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Summer Internship Project Report On Role of supply chain management decision in effective inventory control By Pranav Singh A0101912188

MBA General Class of 2014

Under the Supervision of Mr. S.S Pal Assistant Professor (Department of Operations)

In Partial Fulfilment of the Requirements for the Degree of Master of Business Administration General At AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA - 201301, UTTAR PRADESH, INDIA

2013

INTERNSHIP CERTIFICATE

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DECLARATION
Role of supply chain management decision in effective inventory control I declare (a) That the work presented for assessment in this Summer Internship Report is my own, that it has not previously been presented for another assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged. (b) That the work confirms to the guidelines for presentation and style set out in the relevant documentation.

Date: 21 July, 2013

Pranav Singh A0101912188 MBA General Class of 2014

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CERTIFICATE
I S.S pal, hereby certify that Pranav Singh student of Masters of Business Administration General at Amity Business School, Amity University Uttar Pradesh has completed the Project Report on Role of supply chain management decisions in effective inventory control, under my guidance.

Mr. S.S Pal Assistant Professor (Department of Operations)

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ACKNOWLEDGEMENT
This project has been a great learning experience for me and I would like to express my sincere gratitude to all the people who guided me throughout the project and without the valuable guidance and suggestions of these people this project would not have been completed successfully. I owe enormous intellectual debt towards my industry guide, Mr. Swetank Jain, Asst. Manager, logistics department and Faculty guide, Mr. S.S pal, Assistant Professor, Amity Business School for their continuous support and corporation throughout my project without which the present work would not have been possible. I would like to thank all the respondents whom I interacted during my project without their support and corporation this project would not have been completed successfully. And last but not the least I feel indebted to all those persons and organizations who/which have provided help directly or indirectly in successful completion of this project.

Pranav Singh A0101912188 MBA General Class of 2014

Contents
INTERNSHIP CERTIFICATE............................................................................ ii DECLARATION............................................................................................. iii CERTIFICATE............................................................................................... iv ACKNOWLEDGEMENT.................................................................................. v Contents..................................................................................................... vi ABSTRACT................................................................................................. viii CHAPTER 1: INTRODUCTION .......................................................................1 Purpose of Study............................................................................. 1 Scope of Study................................................................................1 Industry Profile................................................................................1 Overview...................................................................................1 History of Indian Electronic Industry.........................................2 Organization Profile: Anchor electrical Pvt. Ltd. .............................3 Overview...................................................................................3 Switches.......................................................................................... 6 Switchgear & Protection Devices....................................................6 Lighting........................................................................................... 6 Luxury switches............................................................................... 7 Modular switches............................................................................. 7 Non modular switches.....................................................................7 Other Devices..................................................................................7 Switches & Accessories.............................................................7 Office Network........................................................................17 .................................................................................................... 17 CHAPTER 2: REVIEW OF LITERATURE.....................................................17 CHAPTER 3: RESEARCH METHODS

AND PROCEDURES.................................................................................... 21

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Purpose of Study...................................................21 Research Design...........................................................................21 CHAPTER 4: DATA ANALYSIS AND FINDINGS.............................................36 CHAPTER 5: CONCLUSION & RECOMMENDATIONS....................................49 ................................................................................................................. 53 Refrences ........................................................................................ ...............52

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ABSTRACT
The Supply Chain (SC), which involves the configuration, coordination, and improvement of sequentially related set of operations in establishments, integrates technology and human resource capacity for optimal management of operations to reduce inventory requirements and provide support to enterprises in pursuance of a competitive advantage in the marketplace. A coordinated SC integrates procurement, production, and distribution and links together suppliers, manufacturers, distributors, customers and carriers in a network system that allows for effective planning, information exchange, transaction execution, and performance reporting. This paper addresses the structures of supply chain management (SCM) and the activities involved in SCM decisions that help promote profound improvement in efficiency and effectiveness in business operations. In broader context, the paper examines the types of activities involved in SCM decisions; the dynamics of the traditional SCM, the complementarities of technology in achieving effective management of operations through enablers of electronic data interchange (EDI) and quick response (QR) disciplines to implement Just-in-Time (JIT) management techniques; and integrated SC and inventory control as it relates to capacity imbalances and transaction costs.

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CHAPTER 1: INTRODUCTION
Purpose of Study To understand the logistics Procedure Company is following. To understand the current inventory management scenario of the company. To follow up and monitor the process of branch replenishment. To evaluate the benefits of supply chain management decisions for inventory control. Scope of Study The entire supply chain process anchor electrical pvt. Ltd. Is following is described in this paper. This study is limited to the approaches and practices adopted by anchor electrical pvt. Ltd in context with inventory control Procedure Company is following. Industry Profile Overview The electronics industry, especially meaning consumer electronics emerged in the 20th century and has now become a global industry worth billions of dollars. Contemporary society uses all manner of electronic devices built in automated or semi-automated factories operated by the industry. The size of the industry and the use of toxic materials, as well as the difficulty of recycling has led to a series of problems with electronic waste. International regulation and environmental legislation has been developed in an attempt to address the issues.

2 History of Indian Electronic Industry India is the fifth largest economy in the world and has the second largest GDP among emerging economies. Owing to its large population, the potential consumer demand is almost unlimited and consequently under appropriate conditions, strong growth performance can be expected. In fact, the liberalization of the economy in 1991 has led to rapid growth. The electronics industry, in particular, is emerging as one of the most important industry in the Indian market. The electronics industry in India dates back to the early 1960s. Electronics was initially restricted to the development and maintenance of fundamental communication systems including radio-broadcasting, telephonic and telegraphic communication, and augmentation of defence capabilities. Until 1984, the electronics sector was primarily government owned. The late 1980s witnessed a rapid growth of the electronics industry due to sweeping economic changes, resulting in the liberalization and globalization of the economy. The economic transformation was motivated by two compelling factors - the determination to boost economic growth, and to accelerate the development of export-oriented industries, like the electronics industry. The electronics industry has recorded very high growth in subsequent years. By 1991, private investments - both foreign and domestic - were encouraged. The easing of foreign investment norms, allowance of 100 percent foreign equity, reduction in custom tariffs, and delicensing of several consumer electronic products attracted remarkable amount of foreign collaboration and investment. The domestic industry also responded favourably to the politic policies of the government. The opening of the electronics field to private sector enabled entrepreneurs to establish industries to meet hitherto suppressed demand. Improvements in the electronics industry have not been limited to a particular segment, but encompass all its sectors. Strides have been made in the areas of commercial electronics, software, telecommunications, instrumentation, positioning and networking systems, and defence. The result has been a significant trade growth that began in the late 1990s.

3 Despite commendable achievements in the sphere of electronics, considerable infrastructural improvements remain a priority. Water, power, telecommunications, and transportation sectors must still be augmented so that high economic growth can be sustained.

Organization Profile: Anchor electrical Pvt. Ltd. Overview Anchor's foundation dates back to about five decades when it had started as a small business venture. Anchor accomplished the challenging task of delivering nothing but the best to its end users at the most reasonable price. Anchor's acquisition by 'Panasonic', the world's most trusted brand, has made it more proficient with technological advancement and supremacy in the product design and development arena. This path-breaking evolution has done a lot more than just add a touch of advancement in the lives of people. Anchor enjoys an extraordinary position in the eyes of youthful Indians. Over the course of time, Anchor's transformation in terms of innovation and efficiency has served generations as per their requirements by bringing in advancement in the products. The collaboration of Panasonic's technical competence and global persona with Anchor's matchless excellence in Quality, Safety and Reliability has ensnared the minds of the next generation. The world of electrical solutions today has evolved beyond recognition. The prominence of Anchor as India's only "Switches Super Brand" testifies to the fact that it is still the most respected brand to be leading this business vertical. Anchor was the first one to introduce India to the piano-type switch in 1976, which still holds a special position in the industry. Needless to say, in all quarters of this nation, an electric switch simply means Anchor.

