Pravaha
COVER STORY
VOLUME 3
Humanitarian Logistic MANAGING SUPPLY CHAIN AT THE TIME OF DISASTER
From the editors desk Dear Readers, Hope you all are having an amazing time. Operations club, IIM Shillong takes immense pleasure in introducing to you the third edition of its enriched and concise assay of different aspects of operations bundled together, the third edition of its biannual magazine “Pravaha”. With the tormenting summer receding and the frenzyness of the ever fascinating monsoons we have tried to cover yet another innovative aspect of bringing Operations to your convenience. The magazine greets you with a very sensitive; much heard of yet not tapped enough topic of “Humanitarian Logistics”. Something that has been a persistent challenge for us. Pravaha tries to cover the different angles pertaining to the same. Innovation that’s going to redefine the logistics of tomorrow has been aptly touched upon. With pathbreaking technology of Drones and Anticipatory shipping all eager to adorn the existing establishment of supply chain, Pravaha tries to bring to you subtle aspects of all these technologies. Important Environmental aspects to give and enlighten ourselves about a responsible tomorrow have been aptly covered by “Green Supply Chain Management”. It indeed is of subtle and pinnacle importance that our environment today stands endangered to a huge threat that is looming and as responsible global managers of tomorrow, it’s imperative on our part to implement and monitor sustainable technology. At the same time the bottom of the pyramid holds significant importance in the upliftment of business. A socially inclusive model that prompts rural India to enjoy the benefits of e-commerce has also been touched upon and many more insightful facades have been spoken of. It has been our consistent attempt to go beyond the four walls of the classroom and create a conducive environment just to make learning and exploring operations all the more easy and convenient to our dear readers. Hope Pravaha this time takes you through the strides of a lovely, engaging and yet insightful journey along the challenging facades of Operations Management. With that “Team Pravaha’” signs off and welcomes you to turn to the next page and commence upon this wonderful journey.
Happy reading!!
Please feel free to provide your inputs about the magazine, its priceless and it keeps us alive.
Table of Contents INSIGHT Drones - Transport of the future? Raymond MTM - Taking supply chain management to new heights E-commerce in Rural India - Towards Increasing Profit Anticipatory Shipping - Amazon showing the way Digitising Manufacturing - A supply chian perspective
4 7 10 12
BLAZE-A-TRAIL 3D Printing - Transformation of the supply chain Amazon.com - Redefining supply chain
15 18
ROOBAROO Mr. Chaitanya Aggarwal - CEO of Juvalia and You India
21
COVER STORY Humanitarian Logistics - Managing supply chain at the time of disaster
22
VIRTUOSOS Father of Quality - Joseph M. Juran Introduced Taguchi Loss Function - Genichi Taguchi
25 26
RENDEZVOUS Events - Optimus 6.0, Optimus 7.0, OpsMerge Industry Associations - Meghalaya Institute of Governance, SCNext, Magic Cements
2
28
Look for this sign inside! In this issue of Pravaha, we are featuring some of the largest supply chain disasters that had happened based on an analysis from the Supply Chain Digest and bring to light some of the historic failures of giant multinational companies. IIM Shillong • Pravha • 1
DRONES
EMIL P.THOMAS IIM TRICHY
T RA N S P O RT O F T H E F U T U R E?
O
n June 23rd 2014, Michael Huerta, the Administrator
the FAA calls them, are aircraft usually of lesser than 55 pounds
of the FAA (Federal Administration Aviation) , the
in weight, that are usually used for hobby/recreational flying .
American civil aviation regulator, released a very
The primary use of drones today is military: they are being used
cryptic communiqué on the usage of drones. In a
continuously by the armies of the US, UK and China to carry out
press release eliciting public comment on the use
surveillance missions. However, an even bigger tectonic shift has
of drones in civil aviation, Mr. Huerta stated that
occurred in another field – transportation, due to the advent of
unmanned aircraft “delivering packages for a fee” was illegal. What
drones.
the ruling effectively stated was that the use of commercial drones would not be permitted, at least not in the near future. “We have
Current Usage of Drones
a mandate to protect the American people in the air and on the
When we think of drones today, the first images that pop into our
ground, and the public expects us to carry out that mission,” he
minds are the drones in movies being used for ultra-secret stealth
said. As news trickled in of the FAA’s ruling, companies like Amazon
operations in Iraq or Afghanistan. Indeed, this may be frighteningly
which had invested heavily in developing such UAV’s (unmanned
true. The current usage of drones among the big defence spenders
aerial vehicles) had to admit that their drone projects may indeed
such as the US, UK and China is on the rise. A recent study published
take some more time to get off the ground.
by the International Institute for Strategic Studies in the Guardian data blog estimated that there are presently over 807 drones in
Background
active military duty around the world. The United States continues
What exactly are drones? Unmanned aircraft systems (UAS) as
to be the biggest user of such technology, but these numbers are
2 • Pravha • Op-Era
highly understated as proper estimates are not available for China, Turkey and Russia. (Incidentally, even India is estimated to have over 30 UAV’s in its arsenal). AMAZON PRIME – First Mover The event that sparked the fire of the drone revolution was when Amazon revealed that it been working on a drone to carry out delivery of packages. Amazon describes Prime Air as ‘a new delivery system that will get packages into customers’ hands in 30 minutes or less using unmanned aerial vehicles’. Amazon’s Jeff Bezos, in his annual letter to shareholders, gave an update on the progress achieved in the use of unmanned aircraft for delivering packages, while referring to his prime air team that carried out the drone flights. “The Prime Air team is already flight testing our 5th and 6th generation aerial vehicles, and we are in the design phase on generations 7 and 8” he said. Disruptive Innovation Drones have been around for a long time, with the first reported air raid by drones being done by the Austrians against Venice in 1849 . The Austrians attacked the city of Venice with unmanned balloons loaded with explosives. However, the recent surge in interest begets the questions - How exactly do drones help the cause of improving the supply chain? How exactly is it so pathbreaking innovative? The first and foremost reason for drones revolutionizing the transportation sector is the joy of instant
with the company incurring a loss of over $3.538 billion in 2013 on shipping costs alone. Implementation Concerns Even though there are so many advantages associated with such a technology, it does come with its own share of concerns. In Amazon’s case, since the drones will be manually operated, training the pilots, granting them some sort of flying licenses will be required, in conjunction with the FAA. Also, the drone would need some sort of biometric identification to ensure the package has reached its
gratification . Amazon Prime promises and order
rightful owner. The most important change in the supply chain
in 30 minutes or less. So anything that you order
itself would in the location of warehouses, as most drones would
will arrive on your doorstep half an hour from
not be able to travel over very long distances. This might cause a
Amazon Prime promises delivery in 30 minutes or less. So anything that you order will arrive on your doorstep half an hour from now. How amazing is that!”
strategic shift in the supply chain itself, with companies having to shift to smaller warehouses scattered all over the country compared to one major warehouse supplying to an entire geographical area. Other minor concerns such as tracking the position and delivery status of drones would also be problematic and quite complex. The way forward - What does the future hold? If there are that many advantages as the companies developing such UAV’s state, why then has such a technology not been fully utilized? The main obstacle continues to be the regulatory framework, which
now. How amazing is that! Also, there’s the wow factor, at least in the initial stages of such drones – people might actually order a product just to see the drone deliver it at their doorstep. This could be considered the second reason why drones are such a disruptive innovation. Thirdly, it reduces the cost of transportation, as customers are willing to pay a very high premium for near instant delivery of their products. This alone could be reason for companies like Amazon and DHL to invest in such technologies. For example, a recent study by Robot-economics
showed that
considering a premium charge of $15 to $20 per delivery, the use of one drone making 30 deliveries a day, extrapolated over a year,
does not presently allow the use of drones for commercial purposes in the USA, the hotbed of such UAV development. Most other countries are following a wait and watch approach, waiting to see what action the US takes and then follow through. While all the hullaballoo was going on at the FAA, Amazon quietly continues developing its 7th and 8th generation drone devices. The standoff between companies like Amazon, DHL and the FAA shows no sign of abating soon. However, with development of such UAV’s being taken up even in developing countries , there is no doubt that drones will constitute the zenith in transportation efficiency and rule the roost for many years to come.
only cost Amazon about $9.75 to $17.44 in costs, per delivery. This is a huge improvement over Amazon’s present rates for shipping,
IIM Shillong • Insight • 3
RAYMOND MTM
AMAN JAIN PRINCE JAIN
TA K I N G S U P P LY C H A I N M A N AG E M E N T TO N E W H E I G H T S
S
NMIMS
upply Chain management is the backbone for any
free cash flows these companies have invested hugely into their
organisation because of which each and every aspect
distribution networks. Companies have now started to benchmark
of it is planned in detail. In case of large Indian
themselves with the very best globally.
conglomerates, such planning becomes more difficult
In this article, we will talk about a concept which promises to
as the distribution networks of these companies have
provide best customer service and will result in huge first mover
evolved over the time and are not planned from the
advantage for Raymond.
beginning. The fact that most of the companies have come through
Raymond is one of the largest branded and fashion apparel retailer
the license raj era which made land acquisition a big
in India. The company has dominated various categories of apparel
challenge have forced companies to look for cost
in both rural and urban sectors of India through its huge presence
efficient methods of managing their supply chain.
across the country.
