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Enterprise Solutions
If you are an organization which is at that phase of growth where the operations is becoming complex, distributed locations, information not available at the right point of time, then one of the biggest issues you are probably facing is that significant effort being spent on responding to requests. What you probably need is the right Enterprise Solution that connects across the organization.
The decision making process for an Enterprise Solution is an extended one since customers are never sure about the value that they will derive from implementing such solutions. We understand this and try to take a ‘Business Case’ approach to decision making. We help you make that decision with as much objective assessment as possible.
While most people associate Enterprise Solutions with an ERP package, we believe that it is only the first step in ensuring organization-wide business process standardization. At Aqua MCG, we look at Enterprise Solutions as any technology that cuts across departments to achieve an objective that could help in one of the following:
- Strategic Planning – By providing information and allowing informed decision making
- Operational Excellence – By allowing a seamless flow of the business process through the various parts of the chain
- Control and Compliance – By helping to put in the right control mechanisms (workflows, reporting), these solutions help in bringing better governance
At Aqua MCG, we offer a comprehensive set of solutions to address enterprise-wide requirements across the above spans.
Our Offerings
ERP Consulting
If your firm is contemplating an ERP implementation and needs help in identifyin
Last Updated On:6/26/2009 6:50:44 PM
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A Structured Approach to Cost Management
SUPPLY CHAIN COST MANAGEMENT FRAMEWORK
1. Define Goals and Objectives
A structured approach to cost management would obviously first involve defining its goals & objectives. The supply chain cost management & reduction exercises should be well aligned with the overall business strategy. With overall business strategy we mean key business plans, customer expectations, opportunities & threats, supply chain road-map, marketing plans and last but not least, a clear understanding of the relationships shared between various functions and departments. Those that are not tied to these long-term strategic goals are often misguided and create havoc due to the myopic focus on short-term productivity gains.
Team goals should be set with the involvement of all departments & functions, so as to infuse the interest & concern of all. Again, a pure department-focused cost reduction exercise will only motivate a single department and not multi-departments that actually forms a team.
Just as in any strategic exercise, cost management drives also require a core team entrusted with adequate responsibility & authority to drive manage and monitor all cost management initiatives. They should also keep in mind that goals should be realistic, focused, measurable and quantifiable. It should be breakable into clear units of work which can then be assigned to each team. On the other hand, unrealistic or vaguely defined goals can dampen motivation and guarantee the failure of cost management.
2. Identify Supply Chain Costs
Now that the Goals & Objectives have been identified, it is now important to classify all the supply chain costs and its flow. From the primary costs that have been stated in the previous step, the secondary costs and sub costs will emerge. Now the team can drill down on all the activities to be taken up in order manage all these costs step by ste
Last Updated On:7/23/2010 2:40:08 PM
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Other Cost Reduction Areas
This section gives an insight into other areas in the supply chain where there exists tremendous scope of cost reduction specifically in the Indian market context.
Inventory Management
More than Rs 1, 00,000 crores is tied up in industry inventories in India. One of the main reasons for the huge pile-up of inventories is the separation of the inventory strategy from the S&OP planning. The lack of a holistic overall approach results in locally optimal inventory decision and in turn higher inventory holding costs with frequent stock-outs. To add to the industry woes, 84% of inventory replenishment processes in the Indian manufacturing sector are push based (according to a report published by FICCI in 2004).
Thus, there is a clear need of integration between the inventory optimization process and the S&OP. This will help solve not only the inventory holding costs but the over-arching strategic problems that link into other issues. Also, moving from a push based system to a pull based system helps drastically reduce inventory across the supply chain. Efficient production planning and an integrated, responsive supply chain network are all critical to reducing inventories. Inventory segmentation for decisions into service levels, is another popular approach to reduce inventory and retain customer-centric focus on the key products.
In addition to this, the 2007 benchmark report on Working Capital Optimization (WCO) surveyed 400 corporations from across the world and found that for more than 65% of them, WCO was a high-priority at any given point of time. The need to focus on WCO is primarily driven by financial stakeholders who continually urge companies to improve their financial metrics. However financial & inventory strategies are not enough to mitigate this; technology platforms to cushion the impact of inventory, by enabling better access to funding, and helps stream-line & automate various processes.