4 Over the last five decades, Anchor has managed to capture the attention of every citizen in this country. It started with a humble vision of manufacturing electrical products of outstanding quality at a time when the market involving electrical switches or wiring devices was handled by the unorganized sector. The advent of Anchor not only organized the sector, but also brought electrical accessories into mainstream commerce. As a brand, Anchor signifies Trust, Safety and Reliability. These qualities have helped Anchor carve a niche for itself in the electrical accessories market. Anchor is solely responsible for the manufacturing and marketing of world-class ecofriendly products that have added value to the lives of people. The ideology of Panasonic's founder, Konosuke Matsushita' drives the everyday business at Anchor. It states that "the company must contribute to society through its business as a public entity." Anchor is a part of the second largest conglomerate in the electronics industry. As a proud part of the Panasonic Corporation that is located in Japan, Anchor has taken it upon itself to conserve the environment, thus paving a path to a safe, healthy and environment friendly lifestyle. Anchor's merger with Panasonic resulted in a fusion of technological expertise and vast distribution strength. Today, Anchor offers a wide range of more than 3000 exciting products across various product groups. These products are sold with the help of 5000 dealers and 450,000 retail outlets. Firepro, an infrastructure and security solutions giant, was recently acquired by Anchor. This acquisition helped Anchor further its horizons in terms of growth and expansion. Dominating the electrical accessories market and playing a pivotal role in the country's infrastructure development, Anchor continues to deliver reliable services and long lasting products of top quality in India and other neighbouring markets.

Mission & Vision

Anchors mission is to manufacture, innovative, eco-friendly, energy saving world-class products for making users life simpler, safer and comfortable.

Corporate Values

Integrity&Honest Anchor shall be ethical, sincere and honest in all our internal and external relationships. We commit to uphold the highest ethical standards in all our business dealings. Teamwork Anchor believes that people are our key performance differentiators. We nurture an environment where Teamwork is most valued. CustomerFocus Anchor is committed to surpassing expectations of our customers at all times. We believe that our quality of customer responsiveness will lead to greater customer loyalty. Accountability Anchor shall be fully accountable for our actions and we commit to be objective and transaction-oriented, thereby earning respect from others. Innovation Anchor shall continuously encourage entrepreneurial and innovative ideas in pursuit of excellence so as to become the best. Adaptability Anchor will continually adapt our thinking and behaviour to meet the ever-changing conditions around us, taking care to act in harmony with nature to ensure progress and success in our endeavours. SocialResponsibility Anchor is committed towards making a positive and proactive contribution to the community. As a responsible corporate, we will contribute to and abide by environmental and legal norms.

6 Products

Panasonic
Automation Solutions

Full 2 Way | Living Light Controller | Motion Sensor | Smoke / Heat Alarm | Video Door Phone Switches Panasonic Vision Switchgear & Protection Devices Panasonic MCB Lighting CFL Down Lights | LED Down Lights

Anchor markets Panasonic Corporation's home automation products and solutions in India. This year Panasonic has stepped with stellar products in almost every business vertical of Anchor. The products include Full 2 Way remote Lighting control system, Living light controller, Motion Sensor, Heat and Smoke Alarm and Video Door Phones. In addition, Panasonic has also introduced a special range of Switchgear and Protection Devices comprising of MCB, RCCB and Isolator. Vision has been introduced in the switches and accessories vertical. It has stepped with unique CFL and LED down lights in the Lighting & Luminaries business of Anchor. (panasonic.html)

7 Switches & Accessories Luxury switches Ave | Designer Plates Modular switches Vision | Viola | Woods | Allure | Roma | Rider Non modular switches Penta | XL Other Devices Accessories | Boxes | Pop up boxes Switches & Accessories For the last five decades, Anchor has captivated the minds of the prosaic and the prolific with its wide range of quality electrical switches and accessories. It is also Indias only electrical Super Brand in this particular segment of the electrical industry and the amassed popularity has simply made it a synonym for a switch nationally. Empowered by the technological proficiency from Panasonic, it has constantly endeavoured to deliver simplistic solutions for the residential and commercial premises. Innovation and Designing Excellence is what Anchor has been bringing straight to the home and business premises right from 1963. In the year 1976, it gave the nation its first Piano Switch. Be it Ave Sistema 44 at the helm of the luxury modular, Vision with technological excellence Woods and Roma Viola with stupefying finish in the premium modular, its aim to deliver the best has enabled it to constantly occupy the Numero Uno position for Switch manufacturing excellence in India. With several brands like Roma, Roma Allure, Rider and Penta, it has hallmarked its position straight to the heart of the nation. Its accessories range

8 includes a wide variety of Door Bells, Spike Guards, Flexi cords, Plug Tops and Multi plugs. The ability to bring a sense of security, quality and affordability drives Anchor to bring not just products but simplistic solutions that change for the better, suiting the customers requirements. (devices.html)

Wires & Cables N' PVC Tape Advance-FR | FR-LSH C2 | Multicore Flexible Cable | Flexible Cable | Telephone Cable | Flat Cable | Export Range PVC Electrical Insulation Tape PVC FR Insulation Tape | PVC Insulation Tape Zoom in the Ultimate Protection, Get wired to Safety! Anchor Wires and Cables business unit is a leading manufacturer of wires and cables catering to the need of domestic as well as Industrial needs. Anchor rate our customers as first priority, quality as our first commitment and people as our greatest resource. The target audience comprises of Electrical & Project consultants, Architects, Interior designers, Private and Government Institutions, Project Engineers, Builders, OEM's, Dealers, Electrical Contractors, Electricians, the automobile sector and individual homeowners. Anchor manufacturing facilities consist of two of the most modern state-ofart units located at Daman & Kutch. These plants incorporate the latest in cable technology and manufacturing machines, which ensure a high degree of quality and consistency. At the core of Anchor strength is a team of highly qualified and experienced engineers and technicians, who oversee operations with total commitment in order to give the customers value for their money. Anchors goal is to provide customers with high-quality products by understanding customer's needs and translating those needs into continual improved products and services.

9 Keeping in tradition with Anchors commitment towards green technology, the Wires and Cables Business unit has developed RoHS compliant "Green Guard cables" that are environment friendly and designed to make people, environment safer. ICPCI endorse our copper quality among the best copper quality used in the cables. (cables.html)

Lighting and Luminaries Lamps CFL | FTL Luminaries T5 Luminaries | Strip Light Fixtures | Devices and Accessories Panasonic Down Lights CFL Down Light | LED Down Light

Anchor lighting and luminaries brings across futuristic lighting solutions for your home as well as office. In an age where electricity has become a vital component of everyday life and rising power bills take a toll on the pocket of a plebeian, we endeavour to deliver products that help you save energy with our effective lighting solutions. Anchor is guided by convenience of every individual and the simple philosophy of making durable products that will save energy thus protecting the environment adding value to individual lives every day. Anchors range is poised for rapid growth in the upcoming years and has an extensive line up of products that will be launched soon. Recently the cumulative efforts have earned the accolade of Most Trusted Brand in Lighting voted by consumers in the survey undertaken by Readers digest. Anchor aim to make ourselves the fourth largest business division in the country by 2015 and plan to produce and sell over 3 million CFLs per month by 2012

10 & acquiring more than 10% market share. Keeping in tradition with Anchors commitment towards green technology, anchor is currently researching and developing new products that are environment friendly. Company division primarily manufactures products in two categories lamps and consumer luminaries. Manufacturing of T3 spiral CFLs will commence in Roorkee factory very soon, thus making company the first manufacturer that will manufacture spiral CFL shell straight from the tube. Anchor has newly ventured into LED, considering energy conservation as the base of our division in line with the vision of Panasonic to become the no 1. Green Company in the world by 2018, the 100th anniversary of Panasonics founding.

Fans Designer Range Rivia | Lugano | Flora High Speed Range Venice | XL | Penta Turbo Decorative Range Precedent | Dura | Italica | Royal Gold Plus | Royal Gold | Lamini Standard Range Flo | Flo GS

Breathe in the airy enchantment with our breathtaking fans range! Anchor manufacture the widest range of high performance-ceiling fans that are designed for excellence and backed with a powerful combination of rich experience and ADM (aerodynamic mechanism) with computer-aided alignment. Anchors Ceiling Fans are available in attractive colors and sizes. They not only deliver the highest performance levels, but their elegant styling compliments

11 your interiors as well. The superior quality of Anchor fans is harnessed by immaculate expertise with a quest for perfection. Anchor fans are manufactured in a state of the art facility at Dhamdachi. In order to meet the growing demand of quality, the working practices are aligned to the requirements of ISO 9001:2008. This not only ensures consistency in the quality of products but also provides useful feedback as a base for continuous improvement. We are also venturing to design and manufacture fans that are energy saving, in line with the environment philosophy of Panasonic in the near future.

