White paper on Building Supply Network beyond risks factor

White Paper On

Building a supply chain beyond risks factors

By Alok Anand (aloknnd@yahoo.co.in) {URL http://alokanand.weebly.com/ }

Abstract: This white paper discuss on building a supply chain beyond risks factors

surrounding organization operations. Companies today work on several supply chain

strategies to improve their supply chain.

Supply Chain

Partnership

Transportation

Information Technology

Network Designing

Process Re-engineering

Contineous Improvement

White paper on Building Supply Network beyond risks factor

Introduction:

India is the second largest population & fastest growing market of the world. Complex

supply chain from urban to suburban to rural network creates several risk factors &

the question here arises is on how we can cater the value chain in minimal costs.

Brand name like Parle has 70% market share in India in the glucose biscuit category

followed by Britannia, Tiger (17-18%) and ITC's Sun feast (8-9%). What is their

Strategy? How they are present in rural, sub urban & urban markets. How they

compete on pricing with their leading competitors is that because of brand awareness

or?

This white paper focus on supply chain collaboration and partnerships, supply chain

structure, transportation and logistics and the role of Information and Communications

Technologies (ICT).

Today companies like Mother Dairy, Safal is working on the principal of contact

strategy and left out the strategy of contract basis of procurement processes.

Haldiram restaurant chain works on a dynamic supply model. Major foods are

prepared at base kitchen and the shelf life of the food is around 2 to 3 days. Cook &

pack at base kitchen and dispatch on temperature controlled transportation trucks to

Low profit margin

Decrease in weight per

biscuit

Bulk purchase of raw material

Reduce wastage

Increase productivity

Availability in remote

places

Simple packing

White paper on Building Supply Network beyond risks factor

different retail outlets where they procure and server to their customer. They have to

maintain a FIFO process model so as to manage the life span of the product in the

supply chain.

Supply chain of food & processing are very much critical because of perishable items

having short life spam so the supply chain need to be short and fast. If FIFO process is

not maintained them there is a risk factor of quality/freshness of food.

On the other side if we talk about the supply chain of automotive, ancillary or Iron & mining industry their products are not perishable but still are more critical more from demand & supply prospective.

Logistics and SCM practices may be defined as a set of activities undertaken to promote effective and efficient management of supply chains. Today organization work on how efficiently they can maintain a supplier partnership, physical movement of goods, meeting customer demands and information sharing throughout the supply chain. Some of the key logistics and SCM practices that impact performance are related to estimation of customer needs, efficient and effective delivery, integration and collaboration throughout the supply chain, sharing of information and vision using ICT as well as informal methods and use of specialists for performing specific jobs across the supply chain. All of these practices impact logistics and supply chain performance.

Food quality

Short lifespan

Faster Delivery

White paper on Building Supply Network beyond risks factor

Various risks factors of supply chain

Today various risks are evolved across supply chain processes. Customer want value

proposition from the organization and organization have to deliver the goods

according to the compliance. Technically there are two types of supply chain risk

factors:

External risks can be driven by events either upstream or downstream in the supply chain.

o Demand risks - caused by unpredictable or misunderstood customer or end-customer demand.

o Supply risks - caused by any interruptions to the flow of product, whether raw material or parts, within the supply chain

o Environmental risks - from outside the supply chain; usually related to economic, social, governmental, and climate factors, including the threat of terrorism

o Business risks - caused by factors such as a supplier's financial or management stability, or purchase and sale of supplier companies

o Physical plant risks - caused by the condition of a supplier's physical facility and regulatory compliance.

External Risks

Internal Risks

White paper on Building Supply Network beyond risks factor

Internal risks provide better opportunities for mitigation because they are within your business's control.

o Manufacturing risks - caused by disruptions of internal operations or processes

o Business risks - caused by changes in key personnel, management, reporting structures or business processes, such as the way purchasers communicate to suppliers and customers

o Planning and control risks - caused by inadequate assessment and planning, which amount to ineffective management

o Mitigation and contingency risks - caused by not putting contingencies (or alternative solutions) in place in case something goes wrong

o Cultural risks - caused by a business's cultural tendency to hide or delay negative information. Such businesses are generally slower to react when impacted by unexpected events.

White paper on Building Supply Network beyond risks factor

Consequences of supply chain failure:

When a needed supply is not received when it is expected or the quantity is less than

expected or quality is not up to standard, the consequences is not only loss of sale or

profit. Supply chain disruptions can also have a number of other adverse consequences

including

Supply risk analysis assessment It’s always better to prepare for war!

