Supply Chain Management

&
Role of Analytics
(February 18, 2024)

Coordinator:
Prof. Rupesh Kumar Pati
 Important Program Details

• Faculty Coordinator contact point: Dr. Rupesh Kumar Pati (on

academic matters) – also for issues not resolved by admin in 4 days
connect to me.
– Email: rupesh_pati@iimk.ac.in,

• Contact Person
– Vismaya (from IIMK) – on Administrative issues
• e-mail : csmdp12@iimk.ac.in , phone no: 0495-2809370

• Rules: Chat & live Participation, experience sharing, challenges

faced, Whatsapp Group
 Methodology

• Combination of Lectures, case Studies, Presentations & Exercises,

video analysis, simulation, experience sharing etc.
• Case submission, PPT uploading, readings, cases will be available
on IIMK LMS link
• User Id and password can be collected from csmdp12@iimk.ac.in
or would have been sent to you
• For all academic matter only I have to be contacted. Jaro plays no
role in academics.
• Session Link provided by Jaro in JARO LMS and Jaro provides
recording link. Recording only available 1 month post programme
completion and cannot be downloaded.
Is this same as old
supply chain?

Why Did I Join

this eMDP?

--Few Expectations-
 A picture is better than 1000 words!

Aims to Match Supply and Demand,

profitably for products and services

SUPPLY SIDE DEMAND SIDE

Achieves

+ + + + + =
The right The right The right The right The right The right Higher
Product Price Store Quantity Customer Time Profits
Introduction to world of Supply Chain in VUCA Environment
 Why SCM Complex?:
“Many-to-Many” Relationships

Consumer

Large Retail
Customer
Design Partner
Manufacturer Reseller

Distributor
Component
Supplier Small Retai
Customer
Manufacturer Reseller
Raw Material Distributor
Supplier

Manufacturer
Contract Distributor Corporate
Manufacturer Customer

Logistics Logistics Logistics

What is vital for business success?

Developing Business Process

Or
Technology
What Business
Decision is
Taken in these
Companies?
What Business
Decision is
Taken in these
Companies?
 What business decision
is taken in these companies?
Lets see in the past what happened, and what kind of decision were they making?
Apple has a significant Chinese customer base, and nearly all of its critical
manufacturing and assembly partners are based there. Trump’s ban might not
only force Apple to remove WeChat from its App Store — which would destroy
Apple’s Chinese smartphone business — it could existentially change how
Apple is able to build and sell new products in the future.
https://cleantechnica.com/2020/08/09/apple-plans-to-go-100-carbon-neutral-including-supply-chain-by-2030/

Apple’s 10-Year Climate Roadmap

1. Recycling (recover key materials such as rare earth magnets and tungsten)
2. Energy Efficiency
3. Renewable Energy (70% suppliers committed)
4. Materials (carbon free aluminium smelting process)
5. Carbon Removal (Restoration and protection of forest)
https://www.foodnavigator.com/Article/2020/07/16/Unilever-procurement-chief-talks-
climate-crisis-The-world-s-food-system-needs-to-change
 What kind of decision did you observe?
• Globalization vs localization

• Impact of Government policy on Supply chain decisions

• Frequent Introduction of innovative products and increase in variety

• Fight against climate change & Stress on sustainability

• Network expansion (supplier/manufacturing/warehousing etc.) – either

setting up new facility or acquisition

• Hugh investment in e-commerce & emergence of last mile delivery

• Importance of customer in supply chain

• Emergence of digital platform ecosystem and technologies

• Importance of leagility ( Lean + Agile systems) to manage disruption

 What other decision did you observe?
• Sourcing challenges (how to reduce cost for customer)
• Government Regulatory norm to enter new markets
(should I enter or not?)
• Stakeholders can impact supply chain (in addition to
shareholder)
• Role of product recalls & closed loop supply chain –
does it make sense
• Raw material sourcing from global market
 Views on Supply Chain

• View 1: an integrated process where raw materials are

transformed into final products then delivered to customers.

