Wednesday, July 22, 2009

Supply Chain Demystified Part-1

Life has taught me more about Pricing and Supply Chain Management than did my MBA. It has taught me to buy the goods at the point where they are produced. Because more number of partners (vendors/goods suppliers) in supply chain increases the cost of the product. That’s the reason why I prefer to buy my clothes from a Factory outlet or get them tailored. Same applies to Milk also (no naughty thoughts please). I go to the direct dealer near my house, so that I can buy them at MRP, where as door step delivery costs an additional 50 Paisa/ Packet. Today as usual I reached the shop early in the morning escaping the ferocious street dogs. A man buying a bagful of packets smiled at me. I thought I should say some thing. So I said to him smiling “Seems like you have a big family!”.” No” he said amused “I run a canteen here”. The next day I saw a lady buying packets in bulk. I could not resist asking her so I asked “Seems like you run a canteen!”. “No...” She retarded saying “It’s for my family”.


Now, coming back to the point, managing the Supply Chain is not an easy task. Not that I could not score an “A” in SCM, but really it is tough. As the production needs to be maintained in sync with the fluctuating demand without having a higher lead time of delivery. SCM encompasses all the activities of Procurement, Production and Marketing divisions. A scope of an ideal supply chain is considered from your vendor’s vendor to customer’s customer (in a typical B2B scenario). So when you have so many organizational entities, intermediaries and partners, it’s sure that whatever efforts you put to match the demand with the supply, you will still be in a mess.


Production is a controllable factor but not the demand. There are lots of factors that cause huge fluctuations to Demand. The major factor is “Economy”, the leading indicator of the (demand) fluctuation. Let me give an example that can etch in your mind. Recently Pfizer had announced one year free supply of medicines to jobless youth in the country. Needless to say that Viagra was the most sought after than any other drug. Now put yourselves in the shoes of Supply Chain Manager of a Firm that manufactures Latex. Will you be able to react to the increased demand for condoms? First of all will you be able to understand the fact that it affects your demand? Since Pfizer is in a totally different sector. There are certain Freak economic Theories like Lipstick Theory and Condom Economy (No, I am not talking about the size of economy pack), which says that whenever there is a dip in economy, there will be a raise in the sale of products like lipsticks and condoms. I will leave the causes of this phenomenon to your guessing. But now you know what goes up when every thing goes down.


To summarize this post, the first rule of attaining Supply Chain Efficiency is to have a simple and short SC. This makes the supply chain more resilient and cost effective. The other factors that affect SC efficiency are Infra Structure, Information Technology, Climate and other miscellaneous factors like Forecast errors, vendor delays etc. As this is a vast subject, we can discuss this by parts. So let’s take a break here.

Supply Chain Demystified Part-1SocialTwist Tell-a-Friend

Saturday, July 18, 2009

No country for Plastic Money



It was on one fateful Sunday morning that I got a call from my friend. He offered me a free lunch if I can drag my lazy bum (Not literally) till his office in ITPL. It's not that he was my close friend nor I had anything to do for the rest of the day except to be a couch potato, but it was the treat that tempted me. I skipped my breakfast in order to take full advantage of the offer. At 12 noon, I grabbed my bike keys and started off.


To my horror, the fuel in my bike dried out and so was the petrol bunks due to strike in B’lore. Cursing my luck, I came back home tired and thirsty after dragging my heavy bike under hot sun .The Aqua Guard was useless without power. With little energy that was left, I checked my wallet and rummaged my room. After 5 mins I started my journey to ITPL with a book full of Meal Vouchers, two Debit Cards and a Credit card and few coins.


The bus dropped me to the nearest ATM that was out of condition. With a brave heart, and 2 one rupee coins, I boarded a bus, only to learn the words that one can use to swear by in Kannada, as I was caught traveling without ticket. It was 2 PM and I still wanted to commute by bus(This time with ticket) despite my friend’s plea over phone as the autowalas were over demanding. On some one's advice I started off to the nearest ATM which was 2 kms far, cursing the dusty roads and the traffic. As my luck would have it, after getting fired under the hot sun, I met an ATM that was already robbed and another one which was in the process. I stood impatiently in the queue and rushed in at my turn. "Sorry the machine is out of Money" the ugly lines flashed on screen.


A good Samaritan there offered me a drop to another place, a remote area where even one manages to get cash from ATM, cannot manage to get a bus. As my mind had already shut downed many of its operations by then, I sat in his bike without giving a second thought. At 2:30 I was standing in a deserted place staring a HDFC ATM that is yet to be launched. By then, my tongue was parched and stomach dried. My cooked up brain had started hallucinating of vultures following behind. The lonely shop nearby, became an oasis to me in that hot and deserted place. To my despair, my choice of food was limited to a five star chocolate and no water or drink. I ate greedily and settled the bill of 10RS chocolate with 50Rs meal vouchers after a lot of convincing.


The 250 calories gave my brain a little energy to think rationally. I accepted my defeat to the situation. I understood that this is not a country where one can roam around happily with bunch of plastic cards .I negotiated an auto for Rs300. On my way I called up my friend and was about to say that I am on my way....and the battery went dead. I fell back on my seat too strained to be panic and closed my eyes.


After 10 mins, I made an effort to cheer seeing my friend talking to the driver. We drove to nearest Restaurant which by 3:30 had closed its service. Dejected, we helped ourselves with a bottle of coke from a bakery nearby. Burdened by the ill adventure, I took the same auto to go back home. The fateful Sunday, I shelled out 600 bucks to stay hungry, weak and frustrated. May be the world is moving with Credit cards and M-Check but India has long way to go to make all the basic services to be technologically accessible.

No country for Plastic MoneySocialTwist Tell-a-Friend