WAL-MART Walmart Case Study

 Efficiency v/s Responsiveness  Background and Scope

 Efficient
◦ Inventory: cross docking; well planned DC;
 Objective
◦ Transportation  Methodology
◦ Location: centrally Located DC’s
 Literature Review - findings
◦ Sourcing: Large orders; economies of scale
 Responsiveness:  Contribution
◦ Information  Future scope
◦ Cross Docking
No drastic price fluctuations hence demand is  Conclusion
stable.  References

Supply Chain Analytics-An Analytics??

Introduction  Analytics is the discovery and
communication of a meaningful pattern in
the data
 Especially for areas where lots of data is
available and which requires extensive
computations
 We need to apply statistics, computer
programming; analysis tools, operations
research, modelling techniques to quantify
the data and evaluate performance.

Analytics
 Analytics is not simply number crunching,  Analytics uses descriptive; predictive
it includes ability to present information. and prescriptive models to gain
 Decision maker needs graphs; dashboards; knowledge from data while at the same
scorecards; tables; and other data time it uses this insight to recommend
visualization tools to communicate any action or to guide business decision
insight gained from the data. making.
 Firms use data analytics to various areas  Analytics requires extensive
like, operations; SC; Fin; Mktg; HR;business computations and applies algorithms and
to describe, predict and improve software for optimization.
performance

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  Has gained popularity since last 10 years,
Supply Chain Analytics post advent of big data, need for quick
decisions, need for better & faster
 Focuses on the use of analytical techniques decision making needs more information
and information technology to make better that too in presentable/
decisions related to flows of material, money understandable format.
and information in the supply chain.
 To manage the bi-directional flow;
 SCA- set of analytical approaches to make
reverse flow and balancing supply/
decisions that better match supply with demand, the need for analytical
demand. techniques in major SC drivers gained
 Contribute directly to the bottom line by importance
lowering sourcing, transportation, storage,
stock-out and disposal costs.

Need identification Need identification

 Complex supply chain environment  Complex supply chain environment
presented challenges: presented challenges:
◦ Lack of synchronization between business ◦ Lack of flexibility in the manufacturing;
strategy and execution distribution and logistics footprints
◦ Lack of real-time visibility across supply chain ◦ Inability to properly assess and prepare for
operations. supply chain risks
◦ Inability to properly schedule production, leading
to costly asset underutilization
Applying intelligent analytics is the key
◦ Poor forecast accuracy, resulting in frequent to addressing all these challenges.
stock-outs or excess inventory and safety stock
levels

New logistics formats Control Tower Approach

 Address B2B and B2C eCommerce in a  Defined as a set of integrated processes
global supply-demand network. These new and technologies that support a seamless
formats are having an impact on physical flow of product from source to end
order, inventory, and fulfillment processes consumer, regardless of the global
and ask for an evolved analytics and the complexity or the sales and logistics
control tower approach. channel preferences of customers.

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Lack of Supply-Demand
New Omni-Channel fulfillment
Orchestration Equals P&L Impact
 Cross sectional demand impacts 87% of
companies
 65% bypass their own DC’s and ship direct
to store via venders, suppliers, 3 Pl’s and
break bulk.
 More than 61% have direct to home
delivery models
 Inbound to outbound segmentation
and cost to serve requiring higher
degrees of big-data, collaboration and
analytics then have been required before.

New Omni-Channel fulfillment Importance

 Shipping through a free port, FTZ for  Why is supply chain analytics
customs important?
 Hence needs more proactive ◦ Gain a significant return on investment
performance in inventory and item level ◦ Better understand risks
rebalancing in-transit, which is difficult
◦ Increase accuracy in planning
without analytics
◦ Achieve the lean, agile, resilient and
 Managing costs and rates by lane, mode,
sustainable supply chain
customer, and product for proper omni
channel fulfillment is limited: very difficult ◦ Prepare for the future

Category Category
 Descriptive Analytics  Descriptive Analytics-Also does real time
◦ Describes past data and answers questions to analysis about locations; transportation
what happened (uncover hidden pattern); (GPS); manufacturing (RFID); amount of
where and why? goods (barcodes); scheduling; inventory
◦ Involves data summarization, data visualization management (real time updation of
and query based analysis for actionable inventory); emergency order management;
insights.
pandemic supply management etc.
◦ Deals with preparing reports and business
dashboards for effective decisions.

