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01 LSCM Assignment chandan

Marketing Management (Alliance University)

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Operations Management
Logistics and Supply Chain Management
Assignment

ASSIGNMENT:

 As you read the attached white paper, notice the many connections between the
white paper and operations management topics such as SCM, operations strategy,
forecasting, process and product design, etc.

 Select three concepts or discussion points from the whitepaper and s how
how each of these "imperatives" relate to these other OM issues and
concerns.

o Some of the white paper is technical in nature and other areas give
accessible examples. Be sure to include in any technical discussion some
form of explanation or example to illustrate what is meant.
o Be sure to use formatting cues, such as bold or headings, so I can easily
find the different points you are making.
o This must be type-written and double-spaced and would typically be
somewhere in the 3 to 5 page range. Please use paragraph form.

 Each analysis carries a maximum of 10 marks, out of a total of 30 for the

three analyses (3 x 10 = 30 Marks).

ANSWER
In given white paper a detailed analysis provided on Seven Imperatives and applying these
how Accenture has achieved Dynamic Supply Chains thus able to deliver high
performance.
Accenture is a global management consulting, technology services and outsourcing
company. It combine global industry expertise and skills in supply chain strategy, sourcing
and procurement, supply chain planning, manufacturing and design, fulfilment and service
management to help organizations transform their supply chain capabilities.

Accenture further has found in our client experience that the most successful companies
clearly align their supply chain operations with the value proposition of the business and
Invest in those operational areas that lead to highest shareholder return.

First four of the imperatives focus on strategic fit the linkage between the corporate vision
and strategy with the supply chain vision and strategy.
The remaining three imperatives focus on execution–the ability to turn the strategy into
business practices that are performed flawlessly on a daily basis.
Seven Imperatives

1. Clear value creation algorithm.

2. Value delivery system.
3. Segment the supply chain and consistently adapt it to the characteristics of each
segment.
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4. Optimize the global operation architecture for scale, access, flexibility and risk
mitigation.
5. Selectively invest for mastery in differentiating capability areas.
6. Deploy information systems that deliver insightful analytics, alignment and
responsiveness.
7. Drive process execution discipline with the right talent powered by a culture that
enables high performance.

Companies that excel in these seven areas will be better positioned to develop,
source, manufacture and distribute superior products at lower relative costs;
increase revenue, profit and shareholder value faster than competitors; and more
effectively anticipate customer needs and meet them profitably.

1. Articulate a Clear Value-Creation Algorithm

Masters in this new world develop a clear understanding of the company or business-unit
value-creation algorithm. A value-creation algorithm fundamentally comprises two
elements: value proposition orientation and growth orientation. While it may
appear simple on the surface, more often than not, clearly articulating what a company’s
position is on those two dimensions can create far more discussions (often rich,
sometimes long) than one might have expected.

2. Approach the Supply Chain as a Value Delivery System

Designing and managing superior supply chains begins with taking a far more
comprehensive view of the supply chain and defining it as what it truly is: the network
of suppliers, plants, distributors, retailers, and other internal and external stakeholders
that participate in the sale, delivery, design and production of a company’s goods &
services.

3. Segment the Supply Chain and Consistently Adapt It to the Characteristics of

Each Segment

Supply chain Masters in this new world not only segment their customer base and
products within markets and channels, but extend this thinking into their supply chain
and operations. The goal is to create a number of supply chain configurations
capable of delivering differentiated value propositions across multiple channels
and products. They do so by designing their supply chain from the outside in starting
with the customer and their targeted value proposition orientation in mind.

4. Optimize the Global Operation Architecture for Scale, Access, Flexibility and Risk
Mitigation

Translating the supply chain requirements from the segmentation strategy into a
coherent and optimal set of capabilities and resources is neither straightforward nor
simple. The resulting operations architecture must balance cost, service, risk, flexibility
and other outcomes (such as the carbon footprint of the supply chain) as you explore
alternative configurations. Masters take a holistic and systematic approach to their
resources and capabilities.
5. Selectively Invest for Mastery in Differentiating Capability Areas

Masters do not strive to excel at all supply chain dimensions; they outperform
peers on a limited number of domains. Outperforming in every domain only would
lead to leaving money on the table because more money than necessary was invested in
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areas that matter far less than others. However, masters also do not drastically
underperform in any domain. Underperforming significantly in any domain would
dramatically impact business performance and make it unlikely or difficult for any
company to truly outperform from an overall business standpoint.