• View 2: a system whose constituent parts include material

supplies, production facilities, distribution services and

customer linked together by feed forward flow of materials and

feed back flow of information.

 Views on Supply Chain

• View 3: a complex, dynamic network or system of

interconnected and interdependent individuals, groups,
companies, organizations, and relationships whose goal is to
satisfy and add value to their particular customer.
• View 4: a process of strategically managing the movement
and storage of materials, parts, and finished inventory from
suppliers through the firm and on to the customers or an
integrating process based on flawless delivery of basic and
customized services.
 Views on Supply Chain

• View 5: an integrating process, used to build

competitive position, based on the delivery to
customers of basic and unexpected services.
 Changing Basis of Competition

Basis of Competition

Manufacturing company A
Yesterday versus
Manufacturing company B

Then Manufacturing company A and it’s supply chain

versus
Moved to Manufacturing company B and it’s supply chain

Today Digital Supply Chain A Vs Digital Supply chain B

 What Do you Feel, is this good??
What does Asian Paints supply Chain Looks like?
Asian Paints expects an "uncertainty in demand" in the home improvement categories,
including paints, on account of disruptions in operations after the second wave of the
coronavirus pandemic, the company said in its latest annual report.
Besides, the country's leading paint maker is also concerned about the inflationary pressure
on the input materials in its product segments, said Asian Paints in the annual report.
"There has been a re-imposition of restrictions on business activity in many states and this
has again disrupted operations of our vast supply chain network. This is expected to lead to
uncertainty in demand in the larger home improvement categories, including paints," said
Asian Paints in its management discussion and analysis.
Though economic growth is expected to bounce back strongly in 2021-22 on global as well
as domestic fronts but a lot would hinge on how the pandemic plays out, given the
resurgence of the virus and the spread of infections, it added.
Over the inflation in commodity prices, Asian Paints said input materials in its product
segments across geographies have risen "significantly" since the last quarter of 2020-21 and
continues to be on the uptrend.
"The challenges to business posed by this inflationary pressure and the uncertain market
conditions would place a strong emphasis on managing the business in a dynamic manner
and altering operational priorities to suit the changing market conditions," it said.
Asian Paints said the roll-out of the vaccination drive across the major economies, including
India, in the last quarter of 2020-21 has accorded a much-needed boost to sentiments around
a sustained recovery of economic activity across the globe.
"But, it will take some time to deliver results as a large cross-section of the population will
need to be vaccinated before the spread of the virus can be curbed," said Asian Paints
Managing Director and CEO Amit Syngle.
The company will continue to accord the highest priority on the well-being of its
employees, encouraging them to follow necessary precautions, he said. "We will also
have to anticipate intermittent business restrictions and disruptions to the supply chain
networks for some time," Syngle added.
While talking about 2020-21, he said Asian Paints not only adapted to new norms,
addressing the emerging realities, but also remained in pursuit of its long-term strategic
objectives that would enable it to deliver sustainable growth.
In 2020-21, Asian Paints had reported Rs 18,516.9 crore revenue from operations.
The Mumbai-based company is also present in the home improvement and decor segment
and offers bath and kitchen products.
It has also introduced lightings, furnishings and furniture in its portfolio. In the health and
hygiene segment, Asian Paints offers a range of sanitisers and surface disinfectants.
Asian Paints operates in 14 countries and has 26 paint manufacturing facilities in the world,
servicing consumers across over 60 countries.
 Sharing Experience:
• Is the customer happy? Impact of this in todays Social media world?
• Why did this happen? Identify problems? Is it a supply chain Problem?
 Distribution network configuration- Entity location  Distribution Strategies- How will you send my car?
 Inventory management  Supply contracts – with dealer/franchise or own

 Integration and Strategic Partnerships: how to  Product Design, Information Technology

integrate & what information to share  Customer value & Sustainability
 Procurement Strategies- Paints/raw materials  Can Digital technologies help me?
 Sharing Experience:
• Is the customer happy? Impact of this in todays Social media world?
• Why did this happen? Identify problems? Is it a supply chain Problem?

