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OCTANE-The Octaphi Newsletter Volume 04, Issue 04, October, 2015
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“Costs do not exist to be calculated. Costs exist to be reduced.”– Taiichi Ohno
World-class Procurement Despite ongoing economic and business environment challenges, world-class procurement organizations continue to outperform in cost savings vis-à-vis their peer group. In order to raise procurement’s value contribution, world-class organizations have adopted a “borderless” approach, breaking down traditional geographic, information and process boundaries. This includes running extremely lean, optimizing services globally, embracing analytics to gain new insights, and extending process transformation beyond the enterprise to include suppliers. Worldclass procurement organizations distinguish themselves by focusing on the following areas: Being a trusted advisor to the business: Most world-class procurement organizations report a high level of involvement in the company’s budgeting and planning cycle. They are considered valued business partners by the organization, not gatekeepers or administrators. To achieve this status, they ensure the factors that drive the requirements of the business rather than simply facilitating the buying process. Also, the procurement executives make sure that staff goals are aligned to the strategic plan of the company. This ensures that the value delivered is tailored to the specific needs of the business and that priorities are properly set. When goals are aligned and procurement is viewed as a valued business partner. Driving suppliers to innovate: Worldclass procurement groups effectively associate the intellectual capital of their suppliers to bring new and innovative
solutions to influence (not just support) the business strategy. This is enabled by maintaining a strong business relationship with key suppliers and working collaboratively to create customized and unique solutions. Better collaboration often leads to cost savings, product substitutions and cost-sharing programs. Procurement organizations that have invested in formalizing the innovation life cycle (such as idea formation, evaluation, development, and continuous improvement) have seen positive results. Providing analytics-backed insights: World-class procurement works closely with the business during operations planning and budgeting periods to provide predictive insights on supply markets. This requires having the tools and expertise to turn data into actionable knowledge. Using advanced technology, such as artificial intelligence, help them automate the process of cleansing and rationalizing data. World-class procurement organizations have mastered this competency to the point that analytics, market intelligence and benchmarking are offered on demand as a service to key stakeholders. Protecting the business from risk: World-class procurement organizations have formal risk management programs to ensure supply continuity and regulatory compliance. Organizations with a formal and broadly applied strategy for assessing risk have greater procurement ROI (6.18) than those without them (4.99). This includes completing supplier risk assessments
and working with finance and other stakeholders to determine the best mitigation strategy when risk exposure is identified. Despite the advances of world-class organizations in this area, the lack of a mandate and limited resources remain top challenges. Taking an agile approach to staffing: World-class procurement organizations are distinguished by the way they attract, develop and retain talent. They adapt their service delivery model to an extremely diverse set of budget owners and functional partners in the value chain. Delivering this level of agility requires these organizations move from individual talent management to knowledge management. As such, procurement staffs will be required to blend critical business skills (experience, relationship building, management and communication skills, and strategic thinking) with emerging skills category knowledge, global supply market and technology know-how, and risk assessment). Further, with this increasingly sophisticated set of requirements, procurement leaders will need to become adept at mixing and matching talent to obtain a complete skill set stretched across several people, rather than try to hire or develop individuals with all of these skills. The strength of the vision of future supply processes is a key predictor of the evolution of procurement’s value proposition. No single action will instantly elevate procurement’s brand and value proposition. Rather, a continual self-reinvention is required. ~ Jyoti Kumari (15JGBS)
Source: P Connaughton, S.R. Dabbera and C.S. Sawchuck, SupplyChainBrain (2015)
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OCTANE-The Octaphi Newsletter
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Forfaiting – A brief
