Leading a supply chain turnaround in Whirlpool

         Supply Chain plays an important role in any company’s growth and sales. In fact supply chain has become one big differentiator among the companies. By making a turnaround in supply chain Whirlpool could increase profits and reduce costs. In this article it is critically analysed how the turnaround in supply chain  could bring turnaround in the company by use of five step process for supply chain excellence.

The five step process for supply chain excellence:

1. Right leaders - Hire and groom talent with the unique skills needed to build and run your supply         chain.

2. Select and apply the right technologies, from forecasting systems to carbon footprint                           management.

3. Eliminate crippling cross-functional disconnects such as SKU proliferation and obsolete                       inventory.

4. Collaborate with external suppliers and customers.

5. Implement a disciplined management process to sustain success. 

 Situation of the Company in the year 2000

 1.    Supply chain in the company proved to be sales disablers as the products were not available to             the customer though it was in the inventory.

 2.    More finished goods were there in the inventory tying too much capital in it.

 3.    Only 87% of the product was available to the customers.

 4.    Failure of newly implemented ERP. Previously Whirlpool was shipping 70,000 appliances a               day. But after the implementation of new   ERP, company was able to ship only 2000  products.

These were the problems that the company was facing at that point of time which needed immediate attention to reduce the costs, improve the performance, retain the market share and increase the profits.

Devising the strategy

Whirlpool responsibility of today is to maintain the performance of the supply chain. In 2001, they focused only on North America and the guy responsible for it is very new to the supply chain organisation. Their sales were raised to record level in 2000 with the launch of many innovative products. They were success in many things except only one thing holding them back i.e WHIRLPOOL SUPPLY CHAIN.The fixing the problem of the supply chain is a mandate. At the top level, it’s a very simple formulation “Getting the right product to the right place at the right time - all the time”.They sell those appliances in 100 countries, through retailers big and small and to the construction companies and developers that build new homes.Their Approach to the world class in “Supply chain performance” i.e Supply chain strategy starts with the Last link i.e the customer and proceed backwards.

Understanding Customer Needs:

The top line finding of the study undergone from Boston consulting group is that “Delivery with integrity”. i.e Ability to deliver it fast is important  but as  important as your ability when you said you would. 

“Give a date, Hit a date” is what they are asking for.

Identifying Trade Partner’s Priorities:

Moving upstream, we needed to understand the direct customers better and also study many sub-divisions from contract distributors to single-family-home Builders.Finally they discovered 27 different dimensions, along which our performance was being judged, each varying in importance according to the customer.

Bench-marking the Competition:

Customer’s expectations are dependent upon what others in our industry are doing. They quickly staked out the areas where a relatively small investment would yield supremacy.

Their ultimate plan is “Meet or beat the competition in most areas, at minimum cost.

Building for the Future:

Identifying the probable range of future operating scenarios based on industry, economic and technological trends.

Selling the revolution:

Whirlpool had a careful balance between seeking their guidance and selling your vision i.e between the internal and the external customers. They were involved in consensus-building namely nemawashi (literally means “Root binding”).Here from the project management standpoint, it was important to break out each component of the plan into the stand-alone initiative, Justified by its own business case.From the competitor analysis, they charted their current position against the number one competitor in each dimension in order to understand the gap between them.

Sales and Operational Planning Process:
Whirlpool involves a Systemic approach of plan involving all the departments. CPFR – Collaborative Planning, Forecasting and Replenishment. It is a Web based tool to share forecasts and collaborate on exceptions.Project Management Office was to ensure the completion of projects on time and Performance metrics to keep everything on track.I2 supply chain collaborator ensured that the same data is being used for planning/forecasting purposes by both Whirlpool and its trade partners.

Engaging Talent 
Whirlpool gave Heavy emphasis on people’s project management skills – Disciplined planning & Execution, a model developed by Project Management Institute (PMI).Hiring top notch people in business and information systems side in order to fill out their project management task. Involving industrial experts in Supply chain advisory board for challenging the creativity .

Plan to sell/Build to Order
 The Most important notion is that certain High-Volume SKU should never be out of stock. Running out of them has a disproportionately negative impact on customer’s perceptions. Whirlpool formulating a supply chain strategy that allows them to identify these SKUs across all of their trade partners in all channels and to ensure that the replenishment system of their regional warehouses keeps them in stock. This constitutes the “Plan to sell “Part of the program.This constitutes the “Plan to sell “Part of the program.The small Volume SKU’s should be of pure PULL Basis and the service level is set by the SKU’s.Whirlpool continues to develop new Web-based tools. Recently, they’ve been focused on system-to-system transactions, in which their system talks directly to a customer's system for purposes of transmitting orders, exchanging sales data, and even submitting and paying invoices.

Implications of Supply Chain Turnaround
The supply chain turnaround in whirlpool has made the company reap significant benefits by impacting upon the various financial aspects of the company and resulted in increased shareholder value by reduction in cost and increased efficiency in the supply chain. The following figure shows a schematic diagram of the various implications of the supply chain turnaround that resulted in profit and increased customer value.

                                                                                                                                                              Impact on Sales Revenue

The sales revenue of whirlpool got increased as the company was able to deliver on the time specified by them to the customer. As we have already noted that the customer was not delighted by quicker delivery rather than by delivery at the specified time which delighted the customer. By proper collaboration in the supply chain using i2 supply chain collaborator they were capable of reducing the lead time.Further, the forecast accuracy was also improved through CPFR and the variances in the forecast were reduced. This further prevented the loss of revenue through mark down and stock out situations.

