Professional Documents
Culture Documents
SR No.
Particulars
Page No.
Index
Executive Summary
Introduction
SCM in India
Importance Of SCM
Characteristics Of SCM
10
13
Objectives Of SCM
17
10
Issues In SCM
18
11
20
12
Implementation
25
13
Case Study
27
14
Conclusion
32
15
Bibliography
34
Introduction
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 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.The Supply Chain Management has evolved over a
period of time. The major phases through which the present
SCM evolved can be summarized as follows:
a) Before 1960s: M.R.P.-I
b) 1960s to 1980s: M.R.P.-I, II and E.R.P.
c) Post 1980s: SCM
Supply chain management is the systematic and the strategic
coordination management for supplying goods and products
required by the end customer. Or we can say that a practice of
products that reaches to an end user and represents the efforts
of the organization is known as supply chain management. It
represents a conscious effort by the supply chain firms to
develop and run supply chains in most effective and efficient
ways possible. Supply chain management activities cover
almost everything such as from products to its development,
sourcing, logistics and even information system also. The main
objective of SCM is creating net value, building a competitive
infrastructure, synchronize the goods supply, measures the
performance globally and leveraging worldwide logistics etc.
Today most of the global companies are forced to keep looking
for a production center where cost of labor and raw material is
cheap and in order to compete in the global market and
networked economy, SCM is very helpful for organizations.
Various activities are there in an organization which needs
strategic management like sourcing of raw materials from
different place and then from different locations these finished
goods are passed through different chains of distribution
network which includes retailers, distributors and end
customers. Below is an example of a very simple supply chain
3
SCM in India
Todays businesses have become extremely complex. The
interplay of the three Cs, namely, consumers, competition and
convergence, has thrown open new challenges for
organizations all over the world. Consumers have become
highly discerning in their choice of products and services. The
pressure of competition has accelerated product changes,
supercharged by
shortening product and technology
development lifecycles.
Worldwide interest in supply chain management has increased
steadily since the 1980s when organizations began to see the
benefits of collaborative relationships. This management
concept is, however, nascent in India. Indias economic and
infrastructure scenario Before the 1990s, Indian organizations
operated in a protected environment. However the deregulation of the Indian economy in the last decade has
attracted global players in every industrial sector and has
unleashed a new competitive spirit in the Indian organizations.
Statistics reveal that India, the fifth largest country in terms of
gross national product (GNP) and purchasing power parity (PPP)
and a consumer base of over a billion (CMIE, 2000), constitutes
one of the fastest growing markets in the world.
Stages / Components of SC
The basic stages / components in a supply chain can be
classified as:
a) Suppliers / Vendors / Sub-Contractors
b) Processing plants / facilities
Importance of SCM
SCM plays a vital role in organization activities and an
essential element to operational efficiency which can be
applied to customer satisfaction and companys success. You
can say that it is just like the backbone of an organization which
manages the critical issues of the business organization such as
rapid growth of multinational corporations, global expansion
and environmental concerns which indirectly or dramatically
affects the corporate strategy.
Other benefits and importance of supply chain management
are:
Reduces inventory costs
Provides better medium for information sharing between
partners
Improves customer satisfaction as well as service
Maintains better trust between partners
Provides efficient manufacturing strategy
Improve process integration
CHARACTERISTICS OF SCM
Todays supply chains function as a result of extensive research
into how a supply chain behaves, its chief concerns, successful
risk management, diverse markets, widespread collaboration,
and technological advances. However, current supply chains
fall victim to the problems of inefficiencies, inexcusable rigidity,
and failure to recognize the growing demands of consumers.
Some of todays supply chain service providers have already
taken steps to advance supply chain entities into the future; a
best in class supply chain will focus on these 7 key areas.
2.
Inventory Optimization
3. Flexibility
As the global economy becomes more interconnected with
newer, emerging markets, the number of corporate players
within the supply chain will increase. This leads to one ultimate
problem: how will more orders be fulfilled at todays pace? This
is where flexibility will become important. Flexibility refers to
the ability of the supply chain to adapt to the changes within
the market, political climates, and other events, which would
otherwise affect the supply chain.
