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Lecture 35 : Achieving Supply Chain Strategic Fit (Contd.) — Transcript

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0:01[Music]
0:22[Music]
0:25so uh welcome again to this nptl online
0:27course on Logistics and Supply Chain
0:29management so we started discussion on
0:32how we can achieve the Strategic fit and
0:34in that process we have discussed about
0:37the first very two uh basic steps where
0:40we talked about what are what can be the
0:42you know uncertainties coming from the
0:45customer side in terms of demand or
0:47different level of services expected uh
0:49from the customer and then we talked
0:51about the uncertainties coming from the
0:54supply perspective as well right and
0:56then we talked about what are our
0:58capabilities in the second step we
1:00explored our capabilities our strengths
1:02our weaknesses right and then now the
1:05next step is we'll continue with how we
1:08can get the that strategic fit which we
1:10are talking about the you know the
1:12alignment between your supply chain
1:14strategy and your competitive strategy
1:16so this is the third step talking about
1:20uh alignment between uh your supply
1:22chain strategy and your competitive
1:24strategy so obviously your competitive
1:27strategy is targeted to compete with the
1:29ralas right so that
1:32means how you will compete with your
1:35complete supply chain whatever you are
1:36offering through your complete supply
1:39chain right now talking about complete
1:42supply chain that means you need to
1:44synchronize all the
1:46stakeholders right starting from your
1:50raw material
1:51suppliers Subs suppliers manufacturers
1:54co-manufacturers warehousing Partners
1:57distribution Partners Transportation
1:59agency and finally your customer is also
2:02Part of That So within each stakeholder
2:07all functions you will perform supplier
2:09will also do the sourcing supplier will
2:11also store the material he will also
2:13manufacture he will also transport ship
2:16package all these activities will happen
2:19there as well marketing also there
2:21because he is marketing to manufacturer
2:23or the next stage supplier same all
2:25activities more or less in different way
2:28will be happening in the manufacturing
2:30agency as well then all these activities
2:34or some of the activities happening at
2:36the warehousing Center as well we are
2:37manufacturing may be in terms of
2:39packaging manufacturing may be in terms
2:41of kitting manufacturing may be in terms
2:43of any value adding activity if you are
2:45doing with the product right so that
2:47means these all stakeholders within each
2:51stakeholder all the functional units
2:54like here I have mentioned marketing
2:56operation procurement Logistics but
2:57these are not only four right so their
3:01warehousing is very important end mile
3:03distribution is very important storing
3:05of raw material is very important right
3:08M manufacturing is very important
3:10quality assurance is another very
3:12important function right so these all
3:14function if you are saying that
3:16efficient then you need to throughout
3:19ensure the efficiency if you're saying
3:21responsiveness throughout you need to
3:23ensure the responsive so here we'll
3:26Target either quickly you are responding
3:29or efficiently and we'll see the stattic
3:33uh Zone where we'll say that if you'll
3:36lie in this Zone you'll say that you are
3:38hitting that strategic fit zone so
3:41alignment of supply chain responsiveness
3:44and implied uncertainty so implied
3:47uncertainty this is very common sense if
3:49you'll see if uncertainty is high can
3:53you be cost efficient or you have to be
3:55responsible obviously if uncertainty is
3:58very high you have to be responsive
4:01right because quickly you need to
4:03respond to the demand quickly you need
4:05to respond to any change in the supply
4:09so if your supplies demands are matured
4:13enough then you can think of going for
4:17your efficient supply chain so mechmas
4:20car supply chain strategy if you'll just
4:22go through that quick example which are
4:24dealing with maintenance repair and
4:27operation product so they are obviously
4:29the variety is huge because those many
4:32products for ment you need so many
4:35different equipments right different
4:37requirements if you're talking about
4:39only keys so how many different size of
4:41keys are required and then so many
4:43different other items right so rapid
4:45delivery and variety they have to ensure
4:48having said that rapid delivery and
4:51variety that means you need to choose
4:54the responsive supply chain there also
4:58you cannot be very efficient you have to
5:01be efficient right you cannot say that
5:03we are responsive so we cannot be
5:06efficient right but responsiveness is
5:09something this supply chain requires
5:11responsiveness because of two basic
5:14things variety and delivery Rapid
5:16delivery is required aligning rules
5:19across the supply
5:20chain so different stages of the supply
5:23chain may require varing level of
5:26responsiveness and efficiency now this
5:28is something
5:30we were talking about either your supply
5:32chain can be responsive or efficient but
5:34then let's say you are very responsive
5:37in providing the high availability of
5:40the products that means implications are
5:43that inventory you need to keep extra
5:46with the retailer right but keeping
5:49inventory extra with the retailer would
5:51give you one positive chance to reduce
5:53the cost of manufacturing because you
5:55are producing in bulk there you can be
5:57cost efficient you are responsible at
5:59the retailer end because you are keeping
6:01high inventory but at manufacturing end
6:04you can lower down the cost because now
6:06to keep that high inventory you are
6:09manufacturing large lot lot quantity so
