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Supply Chain
                        Visibility Roadmap
                                      Author
                                    Ranjan Arora




WHITE PAPER
       J U LY 2 0 1 2
Supply Chain Visibility Roadmap   |   July 2012




                                                      TABLE OF CONTENTS
                                                      Abstract	3
                                                      Supply Chain Visibility: Definition and Key Trends	                                                                            3
                                                      SCV Framework: The Need	                                                                                                       4
                                                      Supply Chain Visibility: The Key Challenges	                                                                                   5
                                                      Supply Chain Visibility Solution: Deployment Methodology	 6
                                                      Business Benefits	                                                                                                           13
                                                      Conclusion	15
                                                      About the Author	                                                                                                            15




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
2
Supply Chain Visibility Roadmap   |   July 2012




                                                      Abstract
                                                      The benefits of Supply Chain Visibility (SCV) have been known for over a
                                                      decade. Enterprises have been deploying Supply Chain Visibility solutions
                                                      in their environment to reduce costs and improve services but often remain
                                                      dissatisfied as the existing solutions fail to deliver in today’s highly dynamic
                                                      business environment. A recent AMR research titled, affirms, this fact. The
                                                      report cites, “In the area of Supply Chain Visibility, what vendors provide
                                                      and what businesses need don’t match. As a result Supply Chain Visibility
                                                      projects to support agile supply networks are at high risk for failure.
                                                      Achieving Supply Change Visibility excellence has thus become a major
                                                      concern for supply chain leaders. Some of the major challenges faced by
                                                      supply chain leaders are:
                                                      1)	 Collapsing demand, unreliable forecasts and increasingly volatile risks
                                                      2)	 Increasing complexity of global sourcing and aggressive global
                                                          competition leading to longer lead times and more pipeline inventory;
                                                          and
                                                      3)	 The immediate need to control downstream and upstream logistics
                                                      To address the above-mentioned challenges organizations need a dynamic
                                                      and robust SCV framework that can enable quick response to change as
                                                      well as improve and strengthen the organizational supply chain by making
                                                      data readily available to all stakeholders, including the customer.
                                                      The need for Supply Chain Visibility framework is especially great for
                                                      manufacturing companies who are moving from a ‘push’ supply chain
                                                      model to a ‘demand-driven’ supply chain model. A SCV framework such as
                                                      that of HCL can address the needs of CPG manufacturers and retailers by:
                                                      •	 Synchronizing supply and demand while balancing inventory exposure
                                                         across the supply chain utilizing planning software;
                                                      •	 Streamlining and increasing effectiveness of global sourcing and supplier
                                                         management, including developing deeper supplier relationships with
                                                         more sophisticated integration; and
                                                      •	 Enabling real-time collaboration and data exchange between suppliers,
                                                         distributers & retailers

                                                      Supply Chain Visibility: Definition and Key Trends
                                                      Every business dependent on a supply chain needs SCV — as it is related to
                                                      business intelligence — to manage its increasingly complex supply chain. It is
                                                      not just the quantum of visibility that matters but also the kind of visibility.
                                                      SCV should provide appropriate and timely information to businesses to
                                                      take on the key challenges of the increasingly complex supply chain world.




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
3
Supply Chain Visibility Roadmap   |   July 2012




                                                      Understanding the Key Trends in Supply Chain Visibility

                                                      •	 The supply chain organization needs to be treated as a single integrated
                                                         organization to effectively support all supply chain functions
                                                      •	 Risk and opportunity management should span the entire supply chain
                                                         – from demand planning to expansion of manufacturing capacity –
                                                         including the key partners
                                                      •	 End-to-end supply chain cost optimization is critical. Customer
                                                         requirements and competitors call for regionally tailored supply chains
                                                         and product offerings
                                                      •	 Securing growth requires truly global customer and supplier networks.	
                                                         The future of global supply chains depends heavily on international
                                                         customers and customized products. An efficiently managed global
                                                         supply chain is the need of the hour
                                                      •	 Supply chain volatility and uncertainty have permanently increased.
                                                         Market transparency and greater price sensitivity have led to lower
                                                         customer loyalty. Product commoditization reduces true differentiation
                                                         in the consumer and business-to-business (B2B) environments
                                                      Businesses need to catch up with the above-mentioned trends and the top
                                                      pressures (depicted in the graph below) in SCV to achieve excellence.




                                                                              Caption: Top Pressures to Improve Supply Chain Visibility

                                                      Source: Supply Chain Visibility Excellence: Mastering Complexity and Landed Costs,
                                                      MarchAberdeen Group


                                                      SCV Framework: The Need
                                                      In the prevalent dynamic environment, organizations are continually
                                                      striving to meet the ever growing demands of their clients and consumers.
                                                      They need accurate and constant visibility in their supply chain. The
                                                      transparency thus achieved can be passed on to the clients and consumers to
                                                      have an efficient supply chain.




