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Lecture 34 : Achieving Supply Chain Strategic Fit — Transcript

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0:01[Music]
0:22[Music]
0:25hello dear friends welcome back to nptl
0:27online course on Logistics and supply
0:29chain management so in this week we
0:31started discussion on developing supply
0:34chain strategy and then we have seen
0:36what are the various internal as well as
0:39external factors which are very
0:41important to track so that we can come
0:44up with the right combination of your
0:46competitive strategy as well as your
0:48supply chain strategy so till now we
0:51have uh kind of we have done the pestal
0:54analysis where we have scanned our
0:56external environment we have done the
0:59homework with the
1:00what are the strengths we have and what
1:02are the weaknesses we have right how we
1:04can avoid weaknesses or we can improve
1:07on those weaknesses so that the overall
1:09competitive strategy can be developed
1:12now here we need to think about two
1:14different things what we are trying to
1:16say is that there is one your
1:20competitive strategy right which is your
1:23uh Baseline where you are you know with
1:25that strategy you are competing in the
1:27market with respect to your uh other
1:30players in the same market right that
1:32competitive strategy you might have
1:34developed with consultation of your your
1:37obviously very key stakeholder which is
1:39your customer what are the customer pref
1:42preferences what type of services level
1:45customers are expecting and then uh you
1:48have developed that strategy and then
1:50also how the other Industries are
1:52behaving other players are behaving in
1:54the same industry so then you have
1:56developed your competitive Strate uh
1:58your uh competitive strategy where you
2:01think that you you are you know best fit
2:04with your resources whatever resources
2:06you have and then you can think that
2:08this this is the area where you can
2:10Target with your competitive strategy
2:12now the first part is done that you have
2:15uh set up your competitive strategy as
2:18per your competitive strategy now we
2:20need to come up with the supply chain
2:22strategy right so we we have seen that
2:26depending upon our strengths right and
2:29depending for the opportunities in the
2:31market whatever threats are there in the
2:33market we'll develop our your supply
2:36chain strategy and now we are into very
2:39important discussion where we will find
2:41how we can fit find a perfect fit
2:44between your competitive strategy and
2:46your supply chain strategy having said
2:49that competitive strategy is okay how
2:51you are competing in the market but
2:53supply chain strategy again it's not
2:55only strategy with the manufacturer
2:58strategy how you are dealing your
3:00retailer how you are doing
3:01Transportation how you are Distributing
3:03the product how you are storing the
3:06product or fulfillment centers or your
3:08how you are managing your suppliers so
3:11talking about supply chain strategy you
3:14need to talk about collaboration among
3:17all the stakeholders number one number
3:20two within means for each stakeholder if
3:24you are talking about retailer
3:26distributor Transportation agency
3:28warehousing manufacturing
3:30co-manufacturer or raw material
3:32suppliers each one unit are doing so
3:36many different functions so that means
3:38those functional strategies also you
3:41need to develop right so first thing
3:44within any organization all the
3:46functional strategy functional means
3:49different activities we have combined
3:51similar activity into one functional
3:53area we call it as operation Department
3:56we call it as quality Department we call
3:58it as R&D Department marketing
4:00department accounting department HR
4:01department ISO Department all those
4:04purchase department store Department
4:06this is all these different functional
4:09units are working with any stakeholder
4:12right so here we are talking about
4:15developing the functional strategies in
4:19line with complete stakeholder right all
4:22the functional units should you know
4:25should be attached to the common thread
4:27and then the next level of integration
4:30is where all stakeholders with all the
4:33functional units should be aligned in in
4:36a in a way so that the smooth uh
4:39functioning of complete supply chain in
4:42synchronization with the competitive
4:44strategy can be ensured so this is all
4:47about how we can uh achieve that
4:50strategic fit where we are you know
4:53perfectly going in line with your
4:55competitive strategy and your supply
4:57chain strategy so we'll discuss about uh
5:01uh again the competitive strategy
5:04right and some examples of your supply
5:08chain strategy how we can achieve the
5:09Strategic fit we have three steps
5:12process how we can go for achieving the
5:14Strategic fit and then we'll see how we
5:17can tailor our supply chain depending
5:20upon the different needs and then still
5:22we are talking about achieving the
5:24Strategic fit as per the different needs
5:26we'll we'll spend couple of session on
5:29uh the discussion because this is very
5:30very important part of any supply chain
5:33or Logistics right and then we'll talk
5:35about the overall scope of setting the
5:38Strategic fit for any supply chain
5:41complete supply chain I'm talking about
5:42right so we need to expand the scope
5:45from one operation within one functional
5:48unit to complete functions throughout
5:52all the stakeholders just right now I