What has Happened!!

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 Category Category
 Predictive Analytics-  Prescriptive Analytics- finding optimal solution
◦ Predict the probability of occurrence of the to a problem
future event.  Synthesizes big data, business rules, and ML to
◦ Predictive analytics in supply chain derives make predictions. Suggest action to be benefit
forecasting from past data and answers the from prediction and shows implication of each
questions of what will be happening in future. decision.
◦ It helps managers anticipate likely scenarios, so  Prescriptive analytics in supply chain derives
that they can plan ahead and address decision recommendations based on
contingencies, rather than reacting to what has descriptive and predictive analytics and
already happened. mathematical optimization techniques
What could Happen!! What should Happen!!

Three principal analytics stages:

Landscape of SCA
provide answers
 Through each stage of analytics-descriptive,
predictive, and prescriptive-the goal is to
answer questions:
◦ What the user needs to DO
◦ What the user needs to KNOW
◦ How the analytics gets ANSWERS
◦ What SC leaders do to make this POSSIBLE
 Following the above the leader organizations
may identify key technologies and optimization
capabilities to optimize their operations and
close the loop of Plan /Execution for each
current and future scenario

Core components of SCA Three Core Components

 Data Analytics: Examine datasets using specialized
systems and software to draw conclusions by  Hence to deliver actionable insights i.e.
collating and analyzing complementary systems. insights needed to take action, SCA needs
 Data Visualization: Placing data in visual context. three core components as shown below.
Patterns; trends, Correlations that might go
undetected in text based data is exposed.
 Technology Platform- Infrastructure to capture,
store, retrieve, aggregate, analyze and report all
transactions within the supply chain and trading Insights
partners. to take
action

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 Data Quality is important Three stages of SCA
The information from data should be:
 Timely
 Accurate/ error free
 Relevant- zoom on relevant facts
 Integrated-present complete picture
 Digestible- Data presentation make it
more

How SCA works? 2 Processes

Interconnected stages, systems in each; needs Big Data
optimizations
 Consists of 3 V’s- volume, velocity and
The P2P
Cycle variety (VERACITY-need for the data to
Upstream be reliable and accurate)
 Huge in size
 Grows exponentially
 Mostly unstructured/ semi-structured

The O2C
data difficult to fit in regular data base
Cycle
Downstream

Sources of data in Supply Chain Supply Chain Big Data sources

 RFID; GPS..  Sensors
 Camera footage  Tags & tracks
 Images  Smart devices
 Social media postings  etc
 Blogs
 Forum discussion

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 Opportunities for Improvement
from BIG DATA
 Demand forecasting

 Warehouse Design and Location

 Supplier Evaluation and Selection

 Selection of Transportation Mode

Use of BIG DATA and Predictive

Benefits
Analytics
 Inventory Planning  Planning and scheduling: Better decisions
as SCA provide better insights about each
 Facilities Layout decision level/ driver of SC
 Improved responsiveness: Better
prediction leading to better
 New Product Development
responsiveness to trends and events.
 Improved demand planning: Demand
 Sustainability Issues management; stocks required; customer
preferences hence better planning of
 Disaster Management implied demand uncertainty.