Impact on cost of lost sales
The more collaborative supply chain enabled the supply chain to function smoothly reducing the breakdown of the chain. As the supply chain was effective and functioning at its best the product availability was improved to 96% from the meagre 87% that was in the year of 1998-99. This increased the availability of the product in the market and prevented the loss of sales due to stock outs.Further the implementation of the Made to Stock and Build to Order the company was able to tune its production based on the movement of the stock in the market. The products which are of more demand are made and stocked while the slow moving stock were produced only based on the customer orders. By the implementation of the build to order the company was able to reduce the markdown occurring in the slowing moving stock and reduced the cost of lost sales.The combined effect of the increase in sales revenue and reduction in the cost of lost sales made the company to generate more revenue by serving its customers in a really good manner.

Impact on the Fixed Costs
The company reduced its fixed costs directly by outsourcing the logistics to Penske Logistics a third party logistics company. By doing so their working capital locked up in the form of assets like trucks, warehouse, etc. has been reduced and were ready for investment in other areas. Also the third party logistics provider gave the company knowledge in terms of tracking the package and delivering it economically and efficiently to the customers. Further the company was able to reduce the inventory cost y investing more on supply chain technologies which fetched quicker returns and were very much helpful compared to other physical assets.The improved technological linkages in the chain and reduced physical assets lead to the saving of fixed costs.

Impact on Variable Costs
The company reduced the variable costs by reducing the shipping, expediting and purchasing costs. The company also reduced the transportation and warehousing costs by responding to the customers in an efficient and effective manner. By outsourcing their logistics and warehousing and by accurately forecasting the demand through CPFR and sales and operations planning the company was in a position to reduce its variance in the demand forecast thereby reducing the variable costs involved. Carrying inventory cost was also reduced by focussing more on efficient transhipment and reduced lead times. Thereby reducing the goods to get accommodated in warehoused leading to increased costs.The combined effect of reduction of costs both fixed and variable lead to a lot of cost savings t the company. Whirlpool saved around $100 million in the supply chain turnaround process.

Impact on Assets/Investments
The overall effect of outsourcing and improving the production cycles etc. resulted in freeing a lot of working capital that was locked up as inventories, logistics assets and warehouses. Whirlpool after the implementation of newer systems was in a position to reduce the inventory turnover cycles which increased the working capital available for the firm to invest. Further the outsourcing of the logistics resulted in the reduction in logistics asset cost. On the whole the capital locked up in the form of assets was freed up and was ready for investments.

Impact on Economic profit and Shareholder Value
As the supply chain turnaround had a direct implication on reduction of costs and increased sales revenue. The increase in sales revenue was also due to the prevention of loss of sales in due to unavailability of the product and due reduction in the possibility of markdowns. Thus increased sales and decreased costs resulted in increased profits which in turn resulted in increased shareholder value. Thus Whirlpool was able to turnaround the organisation by making its supply chain more efficient through proper collaboration between its suppliers.

Results of the Supply chain turnaround:
The key results of the supply chain turnaround in Whirlpool were as follows,
• Product availability at Whirlpool increased in the range of 88 to 95 per cent
• Inventories were reduced by 15 to 20 per cent (Saved $100 million)
• Lead times became as low as five days.
• Forecasting errors were reduced by 50%
• Warehouse and transportation costs saving rose up to 5%
• Improved quality of goods delivery and integrity (Saved $100 million)
• Improved relations with suppliers
• Increase in customer service levels
• No. 1 in Fortune Magazine’s 2011 World’s Most Admired Companies

Key lessons learnt from Whirlpool’s Supply Chain turnaround

• Start with customer and work backward – Most of the firms have only the supplier side under control but it is more necessary  to keep the demand side also under control for an effective supply chain. So while beginning to integrate the supply chain the integration should always begin from the customer side proceed backeards.

• Implementation of technology is the last step in supply chain transformation- Many firms consider the investment in  technology as the solution for all the problems they face. But that is not the case technology can only be a back bone to support  the flow of information. In order to eliminate the problems the company should get its processes right and then uses the  technology to support its processes leading to the development of a flexible operating system. 

• Chief Information Officer and Chief Procurement Officer must be on the same page about major technology issues- This is  necessary because until the processes are not clearly understood by the CIO he will not be in a position to provide the CPO with the right information system that can integrate and support all the processes in the system.

• Develop clear, written goals and obtain up-front buy-in from all other major internal players – So that all the stakeholders involved knows exactly what the organization is moving towards and can help n flawless execution of the activities.

• Involve suppliers early in network design – Start with customer and work backward

• Implementation of technology is the last step in supply chain transformation

• Chief Information Officer and Chief Procurement Officer must be on the same page about major technology issues.

• Develop clear, written goals and obtain up-front buy-in from all other major internal players.

• Involve suppliers early in network design - So that their views are also considered and the need for modifications in the middle  of the implementation di not arise from the suppliers end. 

References

• “Leading a supply chain turnaround”, an HBR article by Reuben C Slone

• “On-demand Supply Management: World Class Strategies, Practices, and Technology” By                   Douglas A. Smock, Robert A.  Rudzki, Stephen C. Rogers

•  http://www.icmrindia.org/casestudies/catalogue/Operations/Operations%20at%20Whirlpool-               Operations%20Management %20Case%20Study.htm

•  http://www.information-management.com/issues/20030701/7013-1.html

•  www.wikipedia.com

•  www.scribd.com

• “Operations a Whirlpool”- Poornima Pillai, ICMR Hyderabad, 2004

• “Leading supply Chain Turnaround’- Howard Business Case

• “CPFR at Whirlpool Corporation: Two heads and an exception engine” – N Sagar

This article is written by Vanamamalai R. Vana holds a B.E in Mechanical Engineering. His interests lie in reading and drama.Vana also enjoys playing Volleyball. Reach Vana at pgp13058.vanamamalai@iimraipur.ac.in

Role of Indian Railways and Indian Post – Smart Logistics in Retail e-commerce

          E-commerce works on making retail operations online by eliminating distributor/wholesaler and retailer network. E-commerce adapts technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange ( EDI ), inventory management systems, and automated data collection systems. By the use of smart logistics with ease of payments, this business model has achieved forte in recent years.