My story.. An India Customer..

How is Apple Doing in India? Revenue of Apple by country/region from 2012 to 2019 (in billion US $)

What is Apple Target Market Segment?

Do you feel Globally customer market

segment is same? &
Is Quality only about Technology?

Who decides the quality of product or

service: Customer or Company??
What is quality?

Global 2-in-1 laptop market Definition

2-in-1 laptop is also known as 2-in-1 PC and 2-in-1 tablets. It is the portable computer, which
has features of both tablets and laptops. A 2-in-1 laptop gives user the experience of a tablet
with the software compatibility, computing power and general characteristics of a laptop.The
report study has analyzed revenue impact of covid-19 pandemic on the sales revenue of market
leaders, market followers and disrupters in the report and same is reflected in our analysis.
https://www.maximizemarketresearch.com/market-report/global-2-in-1-laptop-market/55791/
 Sharing Experience:
• Is the customer happy? Impact of this in todays Social media world?
• Why did this happen? Identify problems? Is it a supply chain Problem?

– Customer value & Sustainability

– Distribution network configuration- Entity
location
– Inventory management My story.. An India Customer..
– Product Design, Information Technology
– Distribution Strategies- How will you send my
car?
– Supply contracts – with dealer/franchise or own
– Integration and Strategic Partnerships: how to
integrate & what information to share
– Procurement Strategies
– Should I be lean supply chain or Agile Supply
Chain or Legeability is important
– Can Digital Technologies help me?
 The Key drivers for growth:
 Commodity driven trade market from China, India, & shifting of production base
 Super Sizing of fleet
 Replacement of Aging Fleet
 Conversion of Single hull Tanker (due to risk of environmental damage) by
Double Hull Tankers or very large ore carriers
 What is Quality?

• Fitness for Use

• Conformance to Specifications
• Total Customer Satisfaction
• Exceeding Customer Expectations
• Producing the Very Best Products
• Excellence in Products and Services

• Quality improvement starts with reducing Product

VARIABILITY and waste.
 Who’s the better shot?

Supply Chain strategies including technology strategies

attempts to reduce variability
 Detection Example

• Count the number of f’s in this paragraph:

• The study of SPC can be both fun and rewarding for everyone.
When you find out that the fundamental ideas of statistics are
fairly easy to learn, you will discover that your efforts result in
a great deal of satisfaction. If you treat a production problem
as a puzzle, the application of SPC provides clues for its
solution, and when the puzzle is finally solved, the feeling of
satisfaction is very fulfilling. Puzzles can be frustrating, but
their final solution is fun.
Quality is not simply a problem to be solved;
it is a competitive opportunity.
MAY ALSO NEED TO CHANGE THE WAY WE
THINK ABOUT THE BUSINESS??
Do we need to Be Dynamic/ Creative
 Hence, the need to Understand the:
• Industry Life cycle
• Product Life Cycle,
• Component / Subcomponent Level Life Cycle
 Key Issues in
Supply Chain Management
Key Issues in Supply Chain Management

Issues are according to the time horizon:

 Strategic – Long-time effect on firm

 Number, location and capacity of warehouses and
manufacturing units.

 Tactical - Medium range i.e. 4-12 months.

 Purchasing and production decision, inventory policies,
transportation strategies etc.

 Operational – Day-to-day decisions.

 Scheduling, routing etc.
 Key Issues in Supply Chain Management
 Distribution Network Configuration:
 Changing demand patterns, termination of leasing contract
 Selection of new suppliers, new flow pattern of goods/ information

 Inventory control: when and how much to stock & order

 Distribution Strategies: centralized vs decentralized, impact of service level, mode of dist.
 Production sourcing & Supply Contracts:
 Production vs sourcing decision (production vs transportation cost)
 Pricing and volume discounts, delivery lead time, quality etc.
 Revenue sharing contracts etc.

