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ABSTRACT:

Fierce competition in today’s global markets, the introduction of products with

shorter and shorter life cycles, and the heightened expectations of customers have forced

business enterprise to invest in, and focus attention on, their supply chains. This, together

with continuing advances in communications and transportation technologies (e.g., mobile

communication, Internet, and overnight delivery), has motivated the continuous evolution

of the supply chain and of the techniques to manage it.

If a company makes a product from parts purchased from suppliers, and those

products are sold to customers, then you have a ―supply chain‖. The supply chain, which is

also referred as the logistics network, consist of suppliers, manufacturing centers,

warehouses, distribution centers, and retail outlets, as well as raw material, work in process

inventory, and finished product that flow between the facilities.

As supply chain Management involves procuring the right inputs (raw materials,

components and capital equipments); converting them efficiently into finished products

and dispatching them to the final destinations; there is a need to study as to how the

company's suppliers obtain their inputs. The supply chain perspective can help the retailers

identify superior suppliers and distributors and help them improve productivity, which

ultimately brings down the customers costs. At the same time, Market logistics helps

planning the infrastructure to meet demand, then implementing and controlling the

physical flows of material and final goods from point of origin to points of use, to meet

customer requirements at a profit.

To ensure that the supply chain is operating as efficient as possible and

generating the highest level of customer satisfaction at lowest cost, company have to adopt

supply chain management processes and associated technology.

This presentation provides a conceptual understanding of what a supply chain is,

and the various issues while designing, planning, operating a supply chain.

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1. INTRODUTION:

1.1 Supply chain-

A supply chain consists of all parties involved, directly or indirectly, in

fulfilling a customer request. As the supply chain starts and ends with the customer a

simple supply chain is made up of several elements that are linked by movement of

product along it.

Fig.1.1 Supply Chain Block Dia.

Such elements are-

1.Customer:The customer starts the chain of events when they decide to purchase a

product that has been offered for sale by a company. The customer contacts to the retailer.

2.Manufacturers: Manufacturer manufacture the product as per the customer requirement.

Company purchase the raw material as per the requirement of the product from the

vendors that are placed in local market.

3.Purchase:Components of the product are purchase from market by asking the tenders

from venders. And by this process venders are decided.

4.Wholesalers /Distributors: Distributors are fixed by the manufacturer to distribute the

product to retailers.

5.Transportation: Transportation is the key factor of the supply chain it transports the

material and product from company to distributor to retailer and also brings the marerial to

manufacturing unit from suppliers and vendors.

Supplier Manufacturer warehouse Distributor Retailer Consumer

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6. Retailers: Retailer is only factor that is connected with directly with customer. That’s

why retailers role is much more important in supply chain.

Fig1.2. Elements of Supply Chain

Consider a customer walking into a Big Bazaar store to purchase noodles. The

supply chain begins with a customer and his need for noodles. The next stage of the supply

chain is the big bazaar retail store that the customer visits. Big Bazaar stocks its shelves

using inventory that may have been supplied from finished goods warehouse or a

distributor using trucks supplied by third party. The distributor in turn is stocked by

manufacturer (say nestle, India). The nestle India plant receives raw material from a

variety of suppliers, who may have been supplied by lower tier suppliers. This suppliers

receives grains from farmers. Then the company manufacturer decide to make the noodles

by customers requirement to satisfy his needs.

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2. SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the management of a network of

interconnected businesses involved in the ultimate provision of product and service

packages required by end customers. Supply Chain Management spans all movement and

storage of raw materials, work-in-process inventory, and finished goods from point of

origin to point of consumption (supply chain).

Another definition SCM is the "design, planning, execution, control, and

monitoring of supply chain activities with the objective of creating net value, building a

competitive infrastructure, leveraging worldwide logistics, synchronizing supply with

demand, and measuring performance globally."

2.1 IDEA

More common and accepted definitions of Supply Chain Management are:

Supply Chain Management is the systemic, strategic coordination of the traditional

business functions and the tactics across these business functions within a

particular company and across businesses within the supply chain, for the purposes

of improving the long-term performance of the individual companies and the

supply chain as a whole.

Global Supply Chain Forum - Supply Chain Management is the integration of key

business processes across the supply chain for the purpose of adding value for

customers and stakeholders.

According to the Council of Supply Chain Management Professionals (CSCMP),

Supply chain management encompasses the planning and management of all

activities involved in sourcing, procurement, conversion, and logistics

management. It also includes the crucial components of coordination and

collaboration with channel partners, which can be suppliers, intermediaries, third-

party service providers, and customers. In essence, supply chain management

integrates supply and demand management within and across companies. More

recently, the loosely coupled, self-organizing network of businesses that cooperate

to provide product and service offerings has been called the Extended Enterprise.

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A supply chain, as opposed to supply chain management, is a set of organizations directly

linked by one or more of the upstream and downstream flows of products, services,

finances, and information from a source to a customer. Managing a supply chain is 'supply

chain management'.