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
4
Supply Chain Visibility Roadmap   |   July 2012




                                                      Customers today are not only hopping channels, but are switching from
                                                      one retailer to another for better price and service. This has added to the
                                                      demand fluctuations making it vital for organizations to make real-time
                                                      adjustments in their supply chains or else they would end-up with unwanted
                                                      situations such as stock outs or excess inventory.
                                                      Most of organizations have adopted just-in-time (JIT) strategy to significantly
                                                      reduce their inventory costs. While JIT eliminates dependence on supply
                                                      chain partners, just-in-case (JIC) strategy does the exact opposite; it increases
                                                      the dependence. A delay of few hours or even few days in supplies by any
                                                      partner could potentially disrupt operations. To counter such challenges,
                                                      organizations must have the capability to spot the problems and take
                                                      appropriate corrective actions in real time.
                                                      There is a critical business need to obtain real-time visibility across the
                                                      supply chain — to constantly monitor supply chain activities — to identify
                                                      problems and ensure business continuity.

                                                      Supply Chain Visibility: The Key Challenges
                                                      The emergence of the consumer-driven value chain and globalization of
                                                      supply chain networks have increased the complexity and the need for
                                                      supply chain-wide visibility. The key challenges witnessed by the retail
                                                      consumer packaged goods industry are:
                                                      •	 Rising Supply Chain Costs: According to the recent Aberdeen Survey,
                                                         growing supply chain complexity is the top business pressure leading
                                                         to increased supply chain cost. The manufacturing companies are
                                                         specifically facing this challenge because of their higher propensity
                                                         than other industries to outsource production and distribution; hence
                                                         tracking it becomes more critical. Without detailed and effective supply
                                                         chain visibility, it is difficult to control supply chain costs, inventory
                                                         levels and lead times, or react effectively to ever-increasing variability and
                                                         disruptions
                                                      •	 Demand Prediction & Synchronization: With rapidly changing trends and
                                                         consumer preferences, it has become a challenge to predict consumer
                                                         demands and consistently deliver higher overall service levels. The
                                                         demand planners rely heavily on Supply Chain Visibility to match
                                                         supply and demand. It is crucial for planners to get timely and accurate
                                                         updates regarding product availability
                                                      •	 Holistic Supply Chain Visibility: Today retailers & CPG enterprises seek
                                                         visibility from operational as well as strategic levels to have an efficient
                                                         supply chain. Though benefits of gaining Supply Chain Visibility into
                                                         critical elements across the end-to-end logistics network for improving
                                                         cost and service are evident to the industry, but the solutions till date
                                                         have not been effective. While, in recent past, warehouse management
                                                         systems may have been able to give inventory visibility for in house
                                                         stores, the true holistic Supply Chain Visibility is still a challenge for
                                                         most companies



                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
5
Supply Chain Visibility Roadmap   |   July 2012




                                                      •	 Supply Chain Metrics: A holistic supply chain visibility provides
                                                         real-time, accurate, and usable information about product, processes,
                                                         and flows. It streamlines the information flow by avoiding blind spots
                                                         and data-sharing delays. Seeking such information, which can be readily
                                                         accessible from anywhere on the supply chain flow for decision makers,
                                                         has been a challenge. The need of the hour is an effective supply chain
                                                         visibility framework that can provide timely insights into key supply
                                                         chain metrics

                                                      Supply Chain Visibility Solution: Deployment Methodology
                                                      To deploy a successful supply chain visibility solution, organizations need
                                                      to think through the best approach. In our opinion, a successful supply
                                                      chain visibility roadmap and solution must follow the 5-step methodology
                                                      detailed below.




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
6
Supply Chain Visibility Roadmap   |   July 2012




                                                      Understand the Supply Chain Network
                                                      The first and the foremost step before deploying a Supply Chain Visibility
                                                      solution is: to understand the network and identify the nodes. For each
                                                      identified node, capture the list of processes executed by them. And then
                                                      document various activities/ tasks performed by the identified nodes to
                                                      facilitate the movement of goods and information within the network.
                                                      Proceed cautiously through the step to ensure that only the activities
                                                      pertaining to the supply chain are documented.




                                                      Identify Level-1 Strategic KPIs
                                                      Real-time information monitoring contributes effectively to decision
                                                      making. Thus it is important that the implemented Supply Chain Visibility
                                                      solution monitors the strategic key performance indicators (KPIs): the main
                                                      objectives of management; the nature of supply chain; the kind of business;
                                                      and the requirements of various partners.
                                                      The following table depicts top 5 KPIs of an effecint supply chain.




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
7
Supply Chain Visibility Roadmap   |   July 2012




                                                          Performance
                                                                                                       Definition                                 Level-1 Metric
                                                            Attribute
                                                       Supply Chain                       The performance of the                            •	 Delivery
                                                       Delivery                           supply chain in delivering:                          Performance
                                                       Reliability                        the right product, to                             •	 Fill Rates
                                                                                          the right place, at the
                                                                                          right time, in the perfect                        •	 Perfect Order
                                                                                          condition and packaging,                             Fulfilment
                                                                                          in the right quantity, with
                                                                                          the proper documentation
                                                                                          to the right customer.
                                                       Supply Chain                       The velocity at which                             •	 Order Fulfilment
                                                       Responsiveness                     the supply chain provides                            Lead Times
                                                                                          products to the customer.
                                                       Supply Chain                       The agility of a supply                           •	 Supply Chain
                                                       Flexibility                        chain in responding to                               Response Time
                                                                                          marketplace changes                               •	 Production
                                                                                          to gain or maintain                                  Flexibility
                                                                                          competitive advantage.
                                                       Supply Chain                       The costs associated with                         •	 Cost of Goods Sold
                                                       Costs                              supply chain operations.                          •	 Total Supply Chain
                                                                                                                                               Management Costs
                                                                                                                                            •	 Value-Added
                                                                                                                                               Productivity
                                                                                                                                            •	 Warranty/ Returns
                                                                                                                                               Processing Costs


                                                       Supply                             The effectiveness of an                           •	 Cash-to-Cash
                                                       Chain Asset                        organization in managing                             Cycle Time
                                                       Management                         assets to support demand                          •	 Inventory Days
                                                       Efficiency                         satisfaction. This includes                          of Supply
                                                                                          the management of all
                                                                                          assets: fixed as well as                          •	 Asset Turns
                                                                                          working capital.




