs to travel 12

industry. Some of the incentives taken by Indian government are:

km to reach the nearest mandi and more than 50 km in NE India

1. In 2011-12 budget, government provided infrastructure status to

while according to the recommendations by National Farmers

the cold chain sector. The budget exempted equipment used in cold

Commission, availability of markets should be within a 5 km radius.

chain infrastructure like air-conditioning, refrigeration panels, and

A study revealed that the time taken for a hypothetical one-way trip

conveyor belts from excise duty which are mainly used in mandis

covering 300 km in India was between 24 to 36 hours. But the same

and cold storage warehouses.

in China would take less than 18 hours and in EU between 8 to 10

2. In Budget of 2010-2011, government proposed a concessional

hours. While trucks in India log an average of 200 km a day, those in

import duty of 5% with full exemption from service tax to set up and

China and Japan cover 600 km and 800 km, respectively. The major

develop cold chains to preserve perishable goods. It also included

problem is still poor supply chain (logistic and storage system)

duty-free import of refrigeration unit, which is used in refrigerated

which is causing wastage of 20% of all foods. The estimated gap

vans and trucks. It also exempted trailers and semi-trailers used in

between Agri-warehousing supply and demand is about 35 million

agriculture from excise duty.

MT. Currently, public sector agencies like the FCI, CWC and the

3. In 2009-2010, Government of India introduced tax benefits for

various State Warehousing Corporations have a storage capacity of

companies who are making investments in setting up cold chain

71 million MT, while the private sector has close to 25 million MT.

facilities.

High Cost incurred: operating cost for Indian cold storage is much

4. Developed policies like 100 per cent FDI and provision of up to

higher than that of US. Contribution of electrical expense make up

25 per cent redemption on project costs involved in setting up cold

about 28% of total expense in Indian context compared to 10% in

storage facilities by the Government under the Capital Investment

the west. These factors make setting up cold storage uneconomical

Subsidy Scheme in order to attract huge investment from the

and unviable.

private players in cold chain sector.

Power Supply: the power shortage in the country is significantly

All these initiatives from the Government have been very

impacting

encouraging and boosted the probability of increasing investment

cold

chain

sector

which

depends

upon electricity.

India’s

power

deficit is around 10%, with peak deficit of 17%

28 • Pravha • Op-Era

from private players.

VIRTUOSOS JAYARAMAN P IIM SHILLONG

W O R K O F F A M O U S S TA LWA RT S I N T H E F I E L D O F O P E RAT I O N S

W

hen Dr. Shewhart joined Western Electric Company in the year 1918, his job was to separate out the defective items, a modest one. Everything, not just Dr. Shewhart’s life, in the field of statistical methods of quality control changed

when Mr. George Edwards, Dr. Shewhart’s boss, received a one page report from him in 1921. Edwards recalls “About a third of that page was given over to a simple diagram which we would all recognize today as a schematic control chart. That diagram, and the short text which preceded and followed it, set forth all of the essential principles and considerations which are involved in what we know today as process quality control.”

Edwards was wise enough to understand that a novel scientific study of process control was born. Encouraged by him, Shewhart created the first statistical chart for manufacturing processes in the same year. He went on to publish the findings on the same in his book Economic Control of Quality of Manufactured Product in 1931.

He taught at the universities of Illinois and California and served as the Head of Physics at the Wisconsin Normal School in La Crosse before joining Western Electric Company. Shewhart joined Bell Laboratories in the year 1924, when it was opened and continued to work there till 1954, his year of retirement. He worked in many areas like random sampling techniques, summarizing original data, meaningful predictions from measured data, learning

Walter Andrew Shewhart Father of Statistical Quality Control Life Span - March 18, 1891 – March 11, 1967 Known For – Father of Statistical Quality Control Major Works – Control Charts, Sampling Methods

and improvement cycle and measurement errors in science.