Switchgear & Protection Devices Anchor MCB Gold Series | Anchor | Roma | Penta Panasonic MCB Panasonic MCBs Distribution boards Distribution Boards

Electric Safety is the top mantra for all our Anchor switchgear and Protection Devices. Offering continuity of service, greater convenience and operating cost management, our switchgear and protection devices range is widely utilized by the industrial, commercial and the residential sector. Anchor has already launched the new Panasonic MCB range in India. These super advanced MCBs are one of a kind with unique three level indicators and comply with the RoHS (Restriction of Hazardous Substances) compliance defined by the European standards.

12 Anchor manufacturing facilities at Haridwar and Daman are equipped with modern manufacturing equipment and testing laboratories that are operated and controlled by highly qualified production and quality control and testing expert staff. Anchor is also in the process of developing a complete range of environment friendly products such as a MCB that makes complete use of environment friendly raw materials.

CSR Corporate Social Responsibility (CSR) has always been an integral part of Anchors vision and the cornerstone of our core value of good corporate citizenship. Anchor defines Corporate Social Responsibility as making socially responsible products, engaging in socially responsible employee relations, and making a commitment to the community around it. At Anchor, Corporate Social Responsibility is not just a duty but is also a way of life. Being a part of Panasonic Corporations Eco Solutions Group, Anchor has committed itself to the Green movement, unveiling new products that are energy efficient and made from environment friendly materials. Since 2008, it stopped its profitable production and sale of incandescent bulbs as a part of energy conservation drive proactively initiated by the company in-line with the Eco-ideas directive of Panasonic, Japan. Anchor has fostered this idea further by making sure that its factories minimize the emission of carbon dioxide, and conserve natural resources such as water, power etc. The newly commissioned Daman Unit 5 factory is its first green factory and makes use of new methods such as recycling sewage water, solar panels for lighting the premises and modern machinery that reduces wastage of raw materials used for manufacturing the products. Anchor CSR centres around the welfare of its factory workers, who come from the hinterlands of this nation. Anchor factories based out of four major locations of Daman, Kutch Haridwar and Roorkee employ around seven thousand workers of

13 which many are women who come from remote villages. Our CSR activities revolve around their welfare such as conducting medical checkups, providing medical aid etc. Recently there was a unique literacy drive conducted in the factory at Daman encouraging overall employee empowerment. Anchor also undertook an interesting initiative that provided professional certification to Electricians, associating with a leading technical institute in the country. They were awarded certificate upon completion of the program named ACE and it was a unique drive undertaken to empower the electricians. Anchor employees in Haridwar participated in a Volunteer clean-up activity for the River Ganges. As part of the Preservation of the Natural Resources Programme, this activity was initiated before the Kumbh Mela festival. Recently Anchor participated in unique social awareness Energy conservation and saving campaign in association with Chescom (Madurai). It distributed Cfls and calendars providing tips on energy conservation to school children of five districts. Anchor periodically supports initiatives of various NGOs, thus actively committing to overall social empowerment. (csr.html)

Awards & Recognition Product Design The 'Panasonic Vision' range of switches and accessories added another feather in the cap for Anchor Electricals Pvt. Ltd. It

14 is awarded with the prestigious IF award for excellence in product design by the International Forum of Design for 2012-13. 'IF' awards are globally acclaimed across various industries and are awarded for excellence in three domains of design which are Product Design, Communication Design and Packaging Design. Only a product that meets the stringent criteria of IF such as excellence in functionality, manufacturing method and design is nominated by the jury panel of global experts to receive this award.

Good Design Panasonic Vision Switches have received the prestigious Good Design Award from Japan Institute of Design Promotion. It is awarded to products and represents sole comprehensive design evaluation and commendation system in Japan. Panasonic Vision series aims at improving installation & operational safety, sleek matte finish and improved durability. It thus brings added comfort and adds tremendous value in the life of the end-user that has enabled this switch range to be the recipient of this award. SuperBrand SuperBrand is a distinguished organization that has established itself globally. It has managed to direct appreciation towards itself and is currently paying tribute to the finest brands present throughout the world. Even with its notable existence in the market, SuperBrand continuously acknowledges the persistence of custodians towards building their brands. It also helps these custodians stay resilient without worrying about the current economic conditions. Anchor has been honoured as a Consumer Superbrand four times in a row and has proven itself as a Business SuperBrand in India.

15 Most Trusted Brand Anchor's Lighting Business Unit was recognized as the 'Consumer's Most Trusted Brand in Lighting' and is also a proud winner of the 'Most Trusted Brand award. Consumers themselves voted for the winner of this award in a survey conducted by the renowned magazine 'Reader's Digest'. Over a period of 14 years, the Reader's Digest Trusted Brands survey has brought a number of trustworthy Asian brands to light. This is a trademark event for the magazine in Asia and is quite popular worldwide too. (awards-recognition.html)

Manufacturing Facilities Implementing the ideology of Panasonics founder, Konosuke Matsushita, Anchors main purpose of production is to manufacture items of the best quality in abundant supply, thereby enhancing and improving the everyday life of people. Almost all of Anchors products come with a long warranty, thus relating the word 'quality' with the company. Our manufacturing facilities across four locations in India, viz. Daman, Kutch, Haridwar and Roorkee occupy an area of more than 1.6 million sq. feet and are complete with the latest equipment which is acquired from the best manufacturers round the world. With a vast workforce of over 10,000 people, we manufacture virtually all the raw materials and components in-house, right from small metal parts to sophisticated electronic parts. Anchor's newly commissioned factory in Daman is the company's first green factory, built as per the green guidelines given by Panasonic. Switches & Accessories The manufacturing of Wiring Devices and accessories is undertaken by factories in Daman and Haridwar. Both of these factories are ISO certified plants, complete with state-of-the-art moulding, assembly and inspection facilities. Apart from all this, anchor also has in-house facilities for quality monitoring and control.

16 These help in manufacturing products that meet the stringent benchmarks laid down by the Bureau of Indian Standards (BIS). Wires & Cables Two of Anchor's most modern units, located at Daman & Kutch, are responsible for the manufacturing of Wires and Cables. These plants use the latest cable technology and superior machinery. This ensures a high degree of quality and consistency in manufacturing. Several innovative measures, such as the Energy Management Systems, are being used at all the plants. These measures help in reducing electricity consumption, thus actively contributing towards the Green movement. Switchgear & Protection Devices Our manufacturing facilities at Haridwar & Daman deliver the best switchgear and protection devices with their contemporary manufacturing equipments that are handled by highly qualified production & quality control professionals. Lighting & Luminaries Anchors lighting range manufacturing facilities at Kutch and Roorkee have set up contemporary testing facilities that follow the finest manufacturing processes. These empower Anchor to offer products of unparalleled quality. The Roorkee facility has newly commissioned an in-house spiral CFL unit, which manufactures Spiral CFL straight from the glass shell and is an industry first in India. Fans The factory in Dhamdachi (Gujarat) stands out for its manufacturing of supreme quality Ceiling Fans aided with the latest technology. Aligning companys working practice with the requirements of ISO 9001:2008 has enabled to maintain a high level of consistency, making continuous improvement in the Fans range.

17 Office Network Anchor has a direct presence across the country. With a vast Sales & Dealer network, it has undertaken a rapid expansion program. Every state has a dedicated manager who overlooks the daily operations and a team that is highly motivated to impart to its end users the total value for their money. Headquartered in Mumbai Anchor has a massive presence with 4 Regional Offices, over 23 state sales headquarters and with a total 37 Sales offices and is still expanding.