This
Made to Measure which is positioned to transform the apparel industry in India� 4 • Pravha • Op-Era
in
has
resulted
scattered
and
The company operates through various formats which require robust supply chain management:-
unplanned networks
1. Company Owned Company Operated Stores (CoCo)
for companies. But
2. Franchise Owned Franchise Operated Stores (FoFo)
times have changed
3. E-Commerce
now.
4. Multi Brand Outlets (MBO)
of and
With
onset
liberalisation availability of
5. Conventional Distribution
There has been a recent addition to this list through the introduction
3. Money Flow
of MTM-Made to Measure- which is positioned to transform the apparel industry in India. MTM is a European concept which has
Information Flow
been altered to suit the needs of India consumer. It’s a concept
• The fashion advisor gets real time updates on the fabrics available
which provides its customers best of both the words – Tailoring and
at the manufacturing plant. In case of stock out of any kind of fabric,
Ready Made. It is a salon oriented approach focusing on customer
the fashion advisor is notified immediately so that the specific
service in product industry.
sample can be removed from the display at the store. • The measurements and other details of the customers flows from
Process of MTM
the outlet to a central server which transmits this information to the
A customer can walk into any Raymond outlet with MTM facility.
manufacturing plant and also saves this information permanently
Each MTM facility is equipped with a fashion advisor, a tailor and
to ensure quicker service to the customer during his next visit.
large range of collars, cufflinks, buttons etc. The fashion advisor helps the customer to choose the right fabric, colour, collar pattern,
Product Flow
cufflinks etc. The customer then moves to the measurement area
• The fabric flows from the manufacturing plant of Raymond to
where he is asked to wear a trial-on according to his body shape.
the garmenting unit of MTM. This makes use of ARS (Automated
The tailor then take measurements of the alterations that needs
Replenishment System) which triggers an order automatically
to be done on the trial on to make it a perfect fit for the customer.
when stock of any particular fabric touched the re-order level.
These alterations are fed into the computer along with the fabric
• The final product flows from the garmenting unit to the postal
and styling that the customer has chosen. Pictures of the customer
address of the customer through 3rd party courier services (Bluedart
are also clicked that will later assist in computer aided design at
in this case).
the manufacturing plant. This is followed by billing and collection of money and other details from the customer.
Money Flow
The manufacturing plant (located at Bangalore) receives this data
The money collected by the stores is deposited in the nearest
and transmits it to the machines which automatically picks up the
bank branch on daily basis which is reflected in the ERP solution
required fabric and uses laser cutting to cut the garment into pieces
implemented by the company.
with high precision. This is then stitched into garment using state of art technology and packed. This ensures a high quality and defect
What’s in it for the company?
free product. The garment is then shipped to the postal address of
• One of the big advantage that the company gains through the
the customer within 3 days of order placement, thus completing
MTM network is negative working capital. As soon as the customer
the entire chain.
places the order, he is required to make the payment upfront at the MTM counter. If the payment is through credit/debit card it reaches
Supply Chain Management
the company directly. If it is through cash, the store manager is
The entire process of MTM requires a fully integrated supply chain
required to deposit the cash on daily basis in the nearby bank in
and adequate flow of information to ensure the promised level
the Raymond’s account. Thus, Raymond gets the money even before
of customer service. Automating the entire chain of processes,
it starts producing the garment. The company is putting up the
delivering the product in 5 days, managing inventory and workforce
concept of postponement to a good use in this case.
in the supply chain is no small task. To add to it, MTM is being
• The integrated process of MTM results into the final output
provided in the following retail formats – CoCo stores, FoFo stores,
reaching to the customer within 3-5 days of ordering. This results in
Exclusive MTM stores and at Location Independent Stores (Mobile
huge satisfaction level among the customers further strengthening
Vans).
the brand name.
MTM leads to 3 kinds of flow which needs to be managed through
• MTM helps Raymond in freeing up its capital tied up in inventory
robust supply chain management:
at various stores. Stocking of samples at various stores is an
1. Product Flow
insignificant investment as compared to stocking of large amounts
2. Information Flow
of fabric at each store.
IIM Shillong • Insight • 5
• MTM also reduces the company’s dependence on Brick & Mortar
We can say that Raymond’s MTM presents a prime example of a
stores as this concept is working well out of a bus too. Raymond has
company’s carefully managed innovative supply chain delivering
converted Volvo buses to MTM stores which are known as Location
huge customer value.
Independent Stores (LIS). This helps in reaching the customer at their place rather than being limited to a single location. Raymond is using these LIS specifically to target colleges and office campuses.
DISASTER #1 : MATTEL CHINA SYNDROME
Mattel Inc. the toy manufacturer with famous brands such as Fisher-Price, Barbie dolls, Hot Wheels and WWE Toys faced a huge supply chain disaster in 2007. In summer of 2007 Mattel had to recall 10 millions of toys owing to the quality issue that raised from offshore manufacturing in China such as use of lead based paints on some toys. The brand suffered huge hit and huge financial losses. The origin of the issue was not clearly attributed to
6 • Pravha • Op-Era
sloppy manufacturing processes followed by the Chinese suppliers and product design. But this issue did a greater good to the world but exposing the entailing issues of offshoring that many companies failed to realize at that point of time. Companies realized the necessity of restricting the offshoring of QA and having a hold on the supplier end for quality checking.
Article of the Issue
E-COMMERCE IN RURAL INDIA
YERRA ANIKETH IIM LUCKNOW
TO WA R D S I N C R E A S I N G P RO F I T
T
he size of the rural industry in India is expanding
for the consumers. Hence, there is a huge potential to develop the
rapidly. As the rural market is getting more attractive,
e-commerce industry in rural areas.
increasing number of companies are expanding their operations into the rural areas. Despite continuous
Novel Approach
development in India’s rural business environment,
As a preliminary step for designing the supply chain network,
companies are facing various challenges to generate
the needs of rural e-shopper has to be addressed. Some of the
sustained, profitable growth in these markets. The key challenge
parameters that need to be understood are delivery speed, delivery
in rural markets is the increased cost of serving them because of
price, product variety, returns and customer grievance procedures.
poor infrastructure facilities and lack of established supply chain network. Hence, there is a need to improve the network and create
In this article, a new approach is proposed. The basic premise
sustainable channel relationships.
of this approach is to segregate vast expanse of rural areas into groups consisting of few villages. The number of villages can vary
Since 2000s, per-capita GDP has grown faster in India’s rural areas
depending upon various factors like the propensity to consume by
than in urban areas. There has been an increase of 19.2 % in
these rural e-shoppers, proximity of these villages to a town or a
monthly per capita expenditure in rural markets from 2009 to 2012.
city, existing supply chain network & infrastructure facilities. The
Rural incomes are growing and consumers are buying discretionary
aim of this exercise is to aggregate suitable number of orders and
products like electronic items, lifestyle products, two wheelers etc.
thereby save on cost of transportation.