 Integration and Strategic Partnerships: how to integrate & what information to share
 Procurement Strategies and Outsourcing
 Product Design
 Digital Supply Chain and Digital Transformation Supply Chain
 Customer value
 Sustainable Supply Chain
Importance of Supply Chain Management

Frequent Supply Low order

shortages Inefficient fill rates
logistics
Tier 1 Manufacturer Distributor Retailer Customer High
Supplier stockouts

Glitch-Wrong Ineffective
High inventories High landed
Material, Machine is promotion
through the chain costs to the shelf
Down – effect
snowballs

 Eliminating inefficiencies in supply chains can save millions of $.

 Important points for Supply Chain Success

• Minimizing supply chain costs while keeping a

reasonable service level customer satisfaction/ quality/
on time delivery, etc.

 Supply chain success should be measured by total

supply chain profitability, not profits at an individual
stage i.e. global optimization
 Important points for Supply Chain Success

 Supply chain profitability is total profit to be shared

across all stages of the supply chain

 Customer is the Sources of supply chain revenue:

Concentrate on satisfaction

 Efficient flow of information

 Another Challenge : Satisfying
Customer
Long

Lead Time
Responsiveness

Short

VARIETY Changing Customer PRICE

How to Do?
Preferences
High Low

Low How to Do? High

 Contributors to Implied Demand
Uncertainty

Commodities Customized products

Detergent High Fashion Clothing

Price Customer Need Responsiveness

Low Implied Demand Uncertainty High

Short lead times, product variety,

distribution channel variety, high rate of innovation and
high customer service levels all increase
the Implied Demand Uncertainty
 Why Is Uncertainty Hard
to Deal With?
 Matching supply and demand is difficult.
 Forecasting doesn’t solve the problem.
 Inventory and back-order levels typically fluctuate widely
across the supply chain.
 Demand is not the only source of uncertainty, Other
sources are:
 Delivery Lead times
 Manufacturing Yields
 Transportation times
 Natural Disasters
 Component Availability
 SEVEN PRINCIPLES OF
SUPPLY CHAIN MANAGEMENT
Industry View on SCM

By
Anderson Consulting
 Seven Principles of SCM

1. Group Customers by needs:

– What is needed
– When it is needed
– How much of it is needed.

Effective supply chain management groups customers

by distinct service needs--regardless of industry--and
then tailors services to those particular segments.
 Seven Principles of SCM
2. Customize the logistics network :
– Product distribution is as important as product
creation.

In designing their logistics network, companies need to focus

on the service requirements and profit potential of the
customer segments identified.
 Seven Principles of SCM
3. Listen to signals of market demand and plan
accordingly.
Sales and operations planners must monitor the entire
supply chain to detect early warning signals of changing
customer demand and needs. This demand-driven
approach leads to more consistent forecasts and optimal
resource allocation.

-- Aggregate demand
-- Streamline the information pipeline
-- Streamline the distribution pipeline
 Seven Principles of SCM

4. Differentiate the product closer to the customer.

– Postponement
– Assemble-to-order

Companies today no longer can afford to stockpile inventory to

compensate for possible forecasting errors. Instead, they need to
postpone product differentiation in the manufacturing process
closer to actual consumer demand. This strategy allows the
supply chain to respond quickly and cost-effectively to changes in
customer needs.
 Seven Principles of SCM

5. Strategically manage the sources of supply

By working closely with their key suppliers to reduce the

overall costs of owning materials and services, supply chain

managers maximize profit margins both for themselves and

their suppliers..
 Seven Principles of SCM

6. Develop a supply chain-wide technology strategy

As one of the cornerstones of successful supply chain

management, information technology must be able to

support multiple levels of decision making. It also should

afford a clear view and ability to measure the flow of

products, services, and information

 Seven Principles of SCM

7. Adopt channel-spanning performance measures

Excellent supply chain performance measurement systems

do more than just monitor internal functions. They apply
performance criteria to every link in the supply chain -
criteria that embrace both service and financial metrics,
including as each account's true profitability
 Relationship between Supply chain
Principles and Financial outcomes

