Perspective: TCS Supply Chain Center of Excellence An Update

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1 PERSPECTIVE Perspective: TCS Supply Chain Center of Excellence An Update Simon Ellis Leslie Hand IN THIS PERSPECTIVE This IDC Manufacturing Insights Perspective presents a follow-up to the strategy day that IDC Manufacturing and Retail Insights recently completed with the TCS Supply Chain Center of Excellence (SC CoE). IDC presented some high-level trends from our research, while TCS presented on some of its top supply chain initiatives and we provided feedback and suggestions on those initiatives. The discussion took place in Washington, D.C., in February 2015 and was attended by managers from the TCS SC CoE. In the past, we have stated our belief that service providers play an important role relative to the manufacturing and retail industries, and we believe that this role is expanding. Manufacturers and retailers exist in a complex and dynamic environment and are continuing to seek out opportunities to balance performance and cost in such a challenging environment. To achieve this balance, many are investing in their core competencies while exploring opportunities to leverage variable costing models for noncore business functions. Among business functions, this balancing effect remains true in many elements of supply chain management, which is creating opportunities for service providers to leverage their talent pool, resources, expertise, and geographic reach to serve clients in the supply chain arena. Enduring Challenges At IDC Manufacturing Insights and IDC Retail Insights, we have consistently noted across our research since the conclusion of the "great recession" that the external manufacturing environment is a highly dynamic, ever-changing landscape and that the supply chain must adapt to changes that are happening or have happened, as well as anticipate those changes that will happen. That the market is a dynamic one comes as no surprise to students of the supply chain, though the way forward generates much debate. Rather than repeat the litany of current challenges, we highlight a handful of them that we believe are the most compelling: Consumer/customer centric. There seems little question that supply chains are much more aware of the consumer/customer than ever before, and the questions of how to personalize products; manage "mass customization" from facilities that are not well suited for that very purpose; ensure the highest level of product quality from increasingly distributed, global supply networks; and provide consistently high levels of customer service are central to discussions of strategy and competency. Demand awareness. While there has been a decades-long discourse on the relative merits of being "demand driven," there is little question that supply chain organizations can benefit from greater visibility into the cadence of demand. While some businesses will never use demand signals to inform factory-run strategies, the ability to better manage service performance and late-stage assembly/postponement through enhanced insight into demand patterns and more accurate supply chain forecasts is quite apparent. That is not to say that manufacturers ought to be fully and inflexibly "calibrating" their supply chains to a particular forecast because April 2015, IDC Manufacturing Insights #MI255840

2 forecasts will always be wrong and some supply flexibility is critical, but clearly, being demand aware gives the supply chain a better chance of responding seamlessly to changes in the business. Data driven. Repurposing the old saying that "you cannot improve what you don't measure" into "you cannot respond to what you don't see" speaks volumes for the many manufacturers that are wrestling with massive, and constantly growing, amounts of data. Putting the terminology of "big data" aside for the moment, the reality is that the requirement for supply chain organizations to broaden their "supply chain intelligence" is of paramount importance and it is increasingly unacceptable to "not know" particularly when consumers are increasingly empowered with "ubiquitous visibility." And it is not just about what a business knows versus what a business doesn't know; it is also about making information available to critical decision makers "when and how they need it." Manufacturers have a wealth of information across the enterprise that if managed and analyzed in a unified fashion can drive product and service innovation. Of course, manufacturers need to be able to trust this information such that it can be used to accurately verify customer demand, determine the right mix of suppliers, and validate product and process quality. Always "on." Always on is more an overall business requirement, perhaps, but one that clearly impacts the supply chain, and fulfillment/customer service, in particular. The world is moving to a 24 hours, 7 days a week, and 52 weeks (24 x 7 x 52) mentality with expectations for roundthe-clock shipment and customer and consumer service support. Just as the 3PL community has moved essentially to an "always on" approach, so will the logistics and fulfillment functions within the consumer products manufacturer, essentially adopting a 24 x 7 x 52 "continuous" logistics operations and supply chain model. Clearly, there will be regulatory implications and the need to navigate country- or region-specific operating rules, but the move to an approach of 24 hours, 7 days a week, and 52 weeks a year seems inevitable. If manufacturers are going to respond to shrinking order and delivery timelines, greater numbers of delivery points (as a result of omni-channel commerce), or even direct-to-consumer shipments, it is hard to see how to effectively do this without moving to the reality of 24 x 7 x 52 continuous logistics. Digitally executed. Whether adopting modern document management processes and technologies, mobile tools, demand signal repositories, the Internet of Things (IoT), or emerging technologies like 3D printing, just to name a few, the world is going digital and the supply chain is not going to be spared. Nor would we want it to be! Although not the exclusive purview of the supply chain, managing B2B (and potentially B2C) networks is part of what we at IDC Manufacturing Insights and IDC Retail Insights see as the central driver of the next generation of supply chains. Increasingly, businesses across industry are participating in complex, extended, and overlapping value chains. Dynamic change due to increasing product complexity, customer demand, and service efficiency has become the norm rather than the exception. Therefore, companies need to build a level of agility, risk mitigation, and resilience into their value chains that enables rapid response aligning resources with market demands before and after product launch in as close to real time as possible. At the same time, companies are also engaged in an ongoing search for business improvement, seeking new market opportunities in the face of constantly shifting markets. What We Learned with the TCS SC CoE Supply chain consulting and services is a space with many well-established companies competing for the business. Therefore, it is imperative that companies offering supply chain consulting and services, such as TCS, create some unique value proposition to leverage and create some uniqueness in the market. During the strategy day, we sought to identify elements of the TCS SC CoE that we felt would 2015 IDC Manufacturing Insights #MI