Info-graphic Depicting Various Stages and Stakeholders in E-Commerce Transactions

Retail E-Commerce in India

       Retail e-commerce in India is one of the fastest growing businesses with a steady growth of nearly 60-70% [1]. It is forecasted to follow the same trend in the coming years. Increasing penetration of internet in India, gives a hope to many start-ups in this segment [2]. Growing demand from the customers fosters tough competition among the players like FlipKart, Amazon, eBay, SnapDeal, Jabong, Myntra and ShopClues etc. The profit making of the firms, hence, highly depends on cost-minimization of supply chain and logistics.

The Challenge

       Some of the leading e-commerce players use indigenous logistics for delivery of products without outsourcing like FlipKart, Jabong, and SnapDeal etc. And most of the other players deliver the orders through private logistics companies like BlueDart etc. Here comes a challenge – in delivering orders to Sub-urban and rural areas.  Considering the number of orders placed from Tier II, Tier III cities and rural places, rarely the delivery options are available. In case of availability, the delivery service cost is too expensive through private logistic companies. Most of the orders placed by consumers from rural segment constitute low priced products (Rs.500-Rs.1000), which are assumed to be non-fragile and non-luxury products. The figure below illustrates availability of delivery options in Amazon vis-à-vis FlipKart. 

     Figure shows comparison between Flipkart and Amazon.The availability of its  products

 in Rural areas or Tier-3 cities.

The Amazon Way

      And here’s Amazon’s way of catching up the competition soon after entering India against its rival. Amazon delivers most of the low-priced non-time-priority orders through Indian Postal Service. With over 1.6 lakhs post offices throughout the country, with lion’s share of 1.4 lakh in rural areas, India Post claims to have largest postal network in the world. On an average, an area of 21.2 sq km and a population of 7175 are served by a single post office. Indian Post relies upon Indian Railways which is accessible to almost every town and village in India. And Amazon is successful in delivering products to the rural segment through low cost means. Being partnered with Indian Post, Amazon will certainly form a synergy.

       By outsourcing it to the Indian Post, significant cost cutting is done as the cost of postal service is far economical than courier service [3]. Through the unprecedented network of Indian Railways, Amazon makes it more profitable. Indian Railways is considered as one of the world's largest railway networks containing 115000 km of track over a route of 65000 km with 7172 railway stations with around 2.8 million tons (1050.18 million tons per year) of freight transported daily [4].

                                       Figure Shows supply chain of goods in Amazon

       Recently, Amazon has also insisted Indian Post to allow the use of new technologies such as real-time tracking and monitoring devices to develop a delivery mechanism based on smart logistics. Thereby, Amazon wants to leverage Indian Post network to ramp up its delivery mechanism to within 24 hours anywhere in the country [5]

A Similar Model-Alibaba.com

        World’s leading B2B e-commerce giant, Alibaba.com has also implemented the similar strategy of tying up with China Post. Alibaba was the first e-commerce company to tie-up with a government postal agency (in China).  The firm tied up with postal department to share warehouses, processing centers and delivery resources forming a network of smart logistics providing easier, economical and faster delivery services to users.

References

[1] Internet penetration in India 17.4%, on a growth of 28.9% (Source: The Hindu)

[2] India’s fastest growing country in APAC – e-commerce (Source: ET)

[3] No match between Rail and Road Freight (Source TOI)

[4] Indian Railways – Freight Cars (Source – Wikipedia)

[5] Amazon to ramp up Delivery Mechanism (Source - ET)

The article is Submitted by Bharadwaj Sista .He is currently studying PGP 1st Year at IIM Raipur. He has 3 years of work experience at Tata Consultancy Services.

Enterprise resource planning

          Enterprise resource planning (ERP) is a business management software product that contains a collection of integrated applications that a firm can use to manage and interpret data for many business activities such as inventory management, planning and purchasing costs, manufacturing, supply chain management and payments.
         In short ERP is the one of the innovative software which can manage all the major functions of business through computer database and advance processes.ERP system software is a multi-billion dollar industry that produces components that support a variety of business functions across industries. Many firms have increased their IT investments in areas such as Enterprise planning. Initially only large enterprises focused on ERP systems, later smaller enterprises also increasingly started using ERP systems.ERP systems run on different computer hardware and software configurations and uses any database as an information repository.

ERP enables following in businesses:

• Streamlines operations and gain overall visibility of various functional areas in a company.
• Information is accessible anytime, from anywhere to make good decision making and speed up response times.
• Makes businesses to easily adapt to new manufacturing methods, varying customer requirements, and evolving innovative business strategies.
• Push new products to market more quickly.
• Optimize inventory management and production resources to increase efficiency.
• Improve quality and bring more customer satisfaction.

Background:

Before ERP there are other enterprise planning products such as Inventory management which was popular in 1960's,Material requirements planning (MRP) and Manufacturing resource planning.The Gartner Group first used the acronym ERP. Though ERP is first introduced to address    issues   in manufacturing sector, slowly it gained prominence in other areas like accounting, maintenance, marketing and human resources. By mid 1990s ERP systems addressed almost all core enterprise functions. Eventually many Governments and non–profit organizations in various countries also began to use ERP systems.The most important pain point that led to rapid growth of ERP systems in the late 1990s is the year 2000 problem also known as Y2K problem which made  year 2000 indistinguishable from 1900 in digital systems.ERP systems addressed the issue and many     corporations have installed ERP systems in their business processes.