His work on measurement errors in science have influenced physicists W. Edwards Deming and Raymond T. Birge and made them write a landmark paper ‘Reviews of modern Physics’. He was also one of the firsts to talk about noise in the measured signal and the importance of separation of true data from the noise. He also emphasized on finding

IIM Shillong • VIRTUOSOS • 29

whether a disturbance has resulted from assignable cause or chance-cause. Because if there is only chance-cause variation, and keeping it in control, is necessary to predict future output and to manage a process economically. He very well understood that data from manufacturing processes do not resemble natural distribution or Gaussian distribution. Deming created Shewhart’s Cycle based on Shewhart’s methodological proposals around scientific inference and was used largely to improve production during World War II. Walter Shewhart visited India in 1947-48 under the sponsorship of P. C. Mahalanobis of the Indian Statistical Institute. Shewhart toured the country, held conferences and stimulated interest in statistical quality control among Indian industrialists. Despite heading many prestigious positions, Shewart remained gentle and soft spoken.

He always believed in freedom of speech which was evident from his own public views at variance with his own previous statements.

American Society of Quality honored him by awarding ‘Shewhart Medal’ for technical leadership and Shewhart himself was the first recipient.

Kaoru Ishikawa Acclaimed authority on Total Quality Control Life Span - July 13, 1915 - April 16, 1989 Known For – Fishbone Diagram Major Works – Quality Control, Analysis of Industrial Process Major Works – Control Charts, Sampling Methods

D

r. Kaoru Ishikawa is basically a quality guru with phil-

control chart, run chart, histogram, scatter diagram, Pareto chart,

osophical views. He found a vast difference between

and flowchart. With his cause and effect diagram the user can see

the working culture of Japanese system and society.

all possible causes of a result, and hopefully find the root of proc-

He then proposed Quality circle which could be ap-

ess imperfections. The tool is still in practice to perform the root

plied to revitalize the industry and bring about a rev-

cause analysis in many leading houses. Dr. W. Edwards Deming, one

olution in the management. When he first proposed

of Ishikawa’s colleagues, adopted this diagram and used it to teach

quality circle as a faculty from The University of Tokyo, only one

Total Quality Control in Japan as early as World War II. Other areas

company, Nippon Telephone and Telegraph, accepted the system.

of his interests were ‘Bottom-up’ approach and quality control cycle

Not even Ishikawa, at that point of time, envisaged that it would

of new product development. He also did commendable work in the

spread across more than fifty countries in the world, as this was

field of product life cycle.

specifically created keeping Japanese society in mind.

He is a recipient of Shewhart Medal and held many responsible He was probable the first few to visualize the service based market-

positions in the domain of quality and standardization. From 1993,

ing – companies do not sell drilling machines, but they sell holes.

American Society of Quality has started awarding Ishikawa Medal

He told that customer would continue receiving service even af-

in his honor to individuals or teams for outstanding leadership in

ter receiving the product and the service would extend across the

improving the human aspects of quality.

company itself in all levels of management, and even beyond the

Juran delivered this Eulogy after his demise in 1989.

company to the everyday lives of those involved. According to him,

“There is so much to be learned by studying how Dr. Ishikawa man-

standards are not the ultimate goals but customer satisfaction is,

aged to accomplish so much during a single lifetime. In my obser-

hence standards are to be revised periodically. He believed that

vation, he did so by applying his natural gifts in an exemplary way.

quality can always be one step further. He stressed that it would

He was dedicated to serving society rather than serving himself. His

take firm commitment from the entire hierarchy of employees to

manner was modest, and this elicited the cooperation of others. He

reach the company’s potential for success.

followed his own teachings by securing facts and subjecting them to rigorous analysis. He was completely sincere, and as a result was

Ishikawa also showed the importance of the seven quality tools:

30 • Pravha • Op-Era

trusted completely. “

RENDEZVOUS B I O S CO P E O F T H E PA S T S I X M O N T H S

Optimus 3.0 Op-Era came up with Op-timus 3.0 in August 2013, an interesting intercollege event in its Optimus series which tested the creativity and conceptual clarity in a few basic Operations and Supply Chain concepts by explaining the topic in a creative way like examples, cartoons and graphs on 1 PowerPoint slide or any other creative ways.