5:54explained that how functional units
5:57within each function how operation
5:59should be aligned and then how how all
6:02the functions in within uh one unit or
6:05uh stakeholder should be aligned and
6:07then how all the stakeholders in that
6:09complete supply chain should be aligned
6:12and then we'll see what are different
6:13challenges when we are targeting that
6:15strategic fit and we'll come up with
6:17some case studies couple of case studies
6:19I have included and we'll end with the
6:22conclusion so again supply chain
6:25competitive strategy so competitive
6:28strategy again I told you how uniquely
6:31you are proposing your offerings in the
6:34market right what is uniqueness in your
6:37product or services and same way when we
6:40are talking about supply chain
6:41competitive strategy so that will
6:43distinguish your product or services or
6:46the way how you are delivering your
6:49product and services in the market with
6:51respect to rest of the players how they
6:54are dealing with the customers right so
6:56that will set apart a different play in
7:00the overall market right how you will
7:03capture your Marketplace in the so
7:05talking about very very you know known
7:08or unique example Walmart competitive
7:10strategy is I have included the complete
7:14uh case on Walmart towards the end but
7:16right now Walmart is competing on what
7:18we know that they are competing
7:20basically on low price they are giving
7:23wide variety of products right so fair
7:27price and then also Fair you know uh
7:31quality okay so they are not promising
7:33very high quality they are not promising
7:36High responsiveness completely they are
7:38changing their inventories no so they
7:41are promising very low price but fair
7:43quality and fair responsiveness on the
7:46other hand mechm C which is again
7:49dealing with all the mro kind of
7:52products maintenance repair and
7:54operations kind of product different
7:56variety of products are there and on the
7:58other hand this company is dealing with
8:00how they can provide the convenience to
8:02the customer availability of all those
8:04wi product having said that if you have
8:08you know wide variety of products in
8:11your basket so then providing all the
8:14products with all the inventories and
8:16whatever customer responsiveness means
8:18their reactions are to your product how
8:21quickly you are renovating your product
8:23so that will highlight your
8:24responsiveness so the these two
8:26different
8:27players Walmart is is competing on cost
8:31minimum cost mechmas is competing on
8:33basically unique feature of supply chain
8:36is responsiveness right so although they
8:39are dealing with different products
8:41right so we'll now when we'll discuss
8:44about uh this achieving the Strategic
8:47fit we'll talk about you know different
8:49kind of Industries how they are doing
8:51that blue Niles again this case study I
8:54have discussed in detail in one of the
8:57session this companies usually
9:00they are dealing with the diamonds uh
9:01they are selling online right and how
9:04they are different from other stores who
9:06are selling diamonds or jewelry items
9:08because they are emphasizing on variety
9:12and lower price these two features and
9:15we have highlighted how Blue Nile is
9:17ensuring that low price because they
9:20have maintained the centralized
9:22distribution center and from where they
9:25are supplying to all the markets right
9:30from with there they are supplying to
9:32all the market that means because
9:34Diamond kind of industry which is you
9:36know if you're maintaining inventory at
9:38different locations that means you need
9:41to come up with very strong security
9:44structure as well right and then you are
9:46keeping inventory also at different
9:48locations at 10 locations you are
9:50keeping the inventory 10 location you
9:52are ensuring the security of that
9:54inventory and then you can see how much
9:56you are investing into that why don't we
9:59do one thing we are maintaining
10:01inventory huge stock variety also we can
10:04ensure and then because now variety you
10:07need not to ensure at 10 different
10:08stores we'll ensure variety only here at
10:11the center point and online you can
10:13purchase place the order and we'll
10:15ensure the that's why e-commerce website
10:18this is the plus point today they are
10:20launching the product today only they
10:22have complete variety what they will
10:24show just put different images all the
10:27colors available all the the capacities
10:30of that product if you are talking about
10:32iPhone what are different storage
10:34capacity or then they are usually they
10:37are having different product uh segments
10:40depending upon the screen size depending
10:42upon the storage capacity right and then
10:45what series they are offering right so
10:48if you are going through online then you
10:50can consolidate all your orders for the
10:52multiple products in the same category
10:55multiple models and then you can provide
10:57efficiently but on the other hand if you
10:59talk about jails or other any any kind
11:01of your jewelry showroom where they have
11:04the limited variety and because why
11:06limited variety because they are
11:09interacting with the customers and then
11:11they are making the personal
11:12personalized or more customized products
11:15they are providing right but in that
11:18case you see you need to set up 10
11:20different locations so again here I have
11:23included one more video right you can
11:25just go through this video and you can
