January 21, 2012

Not a minute late or not a minute early but the exact time

Padma Shri E Sreedharan, India’s metro man, retired on 31st Dec 2011.  He started his career in 1954 as a Probationary Assistant Manager and served Delhi Metro for 16 years. He redefined Transportation in India as a social service rather than a business and was known for his concern for the environment. His project emphasized minimizing inconvenience to people. He has set a bench mark in Project Management starting from Leadership, Risk Management to Cost Estimation and Budgeting in DMRC which runs 210 trains.  From the start of the construction in 1 Oct 1998, every phase of Delhi Metro was completed on time.  First phase, which was completed in 2006 was three years earlier to its scheduled time. The Phase II also managed to finish by the time of 2010 and Phase III & IV are scheduled to be completed by 2020. Not just for his focus on the Project, he is also known for his organizational culture where he was totally committed to Corporate Mission with efficiency, transparency and courtesy.

The key to his success was his adherence to his words “Punctuality means not a minute late or not a minute early but the exact time”. He made Delhi Metro so much prompt that trains with frequency less than 3 minutes, if late more than 60 seconds, where considered to be delayed whereas in the best of metros in the world the margin was three minutes with even lesser frequency. He believes that punctuality is nothing but a courtesy to others and other two major things each individual working in a project needs to possess are professional competence and a physical and mental strength to boost self-confidence. So he never compromised on choosing the right person for the right job, which created an amiable and conducive working environment. While execution of the Project, he always motivated and inspired the employees with rewards for their work. He is also one with excellent Negotiation skills and Conflict Management skills.  DMRC had to work along with DTC for widening of Road and Electricity Board of Delhi for the electrification and it being an enormous task had to have a good Cost Estimation and Budgeting. DMRC consulted with the best in the business like Hong Kong MTR for operation and construction techniques. Sreedharan set an example for Indian Business by never letting the collaboration to be a problem or a cause for delay in the Project.

Before joining Delhi Metro he was a chief engineer in Indian Railway. He was the first Indian to introduce Build Operate and Transfer (BOT) and he undertook a stretch of 760 km with 93 tunnels and over 150 bridges. To add to his credits, he was in charge of implementation, planning and design of Calcutta Metro which before his joining was underperforming company with delayed projects.  He never changed any decisions of his simply because somebody wanted. His ideology is to fight all the odds and work on the project, once the project is completed, every one including those who opposed will appreciate. He is considered to be the best in the country in Project Management enterprise with concern for environment, employment and customers.

Deepak Sirra, a PGP Student of IIM Raipur, has worked in a Construction SME for 2 years. He can be reached at pgp11011.deepak@iimraipur.ac.in.

January 14, 2012

IIM Raipur students win Second Position in Video Making Competition organized by NITIE

Chain to Excellence (C2X), The Supply Chain Interest group of NITIE Mumbai organized Optitude, a Video Making Competition. The participants were required to make a video on ‘Role of Supply Chain in Disaster Management’.
3 Students from IIM Raipur, Akshay Agarwal, Navjeet Sidhu and Rohit Bhagat participated in the Competition and won II Prize.  The winning team was from NITIE Mumbai.
This video starts with a description of the Disaster Profile of India and emphasises the need for effective Disaster Management using facts and figures. For instance, it has been found that according to the then UN Under-Secretary for Humanitarian Affairs (Jan Egeland): “In Niger in 2005, it would have cost $1 a day to prevent malnutrition among the children if the world had responded immediately. By July 2005, it was costing $80/day to save a malnourished child’s life.”
It is important to plan beforehand as during a disaster, Infrastructure is destabilised, Demand and Supply are unpredictable, last – mile connectivity is hampered and there is lack of coordination and training amongst the Relief Agencies.
An Effective Supply Chain can aid in Pre-Disaster by imparting Training and Education, Infrastructure Planning and Pre-Positioning of Resources. During a Disaster, Relief Operations need to be carried out and Last –Mile Connectivity for supply of food and medicine needs to be ensured. Post Disaster, Infrastructure needs to be rebuilt after cleaning the debris and communities need to be re-established.

January 01, 2012

Best Practices at Flipkart

 Flipkart an electronic commerce company was established by Sachin Bansal and Binny Bansal in 2007 and now it is among India’s largest online retailers with reported sales of Rs 75 crore for year 2011-11. Sachin Bansal and Binny Bansal both are alumni of Indian Institute of Technology Delhi who started this company after quieting their jobs in Amazon.com with a vision To be one of the largest multi-category e-commerce destinations in India, with a strong focus on customer service.