A
Last Updated On:7/23/2010 4:12:30 PM
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Cost Management Initiatives
The Importance of Sales and Operation Planning :
An S&OP process helps in balancing supply and demand with the help of a single operating plan spanning across all functions to achieve profitable growth. It also helps align the company’s strategic business goals with the daily operations plan in the most cost-effective manner. Effective planning results in better forecast accuracy and better visibility. Effective planning of the supply chain helps in maintaining balanced inventory levels, increase inventory turns and a better utilization of the resources. All these three factors together help achieve supply chain cost reduction.
The demand forecasts developed by the Sales personnel are generally inflated to buffer the effect of late deliveries from the manufacturing plant. The manufacturing personnel in turn give an inflated projection to the sourcing and procurement team. The finance team gives another set of forecasts to the manufacturer purely targeted at meeting goals of the finance group, without any idea of either the capacity constraints or the inventory levels. The result is a number of forecast figures most of which are inaccurate and unreliable. On the other hand a poor planning process results in higher costs due to expedited shipments, frequent stock-outs, higher inventory levels, higher transportation costs due to large number of small shipments and lower customer service levels. The chart below shows a typical 5 step S&OP process.
Most companies today have some sort of an S&OP process in place. However, in most cases the existing process in place is far from an ideal state. Even in companies where there is a rudimentary traditional S&OP process where a forecast number is agreed by marketing, sales, finance and production planning teams; forecasts tend to be poor.
A company thus needs to first do a diagnostic to determine at what stage of maturity it is at present, and t
Last Updated On:9/16/2010 2:41:39 PM
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Supply Chain Cost Reduction in India
- Supply Chain Cost Reduction opportunities for Indian Companies
The Market and Supply Chain Need
Failed companies. Rescued banks. Panicked markets. Our current economic suffering is being hailed as one of the worst of all times. With a sharp decline in spending & wealth, now more than ever, have organizations realized the need for strategic thought and structured planning. This is where cost reduction has assumed its insurmountable position.
Cost saving initiatives need to be shaped and implemented by all departments in the organization; the entire process of planning, monitoring and measuring needs the support of all. Everyone from the top to the bottom must be actively involved, and work towards the new goals set. Expense reports are obviously the most logical place to start. These should be over a relatively long period of time in order to remove any seasonal variations. It is also important to stay focused on the key areas that account for the major 80% of costs.
Many organizations believe in myths like an “informal program for cost reduction is fine”; or even that reducing costs have a negative impact on quality. Nothing could be further from the truth. The most efficient cost reduction programs are those that very formal / specific and have clear objectives & accountabilities attached to it.
Companies that have been successful in cost reduction realised that it’s not enough to just reduce expenses to remain competitive; rather it takes innovative measures to emerge as leaders. This is why the role of knowledge advisory groups is so important. They help provide a much needed innovative & structured program, designed through practice-proven tools and strategies from specialists.
For example, it is easy to see why so many companies choose to downsize their workforce so that employee costs, which often account for more t
Last Updated On:7/4/2011 5:43:49 PM
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Comprehensive Business Road-Map Development for one of the largest Indian State’s Food & Civil Supplies Department
Title: Holistic road-map development* for the FCS Department, developed in conjunct with, and for, an organization providing strategic advice to GOI and enabling e-Governance across departments
Background:
Client supply-chain spans procurement of farm produce directly from farmers, movement & storage at warehouses, and public distribution of essential commodities through Fair Price Shops for various beneficiary categories, per government policy. In order to overcome an archaic system based on manual recordkeeping, legacy source, store and supply locations and systemic diversions and losses, the Dept. is in the process of undertaking technology-led changes in order to improve efficiency, effectiveness and transparency
Business Scenario:
Large-scale diversions and system leakages diminishing efficiency and effectiveness of benefit transfer through PDS
Technology infrastructure in terms of hardware, connectivity et al currently being put in place. Initiatives to be planned to migrate current manual operations to system-led one
Piecemeal initiatives across technology & process dimensions underway- need for synchronizing them across the supply chain in a holistic manner
Given sensitivities involved, activities of Dept. have significant political and social ramifications- the same need to be factored while framing solutions.
