A driver to superior supply chain performance

1. View Point
Supply Chain Visibility
A driver to superior Supply Chain Performance
- Sudripto De, Rahul Sharma
Supply Chains are complex and high tech supply chains more so!
Manufacturing Supply Chains are complex and perhaps Hi-Tech Manufacturing the most. Complexity of the high tech
supply chain manifests from three clear sources:
• In terms of its numerous players with strong network of supply dependencies
• In terms of the “virtual enterprise” through collaboration and outsourcing in all functions
• In terms of the complex configurability of products and service, both hardware and software
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2. The requirement of such complex supply chain with diminishing PLC (Product life cycle) is to reduce inventory of finished products, continuous
add agility of product configurations and periodically slash TTM (Time-to-market) while earning maximum profits from new product
introductions.
DESIGN & INNOVATE
BUY MAKE MOVE SELL & SERVICE
PLAN
EXECUTE
SEMICONDUCTORS LOGISTICS PROVIDERS/ CHANNELS
DISTRIBUTORS
WAFER FAB / SORT ASSEMBLY TEST
SUPPLIER
DISTRIBUTION CENTERS RETAIL
PLANT DISTRIBUTION CENTERS
WAREHOUSES
TEST
CONTRACT FAB CONTRACTOR
ASSEMBLY
HOUSE
WEB CHANNEL
DISTRIBUTORS
EMS
DISTRIBUTION
CENTERS
EMS CONSUMERS
SUPPLIER
RETAIL RETAIL STORES
DISTRIBUTION
DISTRIBUTION CENTERS
CENTERS
FACTORIES FACTORIES
PLANT
WAREHOUSES
SUPPLIER
OEM or COMPONENT VARS
MAKERS FACTORIES
Supply Chain Visibility is necessary to drive superior Supply Chain Performance
With High volume, low margin mass production, the semiconductor manufacturers experience maximum amplitude of the bull-whip effect.
Distributors provide the necessary conduit and Value-added services and EMS (Electronic Manufacturing Services) Contract manufacturers
providing the collaboration lifeline in-spite of a spate of Mergers & Acquisitions, experience maximum pressure for inventories, lead times and
profit margins. OEMs as the owners of product designs and the orchestrators of virtual collaboration supply-chain networks experience the
dual pressures of:
• Market pressure of introducing ever-higher configurability to meet daily changing requirements and
• Rationalize product portfolio demand to control bull-whip effect.
Channels downstream experience highest inventory liability and demand management pressure. With “configure-to-order” spread at each
stage of this supply chain, visibility becomes a necessary tool to drive the balance of agility and standardization. With stringent consumer
safety regulations and environmental constraints, visibility emerges also as necessary tool for traceability and compliance.
Lack of Supply Chain Visibility undermines Supply Chain Performance
An analysis of the challenges in the supply chain evinces three critical impacts across all aspects of Supply Chain functioning – design, source,
make, deliver and service:
Inefficient Ineffective Execution
1 2 3
Planning planning issues
2 | Infosys – View Point

