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Lecture 33 : Strategic Supply Chain Management (Contd.) — Transcript

by NPTEL IIT Kharagpur · 7,417 words · 1,142 segments · language en · Watch on YouTube

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0:01[Music]
0:22[Music]
0:25so hello dear friends welcome back to
0:27nptl online course on Logistics and
0:28Supply Chain management so in the last
0:31session we started discussion on uh
0:33strategic Supply Chain management and uh
0:35we'll continue this discussion in this
0:37session as well and here we'll try to we
0:40talked about uh the Strategic Supply
0:44Chain management process what are the
0:45different steps in that right and in
0:48that we identified that the second very
0:50important step is to analyze the
0:52environment right whether you are
0:54talking about internal or external
0:56environment so here we'll see some of
0:57the models how we can implement that
1:00those models to analyze our uh uh in
1:03internal and internal uh external uh
1:06your environment right and then we'll
1:08talk about supply chain strategy
1:10implementation and we'll uh end with the
1:13uh case study right so quickly now
1:16another step is uh developing supply
1:19chain strategy and when talking about
1:21the strategy is obviously for the future
1:24whenever we are going we are talking
1:25about planning strategy we are making
1:28for future which is very very uncertain
1:30right and complex in that way so that
1:33means you need to understand all the
1:35Dynamics in the environment maybe any
1:38fluctuations coming from the suppliers
1:40end from the manufacturing from the
1:42warehouse distribution channel from the
1:44customer end you need to tap those
1:47things so that means this environment is
1:50a kind of uh you know a kind of uh
1:53your uh Factor very important factor
1:57which will you know force you to every
1:59every day change your strategy right so
2:02it's not that today whatever decision
2:04you have taken will last for longer and
2:07obviously the factors which are
2:08responsible for changing this is
2:11evolving customer demands changing
2:14quickly right technological advancements
2:16are there so any obsolete technology if
2:19you are still producing the same product
2:21no one is going to buy that then global
2:23market dynamics if your local market is
2:26not changing maybe the changing force is
2:28coming from the global market and
2:31sometimes the regulatory authorities
2:32like they banned bs3 petrol engine bs4
2:36diesel engines so now you need to come
2:39up with the next version of engines
2:41right so so that you can ensure the
2:43sustainability the environmental
2:45measures whatever they are targeting
2:47right so to navigate this
2:51environment as well your internal or
2:54your external environment we have some
2:56models when you will apply those models
2:58you can tap those forces es you can uh
3:01predict those forces you can track those
3:04forces right so so that you can develop
3:07your strategy in the dynamic environment
3:10so talking about your external
3:13environment so why this external
3:16environment is important because
3:18whatever we are going to offer in terms
3:20of product or Services where we will
3:22offer obviously we are going to offer to
3:24the external environment right and so
3:28designing that basket of product and
3:30services including all the features
3:32obviously you need to find out what you
3:35can choose to Target and when you are
3:38saying that what you can choose Target
3:40obviously you need to consider all this
3:42external environment factors quickly
3:44we'll go through uh uh let's start with
3:47the economic factors economic factors in
3:50terms of uh you can divide maybe the
3:55consumers maybe the pricing you can talk
3:57about maybe the competition you can talk
4:00about if your consumer you need to find
4:05out where you are targeting it's a kind
4:08of uh uh low customer group medium or
4:12higher class group right so accordingly
4:15you need to design your pricing policy
4:17your Buffet of that product and services
4:20accordingly you will fix your pricing as
4:21well right and then competation if the
4:24Monopoly Market is there so then you can
4:27somewhere you can rule and change the
4:29pricing policies quality measures and
4:31all those things right but yes then if
4:33it is not monopolistic market then you
4:35need to take care of your all other
4:38rivalry how your competitors are
4:40competing with the pricing policies
4:41right then talking about physical this
4:43is talking about your basically supply
4:46chain distribution Network right how
4:48physically you are uh uh delivering the
4:52product placing the product in the
4:54market right either you are going
4:55through online Media or you are going to
4:57retail chain or organized store or
4:59unorganized or or whatever all the
5:01possible ways are open for you social
5:05culture social Dimensions lifestyle
5:08Behavior attitude personality where you
5:11are targeting cultural subcultural
5:14Dimensions all you will demographic
5:16features all you will include while
5:18analyzing the external environment Is it
5:21feasible for a kind of maybe that
5:24particular culture right talking about
5:26the Indian culture is little different
5:28when the Walmart is targeting the US
5:31market that is totally different right
5:33so that is also very important when you
5:35are designing the strategy and analyzing
5:38the your external environment then
5:40Global forces how Global forces are
5:43behaving how Global players are coming
5:45into the Indian market acquiring the
5:47flip cart Walmart came into Indian
5:49market acquiring the 80% stake in flip
5:52cart right how it the customers or the
5:55other industry players will react to
5:57that how Flipkart culture will change in
6:01that way when someone else is acquiring
6:03a kind of Walmart organization right
6:06technological how quickly technology is
6:08changing in that particular product
6:10industry or Services industry so that
