Once upon a time in Mumbai – IT helped

On many occasions in my professional life, I have observed, people express utter dissatisfaction about computerization and pass loose  comments like, software implementation just increases workload without offering much benefits to the operation. But I always have a strong opinion against these comments. I fully agree upon the fact, that a business can survive without software, and the core principles or practices of business operation didn't vanish with the advancement of IT, so without computers also show can go on. But what benefits IT brings to the business are two folds, it forces people to be disciplined  with business process, as execution or operation can be railed and fenced with an well defined process flow, and the second and more important one is, it can increases the prompt accessibility of information far beyond of imagination when potential of IT is rightly harnessed.

The case study I’ll discuss here is from my old and gold FIAT days. That time, I was managing a small section of  Logistics department, called as Avviamento ( an Italian word, means Starter ) for FIAT India. Avviamento section was responsible for the 'inbound material' (supply) logistics of the new car projects. This includes materials management for prototype development, launch vehicles build to first 500 commercial cars roll out from the production line of a new car model. After first 500 cars, the regular logistics department takes over the job. So the key function of Avviamento was to develop the supply chain logistics blue print and mature it by resolving the teething issues for the new car manufacturing or engineering changes on existing models. At the early stage of my professional life, it was very challenging role, specially, in an Automobile industry, where material itself is responsible for 80% of the product cost. And the sourcing philosophy of  FIAT was to procure the material from anywhere of the globe where it gives maximum cost benefit. So a final car, rolled out from the plant, carries about 2000 different parts procured from 7-8 different countries. Before the wide spread e-commerce era, this was a concept quite ahead of the time. I feel very lucky for getting this opportunity.

That time FIAT was running its business on a highly customize Baan ERP solution. This includes managing global material logistics by connecting the Polo, the facility of FIAT for a country, responsible for supplying material to FIAT facility to other countries, and manufacturing facilities around the globe, Back bone of this was, its own intranet, as internet was still gaining its maturity. And all material requirements were placed in a batch of 24 cars production material, being called as Kit. Order to a polo, goes in the number of Kits. Then they explode the kit BoM into individual parts and procure or produce with their convenience. Then at the time of delivery, they pack one kit parts together and deliver it in one or multiple consignments. So at the destination when a kit arrives, it carries all the required parts for manufacturing 24 cars, which are sourced from that country, clubbed together. From placing the order to shipment and receiving was maintained and monitored in that customized Baan system ( project name was WMF, Worldwide Material Flow) in a very disciplined way. If I need to check where a particular order is lying, I can get the Consignment number, bill of lading/ airway bill number, ship no/flight no, container number, packages/ sub packages number thus drill down till the individual part level and obviously where it is physically residing in real time. This information helped me in my job in various occasion in many different ways. I am picking up one incident over here.

One fine morning, I have got a call at my desk from production line about a critical shortage of a plastic door pad clip. These types of calls, were part of my everyday life that time, there were very few business days when I didn't receive a single such call. First priority for any materials manager of a manufacturing industry is to keep the production line running, so provide the material by any possible or what I call, creative way and then resolve the process issue, if any, which caused the material shortage, as soon as possible to avoid future occurrence of the same issue. And this is a very important role of the Avviamento department, by resolving those process issues Avviamento develops a supply chain logistics specific to that car model with the initial manufacturing of that model car, which will be used by logistics department to procure material for mass production of that car model throughout its product life cycle. By the nature of the job of Avaiamento, we had to resolve many issues like this, it may be part missing from KIT, parts not required in a perticular model but arriving with Kits, Engineering BoM is wrong, lead time is wrong, supplied part doesn't match with design, changing source country, expedite localization etc. etc. and etc. Each and every issue is little different from others. Sometime silly issues , like material is misplaced in the store or delivered at wrong place used to come too, those are some incidents which used to amuse us, shouting and showing false anger, we used come back to our air conditioned office cubical from plant.

Anyway, during that time I was struggling with one uncertainty, for last few days, there was an indefinite strike called by some Dock labors union. So last few days none of our regular consignments been mobilized from dock to plant warehouse, even after custom clearance were done. We were receiving only air shipments which are only exceptional orders, regular shipments always arrive by ship as it was much much economical. But I was comfortable, as the amount of Kit stock we had in the plant warehouse could feed the production for next 7 to 10 days, I was sure by that time with all odds the strike will be called off.

So to address that days call, I went down to plant as usual. and after doing some basic check, I realize the number of clips arriving in one KIT is not sufficient, so store is opening up next KIT to meet the requirement and with current available stock in Plant, production can run one more day. And from production department, I came to know, without putting this door pads, cars cannot be rolled out. They wont be able to put the door pad without the clips. And in absence of the door pads, if it rains, water may penetrate inside. It was monsoon time and the rolled out cars are stored in open storage area.  During monsoon Bombay receives heavy rain fall for 4 months. So there is no choice other than stopping the production line. For any Materials Manager stopping production for his material shortage is the worst nightmare. Everyday production stop causes huge financial loss for the plant, other than the delivery delay, without any output, plant operating cost itself is a huge everyday loss. So very quickly I sensed the gravity of the problem. 

I quickly check what are the pipe line status for this part status in the ERP ( BaaN) with a remote desktop connection using Timbuktu software ( which I used to use that time in office for my remote computer access and instant messaging with FIAT colleagues across the globe) to my computer from a PC inside the plant, and observed there are few consignments sitting at the dock from other Kits and some more are expected to arrive soon. So I called up the finance department, who handles the logistics partner of FIAT AFL, who were responsible to clear consignments from dock and deliver at the plant, and provide him the exact container numbers, I got from Baan, which we need to make available as soon as possible to avoid plant shortage.

I quickly gave an update to Bianco, my reporting manager, on the spot at production line.  I can’t resist myself to write few words about Bianco, diverting from the story line little bit. In my professional life, I have seen, in many situations when, some foreigners from a developed country and Indians interact in business world, at any level, there is a tendency from Indians to bend down more than what is required. For other party, initially it appears little strange and cannot justify the behavior, but over a period of time, they start expecting same behavior in general. There are very few foreigners, I have seen who could keep behavioral balance and maintain rationality to interact with Indians in general after working some period of time in Indian culture. For that you need to have high personal value of respecting other people without being moved by other side’s behavior. Bianco was one such person. Many incidents are crossing my mind when I am remembering him, I’ll mention one of them here. It was just before I leave to work in FIAT Torino first time, Bianco recently became my manager, he told me, Partho, What you feel appropriate in Bombay office is also appropriate over there, so if you find some issue where voice should be raised, please do so, you will have full support from me. And he told this looking at the eyes of 25years old young professional, who has no foreign travel experience, forget about working.  This was Paolo Bianco, who always stood behind me when needed. Now turning back to the story,after explaining the situation to him and got assurance about any help needed, I moved back to my department carrying a brain, working desperately to find out a solution for the issue.

Then at Avviamento, we started investigating, why part is running shortage, from production department I found each car consumes 6 clips but when we checked the Kit Bills of Material ( BoM),  quantity its coming 4 clips per car consumption. We checked in engineering BoM in Codep ( another legacy system which was in use that time in FIAT mainly for Engineering Department functions ) the quantity is correct, 4 at one place but 2 at different location in both sides of the car doors. But when the Kit BoM is keyed in, those 2 pieces were over looked. It was not observed during prototype  or pilot cars production, because those low value clips were procured in plastic packets of 100s that time, not with exact requirements count. 

At Avviamento, we sit down and quickly chalk out a plan to resolve the issue with minimum expenditure and avoiding plant shut down and also to solve the problem forever. So the recommendation came out is as follows:

• 1. Change the supply chain BOM immediately.

• 2. Immediately order deficit quantity for the shipped Kits containing incorrect quantity in the Bom. This additional order will reach plant after 30 days as the delivery lead time by ship was 30 days.

• 3. Find out those consignment details which carries that part from the system. 

• 4. Initiate the process to bring those containers which carries that part as soon as they arrive at dock.

• 5. If it found the plant shut down can’t be avoided in next 30 days only by expedite the clearing.

• 6. Find the maximum shortage quantity before the additional order reach by sea.

• 7. Order the same qty by Air.

We quickly briefed it to Bianco to engage upper management to move ahead with the plan as the budgetary aspect to execute this was beyond my capacity.

But to execute this plan you need to have a real time snapshot of the material on hand status from end to end of the supply chain, fortunately we had an well maintained ERP system, where this data was  readily  available to us. So from BaaN we captured a real time snapshot of the part inventory across the supply chain, and generate a report in this format :

To keep up a regular production of 25 cars per day, with the supply of the shortage part, we need to figure out when and how much the part is going to be out of stock. So we plotted the expected on hand balance for next 30 days considering the on-hand and in transit material as supply, and consumption is 25 cars material per day. Thirty days were crucial because, the source Polo has a lead time of 30 days to deliver by ship, so any material required before that, need to be Air lifted and logistics cost will be very high for that. So our focus was to keep the plant running for next 30 days with minimum additional cost. 

