atul(scm)

SUPPLY CHAIN MANAGEMENT

CHAPTER -1

INTRODUCTION

Page | 1AMRUT MODY SCHOOL OF MANAGEMENT


INTRODUCTION

Atul Ltd is one of the diversified industries of the Lalbhai group and it

deals with the production of the various chemicals & dyes intermediates. Color

division is one of the six division which are governed by Atul Ltd. The project

aims at highlighting the importance of Supply Chain Management at Atul Ltd.

Various departments are studied in the course of the project report. This

include the order tracking system, the standardization process, the purchase

department, marketing department, manufacturing plant, storage room.

The project deals with the study of how supply chain management is done

in Atul Ltd. I also study the Order processing, Physical distribution, Inventory

management of various depots.

1.1 INDUSTRY PROFILE

The Indian dyestuff industry is only about 40 years old though a few

MNCs set up dyestuff units in the pre independence era. Like the rest of the

chemical industry, the dyestuff industry is also highly fragmented. The industry

is characterized by the co-existence of a small number of players in the

organized sector (around 50 units) and a large number of small manufacturers

(around 1,000 units) in the unorganized sector. The distribution of these units is

skewed towards with western region (Maharashtra and Gujarat) accounting for

90%. In fact, nearly 80% of the total capacity is in the state of Gujarat, where

there are nearly 750 units.



Over six hundred types of dyes and organic pigments are now being

manufactured in the country (both by the organized and the unorganized sector).

But the per-capita consumption of dyestuffs is lower than the world average.

Dyes are soluble and essentially used in textile products. Pigments, on the other

hand, are insoluble and are important imports to product such as points.

During the past two years, the dyestuff industry was overtaken by a series

of fast changing events in the international arena. Indian companies failed to

keep pace with the changing trends. The biggest market for dyestuffs has been

the textile industry. The dominance of polyester and cotton in the global

markets has decisively shaped the demand for certain types of dyestuffs. On the

other hand, the demand for polyamides, acrylics, cellulose and wool was more

or less stagnant. Differences in the regional growth rates of textile products too

affect demand. The Asian region saw the biggest growth in textile production,

followed by North America, Latin America and Western Europe. This suggests

the shift in the global textile industry towards Asia. As a result, Asia leads in

dyestuff production both in terms of volumes and value, with a 42 % share of

the global production; the US is next with 24 % and Europe has around 22 %.

Due to a greater use of polyester and cotton-based fabrics, there has been a shift

towards reactive dyes, used in cotton-based fabrics, and disperse dyes, used in

polyester. These two dyes have been dominant in all the three regional global

market, especially Asia. Adding to the shift in textile usage pattern and regional

developments is the extent of over capacity in the global dyestuff industry.

Capacity is estimated to be around 1.2 million tones, with consumption at 0.8

million tones, leaving a clear gap of 0.4 million tones.

Within India, the major players in the pigments industry are Color Chem.

and Sudarshan Chemicals while in the dyestuff industry companies such as are

Atul, Clariant India, Dystar, Ciba Specialties and IDI are important players in



terms of market share. The Indian companies together account for around 6 %

of the world production.

Nearly 80 % of the dyestuffs is commodities. This means there do most

producers manufacture not much product differentiation between the goods.

Since not much technology is involved, duplication of products is also easy

compared to specialties. However, in the recent past, there have been attempts

by global manufacturers to move to the specialty end of the product profile,

with some success. Vat dyes have always functioned as specialty products, with

technology playing an important role. Now, companies are concentrating on the

higher end of the reactive dyes segment. The trend is now shifting from

supplying mere products to color package solutions. The emphasis is more on

innovation, production range, quality and environmental friendly products.

Producers are collaborating with equipment manufacturers to provide integrated

solutions rather than products.

Fiscal policies and changes in the usage pattern of the global dyestuff

industry have changed the market shares of Indian companies. Excise

concessions for the small-scale sector in the mid and the late 1980s spawned

numerous units in Maharashtra and Gujarat. At one stage, there were in the

unorganized sector around 1,000 units, with most of them located in Gujarat and

Maharashtra. This also led to large-scale evasion of duties. However, since the

early 1990s, there has been a gradual reduction in the excise duty rates

applicable to the organized sector. From 25 % in 1993-94, the excise duty rates

were reduction to 20 % in 1994-95 and further to 18 % in 1997-98.

The latest Union Budget further reduced these rates to 16 %. This gradual

reduction in the duty rates blunted the competitive edge of the unorganized

sector. The organized sector, with better product range, technology and

marketing reach, was able to increase its market share. But more important



changes have come through the German ban on certain dyestuffs, followed by

the implementation of the local pollution control laws. While the organized

sector has been able to phase out the production of dyes based on the 20 banned

amines by the German legislation, many in the unorganized sector were forced

to exit. This was compounded by the local pollution laws, which required

setting up of effluent treatment plants, and pushed out companies in the

unorganized sector.

