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Vol 14.1 March 2014
The Definitive Newsletter on Operations Management
Logistics in Warfare
Business transformation
Flexibility in Operations
... A Newsletter by
Association at XLRI for
Industrial and Operations
Management
● ● ●
In this Edition
● ● ●
A Welcome note to AXIS readers
Hello! With so much sincere happiness, Team AXIOM welcomes you to the pages
of its operations newsletter –AXIS. This is our second issue this year and is extra
special as it comes very close to the beginning of the summer internships. This
issue therefore includes some experiences from our senior batch, of their summer
internship projects in the field of supply chain and operations. This would
hopefully give the junior batch a flavor of the projects, the nature of jobs and help
them to take on their internships in an informed manner.
In addition, this issue brings to you a wide range of articles that explore recent
and pertinent issues in the field of supply chain management and operations in
general. In this world of cut throat competition, organizations often find
themselves at difficult crossroads, where they face a choice between fading into
anonymity, or undergoing Business Transformation to bring about a change in the
very basic nature of the way they do their business. Also, Customer experience
management has until now eluded the attention of the Indian manufacturing
sector, but rising global competition seems to have nudged the sector into
opening its arms towards CEM at last. We would like to congratulate Vinayak
Talwar from the HRM batch for his article on Warehousing in supply chain
management which has been selected as the Best Article. We would also like to
thank the former Junior Executive Team for their contribution.
We also take a look at the dynamics of supply chain management that come into
play during disaster management. Also, in a very interesting article, we explore
the role played by logistics in the field of warfare. With a new AXIOM team in
place and a new editor, expect a great year filled with fun and learning. Keep
reading to find out all this and a lot more and all the very best for your
internships.
Hope you enjoy this issue!!
Cheers,
Team AXIOM
Ushering Change: Competitive advantage
through Business Transformation 1
Customer Experience Management in Indian
manufacturing: A new dawn? 4
By Product Synergy 6
When Disaster Strikes! 8
Warehousing in SCM 10
Logistics in warfare 13
Flexibility in operations 15
CII EXIM Excellence awards 17
Cross-Decking 19
In (tern) Voice 20
Events Corner 22
USHERING CHANGE –COMPETITIVE
ADVANTAGE THROUGH BUSINESS
TRANSFORMATION
“If you do not change direction, you may end up
where you are heading” – Lao Tzu
With rapidly shifting market environments,
increasing product obsolescence driven by
technological improvements and sudden
changes in business regulations, organizations
are increasingly being forced to revisit the way
they conduct their business. In this scenario,
Business Transformation or BT is being widely
used as a management approach to restructure
functioning, realign work cultures and change
the way technology is used in the organization.
It typically involves significant changes to areas
including business processes, core systems,
channels, products, and services. A successful
business transformation initiative would ideally
lead to an increase in market share and
revenues, improved customer satisfaction and
better cost efficiency. A BT initiative would seek
to embed these changes in the DNA of the
company such that it cannot return to what it
was and the benefits of the change can be
continually achieved.
Different organizations can choose to undergo
change in ways best suited to their work
cultures and business environments. However
most BT programs end up following a six stage
process for effective implementation:
Avoiding pitfalls:
A large scale change can usually take several
years and therefore an extremely dedicated and
visionary leadership effort is required to steer
the program towards successful completion. A
halfheartedly followed process would more
often than not produce only lukewarm results.
the program towards successful completion. A
halfheartedly followed process would more often
than not produce only lukewarm results.
Step 1
•Facing the heat from declining relevance in the market or a potential thereof and realizing the need for dramatic change
Step 2
•Deciding a general direction and the form of change needed to achieve the intended objectives
Step 3
•Detailed planning and roadmaps for change keeping in mind the current situation of the organization
Step 4
•Designing the new way of organizational working and providing sufficient support structures for implementation
Step 5
•Implementing and evaluating changes, usually in small increments spread over a pragmatically estimated time period
Step 6
•Embedding the change such that the organization cannot return back to its previous inefficient stage.
1
John P. Kotter in his article Leading change:
Why transformation efforts fail enlists several
common mistakes that leaders make in
designing a change program. According to him,
most change efforts fail at the start if the sense
of urgency is not high
enough. Also, without a
strong vision, a change
program generally
disintegrates into a series
of incoherent projects
which end up achieving
nothing. For him a vision
statement should be such
that it can be
“communicated within 5
minutes and generate a reaction of
understanding and interest”.
Kotter advises change managers to
systematically plan small victories to convince
doubters, but also warns against declaring a
‘final win’ too early to avoid catastrophic
failures.
Success Stories
How TESCO transformed its fortunes
It is hard to imagine that Tesco- one of Europe’s
largest retail chains was once an organization in
desperate need for repair. In the early 1980’s
the company was plagued by several
inefficiencies in not just its distribution and
supply structure, but also in the way the
functioning of the organization was structured.
Many of its stores were in need for an upgrade;
staff attitude and service to customers was
patchy, stock controls were poor and highly
inefficient; the management structures in the
head office were detached from the end
customers and the stores. The supply chain
from suppliers to customers was not integrated
and was expensive to maintain.
In the 1980’s Tesco decided to enter into a
massive BT exercise spread over two decades
and involving every area of operation within
and outside the
company. Its Head
office operations
were realigned to
match those with
the retail stores.
Moreover, its
senior officers
were posted to
retail store
positions for firsthand experience and a retail
stint became a prerequisite for senior head
office positions.