3. A detailed study of such challenges brings to light that “Visibility” as the main cause for all these challenges in the system, which adversely
impacts supply chain performance. In the illustration below, some of the challenges have been illustrated.
SOP adherence low, processes not executed as designed
Low Maverick behavior, Timeliness / correctness of data an issue
Maturity
1 Inefficient
Planning
Lack of
Planning
People skills and training issues, delays in plans/decisions for execution
Many expedites, duplication of work
Absence of
Tools & Tool automation benefits not realized
Templates No/inappropriate/ disintegrated tools and technology resulting in long cycle times
Partners or functions not working on the same page
Collaboration Lack of collaboration and poor supply chain partner responsiveness
Issues
2 Ineffective
Planning
Resource
Resource
Skills
Inadequate visibility to data inputs for planning
Absence of feedback loop processes
Skills Asynchronous and fragmented processes, no clarity on metrics, organizational overlaps
Master data issues
Inappropriate resources and skills
Resource Lack of training
Skills
3
Data
Execution Integrity Users not trusting data quality, usability issues
Issues Issues
Change
Mgmt
Users not properly engaged in the initiative leading to adoption issues
It is needed to build a systemic response to enhance supply chain performance management
It is important to address the core issues of visibility, co-ordination and responsiveness to build a systemic response to enhance supply chain
performance management. Global manufacturers have already accomplished certain levels of Visibility, Coordination, and Responsiveness in their
operations. Infosys believes global supply chains will continue to expand the width and breadth of their diverse partner network over the next
several years. Irrespective of the performance of the economy, the dynamic of increased supply chain complexity at the execution level will continue.
A systemic response to enhancing supply chain performance will need strong appetite for change management and internal stakeholder alignment.
Such a response should tie back in key business goals and objectives and clearly align business value delivery with such planned initiatives.
• Capitalize on “lost sales opportunities” by providing • Identify additional revenue opportunity – cross-sell, up-sell, new
Revenue demand information early to suppliers bundles, new offers based on market, customer and product feedback
Visibility, Co-ordination and Responsiveness Themes – How do they help?
• Design “Demand Shaping strategies” based on visibility • Cut down the “time to market” through better planning & visibility of
Enhancement into inventory by locations, inventory velocity and price information across multiple parties in the value chain along with
markdown flexibilities of products collaborative product development
• Improve inventory turns through demand-supply • Minimize invalid returns, response to invalid warranty
synchronization • Carry out product engineering analysis collaboratively between
Cost
• Reduce cost of expedites due to lack of information visibility partners for quicker CAPA actions
Reduction • Reduce manual touches in obtaining information, in turn • Minimize invalid returns thru rule-based workflow engine to
reduce cost of delays and errors automate return authorizations based on return value
Goals & Objectives
Customer • Perform better on delivery performance (ATP/CTP) based • Provide status and communicate early to customers in case of changes
on visibility into supply capabilities • Manage tracking of product and service quality and take quick
Experience & • Manage and accommodate late order change through remedial action through service campaigns & diagnostics
Satisfaction order lifecycle • Reduction in number of IT tools used & redundant data entry
• Make shared decisions and plans that allow better plan • Build in more Management by Exception capabilities across supply
Partner adherence and execute at a lower cost chain partners
• Reduce partner risk by publishing order/plan/inventory • Reduce human intervention in reconciliation of transactions
Experience information to help partner planning and execution • Allow supply chain partners improve their asset utilization
performance
• Supply chain traceability and tracking of serial numbers of • Manage compliance requirements and documentation needs across
Regulatory the products for installed base, entitlement management, the supply chain partners.
Compliance Restriction on Hazardous Substance (RoHS) compliance • Manage product integrity in terms on BOM Compliance
Infosys – View Point | 3

4. In many manufacturers, process improvement initiatives around elements of Visibility, Coordination, and Responsiveness have been launched with
fanfare only to run out of momentum when the initiative failed to identify and deliver “quick wins” that keep the project team’s motivation high and
the project fresh in the minds of managers sponsoring the initiatives.
It is important to identify such risks of failure very early in the life cycle to help manufacturers develop a well thought out improvement roadmap
that delivers ‘quick wins’ while setting up long term goals that can help sustain supply chain performance improvements in a concerted way.
About the Authors
Well known in supply chain circles globally with many international publications and presentations, Sudripto De (Sudripto_de@
infosys.com) is a manufacturing subject matter expert at Infosys and works across industry sectors like Automotive, High Tech and
Industrial Manufacturing.
Rahul Sharma (rahul_sharma09@infosys.com) is a supply chain subject matter expert at Infosys with over 16 years of operations
and consulting experience. He works across industry sectors like Manufacturing and CPG.
Notes: All content and graphics are solely the intellectual property of Infosys Limited and based on the experience and research of its supply chain
consultants.
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© 2012 Infosys Limited, Bangalore, India. Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges
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