6:13you can you know if very shorter life
6:16cycle so you need to ensure the
6:18consumption of the product as well you
6:21need to minimize the inventory so that
6:23that can be consumed if something new
6:25will come obviously all will buy the new
6:27product so your you will be end up with
6:30the huge inventory in your Warehouse
6:32only what are the political legal uh you
6:35know developments any change in the
6:37political rulings and then they will
6:39come up with their special policies some
6:42political parties are targeting on some
6:44particular infrastructure development
6:46some are targeting on maybe more
6:48employment generation different issues
6:50are there how they are contesting the
6:51elections and then they are ruling right
6:54then demographic features already we
6:55talked about in connection with the
6:57social culture Dimensions right how
6:59demographically you need to think about
7:02where you are going to you know uh
7:05distribute your product what is the uh
7:08you can say in that way how you can
7:11characterize that total population which
7:13you are going to Target through your
7:15distribution supply chain Network right
7:18so in then when you fix your external
7:21environment then you need to analyze
7:23within yourself what capabilities
7:26capacities I'm having resources I'm
7:29having maybe there are huge potential
7:31for maybe the technological
7:35innovation right but I know that I'm not
7:38very good with my R&D skills my team is
7:41not having those R&D skills I'm always
7:44kind of follower player I'm a kind of
7:46player who is very good with the
7:49manufacturing maybe someone else would
7:52come up with that product but I'm so
7:54good with manufacturing with assembly
7:57that I can cut down the cost drastically
8:00but I'm not good with R&D skills I'm
8:02maybe I'm good with the inventory
8:04management policies but not very good
8:06with the distribution and Mild delivery
8:08so then you need to analyze your
8:11capabilities competencies and where you
8:14are not competent maybe you can go for
8:16outsourcing so you need to pick what you
8:18can do right now you found what is the
8:22external environment how it is changing
8:24you know the internal environment in
8:26that way now you can go for the
8:28development of the stry now we'll go for
8:31some of the models how we can analyze
8:33our internal how we can analyze our
8:35external uh environment before going to
8:38that how we'll do the internal analysis
8:41will help us to go for the uh
8:43development of your strategic
8:46competitiveness see we are every
8:48organization is having tangible
8:50intangible resources tangible resources
8:52your infrastructure machines or whatever
8:56uh you know the production facilities
8:58all those resources you are having that
9:01is tangible intangible is your brand
9:03image your recipe what secret recipe you
9:05are using how you are your skills right
9:08your soft skills your connection with
9:11the suppliers your connection with the
9:13End customer those are kind of your
9:15intangible resources so putting together
9:18your tangible intangible resources you
9:20will come up with your capabilities you
9:22will develop your capabilities based on
9:23whatever resources you have those
9:26capabilities will be your core
9:28competencies as well Walmart is very
9:30very cost efficient product uh
9:33Distributing uh partner right on the
9:35other hand Zara is a kind of supply
9:37chain which is very very responsible
9:39because they are working with their
9:40Innovation Pro uh strategy where they
9:43are frequently changing their Styles
9:46right then discovering core
9:49competencies once you have set of
9:51capabilities with you if you are not
9:53aware about your core competencies you
9:55can Target how valuable first criteria
9:59is should be valuable customers should
10:01be ready to pay for that that value you
10:03are creating rare that means no other
10:07player is promising that or delivering
10:09that costly to imitate even if someone
10:12wants to copy even then they cannot copy
10:14right and then nonsubstitutable there
10:17should be no substitut substitute of
10:21that particular product or services this
10:23way if you are meeting those four
10:25criteria then you can say you have
10:28developed the core comp competency right
10:30then you talk about value chain analysis
10:33if something you are not good at maybe
10:35R&D let us Outsource R&D maybe marketing
10:39and sales let us Outsource marketing and
10:41Sal maybe I'm not good with the
10:43warehousing let us Outsource that one so
10:45that you need to identify this way when
10:47you will develop these four major
10:50parameters then you will come up with
10:51the competitive advantage that we want
10:54to be leader in that manufacturing right
10:57so let us Source idea let us Source
11:00material raw material let us Source
11:02distribution everything but we are good
11:04with our cooking so let us open the
11:06restaurant and raw material will be
11:09soured by someone else distribution will
11:11be done by Jato swiggy and then we can
11:14just cook and focus on our recipe only
11:18and that will be your strategic
11:19competitiveness that we will be
11:21targeting to the market right so this
11:24already I talked about you can create
11:26value value is that thing which which
11:29will you know ensure the above average
11:32returns means average returns means if
11:35you invest average in the market what
11:37other players are getting that is
11:39average return right so if anything you
11:42are coming up with with new product
11:43design or new feature or maybe updated
11:46technology how it will help you to get
11:49above average returns right so that will
11:53only help if you are creating value to
11:56the customer and value is if something
11:58you are adding at attributes performance
12:00in the product right or any other
12:02feature which customers are ready to pay
12:05right that is the value creating
12:07activity right so then creating