Customer focused business processes were
introduced and performance measures were
introduced across all levels of operations. The
layout of distribution centers was re-adjusted to
mirror the layout of retail stores to enable
faster in-store shelf replenishment. Focus was
redirected towards collection of useful
consumer data with the introduction of the
Tesco ClubCard. Additionally, some sweeping
changes were made in the use of technology by
the firm. Computerized stock control systems,
pricing and checkouts were introduced.
Personnel management systems were revised
to match rewards and benefits with staff
potential.
The results of the exercise are of course very
visible. Tesco went on to expand its operations
across the globe and became UK’s largest online
food retailer. It has now expanded its portfolio
to include local in-convenience and high street
stores among several others.
2
1
Business Transformation at Bupa, UK
Faced with a need for responding to customer
needs faster in an über competitive market,
Bupa Health & Wellbeing (BHW) embarked on
an ambitious five year business transformation
program.
Starting from year 2007, it implemented the
strategy in three phases. In the first phase it
overhauled its e-learning system completely to
enable its huge workforce get trained on any
new policy in minimum time. This made
changing and launching new products easier
and smoother. In the second phase it
implemented a program called One Voice, One
Vision, and One Team (OVOTOV) to re-engage
and motivate its employees. It brought together
the whole employee team to meet and reflect
on BHW’s progress and new strategy. Finally, it
repositioned itself as a “Healthcare partner for
life”, for which it trained its entire workforce
and made them more knowledgeable about
healthcare.The company reaped rich results in
the form of a highly skilled workforce with 25 %
reduction in attrition rates. Also, it led to a rise
in customer satisfaction and an 11% increase in
customer loyalty, taking Bupa way ahead of its
competition.
Meanwhile, Closer Home
Reliance Industries Limited (RIL) has launched a
new business transformation project called
Smart Transformation At Reliance (STAR), to
prepare itself for future challenges. RIL is
somewhat unique in taking this initiative as its
BT program is not driven by an immediate crisis
facing the organization. Rather, this
transformation project is designed as a
proactive measure to maintain the dominance
of Reliance as India’s leading private sector
establishment.
STAR seeks to align and streamline RIL’s diverse
portfolio of businesses that so far seem to have
been working in isolation. The project would
include businesses like exploration, refining,
petrochemicals, marketing and support
functions such as manufacturing, logistics,
human resources etc. Several state of the art
technological solutions which aim to improve
data collection, reconciliation and operational
performance have been implemented. Also, a
new business architecture framework has been
developed which is ready to be implanted this
year.
To sum up, it can be observed that business
transformation is being widely used by
companies across the globe as a strong tool for
gaining lost ground and preparing themselves
for future challenges in the market. Backed by a
strongly felt intent for change and visionary
leadership, it has the potential to achieve long
lasting results for modern
organizations.
Akarsh Goel
3
1
Customer Experience Management in
Indian Manufacturing: A new dawn?
What is CEM?
A company cannot design a successful CEM strategy
without understanding the very entity it is trying to
manage – the customer.
A Customer is any individual or an organisation that
is currently interacting or has the potential to
interact with the company in the near future.
Customer Experience is the internal assessment by
an individual (or a company) of its interactions with
the company.
Customer Experience Management is the strategic
process of managing various customer touch-points
by providing what the customer wants when, where
and how she wants it with the aim of creating a basis
of differentiation for achieving customer loyalty and
enhancing business success.
CEM in Indian Manufacturing
CEM, till recently, had not been embraced by the
manufacturing sector in India. However, many key
drivers such as increasing global competition and
advent of social media are increasing the CEM
embracement in this area. However, even within the
Indian Manufacturing Sector, the level of CEM
adoption is seen to vary. With renewed focus on
‘customers’, companies are remodelling to mimic
many of the B2C characteristics. How far the
company has progressed in this transformation
seems to be a direct indicator of the CEM adoption
level. FMCG companies, the almost pure B2C
companies, seemed to be most advanced. The
automotive companies are not far behind and have
started implementing practices such as active social
media presence. Companies split between the two
modes of operation, like the tyre or textile
manufacturers are understandably less mature in
their level of CEM adoption. At the other end of the
spectrum are players who still operate more or less
on a pure B2B model. For example, manufacturers of
machine tools have not felt the need to embrace
such practices till now. But, with CEM gaining more
and more traction, slowly but surely, the level of
CEM adoption will only increase
Key Drivers of CEM in Indian Manufacturing
Indian manufacturing industries have mostly focused
on achieving quality and operational efficiency to go
with the advantages of low labour cost, and
abundant raw material in some industries. So, what
has changed lately?
Firstly, the traditional model of a pyramid to explain
the Indian social structure is no longer valid. The
Pyramid is fast becoming a Diamond. The middle
class category is set to explode. Historically, an
increase in income level has always led to even
greater increase in demand for goods & services.
Moreover, with most manufactured products
becoming increasingly commoditised, companies are
looking to create differentiation.
Also, India's potential as a huge market is attracting
number of manufacturing companies to set up base.
The Local landscape has transformed into a Global
Canvas. The global players are much more advanced
in providing an integrated & seamless experience to
the customers across the value chain and Indian
companies are being forced to catch up.
Moreover, the economy has been turbulent in recent
times and manufacturing companies are some of the
worst affected. A traditional outlook of managing
customers is no longer sufficient to keep a customer
happy and loyal when they are considering
alternatives and Indian manufacturers are looking for
hope in these uncertain times by increasingly
considering CEM to retain existing customers.
Another aspect is the rise of the ‘millennial kids’.