6:12change over is minimum then again where
6:15you can be efficient you can be
6:17efficient when acquiring the resources
6:19raw material suppliers you can negotiate
6:21with them because you are buying orders
6:24in bulk right so that means this
6:27responsiveness throughout the supply
6:29chain you need to design where you can
6:31be responsive where you can be efficient
6:34the proper blend of these two you need
6:36to find right so uh retailer and
6:40manufacturer approach retailer holds
6:42minimum inventory if you like the
6:45example I told you if retailer is
6:47observing the maximum uncertainty
6:50keeping the responsiveness parameter by
6:53maintaining the inventory that means
6:55retailer is absorbing the maximum uh
6:59uncertainty in that way so he should get
7:02the maximum benefit in that way right
7:04because he is focusing more on efficien
7:08uh responsiveness so in that way margin
7:11should be little higher on the other
7:13hand manufacturer distribute your raw
7:15medal suppliers they can be efficient at
7:17the same time so there they need to uh
7:20be cost efficient in that day so this is
7:23that beautiful picture we were talking
7:25about we were targeting getting that
7:27strategic zone right now let's talk
7:30about certain demand when your demand is
7:33certain if you're talking about your
7:36product steel industry sugar industry or
7:39all commodity Market if your apparel
7:41Industry jeans industry is not very you
7:43know that much variety is not there
7:45almost right what you can do with the
7:47jeans either color will be different or
7:50some Trend maybe parallel fashion or
7:52maybe narrow jeans or low waste or these
7:54kind of things will be there right but
7:56these are fixed right you know what
7:58other what else you will do with that
8:02but talking about uh let's say the girl
8:06stock or female stock or top how you are
8:09designing so many variety can be there
8:11designs can be there compared to
8:13standardized jeans right so that means
8:17certain demand certain Supply will be
8:19there right so in that way your supply
8:23chain should be very very efficient
8:25supply chain so this is supply chain
8:28efficiency Jo you need to Target right
8:31efficient supply chain but moving
8:34towards as your uncertainty is
8:36increasing
8:38your supply chain from efficiency you
8:42will now promise responsive supply chain
8:45right where you are talking about Zara
8:48now Zara is saying that because they are
8:52majorly producing for females right for
8:55girls latest trends every week they are
8:58changing the fashion they are changing
9:00the inventory on their shelves right so
9:02that means responsiveness is very
9:05important so they are maintaining
9:07minimum inventory so that it could can
9:09be consumed within that time and new
9:11pattern will come
9:13automatically on the other hand Walmart
9:15dealing with the same apperal industry
9:17but they are more responsive uh sorry
9:19efficient right cost efficiency so they
9:22are providing maybe standardized product
9:23or different like Amazon what Amazon is
9:27doing they have divided all all the
9:29patterns into different category this
9:31kind of product maybe genes I talked
9:33about so very regular kind of product
9:35demand Supply is certain so should be
9:38efficient we are designing tops for the
9:41girls should be very very responsive how
9:44quickly we need to replenish how quickly
9:47we come with the new pattern new design
9:49new style right so this is that
9:52strategic fit depending upon where your
9:55product is if you are on the uncertainty
9:58side if you are on the certainty side so
10:00then accordingly you will change this
10:02strategic zone
10:04right so now all the functions within
10:07any supply chain should be targeted to
10:09achieve the competitive strategy like I
10:11told you if we are saying that we are
10:13responsive our retailer should not say
10:16that I cannot process single order
10:18because we are responsive we are
10:20responsive for supplying even single
10:22order as well right so efficient supply
10:26chain Walmart Del supply chain
10:28responsiveness we D is getting the
10:30inputs from the make to order when they
10:33are getting the order then they are
10:34starting the manufacturing process after
10:37implementing all your inputs so Walmart
10:40is not doing that what Walmart is doing
10:43they are producing in vul they are not
10:45taking care of what are your inputs but
10:47in that way they are lowering down the
10:49cost as well right so there is no right
10:52supply chain strategy independent of a
10:54competitive strategy your competitive
10:56strategy is something else right you
10:59saying that you are responsible but you
11:00are doing all efficient kind of things
11:04how you will you just imagine that you
11:08you are BMW and you are talking about
11:11you are promoting BMW with your fuel
11:15efficiency who will believe that BMW is
11:18known for the speed the Comfort the
11:20luxury the safety BVO is known for
11:23safety but if you're saying that you are
11:26cost efficient where is your competitive
11:28strategy that means your competitive
11:30strategy is you are high status product
11:34you cannot compete your your supply
11:36chain cannot be right even if BMW store
11:40is not there in kakur is in Kolkata and
11:43there is one demand customer wants the
11:46ride test drive they should come
11:48specially for that custom and this is
11:50how they are doing that Harley deiton
11:52they are having the look centralized
11:54store so any demand is coming they are
11:57going there and giving the free right
11:59test rides and then go coming back to
12:01their store if any demand is coming they
12:03are meeting from the centralized store
12:05because the inventory because that is
12:08one thing is customized product you
12:10cannot deliver make the regular items
