sridhar ramasubbuscm outsourcing trends-10h15

8/7/2019 Sridhar RamasubbuSCM Outsourcing Trends-10h15

http://slidepdf.com/reader/full/sridhar-ramasubbuscm-outsourcing-trends-10h15 1/10

CONFIDENTIAL© Copyright 2006 Wipro Ltd

© Copyright 2006 Wipro Ltd Wipro confidential

Outsourcing Trendsin SCM

Wipro

Sridhar Ramasubbu, CFO- Americas & Europe



Agenda

Global SCM Dynamics

Outsourcing Wipro – An Introduction

Overview of Real Life success stories

Critical Issues in Global SCM




Global SCM Dynamics

Globalization Technology developments across the world have triggered large scale changes in defining

the way business is conducted.

Communication facilities – Satellite Links, Internet, mobile, Video have ensured real timeconnectivity.

Severe cost pressures are driving business to look for innovative models

Low Cost sourcing

China in Manufacturing and India in IT have shown to the world a new way to leverage

cost and productivity efficiencies.

Continous search towards low cost sourcing is throwing up numerous possibilities.

Talent Pool Leverage

Existing skills in managing SCM no more found to be sufficient

Technology applications and knowledge of Global operations, a necessity




SCM – Process Footprint

PLAN

SOURCE MAKE

DELIVER

SUPPLY CHAINSUPPLIER

SUPPLIER

Product Life CycleManagement

Procurement

Sourcing

Trading Partner

Management

Supply chain design

Demand forecasting

Inventory planningDistribution planning

Production planning

Capacity planning

Transportation Planning

Shop scheduling

Manufacturing Flexibility

Production Management

Manufacturing Flow

Management

Order Fulfillment

Warehouse Management

Inventory Management

Transportation management

Visibility, Event Management

& Track & Trace

Reverse Logistics

Trade Management

From a process perspective the supply chain can be viewed as set of processes used to

produce and deliver goods and services to customers

CUSTOMER

CUSTOMER




Outsourcing Trends in SCM

0

10

20

30

40

50

60

70

EU NA APAC LAAM

%

% of Logistics budget spend on 3 PL Outsourced Functions

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Transportation

Warehousing

InBound

Customers

Clearance

CustomsBrokerage

Series1

Data Source – Council for Logistics Management

0%

10%

20%

30%

40%

50%

60%

70%

Less than $550m or

less than 1000

employees

More than $550m to

$10b and more than

1000 employees

More than $10b or

more than 50000

employees

CurrentlyUse PSP

Plan to usePSP in next3 years

Data Source – Accenture

Procurement Survey 2003

Use of Procurement Service Providers




Emerging Trends in SCM Outsourcing

What How / What Why

Order Fulfillment Online channel integration to

traditional backend processes

Post M&A integration relatedto OF

Hosted applications to manage inventoryand SCM operations

3 / 4 PL services to support physicaltransaction processes

Rapid response to emerging businesssituations without significantinvestments

Leverage available expertise forspecific channel strategy execution

SCM functions related to specificchannels, product line, customer

segment

Providing the core competency related servicesand outsource the rest of the operations /

transactions etc., ex. AT& T calling Cardintroduction – the entire SCM function wasoutsourced

Faster new product / Service Line /geo penetration

Develop channel /product specificexpertise extremely fast

Procurement transactionalfunctions and selected sourcingfunctions

Indirect materials – office, shop supplies,temp labor etc

Sourcing campaigns

Data standardization & rationalization

Spend analysis

Efficiencies of scale

Outsource lower value add activitiesand onetime only activities

Post sales support and returnsmanagement (reverse logistics)

Use of dedicated full service providers (likeUPS Global Logistics) to manage store /customer returns

Expertise available

Quick response

Scalability

4PL – Logistics management Non asset based management of logisticsfunctions end to end

Non core operations

Availability of expertise




Outsourcing & SCM Processes

Process Group Processes Current Trend Comment

Plan Demand Planning Considered core

Transportation Planning In line with Logistics Management

Supply Planning Considered Core

Manufacturing Execution Planning In-house if manufacturing is in-house

Source Spend Analysis & Sourcing Distinct trend

Tactical Procurement

Payable Management

Supplier Management Aspects like certification, QA etc.

Make Manufacturing execution Specific functions

Deliver Warehousing No one does it in-house any more

Transportation

Logistics Management Distinct trend

Low

Medium

High



Agenda

Global SCM Dynamics

Outsourcing Wipro – An Introduction

Overview of Real Life success stories

Critical Issues in Global SCM




Should I Outsource?

Is it needed for

consistency, fiduciary,

governance or controlpurposes?

Place at

CorporateOffice

Do business unit

customers

need this service?

Eliminate

Embed in

Business

Units

Is the function highly

strategic or a source of

competitive advantage?

Is the same service

required by several

business units?

Consider

Outsourcing

START

Embed in

Business

Units

YES

NO

NO

NO

YES

YES

YES

NO

YES

NO

Can a 3rd party

provide the servicecheaper or better?

Embed in

Business

units




Outsourcing Continuum

Organizations outsource non-core functions to maximize returns, protect strategic advantages, decrease risks, and fully utilize

external suppliers’ investments, innovations, and specialized professional capabilities

Strategic

Improve business focus

Increase flexibility and speed

Access to world-class

capabilities

Accelerated change with

proven approach

Shared risks

Free resources for other

purposes

Bring new solutions to

customers faster

Respond to shortening

product lifecycles

Leverage external suppliers

Leapfrog competitors

Enter new markets with

reduced risks

Acquire innovative ideas

Transformational

SHORT TERM

FOCUS

LONG TERM

FOCUS

Tactical

Reduce and control

operating costs

Make capital funds

available

Cash infusion

Resources not

available internally

Function difficult to

manage or out

of control

sridhar ramasubbuscm outsourcing trends-10h15

Documents