The product variety available in rural areas is quite less. Through e-commerce, there is an opportunity to provide wide product range
From the fulfillment center, the products should arrive at hubs that
IIM Shillong • Insight • 7
2) Mobile App – One of the most exciting statistics is that as many as 68 million Internet users are from rural India and the E-commerce industry is waking up to the potential of the rural Indian who often has enough money but lacks access to goods. This growth opportunity is also visible in the recent survey conducted by IAMAI and IMRB International which indicated that there has been a 57% growth in the number of claimed internet users and 32% increase in the number of active internet users in rural India. This is the result of the many initiatives taken by the government and private agencies to improve the Internet infrastructure in the villages such as setting are closest to the area to be delivered, preferably a town or a tier III city. In case, a hub is not present in a town or a tier III city that
up of Community Service Centers and Cyber Cafes.
is closest to the final destination, then it is imperative to enter into a collaborative agreement with a 3PL logistic service provider or
Most rural places in India are famous for their handicrafts, sarees &
with warehouses in that town or a tier III city, to hold goods and
paintings etc. Therefore, e-commerce companies should encourage
then transport further downstream. Here, orders are aggregated
rural e-shoppers to list their products on the company’s website.
depending upon the group of villages to be catered. These orders
This would enhance e-commerce Company’s brand image among
are then transported to respective villages, where they are delivered
the rural e-shoppers and increase their disposable income as
selling through traditional channels would offer them less profit. at a drop points present in each village, which could be a mom and pop store, a newspaper depot or a petrol station. These orders must
Supply Chain Improvements
be delivered from the hub to the drop point through suitable mode
Establishing a supply chain network in rural areas is quite an onerous
of transport, for example for a small order size a two-wheeler might
task given the uncertainty of the orders to justify investment in the
suffice. Clarkes-Wright algorithm (http://www.mafy.lut.fi/study/
supply chain. As a preliminary step, forging favorable relationships
DiscreteOpt/CH6.pdf) is used for finding the path to be traversed in
with supply chain intermediaries that deliver in the rural areas
each group of villages. It would ensure a closed loop as the path to be traversed as shown in figure, which reduces transportation cost. Customer Touch-Points 1) Online Ordering Kiosk – Computers with internet connectivity need to be deployed for a given population size, to communicate company’s brand value to the rural population and also to provide opportunity for them to order products online. In addition to this, company can nominate a person from a particular village who will not only be responsible for aggregating orders but also act as an ambassador enhancing brand value of E-commerce Company to the rural e-shoppers.
8 • Pravha • Op-Era
might be a good idea.
•
Improper functioning of Online Status Tracker
•
Poor Customer service experience because of rude behavior of
1) Collaborative channels –
Collaboration
with
delivery staff •
Money retrieval to Amazon through COD is delayed
established distribution channels of other non-
Feasibility Analysis
competing
companies
As this is a new approach, a feasibility study has
should be explored. This
to be conducted by the e-commerce company to
would reduce delivery
ensure smooth implementation. In this regard, a
costs. The challenge in
flowchart
this model is that the
the sequence of steps
final delivery happens
to be implemented is
only till the retailer level.
proposed.
The final leg of home
The major assumption
delivery needs to be
in the analysis would
addressed. Taking a leaf
be that the customer
out of FMCG companies
base for e-commerce
books, which came up with innovative solutions to deliver in the
Company in rural areas
rural areas, e-commerce companies can tweak FMCG companies
will increase in the
rural distribution model to make their presence felt in rural areas
future. This is only
like nominating a brand ambassador from each village who will
possible when the customer service is exemplary. Hence during the
not only aggregate orders from each household but also enhance
analysis and implementation of the above action points, addressing
brand reputation of the e-commerce company since word of mouth
all the customer needs would be given utmost importance.
depicting
....every company looks for ways to increase revenue and reduce risk and costs involved.”
publicity is the most effective form of marketing in rural areas. 2) India Post Channel – Presently, Amazon is delivering products through this channel. India Post has large penetration in rural areas, however, this channel is fraught with the following problems which have to be addressed •
Reliability of services
IIM Shillong • Pravha • 9
ANTICIPATORY SHIPPING A M A Z O N S H O W I N G T H E WAY
A
DIVITA BHANDARI AMRITA SHARMA NITIE
nd the doorbell rings! To your surprise, it is a delivery
products in anticipation of demand has always been there. ‘Click and
man with a parcel. It might be something you ordered
collect ‘is another concept where you buy online and pick up from
few days back or something which you ordered a few
the store. But in the fight to gain market share as huge as possible
minutes back or let’s imagine it was something you
on the basis of faster and cost effective deliveries, companies have
were going to order but did not.
now come up with the idea of ‘ship from store’ where the product
Yes. This is exactly what the ecommerce colossus
ordered online and shipped to the customer not from the warehouse
‘Amazon’ has been up to – to overwhelm its customers by express
but from a location closer to him. Everybody is coming up with
delivery (by express I mean in the blink of an eye). Amazon has
their version of this concept like eBay’s same
come up with a shipping system called Anticipatory Shipping that
day delivery, amazon’s Sunday delivery. Amazon
will slash delivery times by predicting what the buyers are going to
is planning to take this to a whole new level by
buy before they actually hit the ‘buy’ button. The system would work
shipping products
like this: shipping a package for delivery to a specific geographical area (closer to the customer) without a particular delivery address and specifying the delivery address while the package is still intransit. Ecommerce players have replaced the bricks and mortar shops due to the low prices and speedy, often free deliveries. Companies have resorted to many tricks and ideas to make speedy deliveries. Stocking
10 • Pravha • Op-Era
...predicting what the buyers are going to buy before they actually hit the ‘buy’ button”
in of
anticipation demand
gratifying
and the
never-ending desire
of
customers existing potential.
its both and
The impact of this system on some important elements of a retail supply chain: •
Demand forecasting
Amazon already has predictive algorithms to offer nextday deliveries. To be able to make overnight or same-day deliveries, it needs to know in advance, the time of placing the order and the location from where it is placed. This will require tremendous amount of work on the data collected by means of surveys/questionnaire, demographic data,order history, wish lists, basket contents and cursor movements over items, time spent on a particular items etc. Amazon will know what items are pre-packed at the fulfillment center that a particular customer had ordered in the past and will suggest them for reorder with a promise of immediate delivery. Gauging the mind of a customer to know what he wants before he himself knows will set amazon apart from others. •
Distribution
The target of same-day delivery could be achieved only if Amazon expands its already-huge distribution network and opens hubs. These hubs are different from the fulfillment centers in the way that these don’t deal with order picking and packaging instead they are centers with box handling capabilities.If there is a partial truck load and empty space at a hub, the package will be prepositioned to that hub for any expected order. •
Logistics
For Amazon to be able to keep items closer to customers whether in transit or in hubs, it will take more safety stock to cater to the anticipatory demand of numerous small region around every hub. Also it can plan to re-route the items from one small region to another depending upon the demand or plan to keep packages continuously on transit on truck until a customer makes a purchase. This prospective shipping will mostly be made for mass-interest products like mobile devised or books by bestselling authors. The key to the profitability of this approach is innovative big data based analytics and intelligent network synchronization and planning. Advantages By doing everything discussed above, Amazon will capture the speedy delivery frontier in the ecommerce space. Even if it is able to pre-ship items to urban locations and not to very remote location, it is ok because nobody else would be able to do that. Secondly, the fact that a wrongly shipped item might be delivered as a gift to the customer will give Amazon to add some new customers to its exhaustive list. Thirdly, it will only reduce their cost of making express deliveries through courier services as now they will make bulk-deliveries of an item to the hubs in a particular region. Amazon’s concept of anticipatory shipping is an extension of Amazon’s relentless efforts to provide customers with 3 D’sDelights, Deals and Discounts. The level of convenience which this idea could bring in is tremendous. The customer is in the process
A word of caution Though anticipatory shipping might sound exciting to some but it can also land Amazon in a weird situation. Just imagine Amazon delivering kids’ toys to bereaved parents. Another word of caution for Amazon has to be in terms of Privacy violation issues. It has to ensure that the data being used for predicting the customer buying behavior in order to make the delivery time negligible is not being misused against the interests of the customers. Amazon is already operating on very low margins and it could hardly afford to dole out free shipments to customers who may not even be loyal to the online retailer. Some people might misuse it by just hovering over some products without the intent of buying it or adding them to wish-list just in the expectation of receiving a free delivery from Amazon. This move of Amazon can be seen in the perspective of earning through the patents as well. Its 1-Click patent in 1999 transformed the online purchasing by allowing the customers to buy a product with a single click. Amazon at that time granted the license of 1-Click buying to Apple Inc. for use on its online stores. Similarly it could also offer licenses for anticipatory shipping to other online retailers. It is yet to be seen that when will Amazon actually start implementing it. Amazon’s ambitious vision of 30-minutes drone deliveries, in which a flying drone would drop a package on the delivery address within 30 minutes of placing the order, is yet to turn into reality. So it is clear that there is a lot of forward thinking going on in the minds of company’s leaders through which they want to take the e-commerce shopping experience to the next level. Amazon’s CEO Jeff Bezos has always startled everyone with his vision and his commitment to his vision. He knows exactly what he’s doing. This innovative concept by Amazon may lead to a war in this industry with every player trying to deliver the right product before the right time in the lowest prices. Well only time will tell us that whether this patent will bring a revolution in e-commerce or will prove to be a just another patent among the dearth of patents being filed but never being implemented. Till then keep shopping and keep anticipating. You never know what may arrive at your door-steps.
of finalizing the product and even before completion of the process the product is delivered.
