inclusive & sustainable growth - role of supply chain - final

8/3/2019 Inclusive & Sustainable Growth - Role of Supply Chain - Final

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ACHIEVING THE

INCLUSIVE AND SUSTAINABLE GROWTH

THE ROLE OF SUPPLY CHAIN

A Synopsis byA Synopsis by RahulRahul Jain &Jain & AgeetAgeet KumarKumar

Team BSES Yamuna Power LtdTeam BSES Yamuna Power Ltd

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Introduction

What is Supply Chain?

What is Customer Services?

How Efficient Supply Chain affect Growth?

A Case Study BSES Yamuna Power Limited

The theme & Points of Discussion

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Personal Profile

Rahul Jain

Senior Manager Procurement

BSES Yamuna Power Limited

CA by Education, Negotiator by Profession. CA, CSCM, B.Com (H) , LL.B

Ageet Kumar

Manager Business Accounting


CA by Education, ManagementAccountant by Profession. CA, MBA (PM), B.Sc

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WHAT IS SUPPLY CHAIN?

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Modern SC View

An effective SC ensures high level of Customer Service at

optimum level of working capital and cost!

So simple yet extremly demamding......

Business SC view

an efficient supply chain that ensures products are onthe shelf, available for sale, when Shoppers come to

buy them ... all the time!

Supply Chain (SC) Definition

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Supply Chain Management Evolution

From disconnected.

Exclusively focus on growth/cost.

Separately managed functions.

To integrated.

End-to-end process approach.

Customer focus, profitable growth, liquidity,

functional integration.

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Why implementing a Supply Chain approach?

Poor servicePoor service

Not 1st. in classNot 1st. in class

Empty shelvesEmpty shelves

Poor forecastingPoor forecasting

Its all about Managing Expectations..

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Key Operational Functions

under One Umbrella & Streamlined

SupplyChain Concept

Demand

& SupplyPlanning

Demand

& SupplyPlanning

Data

Integrity

Data

Integrity

Order

& QueryMgmt

Order

& QueryMgmt

W-housing

&Delivery

W-housing

&Delivery

Invoicing

& CashCollection

Invoicing

& CashCollection

Stock

Mgmt

Stock

Mgmt

POS &

Display

POS &

Display

CUSTOMER FOCUSSEDSupply Chain is integration of our business processes and organisations

around the entire demand and supply chain

in servicing our customers and managing our inventories

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Demand Planning

Creation of a Base Forecast

Based on distributor stock, GIT, Lead times & Market/Sales intelligence

Ensuring Forecast Integrity

Ensuring forecast is cleansed and integrity in terms of coding, quantities and

market relevance is achieved. Ensuring Forecast Consistency

Ensuring through planning that the forecast is consistent across lags to get to

stable and accurate forecast.

Reporting

Reporting DP KPIs Major Variances

Detailed Variance Reportings with root cause analysis

Customer

Supplier

Planning

Execution

Demand

Planning

Supply

Planning

Order to

Cash

Warehousing

&

Distribution

Business

Information

Management

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Supply Planning

Inventory Management

Planning promotions

Planning product customisation

New Products co-ordination Avoiding Excess stock

Phase-in/phase-outs

MPS - master production scheduling

Stock allocation

Customer

Supplier

Planning

Execution

Demand

Planning

Supply

Planning

Order to

Cash

Warehousing

&

Distribution

Business

Information

Management

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S&OP is Joint Accountability

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S&OP Disconnected vs. Integrated

CustomerDevelopment:

we can sell 200

Marketing:

the promotion

will sell 400

Manufacturing:

they will

only sell 150

Finance:

we havebudget of 300

Financial

Planning

Demand

Forecasting

& Planning

Category

Customer

Service &

Distribution

Manufacturing

Customer

Development

Supplier mgmt

Debtor mgmt

oneone

consensusconsensus

planplan

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An Efficient Supply Chain for Efficient Customer Service

We have understand what is Supply Chain & its main components

An Efficient Supply Chain through Effective Sales & Operations Planning

Effective Supply Chain will result into Best Customer Service

Better Customer Service will result into Inclusive & Sustainable Growth

Resultant will be increase in Net-worth of the Organization with integration

and synchronization of interests of all the Stakeholders

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WHAT IS CUSTOMER SERVICE?

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Our customer's are not

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NOT this

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But more like this

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What is customer service

Business

Planning

CS

Operations

Meeting the Customers Expectations - every time

Exceed

customers expectations In a few areas Consistently every time

Exceed

customers

expectations In all areas

Consistently every time

CSStrategy

UNDERSTAND what your customer wants

And what you can give them

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Differentiation (Quality; Uniqueness;

e.g., Luxury cars, Fashion Industry,

Branded v/s Generic Drugs

Cost Leadership (Price;

e.g., Wal-Mart

Responsiveness (Reliability; Quickness; Flexibility;

e.g., Dell, Overnight Delivery Services)

Competitive

Advantage through whichthe company market share is attracted

To enhance Customer Service and align demand with supply

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WHAT IMPACT SCMMAKE ONSUSTAINABLE & INCLUSIVE GROWTH?