These are the people who have only seen lightning
fast computers and mobiles that respond to their
1 1 1
4
whims & fancies. Their expectations of a complete
buying & ‘after sales & service’ experience are in
stark contrast to that of the traditional buyer of old.
To keep these millennial kids satisfied, companies
will have to take a whole new outlook to CEM with
greater emphasis on supplementary technological
channels, social media, and mobility. This is also
complemented by the advent of social media.
Customers can now instantly upload their
experiences in a store or the actual usage of product
on online review sites or on social media. Only by
incorporating a CEM program based on intelligent
information management can a company hope to
keep them happy. All these factors together
unequivocally point in one direction – the growing
importance of CEM in the manufacturing industry in
India.
Benefits of embracing CEM
There are many direct benefits of a successful CEM
program. The most important benefit is increased
revenues because of a high correlation between
customer satisfaction levels and revenues.
Moreover, with manufacturing industries focusing on
enhancing revenues from after-sales services that is
recession-proof, having CEM take centre stage
results in enhanced customer satisfaction and more
revenue. An emotionally connected customer as a
result of an effective CEM program increases
customer loyalty, thereby increasing the customer
lifetime value. Also, a high correlation exists between
effective CEM implementation and customers’
likelihood to recommend the company to others.
With customers able to express themselves on social
media, blogs etc., they have the potential to become
the strongest promoters of the business, thereby
increasing the potential customer base.
Apart from the direct impact, a successful CEM
implementation has many secondary benefits
through increased ‘harmony’ in the value chain of a
company. With better level of co-ordination and
greater information visibility across partners, the
entire value chain is now much more closely-knit. For
example - as companies improve data visibility
throughout the value chain in a bid to better manage
information and create value for the customers - the
product design teams, which earlier did not have
access to the customer data (that used to be
available with marketing teams), can now view the
required data and design better products in lesser
time. The sales teams are more informed and are
able to handle customer interactions much better.
The inventory and demand data also become visible
throughout the chain, leading to improved
forecasting and better handling of the ‘bullwhip
effect’. With the supply chain going global and
companies searching for partners across boundaries,
adoption of CEM practices is providing many such
unexpected benefits in ensuring seamless
operations. Having a full blown CEM programme is
no longer just an option. It is fast becoming a ‘way of
life’ for most Indian Companies.
By: Abhijit Nagarhalli
5
BY PRODUCT SYNERGY –
TRANSFORMING WASTE
INTO PROFIT
By taking "wastes" from one company and
using them as raw materials for another,
industry can turn a negative into a positive -
for the environment and shareholders.
o A cement manufacturer uses the slag from a
neighboring steel mill in its production
process, resulting in a 10% increase in
production output and a 30-40% decrease in
nitrogen oxide emissions.
o A major US chemical company identifies
synergies between six of its own plants with
an estimated annual cost savings of $15
million and total annual energy savings of
900 billion BTU.
o A fiberglass manufacturer connects with a
firm that will use its 500 tons/year of off-
spec material as well as discovering soy
polymers and chicken feathers as more
benign and less expensive raw materials.
o A brick manufacturer uses incinerated cow
bone ash from meat processing plants,
industrial ash, and water treatment residue
to create a new product line of recycled
“eco-bricks,” diverting 16,000 tons of waste
from landfills each year.
It's been said that "one man's trash is another
man's treasure."
By shifting strategy from a pursuit of “less
waste” to a strategy of “100% product”,
companies can pursue a path of
“ecoeffectiveness”. It is based on the ecology
principle that “Waste Equals Food”. If
generating products and food, rather than
products and waste, is the ultimate natural
consequence of industrial output, an increase in
output can support or offset resource needs of
another, thereby reducing the depletion of
natural resources.
What is By-Product Synergy?
By-Product Synergy (BPS) is the matching of
under-valued waste or by-product streams from
one facility with potential users at another
facility to create new revenues or savings with
potential social and environmental benefits.
The resulting collaborative network creates new
revenues, cost savings, energy conservation,
reductions in the need for virgin-source
materials, and reductions in waste and
pollution, including climate-changing emissions.
YOU NEED TO ASK WHAT ARE YOUR RESOURCES, AND HOW CAN WE ORGANIZE TO MAXIMIZE THE VALUE WE CREATE
6
Why?
The BPS process breaks down the barriers to
cross-industry communication, as well as the
barriers between government and industry and
between small and large companies, by
fostering dialogue and working across groups to
identify supply chain localization and waste
minimization opportunities.
“With raw materials prices escalating as rapidly as
they are, by-product synergy is a practical survival
strategy for the years to come. In the US,
manufacturers devalue millions of dollars of
inventory each year—even the leanest
manufacturing process does not eliminate the
problems of yield loss or occasional off-
specification product. Instead of total loss and
disposal of these resources, by-product synergy
solutions can identify new uses and can naturally
lead to business savings in the six figure range or
more.” Michael Gromacki, VP Operations & Chief
Sustainability Officer, Dixie Chemical Company
Industrial Ecosystem Development
In order to facilitate an exchange of materials
and resources, businesses need to work
together to determine what unwanted by-
products exist, and what their potential
applications are. The resources can then be
exchanged, sold, or passed free of charge
between sites, creating a by-product synergy.
By-product synergy has been defined by the
World Business Council for Sustainable
Development and the US Environmental
Protection Agency as 'the synergy among
diverse industries, agriculture, and communities
resulting in profitable conversion of by-products
and wastes to resources promoting
sustainability'.
By-product synergy is the principle which
underpins the concept of 'industrial ecology' - a
holistic view of industry in which organizations
exchange energy and material between one
another, rather than operating as isolated units.