11:27just see how this is important uh
11:31achieving strategic fit is important so
11:33guys whenever I'm including video I'm uh
11:36just assuming that that you have gone
11:38through that video because that will
11:40make more sense and maybe sometimes if
11:42that is deleted not available you can
11:44just search your videos uh through
11:47YouTube or maybe LinkedIn where you can
11:49just add these uh you know keywords
11:51targeting supply chain strategic fit
11:53you'll get different videos right so
11:56just only uh purpose here was to you
11:59know uh just give you that practical
12:03experience how things are happening okay
12:05so you can just go through that video
12:08again quickly we'll go through some of
12:10the examples uh talking about supply
12:12chain strategies again there is no such
12:14pure strategy if I'm saying efficient
12:16supply chain strategy all the players
12:18are moving towards efficient no we have
12:21seen like Walmart is doing efficient
12:23supply chain then Zara is doing
12:26responsive supply chain so then also on
12:29different scales they are including
12:31somewhere they are efficient somewhere
12:32they are responsiveness so mixture of
12:34strategy they are doing that right so
12:37efficient supply chain strategy which is
12:38totally focusing on how they can
12:40minimize the total cost right so the
12:43purpose is maximizing the
12:46efficiency so uh talking about
12:49minimizing the cost how we can minimize
12:51the cost we can minimize the cost of
12:54acquiring the raw material how you can
12:56do that negotiate with the vendors Fe
12:59heavy orders large orders to the vendor
13:01and then negotiate on that quantity then
13:04how you can reduce the price keep the
13:06minimum inventory right keep the minimum
13:09wastage when you are you know converting
13:12your raw material into finished one then
13:14during Transportation or final
13:16fulfillment center warehousing also how
13:19properly you are utilizing during
13:21Transportation how properly you are
13:23doing the rooting of the vehicle how
13:25maximum utilization of the container is
13:29assured and then how the end mile
13:31delivery is in the most efficient way is
13:33happening these are some of the things
13:35you can link and then you can say that
13:37acceptable level of quality still I'm
13:40saying that acceptable level not the
13:42highest level of quality we are not
13:44promising because we are promising cost
13:48minimum cost and then obviously service
13:50level I'm not saying same day delivery
13:52two days delivery maybe some standard
13:54delivery will be there range will be
13:56there where you'll get your product
13:58right on the other hand if I'm talking
14:00about responsive supply chain that means
14:03asile and responsive as soon as customer
14:06is
14:07interrupting uh within the let's say you
14:10place the order and today today morning
14:13you place the order and by afternoon you
14:16realized oh I don't need that or maybe
14:18product is taking 5 days to be delivered
14:20and then I will be out of location right
14:23so that means now you need to cancel the
14:25order and then you are cancelling the
14:27order so how quickly your supply chain
14:29is responding to that if the final
14:31packaging is done if it is shipped to
14:34the nearby Hub right so how you can stop
14:38that and store that for there only so
14:40that if the next order will come you can
14:42just change the billing address and
14:43invoice and then again root the same
14:46packet so that means how quickly you are
14:48responding to the customer requirement
14:50this is one uh how he is changing the
14:52order how how is decline the order other
14:55things may be related to variety
14:57customer wants more VAR vary right so
15:00then quality then service level maybe
15:03all those features you can just see and
15:06Club those features how your supply
15:08chain strategy is responding to that so
15:10if you are quickly responding to your uh
15:14these customer requirements so that
15:16means your supply chain is responsive
15:19flexible enough right if you are saying
15:21today uh your if you're talking about
15:24the manufacturing facility how
15:26manufacturing facility can be flexible
15:28or responsive
15:29if the demand is today coming for B
15:31model for a particular product you start
15:35change over uh from other models to B
15:38model right and dedicated maybe two
15:40three production lines you will dedicate
15:42and how quickly that will happen only
15:44you have the production lines you
15:46changed over to from some of the other
15:48model to maybe B model but then whether
15:51you have that raw material supply how
15:53that will happen if your suppliers are
15:56also responsive so that is kind of resp
15:58responsive supply chain you can maintain
16:01then lean supply chain strategy a kind
16:04of supply chain which is always focusing
16:07on how it can be you know more lean in
16:11that way where they are always focusing
16:13on reducing the waste that reducing the
16:16waste maybe if you are keeping extra
16:17inventory that is waste if you are doing
16:20extra handling of the material that is
16:22waste if you are processing extra that
16:25is also waste extra packaging you are
16:27putting on the product primary packaging
16:29secondary packaging then packaging of
16:31the e-commerce website so then is also
16:34it is based right how you can Implement
16:37just in time whenever your product is
16:39required raw material is required you
16:40are shipping to the lines right how