1.1.1 Consumption Pattern:

Dyestuff is a broad term, which includes dyes and pigments. A dye is a

colored substance or an organic compound, which when applied in a solution to

a fabric, imparts a color resistant to washing. The textiles, paper and leather

industry largely use them, with textiles accounting for over 80% in India. This

links the dyestuff industry's fortunes to that of the textile industry. Dyes are

classified according to various systems. The most commonly used one is the

one used by the US International Trade Commission. According to this system,

there are 9 Types of dyes, as detailed in the following table:

Table 1.1: Most commonly used 9 types of dyes.

Group Application

AcidWool, silk, paper, synthetic fibers, leather

AzoicPrinting Inks and Pigments

Basic Silk, wool, cotton

Direct Cotton, cellulosic and blended fibers

Disperse dyes Synthetic fibers



Reactive Cellulosic fiber and fabric

Organic pigments Cotton, cellulosic, blended fabric, paper

Sulphur Cotton, cellulosic fiber

Vat dyesCotton, cellulosic and blended fiber

With the change in the product profile of the textile industry from the

high-cost cotton textiles to the highly durable and versatile synthetic fibers, the

consumption pattern of dyes has also been changing. Polyesters are projected to

account for a large part of dye consumption in the country. Accordingly,

disperse dyes, which find application in polyesters, are projected to grow faster.

In addition to textiles, dyestuffs are also used in industries like plastic,

paints, printing inks, paper and leather. While these industries account for a

very small part of domestic consumption, globally these account for a

substantial part of total consumption.

1.1.2 Technology:

The technology for dyestuff manufacturing varies widely from relatively

simple (direct ago) to sophisticated (disperse and vat) dyes. Though technology

is locally available, most of it is outdated. The problem is further compounded

by the fact that the nature of the process changes from batch to batch and,

therefore, controlling the process parameters becomes difficult. The Indian

industry has made significant progress in terms of technology and production.

The dyestuff industry is one of the heavily polluting industries and this

has resulted in the closure of units internationally and shifting of units to the

emerging economies. Most of the international manufacturers have transferred



the technology to developing nations like China, India, Indonesia, Korea,

Taiwan and Thailand. This shift of manufacturing capacities is because the

industry is perceived as a high-cost and low return one. The batch processing

also makes it a labor- intensive industry. Thus, the competitiveness of

developing economies increases. However, the judiciary has come down with a

heavy hand on several manufacturing units, especially in Gujarat.

1.1.3 Restructuring:

There has been severe a drain on the profitability of the industry. This is

due to entry of many new players in the last few years resulting in severe

competition and price wars. Restructuring of the Indian dyestuff industry,

initiated a couple of years ago, is in progress. The trend was set last year by the

market leader Colour-Chem. Ltd, which decided to opt out of the dyestuffs

business. It has entered into a toll manufacturing agreement with Dystar India

Ltd. There have been other alignments, which would result in improving

capacity utilization at manufacturing facilities and also obtain better reach of

export markets.

Ciba India and IDI have signed a pact to market polyester and cellulose

dyes. IDI has also tied up with Ciba for the manufacture and marketing of dyes

and pigments. Atul products has completed the acquisition of Zeneca’s 50%

stake in Atic Industries Ltd and tied up with BASF, Germany to market 50 % of

its production of vat dyes.

The restructuring of Sandoz, consequent to the merger with Ciba, has led

to the creation of Clariant AG. The dyestuffs manufacturing division of Khatau

Group has been merged with its marketing company, Indokem Ltd.



1.1.4 Dyestuff Industries of Gujarat.

Gujarat Dyestuff Industries Pvt. Ltd. was set up in the year of 1981. The

company shifted the manufacturing base from Textile Dyes & Chemicals to

PPP/HDPE Woven Bag/Sacks/Fabrics and PE Liner in the year of 1985.

Presently, the company is the leader in manufacturing of these bulk

packaging items in the country. As of today the company enjoys a very high

reputation for consistent high quality of products and committed service to the

customers. The company has installed most modern technology Plant &

Machineries of 10000 TPA capacity to manufacture PP/HDPE Woven

Bag/Sacks/Fabrics and PE Liner etc. Encored with good demand the company

implemented expansions in quick succession from time to time.