IIM Shillong • Insight • 11
DIGITIZING MANUFACTURING A S U P P LY C H A I N P E R S P E CT I V E
VR AISHWARYA IIM SHILLONG
anufacturing success is no longer defined by
RFID
development and production expertise, but is
RFID – Radio Frequency Identification is an AIDC concept. It is a
going through a phase of unprecedented change
method of wireless and non-contact mode of storing and retrieving
where responsiveness, resilience, agility and
data by electromagnetic transmission to a RF compatible circuit.
operational excellence are the game changers
The recent developments have drastically reduced the cost
in gaining a competitive edge. Producing good
associated with the manufacturing of RFID as a result of which this
product at good price does not depict the excellence model, but
technology has penetrated into various arenas including retailing,
building in value across the stream has become inevitable. And as
manufacturing etc.. The simplest form of this technology includes
Moody (2006) suggests that in Supply Chain arena technology is
a chip that can be embedded into any object and can be tracked
the direct route to cutting cost and improving productivity in the
throughout the lifetime of the object.
M
quickest possible manner. Integration of Information Technology with Manufacturing promises to bring forth a journey in this
RFID in Lean Management
direction. The lean oriented manufacturing can no longer hold the
Lean principle involves elimination of waste from the system as
influence of IT at bay. Automated Identification and Data Capture
key focus. Lean processes and its implementation majorly revolve
(AIDC) systems were a development that helped Manufacturing
around the following five stages. For any process being accepted as
in this pursuit. One of the significant developments in this field
a lean model, it is essential that it carries these five functionalities.
towards ‘technology-fying’ of manufacturing is RFID in Lean and Supply Chain Management.
The first stage involves the evaluation of value addition, which any practice would bring to the system. RFID provides the opportunity
12 • Pravha • Op-Era
for the system to shift from a long era of group level control to individual item level control. The increased visibility and data tracking that the technology brings in can change the basics of product tracking and inventory management. The step involves identifying the value stream associated with the adaptation of the suggested practice. It is the key to main motive of lean, which is the systematic identification, and elimination of waste. One of the major set backs that value stream mapping faced before RFID technology is the lack of dynamic information. But with the onset of RFID has enabled the tracking of a product across entire process stream not just internal but even after the product has left the premises of the manufacturing unit. This enables the real time value stream mapping and thereby simplifying and improving the ability to plan, distribute and replenish in a Supply Chain. Flow stage of Lean implementation focuses of elimination any waste flow in the system. How does RFID play a role in ensuring that the flow is oriented towards eliminating waste? RFID can be used to bridge the gap between the material and information flow in the Supply Chain. A dynamic appraisal in the system brings real-time visibility of the product flow and can help in avoiding unwanted material flow by providing better traceability and higher reliability. This can ensure a continuous and accurate flow production process. The next objective of Lean implementation is to address one of the most important necessities of Supply Chain. Which is developing a responsive system that is triggered by the pull created by customer requirements arising at the later end of the Supply Chain. Reducing the span between the generation of customer requirement and its incorporation in production process is one of the methods of
ensures the progress towards perfection. By analyzing the fundamentals of Lean with the functionalities and abilities of RFID, the role of RFID in Lean Management has been clearly established. This gives a go-ahead for most of the organizations that look forward to an effective lean implementation in their Supply Chain. A Model for the Automotive Industry An illustration of integration of RFID technology in Automotive manufacturing to achieve Lean process is explained below. Some of the major challenges that the manufacturing world faces include •
manufacturing set-up the chance of misplacing an asset or
achieving this effectively. RFID renders the Supply Chain with this super power thereby helping in tackling the pressure arising due to pull factor. This also helps in achieving the goals of Just In Time
losing track of the asset is highly probable. •
conventional Kanban such as the time lag, loss of data, lesser efficiency, etc. has been removed.
towards
perfection.
The
continuous quest for
perfection
thus forms the core
of
Lean
thinking for which transparency acts as
an
enabler.
It also enables reducing clerical
operational efficiency. •
Safety issues and security issues that can arise due to the lack of where about of people and resources
•
Unwarranted delays and waiting that can occur due to lost information or resources
Finally the focus shifts
Possibility of seeping of in-efficiency in allocation of resources and people for processes is another deterrent to achieve
(JIT), which is accurate delivery in terms of time and quantity. RFID stands parallel to E-Kanban, just that the shortcomings of the
Lack of visibility of valuable or critical assets. In a crowded
RFID provides the opportunity for the system to shift from a long era of group level control to individual item control”
intervention and helps in real-time measurement of key performance indicators. Thus by bringing in real-time visibility and transparency RFID
These are some of the challenges that can be overcome with the help of an effective tracking system in the Supply Chain that increases its flexibility, accuracy, responsiveness and visibility. RFID technology can be implemented to track the order, account for incoming items, distribution and their replenishment. A RFID enabled parts replenishment system automates the entire process thereby eliminating the gap that can arise in the process due to delay in information sharing. RFID tracking is not limited to inbound parts but also can also be activated in work in progress inventory as a result of which a dynamic real-time estimation of the output and productivity can be obtained. It can accurately estimate the WIP inventory, the time it would require to hit the outbound logistics and in case of interruptions the module at which it is trapped. Thereby enabling an effective mode of preventing accumulation of
IIM Shillong • Insight • 13
inventory at workstations.
it leaves the premises of the manufacturing unit and can be used as a tool for customer delight by better coordination depending on
On the completion of production, the out-bound inventory can
the time taken for dispatch, foreseen and unforeseen delays that
be integrated with the demand schedules. This can enable an
occurred during the course of dispatch of the product.
automated dispatch and framing of the next production cycle. RFID also can be made to initiate triggers based on the utilization of
The major areas that can be enabled with this technology includes: This level of visibility that is enabled by using RFID technologies within the lean paradigm allows firms to collaborate, schedule, monitor, and execute while striving
for
continuously
improving
operations within the extended value stream. Some of the industries that are reaping major benefits through this technology breakthrough in manufacturing include aerospace
industry,
mining
industry,
semi-conductor industry and automotive industry. Other technologies from the IT domain that hold huge scope for meeting the fast changing demands of manufacturing industry include Cloud computing in manufacturing and Plant virtualization. These
standardized
and
technology
the workstations, which in turn will help in improving workstation
enabled architectures would go to great extend in revolutionizing
utilization through dynamic tracking. This help in eliminating
the Manufacturing world and making it competent to handle the
useful workstation utility time. With RFIDs travelling right through
changes that are occurring at an unprecedented rate.
the entire useful life journey of product, the exact location of each product until it reaches the customer end along with time stamp can be tracked. This can improve the visibility of the product once
DISASTER #2 : WAL-MART’S RFID SAGA In August 2003 Wal-Mart had announced that top 100 suppliers to the retail giant should adopt RFID tagging for its pallets and cases, which would be extended to all its suppliers in 2006. Few of the suppliers started incorporating RFID tagging for some of the distribution channels. But many where reluctant due to the substantial cost involved. The RFID stint by Wal-Mart dint hold its focus, as the company itself had various views about the benefits of the program to its suppliers. Despite all the PR effort, the program lost its focus by 2006 and continued to be partially accepted by view suppliers. The investment that went into implementing the technology and instruments never paid back for RFID. Many technology companies invested in marketing RFID technology of WalMart expecting the technology to succeed once Wal-Mart’s program succeeded. But all the investment in this line went down the drain. The silver lining to this problem is
14 • Pravha • Op-Era
that all this money that went down the drain where the reason for RFID technology reaching its current state of maturity.