12:13and then keep in the store that means
12:15that very basic purpose that we are
12:18including your input is gone so that
12:21means in that way you need to type see
12:24now this is these two different
12:26scenarios are there first scenario this
12:29is complete supply chain see supplier is
12:33not at all absorbing any uncertainty so
12:36when it is not an absorbing any
12:38uncertainty it should be efficient he
12:40should be efficient in delivering the
12:44products uh now let's say we are talking
12:47about uh genes industry we talk about
12:50ail industry ail
12:53industry we are talking about genes now
12:57genes the material will be more or less
12:59same maybe color will change but then
13:01Trend whatever you are doing you are
13:03doing in the manufacturing unit so that
13:06means and then finally retailer is
13:08placing all the inventory now whatever
13:12you are manufacturing you you are
13:15somewhat maybe uncertainty is there if
13:17any old fashion is there or any Trend
13:20change is there you need to amend but
13:22still still because main demand for Gene
13:25is almost saturated you are known so so
13:29you should be also somewhat efficient
13:31efficienty efficiency parameter should
13:33be top priority responsib should be
13:36there if any trend is there you need to
13:38go for that but then retailer is
13:41observing the
13:42maximum uncertainty because because
13:45their customers are going and then you
13:48might have seen all the stores your
13:50seasonal sales is 70% off 50% plus 25%
13:55off that means that means now there
13:59selling just on the cost of
14:01production so minimum cost they want to
14:04recover so maximum they are observing so
14:06they should keep the maximum margin on
14:08the other hand if any other supply chain
14:10if we talk about uh like we are talking
14:13about the in same apparal industry if
14:15you're talking about girl stop so then
14:18if manufacturing company they need to
14:21change quickly the trend so that means
14:23they need to change the manufacturing
14:25process also how earlier they were
14:27manufacturing the tops now they are add
14:29adding some new accessories into that
14:31they are doing something something with
14:32the stuff because I'm not an expert in
14:35that how they are designing but yes they
14:36are coming with so many different
14:38patterns and then you see how many
14:40options girls are having and then we are
14:42coming with the regular t-shirt shirt
14:43and then Gan what what you will do with
14:45the gene that means only color you can
14:47change maximum this is what you can do
14:49right so but you are talking about this
14:52is one kind of industry so here uh if
14:56you talk about retailer is observing the
14:58least whosoever player in the supply
15:00chain is observing the less uncertainty
15:03obviously he should be efficient right
15:05so now I'm not saying complete supply
15:08chain should be efficient or complete
15:10supply chain should be responsiveness
15:13some players stakeholders may be
15:15efficient some stakeholders may be
15:17responsiveness so we have seen different
15:19scenarios here now talking about
15:22efficient and responsiveness we have
15:24talked about so many things but let us
15:26just narrow down the points where we can
15:28compare this primary goal what will be
15:30primary goal obviously cost reducing
15:32cost inefficiency quick response to the
15:36customer uh requirements should be the
15:40uh objective of responsive your supply
15:42chain product design strategy your
15:44design should be very easy right so that
15:47minimum cost should be there but here
15:49modularity like I talked about modular
15:52design let's say modular design is a
15:54kind of thing if uh in your system I'm
15:57designing let's say your uh LED TV so
16:01you are having any problem with the
16:03sound you want to improve the sound
16:05system just you will remove that sound
16:08modular design sound panel and we'll
16:10insert the new one the repairability is
16:12gone anything wrong with the picture
16:14quality you will remove that picture
16:17panel whatever board is there
16:19controlling the picture you'll put the
16:21another with high configuration any
16:23anything you need to improve the storage
16:25you just take out that storage part and
16:28we'll insert if you want to you know
16:30increase the processing speed just
16:34include the new processor how quickly
16:35you can do that right pricing strategy
16:38here we are concerned here we are not
16:40concerned because they are not competing
16:43on price manufacturing strategy should
16:45be efficient because in case of
16:47efficient supply chain minimize the cost
16:50how much you can do but here capacity
16:52flexibility we are
16:54promising different variety in that
16:56product so how you can ensure that in
16:59strategy minimum we need to keep here
17:01because we are responsiveness so we need
17:04to provide the inventory but that
17:06inventory also you need to keep in mind
17:08because we are responsive so we are
17:09quickly changing the inventory whether
17:11we have the second Market where we can
17:13move that obsolete inventory to sell or
17:16what we'll do with that obsolete
17:18inventory because responsiveness also
17:21says that quickly will will change the
17:23pattern right lead time strategy
17:25obviously here we are not bothering
17:27about the lead time if it even standard
17:30delivery will be there it may take 5
17:32Days 7 Days 10 days but here today only
17:35we'll deliver your product right
17:37supplier selection strategy
17:38Transportation strategy all the partners
17:41will be based in efficient supply chain
17:43first thing is how much you will charge
17:46right then we'll talk about the quality
17:48then we'll talk about your capability
17:50then we'll talk about what access to
17:53which Market you are having right then