Figure out the maximum shortage quantity in this 30 days and order that by Air ( here its 1099). And if the 1st stock out is after 7 days, plant won’t face a production stoppage situation, because the air shipment takes 7 days to arrive at plant. So with the expected Air shipment the projected on hand balance will look like this :

So the execution steps were :

• 1. Figure out the in transit delivery details with quantity, container no, delivery no etc. of the particular part.

• 2. Identify the expected date of arrival of the shipment in the plant.

• 3. Now considering 25 cars production per day identify the expected on hand balance of the part, with the expectation that, the in transit delivery get cleared in time.

• 4. Identify the most negative on hand balance in the next 30 days.

• 5. Placed an air delivery order of the most negative qty of the part.

• 6. Identify the kit no already shipped and calculate the total shortage of the part in the already delivered kit.

• 7. Place an order by ship for the remaining shortage quantity (  total shortage of the part in the already delivered kit - air delivery order quantity ), which is expected to arrive in one month.

Once that delivery will be available plant, we will be able to bury down the problem for ever. Thus the real time data, available in ERP, helped us for making decision to resolve this problem in very controlled way. Plan has been presented, approved and executed with a fire fighting urgency. 

So, that way the long term problem has been taken care of but we still have an immediate risk of plant shut down, day after tomorrow, if some quantity of this part cannot be delivered to the production line. So with an high hope, AFL somehow will be able to bring some requested container in plant, we called it a day.

Next day morning the AFL logistics guy came to my desk and told, out of my list, two containers have been cleared by customs but they cannot lift any consignment from the dock till the strike is called off, strikers are very determined about their demand, more over if they come to know the situation, won’t leave any opportunity to generate pressure from top and exploit the situation. Any effort to bring out trucks may result into a misadventure. No driver is willing to take the risk. So we realize, we are in deep trouble. With the current stock plant can be kept running till next day lunch time. So I went to Bianco with him and explained the situation, and also informed from Baan I could pull out exact container number, and all the packaging details of boxes so physically can trace down the parts in short period of time, getting an opportunity to open the container. But the issue is how we’ll cross the barricade of the strikers.

Finally we decided to go to the dock check the situation and also physically identify the part in the container and look for any opportunity to sneak out some quantity through the strikers. Bianco told another senior colleague from  logistics department name, Kulkarni to join us, he was little senior to me in age and local from Bombay, so his seniority and local advantage may get counted if situation turns wrong. And Bianco also insisted to take two security guard personal from Trig, who was the private security agency for FIAT that time, just in case if any unexpected situation arises. So our team of fabulous five jumped in a car immediately after lunch heading to Mazagaon dock.

After reaching there our version of the story was, we are checking a particular part which has been arrived or missing in one container and if its missing we need to place an additional order for them as soon as possible, that’s why we couldn’t wait till the container arrives to the plant. We never uttered, we are facing a plant shut down situation due to some materials available in that container, situation like will be an opportunity for them to increase bargain power.

Unfortunately the containers of our interest were not on the ground but stacked up high, so needed to involve some more people to bring them down by magnetic crane. Then we open the door of the first container, enter inside with my papers and do some random checking of the packing lists and waited till people started getting thin out soon after getting bored. But behind my mind I have already figured out our jewel chest. After getting the first opportunity, we opened the box inside the container itself quickly pull out the plastic packet of the clips and put inside my folio bag, in which I was carrying for my papers. In this way, we could collect about two-three days production material, then silently came out. Quickly get settled in our car and when the car crossed the striker's barricade and running through the highway, I can feel I am flying sitting in a car.

On the way we stopped at AFLs warehouse and gave special thanks to the manager for allowing his personal for this operation. I have some stories from that warehouse also, I’ll tell in some other occasion.

I reached plant late in the evening and handed over those two plastic bags   ( whose market value was couple of hundred Rupees, but to us something which money cannot buy ) to Babuprasad Dixit, my friend, philosopher and guide store manager, I have lots of good memories with him. And finally I went back home for a good night sleep after a long busy day of earning a life time experience.

In two days the strike had been called off, so the containers started to move in, and the additional orders, we placed started to mobilize as per the schedule, we prepared that day, so plant had never faced a production stoppage for that silly door clips. And thus, one issue is resolved and Avvaiamento department is again all ready to take the next call.

So when you are riding your car and looking at a Mercedes Benz, Lexus, BMW or Ferrari though the window, you  may think of those poor people whose life have been touched by every single parts of your car, this may change your perception about your own small car, it will appear little more precious.

N.B. All data provided over here are conceptual to explain the case study, actual data has not been used.

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