3D printing is classic example of disruptive innovation that has created new market dimensions”
3D PRINTING
SANKET G. DESHMUKH NITIE
T RA N S F O R M AT I O N O F T H E S U P P LY C H A I N
F
or a business to be successful innovation is the prime
mail by email’ or of ‘telegraphy by telephones’ are the examples
key. It leads to sustenance of that business in long run.
where presence and power of disruptive innovations can be felt.
But the innovations named as disruptive innovations
In the current era, technology is changing at tremendous speed.
have always dominated on the way in which industry
Companies using traditional practices for day to day operations
works. As a result many companies have adopted these
are living in the red zone while companies that are integrating
innovations or died down. Disruptive innovations
disruptive innovations in their practices are at safe zone.
are meant to create a new market with a unique set of values,
3D printing is a classic example of disruptive innovation that has
and to eventually disrupt existing market. Replacement of ‘postal
IIM Shillong • Pravha • 15
mass production by reversing standardization approach. Goods can be customized according to personal and demographic needs, and also need not to be made at a stray location. 3D printers accompanied with software defined designs have started democratizing the manufacturing process. Economies of Scale Use of 3D printing can help companies to produce optimum volumes of goods as per the requirement of particular demography. Hence economies of scale are expected. Although initial investments on 3D machines are on the higher side, it will be compensated with reduced logistics, Source: 3D Printing – The Ultra Postponement of Products and Parts created new market dimensions. Although early it was used for prototyping, it is now accepted in daily basis practices. Due to its impressive qualities viz. small size, simple operation, ease of using; it will make industries to think over incorporation of this innovation in their business strategy and adopt accordingly. 3D printing can have impact on various industries and on various functional areas, and supply chain not an exception for this. If properly coupled with artificial intelligence, robotics, and open source electronics, 3D printing can transform global chain supply. A typical supply chain
lower production cost, quality and efficiency of production, and evacuation from many in between processes. It will be boost the era of small and simple. According to IBM, software defined supply chain will lower the unit cost up to 23% in 2022. Customization 3D printing machines have the feature to create various models and this feature is far more beneficial than conventional method of manufacturing, where whole assembly line setup has to be modified if one requires changes in the model. Modifying assembly line leads to long term investments and pause in production cycle.
consists of production, distribution, warehouse, and retail. To make products reach to its final consumer these departments have work together with each other. The major challenges for industries are cost control and customer services i.e. providing right product in the right quantity to the right place and the right time. It looks simple from outside to handle these challenges but in reality it is very difficult because of constraints that an industry faces. Company also depends on various suppliers and contractors within supply chain. Although traditional practices have benefited all those who followed them and the economies as whole, but the trend shows that introduction of new technologies demands new rules to be followed and ultimately changes the economies of market. Using 3D printing a product can be directly delivered to user just after conceptualization stage, bypassing all the intermediate stages viz. manufacturing, assembly, distribution etc. This will have tremendous impact on traditional supply chain model. Current supply chain model is based on standardization, modularization, and digitization. These processes have helped productivity to push further. Standardization has helped to reduce production time, while modularization has helped to create integrated modules. And the processes became simpler due to digitization. Synergistically these three processes impacted on market trade, investments, and employment. Standardization has improved supply chain as it supports economies of scale. Also each company intends to have efficient product supply chain with low cost. 3D printing will make companies to switch to customization from
16 • Pravha • Op-Era
But now small changes in computer program will help to produce various models, saving lots of money. Smaller Development Cycles Most of the big companies require huge manpower to operate their different assembly lines for different products. 3D printing will wipe out this requirement, hence reduction in labour cost and lead times. As an example Airbus, European plane-maker using printed components in its new test plane, saving up to 70% in cost of component and in production time. 3D printing will also help in minimising redundancy present in supply chain to dispatch some components in short time and start production again. These savings can be achieved with just a click by downloading required design from the internet. As they say “Today’s Globalisation, tomorrow’s Localisation”. Businesses residing overseas to take advantage of lower cost
Industrial Utility 3D printing is going to boom the market in next several years. All industry sectors that are having supply chain as their heart will need to change their approach to survive. Textile Industry Customization is the key for businesses like textile and fashion industries. 3D printing will have huge impact due to lower product cycle. Designers will be having chances for infinite models. And they can forward those design directly to consumer and consumer can produce the tangible model on their own. are under threat as 3D printing spreading as a wave. Currently in most of the cases point of consumption is far away from point of production. Hence supply chain is incurring more logistics cost and suffering from long lead times. Alteration in market demands causes changes product model. Also transportation with long lead
Defense Industry Defense Industries deal with products cum weapons that require complex and extensive production procedure. But 3D printing will help to ease the procedure with accuracy and promptness.
time gives birth to possibility of product spoiling. But due to inception of 3D printing, companies can distribute products more easily as point of production and point of consumption will be nearer to each other. Elimination of Redundant 3D printing also known as additive manufacturing, builds an objects by depositing layers over each other. This is very effective than conventional manufacturing process which includes cutting and binding. This will result into lesser stocks of raw material in warehouse. Also printing can be done on make to order basis, hence saving finished goods inventory cost. In the best cases products will be directly made at buyer’s place, saves huge cost involved in supply chain. In short company will save money related to storage and distribution. One of the major advantages of additive manufacturing is lesser waste generation; this will lead to higher profits. As 3D printing will start expanding its wing, all companies will start following make to order approach. This will eliminate unnecessary retailers. Order will be directly hand over to consumer of the product. Whole scenario will help companies to earn more profits. Customer managed Inventory Traditional model incorporates vendor managed inventory. 3D printing will introduce customer managed inventory wherein supplier can install 3D printers at customer site with software designs for models as per requirement. Or even customer can buy a printer while supplier will provide required data and designs. 3D Printing Hub 3D printing will extend concept of high street printing companies of 1980s like KallKwik. Companies will provide 3D printing services in domestic and foreign areas. UPS, one of the largest package delivery companies has announced several Stratasys printers across its USA sites. Basic motivation behind this is to provide printed products to customers according to their design requirements.
Automobile industry It is one of the fastest growing industries. There is a presence small and medium scale industry along with big players. With the help of 3D printing, producer and customers will develop required parts to replace the old one instead of buying from vendors. But the after sales services will fall as accuracy and life of printed models will be more. Conclusion 3D printing is seen as future demand in almost each aspect of industry operation. Soon the conventional production methods will become outdated. Processes are changing from hardware to software dependent models. Cost and labour are the major challenges for industries to adopt this technology. But with the time 3D printers will become cheaper. There will be requirement of competent human resources to handle this change. Only 30% of leaders in supply chain have tested this technique. But trend shows positive response from remaining players. Definitely quality improvement and cost reduction advantages will play major role in the revolution. It is just a matter of time!
IIM Shillong • Pravha • 17
AMAZON.COM R E D E F I N I N G S U P P LY C H A I N
I
RAHUL TIWARI SAUMITR RAI IMI DELHI
n Ecommerce there is always a trade off between
for customers and this is what companies like Amazon, Alibaba,
control and convenience. On one hand customers
Flipkart etc. are trying to do by substantially reducing the delivery
are gaining convenience by way of browsing through
time with the help of various futuristic technologies and concepts.
multiple websites, comparing the products on various parameters and 1 click shopping to avoid the hassles of
Several ecommerce companies are trying various process and
actual market place. On the other hand customers are
supply chain innovations to increase their business by increasing
also letting go of the control that they enjoy. E.g. when they visit a
customer satisfaction and developing customer loyalty in their
brick and mortar store they can actually touch and feel the product,
customers. Flipkart, for example, has recently launched “Flipkart
they can use the product on trial basis. These kinds of features
marketplace” which will eliminate the need for Flipkart to have its
are not available with online shopping. According to the theory
own inventory and buyers can directly deal with sellers. Flipkart will
of loss aversion, any loss has a far greater negative impact than
only act as a delivering agent. Also to pull more customers, Flipkart
a comparably sized gain has a positive impact i.e. Losses looms
has started same day guaranteed delivery across 10 major cities in
larger than gains in the mind of the customers. Lack of control
India. Similarly Amazon.com is planning to have an autonomous
over the shopping is the loss in Ecommerce and the comparable
flying delivery drone system (Prime Air) for shipment of goods.
gain is convenience. To compensate for the negative impact due to
These all efforts are basically targeted to reduce the delivery time
loss of control, companies need to increase the convenience level
and to pull customers from the traditional brick and mortar model.