Initially Flipkart started with selling books online and has since diversified into a generic e-commerce site, selling CDs/DVDs of music, movies, games and software, as well mobile phones and electronics. According to the co-founder Sachin Bansal, “We started with books because they are a comparatively easy category  products to sell online. They do not require huge inventory maintenance, are easier to negotiate  supplier  terms and profit margins are high.” Also since books are low value items, inducing  customer trial was easy. It  was a safe option to start off with books, given their appreciation in e-commerce the world over. Now Flipkart have about 11.5 million book titles, 11 different categories, more than 2 million registered users and sale of 30000 items a day which makes it India's answer to Amazon. All this was possible because of the major goal of the company is to provide a memorable online shopping experience to their customers so that they come back again and again using innovative services like Cash on Delivery, a 30-day replacement policy, EMI options, free shipping , discounted price and very importantly on time delivery of the products.
Mr. Sachin Bansal

The role of logistics in the successful functioning of an e-commerce venture is indispensable. All these innovative services will be ineffective if the products do not reach the customers on time. Here are some Best Practices of the Supply Chain of Flipkart:
Building the Suppliers base- The Company has established a network of more than 500 distributors and only stocks frequently ordered items. Items like the 'Long tail' are almost always sourced from suppliers in real time and as and when the customer places an order.
Building Infrastructure for Operations- The Company has 4 offices in 4 metros cities with more than 500 employees. Warehouses of the company are located in 7 cities including the metros. Company has tie-ups with more than 15 courier companies like Blue Dart, First Flight etc. to deliver their products and Indian post for areas where courier do not reach.
The Process of Supply Chain- The first step in buying the products like books online from the Filpkart.com site by making payments using payments options like credit/debit card, cash-on-delivery, net banking, cheque/DD and money order and enter the phone number and address where the items need to be delivered.
Depending on items purchased they are packed and shipped accordingly for example mobile phones and books are packed differently as per requirement and also all items have transit insurance against theft and damages that may be caused while they are in transit. Flipkart bears the cost of delivery and this make them give a reason/motivator for improving efficiency at every point of supply chain. This also makes them differentiate from their competitors.
Now for delivering the items depending upon the area where the item need to be delivered either courier, Indian post or own internal logistics arm is used. The delivery time varies between less than 24 hours and 3 weeks depending on the location and availability of the product like the products which are imported take 3 weeks time to get delivered to the customers.
The inter-city, trans-zone deliveries are made using air cargo. For satellite cities and others in close proximity, products are transported overnight by train or truck.
For the local parts of the cities where the warehouses of the company exist products are delivered using two-wheelers, bicycles, or on foot depending upon the proximity of the place and because of this many of the deliveries are made within a day of the order being made. All the Team Members have been trained to work efficiently to meet customer expectations.
Use of Information system: The Company use sales to predict the inventory levels. The warehouses are split into multiple areas — inventory, packing, shipping and so on. The stocks are replenished every 24-48 hours. In the Back End, Flipkart stores details of all the transactions that need to be carried out. They have an understanding with their associates for order tracking, reconciliation and MIS (Management Information Systems) reports. The private courier companies in turn have their own ways of tracking every package. The customer is also updated about the status of his shipment via message, email or through the website.
When the product needs to be returned then due to the companies understanding with the courier companies it happens without any disputes or problems efficiently. “Flipkart takes care of the after-sales needs of its customers with regard to delivery of an item or addressing grievances including delayed delivery by the logistics partner, or addressing issues when an incorrect product is delivered. In the case of electronics, warranty and after-sales service is largely the responsibility of the manufacturer. Flipkart does however facilitate interaction between the customer and manufacturer/service center as and when the need arises.”[1]
Future for E-Commerce: India has 11 million online customers now which will increase to 30 million by 2015 which shows that the e-commerce industry with the increased internet penetration will be the service sector's growth engine in India. The industry's size is expected to increase to $11.8 b. Among the challenges faced by the industry is its dependency on the service providers like suppliers, logistics service providers, etc. whose service in not up to the expectation and are affecting the service of the online companies. To solve this issue efforts are to be made to educate these service providers the importance of using technology and provide them incentives to use these technology and shift their focus on to the customers. Seeing the prospects of growth a lot of new online retailers have come up and there is a price war going on to attract more and more customers which is putting pressure on the profitability of the companies so it has become extremely important to manage cost to increase profits which is only possible by building an efficient backend- a nationwide delivery network, warehouses , inventory management , logistics, efficient teams to manage all this therefore supply chain management becomes an important factor on which companies depend to sustain in this industry. Flipkart obtained funding from Tiger global management in 2010 which is being utilized by the company for strengthening supply chain capacity and upgrading technology platforms, including automation at warehouses.
[4] Articles from Economic Times
Vishal Singh is a PGP student of Indian Institute of Management Raipur. He has done his B.Tech in Chemical Engineering from BITS-Pilani, Pilani (Rajasthan) and can be reached at pgp11047.vishal@iimraipur.ac.in or at +91-7587208647.