Industrial ecology promotes a shift away from
traditional open, linear systems towards closed
loops and inter-dependent relationships of the
kind found in nature.
If you look at everything as market-driven, it's
very unlikely you'll get to operational synergies
that fully leverage natural resources and
capabilities within the firm. It is time for business
to take an approach toward resource
management that reflects the principles of
nature. By-product synergy holds great promise
as a way to ensure.
By: Siddharth Priyadarshi
7
When
Disaster
Strikes!
In June 2013, the state of Uttarakhand
received heavy rainfall almost 40% more than
normal. By the end of June there were 1000
or more dead or missing, thousands stranded
and injured, Rs.12000 crore of revenue loss
and 11% of the state’s GDP was lost. The cost
of buildings and roads lost per kilometre was
Rs.46 lakhs. The official machinery was faced
with the gigantic task of rescuing 60000
pilgrims stuck in the valleys of the state,
providing food and medical supplies and
clearing the way for movement of men and
materials. This is where disaster supply chain
management comes in mitigating the complex
problem faced by the teams operating on
ground to minimise casualties of life.
Imagine a company like Coca Cola with the
best supply chain in the industry facing a huge
task in controlling its supply chain. Compared
to that it is a daunting task indeed to maintain
the supply chain for disaster relief. Managing
supply chains during disasters is a different
ball game altogether with uncertain situations
and paralysed infrastructure. Forming a
supply chain is of paramount importance in
this situation.
Communication Channels:
In a stressful situation as a disaster
communication is often compromised or lost.
When conventional channels are down
alternative routes have to be established. As
no single system is disaster proof a
combination of systems have to be used.
One of the best examples of taking help from
alternate communications when commercial
lines are down was seen during the Gujarat
floods. Power Grid of India stepped in to help
with their communication systems and
established a centre for communications till
normalcy was restored.
Crisis Teams:
As important as communication centres are,
Command centres are even more critical.
National and local agencies have their own
roles to play. Specialists and volunteer
organisations are also involved. Crisis teams
are established with the authority make plans
and take decisions and ensure that they are
implemented throughout the chain. In
Uttarakhand it involved the Police, Public
Works, Power Departments and also the
Army, Airforce, Navy, ITBP, BSF, NDRF and a
whole lot of international and national
voluntary organisations working together.
Decisions taken include
Search and rescue
Transportation
Communication
Emergency Infrastructure
Human services
8
Transportation:
In the Uttarakhand disaster by 21 June 2013,
the Army had deployed 10,000 soldiers and 11
helicopters, the Navy had sent 45 naval divers,
and the Air force had deployed 43 aircraft
including 36 helicopters. From 17 June to 30
June 2013, the IAF airlifted a total of 18,424
people - flying a total of 2,137 sorties and
dropping/landing a total of 3,36,930 kg of
relief material and equipment.
Typically transportation includes moving
people from affected areas to safer ones,
moving supplies ( food, medicines, clothes
etc,.) and damage assessment.
Logistics:
Particularly during disasters specified facilities
have to be established to receive and ship
required supplies. It may be limited because
of lack of access to the facilities. The facilities
may include permanent ones and also
temporary sites which also have direct point
of distributions. In countries where Disaster
Management Systems are well established the
whole of logistics are optimised to get the
best delivery which include multi
transportation systems. The importance of
quick delivery cannot be stressed on
adequately. Problems faced in this area
would be inadequate space, shortage of
supply and the changing nature of the
emergency.
Suppliers:
One major difference between normal
suppliers and disaster suppliers is that it is
often donors that provide the required
supplies. It is the donors who decide what
supplies are needed which are often
inadequate
All said and done the one thing that
differentiates conventional supply chains and
disaster management supply chains is the
need for “Speed”. There are also extreme
constraints in other areas as well.
Governments need to be prepared with worst
case scenarios to handle the situations.
Processes need to be reviewed and evaluated
continuously. There is also a need to be
flexible in order to meet unstable situations.
With the increase in incidences of disasters
across the world studies in disaster supply
management are being done. It is important
in saving the lives of people. There are lessons
to be learned from conventional supply chain
management.
Sweta Dantuluri
9
Warehousing in Supply Chain Management
In the last decade, with the recognition of India
as a key player in the dynamics of the Global
Economy, we have witnessed numerous players
entering the market trying to make the most of
its untapped potential. The arrival of Global
Players has brought along various technologies
and ideas that have helped Indian firms in
looking at their operations through a different
perspective.
In the field of Supply Chain Management, a shift
has been witnessed from the age old process of
merely storing one’s inventory towards the idea
of ‘smart warehousing’. Numerous trends have
been witnessed in terms of improving one’s
operational costs and increasing efficiency but
what is common among all these businesses is
the awareness of ‘going vertical’.
In the major metropolitan cities of the country,
with the hiking prices in real estate, the cost per
square foot of land has now increased
exponentially in the last few years. With this
concern, major industries are looking for
options in minimizing their expenditure in terms
of area required for handling their supply chain.
In this kind of a scenario, a proverb often
spoken comes to mind, “The Sky is the Limit”.
It is therefore, imperative for any organization to
use up each inch of horizontal space available for
their operational needs and use their vertical
space for their storage requirements. Many
companies, fully aware of this need have already
established warehouses that have a racking or
shelving system installed that are able to store
their inventory at great heights. The inventory can
be accessed by forklifts or stackers that move
along a fixed aisle to access the required items
and bring it to the user. These systems have been
created to help them organize their inventory on
the basis of their SKUs (Stock Keeping Units) and
reduce the cycle time of moving any object off the
shelf and into the next step of operation.