12:10competitive Advantage how you can create
12:12competitive Advantage with your unique
12:15set of skills those tangible intangible
12:18assets which you worked on and converted
12:21into your core competency and then you
12:24developed your core compet
12:26competitiveness based on which is very
12:29rare no one can substitute right there
12:31is no competition very difficult to you
12:35know copy that kind of recipe so then
12:38you are creating the competitive
12:40advantage that will provide you
12:41competitive Advantage right Edge so
12:44first model here is sort analysis which
12:46we can use to you know analyze the
12:48internal as well as external environment
12:51and when we are talking about
12:53streamlining the supply chain operations
12:55so you need to understand your strengths
12:57you need to understand your weakness es
12:59you need to understand what are the
13:01opportunities and threats coming from
13:03the external Market strengths and
13:06weaknesses will be your internal
13:08environment coming from the internal
13:10environment opportunities and threats
13:12obviously will be posed by your external
13:15environment so your robust Foundation is
13:19required for the successful Logistics
13:21and how you can ensure that by
13:23addressing all your weaknesses either
13:26you need to improve those weaknesses and
13:28if you you cannot improve you think that
13:31maybe much investment is required or not
13:34your core competency let us Outsource to
13:37some competent partner so that that
13:40value can be created cost can be
13:42minimized that headache of you know
13:45developing those extra skills can be
13:48minimized then capitalize your strengths
13:52whatever your strengths if you are very
13:54good in delivering F like Amazon is
13:57promising two days deliveries one day
13:59delivery so that if you are promising
14:02your strengths right you can convince
14:04the audience right then livering
14:06opportunities whatever opportunities are
14:08coming in the next Market you need to
14:10leverage on those opportunities by
14:12mitigating the risk coming from the
14:14threats so usually if you go through any
14:16sort analysis these are the basic points
14:19I we'll talk about in context with
14:21supply chain but quickly what are
14:23strengths strengths are usually what you
14:25are good at right your competitors are
14:28not having those things right you have
14:30some extra resources maybe you have very
14:33good relationship with your suppliers
14:35which Walmart is having so always you
14:37are feeding them large orders and
14:39enjoying scales of economy negotiating
14:42the prices heavily right and then
14:45whatever your tangible resources KFC
14:47magd everywhere anywhere any part of the
14:50world you go their recipe you just you
14:53have that belief set in their this uh
14:56brand that you will get that minimum
14:58quality
14:59but maybe some local player which you
15:02never heard if you are going to some
15:03other country or even in India also now
15:06these are well-known players so what
15:08they are having extra they are maybe
15:11probably getting the same type of raw
15:13material right more or less but then
15:15recipe how they are cooking how they are
15:17preparing
15:18weaknesses these are some of the points
15:21maybe Market complaints are coming
15:24customer feedback we they are not happy
15:26we are not like the weakness I
15:29highlighted that we are not good with
15:30the R&D but we are very good with the
15:32manufacturing so let us then uh promise
15:35our manufacturing skills only and
15:37Outsource the R&D product development
15:39part to some other team to some other
15:43stakeholder right then opportunities
15:46whatever opportunities are coming how
15:48you can analyze those opportunity like
15:50the pestel analysis we did where you can
15:52analyze the external environment any
15:54cultural change in the market you can
15:57assess that right any kind of disaster
15:59in terms of pandemic is coming in terms
16:02of cloud bursting in terms of natural
16:05disaster any earthquake so you can
16:07assess those opportunities those threats
16:10in advance and can then design your
16:13strategy so these are some of the issues
16:15you can just go through for any sort
16:17analysis very generic but we'll go for
16:20the sort analysis when we are talking
16:22about a developing the supply chain
16:24strategy right so here I have included
16:26two perspective one is your company
16:28Manufacturing in perspective another one
16:30is vendor strength there can be you can
16:32talk about the strength weaknesses
16:36opportunities and threats related to
16:37Transportation related to warehousing
16:40related to distribution Network all
16:42these related to implementing distal
16:44twins right so all those different
16:47functional area so just couple of
16:49examples we'll take here we'll just
16:51understand these are not only solely the
16:53points right you can work on on all
16:55those points related to particular
16:57stakeholder or activity
17:00so company strength in terms of supply
17:02chain strength what can be your strength
17:04your purchasing power if you have that
17:06purchasing power of raw material you can
17:09negotiate on price you can negotiate on
17:11quality as well right inventory turnover
17:13rate if your inventory turnover rate is
17:15very high quickly you are selling the
17:17product compared to your inventory you
17:19are keeping that means that is also your
17:21strength anything you are making people
17:23are just dying like the new series of
17:26Apple iPhone is coming people are just
17:28standing in the queue to take that new
17:30phone right so if you are having that
17:33you can leverage on that right payment
17:35history how good you are with the
17:37payments if you are very clear with the
17:39payment terms if you are promised your
17:41uh suppliers that within 60 days or 90
17:45days you'll make the payment and 90% of
17:47the payments are done within that period