2.2 SUPPLY CHAIN MANAGEMENT PROBLEMS

Supply chain management must address the following problems:

Distribution Network Configuration: number, location and network missions of

suppliers, production facilities, distribution centers, warehouses, cross-docks and

customers.

Distribution Strategy: questions of operating control (centralized, decentralized or

shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking,

DSD (direct store delivery), closed loop shipping; mode of transportation, e.g.,

motor carrier, including truckload, LTL, parcel; railroad; intermodal transport,

including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight;

airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation

control (e.g., owner-operated, private carrier, common carrier, contract carrier, or

3PL).

Trade-Offs in Logistical Activities: The above activities must be well coordinated

in order to achieve the lowest total logistics cost. Trade-offs may increase the total

cost if only one of the activities is optimized. For example, full truckload (FTL)

rates are more economical on a cost per pallet basis than less than truckload (LTL)

shipments. If, however, a full truckload of a product is ordered to reduce

transportation costs, there will be an increase in inventory holding costs which may

increase total logistics costs. It is therefore imperative to take a systems approach

when planning logistical activities. These trade-offs are key to developing the most

efficient and effective Logistics and SCM strategy.

Information: Integration of processes through the supply chain to share valuable

information, including demand signals, forecasts, inventory, transportation,

potential collaboration, etc.

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Inventory Management: Quantity and location of inventory, including raw

materials, work-in-progress (WIP) and finished goods.

Cash-Flow: Arranging the payment terms and methodologies for exchanging funds

across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of materials,

information and funds across the supply chain. The flow is bi-directional.

2.3 ACTIVITIES/FUNCTIONS

Supply chain management is a cross-function approach including managing the

movement of raw materials into an organization, certain aspects of the internal processing

of materials into finished goods, and the movement of finished goods out of the

organization and toward the end-consumer. As organizations strive to focus on core

competencies and becoming more flexible, they reduce their ownership of raw materials

sources and distribution channels. These functions are increasingly being outsourced to

other entities that can perform the activities better or more cost effectively. The effect is to

increase the number of organizations involved in satisfying customer demand, while

reducing management control of daily logistics operations. Less control and more supply

chain partners led to the creation of supply chain management concepts. The purpose of

supply chain management is to improve trust and collaboration among supply chain

partners, thus improving inventory visibility and the velocity of inventory movement.

Several models have been proposed for understanding the activities required to

manage material movements across organizational and functional boundaries.

Supply chain activities can be grouped into strategic, tactical, and operational

levels.

2.3.1STRATEGIC

Strategic network optimization, including the number, location, and size of

warehousing, distribution centers, and facilities.

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Strategic partnerships with suppliers, distributors, and customers, creating

communication channels for critical information and operational improvements

such as cross docking, direct shipping, and third-party logistics.

Product life cycle management, so that new and existing products can be optimally

integrated into the supply chain and capacity management activities.

Information technology infrastructure to support supply chain operations.

Where-to-make and what-to-make-or-buy decisions.

Aligning overall organizational strategy with supply strategy.

2.3.2 TACTICAL

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process

definition.

Inventory decisions, including quantity, location, and quality of inventory.

Transportation strategy, including frequency, routes, and contracting.

Benchmarking of all operations against competitors and implementation of best

practices throughout the enterprise.

Milestone payments.

Focus on customer demand.

2.3.3 OPERATIONAL

Daily production and distribution planning, including all nodes in the supply chain.

Production scheduling for each manufacturing facility in the supply chain (minute

by minute).

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Demand planning and forecasting, coordinating the demand forecast of all

customers and sharing the forecast with all suppliers.

Sourcing planning, including current inventory and forecast demand, in

collaboration with all suppliers.

Inbound operations, including transportation from suppliers and receiving

inventory.

Production operations, including the consumption of materials and flow of finished

goods.

Outbound operations, including all fulfillment activities, warehousing and

transportation to customers.

Order promising, accounting for all constraints in the supply chain, including all

suppliers, manufacturing facilities, distribution centers, and other customers.

Organizations increasingly find that they must rely on effective supply chains,

or networks, to successfully compete in the global market and networked economy.

During the past decades, globalization, outsourcing and information technology have

enabled many organizations, such as Dell and Hewlett Packard, to successfully operate

solid collaborative supply networks in which each specialized business partner focuses on

only a few key strategic activities. This inter-organizational supply network can be

acknowledged as a new form of organization. However, with the complicated interactions

among the players, the network structure fits neither "market" nor "hierarchy" categories.

It is not clear what kind of performance impacts different supply network structures could

have on firms, and little is known about the coordination conditions and trade-offs that

may exist among the players. From a systems perspective, a complex network structure

can be decomposed into individual component. Traditionally, companies in a supply

network concentrate on the inputs and outputs of the processes, with little concern for the

internal management working of other individual players. Therefore, the choice of an

internal management control structure is known to impact local firm performance

In the 21st century, changes in the business environment have contributed to the

development of supply chain networks. First, as an outcome of globalization and the

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proliferation of multinational companies, joint ventures, strategic alliances and business

partnerships, significant success factors were identified, complementing the earlier "Just-

In-Time", "Lean Manufacturing" and "Agile Manufacturing" practices. Second,

technological changes, particularly the dramatic fall in information communication costs,

which are a significant component of transaction costs, have led to changes in

coordination among the members of the supply chain network .

