Orchestration-Examples

IN T E G RA T E D S U P P LY CH A IN N E T W O RK S

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Orchestration-Examples

N. Viswanadham

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B2B Logistics Chain

! 

Logistics Network with several companies coming

together to offer the service delivery.

! 

Modular with modular organization structure

! 

The service network is formed for each order from

the collection of 2PLs or 3 PLs

! 

Each delivery is monitored for quality: time,

damage, etc

! 

Planning of the resources and their maintenance is

done by the coordinator generally a 4PL

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B2B Logistics:

Redesign using Cloud & Big Data

Ware house Freight forwarding Customs clearance Airlines/ Shiplines Customs clearance Freight forwarding Ware house _Buye rs S el le rs E-Capacity E-Inventory E-Visibility Cloud IS IS IS IS IS Reconstructed Orchestrate

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The Indian Logistics Growth Model

!  The logistics Industry moved from as a function under

procurement or sales managing end-to-end goods movement to modular clusters or stacks populated by specialist firms and infrastructure authorities.

!  The industry stack divides activities into layers that are

complementary to each other, as depicted in Figure.

!  Most companies specialize in one or a few layers and rely on

other companies to offer complementary components.

!  Each of these components is layered above or below the

other, and communicates through more or less standard interfaces.

!  In this splintered atmosphere with no scale and big

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LLP Business Model

Supplier 2 & 3 PLs _Manufacturer Contract Execution

LLP

Planning, Coordination and Overall Responsibility

Customer Orders Operational Status Plans Material Flow Payment Service

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Execution : Online Supervisory Control

!  4PLs provide end to end B2B logistics services

!  Coordinate all the services needed for the goods transfer

–  Warehousing at Shipper and Distributor Ends

–  Arrange for the trucks all the through the Journey

–  Manages the customs clearance at Ports or Airports

–  Loading and Unloading , Cross Docking, Merge in transit as

required

–  Manage all exceptions through a control room: Truck failure,

Truck registration, Payments at customs, Driver schedules, Expediting,…..

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LLP- Execution excellence

The LLP provides value added services to

customers, supports and/or manages the

production of multiple suppliers,

coordinates their activities, assumes the

responsibility for the logistics and the

management of collaborative relations in

the network, and aligns the participants’

objectives with those of the complete

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Penske works with Genpact in India and Mexico to

improve efficiency and customer service

.

!  Genpact acts as a subsidiary of Penske logistics

.

–  BPO workers in India and Mexico

!  arrange for titles and registrations for the trucks leased by Genpact in

the United States.

!  check the customer’s credit status and arrange for all the necessary

permits. If the truck gets stuck at a weigh station, failing to fulfill some permits, the truck driver would call an 800 number, and the BPO staff transmits the necessary documentation to the weigh station and the truck would be on road within a half-hour.

–  After the trip, the driver’s log would be shipped to a Genpact facility

in Juarez, Mexico, where mileage, tax, toll, and fuel data are punched into Penske computers and then processed in India.

!  Genpact manages the logistical services of Penske, such as

just-in-time delivery of components to US factories and shipping finished goods to retailers and home consumers.

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Mandi : Orchestrator in Indian

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Mandi: Agricultural market in India

•  In India, wholesale trade of agri products happens through

Mandis. Trade outside not permitted.

•  Mandis are established under the Agriculture Product

Marketing Committee (APMC) act to help small farmers (300M) get fair price and protect them from the traders

•  Governments have established about 7000 Mandis . •  Farmers bring agricultural produce to Mandi where it is

auctioned and sold to traders (or to commission agents)

•  Classical open-cry ascending price auction is the format used •  Traders later sell to wholesalers, retailers or companies.

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Social Network of The Mandi

•  The players include

•  Farmers (f),Commission Agents (CA),Traders (T), Industries (In), Retailers (R), Wholesalers (W), Consumers ( C),APMC / Mandi Staff

•  These are desperate groups

with no ties.

•  Structural holes exist among

these communities.

•  Mandi is supposed to fill in

the holes through interfaces, collaboration, etc.

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Farmer’s Dilemma

! 

Where and when to

sell the produce:

–  Sell to the village trader

or commission agent

–  Travel to the nearest

Mandi or another Mandi in a city?

! 