The team that won by scoring the maximum through their creativity and Facebook likes is Team Konvicted from IIM Kozhikode.

Optimus 4.0 Op-Era in association with i-Cube, Entrepreneurship Cell of IIM Shillong conducted Opti-mus 4.0 in 4th week of August 2013. The event consisted of two rounds, the first round tested the participants’ knowledge on operations through a thought proving Quiz and the shortlisted teams where given Operations related caselets for analysis. Winners of Optimus 4.0 were Bhanupriya Gupta and Monika Sakkarwal of Team Angelic from IIM Raipur.

Optimus 5.0 Op-era conducted Optimus 5.0 in November 2013 which opened up the opportunity for the participants to give wings to their creativity. It gave the Operations enthusiasts a vibrant platform to showcase their skills and talent by coming up with fresh interactive original and creative video, that would best explain few specified operations concepts. Team Galactus from Wellingkar Institute of Management & Studies won the event by coming up with an innovative and creative video on 5S.

Shrinkhala The Operations Club in association with SCNext organised “Shrinkhala” in September and October 2013, a Supply Chain case challenge, as a part of Khlurthma – the Annual B-school fest of IIM Shillong. The domain of Operations was primarily focused on process improvements & tactical issues. The Operations stream gained prominence after organisations recognised the importance

IIM Shillong • RENDEZVOUS • 31

production line. The criteria was to maximize the production by minimizing work in progress Oper8 • Opsview – Online quiz challenging the operational acumen of the participants

including

various

concepts like inventory forecasting, production

designing,

prototype

testing and problem solving abilities • Optimus – Participants were put into their dynamic and competitive environment

where

each

team

exhibited their skills to strategize and allocate monetary resources to basic requisites of manufacturing.

• Optronix – Real time simulation of inventory management through forecasting

of integrating key business processes throughout the Value chain.

‘Shrinkhala’ tested the skills of the contestant in the area of Contemporary Supply Chain & Operation issues. The best supply chain minds fought the war and Team North Meets South of NITIE bagged the winner’s title.

demand attainment over a period of six months • Amazing Race – Participants were guided by clues through a maze of operational junctions which had exhilarating games that instilled the participants to bring out their proficiency in optimal route evaluation, risk analysis (through ball-bucket game) , process

Oper8 - Ops Week

design, quality control (through marble game), resource investment,

The Operations Club organized an intra-college eventful week of Operations and fun in February 2014 with many events such as:

location identification, cross integration (through Capitalism game), line balancing, resource optimization, production planning (through prototyping game) Team A-Wingers bagged the Winners title of Oper8 marking the end

Pre- Events • Poster Designing – Testing the creativity quotient of the participants. The best poster was awarded the winner and used for the promotion of Oper8 • Jumbled Word – Participants were asked to find the hidden words from the given set testing their excellence in operations bibliography spread across domains such as SCM, TQM, TPS, OR, etc., • Operations Crossroads – Participants expertise in current trends, time tested operational

demands, production

planning, logistics scheduling and

concepts,

its

practical

implications, industry best practices were gauged by crossword Fun Events • Chaos – The round was open to all participants. Teams combated on an online platform through Counter Strike, testing their planning, strategy and co-ordination • Masti Chef – The event was a spicy test of the operational excellence of the participants in replicating an efficient

32 • Pravha • Op-Era

of the week long Operational Extravaganza.

THE TEAM

Clockwise from the left : Devendra Singh Raghuwanshi, V.M. Sai Murali, Ansuman Mishra, Nishant Kumar, Keshav Sodhi, Harsha Deepak RVS, Jayaraman P, Anish Agarwal, Bhaskar K, Saiprasad Shetye, Aishwarya V.R. , Ankit Kumar Narsaria, Neelav Ratnam, Dipak Bajaj, Poloumi Pal

IIM Shillong • Pravha • 33

34 • Pravha • Op-Era