Atul Ltd. is an honorable member of following organizations

All India Plastic Manufacturer Association (AIPMA)

All India Flat Tape Manufacturer Association (AIFTMA)

Indian Plastic Federation (IPF)

Indian Institute of Plastic (IIP)

Gujarat Chamber of Commerce & Industries (GCCI)

Director General of supplies & Disposals (DGS& D)

The Plastic Export Promotion Council (PEXCONCIL)

Chemicals & Plastics Manufacturers Association (CPMA)

The company has won several awards in these 2 decades of operation,

which shows the high standard of quality. The Indian dyestuff industry has been

facing difficult times. Low profitability and demand growth combined with

increasing importance for environmental protection have resulted in the exit of

many small producers. However these factors have seen the consolidation of



major players in the industry. Currently there is an over capacity situation in the

domestic market that has forced the industry to look at exports for growth. With

the closure of many manufacturing bases in the US and Europe, MNCs are

shifting to Asian countries like India and China. The share of the MNCs in the

domestic production of these two countries has been going up steadily over the

last few years.

1.2 COMPANY PROFILE

Atul Ltd is a member of Lalbhai group, one of the oldest business houses

of India, with interests mainly in textiles and chemicals. The group is strongly

committed to serve the society in the field of education, health as well as

culture.

Lalbhai with dream to make India self reliant in chemicals, generated

employment on a large – scale and create wealth for the society. For translating

his dream into reality, KASTURBHAI LALBHAI brought his confident,

BULLUBHAI MUZUMDAR, an economist- and his son, SIDDHARTH

KASTURBHAI LALBHAI, A CHEMICAL ENGINEER, to lead Atul Ltd and

established a large chemical conglomerate.

Atul Ltd became the first private sector company of India to be

inaugurated by Jawaharlal Nehru, the first Capital Minister of the country. The

company thus commenced its business with just a few dyestuffs, the know-how

of which was brought from freight companies?

Over the year, Atul Ltd joined hand with American Cyanamid crop

(1952), Imperial chemical industries plc (1955) and Ciba-Geigy Ltd (1960) to

from Respectively 3 joint venture companies, namely, Cyanamid India Ltd, Atic

industries Ltd and Cibatual Ltd respectively. Consequent to worldwide



divestment of the days and polymers business by ZENECA plc (formerly a part

of ICI plc) and Ciba Ltd respectively, Atic industries Ltd and Cibatual Ltd were

merged into Atul Ltd in 1995 and 1998 respectively.

Atul Ltd operates through six-business division, namely, Agrochemical

bulk chemicals & Intermediates, Colors, Pharmaceuticals, Intermediates, and

Polymers. Each business, in step with the company vision, develops and

implements its growth plans.

Atul’s registered office is in Ahmadabad whereas its corporate

headquarters are located in Atul Gujarat. Company is listed on the NSE in India

and has over 35000 shareholders. Atul also has office in the USA, the UK,

Germany, and Vietnam that service its international customers.



1.2.1 Organization structure of Atul Ltd.



Source: Discussion with Manager, Marketing Dept. Atul Ltd.



1.2.2 Different divisions of Atul Ltd.

Agrochemicals Division:

In 1967, Atul Limited started manufacture of phenoxy herbicides and in

subsequent years added more products to the range, including urea &

sulfonylurea herbicides, triazole fungicides and carbamate; neonicotinoid;

organophosphorus & pyrethroids insecticides. Phosgene, a vital raw material is

manufactured by the division.

Consistency in quality, commitment to timely

deliveries and prompt techno-commercial services

have ensured that the division is now among the

world's five leading manufacturers of 2,4-D range of

chlorophenoxy derivatives.

The products marketed by the division have been well received by

customers across 35 countries, including quality conscious markets like South

East Asia, Latin America, Spain and Australia.

The division has the technical expertise to meet country specific

requirements of regional registration and regulatory authorities. The division is

fully committed towards promoting environmentally sound chemicals, and

provides the necessary support to all customers for safe use of its products.

Aromatics Division:

Aromatics Division is one of the world’s largest manufacturers of Para

anisic aldehyde, Para cresol and Para anisic alcohol, supplying its products to

diverse industries, including cosmetics, flavours and fragrances, bulk drugs, dye

intermediates; and plant and animal micro-nutrients.



The Division's manufacturing site is located

at Ankleshwar in Gujarat, about 350 km north of

Mumbai.

The Division has always laid great emphasis on

innovation. The state-of-the-art cost-effective processes, scientific research,

ingenious technology and detailed market knowledge form the basis for the

Division’s success.

Aromatics has strengthened its global competitiveness through process

innovation and has developed new tools to gauge customers’ needs. Through

collaborations with universities and research institutes, the Division gets access

to new knowledge and technology constantly.

Bulk Chemicals and Intermediates Division:

The Bulk Chemicals and Intermediates division manufactures a variety of

bulk chemicals and semi-speciality intermediates.

The division started manufacture of bulk

chemicals in 1960 and intermediates in 1963 to

provide backward integration to Atul Ltd.'s dyes

business.

Drawing on its strong research base and flexible manufacturing capabilities, the

division now manufactures numerous intermediates for dyes and semi-speciality

chemicals for customers world-wide.