Mandis are far off, long

wait for auction date,

Middlemen interference

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Analysis of the Mandi Network

!  The current agricultural network has structural holes.

–  The farmers (sellers) and the consumers (buyers) are not allowed to

buy/sell directly with each other and are forced to transact via the Mandi.

!  Trader monopoly exists

–  In the Mandi system, traders have a high bargaining power

–  Traders can form a cartel and inhibit the ascending price auction from

taking place

!  Supply Demand mismatch

–  Farmers do not follow demand driven crop cultivation –  Follow neighbors or past history

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Mandi Electronic Exchange

Empowering the farmers

!  Transform current Mandi to an electronic market place

!  Farmers can directly sell their produce online to consumer,

brokers, retailers, etc breaking the monopoly of middlemen.

!  The Mandi exchange will also provide (with local language

support)

–  Latest market price of all crops and minimum support prices (MSP)

–  Access to financial services

–  Provide real time weather, seeds, fertilizers etc. information

!  Fills the structural hole by connecting Farmers, Quality

control , Transporters , and Consumers

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Success of Mandi

! 

Mandi Acts as an orchestrator and connects all the

stakeholders in the agricultural ecosystem

! 

Estimates the demand for each commodity and

advises farmers on how many acres of cultivation is

required every year

! 

Act as an enabler for farmers to become socially

connected

! 

Help farmers to establish cooperatives (like AMUL)

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Orchestrating the Print Supply

Chain

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"

Print Supply Chain Governance Model

"

Manager Printers Manager Courier Services Manager Bank Branch Interface Audit – Partners of partners, finances, Case History Quality Performance Track Demand Track Delivery Payment Orchestrator Audit – Partners of partners, finances, Case History Quality Performance Feedback

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Conclusions- Print SCN

!  Mapping the print supply chain, finding the strategic

partners for supplies, printing, courier, technology

changes and their effect on production distribution and business models, globalization and outsourcing strategies and finally having suitable organization for managing the entire supply chain is nontrivial and requires domain

knowledge of the industry both in terms of geography and goods.

!  Connections with the stake holders and interconnecting

with them through personal and business relationships are the soft skills needed.

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Risks of Orchestration and Mitigation

Strategies

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Orchestration Is a High Risk Model

! 

The orchestrating company mobilizes the

needed assets of other companies to support

its own growth initiatives

! 

Once a company has chosen to orchestrate,

it’s difficult (though not impossible) for it to

go back and reintegrate

! 

Here is the story of Schwinn, the iconic

American bicycle manufacturer, allowed

orchestration to hollow out the core.

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Story of Schwinn

!  Schwinn owned almost 20 % of U.S. market and produced

hundreds of thousands of bikes a year in five factories.

–  It was the bicycle that all American children dreamed of owning

–  Schwinn stood for cutting-edge innovation and unmatched

quality.

!  Schwinn’s management felt that the company’s legacy of

innovation and customer relationships were the most valuable

assets, so they outsourced production to a small supplier in Taiwan,

Giant Manufacturing Corporation.

!  Schwinn did not ask for a stake in Giant even as it handed over

four-fifths of its bicycle production to its partner.

!  The supplier gained knowledge and expertise, cut costs to become a

far better bike maker than its partner.

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Hollowing Out

! 

Orchestration can look very tempting and

seductively easy “let your partners do a lot of the

hard work while you sit back and reap the

rewards”.

! 

But there is substantial risk lurking beneath the

attractive surface.

–  Unused internal capabilities can quickly atrophy.

–  Collaborators facilitating the process can get in the way.

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What is the solution?

! 

Governance Model: get involved in

orchastration

! 

Keep some production at home: call it high

end

! 

Run it as a JV

! 

Keep innovating and make the outsourced

model outdated and look for a new partner

The need for network orchestration can be

seen most clearly in the failures of off shoring,

outsourcing and strategic alliances.

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Conclusions

!  Value of orchestration in manufacturing or service

networks comes from integration, bridging borders as well as leveraging the company’s connections and knowledge across the network.

!  Modeling & Analysis are in early stages

!  Capability to connect to competencies - the core

competency of network orchestration- is as important as firm specific capabilities

!  Cloud, Big data and other technological advances will fuel

orchestration as a popular mode of governance

!  Orchestration by NGOs and Foundations to ensure food

security, health, affordable housing and skill based