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
8
Supply Chain Visibility Roadmap   |   July 2012




                                                      Study the Extended Supply Chain Issues
                                                      Identify the constraints and issues faced in the supply chain and devise
                                                      strategies to address them. Some examples on what are the typical constraints
                                                      and issues faced in the supply chain network and what customers really
                                                      want are listed in the table below.

                                                                                    Typical                                                                  Voice of
                                                                                                                           Issues
                                                                                  Constraints                                                               Customer
                                                       Demand               •	 Lack of visibility               •	 Frequent                          •	 Decrease in
                                                       Planning                into future                         promotions and                       inventory
                                                                               customer needs                      markdowns                            obsolescence
                                                                            •	 Lack of quality                  •	 Seasonal                             and mark
                                                                               point of sale                       demands                              downs
                                                                               (POS) data                       •	 Low forecast                      •	 Increase
                                                                                                                   accuracy                             customer
                                                                                                                                                        service levels
                                                                                                                                                        and fill rates
                                                       Supply               •	 Planning assumes •	 Replenishment    •	 Reduce
                                                       Planning                fixed lead times    & distribution      inventory cost
                                                                            •	 Simplistic       •	 Inventory        •	 Expedite global
                                                                               inventory           management          supply chain
                                                                               planning leads      (trade off          coordination
                                                                               to overstock and    between          •	 Sharing
                                                                               loss of sales       safety stock vs     information
                                                                                                   customer service    across the
                                                                                                   level)              supply chain
                                                                                                •	 Inventory
                                                                                                   rebalancing
                                                                                                   between
                                                                                                   distribution
                                                                                                   centres
                                                                                                •	 Manufacturing
                                                                                                •	 Product sourcing
                                                                                                •	 Seasonal build
                                                                                                   ahead (for e.g.
                                                                                                   high demand
                                                                                                   during Christmas
                                                                                                   season)




                                                      © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
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Supply Chain Visibility Roadmap   |   July 2012




                                                                                     Typical                                                                  Voice of
                                                                                                                            Issues
                                                                                   Constraints                                                               Customer
                                                        Collabora- •	 Not all entities   •	 Collaborative     •	 On-time and
                                                        tion          are technically       replenishment        Responsive
                                                                      mature                panning for          delivery
                                                                   •	 Not all entities      geographically    •	 Reduction
                                                                      are ready to share    separate             in inventory
                                                                      information           distribution         through
                                                                                            centres and          improved long
                                                                                            plants               term visibility
                                                                                         •	 Collaborating on •	 Reduction of
                                                                                            demand which is      costs – reduced
                                                                                            over a long lead     obsolescence,
                                                                                            time                 better planned
                                                                                         •	 Collaborating for    promotions,
                                                                                            joint promotions     reduction of
                                                                                                                 markdowns and
                                                                                                                 expedites
                                                        Allocation: •	 Allocating      •	 Tier structure/                                             •	 Increased
                                                        disag-         material across    partners tend                                                  customer
                                                        gregating      multiple           to get changed                                                 service and
                                                        expected       dimensions         (how to allocate                                               retention
                                                        supply/        (customers,        constrained                                                 •	 Increased order
                                                        commits        product and        supply in such a                                               promising
                                                        against        time) and also     scenario)                                                      accuracy –
                                                        anticipated    account for                                                                       Hitting Promise
                                                        demand         customer demand                                                                   Dates in
                                                                       fulfilment                                                                        Execution
                                                                       strategies
                                                                    •	 Order promising
                                                                       constraints
                                                                       include
                                                                       accounting for
                                                                       real lead times
                                                                       to customer,
                                                                       accounting
                                                                       for alternate
                                                                       fulfilment
                                                                       locations
                                                                       and alternate
                                                                       products




                                                       © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
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Supply Chain Visibility Roadmap   |   July 2012




                                                       Diagnose the Issues and Frame a Solution Roadmap
                                                       Careful examination of the issues raised and information gathered reveals
                                                       that Supply Chain Visibility should have the capability to: track and trace
                                                       the entire supply chain; sense and respond to important events; conduct
                                                       predictive analysis; and analyze and decide the supply chain behavior. It
                                                       may directly address many of the supply chain management issues. Supply
                                                       Chain Visibility can improve delivery reliability, increase inventory turns
                                                       and reduce slow moving stocks.




                                                                          Caption: Key components of an effective and efficient SCV solution

                                                       Supply Chain Visibility Solution Framework
                                                       Keeping in mind the challenges, HCL has devised a framework to build a
                                                       flexible, agile, reliable and responsive supply chain.
                                                       It covers the data flow that span across the entire network, events/alerts
                                                       generation, and measurement of various KPIs.