With capability to handle a wide variety of chemical processes, the

division is ready to become a global leader in selected intermediates.

Colors Division:



The Colors division is the largest business division of

Atul Ltd, manufacturing a wide range of dyestuffs for the

textile, leather, paper, wool and silk industries. The division

is the largest supplier of dyestuffs in India and exports

nearly 40% of its production to more than 40 countries

worldwide.

The division's manufacturing operations started with sulphur dyes in

1952. In quick succession, other classes of dyes - direct, acid, azoic and azo

disperse - were added to the product range. Vat, reactive and anthraquinone

disperse dyes were manufactured by the erstwhile Atic Industries Ltd, a 50:50

joint venture between Atul Ltd and Zeneca plc (formerly a part of Imperial

Chemical Industries plc).

In 1995, when Zeneca decided to divest its

textile colors business worldwide, Atul Ltd bought

over Zeneca's stake in Atic Industries. Consequently,

the same year, the two companies were merged.

With state-of-the-art manufacturing facilities, stringent quality control

systems and an efficient pool of skill-sets, the division is in the forefront of

exploiting market opportunities and providing optimum solutions to its

customers.

The division is ISO 9001 certified.

Pharmaceuticals and Intermediates:

For over two decades, this unit manufactured Sulpha Drug Intermediates

for Ciba Geigy. Now, as a separate Division of Atul, Pharmaceuticals

Intermediates has diversified into a wide range of specialty intermediates and

APIs.



Atul is the world leader in Dapsone, an anti-bacterial drug. A newly built GMP

manufacturing plant, supported by an approved DMF, assures you a high

quality and regular supply.

The division specializes in offering a range of fine chemicals and

intermediates based on in-house Phosgene supply. Intermediates based on

Phosgenation and Hydrogenation is offered from kilogram to metric ton scale.

The Division has recently launched a range of new products based on

phosgene chemistry namely various Chloroformates, Isocyanates, NCA,

Carbonates & Dicarbonate, Chlorides, Ureas & other products.

The phosgenation business is backed by a strong R&D, Pilot Plant

facility and the new PHIN plant; all covered under scope of ISO 9000 and ISO

14000 certification.

Polymers

Lapox Epoxy Resins and Hardener systems are manufactured and

marketed by Polymers division of Atul Limited. The manufacture of Epoxy

systems began in 1968 in a company established as

a joint venture between Atul and Ciba,

Switzerland. In 1999, on the merger of the JV with

the parent company, the Epoxy operations became

a part of Atul Limited.

Having achieved a leadership position in the domestic market of Epoxy

Systems, the company intends to play its rightful part in the global market. It

has plans to build on the success already achieved in certain segments of the

European and North American markets. The strategy is to target niche markets

offering customized solutions for challenging applications.



Recently added products such as Multifunctional Epoxy Resins,

Cycloaliphatic Epoxy Resins, Epoxy Novolacs, Bis F Resins, Brominated

Epoxies, Reactive Diluents, Phenalkamines, and Aromatic Amines have

enlarged the long-standing grades offered by the company for applications in

electrical casting, composites and laminating, civil and coating industries. These

are strongly supported by a well-equipped Application Development Center and

synthesis as well as analytical labs.

Apart from an intensive network of branch offices and dealers in India,

the company has established marketing subsidiaries in the UK (Manchester), the

USA (Charlotte), Germany (Weisbaden) and China (Shanghai). Besides, it has

enterprising agents/dealers in the UK, France, Germany, USA and China. These

dealers stock Lapox to cater to the needs of their regular customers.

The company has geared itself to delight epoxy users with Lapox in the

global niche markets.

Floras Division

Floras was started with a view of productive utilizing of large land

holdings of Atul Ltd. Its objective is to give genuine herbal extracts which are

obtained from scientifically grown crops.

Floras has ensured that its products meet the perfumery and cosmetic

industry’s needs for genuine natural essential oils.

1.2.3 Departments at Atul Ltd.

Human Resource Management.

In any organization only their employees are the real assets. This is the

only asset, which make use of all the resources and can generated revenues from

business. Employees are human beings and they have their own beliefs,

attitudes, personality and goals to achieve from the organization. As



organization is the group activities of the employees needs to work in order to

achieve common organization goals.

Due to above reason Human Resource Department is essential in the

organization. Human Resource Department deals with the managing human in

an organization. Now due to changing conditions and global effects the people

of different culture, attitudes, language, behavior works to bather at that time

human resource management becomes essential part of organization.

In Atul ltd, Human Resource Department manages all the employees very

effectively and efficiently.

Human Resource means “TO PUT RIGHT PERSON AT RIGHT TIME AT

RIGHT PLACE

Core Values of Human Resource Management:

C -Competences building

A -Adapt to new environment

R -Respect human values

E -Empower, Enrich, Excel

People are key element in the chemistry of the Atul ltd.