16:43continuously you can improve and value
16:45stream mapping how quickly you can map
16:48your all those activities which are
16:50adding value and remove all those
16:52activities which are not adding any
16:54value to the customer right so if you
16:57are maintaining in entry nearby to
17:00customer how C this is adding value to
17:02customer this is adding value to
17:04customer because customer is getting
17:06quick delivery so you need not to reduce
17:09that but yes if you are keeping extra
17:12inventory excess inventory always then
17:14you need to think about that inventory
17:16how you can minimize that inventory in
17:18the Fulfillment center so lean supply
17:20chain is always talking about minimizing
17:22the waste and we have seen seven
17:24different types of waste that is Tim
17:27boot
17:29so Transportation inventory motion
17:33waiting right this is another waste over
17:35processing over production and any
17:38defect we are producing so these seven
17:40types of waste we have already discussed
17:42when we talked about lean Logistics
17:45right so the basic purpose of this type
17:48of supply chain is reducing the waste
17:51through the supply chain then aile
17:53supply chain strategy obviously agility
17:56adaptability and flexibility so if my
18:00ice cream parlor is there you are coming
18:02with maybe family you need maximum two
18:04or three ice creams right okay but the
18:08other day you are coming with your whole
18:10group of friends and you are just uh
18:13having small occasion or then you want
18:15to celebrate with the ice cream so maybe
18:1720 people are there or then maybe then
18:20you are celebrating your birthday then
18:21maybe you are requiring 500 ice creams
18:24and then maybe some bigger event so then
18:26you can see how quickly how I can adapt
18:30to the you know changing customer
18:32demands right so because this is totally
18:35unpredictable I cannot predict right
18:37whenever the occasion is happening with
18:39the customer so how this is totally
18:42unpredictable but yes as ice cream par I
18:45need to figure out these fluctuations in
18:47the demand coming from the same customer
18:50right so then your supply chain is aile
18:54enough if you can meet demand for five
18:57ice creams as well as if you can meet
18:59demand for 50000 ice cream this is not
19:01only I'm talking about the one product
19:04let's say if you are quickly introducing
19:06new products so then also your supply
19:08chain like I always talk about Philips
19:11and their tag line is innovation and you
19:13so that means you as a customer is part
19:17of that Innovation and you are facing so
19:19many problems while using those products
19:22trimming machines right so when you are
19:24using those problems why don't we solve
19:27those problem and make it very handy
19:29and useful for you so that it will give
19:31you best experience after using that
19:34product right so this is a kind of aile
19:36supply chain strategy collaborative
19:39supply chain
19:40strategy this is based on strong
19:43collaboration like Dell is doing very
19:45strongly uh earlier what they were doing
19:48they were just delivering through online
19:50they were recording the orders and
19:51delivering to the customers but now they
19:54realize that we are far away from the
19:56customers right there should be some
19:58retail
19:59who is recording their preferences and
20:01in that way we can be more responsive as
20:04well we can keep some inventory and meet
20:06immediate demand so lead time can also
20:09be reduced for the customer so customer
20:11is if you want to buy laptop simple
20:14example or headphones right so you are
20:17going to retail shop and always Del is
20:19saying that after 2 days they will
20:21configure and delivering you the product
20:23but most of the time we are buying very
20:25standardized kind of product we are
20:27always fixed with the config ation and
20:29many people are using the same type of
20:31configuration because we have almost if
20:34we'll talk about 70 to 80% they are
20:37dealing with same routine kind of
20:38activities if not very high
20:40professionals right so if we leave that
20:4320 30% segment those can be you know
20:46where we need to be more responsive we
20:48need to record the orders then maybe
20:50we'll take one day or two day to
20:51configure that then it is required but
20:54if 70% order is almost fixed why don't
20:58we go for efficiency as well as
21:00responsiveness you are visiting my store
21:02quickly I'll hand over laptop to you or
21:04maybe model design I'll do if you you
21:07want me to change maybe let's say sound
21:09drivers I'll quickly change the module
21:12and we'll put the high efficiency sound
21:14drivers right so that Hardware I will
21:17just replace so that kind of if
21:19manufacturing you know we are doing in
21:21modules so that that can be even if we
21:24are talking about customization so we
21:27cannot say that you will get your
21:30product after 2 days customization
21:32should also happen very quickly
21:34right now the point comes we we
21:37discussed about some supply chain
21:39strategies now the point comes how we
21:41can achieve the Strategic fit and
21:43strategic fit that means your
21:45competitive strategy and your supply
21:47chain strategy should go in line right
21:50so in One Direction only if your
21:53competitive strategy is moving towards
21:54this supply chain strategy is moving
21:56towards this that means disaster
21:59very small example let's say I'm saying
22:01that I'm
22:04always available with my product that