Characteristics of ERP:

1. Flexibility

As way of doing business is fast changing due to amendments in the business standards and changes in law, management of business process which is done through ERP systems should be flexible.

2. Modularity

One of the great features of any good ERP system is that it has open module architecture. This means, if there is mishap in any module, we can correct that particular module by opening it instead affecting all other modules. Also if there is a need to add new modules, it can be easily achieved.

3. Connectivity with Other ERP Systems

There are lots of ERP solutions available in the market, but some systems are standalone systems. A good ERP system should have capacity to connect other ERP systems as businesses have started to interact with millions of other businesses. So, it is imperative to connect them online through our ERP.

4. Changing according to Business Practices

Each industry have different standards. For example, in accounting follows IFRS standards and quality management follows ISO 9000 and six-sigma. So ERP systems should be updatable according to all standards.

Functional Areas:

                                                      Functional Areas of an ERP System

The important functional areas served by ERP system are tabulated below:

Sales Management	Purchase Management	Manufacturing	Project Management
Warehouse Management	Time Tracking	E-commerce	Expense Management
Fleet Management	H R Management	Document  Management	CRM
Accounting & Finance	Manufacturing   Resource Planning	Social Network	Event Management

Illustration of ERP system in East Tech Company:

East Tech, the largest Caterpillar reseller in the world, specializes in the sale and service of new and used construction and mining equipment. They required a solution to optimize the entire life cycle management of the lease, have transparent cost calculations of machinery and simplify the mana- gement reporting. They selected Columbus because of the industry and ERP implementation expertise. They now receive holistic and accurate information about the condition and value of all 
the leased fleet vehicles that has helped to improve the satisfaction levels with existing and potential customers.

"Industry expertise and many years of professional experience of successful implementation of IT projects became compelling arguments in favor of using Columbus."

References:

http://en.wikipedia.org/wiki/Enterprise_resource_planning

http://www.eresourceerp.com/

http://www.svtuition.org/ 

http://www.columbusglobal.com/en/Retail/Client-Briefs

The article is written by Rajesh.He is a first year student of  PGP 2014-16 batch.He has 4 years of experience in IT industry.

Future Trends & Challenges in Supply Chain Management

         A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer. Supply chain management (SCM) is the management of the flow of goods. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.The primary objective of SCM is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory, and labor.

Future Trends & Challenges in Supply Chain Management:

Impact of E-commerce

          E-commerce industry has become prominent in the last three years.This will create an impact on supply chains of many retailers.Statistics of 2013 show that customers preferred online shopping even during holidays.In fact online sales are high during holidays.So retailers are providing special offers during holidays to attract customers.E-commerce players are trying innovative techniques to increase customer reach.One such technique is "click & collect" service,where people order products online for pick-up at store or any other preferred location.This service is popular with busy internet-savvy buyers of groceries and electronic gadgets.These people cannot wait at home during daytime for deliveries but pick up at a convenient location and time.This service has altered the supply chain and inventory management systems of many firms and they need to be ready to face challenges.

Emergence of 3D printing

        3D printing  is the processes of making a three-dimensional object of almost any shape from a 3D model or any other electronic data source.A 3D printer is a type of industrial robot. 3D printing is one of the technology that has potential to revolutionize manufacturing and supply chain systems in future. 3D printing is already being used in health care services (in dentistry for artificial implantation).Manufacturers see the potential for 3D printing to change the way they source various spare parts.At present,this technology is ideal for creating customized parts and reduces inventory and storage costs.If the speed at which 3D printing produces items increases,it will change the structure of supply chains. Right now 3D printing is not that useful in mass production as it takes a long time to print a single item;2 hours for a smartphone and longer periods for complex items.But if,for example it takes 16 hours to print a spare part,and normally that part is shipped from a factory in Europe to India,printing the part is less costlier than sourcing it.

Big Role of Big Data

      It is very easy to get data related to customer behavior and purchasing trends using Big data and a proper analysis and thorough number crunching can give significant inputs to understand customer requirements regarding online and in-store shopping.Accordingly changes in Supply chains have to be incorporated.The challenge is in using the information from big data and getting a particular buying pattern of consumers, as enormous amount of data is generated using big data.

Increasing Use of cloud computing

       Logistics and warehouse operators are increasing usage of cloud computing to host their IT supply chain on a centralized cloud,rather than on different physical computers located at many locations.Cloud computing is used to set up warehouse and logistics operations quickly in areas where there is paucity of established infrastructure.A warehouse is created in the cloud.As long as a physical site is present,data present in the cloud can be accessed.Cloud computing helps in improving  a supply chain's long-term efficiency.

Urban deliveries are becoming more complex

       There is increasing complexity of logistics in urban areas.One important factor contributing to this trend:higher environmental standards set in cities.Cities such as Mumbai are getting bigger and more congested and are struggling to cope with the volume of people and traffic.So there is a pressure on users to be more ecologically responsible.Therefore  Retailers and logistics companies need to work on making their deliveries more environmentally friendly by using innovative solutions.

Integrated Supply chain management

      The ISCM not only means integrated logistics  but also demands that the SCM must look into the ramifications of these arrangements on the cost of transportation  of products within a trade zone and outside it.It also includes developing logistics strategies. The field of ISCM has developed in the last few years for bridging the gap between demand and supply using efficiency and cost trade-offs. The SCM now not only involves the "management of logistics", as was done in the past  but, includes the management and co-ordination of activities, upstream and downstream links in the supply chain. The integrated supply chain management include but not limited to: Planning and Managing supply and demand; Warehouse Management;Inventory control;Efficient Transportation and Distribution;Timely Delivery and customer's delight and customer's satisfaction.