17:55we'll talk about other but talking about
17:57your responsive supply chain we'll talk
18:00about supplier will negotiate starting
18:03with how quickly you can change over
18:05from one product to other product how
18:08quickly you can change if we'll change
18:09the design of the product right so these
18:12will be features some of the other
18:15issues affecting your strategic fit
18:18we'll quickly go through multiple
18:20products customer segments now we talked
18:24about maruti is coming with the 200
18:26different models targeting one car is
18:30starting base price is let us suppose 10
18:33lakhs ending with 22 23 lakhs you just
18:37imagine more than double what is the
18:40base price is so you can just imagine
18:43those many extra features you are
18:44getting so that means different products
18:47and then not only this one this is one
18:48particular model they are coming with so
18:50many different models right different uh
18:53models are there in each model this is
18:56the variety then different customer
18:58segment they are serving right so you
19:01need to make the balance between
19:03efficiency and responsiveness the person
19:05who is looking for 10 lakh model base
19:08model obviously looking for efficiency
19:11he will look for the fuel efficiency as
19:13well he will look for how much maximum
19:15he can carry you might have seen who is
19:18having the
19:20BMW maximum two or three people must be
19:23riding at at a point right including
19:27driver but who is having maruti lower
19:31segment or maybe any other Honda Hyundai
19:34lower segment always full with the seat
19:37capacity the seat capacity is five they
19:40are always trying to fit more than seven
19:42eight people right so this is the extra
19:45challenge that you are minimum cost
19:48product but then you should carry that
19:50maximum weight but then you talk about
19:53so these different products are there so
19:56how you'll make one strategy when you
19:58cannot do that make one strategy then
20:00maruti came with two different supply
20:03chain you see it is so difficult to
20:06manage one supply chain and maruti
20:09traditional supply chain is there and
20:11one is under Nexa so now NEX now the
20:15this is the perception in the market if
20:17you want luxury premium products so
20:20those items products are there in the
20:22Nexa showroom and if you want the base
20:25products right they are there in the
20:28marut the traditional stores right so
20:31that different supply chain there are so
20:33many this is not only maruti is doing if
20:35you talk about uh banking services ICICI
20:40Bank is different different branch is
20:43there maybe in the same city same City
20:46Financial investment Branch will be
20:48there same city your insurance selling
20:51Branch will be there so many different
20:53products different branches right so
20:55that is how you can do that product life
20:57cycle it is again very very very
20:59important see this is the product life
21:00cycle up to introduction stage we we can
21:04characterize introduction stage how our
21:07demand is and our supply both are very
21:10very
21:11uncertain that
21:13means here we are just we have just
21:16introduced we are not sure about demand
21:18so we need to keep very high margin at
21:21that point of time that means high price
21:23because we need to recover the initial
21:25R&D cost as well as we are not not sure
21:29about the manufacturing standardization
21:31is not there we are struggling with the
21:33defects all those things are there so
21:36that means introduction stage your and
21:39then you should be here you should be
21:41responsive because you are not clear
21:43with the demand you are not clear with
21:44the supply those things are not clear
21:48but as your product will mature will
21:52grow your supply and demand in that way
21:56will be more saturated
22:00you are more certain with your supplies
22:02and demand but another challenge will
22:04come in terms of the competition now
22:07other players will also penetrate into
22:09the market so obviously now you need to
22:11lower down the price you need to lower
22:14down the margins and that you can do how
22:17you can do that because your supply and
22:20demand now you can fix your supply and
22:23demand parameters you have standardized
22:25the production process right so this
22:29product life cycle if early stages you
22:31should be responsive but when you are
22:34maturing you are going uh away with the
22:37product then your supply chain should be
22:40very very
22:41efficient competitive changes over the
22:45time globalization is there more
22:47competition will come then obviously you
22:50have to change your strategy if Amazon
22:52is saying that same day delivery so
22:54somewhere manra Flipkart all other
22:57players eBay they have to ensure that
23:00and now the next trend is like I was
23:02talking about the in the I think last to
23:05last session I was talking about what
23:07else is left in the e-commerce industry
23:10I just talked about this that now the
23:13same day delivery if you are promising
23:14that your 90 to 95% will be products
23:17will be delivered same day that is the
23:19major breakthrough if you your supply
23:21chain can support that and the same day
23:24evening when I recorded this session
23:25that session I saw the ad from Amazon or
23:28flip cart I forgot they are promising
23:30that same day delivery and this is going
23:32to be the next you know e-commerce Trend
23:35and then everyone will be moving towards
23:37that right so we don't have that much
23:40time to wait for that now how we can
23:42tailor our supply chain to get that
23:45strategic
23:46fit need for tailor supply chain because
23:49multiple customers are there their
23:51demands patterns variety they want
23:54diverse products we have so no one size
23:57fit no strategic fit pure strategy will