7 Principles Revenue Asset Cost

Growth Utilization Reduction
Segment customers based on needs HIGH Medium

Customize logistics network

Listen to market signal and plan

accordingly
Differentiate product closer to customer

Source Strategically

Develop SC technology strategy

Adopt channel spanning measures

 Organizational Paradigms

Paradigm Shift Leading to Skills Required

From functions to Integral management of Cross-functional management
process material and information flow and planning skills

From products to Focus on markets and the Customer segmentation

customers creation of customer value

From revenue to Focus on the key performance Understanding of the time

performance drivers of profit based performance indicators

From inventory to Demand based replenishment Information management

performance and quick response systems

From transactions to Supply chain partnerships Relationship management

relationships
 GAME-CHANGING TRENDS EVOLUTION

Anything new to
be added in 2021
based on your
experience?
https://financesonline.com/supply-chain-trends/
• Deliver on the business’s purpose (to better serve customers, suppliers,
employees and communities, simultaneous with shareholders) through supply
chain.
– SUSTAINABILITY (Tripple Bottom Line) environmental sustainability
domain a hotbed of activity, there is an opportunity to solve longer-term
environmental and social challenges. Some products are being designed for
circularity.
– Most investments are now made to benefit both planet and business.

• Act now on post pandemic trends to achieve supply chain transformation.

– the supply chains most able to adapt to shifting business conditions won in the
marketplace or being prepared for market disruption (customer), Supply
disruption, Omni Channel distribution (rather than conventional channels)
----- ADAPTABILITY/ AGILITY/ RESILIENCE.

• Reach supply chain autonomy by 2035: use of technology to enable more seamless
customer experiences and more automated and insightful decisions in SC at larger
scale scale.
• Three-step roadmap to experiment, pilot and roll out hyper-automation
• 70% of companies accelerated their digital roadmaps
• use of technology to enable more seamless customer experiences and more
automated and insightful decisions in supply and product management, at scale.
 Lessons learned from these top supply chain
companies in 2020-21
• Use the emerging strength and current focus on your supply chain
to not only drive “green” and people-related programs, but also to
secure marketing budget to fund these initiatives and be part of
the value proposition to customers and investors.

• Transform your supply chain to support new customer value

propositions by building capabilities to enable “as-a-service”
business models as well as business customer and consumer
composable solutions.

• Evolve your transformation journey to become “digital first” by

using technology to enable more seamless customer experiences
and more automated and insightful decisions in supply and
product management at scale.
The Gartner 2020 Supply Chain Report
2020 Supply Chain Leadership Trends

Clearly define and communicate your supply chain’s

broader purpose in the world to inspire customers,
employees and partners to act ethically and
sustainably in support of the global community.
Position your organization to be a disruptor by
infusing agility into existing capabilities or acquiring
startups offering the expertise and DNA necessary to
compete in new or reinvented markets.
Create a digital orchestration culture in your
organization by investing in rapid and open
innovation that is sourced from both internal talent
and external partners with specialized skills and
technologies.
 INDUSTRY TRENDS DURING PANDEMIC
• In planning, artificial intelligence (AI) and machine learning (ML) analyze supply constraints in real
time and balance market share, profit and customer support objectives.

• In transportation, some can now dynamically monitor and manage shipments and intercept late in-
flight deliveries where necessary to maintain customer commitments.

• `Consumer product and electronics companies have continued building downstream visibility through
technology. Use big data in B2C for analysis, get consumer insights from unstructured social media
posts, various sources of market data, and internal demand and supply information.

• In B2B, leaders are establishing more customer-listening posts (e.g., signals, surveys) to capture
sentiment at key moments across critical channels. These insights are fed back to operational teams
to help prioritize where further actions and investments are required.

• Shop floor automation continues in factory environments. Some of the more advanced players are
now using centralized, remote factory monitoring.