18 • Pravha • Op-Era
Although companies like Amazon can deliver goods in 2 days time and can deliver in a day by charging some premium from customers, these methods are constrained by high costs to be paid by customers and dissuade customers to buy online. This is where a concept called anticipatory shipping comes into picture for which Amazon recently got a patent. Amazon’s anticipatory shipping is a shipping system that will deliver the goods to an area or to the right door even before the goods have been ordered. The system is called as anticipatory shipping and is expected to cut delivery time of shipping the goods by predicting the general patterns of what buyers will buy even before they buy. Based on previous buying patterns of customers of
..... anticipatory shipping is a shipping system that will deliver the goods to an area or to the right door even before the goods have been ordered”
a particular area, Amazon is planning to ship products to that area
arrive from different locations. These packages are sorted here
where the goods will wait at shipper’s hub or on trucks until the
and then sent for distribution. These are established to service a
order arrives. On receiving the order the product will be shipped
geographical region which is in proximity.
in no time to the customer’s house. Which product will be shipped
Expedited Services: Medium of transporting goods which provides
where is decided by looking into customer’s wish list, shopping cart,
fast travel from one location to other. e.g. Aviation.
past orders and even his curser movements over an item. Non-Expedited Services: Medium of transporting goods which is Let’s get an understanding of some terminologies related to the
usually slow compared to expedited services. e.g. Road Transport.
process: Fulfillment Center: Location where orders are received, stored,
Delivery Location: The final location where the goods are to be
packaged and shipped to end consumers. These stores receive
delivered viz. the Customer address.
incoming orders from affiliated stores or suppliers. It is not mandatory that all activities related to packaging and Common Carrier Network: The network for transporting goods from
shipping happen at one location (Fulfillment centers), different
one Hub to another or from a Hub to final delivery location.
functions may be carried at separate locations. Usually fulfillment centers have a supporting warehouse which is used to replenish
Hub: these are the shipping facilities where goods or packages
inventories whenever deemed necessary. Thus, in Anticipatory shipping
goods
will
be dispatched through company’s
common
transport
network
to
different Hubs. In-transit Package would
addressing be
complete
used
the
to
delivery
of items to customer location.
This
fulfillment differs
order
mechanism from
conventional
the method
in terms that it doesn’t need a specific address for shipping of items. Products are shipped to a geographical location or hub without specifying the
complete
address.
The address of delivery could be finalized during the transit of the product.
IIM Shillong • Blaze-A-Trail • 19
In the diagram, the orders are shipped using anticipatory shipping
to better predict the customer buying behaviour of a particular
(observing buying behaviour of users at a particular geographical
region. They are even willing to give the customers some incentives
location) from the fulfillment centers using Common carriers. These
in order to make the customers give orders. It is easier to determine
carriers transport goods to Hubs (1a, 1b, 1c) strategically established
that a customer who is a regular reader of a particular author will
near those geographical locations. The common carriers could be a
order the upcoming book of that author. This deduction can be
part of Expedited or Non-Expedited services based on the distance
made by going through the past purchases and searches of the
between fulfillment centers and the hubs to which it caters or
customer. But a much more riskier and rewarding scenario is that
based on the time limit under which the delivery has to be done.
when the ecommerce companies can predict the changing views
When the products arrive at hub, they are sorted and final delivery
and tastes of the reader by using business intelligence software
addresses are given to these packages which till now had only
and can ship a book based on that prediction before the customer
partial addresses. Once, the delivery location is known, packages
makes the order for this kind of alternative purchase.
are transported to these customers using local transports. In today’s age, the customer is very demanding and will provide It’s possible that packages arrived at a hub may not find a customer
his loyalty to the company from which he can reap maximum
in the geographical location to which it caters. Thus, these goods
benefits. Drastically reduced delivery times and policies like gifting
could be further transported to hub where there is demand or back
the package in case it doesn’t find any customer, will definitely
to the fulfillment center only if the cost of return is less than product
enhance the company reputation and image. In 1999, Amazon
cost. Else, the product could be gifted to a random customer in that region. Factors Affecting Anticipatory Shipping Anticipatory shipping mechanism would consider several factors before deciding the products and quantity which would be shipped to an area. E-Commerce companies like Amazon store huge data related to customer buying patterns which could be analyzed and utilized for demand forecasting in an area. Some of the important data points which could be used for this patented mechanism are: 1) Previous Orders: Past orders placed by a customer through the website. 2) Product Search: The products a customer searches while surfing the website. 3) Wish List: Customers
wish
list
maintained in his account on the website where he puts the products he/she would like to be placed for sale on the portal. 4) Shopping Cart Items: The items present in the shopping cart of the user.
received a patent for 1 click ordering in which customers could
5) Cursor Hovering: The time duration for which the cursor of the
order goods by a single click with payment information already
system hovers over a particular product.
entered by the user previously. Because it was a mega hit, other
6) Return: The history of the products returned by the consumer to
companies like apple had to take license from Amazon to use that
the portal.
service. Now if anticipatory shipping could also prove to be a mega
Predicting about customers orders would not only reduce the
hit, various ecommerce companies have to pay Amazon royalty to
shipping time but will also help in cutting inventories and supply
use this service. With adoption of anticipatory shipping by various
chain costs. “Supply chain and logistics optimization is neither easy
ecommerce companies, one of the biggest drawbacks of online
nor cheap, but it is the biggest opportunity for most companies
purchase i.e. large waiting/delivery time would be substantially
to significantly reduce their cost and improve their performance,”
mitigated. This would possibly sway a large number of customers
wrote H. Donald Ratliff, Ph.D., executive director of the Supply Chain
from the brick and mortar model to ecommerce model.
and Logistics Institute. By using predictive analysis, Amazon feels that they would be able
20 • Pravha • Op-Era
ROOBAROO Op-Era: Team Op-Era would like to congratulate you for the success you
an intelligence system built-in, the
have faced with an innovative model of Juvalia & you. Could you share
demand forecast is done through
with us the operational constraints that you have faced in establishing
system analytics. We have a tracking
such a business model in Indian scenario?
system which provides data including
Chaitanya Aggarwal: Thank you so much. The first major operational
the vendor from which the product was
challenge was not in establishing the operating facility but
originated, who picked, checked the
integrating and reaching out to 16,000 odd pin codes through 13
quality, packed and dispatched, which
logistics partners. Integration of the supply chain for 2500 SKUs
airway bill it was dispatched through
to be procured from different suppliers, inventory management
and to which destination. This enables
in various warehouses, subsequent shipment of 1,50,000 parts to 160000 pin codes across India is a big challenge. As it involves multiple variables at different levels, it is necessary to create a multivariate model and then build the technology behind it. Additionally this includes b2b aspects in inbound logistics and b2c aspects in outbound logistics. Op-Era: Was there any readymade technology available that suited your requirement?
Chaitanya Aggarwal is the CEO of Juvalia and You India. He has a Master’s degree in Business Administration from Columbia Business School. With entrepreneurship running in his veins, he aims to project JUVALIA & YOU India as India’s first and finest international jewelry brand. JUVALIA & YOU is an innovative and modern social selling company that offers today’s busy woman a career alternative, where she can achieve success and balance through a career in something she loves.
Chaitanya Aggarwal: A readymade technology was not available. The available technology has to be scaled up to match the
us to have data analytics on piece level rather than a lot level. So
requirement of this model which handles huge number of SKUs.
the system ensures a re-order only when there is enough stock
The outbound has to be six sigma ready with lean operations. The
available in the warehouse.
complexity level is reduced in other businesses due to single source
Op-era: What are the challenges involved in reverse logistics?
and multi-delivery points. But in this model multiple sources cater
Chaitanya Aggarwal: Reverse Logistics are always a big challenge
to multiple delivery points which increases the complexity many
for any E-Commerce company. Most of the service providers cater
folds. Hence the backend system has to be more detailed and robust.
to only fewer pin codes in the reverse direction. We tried to solve
The outbound logistics carries the major challenge of creating
it through our Juvalia’s customer feedback mechanism. However
‘Aaha experience’ to the customers in spite of the complexities
it continues to be a challenge. Another challenge in this system
involved by delivering the promised product at promised time and
is to face non-genuine claims regarding replacements. In order to
in promised condition.
create a ‘wow customer experience’, leniency has been maintained,
Op-Era: Could you tell us more in detail about in-bound logistics?
thereby entertaining few such claims from the customers. The risk
Chaitanya Aggarwal:
hedging is possible through insurances against pilferage, damages,
Products are imported from 45 suppliers
located in different geographies including Thailand, Taiwan, China,
customer non-payment and other such issues.