However, compared to the supply chain
management of firms in Europe and The United
States, India is still following a ‘conventional’
based system of storage and is slowly showing
signs of adopting practices that are up to date
with the demand at hand. Owing to the cheap
labour available in the country, organisations
are still hesitant in investing their resources
towards automation of their supply chain
module but there are examples that beg to
differ. Many pharmaceutical industries are now
showing signs of shifting towards automation
for the storage and retrieval of their SKUs and
are keen on adopting the strategies that have
been used in their sister concerns abroad. The
ASRS (Automated Storage and Retrieval System)
is a fairly new concept that entered into the
Indian market around 5 years ago which
10
involved a completely unmanned operational
handling of one’s inventory. The functioning of
this system involves an integration of a
Structural and a Software Design that allows
you to mechanically retrieve any item in your
entire stock via the operation of a ‘stacker
crane’. This crane operates on its own through a
built in software and is programmed to move
on a fixed railing system along an aisle to any
location that is preferred by the user. Once it
has reached that particular location, it identifies
the item that is to be retrieved and by adjusting
its position, it recovers the same and places it
on the conveyor, ready for dispatch. The system
has minimum utilization of space on the ground
and can even be installed in spaces as small as
10m x 10m. The heights up to which this system
can go up to is endless and there are
organizations which have used up more than
40metres of their height through the
installation of this system. The amount of error
that can be caused is also negligible which can
help avoid accidents and loss of man hours. But
as mentioned, the cost of installing such a
system is immense and owing to the surplus
availability of labour, it will still take a while
before such a system permeates through to the
supply chain processes of India.
Another such example of emerging practices is
the concept of a Radio Shuttle. The Radio
Shuttle is a system which is program controlled
and requires no manpower for its operation.
Instead of a crane moving along an aisle, we
have a platform in the shape of a pallet that
moves within the storage system, locates the
item to be retrieved and brings it to the forklift
or stacker to be carried ahead further. This
technique has been used by the beverage
industry in India but the constraints of cost have
not allowed it to propagate any further.
Certain sectors have been identified where
there is a growing need of making the most of
the space available and where every second
counts. An industry that is not much talked
about is the Record Management Sector. There
are companies all around the world which have
been assigned the task of maintaining the
records of organisations that have to be kept
very secretive and in closed locations all across
the world, here the Stock Keeping Unit is kept
uniform and contracts are made between
service providers on the basis of the no. of
boxes that they would be looking to store.
Some companies that have entered into the
market are Recall, P.N. Writer and the Indian
owned CBSL. As most of these records contain
confidential information, they usually require a
storage system that has the minimum
involvement of human presence and would
prefer the reliability on machines to perform
their record keeping.
The second sector that would gain benefit
would be the Logistics Sector. A lot of Multi-
National companies such as DB Schenker,
Kuehne Nagel, Nippon Express, Expeditors
International are well known logistic providers
who have entered into the Indian market and
performing services for their clients through
warehousing practices all over the country.
Most of these Logistics companies have
multiple clients and require an organized
system of handling a wide range of inventory
for their functioning. Here, the requirement
would be for a system that is able to provide
customized solutions for their various SKUs and
bring about a clean flow of material from input
to storage and finally to output without any
kind of error, miscalculation or delay.
The third and most emerging of all sectors is
that of Cold Storage. Owing to the recent
debate on introducing 100 % FDI in retail for all
the foreign players into the Indian Market, the
11
need for establishing the infrastructure in Cold
Storage facilities has seen a rise. As cold storage
is also a very costly affair that involves cooling
of foods and other perishables in small rooms,
the need for reducing wastage in space
becomes the key point in focus. Here, one may
introduce another technology of Mobile
Storage. In a conventional storage system, there
exist aisles for the movement of a stacker or a
forklift which are used to retrieve an item from
a particular location. In such a scenario, the
space that is left for an aisle is kept static and
accessed only when an item has to be retrieved
from that particular row. However, by
introducing the concept of Mobile Storage, the
entire structure of storage exists on a track of
rails, which creates a compact system having
each row stacked right next to the other. When
an aisle is required, it can be created at will by
shifting the rows on the railing through a
mechanized system.
The above mentioned ideas have been
identified by various service providers of
storage in the country and every year, a
Warehousing Show is organized in different
parts of the country where one can witness
prototypes of the emerging innovations in
terms of warehousing. Apart from modernizing
the current methods of supply chain operations
by replacing the old with the new, an
alternative of increasing efficiency is to obtain
the services of ‘Warehouse Consulting’ firms.
Here, experts in the field of warehousing study
the current operations in warehouses and
suggest new and improved practices that could
help reduce their redundant costs and save
their time.
Despite all the new and improved ways that
have emerged in the world of warehousing
today, the priorities that Indian players have
allocated are quite contrary to that of the
world. In terms of ranking, the maximum
importance is given to the cost of the system,
then to the quality of the system and finally to
the safety and reliability of the system while in
the outside world it seems to be quite the
opposite. This has limited many organizations in
achieving the most of their potential. Therefore,
in order to grow and compete with the global
market, business leaders must understand the
importance of improving their supply chain
operations. Not only will it help in improving
profits, but will also help in creating a
sustainable operational management system
for years to come.
By: Vinayak Talwar
12
Logistics in Warfare
People often identify logistics as a relatively
modern term, coming into existence as
production firms look to improve their
operational efficiency. The truth, however, is
that logistics has been around for a LONG
time, and continues to do so, all around us! In
this article, we’ll try to look at exactly how.
