Improve Operational Efficiency.pdf
- 1. Improve Operational Efficiency Improve Operational Efficiency Subrat Kumar Dash Subrat Kumar Dash
- 2. Executive Briefing Problem: An increase in the inventory level, caused by supply chain disruptions and demand shifts, decreased gross margin by 4.3% for Target versus the prior year. Who are Impacted: Target/Its Partners (Supplier/Manufacture) Why happening: Missing trust in the value chain and complicated demand forecasting contribute to the bullwhip effect. How to Solve : Using technology to create transparency of demand data and trust among partners. Solution: Advance Blockchain Technology in Multi-stage Supply Chain to reduce bullwhip effect.
- 3. Target Purpose: To help all families discover the joy of everyday life. Mission: Convenience, Reasonable Price and Exceeding Expectation Goal: With plans to invest up to $5 billion to keep growing our business and bring guests more of what they love. Target Corporation Announces Updated 2022 Plan Focused on Inventory Optimization. Design: Design for Zero Waste.
- 4. Problem • Supply Chain Disruption: Production delays, trucker and dockworker shortages change the strategy to order earlier. • Change in Consumer Demand : Lower-than-expected sales in discretionary categories (Apparel and Accessories, Hardlines, and Home Furnishings and Décor) which has longer Leadtime. • Retail inventories divided by sales have fallen to or near a 10-year low and are well below historical averages. These sudden spikes in demand create a Bullwhip effect in current supply chain. As of April 30, 2022, Inventory was $15.1 billion which is 43% higher than same period last year and same time sales increased only 4%.
- 5. Persona Role Chief Procurement Officer Supplier/Manufacture/Partners Job I lead the global procurement organization for the company, including all business units and regions. I develop a system to automate the process of receiving purchase orders from customers and fulfilling those orders as agreed in contracts. Goal We need cost savings that improve EPS Fulfill more order with less inventory in quick time Frustration • Transparency in consumer demand has not able to eliminate the bullwhip effect. • Higher inventory making increase in cost and affecting margin. • Current Demand forecasting need to improve to add new external factors. • Customer don’t share the reason for sudden spike in demand reason. • Customer wanted to fulfill the order immediately. • Once customer cancel order, we are loaded with inventory with no buyer.
- 6. How Currently it is working? D Demand (POS) Target Supplier Manufacture Supplier D1 D2 D3 D4 Increase in Demand Increase in Leadtime Is it Panic Buy Is it Promotional Buy Is it Seasonal Demand Is it Last 2-year Data Is it City level Data Trust Deficit Time=T0 Time=T0+ Lead time D<D1<D2<D3<D4= Order at each point and Actual Demand is D
- 7. Hypothesis • As Target, I can manage my inventory efficiently to support my sales, if I get inventory, In transit and Work in progress details from my supplier. • As Target Partner, I can do better plan, if I get to know Order data and Demand data and actual reason from Target. • As Target and Target Partner, we feel secured and trusted, if my data only accessible to right partners. • As Target and Target Partner, we will be efficient , if I get real time data. I focused on Trust instead of Updating Demand Forecast because I assumed updating demand forecast is a continuous process by adding new variables to predict future demand.(Behavioral and External Data)
- 8. Goal • Reduce Bullwhip efficiency: Order/Demand • Optimize Inventory Level Across Supply Chain. • Reduced Cost= Order Cancelation Cost+ Leadtime Cost+ Inventory Cost
- 10. MVP and Experiment • Start from 1-tier& 2-tier - Choose a project (product/partner) that will provide concrete benefits for both sides, so that we can build trust and show the value of collaboration. • Breaking down the barriers to internal communication and integration and establishing trust with partners. • Blockchain by design takes care of security, accessibility and trust. • Some information, such as proprietary data or information exchanged in a non-disclosure agreement, should remain confidential. A simple exchange of demand, purchase and forecast information can go a long way.
- 11. Roadmap Phase Work Time Experimental- Early partnership with 20 Supplier with Tiet1 and Tier 2. Validating the hypothesis by exposing the actual demand data and acquiring current inventory and in transit data from Supplier 1month Moving the range to 1,000 supplier Self onboarding page Data sharing and data Access architecture Explorative approach as we move 4month Onboarding process for other supplier and beta lunch Supplier onboarding integration in existing process Explore addition data sharing option(Payment/Export and import document) 4month
- 12. Thank you