22:07means availability of my product is very
22:09very high and then my retail partner is
22:12saying that I cannot maintain huge
22:14inventory that is cost I cannot bear
22:17that much cost right and even sometimes
22:20I'm not sure about the demand sometime
22:22it is coming but sometimes then I need
22:24to keep inventory for 2 months or 3
22:26months or 4 months who will bear the
22:28expenses for that if manufacturer is
22:30ready to Bear the expenses then it is
22:32okay but sometime what is happening to
22:35keep the inventory running in running
22:37form you need to handle that you need to
22:41operate that you need to store that for
22:43that also the cost is there so whether
22:46the manufacturer is absorbing that cost
22:49or retailer is absorbing that cost so
22:52that means in contradiction retailer is
22:54not ready to keep extra inventory and
22:56you are saying you are always available
22:58with the product so then it is
22:59contradiction right so it should have
23:02your both the strategy should have same
23:05goals now we our whole discussion will
23:08be on these two points how our
23:10competitive strategy is and how our
23:13supply chain strategy is changing right
23:16so that is quite obvious like the
23:18example I talked about you are promising
23:21availability all the time swi is saying
23:23that single piece of suet they will
23:25deliver and then their career partner
23:28who whoever is local corer part because
23:30they they are collaborating with the
23:32local corer Partners right so local
23:34bikers so then they are saying that okay
23:37on this delivery we are getting very
23:39less margin that is quite obvious
23:41because you are placing order for only
23:43two piece of suets how much that
23:44delivery partner will get so then there
23:47is contradiction how you are you know
23:49collaborating with your those career
23:51partners and then ensuring that the
23:53overall profit can be maximized whatever
23:56your model is you need to to convince
23:58your local partner so Del case again you
24:01can see just I talked about
24:04that what is the importance of achieving
24:07strategic fit like small example I
24:09highlighted about inventory where there
24:11is contradiction between the
24:13manufacturer and the local retailer
24:15where they retailer don't want to keep
24:17the inventory and your manufacturers are
24:20saying that they should keep the
24:21inventory why it is required obviously
24:23to meet the customer needs so if Amo is
24:26providing milk products and and one
24:29maybe uh retailer is there who is you
24:31know taking care of all theu products
24:33right and I need sometime I'm buying two
24:36packets of milk sometime four packets
24:38sometime maybe some extra occasion then
24:40I'm buying cheese also then a ice cream
24:43all those products are there you just
24:45see even you track your daily routine
24:48activities other than milk maybe
24:49somewhere fixed if no extra you know
24:52guests are coming so milk quantity is
24:54fixed but other products sometime you
24:56are buying sometime you are not buying
24:58so that means your Mo partner is
25:00maintaining enough inventory or not and
25:03that I'm talking about those products
25:05which are perishable in nature so what
25:07will happen if 10 days or 5 days or 2
25:10days this product will not be consumed
25:12then that is cost to the manufacturer is
25:14wearing that or the retailer is wearing
25:16that is one cost cost of getting
25:18obsolete or expiry date other cost is to
25:22maintain those milk products inventory
25:25you need Cold Storage that cost you need
25:28to carry as a retailer right so that
25:30holding carrying cost is also there
25:33right but yes you need to achieve
25:35strategic fit because you want to meet
25:37customer needs then you can improve the
25:39supply chain overall performance AMU
25:42they don't want to be stock out any
25:44customer asking for Amo any part of the
25:48country they should be able to provide
25:50that it should not be like that that
25:51inventory is over so then maybe people
25:54will shift to other product and this is
25:56a kind of product if you will shift to
25:58some other product so then you will
26:01gradually you will develop the taste and
26:03once you will change the milk from one
26:05company to other company then there will
26:07be problem right then you need to
26:09enhance the competitiveness how you can
26:11enhance by unique by selling your USPS
26:15right what are your unique selling
26:17propositions unique value you are
26:19providing to customer which other is not
26:21doing that if you are delivering same
26:23product how myantra came with the unique
26:26strategy of paper packaging removing the
26:30plastic in that way they are sustainable
26:32and they are ensuring that we are
26:34minimizing the carbon footprint that is
26:36another story how much it is appealing
26:38to the customers I think personally it
26:40is very appealing and customer have
26:43taken it in a positive way
26:46right then manage cost and risk so
26:50strategic fit is also very helpful in
26:53managing the cost if you are targeting
26:55efficiency so obviously throughout your
26:57supply chain you will do that but if
26:59risk any uncertainty is there then you
27:02need to shift from your efficient supply
27:04chain to the responsive supply chain we
27:06will see that how we'll do that right so
27:09that way you can handle this now these
27:11are the three steps you need to keep in
27:13mind achieving strategic fit first is
27:15you need to understand the customer and