Benefits
 Order optimization: SCA helps to  Inventory Management: SCA helps to see
optimize the complete ordering process, Space utilization; consumption rates;
leading to decrease costs; on time obsolescence; inventory levels; forecasts;
delivery; right delivery- quantity/ quality optimum utilization
 Real time Supply Chain execution: alerts  Replenishment Planning: SCA helps to plan
of deviation; Prescriptive analytics helps to for stocks receipt at the right time; right
see other options related to SC drivers. place; right quantity to reduce overall costs
and improve responsiveness

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 Understanding the Metrics and
 Improved Partner performance: greater
KPI’s
visibility; supplier evaluation; efficient v/s
responsive supplier log
 Improved cash management: C2C cycle
(time taken to convert resources inputs,
which includes cost of everything in SC; into
cash); full order; more order; better order
fulfillment; Order to cash (O2C) cycle also
improved as above.

Business Strategy Areas benefitted

Strategic Goal due to SCA
 Increased Profitability: Either increase sales to
 SCA serves two purposes: increase absolute revenue or reduce costs.
◦ Allows businesses to identify, diagnose and Identifying opportunities for SC initiatives.
correct inefficiencies and waste in SC Identifying SC inefficiencies.
 Forecast Accuracy: Improved cost control; order
◦ Enables a business to use supply chain data to fulfillment, inventory optimization affect forecast
identify, prioritize and address business accuracy.
opportunities.  Working Capital Improvement: Better analytics
helps improves cashflow. Inventory analytics
especially enables WCM. Sales outstanding,
Payment outstanding information support WCM.

Strategic Considerations
 Operating margin improvement: savings Matching SCA with Business goals.
by reducing costs through identifying SC  Top Down v/s Bottom up
inefficiencies.  Positive v/s negative variance
 Risk Management: Analytics identify
operational; financial and compliance risks
within company’s own SC, as well of its
partner.

Variance: Difference between the predicted and actual value

of a metrics.

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 Top down v/s Bottom up analytics
What to Measure
Development
 To enhance the supply chain activities we
need to create a series of KPI’s to ensure
that performance targets are achieved.
 Some KPI’s
◦ Metrics of various SC drivers and
◦ Business Metrics

Reading Assignment

Some KPI’s Business Metrics

 Measures activities that add value to the
 Average customer order delivery time business:
 Average service delay ◦ Advanced Shipping Notices timeliness
 Right orders percentage delivered/ ◦ Delivery Timeliness: ontime del./total deliveries
received ◦ Invoice accuracy: Invoice accurately reflects order in terms
of product/ quantity/ price for a specified time
 Days sales outstanding ◦ Price variance: Actual invoice cost of P2P/ price at time of
 Invoice processing time order

 Price per unit trend ◦ Order acceptance rate: Acknowledged PO/ total PO’s
 Order changes in quantity/ variation ◦ Quantity variance: Quantity delivered/ quantity invoiced
◦ Top products by sales
◦ Top partners by spend

Reporting the findings using SC

Expanding Strategic Scope
analytics
 Scope of strategic fit
◦ The functions and stages within a supply chain that devise an
integrated strategy with a shared objective
Extrapolate with
◦ One extreme: each function at each stage develops its own
Stat. Anal. strategy
Trends/ regression ◦ Other extreme: all functions in all stages devise a strategy
frequency jointly
Set alerts for  Five categories:
problem areas
Breaking down
◦ Intracompany intraoperation scope: Minimum Local Cost View
consolidated to ◦ Intracompany intrafunctional scope: Minimize Functional Cost
individual/ root
◦ Intracompany interfunctional scope: Maximize Company profit
◦ Intercompany interfunctional scope: Maximize Supply Chain
Surplus

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 Different Scopes of Strategic Fit Obstacles to Achieving
Across a Supply Chain Strategic Fit
 Increasing variety of products
Suppliers Manufacturer Distributor Retailer Customer  Decreasing product life cycles
Competitive
Strategy
 Increasingly demanding customers
 Fragmentation of supply chain ownership
Product Intercompany
Development Interfunctional Intracompany
Strategy Intrafunctional

 Globalization
at Distributor
Supply Chain
Intracompany
Strategy Intracompany
Intraoperation

 Difficulty executing new strategies

Interfunctional
at Distributor
Marketing at Distributor
Strategy