It is entrepreneurship and creativity of the people as also their integrity

and commitment that determine the success of the company. Atul Ltd aspires to

develop a work environment where these abilities and qualities are nurtured.

Atul Ltd endeavors to identify area of individual development of

employees through its performance management system. The training regimen,

which covers every employee, prepares them to anticipate and meets challenges.



While continuing the tradition of being compassionate and caring, the

focus is on empowering employees and helping them to excel in the business.

Top Three Priorities:

Safety:

Atul Ltd through comprehensive system of design, training, reporting,

and review achieves high levels of performance in plant and employee safety.

Health:

From recruitment to retirement, the health of employees is given attention

and care. Pre-employment medical check-ups, annul routine health surveillance

and target health check-ups are conducted at the medical centers Atul Ltd.

Employees have access to facilities for badminton, billiards, gymnasium, sauna,

squash, swimming, table tennis.

Environment:

In environment, Atul ltd has given also three major priorities.

A. Water:

The factory sites have extensive pipeline system to keep ground water

free of any contamination. The state-of-the-art effluent treatment plants are

of large capacity to fully treat all effluence from the manufacturing facilities.

The treated effluence meeting specified standard are taken in covered

pipelines for discharge in zones agreed with regulatory authority.



B. Air:

Numerous scrubbing systems are integral part of the manufacturing

facility of Atul ltd. Analyses of vent gases and monitoring of ambient air

are done routinely.

C. Soil:

Organic chemical wastes are incinerated in the incinerators of Atul

ltd. Incinerator ash and solid wastes generated from manufacturing

process are carefully monitored in line with prevalent rules and

regulation.

Hazardous solid wastes are disposed of in a secured facility owned

by the company.

1.3 RESEARCH METHODOLOGY

Topic of the study: - Supply chain management at Atul Ltd.

Problem Statement: - To study the marketing and distribution of dyes manufactured by Atul Ltd.

Objective of the study:-

To study how the company perform various functions of

received order, procurement of raw material –material

required for making product, transformation of this

material to intermediates and the finished products and

the distribution of the finished products to the customer.

To study distribution strategy, information and inventory

management.



To study about the location, size and number of

warehouses, distribution centers and facilities.

To study transportation strategy including frequency,

routes and contracting.

Method of data collection:-

Secondary Data:- secondary data are the data already collected and analyzed by someone else

Reference to past performance, report and register.

Personal talk with the marketing manager.

Research Design:-

Descriptive research design is appropriate for this study. A

detail information about the present and past situation of

the company is available in descriptive research.

1.4 RATIONALE FOR THE STUDY

Today’s business environment is changing rapidly so to remain in the

competition each and every company has to adopt the latest technology and

process to minimize its production cost so that they can give their product at the

competitive price and can make their position in stable in the market.

This study is based on supply chain management. Supply chain execution

means managing and coordinating the movement of materials, information and

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



This study shows all the processes starting from the procuring of the raw

material to the distribution of the finished products. This study gives the

information regarding purchasing of raw material, which are the different

processes necessary for testing the quality of the raw material, how the

inventory is managed at the each and every stage of the production process.

This study gives the information about the necessary steps taken for testing the

quality of the finished product. The study also shows the necessary arrangement

required at the dispatch area. The study gives information to the management

that how they can add the value and reduce the total cost across the entire

process. It gives information about which are the value added process and

which are not. So that they can eliminate that non value added processes.

Thus this study gives full information starting from receiving order to the

distribution of the finished product. It also focus on the weak area of the

company and where it required the proper attention.



Five force model

Introduction

The model of the Five Competitive Forces was developed by Michael E. Porter in his book „Competitive Strategy: Techniques for Analyzing Industries and Competitors“

Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change.

Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry.

The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry.



These are the five force model of ATUL.LIMITED

2.1 Bargaining Power of Suppliers

· The market is dominated by a few large suppliers rather than a fragmented source of supply,

· There are no substitutes for the particular input,

· The suppliers customers are fragmented, so their bargaining power is low,

· The switching costs from one supplier to another are high,

2.2 Bargaining Power of Customers

· They buy large volumes, there is a concentration of buyers,

· The supplying industry comprises a large number of small operators

· The supplying industry operates with high fixed costs,

· The product is undifferentiated and can be replaces by substitutes,

· The customer don’t knows about the production costs of the product

· There is the no possibility for the customer integrating backwards.

3.Threat of New Entrants

The competition in an industry will be the higher, the easier it is for other companies to enter this industry. There is always a latent pressure for reaction and adjustment for existing players in this industry.

· Economies of scale (minimum size requirements for profitable operations),

· High initial investments and fixed costs,



· Cost advantages of existing players due to experience curve effects of operation with fully depreciated assets,

· Brand loyalty of customers

· Scarcity of important resources, e.g. qualified expert staff and technology.