12 Sales Offices 4 Regional Offices 23 State Offices 5,000 Authorized Stockists 400,000 Retail Outlets 450,000 sq.ft of warehousing space across the country

CHAPTER 2: REVIEW OF LITERATURE


Literature review provides current research with respect to the selected topic of the project or the research findings by an author which has been done with respect to the research topic. This chapter provides an insight of the overall view of the available literature with respect to the topic of the project. The review of related research works are described as under:According to ( Ram ganeshan and Terry p Harrison (1995) ) A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply

18 chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm. Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved. Supply chain management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm and those where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram [1993] compare supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race. (Ram ganeshan, 1995) According to ( A gunasekaran (2007) ). The build-to-order supply chain management (BOSC) strategy has recently attracted the attention of both researchers and practitioners, given its successful implementation in many companies including Dell computers, Compaq, and BMW. The growing number of articles on BOSC in the literature is an indication of the importance of the strategy and of its role in improving the competitiveness of an organization. The objective of a BOSC strategy is to meet the requirements of individual customers by leveraging the advantages of outsourcing and information technology. There are not many research articles that provide an overview of BOSC, despite the fact that this strategy is being promoted as the operations paradigm of the future. The main objective of this research is to (i) review the concepts of BOSC, (ii) develop definitions of BOSC, (iii) classify the literature

19 based on a suitable classification scheme, leading to some useful insights into BOSC and some future research directions, (iv) review the selected articles on BOSC for their contribution to the development and operations of BOSC, (v) develop a framework for BOSC, and (vi) suggest some future research directions. The literature has been reviewed based on the following four major areas of decision-making: organizational competitiveness, the development and implementation of BOSC, the operations of BOSC, and information technology in BOSC. Some of the important observations are: (a) there is a lack of adequate research on the design and control of BOSC, (b) there is a need for further research on the implementation of BOSC, (c) human resource issues in BOSC have been ignored, (d) issues of product commonality and modularity from the perspective of partnership or supplier development require further attention and (e) the trade-off between responsiveness and the cost of logistics needs further study. The paper ends with concluding remarks. (gunasekaran, 2007) According to ( Funda Sahin (2007) ) Advances in information technology, particularly in the e-business arena, are enabling firms to rethink their supply chain strategies and explore new avenues for inter-organizational cooperation. However, an incomplete understanding of the value of information sharing and physical flow coordination hinder these efforts. This research attempts to help fill these gaps by surveying prior research in the area, categorized in terms of information sharing and flow coordination. We conclude by highlighting gaps in the current body of knowledge and identifying promising areas for future research. (sahin, 2007) According to (Douglas M Lambert , Martha C Cooper and Janus D Pagh (1998)) In 1998, the Council of Logistics Management modified its definition of logistics to indicate that logistics is a subset of supply chain management and that the two terms are not synonymous. Now that this difference has been recognized by the premier logistics professional organization, the challenge is to determine how to successfully implement supply chain management. This paper concentrates on operationalizing the supply chain management framework suggested in a 1997 article. Case studies conducted at several companies and involving multiple members of supply chains are used to illustrate the concepts described. (douglas m lambert, 1998)

20 According to ( Jayashankar M. Swaminathan and Sridhar R. Tayur (2002) ) Supply chain management is likely to play an important role in the digital economy. In this paper, explanation of major issues in traditional supply chain management. Next, author focus our attention on the supply chain issues of visibility, supplier relationships, distribution and pricing, customization, and real-time decision technologies that have risen to importance with the prevalence of e-business. Author present an overview of relevant analytical research models that have been developed in these areas, discuss their contributions, and conclude with a discussion on future modeling opportunities in this area. (Tayur, 2002) According to ( Samir K Srivastava (2007) ) There is a growing need for integrating environmentally sound choices into supply-chain management research and practice. Perusal of the literature shows that a broad frame of reference for green supply-chain management (GrSCM) is not adequately developed. Regulatory bodies that formulate regulations to meet societal and ecological concerns to facilitate growth of business and economy also suffer from its absence. A succinct classification to help academicians, researchers and practitioners in understanding integrated GrSCM from a wider perspective is needed. Further, sufficient literature is available to warrant such classification. This paper takes an integrated and fresh look into the area of GrSCM. The literature on GrSCM is covered exhaustively from its conceptualization, primarily taking a reverse logistics angle. Using the rich body of available literature, including earlier reviews that had relatively limited perspectives, the literature on GrSCM is classified on the basis of the problem context in supply chain's major influential areas. It is also classified on the basis of methodology and approach adopted. Various mathematical tools/techniques used in literature vis--vis the contexts of GrSCM are mapped. A timeline indicating relevant papers is also provided as a ready reference. Finally, the findings and interpretations are summarized, and the main research issues and opportunities are highlighted. (srivastava, 2007) According to ( Peter Kelle (2005) ) The transaction based integrated Enterprise Resource Planning (ERP) software provides different tools that can support supply chain integration but at the same time it has several features that obstructs the integration with business partners. Author concentrate on the inventory management aspects of supply chain coordination reviewing the recent quantitative modeling and

21 organizational results available in literature. Author summarizes the results of a detailed numerical and sensitivity analysis based on our previously published models for supply chain cooperation and joint optimal ordering and shipment policies for the buyer and supplier. These results can be used in enterprise software to measure the potential monetary value of policy coordination, to promote cooperation, and minimize the total supply chain system cost. Further goal is to combine quantitative tools with organizational and management factors, and to integrate them in a multilevel framework of policy coordination. (kelle, 2005) According to ( Arshinder , Arun Kanda, S.G deshmukh (2008) ) Supply chains (SC) are generally complex and are characterized by numerous activities spread over multiple functions and organizations, which pose interesting challenges for effective SC coordination. To meet these challenges, SC members must work towards a unified system and coordinate with each other. A systematic literature review is presented in this paper to throw light on the importance of SC coordination. The objectives of this paper are to: report and review various perspectives on SC coordination issues, understand and appreciate various mechanisms available for coordination and identify the gaps existing in the literature. A framework is suggested indicating scope for further research. (Arshinder, 2008)

CHAPTER 3: RESEARCH METHODS AND PROCEDURES


Purpose of Study To understand the logistics Procedure Company is following. To analyse the current inventory management scenario of the company. To follow up and monitor the process of branch replenishment. To evaluate the benefits of supply chain management decisions for inventory control. Research Design

22 Supply Chain Management (SCM) can be best described as the natural extension of the downsizing (right-sizing) and re-engineering performed by the organization(s) in the past. Downsizing and re-engineering transformed the enterprises into lean and mean competitive units, by cost cutting and process simplifications. These operations (of downsizing and re-engineering) involved the optimization (in terms of the number of persons involved, the time taken, the complexity of the work etc.) of business units (functional and/or administrative domains) over which the organizations had full control. These strategies did lead to increased productivity and profitability of the organizations but as the benefits of these levelled off, it was realized that the approach to the way organizations work needed to be changed. The above changes were a by-product of the isolationist (closed system) world picture of the enterprises involved in the full value chain; with organizations (the system) trying to survive in an hostile environment; assuming that all other participants in the value chain were adversaries with whom the organization must compete, even though the operations performed by the separate organizations may be supplementary in nature rather than complementary. The realization that this world picture was an impediment to the growth of organizations prompted the enterprises to start seeking strategic alliances with other organizations. The formation of these alliances required a basis (a common ground) which would be acceptable to each and every partner in the alliance. This common basis is/was supplied by the participation of the organizations in the value chain (the demandsupply chain). The participants in the chain, suppliers, sub-contract suppliers, inhouse product processes, transportation, distribution, warehouses, and the end customer, generally, perform mutually exclusive tasks and thus do not compete directly with each other. Issues in SCM A supply chain encompasses all the activities, functions and facilities involved in producing and delivering a product and/or service, from suppliers (and their suppliers) to the customers. The supply chain management (SCM) paradigm is geared towards optimizing each component of what used to be called (Production and) Operations management (production, warehousing, inventory, transportation and distribution etc.) and the inter-links between these components synergistically. In the 70s and the 80s, various models for production and operations control and

23 management were developed: Just-In-Time (JIT) Inventory management model, Vendor Managed Inventory (VMI) model, Zero Inventory (ZI) model, Total Quality Management (TQM) etc. These models focused on the various components of the supply chain in isolation, this implies that these models were oriented towards the optimization of a sub-part of the system whereas the SCM paradigm aims at the optimization of the full chain. This leads to trade-offs among the different components of the supply chain. For example, JIT would require a factory to keep inventories low and produce and distribute products in a timely manner, however JIT ignores many other aspects which cannot be seen independently, e.g. if the availability of the input materials is uncertain and irregular, the factory may need to insure smooth and continuous production. Similarly, regional stocking may permit reductions in transportation costs through increased shipment consolidation, as well as expanded sales through better delivery performance. These improvements may be accomplished with only moderate increases in inventory and warehousing cost(s). However, in an environment where different functional units manage the various logistics activities independently, an organization is less likely to properly analyze such important trade-offs.