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Inclusive & Sustainable Growth

Role of Supply Chain Management

Financial Impact

Sustainable Increase in Demand

Increase in Profitability

Efficient Working Capital

Availability of More Cash in

Supply Chain

Non-Financial Impact

Forecast Accuracy

Order Accuracy

Invoice Accuracy

On-time Shipment & Delivery

Customer Satisfaction

Brand reliability Goodwill

Impact of Efficient SCM

on Organizational

Growth

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Inclusive & Sustainable Growth - Role of Supply Chain Management

Financial Impact Sustainable Increase in Demand

Meeting the Customer Expectations Every Times

Exceeding the Customer Expectations in few Area Every Times

Exceeding the Customer Expectations in All Areas Every Times

CustomerSatisfaction

Sustainable Increase in Demand for the Product/Service

Increase in Revenue

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Financial Impact Increase in Profitability

Efficient Supply Chain increase the

profitability in two ways

On one side it increase the revenue by

increase in the demand with Efficient CS

(we already discussed)

On the other side, by reducing the Cost to

Serve; as-a-whole, thru bringing the

efficiency in pre, post & production cycle of

the product. Efficient SCM reduce the VC of

Production, which directly impact the

Profitability

The Sole Object of SCM is all about

providing the Right Product at Right Time &

Place to the Right Person

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Financial Impact Efficient Working Capital

Ease the pressure by lowering

the overall weightedcost of capital

Reduce pressure on

AR/AP & Cash Management

S&OP optimise demand & supply

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Managed Inventory


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Financial Impact Availability of More Cash in Chain

An Efficient Supply Chain Means:

Managed Inventory Minimum Investment in

Inventory, more liquidity

Just-in-time Cash Thru Efficient SCM,

organization can forecast the availability of

cash from sales more accurately.

Reduce Cash-to-Cash Cycle Efficient

Procurement, Production, Ordering, Deliveryreduce the Cash-to Cash Conversion cycle

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Non- Financial Impact

Brand ReliabilityBrand Reliability

Order AccuracyOrder Accuracy

Invoice AccuracyInvoice Accuracy

On Time Shipment &On Time Shipment &

DeliveryDelivery

Customer SatisfactionCustomer Satisfaction

Forecast AccuracyForecast Accuracy

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This Growth will NOT be Sustainable?

UNLESS

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The Sustainable Growth

Green ProcurementGreen Procurement

CSRCSR

EnvironmentalEnvironmental

ProtectionProtection

Safety MeasuresSafety Measures

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TechnologicalTechnological

InnovationsInnovations

KEYS to make the

Growth

SUSTAINABLE


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Keys to Sustainable Growth

Environmental Protection - Implementation & Maintenance of International

Standards in Environmental Protection; e.g.

Implementation of ISO 14001:2004; to provide a framework for a

holistic, strategic approach to the organization's environmental policy,

plans and actions. Implementation of ISO 14004:2004 provides guidelines on the elements

of an environmental management system and its implementation, and

discusses principal issues involved

Safety Measures - Implementation & Maintenance of InternationalStandards in Safety & Occupational Hazard; e.g.

Implementation of OHSMS (ISO 18001) promotes a safe and healthy

working environment to consistently identify and control its health and

safety risks, reduce the potential for accidents, aid legislative

compliance and improve overall performance.

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Green Procurement Procurement of Environmentally preferable goods

and services; like those good and services that have a lesser or reduced

impact on the environment over the life cycle of the good or service,

when compared with competing goods or services serving the same

purpose. Environmental performance considerations include, among other things:

The reduction of greenhouse gas emissions and air contaminants

Improved energy and water efficiency;

Reduced waste and support reuse and recycling;

The use of renewable resources;

Reduced hazardous waste;

Reduced toxic and hazardous substances.

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Corporate Social Responsibility- Business affects many different people -employees, customers, suppliers and the local community.

We should limit to just cutting the costs and boosting the sales. We should think

about the Society as a Whole.

Technological innovations Automation is to be promoted.

Implementation of new technology will improve/speed up the processes and it put

the organization ahead of its competitors.

But implementation of new technology must be subject to its cost & benefit analysis.

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ROLE OF SCM IN UTILITY INDUSTRY?

