Case Study

How Panasonic harnessed digital to build an agile supply chain

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Client: Panasonic

Business need addressed

  • Responsive supply chain to manage both bulk orders and ad-hoc requests effectively, to minimize missed revenue opportunities and cost escalations
  • Incomplete view of operations, long production-to-delivery cycles and slow decision making
  • Effective new product launches, and better use of customer feedback to influence design

Genpact solution: A Lean DigitalSM solution that enabled an integrated view of data and supply chain operations, built on cloud-based Systems of EngagementTM

  • A supply chain control tower to align supply chain strategy and operations, to customer expectations
  • Intelligent planning platform for inventory optimization and forecasting
  • Reporting dashboards, customized user training, and a managed services desk for analytics, data management and infrastructure support

Business impact

  • 32% improvement in overall forecast accuracy
  • 50% reduction in slow moving stock numbers for some products
  • 25% increase in productivity due to reduced manual effort, error reduction and automation

Business challenge

Manufacturers of high-tech products today realize that the lack of an agile and efficient supply chain makes it impossible to compete in a challenging environment where costs rise faster than revenues, stock keeping units (SKU) are proliferating and customers can quickly switch brands in response to promotions or discounts.

 A global manufacturing base makes it harder to respond to surge demand efficiently while the growth of online retail and marketplaces adds to demand volatility with dynamic prices, multiple fulfillment locations, and real-time discounting.

 As one of the largest electronic products manufacturers in the world, Panasonic manages over 15,000 products under its brand. The additional complexity arising from diverse channel partners, multiple distribution centers and manufacturing units rendered the existing supply chain forecasting and planning approach suboptimal in matching demand to supply.

Fragmented view of ‘sell-through’ and point of sale (POS) could lead to ineffective promotional efforts, missed opportunities to incorporate customer feedback for product improvements, misdirected discounting, and unsuccessful product launches while distributors were under-utilizing available funds.

 Analyzing data from suppliers and customers was a particularly challenging task. The company operated on legacy processes with a high degree of manual intervention. Its processes, such as sales, operations, and planning (S&OP), included a number of inefficient manual touch-points and inconsistent baseline data.

The existing analytics solutions and teams were aligned to functions and did not have an end-to-end view. The planning frequency was constrained to once a month, instead of a more responsive cycle due to unavailability of point-of-sale data. With long production-to-delivery cycles (as long as three months), the absence of an agile, real-time decision process resulted in shortages of high-demand SKUs and overstocking of low-demand SKUs.

Genpact solution

The root cause of these challenges is not the lack of powerful digital and analytics tools but the inability to adopt new ways of working that embeds insights into operations. Timely transmission of Data-to-Insight-to-ActionSM across the supply chain makes it more intelligent, able to execute faster and more accurately, and adapt over time, but this is often difficult due to lack of alignment between the front (order management, sales, and marketing), middle (supply chain management, planning, and forecasting) and back office (inventory, manufacturing, sourcing, and procurement) with external vendors and suppliers.

Entrenched organizational silos and operations that are saddled with pre-existing technology need a more actionable approach to digital transformation.

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Timely transmission of actionable insight across the supply chain makes it more intelligent and efficient, but this is often difficult due to lack of alignment between the front, middle and back office

Lean DigitalSM is one such approach: it ensures that the discovery process focuses on what matters, simplifies digital interventions, and applies them in an agile way that reimagines processes to deliver game-changing results.

 A granular analysis of the end-to-end sales and operations planning (S&OP) processes, including key customers, by supply chain and digital experts revealed critical gaps. Demand-side issues such as frequent surge in demand and ad hoc forecasts from channel partners added to supply chain complexity, in addition to supplier-side issues such as defective components and delayed shipments.

The dependency on legacy processes and manual intervention resulted in systems such as ERP, logistics, demand planning, and business intelligence, operating with disparate databases and reporting frequencies. An integrated supply chain control tower solution ensured a “single version of truth” using an agile Systems of EngagementSMtechnology layer to connect the relevant data from the right sources; from there, a centralized team of analytics and supply chain experts analyzed the data to embed insights into forecasting, planning, and operations (figure 1).

Figure 1: Supply chain control tower enables a responsive supply chain

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Metrics and KPIs were also redefined to ensure that operational metrics for each group aligned with the end-to-end supply chain as well as organizational goals. Hierarchy and role-driven dashboards, easy data drill-down for review and monitoring, and integrated insights covering the end-to-end supply chain, provided each stakeholder with a customized view of the supply chain in real time.

The user-friendly, customized reporting dashboards and end-user training supported easy adoption of the new solution. A managed services desk that supported analytics, data management, and infrastructure ensured rapid scale-up by creating the necessary expertise and capacity for sophisticated analysis of more current and accurate data. This helped enable a proactive supply chain that could react to market fluctuations faster compared to the earlier model.

The forecasting model was reimagined to operate on an intelligent planning platform for inventory optimization that utilized 'sell-through' data—a more accurate measure of end customer demand than 'sell-in' data—which helped the company more accurately model demand and improve trade promotions (discounting, bundling, etc.). This technology driven operating model now enabled plans to be updated eight times faster than the earlier once-a-month frequency.

In the transformed operations, the company could sense deviations from planned demand forecasts related to new launches or promotions, or a holiday sale by a channel partner, and respond much faster by optimizing inventory and production, giving adequate lead time to suppliers and plant managers to plan.

With demand accurately modeled, logistics operations could be optimized to ensure timely delivery at the best cost structure for the company.

Granular visibility to ‘sell-through’ performance helped improve promotion and product launch effectiveness and optimize promotion at a store level. The control tower also analyzed customer behavior and feedback to drive long-term process change, product quality improvements, supplier governance, and targeted resilient operations.

The digital evolution of existing operations has the potential to enable a future state driven by the Internet of Things (IoT). Real-time tracking of shipments from the supplier to customer location using IoT, as well as tracking of shipments and delivery using carrier GPS, is planned for the near future.

Granular visibility to ‘sell-through’ performance helped improve promotion and product launch effectiveness and optimize promotion at a store level

Customized user interfaces for warehouse and plant locations, prescriptive analytics to determine the mode of shipment from suppliers for cost optimization, and integrating purchase orders with carrier and supplier data is also under early stages of implementation, and is expected to reduce inventory and schedule adherence by 15% and 10% respectively.

Impact delivered

The increased responsiveness of the supply chain helped drive business agility and improved the alignment of inventory, production, and logistics with market demand. This ensured quicker fulfillment, shorter wait times, and enhanced customer delight—an important parameter. The control tower solution provided a real-time view of the supply chain, boosting decision making in sales and operations planning, with promotional uplift efforts now better aligned to optimize inventory levels.

The intelligent planning platform and supply chain control tower improved forecasting accuracy by 32%, and gave the client an effective tool to manage demand and supply volatility, with improvement in several key metrics, such as sell-in and sell-through forecast accuracy, point-of-sale forecast accuracy, and 50% decline in excess inventory and slow-moving stock numbers for some products (figure 2). The improved visibility combined with real-time information to drive decision-making helped reduce errors and resulted in a 25% increase in productivity.

For additional information, please visit, http://www.genpact.com/what-we-do/industries/high-tech

Figure 2: Forecasting accuracy drives reduction in excess inventory

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