Fig. -1: Interdependence of supply chain with other functional domains in an enterprise. Source: ( Bill Copacino , 1997 ) Moreover, these models also ignore the interdependency of production and operations functions with other domains within an organization, such as marketing and finance. Marketing decisions have serious impact on logistics function and vice-

24 versa. For example, a marketing promotion campaign should be coordinated with production planning, since a higher demand may be expected. On the other hand, when raw materials are cheap, or when the factory temporarily has an over-capacity, the marketing department may decide to cut prices and/or start other promotion campaigns during these periods to increase demands. Also, financial decisions are driven by production and logistics decisions. Production of new products requires the investment in raw materials and consumes other change-over costs. Financial managers have to be aware of the increased demand for capital to finance the production plan. Likewise, the delivery of finished products generates financial income, so the forecast demand can be used to calculate/forecast the accounts payable and receivable in the future. The above description means that production, finance and marketing decisions cannot be made independently . All these decisions are driven by the activities in the supply chain of a manufacturing company. Fig.-1 shows a simple representation of the interdependence of the supply chain and the other functional domains in the organization. The links between the (other) functional domains marketing, sales, human resources etc. - are not shown. The linkage between the supply chain components and the other functional domains relies heavily on information sharing to have an effective impact. One other major factor in the current scenario is the globalization of the supply chain. With the fall of the East-European socialist bloc and the opening of the Asian market, the trade barriers began falling in the 1980s and the 90s. This lead to organizations having a supply chain that criss-crossed the globe. The proliferation of trade agreements - EC, ASEAN, NAFTA, APEC, etc. - has changed the global market. SCM now has become not only a problem of logistics but also demands that supply chain management must look into the ramifications of these agreements on the cost of transportation (including tariffs or duties) of products within a trade zone and outside it. Furthermore, organizations now acknowledge that efficient consumer response (ECR) can lead to competitive edge. SCM is tantamount to coordinating all the operations of an organization with the operations of the suppliers and customers. Effective SCM strategies are essential for successful implementation of ECR programmes. Thus, a production planning and control model that focuses on all the aspects of the operations and distribution activities and links with other functional

25 domains such as finance and marketing is needed. The supply chain management model should also perform the task of managing and coordinating activities upstream and downstream in the supply chain. Of course, such a model in its entirety becomes very complex and cannot be used without a sufficient computational infrastructure.

Supply-Demand Nexus To have an effective supply chain management framework; organizations must have a clear understanding of the supply - demand nexus and its implications for strategy and implementation. There is an interdependent relationship between supply and demand; organizations need to understand customer demand so that they can manage it, create future demand and, of course, meet the level of desired customer satisfaction. Demand defines the supply chain target, while supply side capabilities support, shape and sustain demand. When one considers how tangentially marketing and operations area of an organization typically interact (in practice), it becomes obvious that putting together the supply-demand can only occur in the context of overall perspective. The wide gap between the supply and demand sides of an organization can only be bridged by a comprehensive umbrella strategy. This can be done by developing a holistic strategic framework that leverages the generation and understanding of demand effectiveness with supply efficiency. Such a framework provides a strategic anchor to prevent the supply and demand components of a business from drifting apart. The basis of such a holistic strategy framework is the integrated supply and demand model . The model is designed around two key principles. First, in the present scenario where vertically integrated supply chains (VISC) are a rarity, if not nonexistent; organizations must bring a multi-enterprise view to their supply chains. They must be capable of working co-operatively with other organizations in the chain rather than seeking to outdo them. Secondly, they must recognize the distinct supply and demand processes that must be integrated in order to gain the greatest value.

26

Fig. -2: The Integrated Demand-Supply Model Source: ( Bill Copacino , 1997 ) Thus involving three key elements: The core process of the supply and demand chains viewed from a broad crossenterprise vantage point rather than as discrete function. To gain the maximum benefits, organizations need to identify the core processes across the demand and supply chain, as well as exploring the impact of each of these processes on the different functions.

27 Fig. -3: Integrating processes in the supply and demand chains Source: ( Jeff Beech ,1997 ) The integrating processes that create the links between the supply and demand chains . This implies that the planning processes (which involves development of channel strategies, planning of manufacturing, inventory, distribution and transportation, demand planning and forecasting; and marketing and promotional planning) and service processes (which includes functions such as credit, order management, load planning, billing and collection, etc.) must be integrated. This integration must be done across the boundaries of the enterprises. If each participating organization in the chain formulates its own plans on the basis of its own private information, then there is no way to integrate the supply and demand chain processes that they share. The supporting information technology (IT) infrastructure that makes such integration possible. While information technology is needed to handle routine transactions in an efficient manner, it can also play the a critical role in facilitating the timely sharing of planning, production and purchasing information; capturing and analyzing production, distribution and sales data at new levels of detail and complexity. Information technology provides an integrating tools that makes it possible to convert data into meaningful pictures of business processes, markets and consumers that are needed to feed company strategies in order to develop competitive advantage. On the administrative side, such elements as flow path economics, which help organizations understand the real drivers of costs, and new performance and measurement standards that align functions in accordance with total process goals that are critical to achieving integration.
SCM Framework

A framework to understand the various issues involved in SCM is provided by the pyramid structure for the SCM paradigm (fig. 4) the pyramid allows issues to be analyzed on four levels: Strategic: On the strategic, level it is important to know how SCM can contribute to the enterprises basic value proposition to the customers.

28 Important questions that are addressed at this level include: What are the basic and distinctive service needs of the customers? What can SCM do to meet these needs? Can the SCM capabilities be used to provide unique services to the customers? Etc. Structural: After the strategic issues are dealt with, the next level question(s) that should be asked are: Should the organization market directly or should it use distributors or other intermediaries to reach the customers? What should the SCM network look like? What products should be sourced from which manufacturing locations? How many warehouses should the company have and where should they be located? What is the mission of each facility (full stocking, fast moving items only, cross-docking etc.)? etc. Functional: This is the level where operational details are decided upon. Functional excellence requires that the optimal operating practices for transportation management, warehouse operations, and materials management (which includes forecasting, inventory management, production scheduling, and purchasing) are designed. These strategies should keep in view the tradeoffs that may need to be made for the overall efficiency of the system. Achieving functional excellence also entails development of a processoriented perspective on replenishment and order fulfillment so that all activities involved in these functions can be well integrated.

29 Fig. -4: SCM Framework Pyramid Source: ( William C. Copacino , 1997 ) Implementation: Without successful implementation, the development of SCM strategies and plans is meaningless. Of particular importance are the organizational and information systems issues. Organizational issues centers on the overall structure, individual roles and responsibilities, and measurement systems needed to build an integrated operation. Information systems are enablers for supply chain management operations and therefore must be carefully designed to support the SCM strategy. Supply chain managers must consider their information needs relative to decision support tools, application softwares, data capture, and the systems overall structure. It is important to note that the decisions made within the SCM strategy pyramid are interdependent. That is, it must be understood what capabilities and limitations affect the functional and implementation decisions and consider those factors while developing a supply chain management strategy and structure. The SCM models used in practice lie in a continuum between two extreme models: on one end of the spectrum lies the vertically integrated supply chain model in which the organization has direct control over each and every component of the supply chain, while on the other end of the spectrum lies the horizontally diversified supply chain model (ideally) in which the number of participant is as large as the number of distinct parts of the supply chain. In a vertically integrated supply chain system, the organization can control every component of the chain and can make various changes to the system to optimize the chain very easily. But in a horizontally diversified supply chain the tendency will be to optimize only the functions that the organization is involved in, thus conscious efforts must be made by the various participants in the supply chain for the integration of their respective components in the supply chain. If an organization can be identified as the major/dominant partner in the supply chain, then this organization has to take an initiative in seeking the cooperation of the other participants in the supply chain. The type and structure of the supply chain that is established depends on many factors, some of the major factors are:

30 Geographical: If the supply chain is stretched across the globe then it may not be possible to incorporate some of the principles of lean production like JIT delivery, flexible manufacturing, and co-ordination among suppliers and customers. It can lead to uncertain transportation schedules, unpredictable lead time and may need larger inventory carriage. Cultural: The difference in the culture of the participants in the chain (the difference can be due to geographical factors or corporate practices) can lead to friction and distrust. This may hamper the development of close ties. Government Legislation: The laws of the country may prohibit the sharing of information about some facet of the supply chain and thus, may lead to a restrictive participation by one or more participant in the supply chain.