Many researchers have recognized these kinds of supply network structures as

a new organization form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual

Corporation", "Global Production Network", and "Next Generation Manufacturing

System".In general, such a structure can be defined as "a group of semi-independent

organizations, each with their capabilities, which collaborate in ever-changing

constellations to serve one or more markets in order to achieve some business goal

specific to that collaboration" .

The security management system for supply chains is described in ISO/IEC 28000 and

ISO/IEC 28001 and related standards published jointly by ISO and IEC.

3. DEVELOPMENTS IN SUPPLY CHAIN MANAGEMENT

Six major movements can be observed in the evolution of supply chain management

studies: Creation, Integration, and Globalization.

3.1. Creation Era

The term supply chain management was first coined by a U.S. industry consultant in the

early 1980s. However, the concept of a supply chain in management was of great

importance long before, in the early 20th century, especially with the creation of the

assembly line. The characteristics of this era of supply chain management include the need

for large-scale changes, re-engineering, downsizing driven by cost reduction programs,

and widespread attention to the Japanese practice of management.

3.2. Integration Era

This era of supply chain management studies was highlighted with the development of

Electronic Data Interchange systems in the 1960s and developed through the 1990s by the

introduction of Enterprise Resource Planning systems. This era has continued to develop

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into the 21st century with the expansion of internet-based collaborative systems. This era

of supply chain evolution is characterized by both increasing value-adding and cost

reductions through integration.

3.3. Globalization Era

The third movement of supply chain management development, the globalization era, can

be characterized by the attention given to global systems of supplier relationships and the

expansion of supply chains over national boundaries and into other continents. Although

the use of global sources in the supply chain of organizations can be traced back several

decades (e.g., in the oil industry), it was not until the late 1980s that a considerable

number of organizations started to integrate global sources into their core business. This

era is characterized by the globalization of supply chain management in organizations with

the goal of increasing their competitive advantage, value-adding, and reducing costs

through global sourcing.

4. SUPPLY CHAIN BUSINESS PROCESS INTEGRATION

Successful SCM requires a change from managing individual functions to

integrating activities into key supply chain processes. An example scenario: the

purchasing department places orders as requirements become known. The marketing

department, responding to customer demand, communicates with several distributors and

retailers as it attempts to determine ways to satisfy this demand. Information shared

between supply chains partners can only be fully leveraged through process integration.

Supply chain business process integration involves collaborative work between buyers and

suppliers, joint product development, common systems and shared information. According

to Lambert and Cooper (2000), operating an integrated supply chain requires a continuous

information flow. However, in many companies, management has reached the conclusion

that optimizing the product flows cannot be accomplished without implementing a process

approach to the business. The key supply chain processes are:

Customer relationship management

Customer service management

Demand management

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Order fulfillment

Manufacturing flow management

Supplier relationship management

Product development and commercialization

Returns management

Much has been written about demand management. Best-in-Class companies have

similar characteristics, which include the following:

a) Internal and external collaboration

b) Lead time reduction initiatives

c) Tighter feedback from customer and market demand d) Customer level forecasting

One could suggest other key critical supply business processes which combine these

processes stated as:

Customer service management

Procurement

Product development and commercialization

Manufacturing flow management/support

Physical distribution

Outsourcing/partnerships

Performance measurement

4.1 Customer Service Management Process

Customer Relationship Management concerns the relationship between the

organization and its customers. Customer service is the source of customer information. It

also provides the customer with real-time information on scheduling and product

availability through interfaces with the company's production and distribution operations.

Successful organizations use the following steps to build customer relationships:

determine mutually satisfying goals for organization and customers

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establish and maintain customer rapport

produce positive feelings in the organization and the customers

4.2 Procurement Process

Strategic plans are drawn up with suppliers to support the manufacturing flow

management process and the development of new products. In firms where operations

extend globally, sourcing should be managed on a global basis. The desired outcome is a

win-win relationship where both parties benefit, and a reduction in time required for the

design cycle and product development. Also, the purchasing function develops rapid

communication systems, such as electronic data interchange and Internet linkage to

convey possible requirements more rapidly. Activities related to obtaining products and

materials from outside suppliers involve resource planning, supply sourcing, negotiation,

order placement, inbound transportation, storage, handling and quality assurance, many of

which include the responsibility to coordinate with suppliers on matters of scheduling,

supply continuity, hedging, and research into new sources or programs.

4.3 Product Development and Commercialization

Here, customers and suppliers must be integrated into the product development

process in order to reduce time to market. As product life cycles shorten, the appropriate

products must be developed and successfully launched with ever shorter time-schedules to

remain competitive. According to managers of the product development and

commercialization process must:

coordinate with customer relationship management to identify customer-articulated

needs;

select materials and suppliers in conjunction with procurement, and

Develop production technology in manufacturing flow to manufacture and

integrate into the best supply chain flow for the product/market combination.

