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: