I interviewed Radhika Subramanian who discussed how she helps companies address the impact of product complexity on the supply chain using pattern-based analytics.
Well thank you Radhika for spending your time today to share your insights into supply chain. Can you start by providing a brief background of yourself?
Sure Dustin. First and foremost let me thank you for your time today. It’s an absolute pleasure to be on this program. My background is industrial engineering and what’s called computational mathematics. So, in simpler, terms that really means, “trying to solve business problems for businesses using methods from mathematics and technology” and that’s really my passion.
So at the last company I had, we solved problems for travel and transportation and they were some of the world’s biggest problems around travel and transportation. For example, assigning aircrafts to various routes, thousands of planes and millions of possible connections—very, very big data problem.
What we’re doing today at Emcien is also a big data problem. And the problem we’re addressing is around helping companies to look at the business value and impact across silo-ed data in their companies. And with a focus towards:
• What are customers buying?
• What are the products?
• What are different demand buying patterns?
• How does that impact the entire operational efficiency of the organization?
• What is the impact on margin profit?
• What are all the rest of the implications?
I am the CEO of Emcien. Our toolset really addresses applications that deliver value to businesses and I have an amazing team that helps me in the delivery of these solutions into industry.
Can you discuss the impact of product proliferation on the supply chain?
Sure Dustin, to talk about the impact of product proliferation, we first need to take a step back and really address this basic premise: companies exist for the sole purpose of delivering their products or services to their customers. So the entire company and all business units in the company are all aligned to enable or facilitate that. When products get proliferated, it’s the single biggest determinant of increased cost and loss of efficiency through the entire supply chain or delivery chain. I call it delivery chain because I have to include services in this. This would be services like insurance, services that telecom delivers, services that banking delivers.
So let’s take a step back. Look at a company that makes products. If you look at a company that makes products, let’s say laptops, what are all of the different business functions that are impacted, as the products get more complex and more proliferated?
• You’ve got the manufacturing business unit struggling to figure out what are the parts that we need to carry in stock to deliver this in time to the customer.
• The project managers are adding more product features without visibility into what market is buying what, where, and how.
• Sales guys are standing on their heads to deliver the product in time to their customers.
Now, when you bring these different business functions together, each of them is looking through a different eye: Manufacturing through parts; project managers through configurations; sales through customers; and services through warrantees and parts requirements.
Proliferated products really add an enormous amount of cost and an enormous burden on the organization for them to be able to support and deliver services to customers. The impact on the profit margin is about 18-25 percent. It’s probably the single biggest value bucket that’s sitting out there that companies need to go and get today.
How can improvements in efficiency and profit be made?
Dustin that’s a really good question, how can improvements be made? So let’s kind of go back to the approach to the last answer I gave you. If the products are proliferated and the business units are struggling as these products get proliferated, then the solution really is in being able to pull the business units together so you have cross-functional alignment around the products and services you’re delivering to your customer.
There’s a need for a single platform that brings this “Tower of Babble” together so that when manufacturing is talking about parts, and project managers are talking about configurations, and sales are talking about customers, there’s a translator that can say, “a shortage of this part is going to impact this customer” or “this new feature - or lack of this feature - is going to effect our revenue this way.” There’s a need for a commonality and platform.
So let me take another step back, everybody is talking about big data and the complexity of big data. In companies today, every business unit has its own data silo and each business function optimizes their process within that silo. Most of the time they end up hurting the downstream silo. How can we improve efficiency and make profit? If you bring cross alignment with commonality of goal, common of language around the products and services you’re offering the market, and customers are buying, the opportunity for companies is tremendous and that really is the next frontier of business transformation.
Yes, and where have you seen success? Do you have any examples?
Absolutely. Success breeds more success. I’m going to give you two small examples. The first one is a company called AGCO, and they offer agricultural machinery into the market so it’s very complex products. They had bought a product line from CATERPILLAR and that product line is called the track tractor. These machines are about a quarter of a million to half a million dollars per unit and the number of choices is huge. So when AGCO bought this product line, the manufacturers and project managers actually built up the inventory of finished goods because customers really do demand these products with very short lead time. And sales guys of course are doing their job and selling the products to the customers… so low and behold the orders come in and the orders and the units in stock and inventory absolutely don’t match. So there is this “Tower of Babble” that manufacturing struggles with every day.
What Emcien was able to help AGCO to do is unify that language so that manufacturing was able to stock and build the right configurations and sales could actually deliver those units with very short lead time, almost 5 days, to the customer. The value was hundreds of millions in savings and profit improvement to AGCO.
I’m going to give you a second example. This is a company called NCR and they are looking at this problem of how do you get cross-functional alignment across every business function. They look at it in two ways: one way is demand sensing and the other is demand shaping. Demand sensing is all those business functions that need to listen to the market and see how the market is buying and absorbing their products and need to have readiness to deliver the products on time. So that’s the demand sensing part. The Demand shaping part is of course sales guiding customers based on availability.
So this is a success story that’s resulting in, again, hundreds and millions of dollars of cost savings where NCR is:
• Listening to the market
• Understanding what the customers are buying
• Aligning project management to offer products based on what customers are buying
• Making sure sales and operations planning is aligned with having the right parts to deliver them on time
• And last, but not least, sales people are actually making sure that customers buy what NCR has today and if they don’t they at least differentiate those configurations to say, “you know, that one you might have to wait for.”
That is absolutely a recipe for profit for growth and enormous success and great customer service.
About Radhika Subramanian
Radhika Subramanian is CEO of the Emcien Corporation, a pattern-based analytics solutions provider. Ms. Subramanian has nearly 20 years of experience helping large, sophisticated organizations optimize their business processes and achieve greater success. She is a leading expert regarding the impact of product complexity on the supply chain and has consulted with numerous Fortune 500 companies to reduce complexity in their organizations. In 1998, she co-founded Idmon Corporation, which specialized in analytical applications for the transportation industry. Idmon was funded by Cordova Ventures and Imlay Investments, and its launch customers were Delta Air Lines, Continental Airlines and South African Airways. The company was sold to Swissair Group in 2001.