Tough competition among major E-commerce players

        Last two months have seen major ts investments in various E-commerce companies by venture capitalists.There is an investment of 1 billion dollars in Flipkart by some foreign VCs.Amazon has announced an astronomical 2 billion investment in India.India. Jabong and some companies formed as global fashion group.As all these companies have attracted lot of investment,there would be huge competition among them.In such highly competitive scenario, the simple pursuit of market share is no longer sufficient to ensure profitability.companies must focus on redefining their competitive space and have unique strategies.For E-commerce companies supply chain is main differentiator.A company that has an efficient and better supply chain can have edge over others in getting good revenues.

August 2014 - Quiz

The Quiz event organised by OPEP - The Operations and Supply Chain Management Club at IIM Raipur on the 21st of August 2014 saw an overwhelming response from the participants.The quiz has four rounds i.e,MCQs,connecting pictures,latest operations related questions and rapid fire questions.The event witnessed over 40 teams taking part, including both first year and second year students.

Delhi-Mumbai Freight Corridor - A Project Management Perspective

              India is growing and to accelerate this growth India needs good and efficient infrastructure. To meet the standards of required infrastructure, the government of India has taken multiple positive steps and ‘Delhi-Mumbai freight corridor’ is one of the proposals. Delhi-Mumbai Freight Corridor (also known as Western Dedicated Freight Corridor) is a project announced by Ministry of Railways, India with the financial and technical aid of Japanese government under the Eleventh Five Year Plan (2007–2012). This freight corridor has a length of 1483 Km and has got approval in this year’s (2014) Railway Budget.

                 

                                               A snapshot of Delhi-Mumbai Freight Corridor

          This is a huge project considering its benefits, size and sophistication. To bring this project into daylight, a great and dedicated effort is required. Consequently a detailed and effective project plan and later an effective project management is need of hour.

Coming to the main agenda of this article, we can break up the project of building the Delhi-Mumbai freight corridor into six phases or steps to run or manage the same in a better and effective way. If we refer to the below figure, the six principal phases or activity managing the project of delivering the Freight corridor will be Project initiation, Planning and design, Execution, Control, Validation and finally Delivery. During validation, if something goes wrong or something is needed to be improved, then again planning is required and subsequently things are executed, controlled and revalidated.

 

                                                   Various stages of project Management

Initiation: At the beginning, a competent project manager who has the ability to drive the project maintaining the QCD (Quality, Cost, and Delivery) requirement has to be selected. A project manager has to be selected based on his past record of performance. As the freight corridor is a huge and unique project, so a highly experienced project manager should be employed to lead the project. A project manager should be a great initiator and thinker. In the initial stage he should clearly understand the scope, deliverables and output requirement of the project maintaining the timelines.

Planning and Design: After initiation of project, a team has to be formed by project manager or company’s top management based on the competency matrix available for execution of the project. In this stage, a detailed and most effective timeline for design, execution, validation and delivery is made and the deadlines for the delivery are made considering the feedback from cross functional team (CFT) members. This timeline should be circulated among the CFT members and if there is any change in the timeline, it has to be communicated to them. A detailed ‘Work Breakdown Structure’ (WBS) should also be prepared along with timelines and the work allocation to CFT members has to be based on the WBS. The project manager should be aware about budget allocation for this project to control the expenditures within the limit or to demand for more funds if the budget is insufficient. At this stage, project manager should organize the design review with the entire CFT members and finalize the design. After finalizing the design, the planning for sourced component requirement and selection of vendor is required to be completed. Project manager will give go ahead for starting the development, if the finalized design is acceptable to every cross functional team member. One of the main responsibilities of the project manager is to follow up the CFT members, take the latest update about the progress and continuously push them to meet the deadline.

Executing: In the stage of execution a project manager’s responsibility is to track the in-house product, process and other activity development status. Later he has to track the availability of the entire outsourced and in-house manufactured components for starting implementation. Significant concurrent engineering techniques have to be applied like giving go ahead to make the land ready for railway track, informing to the respective authority if any relocation is required, giving the requirement if any railway bridge is required etc. One of the main problems a project manager faces is receiving the newly developed part or components required to be sourced from outside vendor on time. To avoid this kind of issues during execution, a feasible timeline should be made at the planning stage and the project manager should keep a regular interaction with the vendor development team. The execution stage will be finished when all the activities like laying railway tracks, station work, trains, electricity and manpower to do the regular work required for railway operation are completed.

Control: In every stage of execution, the project manager will control the progress of every sub activity to meet the quality, cost, and delivery requirement. A project manager will coordinate with various departments and organize meetings to make everybody aware about status and future effort required to meet the deadlines. The control and communication activity of a project manager is the most important activity during the entire project. Any fault in control or communication can lead to failure of the project.

Validation: The tracks laid and the technology and trains used in Delhi Mumbai Freight Corridor are new to India. So a detailed validation of the entire system is required to establish confidence and to ensure the reliability for getting go ahead from the respective authority. The Project manager, collaborating with the technical and validation team, will organize the validation activity of the train, railway track and other required systems. If something goes wrong during validation or any improvement suggestion comes out, a meeting is to be organized with the CFT members for planning improvement and subsequent changes have to be incorporated. Another significant responsibility of a project manager is to maintain the documentation, which is very important to track the project and to record all the completed activity. A better documentation in any project helps to easily face the audit. This also helps the change management process in future if required. If the validation reports are accepted by the respective authority, the project manager will release the green report for making the project ready to deliver.

Delivery: After completion of all the planned activity which included initiation, planning, design, development, execution, validation and successfully releasing green report, the project manager will deliver the freight corridor to the Railway Board of India for starting daily operations.