                                                       © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
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Supply Chain Visibility Roadmap   |   July 2012




                                                       HCL’s Supply Chain Visibility framework enables:
                                                       •	 Collaboration across the departments and extended supply chain network
                                                          of multiple trading partners
                                                       •	 Information logistics related to inventory locations, shipments, actual
                                                          demand & potential demand, order status, manufacturing status available
                                                          in a dashboard across the extended supply chain
                                                       •	 Comparison of the planned, actual and projected (expected) inventory,
                                                          order status as well assales
                                                       •	 Administrators to generate alerts for supply chain events. The alerts will
                                                          prompt users to take proactive actions that would help in:
                                                          –– Reducing loss of potential sales
                                                           –– More efficient allocation and distribution of FG inventory
                                                           –– Proactive planning in case of potential non-availability of critical
                                                              components



                                                       © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
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Supply Chain Visibility Roadmap   |   July 2012




                                                       •	 Intelligent reporting of supply chain behaviour. It facilitates supply chain
                                                          managers to take proactive actions for a responsive supply chain, better
                                                          delivery reliability and more efficient use of assets

                                                       Key Differentiators of HCL’s SCV Framework

                                                       •	 The framework is technology-agnostic and can be applied to all packages
                                                          available in the market
                                                       •	 It helps in improving visibility/ B2B connectivity into supplier-side
                                                          processes
                                                       •	 Streamlines processes for easier monitoring
                                                       •	 Improves internal cross-departmental visibility
                                                       •	 Improves timelines and accuracy of data exchange about supply
                                                          chain transactions

                                                       Business Benefits
                                                       The potential benefits of an effective & holistic supply chain visibility
                                                       framework can be observed at three different levels: operational level,
                                                       customer level and enterprise level.

                                                       At operational level:

                                                       •	 Collaborative demand planning
                                                       •	 Sales and operations planning (S&OP)
                                                       •	 Synchronizing activities through information sharing
                                                       •	 Increase operational productivity and accuracy through a system
                                                          enhanced by granular tracking and validation
                                                       •	 Increase supply chain responsiveness
                                                       •	 Reduce cost of inventory
                                                       •	 Increased order promising accuracy
                                                       •	 Efficient inventory turnover
                                                       •	 Reducing inbound lead time variability
                                                       •	 Dynamic reallocation of in-transit inventory

                                                       At enterprise level:

                                                       •	 Increase in enterprise efficiency through enhanced supply network
                                                          visibility and risk management around quality and time-to-delivery issues
                                                       •	 Leverage supply chain visibility for forecasting, tracking and tracing and
                                                          vendor managed inventory to ensure right products and inventory in
                                                          right place at the right time, ultimately helping an enterprise to deliver
                                                          high-quality customer service
                                                       •	 Enabling a collaborative framework for internal and external collaboration
                                                          across the supply chain


                                                       © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
13
Supply Chain Visibility Roadmap   |   July 2012




                                                       •	 Improve enterprise revenue management

                                                       At customer level:

                                                       •	 Increased customer service level
                                                       •	 Improved delivery

                                                       Success Story
                                                       Leading Global CPG Manufacturer Leverages HCL’s SCV Framework to
                                                       Achieve Supply Chain Resilience

                                                       About the Customer

                                                       The Challenges:
                                                       The client was not receiving its raw material at the right time and at the
                                                       right location, thereby leading to commitment failure.
                                                       The supply chain planners did not have real-time visibility into supply
                                                       chain events, and couldn’t plan alternative means to get the requisite
                                                       inventory and ensure order completion. This adversely impacted on the
                                                       customer’sdelivery reliability.

                                                       The HCL Solution
                                                       The HCL team developed a supply chain dashboard on top of the legacy ERP/
                                                       inventory systems. The dashboard provided customer with the visibility
                                                       and projected inventory calculations of the material in a tabular format.
                                                       This enabled the supply chain planners of the organization to understand
                                                       and manage likely shortage of material. The information extracted through
                                                       the dashboard enabled the supply chain planner:
                                                       •	 Expedite the supplier
                                                       •	 Look at alternate sources
                                                       •	 Re-look at priorities
                                                       •	 Provide advance intimation to customer with new commit dates
                                                       The supply chain dashboard provides insight into potential material shortage
                                                       in future and thereby alerts the planner to to fix the potential problems.
                                                       Below has been shown one of the views of Supply Chain Dashboard, where
                                                       •	 d1, d2, depicts Day1, Day2 respectively
                                                       •	 w1, w2 depicts Week 1, Week 2 respectively
                                                       •	 Expected receipts is the commits made by the supplier
                                                       •	 The Red color indicates that the Inventory Level is either zero or below
                                                          zero and an alert is generated to the respective Planner to take appropriate
                                                          action




                                                       © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
14
Supply Chain Visibility Roadmap   |   July 2012




                                                       •	 The yellow color indicates that the Inventory Level is above maximum
                                                          stock level (it is having extra material than what is required and is thus
                                                          locking money and space) and an alert is generated to the respective
                                                          Planner to take appropriate action