· Distribution channels are controlled by existing players,

· Existing players have close customer relations, e.g. from long-term service contracts,

· High switching costs for customers

2.4 Threat of Substitutes

A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players. This category also relates to complementary products.

· Brand loyalty of customers,

· Close customer relationships,

· Switching costs for customers,

· The relative price for performance of substitutes,

· Current trends.

2.5 Competitive Rivalry between Existing Players

· There are many players of about the same size,eg,china

· Players have similar strategies

· There is not much differentiation between players and their products, hence, there is much price competition

· Low market growth rates · Barriers for exit are high (e.g. expensive and highly specialized equipment).



CHAPTER 2

THEORITICAL FRAMEWORK




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.

Supply chain management (SCM) is the process of planning,

implementing, and controlling the operations of the supply chain as efficiently

as possible. 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.

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'



Figure shows the key concepts of the supply chin management.

As shown in the figure Supply chain management (SCM) is the oversight

of materials, information, and finances as they move in a process from supplier

to manufacturer to wholesaler to retailer to consumer. Supply chain

management involves coordinating and integrating these flows both within and

among companies. It is said that the ultimate goal of any effective supply chain

management system is to reduce inventory

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

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.

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 an 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.

2.1 SUPPLY CHAIN DECISIONS

There are four major decision areas in supply chain management: 1)

location, 2) production, 3) inventory, and 4) transportation (distribution), and

there are both strategic and operational elements in each of these decision areas.

2.1.1 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.



2.1.2 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.

2.1.3 Inventory Decisions

These refer to means by which inventories are managed. Inventories exist

at every stage of the supply chain as either raw materials, semi-finished or

finished goods. They can also be in-process between locations. Their primary

purpose to 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.

2.1.4 Transportation Decisions

The mode choice aspect 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.

2.2 SUPPLY CHAIN MANAGEMENT FLOWS:

Supply chain management flows can be divided into three main flows:

The product flow

The information flow

The finances flow

The product flow includes the movement of goods from a supplier to a

customer, as well as any customer returns or service needs. The information

flow involves transmitting orders and updating the status of delivery. The



financial flow consists of credit terms, payment schedules, and consignment and

title ownership arrangements.

2.3 SUPPLY CHAIN MANAGEMENT PROBLEMS:

Supply chain management address the following problems:

Distribution Network Configuration:

Number, location and network missions of suppliers, production

facilities, distribution centers, warehouses and customers.

Distribution Strategy:

Questions of operating control (centralized, decentralized or

shared), delivery scheme, DSD (direct store delivery), closed loop

shipping; mode of transportation, e.g., motor carrier, including truckload,

parcel, railroad, intermodal transport, ocean freight; air freight;

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

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

carrier).

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


http://en.wikipedia.org/wiki/Motor_carrier

http://en.wikipedia.org/wiki/Common_carrier

http://en.wikipedia.org/wiki/Railroad

http://en.wikipedia.org/wiki/Parcel


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. These all the information

should be share with the related employees so that they can contribute

their best effort for accomplishing the task.

Cash-Flow:

Arranging the payment terms and methodologies for exchanging

funds across entities within the supply chain.

2.4 IMPORTANCE OF SUPPLY CHAIN MANAGEMENT

Supply Chain Management (SCM) is "Maximizing added value and

reducing total cost across the entire trading process through focusing on speed

and certainty of response to the market." Due to globalization, SCM has become

a tool for companies to compete effectively either at a local level or at a global

scale. SCM has become a necessity especially for manufacturing industry when

it comes to deliver products at a competitive cost and at a higher quality than

their competitors.

Today's business climate has rapidly changed and has become more

competitive as ever in nature. Businesses now not only need to operate at a

lower cost to compete, it must also develop its own core competencies to

distinguish itself from competitors and stand out in the market. In creating the

competitive edge, companies need to divert its resources to focus on what they

do best and outsource the process and task that is not important to the overall



objective of the company. SCM has allowed company to rethink their entire

operation and restructure it so that they can focus on its core competencies and

outsource processes that are not within the core competencies of the company.

Due to the current competitive market, it is the only way for a company to

survive. The strategy on applying SCM will not only impact their market

positioning but also strategic decision on choosing the right partners, resources

and manpower. By focusing on core competencies also will allow the company

to create niches and specialization of core areas.

SCM has allowed business nowadays to not just have productivity

advantage alone but also on value advantage. 'Productivity advantage gives a

lower cost profile and the value advantage gives the product or offering a

differential 'plus' over competitive offerings.' Through maximizing added value

and also reduce the cost in the same time, more innovation can be added to the

product and process. Mass manufacturing offers productivity advantage but

through effective supply chain management, mass customization can be

achieved. With mass customization, customers are given the value advantage

through flexible manufacturing and customized adaptation. Product life cycles

also can be improved through effective use of SCM. Value advantage also

changes the norm of traditional offerings that is 'one-size-fits-all.' Through

SCM, the more accepted offerings by the industry to the consumers would be a

variety of products catered to different market segments and customers

preferences.

