I had presented a paper on tranforming the supply chain at The "Fourth Biennial Supply Chain Management Conference" jointly organized by the EADS-SMI Chair for Sourcing and Supply Management, Indian Institute of Management Bangalore and Supply Chain Management Centre, Indian Institute of Management Bangalore, in Dec 2014.
I have repproduced an extract from my papaer below
Establishing the need
The FMCG/retail sector in India is sized at $50B / year. This market consists of 12-15 main CPG companies and a host of regional and local players with 20K dedicated distributors and 80K wholesalers supplying a base of 8.3 M FMCG product retailers. Today the last mile retail stores in India have a highly inefficient, manual supply chain. Some of the insights we gained through the market analysis is given below
The CPG/FMCG companies have always faced a challenge in connecting to the last mile of their supply chain. “SAP Ganges” is a business network that connects this supply chain. The SAP Ganges solution endeavors to provide insights and information to all the stakeholders in this ecosystem.
SAP Ganges is a business network that solves this problem through a disruptive innovation in the most comprehensive way. It is an intensive network that links millions of retailers, thousands of distributors and wholesalers, CPG companies, banks, and service providers
SAP through this project has designed and appliance for use by small and medium retail shops with capabilities such as GPRS connection, multi-function capability and modularized components for easy servicing and so on. These appliances will connect to an SAP Cloud solution for secure data storage, analytics and such other activities. These appliances will be sold and serviced by the Hardware Manufacturers who are eco system partners.
Along POS Solution for the last mile retailer, SAP also has cloud based offerings for the other stakeholders in the network like, CPG / FMCG Solution, Distributor Solution, Bank Solution.
The potential of such a connected supply chain network in retail is immeasurable to all the partners of ecosystem participating in this initiative.
Design-thinking methodology: SAP Ganges started as an incubation project at SAP Labs India with the aim to create an ingenious solution for the specific needs of the very unique Indian market. The problem of last-mile-connectivity is a challenge that FMCGs have been grappling with for a long time due to the vast geographical spread of Indian market with no Internet which deters connectivity into remote areas and hence limits ways to track consumer sales. Given this situation it was essential that we adopt a ground-up approach to solving this problem and hence we reached out to the end-users of the prospective solution, talking to them, closely observing their day-to-day business to see how we can create a solution which they find useful and also easy-to-use with their semi-literate background. This approach is called ‘design-thinking’ and using this technique we interviewed about 200 personas (150 retailers, 30 distributors and 5 CPGs ) to create a specific mind-map and user-needs guideline. Through this process, the PoS software is designed based on numbers and iconography as most of the retailers were semi-literates and were uncomfortable with traditional PoS UI. It has a touch-based interface with minimal need for manual data entry to increase the user friendliness.
Affordable and value-for money device: Even though many Point of Sale devices exist in the market today, they are not suited for the needs of a mom-and-pop retailer because, first, these devices are. expensive and second, they are based on internet connectivity which exists rarely for these retailers Therefore, we carried ingenious innovation to design a device strictly according to their needs, a modular and value-for-money device which is at 1/4th to 1/5th of the price of other devices in the market, offers battery back-up (with no need for additional UPS) and is compact and rugged to sustain the environment of a retailer’s shop.
Product Development / Offerings
The scale of computing and analytics for the massive scale of retail point-of-sale data is made possible by HANA which provides real-time access to data and enables complex analytics on it. SAP Ganges is comprised of the following six offerings:
SAP had conducted a set of pilot in 2013 to ascertain certain capabilities and to outlines the value from the network. The results of that pilot are summarized below
At present a pilot is in progress across Bangalore – Mumbai and soon to be launched in Delhi which mirrors the production level operations. Through this pilot, we plan to demonstrate the values of the network to the stakeholder s and also understand the considerations while operating such a vast network.
These companies suffer inefficiencies in their inventory management, procurement, marketing and promotions spend due to a lack of last mile visibility. Most FMCG companies rely on dated and extrapolated data while framing their strategy. SAP Ganges enables forecasting based on actual demand and allows the CPG to reach the retailer POS network for marketing messages and promotions.
The problem of last mile connectivity is a complex one and requires an integration of the best technologies in software, hardware and design for a reliable resolution. SAP Ganges is not just one offering but a combination of different technologies and multiple partners coming together to provide a solution which is targeted to the end-user. There have been multiple attempts at solving the problem by many companies but have been unsuccessful due to many weaknesses, namely:
The integration achieved through a POS can help FMCG companies to tap into hidden opportunities that can open up new efficiencies in the supply chain:
Through the POS device, companies are able to get the most real-time and actual data of their demand to uncover demand patterns and improve forecast. This forecast data based on actual rather than historical data can be used for achieving a sensitive and automatic replenishment plan, which creates synchronized and more accurate demand signals up through the entire supply chain. Using the market basket analysis , FMCGs can creates popular assortment, replenishment and promotional strategies across the entire supply chain through to the shelf to accurately assess the impact on sales, service and cost prior to executing those strategies.
Using the demand information sent from the POS, companies can localize assortments and profitably flow inventory to the shelf and capture more consumers, and grow market share, revenue and margins.
Greater understanding of the impacts of trade promotions, consumer marketing activities, seasonality, new products on demand and supply plans with near real-time analysis capabilities, enabled by Ganges, are must-have capabilities for the future of retail.
The SAP Ganges network can make supply-chain management and credit management system intuitive across the entire network whose final nodes are the retailers in far-flung regions of developing countries. This has the potential to transform the social landscape in these countries by empowering the weakest parts of the distribution hierarchy. Through this solution, SAP is truly touching the lives of millions of people.
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