Digital Supply Chain Transformation with Integrated Business Planning at Mahindra USA
Today at Sapphire, I listened to Dharmesh Shah, from Mahindra USA discuss his companies digital supply chain transformation.
First, Dharmesh explained a littler about Mahindra USA who were formed in Tomball, Texas, in 1994 to expanding Mahindra & Mahindra’s (M&M) global reach to a key market. I was interested to hear that “Mahindra are not only the fastest growing tractor brand in North America, we are the World’s #1 seller of farm tractors”.
The Business Case for Digital Supply Chain Transformation
Dharmesh explained some of the challenges the company was facing from “demanding customers who expect increased customization, quicker deliveries, e-Commerce Experience, and traceability across the supply chain”. He continued, “this resulted in the increased complexity of increased new product introductions with fast ramp-ups and short life cycles”.
As Dermesh explained, this was compounded by “a lack of visibility and control across the global supply chain and an absence of one number forecast”. As he continued, “driving a responsive supply chain is difficult, with changing demand, and long lead times in manufacturing. All of this resulted in a cost to serve and days in inventory that was too high, an on-time fulfillment rate that was too low, and an inability to scale the business”.
The key driver supporting the transformation journey
At the start of the project in 2017, the company required a change of business processes and systems to drive sustained growth on a scalable platform. Dermesh explained, “we required an agile, flexible and responsive supply chain, and to nurture a partner ecosystem built around Industry best practices”. To enable this transformation required “end to end visibility to enable the company to orchestrate supply chain processes”.
Supply Chain Transformation at Mahindra USA
The company embarked on a project they entitled “mFusion“ in partnership with Bristlecone which had several phases:
- Enable an integrated and collaborative Sales, Inventory and Operations Planning (SIOP) process that incorporated New Product Introductions (NPI), Demand Planning, segmentation, the calculation of dynamic safty stock to drive the S&OP and MRP processes.
- Delight the Dealers with a revamp of the Dealer Portal, demand prioritization and commitment dates and Utility Vehicle (UTV) configuration options.
- Improve Performance Measurement with organizational wide KPI’s and analytics
- Data Governance to drive the quality and accuracy of master and transactional data
- Improved supplier collaboration to improve lead times and WIP visibility
- Warehouse Management project to optimize layout, lane management and quality.
KPIs and associated Business Benefits
As part of the project key KPI’s were identified across the company. They included:
- Forecast Accuracy
- Working Capital (Inventory)
- Lead Time (Inbound /Outbound)
- Supply Chain Costs
- Cash to Cash Cycle
- Quality Control/Assurance
By tracking, and managing KPIs and aligning to business goals impacted the business outcomes:
- Increased Sales by “moving from Sense & Respond to Demand Shaping”.
- Cost Control through proactive Inventory handling (Inter DC transfer, aging, labor etc.).
- Demand – Supply Alignment – balance supply push and demand pull.
- Working Capital Optimization through proactive planning for right product/ right mix / right location.
- SCM Agility and Flexibility via faster throughput, lead time reduction, partner collaboration.
- Scalability through business process standardization and technology enablement for
- Faster dealer and supplier onboarding
- Global/Local design approach that can be extended across all locations, DCs, and 2ndParts Distribution Centers.
- Support growth without adding resources
How SAP IBP and SAP Ariba has impacted Mahindra USA
Dharmesh explained that this transformation required n end-to-end approach from SAP:
- SAP IBP for Demand and , SAP IBP for Response and Supply has “enabled ‘One number’ consensus planning, greater stability in demand signals, and lead time based order management across value chain”.
- SAP Ariba Supply Chain Collaboration enables “automated and real time collaboration with suppliers, and transparency in quality management”.
- SAP BW on HANA, SAP Supply Chain Control Tower and SAP LEONARDO provide “advanced tools and capabilities for predictive analysis, simulation, and alerts to improve productivity and throughput”.
I would like to thank Dharmesh for a great overview. I am sure that all attendees left the session inspired by this digital transformation story.