Non added value activities are considered to be waste and therefore must

be eliminated. Such non added value activities are overproduction, waiting,

unnecessary transport, over processing, excess inventory, unnecessary

movement, defects and unused employee creativity.



2.5 VALUE CHAIN ANALYSIS

Value chain analysis is a powerful tool for managers to identify the key

activities within the firm which form the value chain for that organization, and

have the potential of a sustainable competitive advantage for a company.

Therein, competitive advantage of an organization lies in its ability to perform

crucial activities along the value chain better than its competitors.

Figure shows Porter's Generic Value Chain Model

The value chain analysis essentially entails the linkage of two areas.

Firstly, the value chain links the value of the organization’s activities with its

main functional parts. Then the assessment of the contribution of each part in

the overall added value of the business is made.

In order to conduct the value chain analysis, the company is split into

primary and support activities (Figure). Primary activities are those that are

related with production, while support activities are those that provide the

background necessary for the effectiveness and efficiency of the firm, primary

and secondary activities of the firm are discussed in detail below.


http://www.coursework4you.co.uk/essays-and-dissertations/analysis-of-companies/analysisofcompanies.php

http://www.coursework4you.co.uk/essays-and-dissertations/general-business/strategic-models/value-chain-analysis/valuechainanalysis.php


2.5.1 Primary activities:

The primary activities of the company include the following:

Inbound Logistics

These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. So all these activities related with bringing the raw material, keeping them in the store and managing the for the production process. The following are the various processes which are used in the inbound logistics.

Transportation Material handling

Material storage

Communications

Testing

Information systems

Operations

These are the activities related to the production of products and services. This area can be split into more departments in certain companies. It consist of various plants where the production is done. Here the inventory should be managed at each level of production process. So here all the production process is included. The following are the various processes which are used in operation.

Process Materials

Machine tools

Material handling

Packaging

Maintenance


http://www.coursework4you.co.uk/essays-and-dissertations/operations-management/operationsmanagement.php


Testing

Building design & operation

Information systems

Outbound Logistics

These are all the activities concerned with distributing the final product and/or service to the customers. All the process related with handling the finished product and distribution of these product are there in the outbound logistics. The following are the various processes which are used in the outbound logistics.

Transportation Material handling

Packaging

Communications

Information systems

Marketing and Sales This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firm’s products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products. The following are the various tools which are used in the marketing and sales.

Media Audio/video

Communications

Information systems

Service

There is often a need to provide services like pre-installation or after-sales


http://www.coursework4you.co.uk/essays-and-dissertations/marketing/sales-promotions/salespromotions.php

http://www.coursework4you.co.uk/essays-and-dissertations/marketing/marketing-communications/marketingcommunications.php

http://www.coursework4you.co.uk/essays-and-dissertations/marketing/marketing-communications/marketingcommunications.php


service before or after the sale of the product or service. The following are the service tools.

Testing Communications Information systems

2.5.2 Support Activities:

The support activities of a company include the following:

Procurement This function is responsible for purchasing the materials that are necessary for the company’s operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices. It is the responsibility of the procurement department to purchase the good quality goods so that product can achieve higher quality. It is the responsibility of the department to order the sufficient amount of the quantity at the lower price.

Human Resource Management

This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage. To keep the employs highly motivated and trained is the responsibility of human resource department so that they can help the company to achieve their target.

Technology Development

This is an area that is concerned with technological innovation, training and knowledge that is crucial for most companies today in order to survive. Latest technology should be provided to the employs of the company so that they can do their work more efficiently and timely. Latest technology is the one important requirement of the company to remain in the competition with the other industry.


http://www.coursework4you.co.uk/essays-and-dissertations/human-resource-management/reward-management/rewardmanagement.php

http://www.coursework4you.co.uk/essays-and-dissertations/human-resource-management/employee-training-and-development/employeetraininganddevelopment.php

http://www.coursework4you.co.uk/essays-and-dissertations/human-resource-management/recruitment/recruitment.php


Firm Infrastructure

This includes planning and control systems, such as finance, accounting, and corporate strategy etc. This department is related with all the finance and account related planning. It concern with the process of allocating the money to the various department for their work.

Margin

The word ‘margin’ is used for the difference between the total value and the cost of performing the value activities. Means the value achieved by selling the product or the services the customer and the cost occurred in the process of manufacturing product or service. This difference is shown by margin here.

2.5.3 Linkages Between Value Chain Activities

Value chain activities are not isolated from one another. Rather, one

value chain activity often affects the cost or performance of other ones.