 A project manager controls the planning and execution and if something goes wrong then holding the activity, rectification, tracking the development status, synchronizing the perception of every CFT members and reminding them the deadline. Every project is unique and has different challenges in every step. So, a project manager should have the ability to face all the challenges and to deliver the project maintaining the QCD target. A project manager should be an efficient communicator, good listener, motivator, self learner, dynamic and should have the imagination ability. He should accept the failure and has to overcome the failure and yes of-course should not forget to celebrate the success.

         The article is written by Arijit Hawlader. He is a mechanical engineering graduate and is currently student of PGP 2014-16 batch. He has work experience of 46 months in Tata Auto comp Systems Limited.He can be reached at pgp14007.arijith@iimraipur.ac.in.

OPERATIONS STRATEGY

Strategic Framework For Manufacturing
A company needs a ‘strategy’ that specifies the kind of competitive advantage it seeks in its market place and articulates how it shall be achieved. In today’s changing, challenging and competitive world, it is not enough for a company to have its goal to be as good as that of its toughest competitor, advanced equipment or the transfer of production to a low–wage area, rather, a need has arisen for ‘strategic flexibility’, better suited to respond to the market requirements of the time than to pursue a mere generic approach to competitive success.
It is, thus, obvious that the key to long term success of a company is being able to do things better than your competitors, besides selecting and creating operating capabilities in anticipation of market demands.

Mass Customization – Developing Unique Operating Capabilities 
Providing remarkable services to customers is imperative in order to perform better than the competitors. One of the programs invented to meet every customer’s request is mass customization. This attempt has been on one hand, embraced as providing a unique value to the customers efficiently and on the other as a strategy that can produce unnecessary cost and complexity.
Later, four distinct approaches to customization namely - collaborative, adaptive, cosmetic and transparent have been identified, which provided a framework for companies to design customized products and to support business processes. Each of the approaches is important in its own way and differs on the conditions under which each should be employed.
Collaborative customization is apt for businesses which deals with customers who cannot easily articulate their requirements, and grow frustrated when forced to select from a plethora of options. The adaptive approach is appropriate for businesses whose customers want the product to perform in different ways in different situations. The cosmetic approach is appropriate when customer’s usage of a product is the same but differs only in how they want it to be presented. The transparent approach to customization is appropriate when customers’ specific needs are easily predictable.
The various combinations of the approaches to customization have to be explored and a company has to come up with the
combination that would create customer unique value at the lowest possible cost.

Product Development – A Way to Survive Competition
Creating a sustainable product development competitive advantage is the most effective organizational capability, which will have a greater impact on market share and the rate of share growth than other organizational capabilities. The company has to be adept at creating new products and extensions of them to be competitive, according to the changing market conditions and the product life cycle, a factor popularly known as time-to-market and to deliver this capability,being productive and timely is imperative. The rise in customer expectations in this competitive environment has made quality and accuracy (in design), a virtue of design, which also determines a business competitive status.

With the help of processes like Integrated Product Development and Sequential Development, smooth functioning is enabled, accurate budget allocations are made and the risk of performance issues at the functional block level are minimized. During product development stage, supply chain management plays a key role not only in operations to deliver new product, but also in adopting innovative processes such as IPD.

REDUCING BOTTLENECKS WITH INDUSTRIAL AUTOMATION

The scope and direction of this article would be to introduce the concept of bottleneck in an industry and show how eliminating them is a step towards achieving what is called 'competitive advantage'. In today’s world achieving this is easier said than done, businesses must boost their operational efficiency wherever and whenever possible. It’s a given that – if a company fails to operate efficiently it will soon find itself at the verge of extinction.

Let’s start with an understanding of what exactly a bottleneck is and what automation has anything to do with it? A bottleneck (or constraint) in a supply chain refers to the resource that requires the longest time in operations for a certain demand. An important thing about bottlenecks is that they determine the throughput of a supply chain. Now this brings us to another term - Throughput, which indicates the productivity of a process, a machine, a procedure or a system over a unit period. It’s a part of the Theory of Constraints of business management. The guiding ideology of which is that a chain is only as strong as its weakest link. So the important thing to note that if bottlenecks are not recognized fast enough, it’s highly likely that you miss out on a chance to increase the overall throughput of the system in consideration.

Now that we know what a bottleneck is and how it affects the productivity of a system let’s start to look at how they can be minimized, I say minimize because in no system can bottlenecks be completely eliminated for the simple reason that as you move on from removing one bottleneck to another a new one seems to appear, though the overall performance of the system may have improved there would still be scope for improvement at every stage of operation. These improvements in processes can be brought upon by better utilization of existing resources or by implementing new techniques. One such method would be to adopt automation, the degree of which may vary across industries.  Automation is a technique of making a process or a system to operate by itself (automatically). It encompasses many vital elements and job functions and virtually provides benefits to almost every industry in existence for example:

NAVARASAS OF RISK MANAGEMENT IN PROJECTS

This article encapsulates the people and cultural aspect of risk management, the Cultural barriers to effective risk management and what mature organizations have done about it.

The ancient art form of Bharatnatyam talks about the navarasas and most dance recitals have a mix of one or more Navarasas. 

Below are some analogies and allusions to the Navarasas in relation to risk management:

• Vīram (वीरं) Heroism – During the winning speech of the first ICC T20 World Cup final, the captain MS Dhoni described the dilemma he had to face when selecting the bowler of the last over. It was a do or die situation and one would have expected him to hand over the ball to the most experienced spinner. However he did the unexpected and took a risk by asking Jogendar Sharma to bowl. His bet paid off and the opponents were defeated.  The valiant captain had inspired his team and the bowler who used the opportunity to create a mark for himself.  This heroic risk taking will be celebrated in the records of T20 games.
  