The process of identifying risks, assessing risks and developing strategies to manage risks is known as risk management. A risk management plan and a business impact analysis are important parts of business continuity plan. By understanding potential risks to business and finding ways to minimize their impacts, analyst will help business recover quickly if an incident occurs.

Types of risk vary from business to business, but preparing a risk management plan involves a common process. Your risk management plan should detail strategy for dealing with risks specific to your business.

It's important to allocate some time, budget and resources for preparing a risk management plan and a business impact analysis. This will help business to meet legal obligations for providing a safe workplace and can reduce the likelihood of an incident negatively impacting on business.

Loss to customer

Damage of image/brand

Reduce share price

Inability to maintain customer services

Failure to meet requirement

Delay in products/projects or other strategic growth plans

Lower employee morale

White paper on Building Supply Network beyond risks factor

Risk Management Life Cycle:

This guide outlines the steps involved in preparing a risk management plan and a business impact analysis for business.

Thread assessment

o Low Risk - No recent incidents

o Medium Risk – Information on possible activity

o High Risk – Recent incidents and information

Risk Identification

Fact Finding

Risk Definition

Idea findings Evaluate &

Select

Acceptance

Solution Execution

White paper on Building Supply Network beyond risks factor

Defining Risk Analysis Life cycle:

Risks are a probability of loss or failure.

Risk Identification: Risk Identification is the process of determining risks that could

potentially prevent the program, enterprise or investment from achieving its objective.

Risk Definition: Risk is incorporated into so many different disciplines to portfolio

theory that it should come as no surprise that it is defined in different ways by each

one.

Idea findings: Finding a way out to reduce the risks factor. The techniques used to

minimize and prevent accidental loss to a business.

For example: process re-engineering

Evaluate & Select: Evaluation is a process of analyzing on idea finding by playing

probability game. Select the major idea and freeze the scope of risks solution. Making

an action plan and present to different stake holders.

Acceptance: Based upon process analysis, the business analyst present the solution to

different stake holders to take their acceptance. On successful acceptance the analyst

works on execution stage.

Solution Execution: Execution means how you are going to implement the solution

permanent. This is somehow happens when all stakeholders agreed on the different

points & approve.

During the time of solution execution different process owners are present to monitor

the implementation & document all the facts which need to monitor.

White paper on Building Supply Network beyond risks factor

Information Communication Technology in Supply Chain

Today Information communication technology plays vital role in value chain.

The agility and competitiveness of any supply chain depends on the systems and

supply chain information technology used to plan, collaborate, monitor and execute

processes.

Information technology helps company plan, design, justify, select, configure,

implement, and assess the IT solutions one need to drive their supply chain.

The technology assessment pays close attention to company system development standards and framework for internal and external information flows.

Balanced with leading technology and best practices that are currently being deployed in the marketplace, technology provides a roadmap which fits with company supply chain and business objectives.

Areas of concentration across the I.T. applications include:

Trading Partner Collaboration

o Real-time visibility and exchange with suppliers, customers, carriers in supply chain network

o Collaboration with suppliers for streamlining inbound processes o Visibility into customer order status integrated though customer

service web presence

White paper on Building Supply Network beyond risks factor

Supply Chain Planning and Management

Forecasting, planning and order management systems aligned with business goals:

o Inventory levels and working capital availability o Alignment of inventory availability with customer service goals o Distributed planning across stages of availability and position in

the supply network Global Supply Chain Visibility

o Communications with global trading partners o Import/export compliance and visibility o Integrated workflow for linkage of business processes o Rules-based response to supply chain events

Warehouse Management (WMS)

Intelligent management of operations within the warehouse:

o Improved productivity and increased utilization of warehouse space

o Enhanced customer service o Better managed inventory

Warehouse Optimization

o Labor management for optimized productivity o Slotting management for optimized space and traffic management

Warehouse Technology

o Material handling controls integration with WMS o RFID& Barcode scanning and WMS integration o Voice-directed task execution

Transportation Management

Allows for quick response to rapidly-changing conditions:

o Reduction in freight and administrative costs and improved on-time delivery

o Consolidation of orders and optimized loads, freight and parcel rating and routing

Reverse Logistics Management

Structured management of return, disposition and credit process:

o Minimized unauthorized returns and transportation cost o Improved asset recovery, behavior visibility