6. Deploy Information Systems that Deliver Insightful Analytics, Alignment and

Responsiveness

The level of coordination and alignment required to operate in a networked supply chain
operations model goes beyond what can be traditionally achieved in the context of a
classic management and control approach. In a supply chain organization fit for the
multi-polar world, decisions are distributed throughout the network but still need to be
aligned. Achieving unified expectations for performance with aligned accountabilities
for success is a critical hurdle to overcome.

7. Drive Process Execution Discipline with the Right Talent Powered by a Culture that
Enables High Performance

Clearly the “New Normal” will require companies to devote disproportionately more
time and energy than their competitors into developing and executing a strategic
approach to talent. They are relentless in creating a “talent mind-set” across the
organization, while continually measuring and aligning talent to changing strategies,
objectives and demands. While such a focus could have been viewed as relatively trivial
five years ago, current global trends and the associated fundamental shift taking place in
the workforce (impending retirements, shrinking labour pools, emergence of new
talent sources, availability of virtual methods of working, and growing divisions
in workforce culture whether because of generations or geographical diversity)
make it increasingly an imperative for success.

Out of given Seven Imperatives we will discuss about below given 3 Major Imperatives in
detail and explain with example how following the principles companies become market
Leaders.

Imperative- 1: Articulate a Clear Value-Creation Algorithm:

As per given whitepaper and research Value creation algorithm, has two core elements, shown in PIC.

1. Value Proposition Orientation

2. Growth Orientation

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Let s start ith Arti ulati g Clear alue reatio algorith : If we go into details, the author
said that it is important to positioning the firm with value orientation and as well as growth
orientation. If we see positioning a company as Product leader, there are few operational
and technical aspects involved. A company can establish itself as a Product leader with
Operational Techniques.

Value proposition orientation—What a company (or business unit) is known for, its
market differentiation and what that differentiation requires of its supply chain.

Every organization has five fundamental ways in which it can generate customer value:

1. Product leadership
2. Speed to market
3. Customer experience
4. Price competitiveness
5. Choice extensiveness

Growth orientation—What the business must focus on (in terms of its customer
segments, product/service offering, channels to market and geographies) to generate
current and future growth.

In addition to clearly understanding what customer value organisations should focus on,
leading manufacturers are better at determining where, how and to whom to provide
that value. Masters have a much better sense of which customers to target, how to reach
them (marketing messages and distribution channels) and in what regions of the world.

1. Customer Segment
2. Products
3. Channel
4. Geographies

Example: Coca Cola Brand Value Proposition

1. Choosing a Broad Postioning: Following the Value Discipline of Treacy and Wiersema, Coca
Cola try to be the best as a product leader. Their main goal is that every family has a bottle of
coke on their lunch table. Also operationally excellent is the second objective.
2. Choosing a Specific Positioning: Based on several source we can analyze the specific positioning:

- Attribute positioning: Tasted, u i ue, s eet, ef esh…

- Benefit positioning: Coca Cola promise happiness.
- Competitor positioning: It´s a leader in the worldwide market.
- Category position: Coca Cola is the cola of the world.

That drives us that Coca specific positioning can be defined as:

 Best quality and unique taste

 The Happiest
 Most Prestigious
 Best value for money

3. Choosing a Value Positioning:

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In this case, as a assi e leade sto e p odu t Co a Cola a e i luded i the Mo e fo less
group.

4. Develop a Value Proposition:

Just think, Why Should I buy from COKE? Be ause Co a Cola gives us a unique experience of
happi ess .

Building the brand.

