Supply Chain – A Competitive Edge

Anil ShipleyEVP & Head – Supply Chain

Bajaj Electricals Ltd.

Generic ProblemsComplexity – Huge variables

Customers change their mind all the time

The forecast is NEVER accurate

Suppliers are slow & unreliable

Absenteeism, quality, downtime

Realities

The AAA – A Supply Chain

Availability

Aligned

AgileAdaptable

AgilityRespond to short-term changes in demand or supply quickly; handle external disruptions smoothly

Flow of Information with suppliers & customers

Collaborative Relationship with suppliers

Design for postponement

Inventory Buffers

Contingency plans

AdaptabilityAdjust supply chain’s design to meet structural shifts in markets; modify supply network to strategies, products, and technologies.

Constant search for new supply base & markets. Track economic changes

Evaluate needs of the end customer, not just intermediate customer

Flexible product designs. Flexible production

Benchmarking on product life cycles

AlignmentAlign the interest of all the firms in the supply chain

Exchange of information & knowledge with vendors & customers

Equally share risks, cost & gains of improvement initiatives

Partnership approach with vendors

Sharing of resources

Achieving Strategic Fit

ResponsivenessSpectrum

Responsive SC

EfficientSC

CertainDemand

ImpliedUncertainSpectrum

Uncertain Demand

Zone of Strategic FIT

The TOC way

1 2

3

System 1 System 2

Which system is more complex??

3

12

4

5

786

Five Focus StepsIdentify the System’s Constraint

Decide how to Exploit the System Constraint

Subordinate the rest of the system to the above decisions

Elevate the System Constraint

Go back to step 1

Buffer Management

Buffer management is a control mechanism technique

The objective of buffer management is to check whether the due-dates or availability are threatened

Another objective is to validate whether the buffers used are about right, adequately protecting the system performance

The kernel of the idea behind buffer management is to monitor the cases when the protection mechanism is nearly exhausted!

Replenishing what is soldIf we have 100% availability at the branches and replenish what is sold we can maintain availability at the distributors

To have 100% availability at our branches.

We need 100% availability at RDC’s and the central warehouse

CWH

RDC’s

Branches

This can be possible only if the central warehouses has 100% availability

i.e. material is available for the daily supplies to the branches.

Distributors

SUPPLIER

Avg LT : 6 days

Avg LT: 6 days

Avg LT : 2 days

Avg LT : 1 days

Set upEnd

MarketsPlanning Vendors

Vendor management

RM Suppliers

Cent

raliz

ed P

lann

ing

& S

ourc

ing

Logi

stic

s

VendorsCWHRDCBranchCustomer

BU Sales teams

Planning & vendor management (incl. costing) (centralized) Vendors

Logistics & warehousing (BSS) – WH, CFA, Freight