24:00work right it's not feasible for one
24:03maybe you need very efficient supply
24:05chain you are selling maruti Alto
24:08through your traditional store and then
24:10Baleno you are selling maybe High status
24:12product little higher compared to that
24:15and then you are selling through your
24:16Nexon supply chain right so examples of
24:19tailored supply chain Dell is very good
24:22example because earlier what D was doing
24:26for responsiveness they were recording
24:27the AUD through online and then they
24:30were configuring the systems right as
24:32per the requirement but then they
24:34realize that okay we need to because
24:36this lead time is huge they are placing
24:38order we are manufacturing the
24:39manufacturing Hub then we are shipping
24:41the product why don't we set up we go
24:43with the traditional kind of chain where
24:46responsi will be there still you can
24:48configure your system but we should have
24:50retailer in the local market so that
24:53your retailer can fulfill the some of
24:55the immediate demand for the regular
24:58product and any specialized that high
25:00configuration is required then we can
25:02take some lead time of maybe one or two
25:04days and we can maintain inventory there
25:07only with the retailer from there we can
25:09fulfill the
25:10Demand right so Levis stores they also
25:14they have standardized size genes also
25:16and customized genes also right so then
25:20how you can do that so you for obviously
25:23for customized genes you need to be
25:26responsive for standardized you will be
25:28efficient so if you are looking for
25:30standard products always you will get
25:32the lower price right designing a
25:34tailored supply chain what will be the
25:36key issue key issue will be that
25:40designing a supply chain that is
25:42efficient is obviously when uncertainty
25:46is not there then you can go for that
25:48but if it is there then you need to
25:51tailor your supply chain toward the
25:53responsiveness right that is very
25:55clear strategies for tailoring the
25:58supply chain so that means maximum
26:01efficiency okay and then utilizing
26:04different manufacturing processes and
26:05transportation mods
26:08so if you are saying that fast delivery
26:11through drone or through air you can
26:13ship if you are saying sustainable
26:14delivery through ship you can transport
26:17if you're saying that cost efficient
26:20delivery through ship or through Road or
26:22through train you can go right so then
26:24again whether you are maintaining or
26:26inventory at the centralized store or at
26:28the distributor location so then also we
26:31change your uh your strategy with
26:34respect to your competitive strategy so
26:37again you can see fast moving item with
26:39low implied uncertainty stored in
26:43decentralized location where you are
26:45sure about the demand you can set up
26:47your that retail chain there and you can
26:49consume that but you are not sure like
26:52Blue Nile you can keep the diamonds in
26:54the centralized store and then from
26:57anywhere if the C demand is coming you
27:00can supply the product right you can
27:02consider another example of
27:04pharmaceutical industry any new demand
27:06is coming new drug is coming you are not
27:08sure first is product availability is
27:10very big question then then you are
27:13promoting through your uh medical
27:15Representatives they are meeting the
27:17doctors doctors are prescribing your
27:18drug and then you are finding too
27:21difficult to find that drug right so
27:25then you will search for the alternative
27:27how you can sure during the introduction
27:29time this is a big big challenge maybe
27:32it is accepted maybe it is not accepted
27:34the reaction and all that after taking
27:36that pill how it will be you know so
27:40then you are not sure about the demand
27:41you are not sure about the unty so
27:44during that time you should be
27:46responsive how quickly you can respond
27:48to
27:49that now expanding strategic scope of a
27:52supply chain so we can see how we can
27:55expand that now this is not limited
27:58scope to one functional department or
28:01one operation or one stakeholder this
28:04should be across all the functions
28:06across all the supply chain stages
28:09across all the stakeholders shared
28:12objective is the main motto of this
28:15expanding the Strategic scope we'll see
28:17five different strategies intra company
28:20intraoperation scope intra company intra
28:22functional scope but first we'll
28:25understand what is the meaning of intra
28:26company intra operation intra functional
28:29and then inter compan interoperation
28:32interfunctional
28:34intra operation scope is very minimized
28:37local view within let's say uh I'm doing
28:41manufacturing this is one function is
28:45manufacturing this is any Department in
28:49the any unit
28:51right now manufacturing whatever I'm
28:53doing is first is obviously my process
28:56of converting raw material into finished
28:58I'm doing the handling of the material
29:00as well I'm maintaining the inventory as
29:04well I'm doing the change over as well
29:08from one model to other model I'm doing
29:10the packaging as well these all are
29:13different functions I'm doing within one
29:15function different activities activities
29:18means operation intraoperation means I
29:21am only concerned about the
29:23process process I'm saying I'm very
29:26efficient I want to reduce the cost of
29:28doing this but on the other hand I'm
29:30saying packaging inventory maybe I'm
29:33targeting responsiveness maybe another
29:37parameter right so that means local view
29:41one operation I'm targeting efficiency
29:43other operation is not at all aligned
29:45with that second is now limited scope
29:49this is the problem if you are having
29:50that limited scope you are not even
29:54aligning even one single Department
