Supply Chain Management (SCM) Overview and SCM Development in Pune
Have you ever wondered how much planning and co-ordination it takes to roll out Indicas smoothly off the Tata Motors assembly line? Consider this – A typical automobile consists of thousands of parts sourced from hundreds of suppliers, and a manufacturing and assembly process that consists of dozens of steps. All these different pieces need to tie-in in an extremely well synchronized manner to realize the end product.
How is this achieved? Well, like most complex business challenges, this too is addressed by a combination of efficient business processes and Information Technology. The specific discipline of software that addresses these types of problems is known as “Supply Chain Management” (SCM).
Pune has a strong manufacturing base and leads the nation in automotive and industrial sectors. Companies such as Tata Motors, Bajaj Auto, Kirloskar Oil Engines, Cummins, and Bharat Forge are headquartered in Pune. The manufacturing industry has complex production and materials management processes. This has resulted in a need for effective systems to help in decision making in these domains. The discipline that addresses these decision making processes is referred to as ‘Advanced Planning & Scheduling’ (acronym: APS). APS is an important part of SCM. This article briefly discusses some of the basic concepts of SCM/APS, their high-level technology requirements, and mentions some Pune based companies active in this area. Note, given Pune’s manufacturing background, it is no accident that it is also a leader in SCM related software development activities in India.
Introduction to SCM
Supply chain management (SCM) is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. SCM Software focuses on supporting the above decision making business processes that cover demand management, distribution, logistics, manufacturing and procurement. APS specifically deals with the manufacturing processes. Note, SCM needs to be distinguished from ‘ERP’ that deals with automating business process workflows and transactions across the entire enterprise.
‘Decision Making’ is vital in SCM and leads to a core set of requirements for SCM software. Various decision making and optimization strategies are widely used. These include Linear Programming, Non-Linear Programming, Heuristics, Genetic Algorithms, Simulated Annealing, etc. These decision making algorithms are often implemented in C or C++. (In some cases, FORTRAN still continues to be leveraged for specific mathematical programming scenarios.) Some solutions use standard off-the-shelf optimization packages/solvers such as ILOG Linear Programming Solver as a component of the overall solution.
Consider a typical process/paint manufacturer such as Asian Paints. They make thousands of different end products that are supplied to hardware stores from hundreds of depots and warehouses, to meet the end consumer demand. The products are manufactured in various plants and then shipped to the warehouses in trucks and rail-cars. Each plant has various manufacturing constraints such as 1) a given batch mixer can only make certain types of paints, 2) to reduce mixer cleaning requirements, different color paints need to be produced in the order of lighter to darker shades. Now, to make it more interesting, there are many raw material constraints! Certain raw materials can only be procured with a long lead time. An alternative raw material might be available earlier, but it is very expensive! How do we decide? How many decisions are we talking about? And remember, these decisions have to be synchronized, since optimizing any one particular area in isolation can lead to extremely bad results for the other, and an overall sub-optimal solution. In optimization language, you can literally end up dealing with millions of variables in solving such a problem.
SCM software also has a fairly specific set of GUI requirements. A typical factory planner will deal with thousands of customer orders, machines, raw material parts and processing routings. Analyzing and acting on this information is often challenging. A rich role based user workflow for the planner is a critical. GUIs are usually browser-based with custom applets wherever functionality richness is needed. In very specific cases, ‘thick’ desk-top based clients (typically developed in Java) are also required for some complex workflows. Alerts and problem based navigation are commonly used to present large amounts of information in a prioritized, actionable format. Rich analytical OLAP type capabilities are also required in many cases.
Integration is an important part of SCM software architecture. SCM software typically interacts with various Enterprise IT systems such as ERP, CRM, Data-Warehouses, and other legacy systems. Many inter-enterprise collaboration workflows also require secure integration with customer/partner IT systems via the internet. Both batch and real-time integration workflows are required. Real-time integration can be synchronous or asynchronous. Batch data can sometimes (e.g. in Retail SCM) run into terabytes and lead to batch uploads of millions of lines. Loading performance and error checking becomes very important.
Consider a computer manufacturer such as Dell. They are renowned for pioneering the rapid turnaround configure-to-order business. Dell assembly plants sources material from different suppliers. In order to get maximum supply chain efficiencies, they actively manage raw material inventory levels. Any excess inventory results in locked-in capital and a reduction in Return on Investment (ROI). In order to achieve effective raw material inventory management, Dell needs to share its production and material requirements data with its suppliers so that they can supply parts at the right time. To achieve this, there needs to be a seamless real-time collaboration between the Dell procurement planner and the suppliers. Data is shared in a secured fashion via the internet and rapid decisions such as changes to quantity, selecting alternate parts, selecting alternate suppliers are made in real-time.
SCM in Pune
Most of the large manufacturing companies in Pune leverage some kind of SCM software solutions. These are typically sourced from SCM software industry leaders such SAP, i2 and Oracle. In some cases, home grown solutions are also seen.
Many small and med-sized software product companies in Pune are focused on the SCM domain. Some offer comprehensive end-to-end solutions, while others focus on specific industry niche areas. Note that by its very nature, SCM processes are fairly complex and specifically tailored to individual companies. As a result many SCM products are highly customizable and require varying degrees of onsite development. This leads to software services as an integral part of most of these SCM product companies.
Pune based FDS Infotech has been developing SCM and ERP software suite for over a decade. They have a wide customer base in India. A representative example of their solution can be seen at Bharat Forge. Here their SCM/APS solution is being used to maximize the efficiency of the die shop. This is achieved through better schedule generation that considers all the requisite manpower, machine and raw-material constraints.
Entercoms, also based in Pune, is primarily focused on the Service Parts Management problem in SCM. Their customers include Forbes Marshall and Alfa-Laval.
SAS, a global leader in business intelligence and data-analytics software also develops various SCM solutions, with specific focus on the Retail segment. Their Retail solution focuses on a wide variety of problems such as deciding the right merchandizing strategies, planning the right assortments for the stores, forecasting the correct demand, etc. They boast a wide global customer base. Their Pune R&D center is involved in multiple products, including their Retail solution.
In addition to these three, many other small SCM software companies in Pune work on specific industry niches.
About the Author
Amit Paranjape is one of the driving forces behind PuneTech. He has been in the supply chain management area for over 12 years, most of it with i2 in Dallas, USA. He has extensive leadership experience across Product Management/Marketing, Strategy, Business Development, Solutions Development, Consulting and Outsourcing. He now lives in Pune and is an independent consultant providing consulting and advisory services for early stage software ventures. Amit’s interest in other fields is varied and vast, including General Knowledge Trivia, Medical Sciences, History & Geo-Politics, Economics & Financial Markets, Cricket.