Because what is simple and logical, is
common. And as Arthur Ferrill, an expert in
military history puts it, logistics is simply
“organized supply.”
To help the “Romans roam”
The Roman military received rations on a
fixed day of the month. The amount which
one received did not depend on what one
needed, but what one was entitled to, based
on his rank. However, when the soldiers were
on the warpath, equal food and drink was
distributed among the legions, with the
difference being accounted for later on. This
made sense since carrying no excess rations
made an army mobile and agile!
Carthage – Logistics = Carnage!!
Before the first Punian war in 264 BC,
Carthage was the major naval power in the
Mediterranean. Our favourite Romans, their
main adversaries, were able to capture one of
their war-ships, and in the modern equivalent
of a “tear-down analysis” were able to
replicate several powerful Roman triremes
(war vessels). What they lacked in quality,
they made up in numbers. To win back Spain
from the Romans and invade Italy, Carthage
had to continue their war against them
through land, but using a long terrestrial route
spanning Spain, Gaul and the Alps.
This is where the Romans made their killer
moves. They knew the Carthagians were a
long way from home and themselves had
walled cities established all along the route.
The Romans attacked like a pack of hyenas,
with stealth and surprise and even lost a
couple of battles in the beginning, but always
had the luxury of retreating to their cities to
lick their wounds and plan the next attack.
The Carthagians had to act like sharks- they
had to keep moving to survive, the longish
land-based campaign meant they could not
carry provisions from home and half the army
was busy foraging for food. Inferior logistics
ultimately led to their defeat.
Alexander believed in Lean Inventory!!
Alexander the Great was said to be a master
in Supply Chain Management. Like the
Romans, he trained his Macedonian army to
carry their own equipment and the use of
carts was restricted, as additional people
would have to tag along to tend them. By
taking these measures in contrast to other
contemporary armies, the Macedonian army
became the lightest and fastest army of its
time.
Alexander also had a unique method of part-
by-part territory conquest. He first arranged
for the surrender of the new territory he was
entering into and also made food
arrangements for his army by engaging the
local authorities. In case the area leader
refused to surrender, Alexander first gathered
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information about all the routes in and out of
the target area, the resources and the climate
of the area, built up his army accordingly, and
finally attacked with a relatively light team.
The main army would be stationed at a
nearby strategic position and would be called
only if their food supplies were arranged.
Vietnam War- the Ho Chi Minh trail:
In the David v/s Goliath battle of Vietnam,
there was a certain network of pathways,
called the Ho Chi Minh trail, which served as a
miracle worker for the Viet Cong. The
construction of these trails, running from
North to South Vietnam via Laos and
Cambodia, was started in 1959, and over the
next 16 years helped the North Vietnamese
supply their National Liberation Front soldiers
with rations, despite repeated American air
strikes. Going down the path meant basically
taking a six week hike through the jungle, and
for all people who fell ill along the way, there
were base camps located at regular intervals
known as “Binh Trams” where food, medical
care and directions for the next station were
provided.
The trail was also used to transport soldiers
from the north to the south, and there were
times when around 20,000 soldiers a month
used to come from Hanoi using this path (It is
said more than one million soldiers North
Vietnamese were transported over the
years!). While America tried to retaliate using
their famous defoliant –Agent Orange- to
remove the heavy vegetation cover, the task
proved too great and the Ho Chi Minh trail
was used for the entire duration of the war.
Counter Strike (Virtual warfare):
Here’s how an operations engineer would
interpret what he said:
An expert Counter
Strike player says:
Operations Manager
understands this as:
“Buy guns you’re
comfortable with”
“Your product
depends on your skill
sets”
“Know the cost of all
items to save time
and make the best
buy”
“Know the cost of all
items to save time
and make the best
buy” (No change
here!)
“Always buy extra
ammo!!”
“Perishable
components should
be stocked up!”
By: Abhra Basu Ray
Chaudhuri
If you ask an avid Counter Strike player/fan
(they’re usually the same people) he could prattle
on for hours about what to buy in each round. He
would give little gems of advice like “BUY GUNS
YOU’RE COMFORTABLE WITH”, “KNOW THE COST
OF ALL ITEMS TO SAVE TIME”, and “ALWAYS BUY
EXTRA AMMO!!” Ask him about inventory
management and he’ll probably tell you to stop
wasting his time.
14
FLEXIBILITY IN OPERATIONS
“If you focus on results, you will never get change.
If you focus on change, you will get results.”- Jack
Dixon
Marketing and operations strategies are
integrated in which they are interrelated and
correlated strategies and each one of them is
considered when formulating and implementing
the other as the both strategies must be clearly
linked with business and corporate strategies of
a firm. However, these strategies are not only
correlated ones but also they contributed to
forming the competitive advantage of a firm.
Flexibility as a competitive weapon in the
arsenal of any firm practices its activities in a
turbulent environment is required for coping
with uncertainty. Uncertainty emerges from
two perspectives: marketing function and
manufacturing function. Flexibility is the ability
to respond effectively to changing
circumstances. Therefore, flexibility as a multi-
dimensional concept can be used for addressing
and analyzing the relationships between
marketing and operations functions where the
emphasis should place on using the different
dimensions of flexibility in coping with changes
associated with marketing and operations
functions, particularly, when dealing with
business environment.
What is Plant Level Flexibility?
Flexibility acts as a strategic tool to avoid the
imbalance between demand and capacity,
which results in causing several risks for
organizations such as entering competitors to
the market and reducing the market share.