29:56intra functional now now within each
29:59department now manufacturing is one
30:01Department marketing is another
30:03department storage is another department
30:06distribution is another
30:09department sourcing who is handling the
30:13raw material procurement is another
30:15department R&D is another department
30:18quality is another department ensuring
30:20the Quality quality assurance is another
30:22department right but now we are saying
30:24we are little bit we are moving to the
30:27next level and we are saying that within
30:29one functional unit will'll align all
30:32the strategies means all these fun
30:35activities operation within
30:37manufacturing function should be aligned
30:40either we are talking about efficiency
30:42so all should be aligned towards
30:43efficiency so we are getting the next
30:45level now interfunctional scope let's
30:48say we have different function I'm
30:49talking about only manufacturing again
30:52right so manufacturing means within
30:56manufacturing unit all the functions of
30:59let's say manufacturing process uh
31:03inventory R&D all these functions should
31:07be aligned this is interfunctional right
31:10all the functions within one unit
31:12stakeholder should be aligned now inter
31:15company scope let's say other than
31:18manufacturer I'm adding distributor as
31:22well I'm adding
31:24retailer then maybe your raw materials
31:28suppliers so all these are doing
31:30different function units right raw
31:33material supplier is also doing
31:34manufacturing he is also doing auditing
31:36he is also doing sourcing he is also
31:39maintaining the records accounting HR
31:42all those functional units are there
31:44inter company means all the if I'm
31:48saying that efficiency is the main
31:51target all functions within one
31:55organization should be aligned towards
31:56efficiency that all organization
31:59involved in that supply chain should be
32:01aligned towards the efficiency this is
32:04the complete view maximizing the supply
32:07chain Surplus right so if we understood
32:10these concept we'll quickly go through
32:12uh the diagram which I wanted to show
32:14you aile inter company scope means how
32:17quickly you will change right so that
32:19will see this is what I was talking
32:21about now first is this only here what
32:25we are doing one operation let's say
32:28this is distributor this operation
32:30distributor is doing one operation let's
32:32say distributor is pack doing the
32:34packaging he is doing the inventory
32:37practices as well right but packaging
32:39only he is maintaining right now and
32:42towards efficiency he is not bothering
32:43about the inventory sometime he talk out
32:46sometime he is keeping the XX inventory
32:48but then what I will do I will maximize
32:52the scope and I'll keep intra compan
32:54still the company is only one
32:56distributor and and intra functional
32:59that means intra functional means supply
33:01chain strategy only I'm talking about so
33:03within supply chain strategy I will
33:05align all the strategies towards either
33:09efficiency or responsiveness or wherever
33:12I want to set the parameter of responsib
33:14or efficiency right so these different R
33:19functions like I was talking about
33:20manufacturing R&D HR accounting here I
33:23have this diagram includes these four
33:27different function functions competitive
33:28strategy is one function product
33:30development strategy is another function
33:33supply chain strategy another functional
33:34unit marketing strategy and other
33:36function you can include R&D you can
33:38include your HR you can include
33:41accounting you can include purchase
33:43Department wosing that also functions
33:45right and these are different players
33:47now let's broader this picture and come
33:50to one particular player and align all
33:55the strategies all the functions this is
33:57is what I was talking about now within
34:01that player if distributor want to want
34:03wants to be efficient so competitive
34:06strategy will be minimum cost product
34:09development strategy will be if he is
34:11developing because distributor is not
34:13developing the product if we'll take the
34:14example of manufacturer then we can say
34:17that manufacturing strategy will be
34:19minimum cost right supply chain strategy
34:21will be minimum cost all the functional
34:24units toward the minimizing the cost
34:27then we'll will expand this view to the
34:29maximum where we are talking about all
34:32players are talking about
34:36responsiveness or maybe responsiveness
34:39on 1 to 10 parameters we are setting
34:41nine and cost efficieny 1 to 10
34:45parameters we are setting somewhere five
34:48this also can happen mixture of strategy
34:50another supply chain can come which will
34:52say cost will be eight and then
34:55responsiveness will be seven
34:58right so this is how you can expand the
35:01scope of the Strategic fit right so key
35:04drivers that improve supply chain
35:06strategy obviously you need to align the
35:09markets with you only then both the
35:11strategy will be getting the best fit
35:14Global growth and expansion competitive
35:17strategy is also going for growth your
35:18supply so that way your supply chain
35:21need to support your competitive
35:23strategy you need to set up your
35:25distribution fulfillment centers in the
35:27Global markets as well supplier
35:29relationship collaborative approach your
35:32competition is how you can minimize the
35:36uh sources right cost of acquiring the
35:39raw material supplier collaboration
35:41process redesign if any inacurate
35:43accuracy is there with the process you
35:46need to update the process and then
35:48obviously you need to track all the kpis
35:50whatever you are recorded and you want
35:52to Target what are the challenges to
35:54achieve this strategic fit obviously we