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4.4 Manufacturing Flow Management Process

The manufacturing process produces and supplies products to the distribution

channels based on past forecasts. Manufacturing processes must be flexible to respond to

market changes and must accommodate mass customization. Orders are processes

operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the

manufacturing flow process lead to shorter cycle times, meaning improved responsiveness

and efficiency in meeting customer demand. Activities related to planning, scheduling and

supporting manufacturing operations, such as work-in-process storage, handling,

transportation, and time phasing of components, inventory at manufacturing sites and

maximum flexibility in the coordination of geographic and final assemblies postponement

of physical distribution operations.

4.5 Physical Distribution

This concerns movement of a finished product/service to customers. In

physical distribution, the customer is the final destination of a marketing channel, and the

availability of the product/service is a vital part of each channel participant's marketing

effort. It is also through the physical distribution process that the time and space of

customer service become an integral part of marketing, thus it links a marketing channel

with its customers (e.g., links manufacturers, wholesalers, retailers).

4.6 Outsourcing/Partnerships

This is not just outsourcing the procurement of materials and components,

but also outsourcing of services that traditionally have been provided in-house. The logic

of this trend is that the company will increasingly focus on those activities in the value

chain where it has a distinctive advantage, and outsource everything else. This movement

has been particularly evident in logistics where the provision of transport, warehousing

and inventory control is increasingly subcontracted to specialists or logistics partners.

Also, managing and controlling this network of partners and suppliers requires a blend of

both central and local involvement. Hence, strategic decisions need to be taken centrally,

with the monitoring and control of supplier performance and day-to-day liaison with

logistics partners being best managed at a local level.

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4.7 Performance Measurement

Experts found a strong relationship from the largest arcs of supplier and

customer integration to market share and profitability. Taking advantage of supplier

capabilities and emphasizing a long-term supply chain perspective in customer

relationships can both be correlated with firm performance. As logistics competency

becomes a more critical factor in creating and maintaining competitive advantage,

logistics measurement becomes increasingly important because the difference between

profitable and unprofitable operations becomes narrower. firms engaging in

comprehensive performance measurement realized improvements in overall productivity.

According to experts, internal measures are generally collected and analyzed by the firm

including

1. Cost

2. Customer Service

3. Productivity measures

4. Asset measurement, and

5. Quality.

External performance measurement is examined through customer perception measures

and "best practice" benchmarking, and includes 1) customer perception measurement, and

2) best practice benchmarking.

Components of Supply Chain Management are

1. Standardization

2. Postponement

3. Customization

5. THEORIES OF SUPPLY CHAIN MANAGEMENT:-

5.1 SUPPLY CHAIN SUSTAINABILITY

Supply chain sustainability is a business issue affecting an organization’s

supply chain or logistics network and is frequently quantified by comparison with SECH

ratings. SECH ratings are defined as social, ethical, cultural and health footprints.

Consumers have become more aware of the environmental impact of their purchases and

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companies’ SECH ratings and, along with non-governmental organization’s , are setting

the agenda for transitions to organically-grown foods, anti-sweatshop labour codes and

locally-produced goods that support independent and small businesses. Because supply

chains frequently account for over 75% of a company’s carbon footprint many

organization’s are exploring how they can reduce this and thus improve their SECH rating.

5.2 Components of Supply Chain Management Integration

5.3 The Management Components of SCM

The SCM components are the third element of the four-square circulation

framework. The level of integration and management of a business process link is a

function of the number and level, ranging from low to high, of components added to the

link. Consequently, adding more management components or increasing the level of each

component can increase the level of integration of the business process link. The literature

on business process re-engineering, buyer-supplier relationships, and SCM suggests

various possible components that must receive managerial attention when managing

supply relationships. identified the following components:

* Planning and control

* Work structure

* Organization structure

* Product flow facility structure

* Information flow facility structure

* Management methods

* Power and leadership structure

* Risk and reward structure

* Culture and attitude

However, a more careful examination of the existing literature . leads to a more

comprehensive understanding of what should be the key critical supply chain

components, the "branches" of the previous identified supply chain business processes,

that is, what kind of relationship the components may have that are related to suppliers

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and customers. A primary level channel participant is a business that is willing to

participate in the inventory ownership responsibility or assume other aspects of

financial risk, thus including primary level components. Secondary level participant

(specialized) is a business that participates in channel relationships by performing

essential services for primary participants, including secondary level components,

which support primary participants. Third level channel participants and components

that support the primary level channel participants and are the fundamental branches of

the secondary level components may also be included.

Consequently, framework of supply chain components does not lead to any conclusion

about what are the primary or secondary (specialized) level supply chain components .

That is, what supply chain components should be viewed as primary or secondary,

how should these components be structured in order to have a more comprehensive

supply chain structure, and how to examine the supply chain as an integrative one .

Reverse Supply Chain Reverse logistics is the process of managing the return of

goods. Reverse logistics is also referred to as "Aftermarket Customer Services". In

other words, any time money is taken from a company's warranty reserve or service

logistics budget one can speak of a reverse logistics operation.