4. Rapid Fulfillment
5. Customization
6. Sustainability
major
decision
1) location,
11
areas
in
supply
chain
2) production,
3) inventory, and
4) transportation (distribution),
and there are both strategic and operational elements in each
of these decision areas.
1. Location Decisions
4. Transportation Decisions
supply chain. The earliest work in this area, although the term
"supply chain" was not in vogue, was by Geoffrion and Graves
[1974]. They introduce a multicommodity logistics network
design model for optimizing annualized finished product flows
from plants to the DC's to the final customers. Geoffrion and
Powers [1993] later give a review of the evolution of
distribution strategies over the past twenty years, describing
how the descendants of the above model can accommodate
more echelons and cross commodity detail.
Breitman and Lucas [1987] attempt to provide a
framework for a comprehensive model of a productiondistribution system, "PLANETS", that is used to decide what
products to produce, where and how to produce it, which
markets to pursue and what resources to use. Parts of this
ambitious project were successfully implemented at General
Motors.
Cohen and Lee [1985] develop a conceptual framework for
manufacturing strategy analysis, where they describe a series
of stochastic sub- models, that considers annualized product
flows from raw material vendors via intermediate plants and
distribution echelons to the final customers. They use heuristic
methods to link and optimize these sub- models. They later
give an integrated and readable exposition of their models and
methods in Cohen and Lee [1988].
Cohen and Lee [1989] present a normative model for
resource deployment in a global manufacturing and distribution
network. Global after-tax profit (profit-local taxes) is maximized
through the design of facility network and control of material
flows within the network. The cost structure consists of variable
and fixed costs for material procurement, production,
distribution and transportation. They validate the model by
applying it to analyze the global manufacturing strategies of a
personal computer manufacturer.
Finally, Arntzen, Brown, Harrison, and Trafton [1995]
provide the most comprehensive deterministic model for supply
chain management. The objective function minimizes a
combination of cost and time elements. Examples of cost
elements
include
purchasing,
manufacturing,
pipeline
inventory, transportation costs between various sites, duties,
16
18
Objectives of SCM
Supply chain management is a collaborative approach to
getting goods from manufacturer to consumer. The primary
goals center on shared efficiency, optimized transportation and
utilization, quality improvement and long-term stability.
Shared Efficiency
Managing inventory, transportation and logistics is
complex and costly for companies that don't have an effective
system. When manufacturers, wholesalers and retailers
collaborate on a supply chain system, it is easier to ensure
efficiency. In many cases, suppliers and buyers in a channel
share inventory data, which allows for fast replenishment of
inventory to meet customer demand. Efficiency in getting
goods to the right place at the right time minimizes inventory
costs and meets customer demand.
Optimized Transportation and Logistics
The umbrella concept of supply chain management
encompasses transportation and logistics. In an independent
business environment, each company is responsible for its role
in ordering, shipping and transporting goods. In this structure,
costs are high and timing is poor. With supply chain
management, vendors and buyers plan optimized
transportation and logistics activities. Orders are automated
between a reseller and a vendor, and vendors quickly pull, ship
and transmit orders to buyers for clear communication.
Quality Improvement
Getting consumers the best value is a shared goal of
supply chain partners. To closely connect is the objective of
perpetual quality improvement. Retailers, as the most direct
link between consumers and goods, are the ones who often
hear formal and informal feedback about product quality. In a
collaborative supply chain, a system exists for retailers to
communicate customer feedback with wholesalers and
manufacturers. This feedback enables manufacturers to
19
expectations
and
affordability
of
products
by
21
22
Leadership
The effective of quality management depend on the effective
of leadership because quality effort can get actual effect only
with the recognition and support of the leadership. In supply
chain circumstance, the core enterprise play as the leadership
since it establishes the development strategy and operation
targets of supply chain affect the actual efficiency and
effectiveness of the quality effort of all the other members.