Our Solution:
Conduct detailed mapping and base-lining of Department activities, including ongoing initiatives and planned interventions
Extensive study of best-practices in delivery & policy mechanisms across other states, evaluation of applicability in State context, and methodologies for implementation o
Last Updated On:7/6/2011 10:42:59 AM
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Project Management
Aqua has developed a project management dashboard that is capable of providing project progress information to the project manager. The tool uses EVM & ES techniques to provide valuable information to the project manager – eg. Cost Performance Index, Schedule Performance Index, Cost Estimate at Completion, Time Estimate at Completion etc.
The tool also has a set of parameters for measuring the efficiency of various departments.
Summary
Last Updated On:7/7/2011 1:12:50 PM
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Designed a S&OP Process for a leading global Pharmaceutical Company
Title: We developed a 3 year roadmap for implementation of strategic initiatives starting with the S&OP process followed by initiatives in Procurement and Distribution
Business Scenario:
Pharmaceutical MNC with an established presence in India. Annual Sales of approx 180 crores and 40 SKUs
Products are all established ones and purely driven by prescription sales. Offers to trade are planned, and very few. Products have Highly predictable sales and are in the growth and maturity stages of the life cycle. There are very few new product introductions
All Manufacturing outsourced to 3rd parties, but Procurement handled within the company
Country wise distribution done through 20 stocking points managed by CFAs (Carrying and Forwarding Agents).All CFAs and departments are on ERP.
Planning and Distribution carried out using annual budgets and excel sheets using a process which has worked well for many years
Company has growth plans to double market share and triple turnover in India in a period of 5 years
Our Solution:
A S&OP Diagnostic exercise was done to understand planning processes. This revealed a “Basic” level of maturity implying that processes existing were sufficient to support current business but not enough to support future growth
Improvement Areas revealed mainly in Sales and Operations Planning Process, IT Systems used for Planning, Procurement Processes and Distribution Strategy
We developed a Road map for phased strategic initiatives starting with implementation of the S&OP process and then Procurement Strategy and Distribution Network Optimization
Detailed Roadmap with
Last Updated On:9/13/2011 3:05:32 PM
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Case Studies
We created a holistic road-map development* for the FCS Department, developed in conjunct with, and for, an organization providing strategic advice to GOI and enabling e-Governance across departments
Last Updated On:9/10/2009 5:36:00 PM
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The need to reduce Cost in the Indian Supply Chain
The aim of any manufacturing/services firm is to produce goods to meet the end-customer requirements. One of the key differentiators which influences a customer’s buying behavior is the price of the product. This is especially true for a mass market like India, where volumes are more important. Another reason for this is the increasing maturity of many industries and the mass commoditization of products. In such a case, the product price and on-time delivery becomes a very critical factor. With the cut-throat competition and increasing input prices, cost reduction is a must to help maintain/increase margins. The competition is so intense that a small price rise of a product might cause huge reduction in demand for that product.
Secondly, there is always a push from the shareholders to maximize their return on investments. As operations cost for a major part of the cost that goes into the product, supply chain cost is the single most important area for cost reduction. However supply chain cost reduction needs to be followed with the customer in focus i.e. there should be no compromise on either the quality of the product or technology or customer service. Also cost reduction has to be a continuous improvement program rather than a one-time attempt keeping in mind the ever demanding customers who wants a better quality product at a lower price. Thus supply chain cost reduction is one of the most critical tasks facing the Indian companies.
When the competition is no longer among individual companies but among entire supply chains, every area of end-to-end cost reduction needs to be looked into. Financial supply chain optimization has helped many leading companies make their entire supply chain competitive, with the introduction & implementation of many advanced SCF (Supply Chain Finance) practices & technology (automated transaction processing).
Finance, supply chain and procurement groups
Last Updated On:7/23/2010 1:16:39 PM
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