17:50that means you are good with the track
17:51record right and 10% of because of some
17:54quality issues sometimes you are
17:56returning the load those many things are
17:58there which which we can understand
17:59right so that is another strength which
18:01you can carry right multiple vendors if
18:04you are having then also you are having
18:06negotiation power so if someone is
18:08lowering down the price you can
18:09negotiate on that on the other hand if I
18:11talk about the vendor
18:13strength credit terms right if he is
18:16offering longer period of time to repay
18:19right then also it's kind of strength
18:21quality no one can you know match the
18:25quality so then that vendor you will
18:27obviously you will go for and as a
18:29customer they are also aware that which
18:32processor you are using inside your PC
18:35when you are manufacturing Dell uh
18:38purchasing Dell laptop or Lenovo laptop
18:42or any other XYZ laptop who is the you
18:45know sometimes those it's not that
18:47always these players are hidden who are
18:49providing the raw material they are
18:51known they are well established and we
18:53see we say that if
18:56that processor you are using so L if it
18:59is uh by Intel we'll use that right then
19:03willingness to retain inventory if that
19:05is very big kind of your supplier he can
19:08absorb those kind of you know inventory
19:11extra inventory cost he can be efficient
19:14in that way setting up the manufacturing
19:16facility near to you just in time you
19:18can implement this can be the you know
19:21strength of your organization talking
19:23about the weaknesses so weaknesses can
19:27be you can reverse these points right
19:29just you are not good with the
19:31manufacturing that is also your weakness
19:34right maybe manufacturing cost is very
19:36high that is how you can be more
19:39productive you are still using automated
19:41uh manual manufacturing where you can go
19:43for automation where your other
19:46competitors are using automation so that
19:48means they are producing more products
19:50number of units with lesser cost their
19:52productivity is high but your
19:54productivity is because of your manual
19:56this is one of the weakness right so
19:58other weakness may be so inaccurate
20:01purchases you are not sure how much you
20:03should purchase raw material sometimes
20:06you are placing order for larger
20:08quantity sometimes for lesser quantity
20:09in that way you are not in a position to
20:11negotiate with the vendor right you are
20:13not good with the distribution network
20:15but still you are managing your own
20:17distribution Network right so that is
20:19also a kind of weakness and then vendor
20:22weakness can be maybe he's struggling
20:24with the quality maybe he's struggling
20:26with meeting the delivery uh schedules
20:28is struggling struggling with producing
20:30that quantity scale up scale down cannot
20:32do the scale up scale down can be the
20:35company weakness as well so quickly how
20:37quickly you can respond to that if you
20:39need to manufacture less how you can
20:42reduce the cost right because if you are
20:45having multiple models how you can
20:48design your production assembly in such
20:50a way that if there is less demand for
20:53some models for few models you can
20:56channelize other models on those
20:57production lines how flexible your
20:59production lines are if those production
21:02lines are kind of dedicated production
21:04lines where you may uh may not produce a
21:07b model on a Model even a there is
21:10nothing much to produce even that is
21:13lying vacant that production line you
21:14are not using right so that kind of
21:16things can be there supply chain
21:19opportunities company opportunity just
21:21you can quickly go through all those
21:23points again what can be the opportunity
21:25like I talked about in e-commerce Market
21:28one day delivery if today you promise
21:31that 100% one day delivery all the
21:33traffic will go to your
21:35website right and then how you can
21:38improve the delivery experience if I'm
21:40ordering maybe five or six orders I'm
21:43receiving six different messages from
21:45the career partner these are out for
21:47delivery today why don't you combine
21:50consolidate into one order and we'll get
21:52the one delivery all six times you will
21:55not ring my bell and then I'm getting
21:57that you you know enhanced customer very
21:59small point but sometimes now customer
22:02is also whole day is not you know free
22:05that that he's waiting for the product
22:08and uh visit of that career partner and
22:11always ringing the bell and all those
22:13can be sometimes irritating as well so
22:15why don't you consolidate into one
22:17delivery that can be one opportunity
22:19right so expansion of Your Capacity how
22:23you can do that if you are not
22:25leveraging on economies of scales why
22:27don't you expect and to some other
22:29Market some nearby market right so this
22:32is the kind of opportunity you can sense
22:35vendor opportunity same way vendor can
22:37also you know improve upon their
22:40services upon the quality upon the
22:42delivery they can uh update their
22:45manufacturing technology come up with
22:47the latest technology right so this this
22:50is the uh opportunity threats threats
22:53again posed by the external environment
22:56suddenly government is coming up with
22:58the Banning of those you know diesel
23:00engines like I was talking about bs4
23:03engine right so now you need to shift to
23:05the new technology government is now
23:08very uh or regulatory authorities
23:10environmental agencies working different
23:13environmental agencies Who coming up
23:15with the strict guidelines that
23:17electrical waste should be minimized how
23:19you can do that how you can ensure the
23:22longivity how you can so this is a kind
23:24of threat right then sustainability
23:26measure overnight your customers are
23:28getting more aware how they can reduce
23:30the carbon footprint so then this is