Therefore, the core enterprise must act as leadership to
consider adequately the needs and expectation of the other
members, establish a clear, realizable and coincident holistic
target, and then lead and inspire the other members to strive
jointly for the target. At the same time, the core enterprise
should foster more leaders of TQM in each layer of supply chain
and make them take their responsibility zealously.
23
Involvement of people
The exertion of enthusiasm and creativity of all the
employees is the precondition of the actual effect of quality
management. In supply chain circumstance, an up-and-coming
excelsior work atmosphere should be established to inspire the
enthusiasm and creativity of the employees of all the members.
Each employee should understand his/her role and
responsibility in the supply chain system, solve the problems
forwardly as mastership, and learn the principles, skills and
technologies of TQM and ISO9000. Here, we can foster the
ethos of self-motion and self-knowledge in supply chain through
5S, i.e. seiri, seiton, seiso, seiketsu, and shitshke. Furthermore,
we can make all the employees participate into supply chain
quality management and strive for the satisfaction of users
jointly through the establishment of QC teams that cross
function or even enterprise.
Process management
24
System management
Continual improvement
Continual improvement is one of the focuses of modern
quality research and practice. Enterprise must improve the
quality of product and service continually and reduce the cost
to make customer satisfactory. In supply chain circumstance,
the pressure of continual improvement is more and more
pressing because the market competition is more and more
hard. Not only the core enterprise but also the other members,
such as suppliers, sellers, and logistics providers, must improve
their product and service respectively so as to construct the
continual improvement of products and services all over the
supply chain process. Then, the continual, stable and
harmonious ability of quality assurance can be established.
Furthermore, the core enterprise and other members must find
the ways and practices improving performance in or out of
supply chain through benchmarking to make the continual
25
27
Implementation
Implementation refers to responsibility for the tendering of
equipment and supplier selection, contract negotiation and
placement. Contract Management through to completion to
ensure that the project is progressed in accordance with the
requirements of time, cost and quality. Work with the client on
preparing any organisational changes and training to ensure a
smooth start to the new operation. There has been found that
many companies have not thought comprehensively about the
design of their supply chains. Often, their attempts to achieve
excellence have been focused on perhaps one or two supply
chain building blocks--and not, as they should be, on all of the
dimensions required for world-class performance.
The framework below outlines the five key dimensions of
supply chain management through the implementation
procedure that are required to achieve superior performance.
These areas must be addressed iteratively and, generally, in a
hierarchical fashion:
1. Strategy--specifically, the alignment of supply chain
strategies with the overall business direction. Key decision
points for managers here include:
What is required to align the supply chain with the
business strategy?
What level of customer service must we provide to each
customer segment to compete effectively?
Which channels of distribution best meet our goals and
our customers' needs?
28
CASE STUDY
ANAND
MILK UNION LIMITED (AMUL)
Amul (Anand Milk Union Limited) was formed in 1946.
During that time there was an acute shortage of milk in India.
One a bottle of milk per family per day was allowed by the
government. To address this shortfall Gujarat Cooperative Milk
Marketing Federation Ltd. (GCMMF) came up with a unique idea
of making improvement to the Supply Chain of milk in such a
way so as to cut down the dumping and wastage of milk. Amul
produces around 450000 litres of milk every day. And over 2
million milk farmers are associated with this brand currently.
30
Conclusion
Effective Supply Chain Management and Logistics
contributes to competitive advantage to organizations. This
paper conveys the conceptual idea of SCM and Logistics as well
as importance of information technology tools and technologies
for improving the performance of SCM and Logistics in India. To
achieve this improved performance, organizations should focus
on applying techniques which offer a strategic opportunity for
companies to gain an increase in revenue. This is possible by
refocusing on integrating IT with supply chain management and
35
36
BIBLIOGRAPHY
37
Websites
www.google.com
www.wikipedia.com
Books
38