Korea, Turkey and India. The import and indigenous ratio is about
Op-Era: How are independent designers integrated into the functioning
forty and sixty percent respectively.
of this model?
Op-Era: What is the nature of products that you sell in terms of its life
Chaitanya Aggarwal: Though the business aspects of these designers
cycle?
are in b2b level, we manage them with b2c approach wherein a
Chaitanya Aggarwal: Every year we launch four collection – one
designer is provided with a login through with the transactions
new collection every quarter. For product to be ready for launch,
are made. They are considered as dealers and are provided with
the design initiation should happen five months in advance. The
dashboards, mobile logins and other tools that are required to run
lead time for the product delivery will be around 45 to 60 days and
the business. Around 75000 stylists are currently working with
considering a 15 days safety time, the order has to be placed at
Juvalia and conduct around 8000 to 10,000 style shows a month.
least 75 days prior to the launch.
Op-Era: Thanks a lot for giving us an opportunity to interact with you.
Op-Era: With such a tight schedule, how do you ensure product
We wish you success in all your future endeavors.
availability?
Chaitanya Aggarwal: Thank you so much!
Chaitanya Aggarwal: All our vendors are integrated through ERP system. Purchase order initiation, order placement, inventory replenishment happen through ERP. Though it does not have
IIM Shillong • Roobaroo • 21
Cover Story
HUMANITARIAN LOGISTIC
NISHANT KUMAR IIM SHILLONG
M A N AG I N G S U P P LY C H A I N AT T H E T I M E O F D I S A S T E R
E
very year there are about 400 disaster (human &
about the scale of challenges they are facing in Liberia, fighting the
man-made) killing on an average 120000 people and
battle against the Ebola virus.Many technicians are dying because
affecting 250 million people and resulting in damage
they lack the necessary protective clothing. Program director for
of US$120 billion. Over the past few decades, the
Pharmaceutical Systems Africa — an organisation devoted to
frequency of natural disasters has increased globally
developing sustainable supply chains in developing countries says
but the sharpest increase has been in the Asian and
“supply chain is pivotal to the treatment of the epidemics and to
Pacific region. This region is also highly sensitive to the man-made
prevent its spread. But lack of medicines and poor infrastructure
disasters. Consider the current conflict in Middle East Region where
in Asia and pacific regionpresent insurmountable
millions of people are in extreme need of assistance.
barriers”. Similar problem has been encountered
The activities of ‘‘planning, implementing and controlling the
by Indian Army in flood affected Jammu and
efficient, cost-effective flow of and storage of goods and materials
Kashmir.
as well as related information, from point of origin to point of consumption for the purpose of alleviating the suffering of vulnerable people’’ are known as humanitarian logistics (Thomas and Kopczak 2005 p. 2). Until fairly recently, no proper attention was given to the humanitarian logistic and was back office function. This is changing, as logistics has started to be recognized as integral to any relief operation. In recent incident, pharmacists working in West Africa are talking
Disaster relief is about 80% logistic, and it is the one that decides between a successful and a failed operation”
IT
systems
and
collaboration among players
of
supply
chain. The response phase refers to the various operations executed immediately a
disaster
after occurs.
Its main objective is to restore basic services and delivery of goods to highest possible
number
of beneficiaries in shortest time. Disaster relief is about 80% logistics ,and it is the one that decides between a successful and a failed operation. When disasters strike, relief/humanitarian organizations respond by delivering aid to those in need with the help of donors. Fast and agile supply chain is required by these organizations. Because of these reasons, knowledge of logistics and supply chain management has become critically important for humanitarian organizations. Stages of Humanitarian Supply Chain Humanitarian Supply chain is highly dependent on disaster management cycle which have four phases: a) Mitigation
This
possible stage
requires high level of coordination and collaboration among all the players of Humanitarian Supply Chain. The reconstruction phase aims to address the problem occurs after the disaster. It involves rehabilitation, reconstruction etc. In humanitarian supply chains, effectiveness ensures that we save time which help in saving more lives and efficiency ensures that we save costs which results in helping more lives. High level of agility in humanitarian supply chain helps in saving time by responding early in response phase. The objective of the reconstruction phase is saving as many costs as possible, and it can be achieved through
b) Preparation c) Response d) Reconstruction Humanitarian
supply
chain concerns about the preparation,
response
and reconstruction and called as humanitarian logistics stream. The
preparation
phase refer to various activities/operation that occurs during the period before a disaster strikes. It aims to avoid possible disaster consequence by incorporating strategies, learning and adapting from past experience which
help
successful
response. This help
in
in
a
operational phase
developing
physical infrastructure,
IIM Shillong • Cover Story • 23
leanness. Key Performance Indicators Uncertainty and Risk
Appeal Coverage, donation-to-delivery time, Financial Efficiency
Supply Chain is all about getting right product, at the right time, to
and Accurate Assessment are four developed and mostly used key
the right place and distributed to the right people are still applicable
performance parameters. These does not reflect the pure and true
in the humanitarian context but humanitarian logistic always faces
picture but are helpful to the logisticians to get a sense of how
the higher uncertainty and risk than that of logistics in private
well they are achieving their goals related to each “appeal,” the term
sector. Adding to this ,accurate data about demand and supply
which refers to the list of items recorded on an operation’s total
varies very dramatically in case of humanitarian logistics. Dealing
budget.
with unexpected events also makes it difficult for humanitarians.
1. Appeal Coverage: It comprises of two important metrics: percentage
So we can conclude that humanitarian supply chains show the
of appeal coverage and percentage of items delivered. First one
extremes of a trend towards more uncertainty and risk.
quantify quantity of items that have been pledged by donors out of the total number of items requested for the operation. Second
What makes a successful response in humanitarian logistic?
metrics is percentage of items that has been delivered on site out
A successful response heavily depends on better preparedness.
of total number of items requested for the operation
Humanitarians have begun to learn from previous disasters
2. Donation-to-delivery time: It indicates the time taken for an item
and have started thinking more in terms of optimizing their
to be delivered to the destination after a donor has pledged to
performance by being better prepared. So the question comes,
donate it
how can organizations be better prepared if they do not have prior
3. Financial Efficiency: This consists of a comparison between the
or accurate information regarding the timing (when?), location
budgeted prices to the actual prices paid for items delivered in the
(where?) and type of disaster (what?) or the number of people
operation. It also incorporates the transportation cost of delivering
requiring assistance (how many, where from?).
the goods to the beneficiaries 4. Assessment accuracy: A quick and efficient donation and delivery
Preparedness consist of five key factors that have to be in place to
relies on how accurately the field personnel assessed the needs
insure better preparedness. They are:
of the affected population. Therefore this indicator indicates how
a) Human resources
much the operation’s final budget changed over time from the
It is always better to have a prepared, trained local team to dispatch
original budget
at the time of a disaster. Members should speak basic English and local language
and
should
have capability to plan, coordinate,
act
and
intervene where it is necessary. b)
Knowledge
Management Learning from previous disasters
by capturing,
codifying and transferring knowledge about logistics operations.
Events from past few years have forced humanitarians and
c) Operations and Process Management
logistics firms to rethink their decision making process, inventory
First of all, recognize logistics as central role in preparedness. There
management policies and disaster management planning. There
should be alternate suppliers, mode of transportation and trade
is need of restructuring the supply chain strategies in order to
lane in place.
minimize the impact of eternal incidents and improve security.
d) Resources
Initially, companies were participating in humanitarian efforts
Arranging sufficient money and financial resources to prepare
because they observed that the losses inflicted by disasters
and initiate operations and ensure that they run as smoothly as
are enormous and it’s interrupting their flow of business but it’s
possible. Also goods like food, water, clothes, drugs etc. should be
changing. Leading logistics companies like FedEx, DHL, UPS,
available at ease.
Maersk and TNT have raised their involvement in terms of sharing
e) Communication between Players
their resources, knowledge and assets to their humanitarian
It’s important to have effective communication for a better
counterparts. It’s because of their capability in speed and efficiency,
collaboration with the key players like government, military,
logistic companies are supposed to play a more prominent role as
humanitarians etc.
partners in humanitarian organization.
