Info-tech

Tech support in supply chain

Srirengarajan A | Updated on: Feb 06, 2011
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‘Tagging, tracing, and tracking' is one of the sections in Supply Chain Management: Concepts, practices, and implementation by Sunil Sharma (www.oup.com). It is not about the distressed students in a US university, as you would have guessed, but about the new directions in SCM facilitated by information technology (IT).

The author describes, as example, an identification technology based on electronic product code (EPC) embedded in products. “A radio frequency radar, based on wireless technology, would scan the smart tag which would in turn transfer the product's embedded identity code to the Web, where the detailed information as on the product would be stored. It can then be retrieved by the user.”

Just as the domain name system (DNS) routes information to respective Web sites, so too can the object naming service (ONS) act as a ‘post office' that would act in a flash, retrieving data for each of the trillions of objects in the world which would carry an EPC code, reads a futuristic scenario. Postulates Sharma that in the retail industry, shoppers would be able to learn the features of a product from the manufacturer's Website by just pointing the EPC scanner-equipped mobile phones at any product in the store. From the SCM point of view, he adds that such a system would make tracking simplified, enable real-time information sharing, and improve customer service levels.

SRM in Tata Motors

A chapter devoted to procurement and outsourcing strategies discusses the Tata Motors case of domain name system (DNS) using SAP. Improvement numbers, as attributed to the company CIO, are that SRM directly reduced the processing time to get acceptance from a supplier by 24-96 hours, depending upon the transaction, and cut manual work by 60 per cent, all resulting in huge savings.

Earlier, the company had an in-house Windows-based value chain management (VCM) system using Oracle database, and it was not able to handle the increasing number of suppliers and transactions, the author recounts.

As the goods receipt notes (GRNs) had multiplied from 6,000 to 16,000, it took anything between 20 and 60 days for approval of quotations from suppliers because of a number of lengthy processes at Tata Motors, he informs. “SRM ensured that a single bar code would enable multiple supplier shipments reducing the goods receipt cycle time significantly at the entry gate, leading to a reduction in the turnaround time of vehicles at the inward gate by 50 per cent.”

Online bidding

Of interest is the spadework prior to implementing SRM, in the form of help that the company received from the spend-management and procurement solution provider Ariba to locate global sources (e.g. jacks from China and specialty steel from Slovenia and China), and do reverse auctions. By 2005, the company saved around Rs 350 crore by carrying out around 1,500 competitive biddings and covering 40 per cent of the total material spend by reverse auctions, notes Sharma.

This is because the bid quoted online simply provides the cost curve of that industry at that point in time, he observes, drawing from the comments of Ariba's officials. It is transparent and may not pertain to price alone, but also to other conditions of the offer so that the buyer can choose a supplier based on his specific requirements, elaborates the author. “The auctions started from castings, forgings, bearings, sheet metal components, furnace oil, and fasteners, and then up to brake, clutch, steering, and radiator assemblies. The savings accrued in procurement costs by virtue of e-procurement ranged from an average 5 to 15 per cent…”

Valuable read for those in SCM.

> dmurali@thehindu.co.in

Published on February 06, 2011

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