CASE STUDY

BSES YAMUNA POWER LTD(INTO THE BUSINESS OF ELECTRICITY DISTRIBUTION IN

CENTRAL & EAST DELHI)

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Case Study: Role of SCM in Utility Industry


1. BSES Yamuna Power Limited; a subsidiary of Reliance Infrastructure

Limited, took over the business of Electricity Distribution in East & Central Part

of the Delhi in July 2002. It was a PPP model, a joint venture between

Reliance Infrastructure & Delhi Government, with management in the control

of Reliance Infrastructure Ltd.

2. Here, in the case study we are presenting the growth BSES Yamuna Power

Ltd (referred as BYPL hereinafter) has witnessed. This growth is a true

example of implementation of SCM, efficiently in a Utility Business.

3. Implementation of Efficient SCM has given manifold growth to the business,

which can be summarized into following two main categories:

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Power Supply

to Consumers

Internal

Operations &

Maintenance


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BSES Yamuna Power Limited Power Supply to Consumers

PowerSupplyCondition; before BYPL took-over:

1.At-least 10-12 Hrs of power cut daily.

2.Poor Power Quality (i.e. Low Voltage, Voltage Fluctuations etc); which

caused the damages to Consumers Electric Equipment.

3.No Process for Demand Forecasting.

4.No open market procurement.

5.Lack of Integration/coordination between Power Procurement and

Power Distribution Departments.

6.No Integration among PowerSupply Grids/Sub-stations.

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Power Supply Condition; before BYPL took-over leads to

following situations:

1.Long Power Cuts leads to Consumer Dissatisfaction resulting into

huge No-Supply Complains

2.Commercial/Industrial consumers were forced to arrange alternatives;

e.g. DG-sets, which also resulting into Air as-well-as Noise Pollution.

3.On the same line. Domestic Consumers were also forced to arrange the

Invertors/ battery operated appliances for light, fans etc.

4.Huge Technical & Commercial Losses, which was burden on the ex-

chequers.

Ultimately all these situations were the basic reasons for the lack ofIndustrial

growth in the region & also the living standard & general living satisfaction of

the residents.

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Power Supply Condition; Implementation of Efficient SCM by

BYPL:

1.Power Procurement and Power Distribution Departments were

Integrated for better Planning & Coordination.

2.A Demand Forecasting System was developed & successfully

implemented, on the basis of Historical data & Planned Future

Projections.

3.A process was developed for Short-Terms/open market Power

Purchase, to meet additional demand.

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Power Supply Condition; Implementation of Efficient SCM and

How it Turnaround the Business?:

1. Accuracy in Demand Forecasting

2. Efficient / In-time arrangement of PowerSupply

3. Gradual Reductions in Power Cuts resulting the Reduction in

ConsumerComplain

4. Noise of DG-sets vanished.

5. Industrial Growth in terms of Expansion and Set-up of new Units.

6. Improvement in the Status of the Society as General

Although it has Negatively Impacted the Followings too:

1. Negative Growth in DG/Inverter/StabilizerManufacturing Industries

2. Increase in Electricity Consumption led to High Electricity Bills

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BSES Yamuna Power Limited Operations

OperationalConditions; before BYPL took-over:

1.Indefinite Time for replacement for Burnt Transformers/Meters/Cables

etc.

2.Recurring Break-downs in electricity supply due to lack in replacement

of Old Conductors on Time.

3.Delay in the Augmentation ofTransformers & related equipment due to

improper planning of material availability

4.Huge No-Supply Complains due to Faults

5.Meters Installation Cycle was long due to shortage of Equipments.

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Operational Conditions; Implementation of Efficient SCM by

BYPL:

1.Integration of O&M Departments with Stores & Procurement

Department with implementation of ERP Tools.

2.EfficientMRP System was installed

3.Levels of Inventory was set-out for the Essential Equipments; e.g.

Transformers, Cables, Meters etc.

4.Periodic Review of

Stores and Demands from O&

MDepartment

5.Implementation of VMS at Procurement Department

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Operational Conditions; Implementation of Efficient SCM and

How it Turnaround the OperationalConditions?:

1.Prompt replacement of Burnt/ Defective Transformers/Conductors

/Meters etc.

2.Seasonal Preventive Maintenance Drives was undertaken to prevent

breakdowns, faults.

3.PlannedAugmentation of the System based on the demand forecast.

4.Prompt Installation of the meters for new connections.5.Drastic reduction in the consumers complains

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Contribution of BYPL towards green environment-

More availability of power reduced air and noise pollution

Sending bills on emails

accepting payments through credit card and internet banking

Acknowledging complaints over emails and call centre and sending

resolutions through e-mails and sms to reduce footfalls.

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How SCM impacted the Growth

1.The Sales of the Company has increased more than 5Times

2.TheAT&C Losses has reduced by 65%

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inclusive & sustainable growth - role of supply chain - final

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