                                                       Conclusion
                                                       The retail and consumer packaged goods industries are adopting Supply
                                                       Chain Visibility as a concept. An SCV framework can add value through
                                                       the addition of standardized supply chain metrics, increased continuity in
                                                       definitions and terminology across the supply chain, and is helping industries
                                                       increase their ROI leveraging existing investments in the currently deployed
                                                       IT environment. The SCV framework developed by HCL can enable
                                                       organizations achieve supply chain resiliency and the below mentioned
                                                       benefits:
                                                       •	 Synchronize the details of promotional events to alleviate out-of-stock
                                                          and excess inventory situations
                                                       •	 Co-ordinate demand planning between retailers and suppliers to increase
                                                          forecast visibility; improve forecast accuracy results; and the overall
                                                          trading relationships; and
                                                       •	 Carefully plan prior to release and close monitoring of sales results, to
                                                          have higher supply chain responsiveness, increased sales, and reduced
                                                          inventory




                                                       About the Author

                                                       Ranjan Arora
                                                       Associate General Manager
                                                                        Ranjan Arora is an expert in supply chain management
                                                                        who has led supply chain transformation projects for
                                                                        many Fortune 500 companies in his career span of over
                                                                        12 years. He also holds a Production and Inventory
                                                                        Management (CPIM) certification from The Association
                                                                        for Operations Management(APICS), USA.


                                                       © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
15
ENGINEERING AND
R&D SERVICES

CUSTOM APPLICATION
SERVICES

ENTERPRISE APPLICATION
SERVICES

ENTERPRISE
TRANSFORMATION SERVICES

IT INFRASTRUCTURE
MANAGEMENT
                          About HCL
BUSINESS PROCESS
OUTSOURCING               About HCL Technologies
                          HCL Technologies is a leading global IT services company, working with
                          clients in the areas that impact and redefine the core of their businesses.
                          Since its inception into the global landscape after its IPO in 1999, HCL
                          focuses on ‘transformational outsourcing’, underlined by innovation
                          and value creation, and offers integrated portfolio of services including
                          software-led IT solutions, remote infrastructure management, engineering
                          and R&D services and BPO. HCL leverages its extensive global offshore
                          infrastructure and network of offices in 26 countries to provide holistic,
                          multi-service delivery in key industry verticals including Financial Services,
                          Manufacturing, Consumer Services, Public Services and Healthcare. HCL
                          takes pride in its philosophy of ‘Employees First, Customers Second’ which
                          empowers our 84,319 transformers to create a real value for the customers.
                          HCL Technologies, along with its subsidiaries, had consolidated revenues
                          of US$ 4.2 billion (Rs 21,031 crores), as on 30 June 2012 (on FY’12 basis).
                          For more information, please visit www.hcltech.com

                          About HCL Enterprise
                          HCL is a $6.2 billion leading global technology and IT enterprise comprising
                          two companies listed in India – HCL Technologies and HCL Infosystems.
                          Founded in 1976, HCL is one of India’s original IT garage start-ups. A
                          pioneer of modern computing, HCL is a global transformational enterprise
                          today. Its range of offerings includes product engineering, custom &
                          package applications, BPO, IT infrastructure services, IT hardware,
                          systems integration, and distribution of information and communications
                          technology (ICT) products across a wide range of focused industry
                          verticals. The HCL team consists of over 90,000 professionals of diverse
                          nationalities, who operate from 31 countries including over 500 points
                          of presence in India. HCL has partnerships with several leading global
                          1000 firms, including leading IT and technology firms. For more on HCL,
                          please visit www.hcl.com

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HCLT Brochure: Unleash Supply Chain Potential