23:33again a kind of threat then other
23:35threats natural disaster or maybe kind
23:38of pandemic shutdown now complete
23:40shutdown how you will meet the customer
23:42demand how still you will ensure your
23:45supply chain is moving smoothly when
23:47there is any flood how you can ensure
23:50the smooth supply of the medicines
23:53smooth supply of the food packets
23:55emergency supply chain disaster relief
23:57Supply chains how you can ensure so that
23:59is always promising the Emergency
24:02Services right so those kind of threats
24:04can be there and in terms of vendor also
24:07if those threats are there sometimes
24:10more demand and next day I'm saying that
24:13customer are shifting to some other
24:14product how you'll manage that right
24:17like overnight customer shifted to GE
24:20then what the bone H other networks they
24:24will do with their existing Network
24:26structure right how they will ize that
24:29it's better to divest into something
24:31else to liquidate that sell those things
24:34to maybe Gio or a and maybe uh merge so
24:39that they come they can come strongly to
24:41fight with one player this is how they
24:43can manage that right so these are some
24:46of the threats right these are not only
24:48the points only few examples I have
24:50quoted here but yes different activities
24:53different opportunities and threats you
24:55can find out let's talk about one case
24:58again Amazon how they are dealing with
25:02all those opportunity threats with
25:04coming up with with their uh supply
25:06chain strategy where they are always
25:08promising highly efficient supply chain
25:12and they think that this is the key key
25:15measure for their success and how three
25:19fundamental elements they are focusing
25:21on extensible warehouse and distribution
25:25Network all coverage of all the PIN
25:28codes Diversified Fleet right how you
25:31can diversify the transportation
25:33advanced technology quickly you are
25:35sharing the information and you can see
25:402373 active facilities they are managing
25:43single in if you talk about North
25:46America alone more than 200 fulfillment
25:48centers so worldwide presence how they
25:51are ensuring through their efficient and
25:54affordable Supply chains right so
25:59there is very beautiful program run by
26:01this uh Amazon that is fulfill by Amazon
26:04where they are collaborating making a
26:07kind of supply chain strategy where they
26:09are closely collaborating with the
26:10suppliers what they are doing they are
26:12asking their supply suppliers to supply
26:14the products to them to their
26:16distribution or fulfillment centers and
26:19then they will do Amazon will do the
26:21packaging and delivery right see how
26:23good it is that so then under that uh
26:27program FBA program what they did they
26:30also tried to develop the technology
26:33what suppliers are using for
26:35manufacturing for packaging for
26:37delivering and then they also
26:39implemented the automation what they
26:41were using in their warehouses to you
26:44know maintain the inventory to how they
26:46can be cost efficient fulfillment uh
26:49centers right so they helped with that
26:51also so this is a kind of strategy where
26:54they uh worked very closely with their
26:57uh vendors they asked them to supply in
27:00advance where the packaging is delivery
27:03is being done by the Amazon only and
27:06they introduced the Scout of six bu
27:08automatically automatic delivery robot
27:11to carry the product to the customer
27:13doors so key takeaway you can see after
27:17implementing this closed network with
27:19their uh suppliers and making them a
27:24very much part of their Supply Chain by
27:26implementing fva on s it program they
27:30increase this inventory turnover by 8.39
27:33times that means
27:368.39 times they are moving their
27:38inventory consuming their inventory
27:40rather than uh means ensuring sales then
27:43they are keeping the inventory how
27:45efficient they are with their inventory
27:48management so these are some of the
27:50parameter where they worked cost
27:52effective Advantage for Revenue
27:54generation Save More Time needless
27:57warehousing
27:58customer feedback sales volume business
28:00expansion how they can go with these
28:02parameter they set all these parameters
28:04to get that efficient supply chain right
28:08talking about s analysis implementing on
28:12uh Amazon so obviously strength brand
28:15and entity well known and pioner in that
28:18cost Advantage we get lowcost products
28:21and continuous business Improvement they
28:23are doing that and we have seen over the
28:26time in terms of delivery they are
28:28promising if we talk about weaknesses
28:30obviously e-commerce industry is a kind
28:32of industry where margins are uh very
28:35low right because the competition is
28:37huge and seasonal is also affecting
28:41sometime there is high demand sometime
28:43there is low demand what you will do
28:45with your resources when there is less
28:47demand how good you can utilize those
28:50resources opportunities you can
28:53diversify e-commerce business into those
28:56areas where it is not tapping much
28:58Market potential like Furniture industry
29:00we talked about we talked about your
29:02grocery industry so how we can expand
29:06more into still uh that mobile industry
29:09we have uh you know explored much but
29:11still where to go you know to uh tap the
29:16full Market potential so how we can go
29:18for so continuous uh uh continues to
29:21increase awareness of its branded
29:24product and services how they can go for
29:27expansion of local businesses they have
29:29included the local partner also uh local
29:32suppliers like local manufacturers local
29:35products threats can be obviously low
29:37margin low profit will be there and then
29:39patent infringement is there obviously
29:42uh this kind of industry is that we not
29:46very high barriers are there any day you
29:48can collaborate with any even small