6. Global supply chain management

Global supply chains pose challenges regarding both quantity and value:

Supply and Value Chain Trends

Globalization

Increased cross border sourcing

Collaboration for parts of value chain with low-cost providers

Shared service centers for logistical and administrative functions

Increasingly global operations, which require increasingly global coordination and

planning to achieve global optimums

Complex problems involve also midsized companies to an increasing degree,

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These trends have many benefits for manufacturers because they make possible larger lot

sizes, lower taxes, and better environments (culture, infrastructure, special tax zones,

sophisticated OEM) for their products. Meanwhile, on top of the problems recognized in

supply chain management, there will be many more challenges when the scope of supply

chains is global. This is because with a supply chain of a larger scope, the lead time is

much longer. Furthermore, there are more issues involved such as multi-currencies,

different policies and different laws.

The consequent problems include:

Different currencies and valuations in different countries

Different tax laws (Tax Efficient Supply Chain Management)

Different trading protocols

7. Food Supply Chains in India

In India, about 60 percent of food quality is lost in the supply chain from the farm to the

final consumer. Consumers actually end up paying approximately about 35 percent more

than what they could be paying if the supply chain was improved, because of wastage as

well as multiple margins in the current supply structure. The farmer in India gets around

30 percent of what the consumer pays at the retail store. Compare this with the situation

obtaining in the USA, where farmers can receive up to 70 percent of the final retail price

and wastage levels are as low as 4 to 6 percent. One can easily understand the benefits that

could be generated from emulating those practices and tapping that expertise for the

Supply chain in India.

Fig7.1. Indian food Supply Chain Network

Fig7.2. Foreign Countries Food Supply Chain Network

Farmer Dealer Wholesaler Warehouse Retailer Customer

Farmer Warehouse Retailer Customer

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As supply chain Management involves procuring the right inputs (raw

materials, components and capital equipments); converting them efficiently into finished

products and dispatching them to the final destinations; there is a need to study as to how

the company's suppliers obtain their inputs. The supply chain perspective can help the

retailers identify superior suppliers and distributors and help them improve productivity,

which ultimately brings down the customers costs. At the same time, Market logistics

helps planning the infrastructure to meet demand, then implementing and controlling the

physical flows of material and final goods from point of origin to points of use, to meet

customer requirements at a profit.

Till now most retailers in India have invested majorly into the front end, but

relatively little on the back end and supply chain. Even in countries like the USA,

Germany and England, where organized retail is highly developed; supply chain efficiency

is a major concern. The nature of retail sector in India is different from other countries

around the world. The organized retail sector in India is highly fragmented and there are

huge inefficiencies in the supply chain.

The most important part of retailing business is to find a balance between

investing in front-end and back-end operations. The channel dynamics is going to change

over next couple of years as the retailers start growing in size and their bargaining power

is likely to increase. Probably that would bring some kind of mutual understanding

between manufactures and retailers to develop strong supply chain network. In such a

scenario, both the existing operators and new operators must put collaborative efforts to

phase out inefficiencies in the supply chain network.

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Case study-

8. Future Group-

8.1 Introduction-

Future Group is the country's leading retail business group that caters to the entire

Indian consumption space. It operates through six verticals: Future Retail (encompassing

all lines of retail business), Future Capital (financial products and services), Future Brands

(all brands owned or managed by group companies), Future Space (management of retail

real estate), Future Logistics (management of supply chain and distribution) and Future \

Media (development and management of retail media spaces).

The group's flagship company, Pantaloon Retail (India) Limited operates over 5

million square feet through 450 stores in 40 cities. Some of its leading retail formats

iclude, Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, EZone, Depot,

Health & Beauty Malls and online retail format.

The group's joint venture partners include Italian insurance major, Generali, French

retailer ETAM group, US-based stationary products retailer, Staples and UK-based Lee

Cooper and India-based Talwalkar's, Blue Foods and Liberty Shoes.

8.2Working-

Future Group is working on the ―vendor network‖ as well as the ―logistics

network‖. The company has identified up to 40 anchor vendors, each with turnovers of

US$45 million, to achieve economies of scale. The group is also keen to ensure that its

smaller vendors are able to reach turnovers of around US$1 million and a growth rate of

40% annually, to be able to pass on the benefits of scales. The company is also working

towards bringing its 1,200 vendors online, likeWall-mart

Going further in this direction, the Future Group has also launched Future Logistics

initially aimed at handling the supply chain logistics of the group. However, sensing

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immense opportunity in this area, the company is now looking to offer its services to its

1000-odd vendors, spread across consumer related goods, to reach a targeted turnover of

about Rs.700 crore by 2010.The thrust at present will be on modes of surface transport like

roads and rail only. However, at a later stage, sea and air modes might also be considered

as per the requirement.

In India, Future group derives significant economies of scale in managing their supply

chain. With more than 170000 products, the company maintains a strong supplier

relationship in a partnership mode, avoiding the exploitative supplier – buyer transactional

philosophy. The IT enabled back-end operations and supply chain management increases

the reliability and efficiency of the business.