Thus, capacity and demand concepts are
related to each other. Particularly, it is the
volume flexibility that is used for making the
balance between demand and capacity.
Another form of flexibility is the mix flexibility
which is measured by the number of products
that a system produces at any point in time. Mix
flexibility contributes to satisfying customer
needs' variations in the target market by
producing products and introducing services for
all market segmentations. It supports
competitive advantage by enabling an
organization to compete on a basis of variety of
products and services.
•Volume Flexibility
•Mix Flexibility
•Expansion Flexibility
•New product Flexibility
Plant Level
•Routing Flexibility
Shop Floor Level
•Labor Flexibility
•Machine Flexibility
•Material handling Flexibility
Individual Resource
Level
15
What is Shop Floor flexibility?
The number of products that have alternative
routes or alternate sequencing plans and the
extent of variation among the routes used
without incurring high transition penalties or
large changes in performance outcomes.
Routing flexibility may contribute to shop
responsiveness by offering a means to deal
with, for example, congestion, machine failure
or blocking.
What is Resource level flexibility?
Resource flexibility can be in the form of either
labor, machine or material handling. Labor
flexibility is the ability of the workforce to
perform a broad range of manufacturing tasks
economically and effectively. Machine flexibility
is the ability of a piece of equipment to perform
different options economically and effectively.
It refers to the ability of different types of
operations that the machine can perform
without requiring a prohibitive effort in
switching from one operation to another.
Technological sources of machine flexibility are
numerical control, easily accessible programs,
rule based languages, sophisticated part-
loading and tool-changing devices. These are
built in to ensure easy changeability of work
pieces, tools, size of the tool magazine,
availability of sufficient pallets and fixtures,
number of axes, automatic chip removal,
adaptive control to optimise metal removal,
diagnostic software, and integration CAD/CAM.
Therefore, operators need to be trained to
acquire programming, maintenance, and
diagnostic skills. Material handling flexibility is
the number of existing paths between
processing centers and the heterogeneity of
material which can be transported along those
paths without incurring high transition penalties
or large changes in performance outcomes.
The different dimensions of flexibility that are
required for achieving strategic objectives
considering the type of uncertainty associated
with marketing and operations functions are
depicted as follows:
By:
Nihit Kumar
Pulkit Gupta
16
With cut throat competition and the need to
globally benchmark one’s organization, various
metrics and models have played a role in the
assessment of an organization to globally
accepted Standards. Several awards like the
Deming award or the Japan Quality Medal have
been an aspiration for many companies.
But amongst Indian companies an award that
seeks to recognize excellence in every aspect of
its operation, be it from the manufacturing or
service industry was non prevalent till 1994,
when the Confederation of Indian Industry and
the Export Import Bank joined hands together
to institute the CII EXIM Business excellence
Award.
According to them Excellent organizations meet
their mission and progress towards their vision
through planning and achieving a balanced set
of results that meet both the short and long
term needs of their stakeholders and where
relevant, exceed them.
So it involves adding value for the customers
primarily and leading with Vision, Inspiration
and Integrity. Also excellent organizations
manage by process, succeed through people
and they also nurture creativity and innovation
and do not hesitate in taking responsibility for a
sustainable future.
The excellence model is based mainly on the
European Forum for Quality Management
(EFQM) model .It is thus based on nine criteria-
five of them called as enablers and four of them
called as results .Hence the enablers bring
about the results and the feedback from results
is used to improve the Enablers. . Thus, like
kaizen it brings about continuous improvement.
The enablers are:
1. Leadership : They check for the following:
i) Leaders define the Mission , vision, values
and ethics and act as Role Models
ii) Leaders define, monitor, review and drive
the improvement of the organization’s
management system and performance
iii) Leaders engage with external stakeholders
iv) Leaders reinforce a culture of excellence
with the organization’s people
v) Leaders ensure that the organization is
flexible and manages change effectively
2. Strategy: It consists of the following factors
i) Strategy is based on understanding the needs
and expectations of both stakeholders and the
external environment
ii) Strategy is based on understanding internal
performance and capabilities
iii) Strategy and supporting policies are
developed, reviewed and updated
17
iv) Strategy and supporting policies are
communicated, implemented and monitored
People: The following qualities are stressed
i) Plans support the organization’s strategy
ii) Knowledge & capabilities are developed
iii) Aligned, involved and empowered.
iv) They communicate effectively throughout
the organization
v) People are awarded, recognized & cared for
Partnerships and resources: It’s all about the
following:
i) Partners and suppliers are managed for
sustainable benefit
ii) Finances are managed to secure sustained
success
iii) Buildings, equipment, materials and natural
resources are managed in a sustainable way
iv) Technology is managed to support the
delivery of strategy
v) Information and knowledge are managed to
support effective decision making and to build
the organizational capability
5. Processes, Product and services
i) Processes are designed and managed to
optimize stakeholder value
ii) Products and services are developed to
create optimum value for customers
iii) Products and services are effectively
promoted and marketed
iv) Products and services are produced,
delivered and managed
The results are customer results, society results,
people results and Key results. They have
perceptions and performance indicators for the
same.
The assessment process would be thus:
1. Companies order application brochure.
2. Applicant submits documents and the
assessors are selected.
3. An assessment team is formed to filter out
applicants.
4. The applicants are screened for Site visits and
then a Site Visit is made is conducted after a
few days.
5. The different parameters are assessed and
then the jury finally awards the marks.
6. An awards Function is held to honor the
distinguished companies.