29:50restaurant can collaborate with you know
29:53uh sui and zato likewise small seller
29:56can collaborate if today they are
29:57collabor ating with Amazon delivering
29:59the fresh vegetables tomorrow they can
30:02set up their own distribution Network
30:03when they have that much resources to
30:05cover that one particular city right so
30:08then obviously security issues are one
30:11thing when you are talking about
30:12implementing digital networks right so
30:16those are always required now Porter
30:18five forces model this was given by
30:20Professor Michael Porter professor of
30:23Harvard Business
30:25School where he talked about uh the role
30:28of your competitors When developing your
30:31competitive strategy and then he he he
30:35wrote this book article how competitive
30:38forces shape strategy where he talked
30:40about there is you know more than their
30:43competitors there are other factors
30:45which we need to tap those factors to
30:47when we are thinking of developing our
30:49strategy right so how quickly we can
30:52adapt to the Supply Chain management
30:55those dynamics of the environment so
30:58that we can come up with the accurate or
31:01perfect strategy and these are Porter's
31:03five forces model which is known uh five
31:06forces five different aspects uh Porter
31:09has included so competitive rivalry is
31:13obviously the center of uh this model
31:17where we talk about the competition of
31:19that particular industry and we talk
31:21about number how many competitors are
31:23there how you are differently with the
31:26quality and other differen if you are
31:28providing some extra features what cost
31:31is there customer is loyal or not in
31:35that particular industry because
31:37nowadays customer loyalty is a very
31:40fragile kind of you know you uh kind of
31:44statement if you're saying customer is
31:46loyal right so we are getting
31:48opportunities and quickly as a customer
31:50we are switching from one before placing
31:52order if very kind of standardized item
31:55I'm getting little less price obviously
31:57I'll go for that if I'm getting better
32:00experience in terms of delivery in less
32:02time obviously I'll go for that so you
32:04need to analyze your complete
32:07competition in the market right then we
32:09need to know the supplier power very
32:12limited number of suppliers so that
32:13means supplier is at that position where
32:16he can negotiate right and if many
32:20suppliers are there so then you can
32:22negotiate but then negotiation depends
32:24upon the quantity you are buying and
32:26then number of supplies size of
32:28suppliers uniqueness of services like if
32:31you are providing a kind of services
32:33where everyone is looking towards your
32:35services in the finished product then
32:38you have to you know go for that
32:39supplier only okay so cost of change
32:43what is the cost if you'll change from
32:44one supplier to other supplier like we
32:46talked about it is not that easy to
32:48change the suppliers overnight because
32:51supplier is our Strategic investment he
32:55is our strategic stakeholder so we are
32:57sharing the secret recipe how we are
32:59preparing the products what are the raw
33:01material manufacturing process we are
33:03sharing the designs everything so it is
33:06not that easy threat of new entry how
33:10this third force is affecting the
33:12industry if threat is very low anyone
33:14can enter into that industry then it is
33:17very difficult but if talking about a
33:19kind of a communication industry where
33:20Gio is in you know obsoleting everything
33:24earlier we were having cable network but
33:26now they are setting up one solution
33:28they are providing you in your house
33:30they are making everything smart kind of
33:32house so they are promising with you
33:35need not to pay separately to uh your
33:38other dish or TV services you are
33:41getting broadcasting Services you are
33:43getting through geofiber you'll get that
33:45also for Wi-Fi you need not to pay extra
33:49for recharging your mobile you need to
33:51need not to pay extra only one single
33:53recharge and you will get all those
33:55Services right so threat of new entry
33:58how you need to sense that also so if
34:02technology is very high strong that also
34:05very big threat right so suddenly new
34:07player cannot leverage on that if
34:10economies of scales producing in large
34:13order so then new player is that maybe
34:16big uh threat right so barrier and then
34:20cost Advantage if you are working on
34:22that because you have recovered all the
34:26initial investment cost R&D cost
34:28stabilization cost standardization of
34:31cost standardizing the process now you
34:33have standardized everything you have
34:35recover the initial cost also now you
34:37can lower down the price as well right
34:39so but new player will not be easy for
34:42that player to uh you know reduce the
34:45price because initial investment cost is
34:47very high then the fourth player is by
34:51buyer power if you are buyer or customer
34:55is buyer how much quantity he is buying
34:58but quality he needs right negotiation
35:01power if only you are there you can you
35:03know motivate you can just uh at that
35:07point of time you are dominating the
35:09whole market so customer is not that a
35:11position that he can negotiate right
35:14whatever quality whatever variety
35:16whatever price you are offering Services
35:18you are offering customer has to buy
35:20that there is no option right so price
35:24sensitivity if the customer is so price
35:27sensitive quickly changing the product
35:29because of the price then also you need
35:31to take care cost of change how if the
35:35customer is changing from one service
35:37provider to other services provider then
35:39also you need to find out threat of
35:41substitution if any Clos product is
35:44coming you need to sense that also when
35:47your product can be replaced so in that
35:50way you need to come up with your
35:51renovation strategies Innovation