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VIRTUOSOS JAYARAMAN P 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
IIM SHILLONG
hat every Tom, Dick and Harry in operations domain tells in 21st century “It is most important that top management be quality-minded. In the absence of sincere manifestation of interest at the top, little will happen below” is actually told by a son of Jewish immigrant in USA. He began his humble beginning (compared to what he later became) as an engineer in Bell System in 1924. Sooner, he was assigned a responsibility of implementing new tools and techniques that are known today as statistical quality control. That created an early interest for Juran to lead a quality life devoted to quality.
During the crisis situation of WW II, he was appointed specially as an assistant administrator for the Lend-Lease Administration to improve the efficiency of the process, eliminating excessive paperwork and thus hastening the arrival of supplies to the United States. This was a turning point to his illustrious career when he felt that he was controlled by stronger forces than himself. After the war time, he was relieved from government duties and never went to join back. By the end of the war, he was a wellknown
and
highly-regarded
statistician
and industrial engineering theorist and that helped him become a teacher. It is by his virtue he was invited by the Union of Japanese Scientists and Engineers to Japan in 1954. There he interacted with many other Stalwarts including Kaoru Ishikawa and he recorded “Juran’s visit marked a transition in Japan’s quality control activities from dealing primarily with technology based in factories to an overall concern for the entire management. The Juran visit created an atmosphere in which QC was to be regarded as a tool of management, thus creating an opening for the establishment of total quality control as we know it today.” After coming back from Japan Juran gave more credit to Japanese than Americans for the development of quality. He started to advocate Japanese systems like
Joseph M. Juran Father of Quality (Juran) Trilogy Life Span – Dec 24, 1904 – Feb 28, 2008 Known for – Management Theory of Quality Major Works – Application of Pareto principle in quality, transfer of knowledge on quality aspects between East and West IIM Shillong • Pravha • 25
Quality Circles openly. The ideas that Juran developed were gradual rather disruptive ones. He is best known for ideas like involvement of Top management, quality application of the Pareto principle, the need for widespread training in quality, the definition of quality as fitness for use, the project-by-project approach to quality improvement and all emerged gradually. Readers! We give you Dr. Joseph Juran, a teacher, as introduced by the ASQ president Dana M. Cound, when he could not fathom introducing him with mere words.
Genichi Taguchi Life Span – Jan 1, 1924 – Jun 2, 2012 Known for – Taguchi’s loss function Major Works – Deign of Experiments, Philosophy of off-the-line control
T
he traditional mentality of binary system in quality,
environment where both ECL of Japan and Bell Systems of USA
i.e. a produced item is of either good quality or bad
were working on the same project and eyeing for the same contract
depending on the specifications of upper and lower
from AT&T. Eventually ECL bagged the contract, thanks to Taguchi’s
tolerance levels, was the only quality concept preva-
impact in ECL’s superior production. Later, he worked on Experimen-
lent in Japan and the rest of the world, before a textile
tal Design and Life Test Analysis, Design of Experiments, industrial
engineer named Genichi Taguchi came and changed
research on signal to noise ratio. He chose research over industrial
the perception of quality altogether.
job and worked with number of Universities including Princeton University. During his brief stay in USA he was consulted by leading
Initially Taguchi was looking after his family business, textile manu-
industries like Ford, AT&T and Xerox.
facturing. It during the crisis wartime situation he was sent to work with the Ministry of Public Health and Welfare and in the Institute
Taguchi was recognized for his outstanding contributions to Japa-
of Statistical Mathematics of the Ministry of Education. It created an
nese economics and industry and was awarded the Indigo Ribbon
everlasting interest in statistics for Taguchi and an opportunity to
from the Emperor of Japan in 1986. That year he also received the
meet the renowned statistician, Matosaburo Masuyame, who nur-
International Technology Institute’s Willard F. Rockwell Medal for
tured Taguchi’s statistical skills.
combining engineering and statistical methods to achieve rapid improvements in cost and quality by optimizing product design and
He later went to Indian Statistical Institute and worked as guest
manufacturing processes.
lecturer during 1954-55. It was that time when he had the opportunity to work with best brains in statistics like C.R. Rao, Ronald Fisher and Walter Shewart. He was fascinated by orthogonal arrays invented by C.R. Rao and applied the principles to develop Taguchi’s methods. He was later assigned to work for ECL to develop cross bar and telephone switching systems. It was a highly competitive business
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IIM Shillong • Virtuosos • 26
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 EVENTS Optimus 6.0 Optimus 6.0, held in March 2014, was an online quiz for 20 minutes which required participants to register in a team of two. It gauged their expertise in various fields like supply chain management,
operations,
current
trends
in
industries, best industry practices and concepts involving operations. Team The Blue & The Black from IIM Shillong stood first followed by Team Serendipity from XLRI Jamshedpur. Optimus 7.0 Optimus 7.0 tested the creativity and conceptual clarity of the participants in a few pre-mentioned basic Operations and Supply Chain concepts. Participants were required to submit a one slide power point presentation in a team of two which was followed by gathering of Facebook likes by them. Teams were evaluated on creativity, concept clarity/originality, content and Facebook likes/ shares. Team Blackops from NITIE emerged as a winner for innovative solution explaining the topic “Influence of GST on Supply Chain Industry”. OpsMerge On 24th August 2014, Op-era in association with i-cube, Entrepreneurship Cell of IIM Shillong launched OpsMerge– a national level operations case study competition. It was a two round event. In first round over 100 teams participated from all the B-schools. Out of all the participating teams, 25 teams proceeds to second round which was a case study round. Finally the teams Optimus from SIMSR emerged as winner of the OpsMerge while Team Brahmashiras from IIM K settled as the runner-up.
INDUSTRY ASSOCIATIONS Magic cement Op-Era collaborated with Magic cement of RNB group in the form of a live project to design Market penetration strategies into the Shillong cement market. OP-ERA has successfully accomplished the task and is entering into newer collaborations with the group including more
IIM Shillong • Rendezvous • 27
live projects, industrial visits etc. Meghalaya Institute of Governance, Government of Meghalaya OP-ERA has begun its association with Meghalaya Institute of Governance (MIG) in the form title sponsorer for Shrinkala, the flagship event of the club at Khlurthma, the annual B-school fest of IIM Shillong. Op-ERA has also entered into a tie-up in the form of a live project with MIG related to governance in Meghalaya state thus taking the relationship to newer heights. SCNext The club associated with SCNext, an international
organization
bringing
together youth working in the domain of Supply Chain from across the world. As a part of members of the prestigious competition the students get to interact with professionals from across the globe, get to enrol for various certifications in the domain of supply chain, six sigma etc. and participate in the international PTAK prize organized by ISCEA.
DISASTER #3 : APPLE MISSED THE BUS Apple’s leadership in PC market share in 90’s is a lesserknown fact. But this dominance of Apple took a hit in 1995. In 1995, Apple introduced its new line of product Power Mac PCs. In a similar launch of Power Book Laptops during 1993 Apple had burnt its finger with excess inventory and production capacity. The company played it safe this time around and was hit drastically by the explosive demand for Power Macs. There wasn’t enough PCs in supply and default for suppliers made Apple miss huge demand of the Christmas season. Stock prices where cut in half owing to the lack of capability to handle market opportunity, CEO was fired, Share holders raised lawsuit and Apples market
dominance took a permanent hit. It took years after for Apple to come up with the legendary IPOD to gain its prominence.
DISASTER #4 : CISCO’S INVENTORY MAYHEM Cisco was riding the high tide with its technological innovation reflecting in its incredible growth, profit, stock valuation and prominence. But the tech bubble burst led to the tanking of market. The inventory system and visibility issues at Cisco led to Cisco not realizing this slowing demand. The company was soaring high on inventory that it had to face as huge as $2.25 Billion inventory write up, probably the largest write up of inventory that had occurred in history. The network industry, which had not faced a downturn till then, encountered its first ride down the hill. With the industry Cisco also faced a bubble burst, had a half cut in stock price and lost its market position.
28 • Pravha • Op-Era
THE TEAM
Clockwise from left : Jayaraman P, Nishant Kumar, Keshav Sodhi, Harsha Deepak RVS, Ansuman Mishra, Dipak Bajaj, Aishwarya V.R. , Ankit Kumar Narsaria
IIM Shillong • Pravha • 29
Op-Era, Operations Club, IIM Shillong Email: opsclub@iimshillong.in Website: operaiims.in Follow Us at facebook.com/OpsClubIIMS
30 • Pravha • Op-Era