35:57talked about about different variety and
35:59shrinking life cycle if first thing is
36:03you quickly you are you are providing so
36:05many different products so then also it
36:07is a challenge to get the because many
36:10products so then sometime you are saying
36:12efficient and then the demand is
36:14changing for some other product you have
36:16to be responsive so this is again will
36:18disturb you from that strategic path
36:20Zone we talked about this strategic path
36:23strategic fit right so it will disturb
36:26you from that Jone this is strategic fit
36:29Jone where you are talking about let's
36:31say if it is efficiency is here
36:34responsiveness here that means it is uh
36:37demand is certain here certainty is here
36:40here you are very uncertain with the
36:44Demand
36:46right then globalization and increasing
36:49uncertainty challenge will be obviously
36:51globalization is giving you access to
36:54the overseas suppliers overseas markets
36:57but also then disruption happens then
37:00risk is also there so how you can do
37:02that you need to build the flexibility
37:05if something goes wrong with your
37:06overseas suppliers how you can ensure
37:09the smooth delivery of the product with
37:10your in know suppliers Honda very best
37:13example you know they are coming up with
37:17those kind of production lines where
37:19they are
37:21manufacturing sedan cars SUVs or
37:24hatchback cars on the they can
37:26manufacture on the same production line
37:28right if any goes wrong with the demand
37:32of maybe sedan cars you can switch to
37:34the switch to the manufacturing of sus
37:37or some other segment right
37:39fragmentation of supply chain challenges
37:42increased Outsourcing now what is there
37:44when you are Outsourcing some functions
37:46obviously you are losing the control
37:48that means ownership is gone so your
37:52overall control on the supply chain is
37:53gone I can motivate my retailer to keep
37:57extra inventory to be responsive but in
37:59the end he is only responsible for that
38:03and he because we don't have we cannot
38:06force him right so in the end if he is
38:09convinced with the demand pattern
38:12obviously he'll maintain if he's not
38:13convinced with the demand P he'll not
38:15maintain that so what is the solution
38:17solution is you ensure your retailer
38:21even if your inventory is not consumed
38:24properly so we will take it back we'll
38:26reprocess it or whatever will'll sell in
38:29the second market so cost we will be
38:31bearing you just keep the inventory then
38:33it can happen
38:35right changing technology because
38:38rapidly you are changing the technology
38:40product shorter time so life cycle is
38:43now getting shorter so again getting
38:46shorter you are starting new product
38:48introduction already I highlighted the
38:51characteristics of the introduction
38:52stage uncertainty with the supply
38:54uncertainty with the demand margin you
38:57need to keep High R&D cost you need to
38:59recover and then you need to be
39:02responsive supply chain like Dell
39:05shifted from direct sales now they are
39:07providing through retail outlet so that
39:09is another example environment
39:11sustainability measures are coming right
39:13so again you need to change like manra
39:16did they changed their packaging
39:18Starbucks is also very good example so
39:21you need to come with those policies now
39:24case of Walmart quickly I want to uh
39:27just give you the picture if you'll talk
39:30about the Walmart on we'll talk about
39:32all the you know the drivers we talked
39:35about we talked about
39:38facilities we talked about inventory
39:40Logistics drivers we talked about
39:45transportation and then we talked about
39:48cross functional
39:50drivers
39:53sourcing pricing and information
39:59I just want to elaborate on each of
40:01these six drivers how Walmart leading
40:04giant right in the industry highest
40:07sales per square fet how Walmart is
40:10handling all those six drivers how they
40:12are coming up with the supply chain
40:14strategy so what they are doing with the
40:17facilities and inventory they are having
40:19centralized distribution
40:22centers now we have discussed that when
40:24you are having centralized stores that
40:28means that means you are not keeping
40:30inventory at multiple location rather
40:32you are keeping inventory at one
40:34location so inventory cost is minimized
40:37right facility cost is also minimized
40:39because instead of setting up 10
40:41different facilities you are having one
40:44centralized facility so facility
40:46operation cost is also down so in that
40:49way they are saving huge cost in these
40:52two parameters huge cost inventory
40:55almost there are minimum invent
40:57but they are keeping maximum imunity in
40:59the centralized store
41:02Transportation now Transportation they
41:05are responsive here they are efficient
41:07see this is the perfect example to code
41:10with first two drivers facility and
41:14inventory they are efficient with
41:15Transportation they are providing the
41:17responsiveness by running their own
41:20fleets they are running their own fleets
41:22to deliver the items so the cost extra
41:25cost they are bearing of running their
41:28personal Fleet to deliver the items they
41:30are recovering from this so here cost
41:32will be little higher but still you are
41:36in the profit side because you are not
41:39maintaining inventory so what they are
41:42doing for centralized stores they are
41:45doing the cross docking for
41:47transportation basic model is cross
41:50docking and we have seen cross docking
41:52is the best example where you are not
41:54maintaining inventory that
41:56Transportation cost is cutting down and
41:58you are consolidating orders at one
42:00location from where you are shipping the
42:03trucks to different pin code wise right