35:53strategies you need to quickly uh change
35:56the product so how this water five
36:00forces model can be used to you know uh
36:03to design your supply chain strategy so
36:06supplier power supplier concentration if
36:10very high concentration limited number
36:12of suppliers will affect this uh
36:15decision right so then supplier is
36:17having more negotiation power switching
36:19cost how costly it is when you are
36:22switching from one supplier to other
36:24supplier not that easy because if you
36:27have ize the process with one supplier
36:29you cannot change other supplier
36:31supplier relationships it takes time to
36:34develop those relationship where during
36:36your worst time your suppliers are the
36:39best stakeholder to support you so if
36:42you have developed those relationship
36:43buyer power you need to assess your
36:46power how much quantity you are buying
36:48you need to negotiate on that right so
36:50price sensitivity under wire
36:52concentration if you you are only wire
36:56right so that means you have that
36:58negotiation power you can buy that
37:00product differentiation if you are
37:01offering different products right any
37:04unique feature so obviously customer
37:06will come to you right you have more
37:08power bargaining power threat of new
37:11entrant so if anyone new is coming that
37:14is a Potential Threat for my uh existing
37:17product threat of new entry you need to
37:20anticipate those entries barriers to
37:23entry you can see if High capital
37:25investment is required or technology
37:27iCal investment is required or any
37:29regulatory restrictions are there so
37:32then varrier to entry are there you can
37:34leverage on that industry structure you
37:36need to analyze the competitive
37:38landscape Market concentration so that
37:41you can find out the industry what the
37:43market scenario is and then
37:45technological advancement any uh you
37:50need to keep on right I mentioned that
37:52if you are renovating your product
37:55quickly coming up with the new feature
37:57so obviously your product will not be
37:59Obsolete and then that will be very high
38:02uh threat uh big threat for the new
38:05entry right threat of
38:07substitutes customer preferences if
38:10customer is now moving towards the
38:12substitute products right so then you
38:14need to tap those customers by you know
38:17providing the substitute products you
38:18need to move from your product to the
38:21other product right product
38:22differentiation how uniquely you are
38:25proposing your product and delivering
38:28the unique value a regulatory
38:30environment regulatory environment also
38:33sometimes like your uh uh if you are
38:37producing a kind of using a kind of
38:38technology in your product which is you
38:40know not uh environmental efficient so
38:44then you need to take care you need to
38:45change that technology
38:47right so rivalry among competitors
38:50market growth opportunities for growth
38:53and expansion if it is growing you need
38:55to grow so how
38:58your other players competitors are
39:00capturing more market share how you can
39:02go for that right but during a time when
39:05like Gio came into market so most of the
39:08competitor were thinking to stabilize
39:10their at least the existing market share
39:12because that was the time because they
39:14were offering everything free so how
39:17they can do that now see this is a kind
39:20of strategy you need to understand
39:22during IPL Gio came with the free you
39:24know broadcasting of IPL so now they
39:27start they the maybe the strategy was
39:30when the World Cup will come just after
39:322 3 days it is going to start so when it
39:36will come so then they can charge on
39:38that right but then to counter this now
39:42Disney hotstar is coming with free
39:44subscription of your uh World Cup right
39:47so this how long you can go with these
39:50kind of counter strategies right you
39:51need to you need your your resources
39:54should support your these kind of
39:56competitive strategy right
39:57but barriers to entry if you are
40:00leveraging on those kind of barriers
40:03there either technology barriers are
40:05there or you have uh highly invested in
40:08the market to set up that distribution
40:10Network so in that case the entry for
40:13barriers uh this entry will be very
40:15difficult for the new players right so
40:18next supply chain strategy
40:20implementation once you have figured out
40:23all the factors responsible for
40:25implementing for designing your supply
40:26chain strategy based on your internal
40:29environment analysis and external
40:31environment analysis now you can go
40:33ahead with implementing picking your
40:35strategy and implementing your strategy
40:37but this is for sure no one best
40:40strategy right so uh in Game Theory we
40:44talk about in operation research there
40:47is concept of Game Theory pure obsolete
40:50strategy we are going with one strategy
40:52only but usually we have seen in game
40:55theory that we are opting for mixture of
40:57strategy right mixed strategy so we are
41:01using partly maybe 20% of cost efficient
41:05maybe 60% of responsiveness maybe then
41:08rest 20% cost efficient plus
41:11responsiveness right so those kind of
41:13strategies you need to only when you
41:16have configured your external and in
41:18internal environment then you will
41:20identify what is the demand type how you
41:23need to design your product and services
41:25you need to know customer location where
41:27is customer location so that you can
41:29move to that location manage inventory
41:32near to customer location and finally
41:34you need to know your supplier location
41:37as well because that distance between
41:39customer and supplier in between you are
41:41there so whether you want near to your
41:43supplier or near to your customer
41:45identify demand how whether your demand
41:48is seasonal linear consistent if it is
41:52consistent you can be efficient you know