Time: Just as among individuals, organizations require time before trust can be built up. The first phase in any relationship is manifest as confrontation that essentially means that participants in the chain try to win at the cost of other participants. And, the last phase is exemplified by total trust and working together of organizations. The information sharing behavior in the first phase is almost zero, while in the integrated relationship the information sharing is mutual and free about the common concerns. In between the two phases lies a continuum of phases . Supply Chain Decisions We classify the decisions for supply chain management into two broad categories -- strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy (they sometimes are the corporate strategy), and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these types of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain. There are four major decision areas in supply chain management:

31 Location Decisions The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level.

Production Decisions The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

Inventory Decisions These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to

32 buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

Transportation Decisions The mode choice aspects of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm's transport strategy.

INTEGRATED SUPPLY CHAIN AND INVENTORY MANAGEMENT (Chandra, 1997) Integrated supply chain require that each segment of the supply chain i.e., procurement, production and distribution be functionally integrated for optimum result. Today's technology is the key that allows the supply chain to become integrated and therefore reduces the inventory requirement. Some examples are the electronic transmission of advance ship notices (ASN) to advise customers of the

33 contents of a shipment and its expected delivery date. The transmission of purchase orders via electronic data interchange (EDI) can provide more timely and accurate data to suppliers, allowing for more efficient information in management and production planning (Kilty, 2000). Also, freight tracking systems now are being used in the management of the movement of goods, which provides flexibility that can be used to react to rapidly changing internal and external needs such as changes in production schedule or changes in customer product delivery requirements. It is important that companies develop a supply chain management strategy that is consistent with their overall business strategy. A key tool to achieving this is to develop a supply chain "diagnostic method" that can be used to improve operations and reduce inventories. The first consideration here is for the company to examine and understand their supply and demand planning. This is the key to optimizing resources as well as the timing of activities associated with procuring raw materials and producing and distributing products. The next step is to begin the process of transitioning from a functional organization to a process organization. And finally, as companies reorganize to be process driven, then the performance measures for the various functional departments should be changed to support the overall supply chain management goals. Some examples of the measurements would include perfect order fulfilment, customer satisfaction, product quality, total supply chain cost, inventory days supply, and cash-to-cash cycle time. The process described above will not achieve optimum result desired by supply chain if each subsystem works independently. To eliminate wasteful and expensive inventory, supply chain needs to be integrated as illustrated in the integrated model below. Supply chain refers to integrated planning. First, it is concerned with functional integration of purchasing, manufacturing, transportation, and warehousing activities. It also refers to spatial integration of these activities across geographically dispersed vendors, facilities, and markets. And finally, it refers to inter-temporal integration of these activities over strategic, tactical, and operational planning horizon. It is pointed out that effective linkage (integration) among activities (or subsystems) in company's can lead to competitive advantage in two ways: (1) optimization, and (2) coordination. This proposes that a firm must optimize linkages in a way to reflect its competitive advantage. It also reinforces that the ability to coordinate linkages is significant to reducing costs or enhances differentiation. Advances in information technology (IT)

34 have helped facilitated the developments in integrated supply chain planning and management. A major goal of the integrated supply chain is the coordination of the logistics, distribution and production, and production management in a direction that will optimize the value chain of the company and help to minimize transaction costs and inventory sock keeping unit (SKU) level. Conventionally, we know that a company may hold inventories of raw materials, parts, work-in-progress, or finished products either to hedge against the uncertainties of supply and demand or to take advantage of economies of scale associated with manufacturing or acquiring products in large batches. Similarly, inventories are considered essential to build up reserve for seasonal demands or promotional sales. However, with the new reengineering in management and companies not just adopting just-in-time inventory practices but engaging in more integrated supply chain management, attention has recently been more focused on creating processes that reduce or eliminate inventories, mainly by reducing or eliminating uncertainties that make them necessary. These efforts have been motivated in part by the recognition that metrics describing the performance of a company's inventory management practices can be important signals to shareholders regarding the efficiency of the company's operations and hence its profitability. The maintenance of lower transaction costs and optimum inventory control management is not without some costs and trade off. Past experiences have shown that managing inventory effectively in our economy and the business environment is often difficult. Logistics - An Integral Component of Supply Chain Management Supply chain Management encompasses, planning, design, control and implementation of all business processes related to procurement, manufacturing, distribution and sales order fulfilment functions of a business. All these activities involve multiple networks of vendors and service providers which are integrated and co-coordinated by the Supply chain Experts of the organization to move raw materials and finished goods from and to all distant locations across the globe. Logistics is the backbone on which Supply Chains are driven. Logistics refers to management of flow of goods and supplies involving information, data and documentation between two entities or points. Logistics play important role in post

35 procurement function of delivery of raw material from the supplier to the point of production and Finished Goods Supply chain management from the point of dispatch from factory to the point of delivery to the customer. The flow of goods flows through a network of transportation by road, rail, air or ship and intermediary warehouses to hold inventories before moving to the forward locations. The entire activity involves multi tier suppliers, agents and agencies including freight forwarders, packers, customs department, distributors and Logistics service providers etc. Logistics Management. Origin of Logistics as a recognized discipline is generally attributed to military and defence organizations. Defence departments make use of detailed and extensive planning to gather supplies and move men and materials to various locations and bases. The success of any military exercise depends upon the ability of the establishment to be able to gather information, analyze, assimilate and take appropriate logistical measures to continuously support their units. In many cases Supply chain is often referred to as Logistics and vice e versa. Though logistics and supply chain are intricately linked, both do not mean the same. Logistics is a sub component and extension of Supply Chain. Supply chain design in an organization would detail, plan and strategize the procurement strategy, manufacturing location selection, design and develop distribution network and strategy for finished goods etc. While logistics planning would deal with the details of procurement logistics, finished goods distribution, sales order fulfilment and inventory management etc. Logistics planning derives the strategic direction and framework for its design planning from SCM Strategy. Take the case of production procurement, SCM strategy will define the process, selection of vendors, procurement strategy and the mode of order fulfilment coupled with cycle time and lead time to supply to the production floor. Logistics in this case details out the mode of transportation from the vendor, the consignment planning, process for order trigger, consolidation of shipments, detailing transportation modes and vendors, defines transit times, documentation process and therefore is an integral component of Supply chain

36 implements the plan, controls and monitors the flow of goods from point of origin up to the point of delivery to the plant for production. In the case of Finished Goods distribution, SCM strategy will define overall network design for stock holding and further channels of distribution. Logistics deals with the entire gamut of designing transportation network, partnering with 3rd party logistics providers to establish distribution centres and warehouses, planning inventory management and operations process including packing, promotional bundling etc, primary, secondary distribution network and vendors and at the end the complete documentation and information process for the entire chain of activities.

CHAPTER 4: DATA ANALYSIS AND FINDINGS

Anchor electrical Pvt. Ltd. Anchor is one of the big players in the Indian market in terms of producing electrical accessories. Anchor is following the supply chain process like any other company in the market.