• Digital transformation would not be possible without the right talent. AI, ML and big data analysis
are the most common capabilities. Several advanced supply chain organizations run digital literacy and
agility programs to enable employees to better understand and exploit digital business opportunities &
learn how to use data-driven analytics for more informed decision making in their roles.
 WHAT IS RIGHT SUPPLY
CHAIN FOR YOUR PRODUCT
Devising an effective Supply Chain Strategy

Step 1: Consider the nature of demand for the products

FUNCTIONAL DEMAND INNOVATIVE DEMAND

Depends on:
– Product Life Cycle (PLC),
– Demand Predictability
– Product Variety
– Market standards for lead time
– Service level
Physical Function For Functional Product

• The predictable demand makes market

mediation easy as nearly perfect match of
supply and demand is achieved.
• Focus on minimizing physical cost, given
price sensitivity of most functional
products.
Market mediation for Innovative Products

• High risk of shortage and short PLC

leading to obsolescence makes market
mediation function essential for innovative
products.
• Critical decision:
– Inventory and capacity management and not
minimizing cost
– Position of inventory and available production
capacity
 Made-to-stock environment
Efficient SC to Market
Product
PUSH Functional
characteristics
• Stable, predictable products
demand & life Retail products,
Inventory
cycle time Food cans, beer,
• Low level of of
drinks, Pasta,
demand Finished
goods baby diapers
uncertainty
• Low margin Etc…

All production and distribution decisions

are made on long-term forecasts
• Forecast are always wrong,
• The longer the forecast horizon, the worst the forecast
• Aggregate forecast are more accurate. (risk-pooling
concept.)
 Made-to-Order environment
Responsive SC to Market
Product Innovative
Characteristics PULL Products

•Unpredictable All sorts of

demand Inventory of industries : High
•Short life cycle time Parts & tech industries
•Great variety assemble on Computer (Dell),
•High margins order Fashion
..etc …

Decisions based on Accurate Customers Demand

Ensure that the variety of products reaching the market

place matches what customers want to buy
 Functional vs Innovative Products:
Differences in Demand
Aspects of Demand Functional Innovative
(Predictable demand) (Unpredictable demand)
PLC More than 2 years 3-12 months
Contribution margin 5-20% 20-60%
Product variety Low (10-20 per High (often millions of
category) variants per category)
Forecast error margin at the 10% 40-100%
time production is committed
Average Stock out rate 1-2% 10-40%
Ave. forced end of season 0% 10-25%
markdown as % of full price
Lead-time required for made 6-12 months 1-14 days
to order products
Contribution margin = (price – variable cost)/ price
 Physically Efficient Vs
Market Responsive Supply Chain
Physically Efficient Market Responsive Process
Process
Primary Purpose Supply predictable Respond quickly to unpredictable
demand at the lowest demand in order to
possible cost • minimize stock outs,
• forced markdowns and
• obsolete inventory
Manufacturing Maintain high average Deploy excess buffer capacity
Focus utilization rate
Inventory Generate high turns Deploy significant buffer stocks of
Strategy and minimize inventory parts or finished goods
throughout the chain
 Physically Efficient Vs
Market Responsive Supply Chain

Physically Efficient Process Market Responsive Process

Lead-time Focus Shorten lead time as long as it Invest aggressively in ways to

does not increase cost reduce lead time

Approach to Select Primarily for cost and Select primarily for speed
choosing suppliers quality and flexibility

Product-design Maximize Performance and Use modular design in order

Strategy minimize cost to postpone product
differentiation as long as
possible.
What Strategy for your products?

– Is your product functional or innovative?

– Should your SC be physically efficient or responsive to

the market or differentiation?

– Where in the SC to position inventory and available

production capacity in order to hedge against

uncertain demand?
 Managing Supply Chains With
Products

Functional Innovative
Products Products

Efficient
Supply Chain MATCH Mismatch

Responsive
Supply Chain Mismatch MATCH
Supply Chain 2040: A Look at the Future

https://www.youtube.com/watch?v=zA0NbwVVJzg

THANK YOU