  • 1. Supply Chain Visibility Roadmap Author Ranjan Arora WHITE PAPER J U LY 2 0 1 2
  • 2. Supply Chain Visibility Roadmap | July 2012 TABLE OF CONTENTS Abstract 3 Supply Chain Visibility: Definition and Key Trends 3 SCV Framework: The Need 4 Supply Chain Visibility: The Key Challenges 5 Supply Chain Visibility Solution: Deployment Methodology 6 Business Benefits 13 Conclusion 15 About the Author 15 © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 2
  • 3. Supply Chain Visibility Roadmap | July 2012 Abstract The benefits of Supply Chain Visibility (SCV) have been known for over a decade. Enterprises have been deploying Supply Chain Visibility solutions in their environment to reduce costs and improve services but often remain dissatisfied as the existing solutions fail to deliver in today’s highly dynamic business environment. A recent AMR research titled, affirms, this fact. The report cites, “In the area of Supply Chain Visibility, what vendors provide and what businesses need don’t match. As a result Supply Chain Visibility projects to support agile supply networks are at high risk for failure. Achieving Supply Change Visibility excellence has thus become a major concern for supply chain leaders. Some of the major challenges faced by supply chain leaders are: 1) Collapsing demand, unreliable forecasts and increasingly volatile risks 2) Increasing complexity of global sourcing and aggressive global competition leading to longer lead times and more pipeline inventory; and 3) The immediate need to control downstream and upstream logistics To address the above-mentioned challenges organizations need a dynamic and robust SCV framework that can enable quick response to change as well as improve and strengthen the organizational supply chain by making data readily available to all stakeholders, including the customer. The need for Supply Chain Visibility framework is especially great for manufacturing companies who are moving from a ‘push’ supply chain model to a ‘demand-driven’ supply chain model. A SCV framework such as that of HCL can address the needs of CPG manufacturers and retailers by: • Synchronizing supply and demand while balancing inventory exposure across the supply chain utilizing planning software; • Streamlining and increasing effectiveness of global sourcing and supplier management, including developing deeper supplier relationships with more sophisticated integration; and • Enabling real-time collaboration and data exchange between suppliers, distributers & retailers Supply Chain Visibility: Definition and Key Trends Every business dependent on a supply chain needs SCV — as it is related to business intelligence — to manage its increasingly complex supply chain. It is not just the quantum of visibility that matters but also the kind of visibility. SCV should provide appropriate and timely information to businesses to take on the key challenges of the increasingly complex supply chain world. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 3
  • 4. Supply Chain Visibility Roadmap | July 2012 Understanding the Key Trends in Supply Chain Visibility • The supply chain organization needs to be treated as a single integrated organization to effectively support all supply chain functions • Risk and opportunity management should span the entire supply chain – from demand planning to expansion of manufacturing capacity – including the key partners • End-to-end supply chain cost optimization is critical. Customer requirements and competitors call for regionally tailored supply chains and product offerings • Securing growth requires truly global customer and supplier networks. The future of global supply chains depends heavily on international customers and customized products. An efficiently managed global supply chain is the need of the hour • Supply chain volatility and uncertainty have permanently increased. Market transparency and greater price sensitivity have led to lower customer loyalty. Product commoditization reduces true differentiation in the consumer and business-to-business (B2B) environments Businesses need to catch up with the above-mentioned trends and the top pressures (depicted in the graph below) in SCV to achieve excellence. Caption: Top Pressures to Improve Supply Chain Visibility Source: Supply Chain Visibility Excellence: Mastering Complexity and Landed Costs, MarchAberdeen Group SCV Framework: The Need In the prevalent dynamic environment, organizations are continually striving to meet the ever growing demands of their clients and consumers. They need accurate and constant visibility in their supply chain. The transparency thus achieved can be passed on to the clients and consumers to have an efficient supply chain. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 4
  • 5. Supply Chain Visibility Roadmap | July 2012 Customers today are not only hopping channels, but are switching from one retailer to another for better price and service. This has added to the demand fluctuations making it vital for organizations to make real-time adjustments in their supply chains or else they would end-up with unwanted situations such as stock outs or excess inventory. Most of organizations have adopted just-in-time (JIT) strategy to significantly reduce their inventory costs. While JIT eliminates dependence on supply chain partners, just-in-case (JIC) strategy does the exact opposite; it increases the dependence. A delay of few hours or even few days in supplies by any partner could potentially disrupt operations. To counter such challenges, organizations must have the capability to spot the problems and take appropriate corrective actions in real time. There is a critical business need to obtain real-time visibility across the supply chain — to constantly monitor supply chain activities — to identify problems and ensure business continuity. Supply Chain Visibility: The Key Challenges The emergence of the consumer-driven value chain and globalization of supply chain networks have increased the complexity and the need for supply chain-wide visibility. The key challenges witnessed by the retail consumer packaged goods industry are: • Rising Supply Chain Costs: According to the recent Aberdeen Survey, growing supply chain complexity is the top business pressure leading to increased supply chain cost. The manufacturing companies are specifically facing this challenge because of their higher propensity than other industries to outsource production and distribution; hence tracking it becomes more critical. Without detailed and effective supply chain visibility, it is difficult to control supply chain costs, inventory levels and lead times, or react effectively to ever-increasing variability and disruptions • Demand Prediction & Synchronization: With rapidly changing trends and consumer preferences, it has become a challenge to predict consumer demands and consistently deliver higher overall service levels. The demand planners rely heavily on Supply Chain Visibility to match supply and demand. It is crucial for planners to get timely and accurate updates regarding product availability • Holistic Supply Chain Visibility: Today retailers & CPG enterprises seek visibility from operational as well as strategic levels to have an efficient supply chain. Though benefits of gaining Supply Chain Visibility into critical elements across the end-to-end logistics network for improving cost and service are evident to the industry, but the solutions till date have not been effective. While, in recent past, warehouse management systems may have been able to give inventory visibility for in house stores, the true holistic Supply Chain Visibility is still a challenge for most companies © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 5