As part of the operation, Future Group is also undertaking to reduce its

warehousing costs through a consolidation process. In a country like India, where most

retail stores are located in the heart of the city—where rents are high and storage space is

scarce—supply chain management has even more serious business implications. Future

Logistics now handles two-and-a-half million stock keeping units a day across the Future

Group's various retail formats around the country. By 2010, this number is expected to

increase to more than 30 million stock keeping units a day. Even with 98% accuracy, some

600,000 pieces will not be delivered correctly, resulting in an estimated sales loss of more

than Rs 4 crore a day.

The biggest driver in consumer logistics is going to be zero defect in managing

the supply chain. While infrastructure, technology, automation, processes and people will

all play an important role, zero defect can only be achieved through vertical integration

across the entire supply chain—from raw material supply, production, wholesale and

retail. The different parts of the supply chain will no longer be able to work in silos as they

do today.

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8.3Retailing in India

The Indian retail industry accounts for 10% of GDP and 8% of employment.

India is being touted as the next big retail destination with an average three year

compounded annual growth rate of 46.64%.

The Indian economy is poised to take the third position in the world in terms of

Purchasing Power Parity by the year 2010.

The Indian Retail Market is a Rs.1,200,000 million market as per the Images India

Retail Report 2007.

Organized Retail market is zooming ahead with an annual growth rate of 30%

The country will have over 300 malls translating to over 100 million sq.ft. in

available mall space by the end of 2007

Mission & Vision

Future Group shall deliver Everything, everywhere, anytime for every Indian

Consumer in the most profitable manner.

We share the vision and belief that our customers and stakeholders shall be served

only by creating and executing future scenarios in the consumption space leading to

economic development

Introduction to Big Bazaar

A chain of shopping malls in India currently with 31 outlet owned by Kishore

Biyani’s Pantaloon Group.

Big bazaar is not just another hypermarket.

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Provides the best products at the best price.

Reflect the look and feel of Indian bazaars at their modern outlets .

All over India, Big Bazaar attracts a few thousand customers on any regular day.

Target Audience

Big Bazaar targets higher and upper middle class customers .

The large and growing young working population is a preferred customer segment

.

Big Bazaar specifically targets working women and home makers who are the

primary decision makers.

Different elements of retail mix

Merchandise assortment

Location

Price

Visual merchandising

Retail-mix continued.

Store atmosphere

Customer service

Advertising

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Promotion

Personal selling

Internal Attributes

Envelope

Internal layout

Methods of display

Visual merchandising

Distribution

Distribution is one of the 4 aspects of marketing.

Traditionally, distribution has been seen as dealing with how to get the product or

service to the customer

Distribution is done by distributor who is is the middleman between the

manufacturer and retailer

Logistics

Logistics is the art and science of managing and controlling the flow of goods ,

energy, information and other resources like products, services and people from the

source of production to the marketplace.

It’s Important to have professional logistical support

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The operating responsibility of logistics is the geographical repositioning of raw

materials, work in process and finished inventories where required at the lowest

cost possible.

Fig.8.4. Big Bazaar Supply Chain Network

Big Bazaar

Retail outlet

Warehouse

Distriubutor1 Cloth

manufacturer

supplier1

(Cotton)

supplier2

(Packing material)

Distributor2 Electromnics equipment

manufacturer

Supplier3

(Electronic parts)

Supplier4

(Packing material)

Vendor1

Fast Food

Manufacturer

Vendor2 Wholesaler Farmer

(Grains)

Vendor3 Wholesaler Farmer

(Dairy product)

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CASE STUDY-

9. Introduction

9.1 McDonalds Is……..

McDonalds is a name which is today synonymous with the fast food.

McDonalds is a fast food chain with restaurants all over the world with headquarters in

oak brooks, Illinois , US. It serves burgers and other fast food customized to local tastes.

Its philosophy has been one world one burger. Which meant that the burger must be

consistent in terms of cost and quality. To meet such high standards , it was essential to

have an excellent supply chain management system. In INDIA McDonalds had a very

well orchestrated supply chain called cold chain.

9.2 IT STARTS WITH……………

In 1954, Ray Kroc, 52, Distributor of milk shake maker multi mixer, went to see

McDonalds brothers hamburger stall in California.

With an opportunity, he thought to open several of such restaurants so as to sell his

multimixer milk shake machine.

9.3 SOME IMPORTANT FACTS………

In year 2004 , McDonalds was the largest marketer of fast food in the world.

31000+restaurants.

47 million customers served daily.

1999-2008 most valuable brand.

2000-ranked among top 100 firms in the world.

9.4 INDIAN MARKET…………

It’s a huge sub-continent.

India is 4 times more populated than the US.

India has 300 million strong middle class people.

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India is one the largest economy in world.

Incorporated in 1993, MIPL is McDonalds Indias wholly owned subsidiary.

In India, Mcdonalds open its first restaurant in vasant vihar, south Delhi.

50:50 joint venture .