18
7. Every applicant is provided a feedback on
how to improve and strive for excellence.
There are four different levels of achievement
that the CII EXIM bank would award for
different levels of achievement:
1. Award
2. Prize
3. Commendation for significant achievement.
4. Commendation for strong commitment to
excel.
Last year the award was won by Inteliment
Technologies. The award has been won by very
few distinguished firms like Infosys, TCS, Maruti
Suzuki Limited, HP India and Tata motors
Limited.CII Institute of Quality also provides the
following services for corporates in order to
apply for the award like workshops on the
Business Excellence model, Business Process
management and Strategic Quality
Management etc.
By:
Suhas Kini
19
IN(TERN) VOICE
Louis Ritchie C – ITC Supply Chain
My internship project with ITC involved
improving the efficiency and responsiveness of
one of its business segments. I was provided
with an exhaustive project brief almost a month
prior to my internship with all the project
details such as location, deliverables, Guide
contact etc.
The duration of my project was 8 weeks. It was
a live project with huge scope and impact. In
the first week, all the interns of my division got
the opportunity to interact with the CEO of the
division. He stressed upon the scope and
relevance of our projects. It helped us realize
the importance ITC places on each of the
projects. The first two weeks were utilized to
understand the entire operations and I was
asked by my guide to undertake an exhaustive
process mapping which helped me understand
the flow of materials & information across
different departments. I was sent to the
manufacturing facilities to understand &
appreciate the various aspects of the business.
A detailed time plan was designed by my guide
to accommodate all the deliverables in the
limited time. I had frequent meetings with all
the related departments (such as Operations,
Logistics, Procurement, Stores etc) to
appreciate the probable implications on each of
these departments due to my
recommendations. Before the final
presentation, my guide helped me share my
ideas with other section heads to get their
views and approval. It helped me provide
feasible solutions which would result in overall
improvement of the business.
Proficiency in Excel & Power-point would
immensely help during internships. It saves lot
of time and effort which can be channelized in
the actual project. Another critical aspect that
determines the outcome of the project is the
inputs and guidance of the project guide. It is
very difficult for any intern to understand the
entire process and its constraint in such a short
time frame, without the help of the guide. It is
the role of the interns to get the maximum out
of the interactions with the guide and complete
the project within the stipulated time.
Manish Sapra –ITC Supply Chain
I did my Summer Internship in ITC - Supply
Chain Management Role. I interned in TM&D-
Warehousing department and worked on a live
project which was on resource optimization of
ITC's three biggest warehouses. The first week
was spent in understanding the basic structure
of supply chain in ITC and the strategy behind
setting up a warehouse. I was sent to a small
ITC warehouse nearby to practically see and
understand various operations and
20
methodology followed in ITC's downstream
supply chain operations. In the second week,
milestones were defined along with timelines
and basic plan of action was made to capture
relevant data points in the warehouse. The
three warehouses differed from each other as
they operated with different settings- Block
storage, Rack storage with WMS, Rack storage
with automated WMS (WMS- warehouse
management system). Due to the busy
schedules of my guide and top management,
my warehouse visits started only after 4 weeks.
I visited the warehouses to do process mapping
of various inbound and outbound operations
and performed time study to arrive at resource
productivity of the warehouse. The scope of the
project was expanded to on-ground pilots of
certain improvement measures suggested and
hence I covered two warehouses. After
spending 4 weeks at two warehouses (
Hassangarh & Chennai), I presented the final
findings and potential results of proposed
measures to the Head of Department-
Warehousing.
Overall, the best part was that I was given a live
project and was exposed to different types of
warehouse operations.
Abhishek Modani –GSK CH
I interned with the Procurement function
reporting directly to India Sub-Continent Head
for Raw Material Procurement. My project
aimed at Reducing Working Capital requirement
through Inventory Optimization for GSK owned
manufacturing sites. The line manager helped
me to define the project objectives, scope and
timelines in the very first week of the
internship.
The project involved identifying major inventory
holding items, studying current inventory policy
and identifying scope for improvement. I
started my project by visiting GSK owned sites
(Nabha and Sonepat ) to understand the
physical flow of raw materials at every stage -
from supplier to consumption site.
Based on the last 12 month data, I built a
statistical model taking into account average
daily consumption, supplier lead time and
supplier performance to suggest optimum
inventory levels for each raw material item
ensuring 99.9% service level (0.1% risk of stock
out). Using this model Raw material working
capital requirement was reduced by close to
INR 20 million.
Pre-requisite for project: Basic understanding
of inventory models and costing process.
Takeaways from the internship: Toughest part
of the project is extracting the required data
from the right source in the right form. Building
personal connect with people makes you job
easier
Suggestion for juniors: Be proactive at all times.
The project is your responsibility; make sure
you get time and guidance from your guides.
Talk to as many people from different functions
to understand and learn what work they do.
This will help you get a feel of the overall SCM
function.
21
22
_____________________________________EVENTS CORNER
KRONOS - the Operations quizzing league was revived after a hiatus. There were two online
quizzes which had almost 36 teams participating in all. It was a quiz worth fighting for as it
was their only way to enter LIFELINE- AXIOM’s brand new simulation event. The top 6 in the
leader board made it to LIFELINE
The top 6 teams from KRONOS were in for some tight walk as the prdeictions of the teams were pretty close. It was a
problem on optimising the movement in a hospital based on seasonal data. After 4 rounds of simulation our Drac quiz
master Pritwish Datta emerged victorious along with the other seasoned quizzer - Francis Thomas.
……………………………………………………………………………………………………………………………………………………………………………………………
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