  
• Hāsyam (हास्यं) Comedy. It’s indeed amusing to hear the amount of excuses people give to escape from a candid discussion on challenges and risks of a project. When a meeting is set up, people try to avoid the same saying that they have a calendar clash, client visit is on, audit is happening. In extreme cases, people join calls and later disconnecting abruptly to later clarify that the signal dropped or that their mobile phones ran out of charge
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• Raudram (रौद्रं) Fury – This is the typical reaction of a project sponsor or client who comes to know that the project has gone awry. They are furious to know that the cost, quality or timeline will not be met and express their feelings either verbally or in writing. This situation also turns comical when the wrong person is blamed for the trouble or some unsuspecting person is caught in the cross-fire.
  
  
• Kāruṇyam (कारुण्यं) Compassion – When you are in an extremely risky and intense project, the project manager and the senior leaders need to exhibit this emotion. Typically such projects are marked by long working hours, very less time for one self and a skewed work-life balance. Sensing the intense effort put in by the teams, senior leaders need to behave humanely and exhibit compassion. This could either be in the form of relaxing certain guidelines so that work-life balance is restored and there is a sense of win-win for employees and employers.
  
  
• Bībhatsam (बीभत्सं) Disgust. Aversion is the way society and organizations should look at people who unnecessarily put others’ lives and careers at risk to safeguard or further their own interests. The financial and political scams depict some people artfully deceive the bells and whistles put in place.
  
  
• Bhayānakam (भयानकं) Horror, Terror – When risks are not identified or managed appropriately, the nature of the outcome is disastrous. Take the example of Fukushima Nuclear reactor that was destroyed by the tsunami or the Bhopal Gas Tragedy. The risks were present and could have been forecast if the modelling and honesty were in right measure. The horror of the aftermath is difficult to describe or overcome.
  
  
• Śṛngāram (शृङ्गारं) Beauty – There is immense beauty in the innovative ways to overcome challenges and constraints. It is some of these innovative risk mitigation steps in troubled projects that help organizations in pushing the envelope. Beauty also lies in the character of organizations and people who share praise for the successful outcomes of risky projects with their team and contributors.
  
  
• Adbhutam (अद्भुतं) Wonder – When the crisis is over and the risk has been overcome, the team is amazed at their own capability to have pushed themselves and their organizations to achieve the results. When at first they had encountered the problem, they would probably have thought that the challenges were in surmountable.

CHENAB BRIDGE - AN ENGINEERING MARVEL

Indian Railways plans to complete the Chenab Bridge in Jammu and Kashmir by 2016, making it the world's highest rail bridge. The bridge will be five times higher than Delhi's Qutub Minar and far taller than the Eiffel Tower in Paris. It is being constructed across Chenab river-bed in Salal village of Reasi district. It is a part of project that will connect Baramulla and Srinagar to Jammu via Udhampur-Katra-Qazigund covering the entire route in about seven hours. Currently, it takes exactly double the time - 13 hours - to reach Jammu from Baramulla in northern Kashmir, which is 60 km from Srinagar.

Indian Railways has undertaken the Jammu-Udhampur-Srinagar-Baramulla Rail Line (JUSBRL) mega-project construction which has been declared a national project. The alignment is a combination of a large number of tunnels and bridges. The alignment crosses a deep gorge of the Chenab River, near Salal Hydro Power Dam, which necessitated construction of a long span bridge.

The bridge will have a lifespan of 120 years and will contribute to the economic development, better transportation accessibility to the state and the country.The height of Chenab Bridge is 390 meters exceeding the current tallest bridge on France’s Tarn River (tallest pillar rises 340 meters while the actual height at which trains run on the bridge is 300 meters). 

The construction of the JUSBRL was started in 2003 when Atal Bihari Vajpayee was the prime minister. Construction of the Jammu-Udhampur section was completed and opened in April 2005. The project was stopped in September 2008 when the construction of bridge was announced to be unsafe despite the completion of the approach viaducts in 2007. Difficult geological conditions, access problems, tunnel excavation difficulties, labor disputes and development of a lower, more direct route through tunnels were cited as reasons. The alignment of the JUSBRL project was reviewed to give solutions for the challenges faced. In 2009, the review was submitted to the Railway Board and was approved. The design of the bridge, however, was approved in July 2012. The construction of the project restarted in 2010, and has now been declared a national project. As of early 2013, the latest word is that the original route is back on track and the bridge will be built as originally planned.

INSTITUTIONALISING QUALITY

“Tell me I forget. Teach me and I remember. Involve me and I learn.”

                                                                                                        - Ben Franklin

As the quote mentioned above says everyone will learn when they get involved in whatever they do. Institutionalising quality in an organisation is one such activity where everyone should be involved so that they learn about it and strive to make it a part of their day to day activity and integrate it with the organisation. This article gives you a framework to institutionalise quality in an organisation by describing the essential components for quality assurance and facilitates the processes required to achieve it. This framework has been tested in many countries and can be applied at any level from small shop floors to organisations.

The QA model:

The entire model is built around Quality which forms the core of the Quality Assurance model (QA Model). The Quality assurance is encompassed by three components which forms the basis of quality, they are QD – Quality Definition, QM – Quality Measurement and QI – Quality Improvement. Every organisation must define what quality is, then quantify it and measure it so that it can improve it further continuously. For example, Ritz Carlton hotels developed Service Quality Indicators (SQI) to keep track of the quality of their customer services.