  • 6. Supply Chain Visibility Roadmap | July 2012 • Supply Chain Metrics: A holistic supply chain visibility provides real-time, accurate, and usable information about product, processes, and flows. It streamlines the information flow by avoiding blind spots and data-sharing delays. Seeking such information, which can be readily accessible from anywhere on the supply chain flow for decision makers, has been a challenge. The need of the hour is an effective supply chain visibility framework that can provide timely insights into key supply chain metrics Supply Chain Visibility Solution: Deployment Methodology To deploy a successful supply chain visibility solution, organizations need to think through the best approach. In our opinion, a successful supply chain visibility roadmap and solution must follow the 5-step methodology detailed below. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 6
  • 7. Supply Chain Visibility Roadmap | July 2012 Understand the Supply Chain Network The first and the foremost step before deploying a Supply Chain Visibility solution is: to understand the network and identify the nodes. For each identified node, capture the list of processes executed by them. And then document various activities/ tasks performed by the identified nodes to facilitate the movement of goods and information within the network. Proceed cautiously through the step to ensure that only the activities pertaining to the supply chain are documented. Identify Level-1 Strategic KPIs Real-time information monitoring contributes effectively to decision making. Thus it is important that the implemented Supply Chain Visibility solution monitors the strategic key performance indicators (KPIs): the main objectives of management; the nature of supply chain; the kind of business; and the requirements of various partners. The following table depicts top 5 KPIs of an effecint supply chain. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 7
  • 8. Supply Chain Visibility Roadmap | July 2012 Performance Definition Level-1 Metric Attribute Supply Chain The performance of the • Delivery Delivery supply chain in delivering: Performance Reliability the right product, to • Fill Rates the right place, at the right time, in the perfect • Perfect Order condition and packaging, Fulfilment in the right quantity, with the proper documentation to the right customer. Supply Chain The velocity at which • Order Fulfilment Responsiveness the supply chain provides Lead Times products to the customer. Supply Chain The agility of a supply • Supply Chain Flexibility chain in responding to Response Time marketplace changes • Production to gain or maintain Flexibility competitive advantage. Supply Chain The costs associated with • Cost of Goods Sold Costs supply chain operations. • Total Supply Chain Management Costs • Value-Added Productivity • Warranty/ Returns Processing Costs Supply The effectiveness of an • Cash-to-Cash Chain Asset organization in managing Cycle Time Management assets to support demand • Inventory Days Efficiency satisfaction. This includes of Supply the management of all assets: fixed as well as • Asset Turns working capital. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 8
  • 9. Supply Chain Visibility Roadmap | July 2012 Study the Extended Supply Chain Issues Identify the constraints and issues faced in the supply chain and devise strategies to address them. Some examples on what are the typical constraints and issues faced in the supply chain network and what customers really want are listed in the table below. Typical Voice of Issues Constraints Customer Demand • Lack of visibility • Frequent • Decrease in Planning into future promotions and inventory customer needs markdowns obsolescence • Lack of quality • Seasonal and mark point of sale demands downs (POS) data • Low forecast • Increase accuracy customer service levels and fill rates Supply • Planning assumes • Replenishment • Reduce Planning fixed lead times & distribution inventory cost • Simplistic • Inventory • Expedite global inventory management supply chain planning leads (trade off coordination to overstock and between • Sharing loss of sales safety stock vs information customer service across the level) supply chain • Inventory rebalancing between distribution centres • Manufacturing • Product sourcing • Seasonal build ahead (for e.g. high demand during Christmas season) © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 9
  • 10. Supply Chain Visibility Roadmap | July 2012 Typical Voice of Issues Constraints Customer Collabora- • Not all entities • Collaborative • On-time and tion are technically replenishment Responsive mature panning for delivery • Not all entities geographically • Reduction are ready to share separate in inventory information distribution through centres and improved long plants term visibility • Collaborating on • Reduction of demand which is costs – reduced over a long lead obsolescence, time better planned • Collaborating for promotions, joint promotions reduction of markdowns and expedites Allocation: • Allocating • Tier structure/ • Increased disag- material across partners tend customer gregating multiple to get changed service and expected dimensions (how to allocate retention supply/ (customers, constrained • Increased order commits product and supply in such a promising against time) and also scenario) accuracy – anticipated account for Hitting Promise demand customer demand Dates in fulfilment Execution strategies • Order promising constraints include accounting for real lead times to customer, accounting for alternate fulfilment locations and alternate products © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 10
  • 11. Supply Chain Visibility Roadmap | July 2012 Diagnose the Issues and Frame a Solution Roadmap Careful examination of the issues raised and information gathered reveals that Supply Chain Visibility should have the capability to: track and trace the entire supply chain; sense and respond to important events; conduct predictive analysis; and analyze and decide the supply chain behavior. It may directly address many of the supply chain management issues. Supply Chain Visibility can improve delivery reliability, increase inventory turns and reduce slow moving stocks. Caption: Key components of an effective and efficient SCV solution Supply Chain Visibility Solution Framework Keeping in mind the challenges, HCL has devised a framework to build a flexible, agile, reliable and responsive supply chain. It covers the data flow that span across the entire network, events/alerts generation, and measurement of various KPIs. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 11
  • 12. Supply Chain Visibility Roadmap | July 2012 HCL’s Supply Chain Visibility framework enables: • Collaboration across the departments and extended supply chain network of multiple trading partners • Information logistics related to inventory locations, shipments, actual demand & potential demand, order status, manufacturing status available in a dashboard across the extended supply chain • Comparison of the planned, actual and projected (expected) inventory, order status as well assales • Administrators to generate alerts for supply chain events. The alerts will prompt users to take proactive actions that would help in: –– Reducing loss of potential sales –– More efficient allocation and distribution of FG inventory –– Proactive planning in case of potential non-availability of critical components © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 12