~ Monal Pandey, (15JGBS)
Source: SupplyChainBrain (2015)
OCTAPHI Club Members 2015-16 List of OCTAPHI Club Members 2015-16 S. No. Name 1 Dr. Saroj Koul 2 Dr. Anirban Ganguly 3 Saurabh Sao 4 Nagaraj NB 5 Ravishekhar Kumar 6 Sarath Menon 7 Babita Jain 8 Mayank Katyal 9 Ashwathej Purushothaman 10 Mili Gupta 11 Maharashi Samir Mehta 12 Jyoti Kumari 13 Abhisekh Antil 14 Sahil Batra 15 Monal Pandey 16 Srishti Nanda 17 Aayushi Pratap
Course Designation JGBS Faculty Advisor JGBS Faculty Co-Advisor MBA 2 Coordinator MBA 2 Treasurer MBA 2 Executive Member MBA 2 Executive Member MBA 2 Executive Member MBA 2 Executive Member IBM 3 Assistant Coordinator IBM 2 Executive Member IBM 1 Executive Member MBA 1 Secratory MBA 1 Executive Member MBA 1 Executive Member MBA 1 Executive Member MBA 1 Executive Member IBM 1 Executive Member
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KRA Mentor Co-Mentor Operations and Supply Chain of the Club All Fianacial and Policy Control Club Ambassadors - Germany Club Ambassadors - Germany Club Ambassadors Club Ambassadors SCNext and Online Communications Event Planning and Execution Activities Planning and Designing OCTANE Newsletter Publisher Event Planning and Execution Marketing and Public Relations Administration and SCNext Internal Logistics OCTANE Newsletter Publisher
Editorial Board: Jyoti Kumari, Monal Pandey, Aayushi Pratap, Saroj Koul. Jindal Global Business School. Contact us: octaphi@jgu.edu.in
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Clues: Across: 1. The number units that are defective and cannot be reworked. 2. For a process or activity, the maximum THROUGHPUT that can be sustained. 3. The process of managing materials for operations to meet certain objectives such as delivery speed, low inventories, and high accuracy. 4. In general denotes an allocated cost to a direct operation. It includes all manufacturing costs, other than direct material and direct labour. 5. The process by which supply contracts are let by purchasing. Down: 1) The implementation of statistical tools (including control charts) that monitor processes in order to identify improvement opportunities. 6) That action that combines in parallel previously independent processes to reduce the total variance compared to the variances that would occur when the processes were independent. 7) Inventory between processing or activity units. 8) The average fraction of the capacity of a process or activity that is utilized during an operation. 9) Inventory consisting of products that are in a semi-finished state.
~ Saurabh Sao, (14JGBS)
Answers – Volume 4, Issue 3, July 2015: Across: 1) UPTIME 2) WHARFAGE 3) OPL Down: 4) ULLAGE 5) MAXICODE 6) EOQ
Forfaiting is a form of international supply chain financing; a flexible discounting technique, custommade to the requirements of both domestic and international transactions. Forfaiting can be applied to a wide range of trade related financial receivables. The discounted receivables can be as short as 6 months or as long as 10 years. Major characteristics of forfaiting include a 100 percent financing arranged on a fixed or floating interest rate basis; debt instruments denominated in major currencies; payment obligation often supported by a bank guarantee, and debt evidenced in the form of a bill of exchange, promissory note, letter of credit or note purchase agreement. Benefits of forfaiting include : Elimination of Risk: 1) Removes political, transfer and commercial risk, 2) Provides financing for 100 percent of contract value, and 3) Protects against risks of interest rate increase and exchange rate fluctuation. Enhances Competitive Advantage: 1) Enables sellers of goods to offer credit to their customers, making their products more attractive, and 2) Helps sellers to do business in countries where the risk of non-payment would otherwise be too high. Improves Cash Flow: 1) Forfaiting enables sellers to receive cash payment while offering credit terms to their customers, and 2) Removes accounts receivable, bank loans or liabilities from the balance sheet. Increases Speed & Simplicity of Transactions: 1) Fast, tailor-made financing solutions, 2) Financing commitments can be issued quickly, 3) Documentation concise and straightforward, 4) No restrictions on origin of export, and 5) Relieves seller of administration and collection burden.
Crossword Puzzle
Do You Know? World's Largest Telecom Tower Company, Indus Towers, has 1,16,454 towers and its SCM team has clocked industry-best standards. As part of its roadmap, the SCM team has designed a 5P program – People, Partner, Process, Price, and Performance. ‘Partner’ is for all vendors and suppliers.
Student Feedback Corner I really like OCTANE and I am following this newsletter consistently from last few quarters, especially the “Crossword” and “Do You Know” column. Also the articles published are very informative. ~ Aditi , NPTI -Faridabad
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