The core quality activities must be supported by the 3 components shown in the figure so that there is effective implementation and integration of quality with the organisation. The enabling environment represents the organisational support rendered in the institutionalisation process. Anything in the industry can be done only when there is commitment and support from the top level management of the organisation. The top level management should provide the essential environment in the organisation by providing necessary policies for initial implementation with well-directed leadership for guidance in implementation with proper allocation of necessary resources in terms of man, machine, money and material. This should be planned in such a way to sustain it so that quality gets institutionalised should lead to the integration of quality in the core values of the organisation. Toyota’s quality assurance is based on its core principle of “Customer first, Quality first and go & see at the scene” which provides an environment fruitful for quality implementation.

Once the organisation is through in getting the support of the organisation in implementation of the quality by creating the necessary environment it should move to the next stage in the QA model , Organising for Quality (i.e.) creating a proper structure in the organisation for quality. It involves processes like delineation of responsibilities among teams within the organisation. Team work plays a crucial role in giving a structure to the implementation process. There is no particular structure as such, it is up to the organisation to decide how to form teams for this process according to them. South west Airlines used 12 different teams to maintain their quality in providing shortest flight turnarounds by proper handling of passengers and their luggage every day. 

INDUSTRIAL VISIT II - BHILAI STEEL PLANT

On 17th February 2014 a group of 28 students started their journey on what was the second industrial visit this season and this time around the destination was the Bhilai Steel Plant (BSP - the flagship plant of SAIL). 

Located in Bhilai, Chhattisgarh, BSP is India's first and foremost producer of steel rails (It is the sole supplier of the country's longest rail tracks, which measure 260 metres), as well as a major producer of wide steel plates, wire rods and other steel products.

Upon arrival the group was taken to a training room where a brief video describing the various processes involved in the manufacturing of steel was shown. After the session, safety instructions were given and the students were sent off to the plant. The first stop, the blast furnace shop, gave a feel of what it is like to be in a steel plant. See pic below.

The instructor explained the processes that happen inside the furnace which reduces iron ore, coke and limestone into hot metal. Liquid iron is separated from slag when it settles down at the bottom of the furnace and is sent to the Steel Melting Shop (SMS). At the Steel melting shop the impurities are removed and the students were explained and shown how the homogenization of steel takes place. The next stop was to one of the 21 batteries at BSP. A battery is a set of ovens lined up together which heat coal in order to remove unwanted gases from it and transform it to coke, the process lasts for about 16-18 hours after which it is transported to the blast furnace. The final stop was the plate mill rolling shop. The students witnessed the automated process wherein molten billets of steel were rolled into the desired shapes and cut as per the specification.

Performance Measurement of Supply Chain and its Strategic Implications

Introduction

In today’s world technical and competitive factors are changing at an alarming rate. In order to survive these radical changes organizations also need to learn to respond to them. The survival of an organization in today’s ever changing environment depends on its ability to respond to changes. This aspect of being dynamic becomes even more difficult for smaller firms. Over the years companies have also acknowledged that it is not economically viable to develop every part of the final product in-house and therefore outsourcing has become increasingly common. Also, with globalisation logistics have become vital part of any organisation and hence supply chain management has become the key to survival.

Supply chain management is the process of planning, implementing and controlling the operations of the supply chain with a purpose to satisfy customer’s requirements as efficiently as possible. SCM spans all movement and storage of raw materials, work-in- progress and finished goods from point-of-origin to point-of-consumption.

On the other hand performance management is also very important. It should be understood that all businesses need performance management, because without it nobody can actually comment on how well or poor any business is doing. There should be some benchmarks, targets etc. to compare so that performance of an organization can be measured. Supply chains constitute substantial costs to organizations. Hence cost and performance effectiveness become vital. Strength and performance of any process are only as good as its weakest link. Therefore performance measures specific to a firm are needed to enable improvements and to compare it with industry standards and competitors.

This brings us to the very important point that if anything cannot be measured, it cannot be controlled and thereby cannot be managed; finally if we cannot manage something, we cannot improve it.

Need of Metrics and Performance Management

Supply Chain Risk Management should become one of the top concerns of companies and supply chain executives, as the industry gains a greater conceptual understanding of the real costs of supply chain disruptions, combined with recent incidents such as the Mattel toy recall disaster and Boeing’s massive Dreamliner delays have reinforced the point.

Companies have also realised that in order to survive they need to change according to the market. The strength that they can boast of today may become a weakness tomorrow. This point can be made clearer by the example of State Bank of India which at one point in time boasted of its large amount of branches, but with the advent of internet banking these same branches have now become liability. In today’s business change is the only constant.

Some of the issues due to which organizations are not able to successfully integrate and monitor their supply chains are:

COGITATE - Crossword Key

INDUSTRIAL VISIT - JSPL

Industrial visits provide a welcome opportunity for us management students away from the gruelling academic sessions and rushing deadlines to gain a hands on experience of a plant functioning.

Continuing the tradition, the OPEP club organized the industrial visit for the current academic sessions for the whole 2013-15 PGP and 2013 FPM Batch at Jindal Steel & Power Limited Raipur Plant. The visit was scheduled from 9th Dec to 11th Dec 2013. Due to the large number of participants this year, the visit was conducted in three batches to facilitate the smooth conduct of the visit.

JSPL Raipur Plant is located 13 km from Raipur and operates as the machinery division. The plant is spread over an area of around 162000 m2 and manufactures critical equipment such as cranes, pressure vessels, ladles, and other steel castings used in steel, power, cement, and mining industries. The facilities available at the plant are steel foundry, centrifugal casting, machine shop with latest CNC machines, fabrication & assembly shops, shot-blasting, paint booth, heat treatment furnaces, etc.

The visiting batches of the students were given a brief introduction about JSPL and the machinery division by a panel of marketing, operations and safety managers of the plant. This was followed by a guided tour of the facility in small groups. The plant is divided in four units based on the processes such as casting, forging, machining and assembly.