The basic function of the haridwar branch is of branch replenishment. Haridwar branch is maintaining their logistic department in such a way that they can fulfil the demands of other branch in the country. The procedure company is following is the card system so that there is production of only that material which is

37 required by the distributors. Company is maintaining a minimum inventory of 5 days and the production takes place on its basis only. The logistic department of the company is divided in two parts: Order processing Warehousing and transportation

Order processing This parts deals with the functioning of day to day orders for dispatch. Orders are taken on the basis of the inventory in warehouse and the information about the inventory is checked by the oracle. Various functions that come under this part are: Allocation and pick slip generation Stock transfer Audit Cancellation of items & orders closure Communication with SOs Stock reco and adjustment entries in oracle Oracle assistance to warehouse CN/DN issuance Scrap sale SO booking upto shipping

Warehousing and transportation This segment basically deals with the picking and packing of the material from the warehouse and transportation network of the company is following.

38 Transportation network of the company should be reliable in order to provide the best service which can help company in earning the maximum profit. The various procedures which come under this part are: Goods inward Picking physical order execution Packing loose order Labelling / weighing Moving to transport area , vehicle arrangement , vehicle loading & dispatch L/R no. Ship confirmation Invoice generation Invoice checking Invoice signing Road permit filling Complete documentation for vehicle release , invoice, road permit, tallying, etc L/R attaching Pick slip , invoice , LR filling & documentation Record maintenance MIS customized for kaizen activities MIS haridwar status,gemba status, sales analysis report, allocation vs. dispatch, logistic performance report MIS delivery confirmation Warehouse layout 5s warehouse

39 Audits internal, external Inventory record accuracy Road permit follow up with branches & replenishment Display boards Warehouse performance graph Transporter evaluation Manpower management Inventory management Vendor development and retention Payment cycle Primary freight control Annual budgeting Freight bill checking and payment follow up Deductions in case of discrepancy Insurance claims Branch coordination Dispatch & material details updation to branches on a daily basis Physical stock count at each month end Coordination with HO

Above mentioned activities are the activities which are followed by the company on daily basis. There is always a scope for improvement in order to increase the profit margin as well as the standard of working in the company. There are various sub process which are followed many times in a day. Ordering raw material to vendor

40 This is a daily process and it is done by the unit store directly to the vendor. Step 1. Order to vendor Step 2 . Dispatch details from vendor. Step 3. Material in main store Step 4. Material to unit store Company is following the concept of move order in order to move the raw material from one place to other. Production is done on the basis of card system.

WAREHOUSE PROCEDURE Step 1. Quantity allocation Step 2. Order upload in web Step 3. Web approval Step 4. Order booking Step 5. Allocation request mail Step 6. Download pending order Step 7. Quantity allocation Step 8. Pick list generation Step 9. Pick list hard copy Step 10. Material picking at floor Step 11. Material arrival to loading area Step 12. Loading checksheet Step 13. Oracle shipping Step 14. Invoice generation Step 15. Transport documentation

41 Step 16. Record keeping Step 17. Material in transit Step 18. Material delivery confirmation.

Process followed for dispatch Step 1. Generation of pick list Step 2. Required material to packing area Step 3. Material is shifted to dispatch area Step 4. Truck Material is dispatched on FIFO basis and company follow the card system only. As the card gets free they are transferred to production unit.

Receiving of material in warehouse Step 1. Production unit to warehouse Step 2. Quantity checking Step 3. Receiving on move order if quantity is ok Step 4. Oracle entry

Order dispatch from warehouse Step 1. Order from order processing department Step 2. Packing section

42 Step 3. Quantity check Step 4. Weight of master carton Step 5. Packed order for system punching Step 6. Order to dispatch area

Anchor is aiming for the JIT technique in there company and all the procedures are followed in order to achieve this aim.

Pitfalls in supply chain management of Anchor electrical pvt ltd. Pitfall 1: Inadequate definition of customer service A supply chain must ultimately be measured by its responsiveness to customers. However, there are different definitions of responsive customer service. Most companies measure the average line item fill rate (percentage of line item requests shipped prior to customer due dates). The appropriate performance measure, but measuring it will not help the firm identify which divisions are slowing down order completion. In case of anchor the basic order comes from other branches on daily basis and anchor is trying their level best for completion of these orders on time so that there is no delay in dispatching of the material on the daily bases. Dispatching is done on the basis of size of the order- the bigger size will get the priority. This is generally done so that company can prepare a full truck load. Anchor is aiming to gain maximum benefits on each and every truck they dispatch.

Pitfall 2: Inaccurate delivery status data When customers place orders, they want to know when their products will arrive. While waiting, they may also want updated order delivery status, especially when the order is late. We do not understand the significance of on-time delivery, but we know that not enough attention is paid to providing customers with timely and

43 accurate updates on the status of late orders. The consequence is dissatisfaction, confusion, and loss of goodwill. Most companies publish their standard response times to customers,

although these may not resemble actual response times. And most companies quote shipment dates. Now companies should track delivery performance and keep customers appraised of their order status. In anchor they took a lead time of 4 to 6 days of delivery in ideal conditions. A daily MIS report is sent to the branch whose order gets dispatched with full details like time and weight of the load. This report generally contains an expected date of receiving material. Company keeps a track of the material in transit every time so that if any delays occur in delivery they can convey the problem to the branch so that they can prepare for it in advance.

Pitfall 3: Inefficient information systems The databases at different operating sites that describe system environment, inventory/backlog status, future production information can be a tedious, manual process. Delays in information retrieval and transmission make it impossible to quote accurate shipment dates to customers. They also discourage or prohibit short production planning cycles, leading to gross forecast errors and inventory and backorder accumulation. In anchor they have a proper database which includes day wise and month wise data of material dispatch which can be retrieve at any moment of time. For this condition only company is using oracle system so that they can store every sec record for their future use. Company has its own IT support wing which creates a well planned support for the users. plans, and so on, are usually not linked. This sometimes happens even on a single site. Consequently, retrieving this

Pitfall 4: Simplistic inventory stocking policies

The next step is to use such information policies. This is a dynamic reliable. Demand demand components

44 to drive inventory stocking changing.

process; the uncertainties are constantly

Some suppliers become more reliable in both delivery and quality; others become less for some items becomes more predictable as products mature; Inventory needs for some products use common. Inventory stocking for others becomes more unpredictable. stabilize as multiple

policies should be periodically adjusted to reflect such changes. When this type of condition occurs in anchor they try to find out the solution and rectify it as soon as possible. If this condition occurs due to quality or design then they focus on production and if it comes due to insufficient supplies of raw material then this taken care by the authorities by arranging the raw material from other sources as soon as possible so that sale of product does not get effected due to any reason.

Pitfall 5: Discrimination against internal customers For vertically integrated companies, one entitys outputs are simultaneously inputs to other company entities and products customers for external customers. Yet, an independent division, external bring in real revenues and thus are

more visible and apparently more valuable. Although customer service for internal customers is not tracked, it is

common knowledge that it is much poorer than for external customers. The resulting delays at the other internal entities could create significant inventory and backorder problems. Such a priority system can hurt the company's overall profitability. Discriminating against internal customers has a profound impact on the overall supply chain. Often, the purchasing managers of the receiving entities spend a lot of time jockeying with the supplying division's distribution manager to improve their priorities in the system. This effort adds no value; it only increases product cost.

Pitfall 6: Poor coordination If customer orders consist of multiple items that are supplied by different divisions, and if customers demand receipt of all items at the same time, the company

45 will use a merging centre. The products will be shipped to the customer as soon as they all arrive. Obviously, tight coordination along the supplying divisions is important. It is useful to give the divisions a target date. Unfortunately, generating a target date can take a long time, and arbitrarily generated target dates that do not consider existing backlogs in the supplying divisions are nor useful at all. As a result, target dates are often ignored. Lack of coordination results in excessive delays, and ultimately, poor customer service at the same time. Inventory builds up at the merging centre. Another consequence of poor coordination is that some divisions habitually expedite deliveries, which is unnecessary and costly. As the supply chain becomes globalized, coordination is more critical. In anchor a proper coordination can be seen in the different wings of logistic department. Everyone is trained in such a way that they will do the best of their work. This is done by the regular audit and training provided to them. If any problem occurs in the process then the concerned person is questioned and asked for the reason of delay then only occurrence of such problem in future can be avoided. A proper coordination between the branches is maintained so that the flow of information remains smooth and all the work can be coordinated properly.