9.5 SUPPLY CHAIN IN McDONALDS INDIA……….

In fast food business supply chain is of highest importance .It helps in minimizing cost cut

down the delivery time, improve the profits and at the same time maintain the highest

standards. The importance of supply chain can be understood by the fact that before

setting up their first restaurant in India McDonald infused around Rs.400 crores in the

supply and delivery chain. McDonalds India source all its product and its raw material

from India only. McDonalds develops local businesses that supply them the products and

that too of highest standards. Today McDonalds have around 38 suppliers and that on the

long term basis.

Fig.9.5. Supply Chain In Of McDonald

9.6 McDONALDS DISTRIBUTION CENTRES………

Noida and Kalamboli(Mumbai)………………..1996

Bengaluru………………………………………………..2004

Kolkata…………………………………………………….2007

1st distribution agreement was done by Radhakrishana group, a group engaged in food

business in the year 1993 and it was their 1st distribution center.

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9.7 CONCEPT OF COLD CHAIN ………………

A cold chain is a temperature-controlled supply chain. An unbroken cold

chain is an uninterrupted series of storage and distribution activities which maintain a

given temperature range. It is used help extend and ensure the shelf life of products such

as fresh agricultural produce, processed foods, photographic film, chemicals and

pharmaceutical drugs. This concept of cold chain in food industry and that too on such a

large scale was started by mc donalds only.

This concept was unique in India and to start this concept, it took around 6

years. It benefited both farmers as wella s the consumers, as they are getting the fresh, best

quality and great value food. With this concept mc donalds cut down its wastage and able

to maintain its freshness and nutritional value of raw material.

9.8 STEPS INVOLVED IN COLD CHAIN CONCEPT…….

· Procurement

· Warehousing

· Transportation

· Retailing

9.9 STEPS INVOLVED IN COLD CHAIN CONCEPT……

McDonald's finding the factor of cold room being vital ensured that even

before vegetables from farms entered the refrigerated zones, they were locked in a pre-

cooling room to remove field heat. Vegetables were placed in the pre cooling room within

half an hour of harvesting where rapid cooling decreased the field temperature of

vegetables to 2ºC within 90 minutes. Then a large cold room (a refrigerated van) was used

for transportation to the distribution centers. In the van, the temperature and relative

humidity of crop was maintained at 1-4ºC and 95 per cent, respectively and the flavors and

freshness are locked. At the suppliers' level, care was taken to guard against any possible

contamination or interruption in the cold chain that can break the link and have a

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detrimental effect on the quality of our product. The iceberg lettuce from Ooty, mutton

patties from Hyderabad and sesame seed buns from Punjab were all delivered to

Radhakrishna Foodland Private Limited distribution centre (cold storage) in its

refrigerated vans. RFPL stored the products in controlled conditions in Mumbai and New

Delhi and supplied them to McDonald's outlets on a daily basis. By transporting the semi-

finished products at a particular temperature, the cold chain ensured freshness and

adequate moisture content of the food. The specially designed trucks maintained the

temperature in the storage chamber throughout the journey. Drivers were instructed

specifically not to switch off the chilling system to save electricity, even in the event of

traffic jam.

9.10 LIST OF SUPPLIERS AND THE DISCRIPTION SHOWING HOW COLD

CHIN CONCEPT WORKS AND CONTRIBUTE TOWARDS EFFICIENCY…….

· Dynamix dairy industry (cheese)

· Trikaya agriculture (iceburg lettuce)

· Vista processed food pvt ltd. (chicken and veg range of products)

9.11 McDonalds: Supply Chain Management

· Radhakishana food land(distribution centre- delhi and mumbai)

· Amrit food(long life UHT milk and milk products for frozen desserts) Below mentioned

is the data about Refrigerated vans for McDonald's distribution

9.12Type Route Quantity

National inbound Suppliers to Distribution Center 20 vehicles

Outbound North Distribution Center to restaurant 13 vehicles

Outbound West Distribution Center to restaurant 11 vehicles

Outbound South Distribution Center to restaurant 1 Vehicle

9.13 DYNAMIX DAIRY INDUSTRY (SUPPLYING CHEESE)

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· Firm from baramati, maharashtra

· Milk collection centres with bulk coolers

· International standard and processing facilities

· Stringent quality control measures

9.14 McDonalds: Supply Chain Management

· All activities from procurement of milk to changing it into cheese and then to serve that

cheese in the restaurant is all under temperature control atmosphere

9.15 TRIKAYA AGRICULTURE (SUPPLYING ICEBURG LETTUCE)

· Advanced agricultural practices helps them to grow specialty crops like lettuce and

herbs.

· Pre cooling room and large cold room for post harvest.

· Refrigerated transportation.

9.16 VISTA PROCESSED FOOD PVT. LTD. (FOR SUPPLYING FROZEN

CHICKEN AND VEG PRODUCTS)

· For chicken, temperature maintained is -35 degrees Celsius.

· Refrigerated transportation.

9.17 RADHA KRISHNA FOODLAND (DISTRIBUTION CENTRE)

· Specialized in handling large volumes.

·Activities involved are procurement, quality inspection, storage, inventory

management, deliveries, data collection, recording and reporting.