  • 13. Supply Chain Visibility Roadmap | July 2012 • Intelligent reporting of supply chain behaviour. It facilitates supply chain managers to take proactive actions for a responsive supply chain, better delivery reliability and more efficient use of assets Key Differentiators of HCL’s SCV Framework • The framework is technology-agnostic and can be applied to all packages available in the market • It helps in improving visibility/ B2B connectivity into supplier-side processes • Streamlines processes for easier monitoring • Improves internal cross-departmental visibility • Improves timelines and accuracy of data exchange about supply chain transactions Business Benefits The potential benefits of an effective & holistic supply chain visibility framework can be observed at three different levels: operational level, customer level and enterprise level. At operational level: • Collaborative demand planning • Sales and operations planning (S&OP) • Synchronizing activities through information sharing • Increase operational productivity and accuracy through a system enhanced by granular tracking and validation • Increase supply chain responsiveness • Reduce cost of inventory • Increased order promising accuracy • Efficient inventory turnover • Reducing inbound lead time variability • Dynamic reallocation of in-transit inventory At enterprise level: • Increase in enterprise efficiency through enhanced supply network visibility and risk management around quality and time-to-delivery issues • Leverage supply chain visibility for forecasting, tracking and tracing and vendor managed inventory to ensure right products and inventory in right place at the right time, ultimately helping an enterprise to deliver high-quality customer service • Enabling a collaborative framework for internal and external collaboration across the supply chain © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 13
  • 14. Supply Chain Visibility Roadmap | July 2012 • Improve enterprise revenue management At customer level: • Increased customer service level • Improved delivery Success Story Leading Global CPG Manufacturer Leverages HCL’s SCV Framework to Achieve Supply Chain Resilience About the Customer The Challenges: The client was not receiving its raw material at the right time and at the right location, thereby leading to commitment failure. The supply chain planners did not have real-time visibility into supply chain events, and couldn’t plan alternative means to get the requisite inventory and ensure order completion. This adversely impacted on the customer’sdelivery reliability. The HCL Solution The HCL team developed a supply chain dashboard on top of the legacy ERP/ inventory systems. The dashboard provided customer with the visibility and projected inventory calculations of the material in a tabular format. This enabled the supply chain planners of the organization to understand and manage likely shortage of material. The information extracted through the dashboard enabled the supply chain planner: • Expedite the supplier • Look at alternate sources • Re-look at priorities • Provide advance intimation to customer with new commit dates The supply chain dashboard provides insight into potential material shortage in future and thereby alerts the planner to to fix the potential problems. Below has been shown one of the views of Supply Chain Dashboard, where • d1, d2, depicts Day1, Day2 respectively • w1, w2 depicts Week 1, Week 2 respectively • Expected receipts is the commits made by the supplier • The Red color indicates that the Inventory Level is either zero or below zero and an alert is generated to the respective Planner to take appropriate action © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 14
  • 15. Supply Chain Visibility Roadmap | July 2012 • The yellow color indicates that the Inventory Level is above maximum stock level (it is having extra material than what is required and is thus locking money and space) and an alert is generated to the respective Planner to take appropriate action Conclusion The retail and consumer packaged goods industries are adopting Supply Chain Visibility as a concept. An SCV framework can add value through the addition of standardized supply chain metrics, increased continuity in definitions and terminology across the supply chain, and is helping industries increase their ROI leveraging existing investments in the currently deployed IT environment. The SCV framework developed by HCL can enable organizations achieve supply chain resiliency and the below mentioned benefits: • Synchronize the details of promotional events to alleviate out-of-stock and excess inventory situations • Co-ordinate demand planning between retailers and suppliers to increase forecast visibility; improve forecast accuracy results; and the overall trading relationships; and • Carefully plan prior to release and close monitoring of sales results, to have higher supply chain responsiveness, increased sales, and reduced inventory About the Author Ranjan Arora Associate General Manager Ranjan Arora is an expert in supply chain management who has led supply chain transformation projects for many Fortune 500 companies in his career span of over 12 years. He also holds a Production and Inventory Management (CPIM) certification from The Association for Operations Management(APICS), USA. © 2012, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved. 15
  • 16. ENGINEERING AND R&D SERVICES CUSTOM APPLICATION SERVICES ENTERPRISE APPLICATION SERVICES ENTERPRISE TRANSFORMATION SERVICES IT INFRASTRUCTURE MANAGEMENT About HCL BUSINESS PROCESS OUTSOURCING About HCL Technologies HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on ‘transformational outsourcing’, underlined by innovation and value creation, and offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 26 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Consumer Services, Public Services and Healthcare. HCL takes pride in its philosophy of ‘Employees First, Customers Second’ which empowers our 84,319 transformers to create a real value for the customers. HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 4.2 billion (Rs 21,031 crores), as on 30 June 2012 (on FY’12 basis). For more information, please visit www.hcltech.com About HCL Enterprise HCL is a $6.2 billion leading global technology and IT enterprise comprising two companies listed in India – HCL Technologies and HCL Infosystems. Founded in 1976, HCL is one of India’s original IT garage start-ups. A pioneer of modern computing, HCL is a global transformational enterprise today. Its range of offerings includes product engineering, custom & package applications, BPO, IT infrastructure services, IT hardware, systems integration, and distribution of information and communications technology (ICT) products across a wide range of focused industry verticals. The HCL team consists of over 90,000 professionals of diverse nationalities, who operate from 31 countries including over 500 points of presence in India. HCL has partnerships with several leading global 1000 firms, including leading IT and technology firms. For more on HCL, please visit www.hcl.com