Pitfall 7: Incomplete shipment methods analysis Changing the mode of transportation can significantly affect inventory investment and service performance. However, transportation operational factors. These savings would come from inventory decisions are often reduction in the based on economic considerations that do not take into account these important transportation pipeline and shorter delivery lead times to the distribution centres. The distribution centres would need less safety stock to provide the same level of customer service. In anchor while choosing a transporter the first thing that company focus is value for money they are going to pay for it. Cost for the truck is calculated on the basis of the weight it can carry and for the distance company is hiring that transporter.

46 They are also tested on the basis of reliability they are going to show towards the company then only they are hired. Benefits Company is going to get from it. Pitfall 8: Incorrect assessment of inventory costs A proper assessment of inventory cost should be done on regular basis and company should know how much they should hold and how much they should keep in there warehouse. All the carrying costs of inventory including the warehousing cost and storing cost should be assessed properly and regularly. Whenever there is any new decision is taken in anchor regarding the inventory storage in warehouse, a regular assessment is done for inventory to look for the effects of that decision in warehouse. On the basis of this review it is decided that company should continue with that decision or not. This is basically done at the month end because the entire inventory is counted at this time and the effects can be measured properly at that time only. Pitfall 9: Organizational barriers

Sometimes entities of a supply chain belong to different organizations within a company, each organization having its own performance responsibilities. Organizational measures and evaluation barriers that may inhibit coordinated inventory

control include differences in objectives and performance metrics , disagreements on inventory ownership, and unwillingness to commit resources to help someone else. In anchor barriers may occur when there is any disagreement between the production and logistic department. Whenever there is order for a particular item then warehouse will send request for its production with the deadlines but if production department denies for its manufacturing due to any reason then this may result in loss of sale and demand of that product in market. This will also effect in inventory of that material. Pitfall 10: Incomplete supply chain Going beyond the internal supply chain by including external suppliers and customers often exposes new opportunities manufacturers for improving internal operations. such as retailers or other Manufacturers commonly view their immediate customers

as the end of the supply chain. Manufacturers with a hierarchy of

47 understanding the dealers' inventory control systems are the only way for the manufacturer to accurately set internal service targets. Another benefit for incorporating dealers into the supply chain comes from sharing information. By knowing the dealers' inventory levels, the manufacturer can respond accordingly. It can appropriately reprioritize dealer orders, expedite shipments, and use overtime. Similarly, dealers who have access to the manufacturer's inventory status can respond to market changes more promptly. Dealers' inventory control systems determine, to a large extent, their

reorder patterns, that is, frequency, size, and composition. Hence, understanding their inventory control systems would also improve the distribution network's ability forecast demand.

Opportunities and solution to pitfalls:Design for supply chain management. A lot has been written on design for manufacturability, for assembly, for quality, for productibility, and for serviceability. To this list we would add "design for supply chain management." Thus product designs should be evaluated not only on functionality and performance but also on the resulting costs and service implications that they would have throughout the product's supply chain. The same applies to process designs. Integrate databases throughout the supply chain,

Effective operational control of a supply chain requires Distribution centres concentrate on inventory costs and service only up to the major distribution centres. Manufacturers often have service targets in the form of fill rate, the fraction of customer demands met without delay. "Customer demand" usually refers to orders from dealers. But good service to dealers does not necessarily translate into good service to customers; manufacturers who do not consider the entire supply chain will have operational inefficiencies. Centralized coordination of key data from the different entities. Key data would include order forecasts, inventory status at all sites, backlogs, production plans, supplier delivery schedules, and pipeline inventory. The databases should be linked

48 so that managers from any point in the supply chain can retrieve accurate information quickly. With advances in information technology, Databases can also be integrated between companies. The trend towards stronger vendor-vendee relationships certainly supports the need for database integration between different companies in an expanded supply chain. Integrate control and planning support systems. As noted earlier, production planning and inventory control decisions are one site in a supply chain affect decisions at other sites. Decisions at the multiple sites should not be made independently. Most companies use incentive systems focused on the division, group, system wide effectiveness and

or site. These tend to inhibit cooperation. To get multiple sites from different divisions or groups work together to achieve efficiency, companies may need to redesign the organization and develop new incentive systems. As we expand our view of the supply chain, we may need to make such changes across company boundaries. This will be more difficult to Achieve but should not be ignored. Institute supply chain performance measurement. New incentives and organizational redesign go hand in hand with new performance metrics, these memes should take the supply chain perspective; they should consider, for example, inventory measures across the supply chain and total response time instead of individual sires' lead rimes. Instead of each entity being responsible for its own set of metrics, all entities should

49

CHAPTER 5: CONCLUSION & RECOMMENDATIONS


In this paper, we have examined the structures of supply chain management (SCM) and the activities involved in supply chain decisions that help promote profound improvement in efficiency and effectiveness in business operations. The paper has discussed critical issues regarding how the pressures from low-cost and the new global competitive environment require companies to be more productive, react faster to market changes, and maintain smaller inventories. The issue of supply chain management is discussed with the implications of the vertical and horizontal structure of industry and its relationship to procurement, production and distribution in the supply chain process. In the discussion of supply chain management decision, the study points out that operational strategy should be designed and managed around customer needs with a focus on how companies can add value to their products as they pass through supply chain and deliver the products to geographically dispersed markets/customers. With inventory management as a major factor in operational efficiency, the implications of supply chain integration and non-integration were discussed. The study shows that through integration, and by partnering with upstream and downstream players of supply chain, companies have demonstrated improved ability to manage and deliver products to customers in the correct quantities, with the correct specifications, at the correct time, and at a competitive cost. Also, a major lesson for entrepreneurs from the implementation of supply chain is that businesses that focus only on cost containment will miss out on revenue-generating opportunities. Similarly, it is observed that efficient operations will not lead to superior profits if companies' products are being manufactured in plants with outdated technologies that are poorly located relative to companies' vendors and their markets. Recommendations When supply chain decision makers are empowered with solutions that deliver global supply chain visibility and capabilities to drive not only improved

50 planning, but also response management, they are able to leverage inventory assets more efficiently and make more effective inventory management decisions for the company. Supply chain analysts, inventory managers and others across the organization can:

Import data from multiple disparate ERP systems within the supply chain network to support an enterprise-wide view of inventory levels

Trace the flow of inventory from purchased items, through work-in-process (WIP), to finished goods, and finally, delivery to customers. Filter inventory data, as desired, by site, business unit or product

Model and set inventory targets and drive replenishment based on those targets

Calculate projected excess inventory over varied time horizons to understand the inventory liability of decisions

Align global inventories by understanding where shortages exist in one site and excess material at another site

Simulate (at any time and with unmatched speed) various business conditions and inventory strategies to obtain a forward-looking view of the specific impact it has on inventory metrics. For example, users can
o

Model the effects of different inventory policies such as multi-tier considerations, postponement, seasonality and multi-sourcing

Model decisions made during the S&OP cycle to understand impact on inventory targets

Simulate the use of item substitution, or "borrow and payback" opportunities across customer contracts / demand pools

Compare and select particular affectivity dates for engineering changes, new product introductions and/or product phase-outs

51 References
Arshinder, arun kanda. 2008 , Supply chain coordination: Perspectives, empirical studies and research directions. Chandra, R.K. Gupta* and Pravin 1997. integrated supply chain management in government enviroment. douglas m lambert, Martha c cooper, janus d. Pagh. 1998 , Supply Chain Management: Implementation Issues and Research Opportunities. gunasekaran, management development . kelle, Peter. 2005 , The role of ERP tools in supply chain information sharing, cooperation, and cost optimization. R K GUPTA, Pravin Chandra. 2001 , Integrated supply chain management in the government environment . Ram ganeshan, Terry p harrison 1995. An Introduction to Supply Chain Management . sahin, funda. 2007 , Flow Coordination and Information Sharing in Supply Chains: Review, Implications, and Directions for Future Research. srivastava, samir k. 2007 , Green supply-chain management: A state-of-the-art literature review. Tayur, Jayashankar M. Swaminathan and Sridhar R. 2002 , Models for Supply Chains in E-Business. http://www.anchor-world.com/ awards-recognition.html http://www.anchor-world.com/ cables.html http://www.anchor-world.com/ csr.html http://www.anchor-world.com/ devices.html : A. a 2007 , Build to order and supply chain for

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