27:18supply chain uncertainty customer
27:20uncertainty in terms of services they
27:22are looking for supply chain uncertainty
27:25in terms of how we are delivering the
27:27product very simple right now second is
27:30understanding the supply chain
27:31capabilities whether we are capable we
27:34promised in the market that we'll
27:35provide you the highest quality product
27:38within no time lead time is minimum
27:41within 30 minutes your medicine will be
27:43delivered Farm easy whether we have that
27:46infrastructure in that particular area
27:49where we are advertising that in that
27:51particular pin code where we are
27:52promoting that product that supply chain
27:55capability it's only related not only
27:57related to
27:58related to Quality related to variety
28:01related to quantity right related to
28:03service level customers are expecting
28:06whether they are ready to wait for 5
28:08hours 5 days 10 days what is the lead
28:11time right then we will we understood
28:14what are the uncertainties we understood
28:16our capabilities now we'll go for
28:18strategic fit whether we can promise the
28:21responsive supply chain no we cannot
28:24promise because our resources are not
28:25like that let us focus on the cost
28:28efficiency part there we will maybe
28:30blend a little bit the flavor of your
28:34responsiveness as well like what Walmart
28:36is doing so cost efficiency is the main
28:40but responsiveness also they are adding
28:41with more variety right on the other
28:44hand if you talk about Zara
28:47responsiveness is at highest end minimum
28:50inventory they are maintaining because
28:52quickly they are changing the inventory
28:54so first step we'll go in detail
28:57understanding the customer and supply
28:58chain
28:59uncertainty two points we'll discuss
29:02here first is what are customer
29:04preferences needs priorities second is
29:08supply chain capabilities or supply
29:10chain uncertainties how they they are
29:12posing threat to uh uh to the overall
29:15strategy right so quickly we'll go
29:18through what are the customer
29:19requirement or preferences what are the
29:21needs of the customer as a product or
29:23Services when you are designing product
29:25or Services what are the customer needs
29:28so whether you need to provide those
29:30features need to add extra features into
29:32that so who is talking about you are
29:34buying mobile to mobile phone just to
29:37communicate no one is talking about that
29:39you can communicate through long
29:41distances and voice quality is clear
29:43even the network is not that strong even
29:47then you can transfer your message
29:49clearly who is promoting that any player
29:51can you recall no one is doing that
29:54basic function of mobile is to
29:56communicate but that then what we are
29:58promoting these many megapixels your
30:02camera quality we are talking about
30:04storage we are talking about games you
30:07can install we can talking about what
30:09are the ready apps installed apps in
30:11your mobile phone we are talking about
30:13all the internet connections social
30:16media apps whatever you can provide in
30:18your mobile phone these are features you
30:20just imagine if you are buying a new
30:23mobile phone what you are looking for
30:25right so that is you need to configure
30:27the
30:28uh needs of the customer right quantity
30:31what type of quantity from each market
30:33is demanded so like I highlighted the
30:36example sometimes you are asking for
30:38five products sometime you are asking
30:39for 500 products right so that quantity
30:42what is the variation response time
30:45whether customer is ready to wait for 2
30:47days or if you are saying two days or
30:49flip cart is giving me maybe one day
30:52I'll go for flip cart because almost
30:55same price so then why should I wait for
30:572 days I'm already investing I have made
31:00my mind why instead of enjoying those
31:02services from tomorrow why don't we get
31:05the services today we are investing that
31:08variety what is the variety required now
31:10you see automobile industry like I
31:13always talk about in petrol version we
31:16have the lowest LXI let's talk about the
31:18maruti LXI is there then the next
31:21version of LXI is there then in between
31:23your vxi is there then next version of
31:26vxi is there then Top Model J XI is
31:28there talking about maruti right so in
31:31that top version so that means five
31:33variants minimum they are maintaining
31:35maybe more than that depending upon
31:37different features they keep on adding
31:39right and in the top model you are
31:41getting sunroof you are getting alloy
31:42wheels you are getting safety bags
31:44airbags all those things and the base
31:46model five models let's say five
31:48different colors how how many products
31:5025 products now let's say 25 products in
31:55petrol 25 products in diesel in hybrid
31:58and then 25 on CNG 100 products in one
32:02product one maruti Suzuki vehicle
32:05automobile industry maybe barara Grand
32:08barara is coming in 100 different models
32:11and then if you say we have two engine
32:14capacity 1,000 cc600 CC then that means
32:19200 models so you just see the variety
32:23customer can place order for any product
32:27out of those 200 basket right so then
32:30what is the service level and then
32:31customer is not ready to wait and then
32:34you expect that top level model is
32:36minimum required but then customer can
32:38place the order for that you cannot say
32:41no that we are not manufacturing that
32:43because you are promising you are
32:44placing the product in the market right
32:46pricing is also important keeping all
32:48the uncertainties all things in mind
32:51these 200 different variety inventory
32:53you are maintaining and then customer
32:55want that okay this product I need to
32:57comp compare with maruti Hundai Toyota
33:00all other uh mg all other players I will
33:06compare and then I'll decide right so
33:09then desire rate of innovation how
33:11quickly you are innovating your product
33:13right if you are quickly innovating your
33:15product I am feeling as a customer in
33:17that way safe that I'm getting the
33:20updated product but then there is
33:21another problem the problem with quick
33:23Innovation is shorter product life cycle
33:27that means
33:28so maybe tomorrow it will be obsolete
33:31demand uncertainty implied demand
33:33uncertainty so regular uncertainty in
33:36the demand is demand uncertainty
33:38sometime it is coming sometime it is not
33:40coming imply demand uncertainty if you
33:42are dealing with the emergency kind of
33:44products so how you will deal with that
33:46kind of situation right so if we'll talk
33:49about how the customer needs will affect
33:52your implied demand uncertainty you can
33:54just see if you're in increasing the
33:57range of products obviously your emply
34:00demand uncertainty will increase because
34:03now you when you are placing for
34:04particular P of order you never know
34:07right lead time decrease that means
34:09don't want to wait for more than one or
34:11two days then again it will increase
34:14your implied demand uncertainty will
34:16increase because you are promising that
34:18within one day we'll deliver variety of
34:20product will increase then also your
34:23emply demand unty will increase from
34:25those 200 different models customer can
34:28place order from anywhere number of
34:30orders now earlier you were selling
34:32tickets only through Indigo your own
34:34website now you are selling from make my
34:36trip from goo from exigo from IRCTC
34:40demand can come from anywhere but the
34:42seats are limited in one Aeroplane right
34:45so how you are dealing that so imply
34:47demand uncertainty will also increase
34:49rate of innovation will increase again
34:51un because new products you never know
34:54how customers will take it so in that
34:57way your implied demand uncertainty will
34:59increase required Services level will
35:02increase again your uh this implied
35:05demand uncertainty will increase so you
35:07can just see if your uncertainty is low
35:10and imply demand uncertainty is low I
35:13told you another example uncertainty is
35:15low normal taxi and then if you are
35:18providing the ambulance services how
35:20that is different from the normal taxi
35:23product margin very low right so profit
35:27so obviously here because you are
35:29dealing with those kind of services
35:30emergency services will be high forecast
35:33error only 5 to 10% here it can be 100%
35:38sometime whole day ambulance is free and
35:41maybe for next 2 hours you are getting
35:44so many different orders right so then
35:47stock out rate here you can easily
35:49maintain even if 2% stock out is
35:51disaster for a kind of supply chain
35:54which is having very low implied demand
35:57un uncertainty but in case of high
36:00demand it is usual you can be stock out
36:03right average for season and markdown
36:05seasonal sale here you can reduce
36:08because because those kind of product
36:10you are dealing with the continuous
36:11demand but here can be up to 25%
36:16right now we'll see impact of Supply
36:19Source capability on Supply uncertainty
36:22obviously when we have new products you
36:25are not sure about the supply as well
36:27it's not only demand Supply is also not
36:30sure because your product is very new
36:32and suppliers are also taking time to
36:34standardize that raw material right then
36:37mature products generally have lower
36:40this is obvious once you will
36:42mature a kind of saturated demand
36:45saturated Supply and because now that
36:49initial defects process rejection is
36:51also reduced because you have
36:52standardized the product right so that
36:54you can uh lower down during when the
36:59product is passing to the maturity stage
37:01so how it will impact the uncertainty
37:03frequent breakdowns obviously again
37:06uncertainty will increase sometime your
37:08breakdown in the manufacturing facility
37:11machines equipments or production lines
37:13or maybe Manpower absentismo kind of
37:16breakdown only right unpredictable and
37:19low yelds your process is not stabilized
37:22and in that way when it is not
37:25stabilized so your defect are more poor
37:28quality initially poor quality will be
37:31there because your process is not
37:33standardized so variability will be huse
37:36limited capacity because you are not
37:38sure how much demand will be there how
37:40you can design the supply capacity right
37:43so because still the production process
37:45is evolving so you are also in that
37:48dilemma where whether the product will
37:50mature whether it will go up to that
37:52level we are expecting we are maybe we
37:55we try to extend the Capac and suddenly
37:58there is downfall so what we'll do with
38:00that right so we can just see how this
38:04uh uh different scenarios are there if
38:07you are talking about salt industry
38:09steel industry we talk about all these
38:12kind of sugar industry with commodity
38:14markets kind of products right so we
38:17have predictable Supply predictable
38:20demand so you should be very very