41:55number of shipments required frequency
41:58of uh shipment required how much
42:00quantity they are demanding you can
42:02forecast weekly forecast can be there
42:04monthly forecast can be there but if it
42:06is seasonal that means during particular
42:09season that demand will be there you
42:11need to be very very you know strong
42:13with your distribution Network during
42:15that time but then when the season is
42:17off maybe you are focusing on
42:18manufacturing keeping some inventory so
42:21that whenever there will be season you
42:23can channelize that same inventory right
42:25understand the product portfolio you
42:28what your competitors are providing in
42:30the market what customers are liking if
42:33my customer is moving to some other
42:35brand why he is moving to some other
42:37brand because they are providing some
42:39other features which we are not
42:41providing so we need to understand that
42:43and include in our product portfolio
42:46then you need to know the customer
42:48location only then you can design the
42:49distribution Network I need to know the
42:51location is far away from this Metro
42:54City I cannot promise one day
42:57if it is more than 500 kilm so obviously
43:00it will take time I need to consolidate
43:03orders for that particular pin location
43:05or can I come with the one kind of Big H
43:08there nearby that so that same one day
43:11delivery can be ensured but whether I'm
43:13getting those many of uh orders from
43:15that particular reason right then you
43:18need to know location whether customer
43:20is within country outside right Global
43:23shipments are also happening same way
43:25when you are talking about the supplier
43:26location
43:27whether your supply is coming from
43:29overseas so in overseas then you need to
43:32take a little longer time because
43:34delivering will take little longer time
43:38okay so that's why you are setting up
43:40your nearby uh vendors also so that
43:43during those emergency periods that just
43:46in time can also be implemented and then
43:48you need to manage the inventory what
43:50type what size nature complexity
43:52depending upon that you are managing the
43:54inventory right to tap all those forces
43:57so there is one case study on uh this
44:00Starbucks and uh we can see we have seen
44:03that how they have implemented that uh
44:06uh collaborative uh planning forecasting
44:09and replenishment so just take uh uh
44:12just we extend this case study
44:15Starbucks 35,000 retail shops and you
44:19can see the revenue and they are more
44:23than 50 years of operation huge
44:26extensive Network and one thing they are
44:28promising is efficient supply chain how
44:32they are promising that not only
44:33efficient they are also applying uh they
44:36are also promising your quality coffee
44:39beans how they are doing that because
44:41they have vertically integrated they
44:43have collaborated with the these coffee
44:46producers right the coffee beans
44:49producers so those Farmers under their
44:53their standard for coffee and farmer
44:55equity and ESD plans they have developed
44:58that where they are talking about
45:00ethical environmental social qu quality
45:02criteria they have implemented right
45:04they are closely collaborating with all
45:06those coffee beans producer right
45:08Farmers more than four lakh producers
45:11directly collaborated with them they are
45:13ensuring the quality and delivery and
45:16same taste throughout right so this
45:20complete supply chain from the farmer
45:22field to the cup of coffee they have
45:25integrated beautifully right so this is
45:28their supply chain strategy
45:31because by collaborating all those
45:33players including farmers in their
45:35supply chain they have created very very
45:38complicated supply chain but then uh
45:41Peter given he implemented this he
45:45transformed this complex supply chain
45:47into simple supply chain structure and
45:51then he took implemented adopted four
45:54stage model taken from that core model
45:57plan Source manufacture and deliver
46:01removed The Return part for these stages
46:04M macro operation they have in included
46:08in their supply chain and ensure that
46:10centralized logistic system so how they
46:13can coordinate with planning sourcing
46:16from the suppliers manufacturing the uh
46:19you know the coffee roasters who are
46:22roasting the beans right and delivering
46:24to the uh your Starbucks coffee houses
46:29from there these are coffee beans are
46:31served to the customers right and then
46:34they divide the complete supply chain
46:36into four matrics operational safety how
46:40safe their operation equipment whatever
46:41they are using on time Supply and Order
46:44fulfillment rate how many times you are
46:46on time overall cost of the supply chain
46:50and financial performance in terms of
46:53cost Effectiveness and you can see this
46:56after streamlining this supply chain
46:58they have utilized the digital
47:00Technologies as well so as well so that
47:03they can implement the complete
47:05transparency throughout the network
47:08immediately they can collaborate they
47:10can share information with the coffee
47:12producers if any quality measure they
47:14need to take any deviation is there they
47:17can com they can quickly instruct their
47:20coffee Farmers producers right and
47:23Coffee Roasters as well who are roasting
47:25you know they are having the roasting
47:26machines and all they are producing the
47:28coffee beans so you can see after
47:31implementing this plan program they are
47:34now ethically sourcing
47:3798.6% and worldwide they have increased
47:40their revenue by 5% this is huge 5%
47:44right achievement so uh these are the
47:47books I referred in the last session as
47:49well you can go for these basic models
47:52of strategic Supply Chain management we
47:54have taken from there some references
47:57you can go through so thank you very
47:59much that's all

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