42:06sourcing for sourcing another cost
42:09efficient parameter you see again they
42:12are targeting on efficiency side and
42:15they are feeding very very large orders
42:18to
42:19their raw material suppliers negotiating
42:22huge on price so they are lowering down
42:24the cost then pricing I'll talk about
42:27later
42:29information information again they are
42:31very very
42:32responsiveness they are setting up huge
42:35Information Network so that they can
42:37collect whole information and provide
42:40the product meet the customer orders
42:42maintain that inventory all the variety
42:45they are promising with minimum level so
42:48here they are responsive pricing very
42:51best strategy of pricing is everyday low
42:55pricing the unique feature Walmart is
42:58everyday low pricing means whenever you
43:00will visit our store you'll get the same
43:02price so as a customer I feel okay I
43:05need not to negotiate much with that
43:07because it is fixed kind of pricing when
43:09it is fixed kind of pricing the very
43:11best you know the implication of this
43:14kind of strategy is your demand is fixed
43:18your supply is fixed when you are sure
43:21about your demand and Supply that means
43:24pricing also you are efficient okay so
43:28you can see how those six different
43:31drivers Walmart is maintaining overall
43:34the result is huge variety volume
43:38quantity is available minimum price Fair
43:42quality right these are some of the
43:44parameters we can characterize the
43:46Walmart supply chain so you can just go
43:49through the complete case key takeovers
43:52reduced its out of stock occurrences by
43:5516% right you can just go through I have
43:58explained every aspect of this supply
44:00chain another supply chain is Del supply
44:03chain so I talked about before 2007 they
44:06were taking orders online designing the
44:09product right so direct sale model they
44:12were implementing they were taking the
44:13orders online and then directly shipping
44:15to the customer in that way they were
44:17very close contact with the customer
44:20getting real time information but the
44:22problem is the distance between the
44:23customer and their manufacturing sites
44:25from there they were you know shipping
44:27the orders so that means lead time is
44:29one thing build to order you place the
44:32order then they will start the
44:33manufacturing then again lead time will
44:35increase just in time they can ensure
44:38they can minimize the cost in just in
44:39time and inventory management because
44:41inventory is not required you are
44:43placing order will our raw meterial
44:45suppliers will supply as and when
44:48required we can cut down the cost so
44:51minimum cash is required supplier
44:53collaboration is obviously required when
44:55you are implementing that kind of system
44:57just in time because as soon as you need
45:00to process the order you will do that
45:02but after 2007 they also experience that
45:05other players are now very closely
45:07linked with the End customer because
45:09they are having retail distribution
45:12chain we should also go near to the
45:14customer now shift to retail
45:17distribution partner partnering with
45:20some retailers right so now again
45:23product diversification if you are doing
45:26that let us not
45:27only uh limit to PCS only we'll come
45:32with the different laptops configuration
45:33we'll come with some other you know
45:36Electronics item with headphones with
45:37whatever other uh related items you can
45:40add into that supply chain optimization
45:43they focused how they can Implement
45:45because now the complete supply chain
45:47they need to manage they need to manage
45:49they have included one more player into
45:52their supply chain that is their
45:53retailer strategic Partners obviously
45:56you'll talk about
45:57and then sustainability environmental
45:59initiatives also obviously now customers
46:01are very aware and also regulatory
46:04authorities wle e that based coming from
46:08electrical and electronics products
46:10equipments you need to handle because
46:12many measures are coming in that way so
46:14customer Centric approach still they are
46:16focusing on that only thing is they have
46:19added more into responsiveness and
46:21efficiency because they have moved their
46:23retail chain near to the customer right
46:26so so this is another very good example
46:29so you can see we how we
46:32identified uh based on uh the market
46:35analysis environmental analysis and
46:37internal analysis we found the
46:39opportunities we found what are the our
46:42strengths how we can exploit those
46:44opportunities then we came up with one
46:46competitive strategy how we will compete
46:48with the uh different players in the
46:50market then we thought okay we fix this
46:53strategy as per all the forces and then
46:55we need to design the compl compl supply
46:57chain strategy then we talked about how
47:00this complete supply chain strategy
47:01should be aligned with the your
47:04competitive strategy to get that
47:05strategic fit we have seen some
47:08parameters how this strategic fit can be
47:10disturbed with your multiple products
47:12multiple customers sub life cycle
47:15changing your uncertainty from the
47:17supply uncertainty from the demand
47:20globalization all those things right any
47:22change in the technology will disturb
47:24your complete strategic fit right so
47:27that's all about how we can develop the
47:30supply chain strategy in line with the
47:32competitive strategy so major source
47:34that is used is this book of choa and
47:36Mandel supply chain manage management
47:38strategy planning and operation so you
47:40can just go through uh this book for
47:43further reading so that's all from my
47:45side thank you very much

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