38:22efficient when you are having that kind
38:24of supply chain it should be targeted
38:26towards efficient efficiency because you
38:29know all parameters your demand is fixed
38:31your supply is
38:32fixed but the situation like automobile
38:36industry sometimes you are sure with the
38:39supply but your demand is in question
38:43sometimes you are unsure with the supply
38:45you are okay with the demand so then
38:48this is a example of automobile industry
38:50then you need to handle in that way a
38:52new communication device is highly
38:54uncertain Supply uncertain demand
38:57because you are not sure how the market
38:59will take it right so the second step in
39:02achieving that strategic fit is
39:04understanding the supply chain
39:05capabilities right now we have seen that
39:08what can be the supply uncertainities
39:10what can be the demand uncertainties now
39:12we need to understand our capabilities
39:14as supply chain whether our supply chain
39:16is responsive enough or our supply chain
39:19is or our supply chain is flexible
39:21enough or cost efficient or we are
39:23focusing on quality what are the
39:25parameters what are the USP we are
39:27carrying with our supply chain and so
39:30that means this uh our main focus is how
39:35we can Bridge gaps between current
39:37capabilities and desired capabilities if
39:39you are saying that we are not very
39:42responsive but we want to hit the
39:43responsive parameter then you need to
39:46find out the Gap and where you can
39:47remove uh remove those gaps right so how
39:51you can do that you need to ensure
39:53technology Improvement in process
39:55supplier relationship or whatever
39:56activity you are doing through all the
39:58supply chain right either your sourcing
40:00either your manufacturing either your
40:02distribution warehousing storage
40:04Transportation how you are doing the end
40:06mile delivery right so supply chain
40:10capabilities just to highlight if you
40:12are talking about responsiveness how
40:14quickly you are responding to wide
40:17variety of 200 different models of same
40:21desire Vitara braa and then how you are
40:24dealing with that shorter lead time how
40:26quickly you are delivering the product
40:28handle a large variety of product and
40:30build highly Innovative products you are
40:33quickly renovating the products Philips
40:36right meet a high service level service
40:38level means customer is forcing you to
40:42when you are delivering those many
40:45services are required after Sal services
40:47are required how you are using
40:49installing the product that is required
40:51to demonstration is required delivery as
40:54per their schedule it is required right
40:56installing as for there it is required
40:59right and then handle Supply uncertainty
41:02that we have seen already so just uh
41:05quick understanding if I'm saying
41:07responsiveness at one end highest
41:10responsiveness what is the meaning of
41:11highest responsiveness you are keeping
41:14extra inventory with you you are having
41:17very short lead
41:22time you are having highest
41:26quality you are providing the largest
41:29variety possible you are processing even
41:32the minimum
41:34orders you are providing the highest
41:37Services
41:39level all those things right so that
41:42means cost will be high so here highest
41:46cost when you are targeting responsible
41:48and highest cost just just see the vice
41:51versa of this when you are you are ready
41:54to wait for your product that means I
41:57can consolidate the order I need not to
41:59make delivery within 30 minutes of the
42:01pizza maybe if from IIT kakur campus it
42:05is order is coming I can wait another 30
42:07minutes and I can consolidate five
42:09orders so that the total transportation
42:11cost same viker can or delivery partner
42:15can deliver my all the five orders right
42:18so this is how I can reduce the cost
42:20right so this is the uh relationship
42:23between your responsiveness and cost
42:28so again you can see highly efficient
42:30supply chain steel mill Sugar Mill all
42:33commodity markets somewhat efficient
42:35when you are talking about app industry
42:37so you are sure about the trends for
42:39next 6 months or one year so you should
42:41be efficient in that Way Automotive
42:43production somewhat responsive because
42:47different models are there customer can
42:49seek for any type of product and highly
42:52responsible kind of Zara supply chain
42:55kind of Dell Supply Chain where you are
42:57you know or 711 Japanese store where you
43:01are daily you know changing the
43:03inventory you are uh making customer as
43:06very important part of your supply chain
43:08strategy right so see this you need to
43:11understand as your supply chain
43:13capabilities what are your capabilities
43:15okay so this second step we have seen
43:17that what are our capabilities at the
43:19supply chain now the next step will be
43:22we will find the synchronization between
43:24the supply chain strategy and
43:26competitive strategy looking into these
43:28parameters so till now we have seen what
43:31are the uncertainties threats challenges
43:33can come to our supply chain and then in
43:36the second step we have seen the our
43:38capabilities now in the next session
43:41we'll continue this discussion how we
43:43can find the common path where we can
43:46align our competitive strategy with the
43:48supply chain strategy so we'll continue
43:50this discussion in the next session
43:52thank you

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