· One stop shop for all distribution management services.

· Both dry and cold storage facility.

9.18 AMRIT FOODS

· An ISO 9000 firm

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· Supplies long life UHT milk/ milk products for desserts.

9.19 DIFFERENT ITEMS ARE SOURCED FROM DIFEERENT GEOGRAPHY IN

INDIA……..

· BUNS-shah bector &sons, Maharashtra and cermica, ludhiyana

· BATTER & BREADING- cremica, ludhiyana

· VEGETABLE PATTY- kitran foods, taloja, Maharashtra

· CHEDDAR CHEESE- dynamix dairy, baramati, Maharashtra

· SEASAME SEED- Gaziabad, UP

· SPL VEG EGGLESS SAUCE- Quaker, cermica, ludhiyana

9.20 THREE LOGISTICAL DRIVERS…….

1. Facilities- they are the actual physical location in the supply chain network where the

product is stored, assembled, or fabricated. The two main facilities are production sites

and the storage sites. In McDonalds, because the products are perishable, storage time was

minimal so as to reduce the wastage.

2. Transportation- it is the process where the inventory is moving from place to place.

Refrigerated vans are used here in this case.

3. Inventory- it includes raw materials, work in progress, and finished goods within a

supply chain.

9.21 THREE CROSS-FUNCTIONAL DRIVERS……

1. sourcing- who will perform which activity( production, storage, transportation, and

distribution) in a supply chain. This activity was taken care by mcdonalds corporation.

2. information- it includes data and analysis related to facilities, inventory, transportation,

cost, prices and customers in the whole supply chain. This activity was done by

Radhakrishana food land that acts as their distribution centre.

3. pricing- how much a firm could charge for a particular goods and services that it makes

available in the supply chain. Here it was done by the mcdonalds only.

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9.22 PULL/PUSH PROCESS

Pull processes are initiated by a customer order while the push processes are initiated by

the anticipation of customer order. Mcdonalds use both pull as well as push process, to a

certain extent push is created and after that level the pull created by the firm did its task.

One important

question can be asked to what level that push can be applied. The products will be pushed

to the restaurants where the customers automatically demand that product and hence a pull

is created.

Fig.9.22 showing the boundry of pull and push, push last till the product reaches the

restaurant and pull starts when a customer orders the product.

Fig.9.22 Push Pull Process

9.23 SUPPLY CHAIN PROCESS CYCLE……..

The processes in the supply chain are divided into a series of cycles, each

performed at the interface between 2 successive stages of supply chain

Various Suppliers supplies the materials

Products delivered to Distribution centres

Products delivered to restaurant

Push stops ,pull starts here

Customer order at restaurant,

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9.24 IN NASIK THEY ARE AT……..

· College road,

21 IN UTTAR PRADESH

· Noida (5),

· Ghaziabad (4),

· Mathura (1) (Highway and Drive

Thru),

· Kanpur (2),

· Meerut (2),

· Lucknow (3),

· Agra (1),

· Allahabad (1),

· Varanasi (2)

79 IN NORTH AND EAST

· 33 in Delhi

· 22 in Uttar Pradesh

· 11 in Haryana - Faridabad (3), Manesar

(1) (Highway and Drive - Thru),

Gurgaon (5), Karnal (1) (Highway and

Drive - Thru), Panipat (1)

· 7 in Punjab - Chandigarh (2), Ludhiana

(2), Doraha (1) (Highway and Drive -

Thru), Jalandhar (1), Patarsi (1)

(Highway and Drive - Thru)

· 3 in Rajasthan - Jaipur (3)

· 1 in Uttaranchal - Dehradun (1)

· 1 in West Bengal – Kolkata (1)

· 1 in Himachal Pradesh- Jabli (1).

53 IN WEST AND SOUTH

· 32 in Maharashtra – Mumbai (23), Pune (8), Nasik (1)

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· 7 in Gujarat – Ahmedabad (4), Vadodara (2), Surat (1)

· 7 in Karnataka – Bangalore(7)

· 4 in Andhra Pradesh – Hyderabad (4)

· 3 in Madhya Pradesh – Indore (3)

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10.Case study of Tomato Supply Chain-

Fig.10.1Modern supply chain of Tomato

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Fig. 10.2 Traditional Supply chain of Tomato

36

Fig. 10.3. Traditional Supply chain of Tomato

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11. Conclusion-

In this seminar the various aspects of supply chain management are discussed.

After the above discussion we can say that every organization should follow the new

technologies of supply chain management. To improve supply chain IT and electronic

media are today’s best mediums. By implementing effective supply chain every

organization can compete in market with their competitor, they can improve their product

quality, services, after sells services to make customers happy. Also reduce the losses

which occur in the supply of food to customers due to delay by implementing the supply

chain management.

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12. Refferences-

1. Designing And Managing supply chain management by

David Simehi-levi

2. Supply Chain Management by B.S.Sahay

3. supply chain management by Sunil Chopra

4. Logistics and Supply Chain Management by Martin Christopher

5. www.Scribd.com

6. www.informaworld.com