‘SCM will be the backbone of a successful business model’

Tarun Narayan in Mumbai

The task of judiciously matching demand and supply while structuring a supply chain management solution will become the major competitive tool for survival of corporates. This was the concept for discussion by Mr Sunil Chopra, IBM distinguished professor of operations management and information systems director, MMM Programs, Kellogg Graduate School of Management, US.

Mr Chopra was in Mumbai to conduct a talk on the supply chain management module for corporate and business development managers.

“Adept collaboration, planning, forecast and replenishment (CPFR) are the guiding norms to create a high response supply chain management system,” says Mr Chopra.

“Corporates across sectors need to realise the applicability of the model to institute an integrated supply chain network and function,” adds Mr Chopra.

Mr Chopra points out that the concept of CPFR has been initiated by Procter & Gamble (P&G) and WalMart globally. “The concept has been introduced as Collaboration Forecast and Replenishment (CFAR) model,” he informs.

Under the system, P&G and WalMart have collaborated to form a common team of managers who would be heading the systems. They are responsible for kickstarting the strategic process starting from conceptualising, developing, monitoring, executing and deriving feedback as an effective step in creating a well-linked supply chain management initiative.

Notes Mr Chopra if WalMart were to kick off promotions in September for the products then P&G may have to either bring forth the production schedules to August—which indicates cost and logistic management challenge—or P&G will have to produce in anticipation the previous year which again will lead to piled up costs due to long stretched inventory holding.

“But with the common team of managers who will structure a strategy incorporating all the aspects where supply chain is also
linked to sales estimates, promotional plans and other core variables, the production planning and promotions will never dabble in isolation. This is more so because the team will comprise a combination of professional managers from sales, production and marketing from P&G and WalMart,” explains Mr Chopra.

“Thus P&G and WalMart can evolve a consensus in structuring a process where production schedules do not strain the resources and promotion plans also get into action to communicate the message at the mutually defined timespan,” explains Mr Chopra.

Points out Mr Chopra, corporates will have to incorporate supply chain management as a mainstream strategy for a successful business model. “Companies can deal with uncertainties when there is an accurate estimate of customer response, strategic resourcing and risk sharing with channel partners and companies”.