3 help this group to achieve some unique position in the market. The following are some of the elements that stood out during the discussions: Experience. The leadership team in the TCS SC CoE is made up of seasoned industry professionals with deep domain experience as well as vertical expertise. A combination of domain and industry-specific knowledge is important when approaching supply chain challenges. Having a well-balanced team enables service firms to address supply chain problems with a blend of industry-specific knowledge and supply chain domain experience while also enabling cross-industry collaboration. In addition to the SC CoE, TCS has supply chain expertise resident in its Industry Solution Units (ISUs), Enterprise Solution teams (focusing on systems integration), and Business Process Services (Managed Services). This provides TCS a multipronged strategy to tackle hard supply chain problems. Science-based offerings. Supply chain management today requires a more sophisticated approach including deep analytics, simulation, and optimization to support effective decision making. The TCS SC CoE is committed to developing a set of supply chain offerings built on a common platform leveraging modern cloud, mobile, and big data capabilities: Scientific Forecasting. The offering outlined by TCS is impressive, including proprietary algorithms and pattern recognition technology. While forecasting models have been around for a while, it is refreshing to see that firms are still finding ways in which to innovate a process as ingrained in business as forecasting and demand planning. Omni-channel fulfillment. The globalization of today's business environment coupled with the omni-channel fulfillment requirements of consumers has exponentially increased the complexity of designing a supply chain. Furthermore, an optimal supply chain today may not be the best design for tomorrow, requiring that firms take a more operational approach to planning their network. Scientific Supply Chain Design. The TCS offering provides a well-thought-out approach to supply chain design including site-level event simulation, optimization, and scenario analysis. Variable cost model/managed services deployment. As organizations focus on core competencies and seek to leverage third parties to handle noncore business functions, service providers are taking on a larger role for their clients. The value of outsourcing business functions is the opportunity to leverage the talent pool and resources of a service provider while enabling the internal staff to focus on those core business functions that add value to the firm. TCS is equally committed to providing its clients with flexible engagement options as it is to its scientific approach to supply chain management and has built out a team capable of executing to this approach and scaling as necessary. TCS is currently in the process of implementation of the Scientific Forecasting solution as part of a managed services engagement with a large manufacturer. As manufacturers and retailers continue to evolve and adapt to a dynamic market place, they will continue to leverage service providers to introduce innovative approaches to solving their most challenging business problems. The TCS SC CoE possess a well-rounded and experienced team that is committed to the development of innovative solutions to common challenges We believe that the offerings and team in place in the TCS SC CoE position the organization as a competitor in the supply chain service provider space IDC Manufacturing Insights #MI

4 LEARN MORE Related Research Business Strategy: The Evolution of Manufacturing Supply Chains Networked, Collaborative, and Transparent (IDC Manufacturing Insights #MI255229, April 2015) IDC FutureScape: Worldwide Manufacturing Supply Chain 2015 Predictions (IDC #253421, December 2014) Business Strategy: 2014 Manufacturing Supply Chain Survey Results and Implications for the Industry (IDC Manufacturing Insights #MI250183, August 2014) 2015 IDC Manufacturing Insights #MI

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