1. Brand Name. Coca Cola also Coke, means the oke saying that there is only one and is the
Coke . Most people ask fo Coca cola he they efe to the cola or soda.

2. Building Positive Associations

- Which associations are positive or negative?

Coca Cola is associate with the happiness and family meetings which gives a special
differentiation in term of value. A negative associations is the high calories.
- How Strong is each association?
Positive associations are very strong and in the most family meeting there is a coke.
Negative association are not so strong especially after diet and light coke.
- Are any association unique to Coca Cola?
Coca Cola is uniquely associated with happiness, with family meeting. No other cola brand
is associated in this sense.
The five dimension of the positive association are briefly explained below:

Attributes: Sweet, unique, tasted

Benefits: The main benefit is the happiness.
Company Values: Coca Cola company emphases the family as a value.
Personality: Coca Cola doesn´t give you any special personality. Its target market is every
family in the world
Users: Coca Cola is mainly focused on the family worldwide

With a o e exa ple it s pro e that: Clea ly defi i g the o pa y s value creation algorithm is a
critical step in designing and operating a superior supply chain that drives high performance. High-
performance businesses have a sharp understanding of how they create value for customers, where
they are and the best ways to reach those customers.

Another Example of Dell: Consider DELL as example, Dell has been a global leader in PC &
Laptop segment. In the early stages, the market leaders like IBM, Apple and others concentrated on
building the product features and technology. In the second stage they realized the importance of
providing service support. The products were not necessarily cheap but excellent in terms of
configuration, architecture and after sales service support. At
this stage, Dell saw a huge opportunity to make a unique offer to the customers and stand apart
from the rest of the competition. Dell proposed to sell directly to the customers, allow customers to
choose custom configuration and order their machines online.

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The efficiency lies in the operating model that was implemented by the Organization. Dell has built a
very strong and efficient customer ordering process. At the sales side, it has eliminated the entire set
of dealers, stockiest and other sales channels by offering direct ordering through internet. At the
back end, the production is taken up on receipt of the customer order, thus avoiding stocking and
inventory holding in the pipeli e. The a ufa tu i g p o ess is ased o Build to O de odel
rather than Build to Sto k odel follo ed y othe s i the a ket. Goi g fu the , Dell has tied
up with the vendors to offer the parts on VMI-Vendor managed inventory basis. The vendors
inventory hubs are located adjacent to the manufacturing plants whereby DELL can draw the parts
Just I Ti e for production, thus eliminating inventory of raw materials. Thus DELL has minimized
its logistics costs and is able to pass on the price advantage as the chosen value proposition to its
customers.
And also it is extremely hard for companies to retain innovative differentiating aspects of their
products for a long time. Although STM (speed to market) is the popular technique across the
industry, companies are still struggling to achieve the desired product development outcomes
because of talent shortage, complex processes, and outdated technology and data limitations.
Technological aspects play a vital role in bringing new products to market quickly, as the technology
improves companies has to get their products updated with latest technology. For example lets
us consider mobile phone market, A year ago Fingerprint unlock was the latest technological aspect
but now there are more things onscreen fingerprint, notch display, even onscreen hidden front
camera. So Technology also plays an important role here.

2nd Imperative: Let s see Seg e ti g the supply chain and consistently adapt
it to the characteristics of each segment.

Segmentation lets companies boost profitability by tailoring their supply chain strategy to each
customer and product in their portfolio Under this model, different customers associated with
different channels and different products are served through different supply chain processes,
policies, and operational modes. The goal is to find the best supply chain processes and policies to
serve each customer and each product at a given point in time while also maximizing both customer
service and company profitability.
Below given figure is evident for the same:

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By understanding the profit profiles of their customers and Products, companies can tailor a more
profitable supply chain strategy to each of them and thus increase the overall profitability of their
portfolios. Many companies today, however, still use "one size fits all" supply chain processes and
policies, over serving some customers and underserving others—a practice that leads to significant
profitability and cash-flow leakages and potentially lost sales. Segmentation can also help supply
chain managers address some of their biggest problems. One example is demand variability, cited by
respondents to a recent survey of chief supply chain Officers as the biggest challenge driving the
supply chain agenda. Properly structured Segmentation policies for customers and products can
significantly reduce the impact of demand variability. Inventory may be the area where supply chain
segmentation has been employed most often and Inventory optimization has progressed and
become a process-driven discipline of regularly determining what inventories to carry, where, in
what form, and in what quantities across a multi echelon network. Once again, this starts with the
foundational step of understanding the value propositions offered for each customer/product
intersection. Based on this information, companies use analytic tools to evaluate the entire network
and determine the stocking policies for each Product at each stocking location.
Allocation and order promising are critical areas for implementing policies that enable segmented
and profitable customer service strategies. Allocation is the process of reserving inventory and/or
capacity for certain customers or groups of customers, or for other entities, such as sales groups or
geographies. The intention is to provide preference for certain customers based on objective criteria
such as volume, profit, and service-level agreements.

For standard configurations, the manufacturer would forecast end items. For standard configuration
with greater choice, it would forecast the options that went into the end item. With each level of
increasing flexibility the manufacturer was able to move the response buffer and associated forecast
item upstream in the supply chain. This had the effect of dramatically improving forecast accuracy.
Prior to implementing this approach, the manufacturer had only been forecasting a wide Variety of
end items, which had resulted in very low forecast accuracy. For many companies, supply chain
segmentation would offer significant financial and operational benefits.

In given white Parer example of CISCO and P & G is explained in details how following the
segmentation in supply chain help them to be in market leader.

3rd Imperative:
And finally about Selectively investing for mastery in differentiating
capability: A Company’s success depends on the high efficiency achieved in its operations
management (OM), which directly determines productivity. There are many areas which a company
needs to develop in order to obtain efficiency operations. To become a high performance
organizations a company must gain excellence in selective investment in few areas based on the
value positioning of that industry. If there is no clear positioning a company cannot identify its area of
interest and improve excellence in selected domain. For example If a company articulated its value
positioning as a choice extensive company, all it needs to focus is planning and Procurement.
Here operational excellence plays extensive role.

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Below given figure is self-explanatory:

Amazon is an example of the Choice extensive industry with significance of technologically

supported productivity for optimal efficiency of services. The design of organizational output is
covered in this strategic decision area of operations management. Amazon addresses this concern
primarily through technology. This company uses advanced information and communication
technologies to ensure that its online retail services are efficient and convenient for target
customers. Operations management approach involves continuous improvement efforts in its e-
commerce business. The company uses its organizational culture to support innovative idea creation
among employees.
In inventory management, ope atio s a age e t s fo us is o ai tai i g opti al inventory
ordering and holding. Amazon addresses this strategic decision area through a finished goods
inventory using just-in-time inventory management in some areas. With just-in-time inventory
a age e t, so e goods that a i e at the o pa y s fulfilment centres are immediately shipped
to fulfil usto e s o de s. A azo holds other goods as part of its finished goods inventory. In
addition, to ensure optimal inventory ordering and holding, warehouse employees are trained to
maximize the speed of order fulfilment through mobile computers linked to a central computer and
Database.
In Amazon, managers consider intermediate and short-term schedules to ensure that resources
satisfy market needs. In this strategic decision area, Amazon relies on the involvement of suppliers
fo its o li e etail usi ess. Supplie s a ess the o pa y s website to determine demand levels
and implement their shipping and delivery s hedules a o di gly. Also, A azo s ope atio s
management automates shipping schedules involving its fulfilment centres, which provide shipping
services to sellers fo a fee. A azo s usi ess p odu ti ity ainly refers to the productivity of its
Personnel a d auto ated syste s i fulfilli g usto e s o de s. I o li e etail operations, the
o pa y s e ployees ust o e fast i pa ki g a d shippi g ite s to fulfil usto e s o de s. With
all these Techniques and strategies this company became a global leader in its industry. By using this
as a example we can clearly explain the significance of operations management and importance of
supply chain mechanism in any industry.

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