Linkages may exist between primary activities and also between primary and

support activities.

Consider the case in which the design of a product is changed in order to

reduce manufacturing costs. Suppose that the new product design results in

increased service costs; the cost reduction could be less than anticipated and

even worse, there could be a net cost increase.

Sometimes however, the firm may be able to reduce cost in one activity

and consequently enjoy a cost reduction in another, such as when a design

change simultaneously reduces manufacturing costs and improves reliability so

that the service costs also are reduced. Through such improvements the firm has

the potential to develop a competitive advantage.



CHAPTER 3

SUPPLY CHAIN MANAGEMENT AT

ATUL LTD.



SUPPLY CHAIN MANAGEMENT AT ATUL LTD.

This chapter is about how the supply chain management is done at Atoll

ltd. It shows the whole process of supply chain management. Staring with

taking the order to the dispatching of the finished products. The order is taken

by e-mail or fax or on the telephone by the marketing department. According to

the order quantity they inform the production department to plan for the

required order quantity.

3.1 PRODUCTION PLANNING

Basically production planning is done on the basis of three month

forecast given by the marketing. Every week there is meeting of production and

marketing and all the order are reviewed. The minimum batch size for

production is 1 ton so they don’t give the priority if the order is quit small.

Compared to reactive dyes plant, vat dye plant is a bit slow because large no. of

steps go in the production of vat dyes.

FLOW CHART OF PRODUCTION PLANNING:


National MarketingInternational Marketing

Get Stock details and merge requirement

To Calculate Quantity to be manufacture for finished product

To Determine Nos. of crude and intermediates Batches

To check rough-cut capacity of plants



Plant loading and batch scheduling as per priority /advance planning

Communicate schedule to the plant/DQC & R&D

Calculate required quantity of raw material

Communicate raw material requirement qty along with schedule to purchase department

Monitor Manufacturing Activities


3.2 PURCHASE PLANNING

Once when to products and how much to produce is decided than

according to the order of product, requirement of raw material is decided and

purchase department give order to purchase the raw material. Following is the

flow chart of purchase planning.

FLOW CHART OF PURCHASE PLNNING


Requirement from planning

Getting Stock detail and merge req. for East & West

Calculating quantity to be order

Floating enquiry to approve vendor

Receipt of Quotation

Reminder for Quotation

Evaluation of Quotation



Negotiation

1st Level

2nd Level

3rd Level

Approval of QCS at different level

Asst. Mgr

GM

Preparation of Order

Signature of Order

Preparation Advance note for advance item

Preparation of Government Paper work for control item

Pss approval/import product

Dispatch of RM from Vendor to Atul

Material to quality department for material quality approval

Sr. Mgr



Else reject material after second test


3.3 RAW MATERIAL STORES

In Atul ltd colors division has two sites , East site & West site. Both sites

have their own RM stores. RM stores had taken the decision about how many

raw materials is required and then given the order for purchasing the raw

material. Here is the flow chart of receiving raw material.

FLOW CHART OF RAW MATERIAL STORES


Receipt of the Material Stores

Unloading of R.M. as per number

Marketing of Consignment number

Staking of Receipt

Data entry of receipt

Preparation of MRA/Account Advice

Intimation to Lab/Excise/Finance

Sampling of Consignment


3.4 RAW MATERIAL TESTING ACTIVITY

After purchasing raw material, it is given to the testing for the testing

department. Testing department has taken some sample from this raw material

and check the quality of this sample. We are prepared following flow chart of

the raw material testing activities.

FLOW CHART OF RAW MATERIAL TESTING ACTIVITY:


Preparation of Sample Bottles (Labeling etc)

Sampling

Eatery in Sampling Registry & Work Distribution

Checking Entry in Register & Comparison with Specification

Report printing

Approval & release for Conformed Quality Consignments

Distribution of Reporting


3.5 PRODUCTION AND PACKING

After the testing of the raw material, raw material is sent to the

production plants and depending upon the requirement of product, process is

done to produce the product. Vat dyes takes longer time to be prepared

compared to the other dyes. Vat green dyes is the monopoly of the Atul Ltd.

60% market of the vat green in India is captured by Atul Ltd. Here, general

routine procedure is followed, every day in the morning they take Tempo to the

shed D which is for reactive, there is a person who checks all the material while

loading, the material is then send to the warehouses and it is arrange out there.

After finishing with shed D, the tempo goes to shed E for carrying the vat dyes.

When the product is prepared it is send to the packing department where

the packaging process is done according to the order of packages. Following is

the flow chart of packing department.


Referred to R&D for dose not Confirmed Consignment

Return to Reports from R&D their Decision

Approval & Release

Distribution of Reports

Re-sampling & Retesting in case of Rejection of

Consignment/Deduction


FLOW CHART OF PACKING DEPARTMENT

PROBLEMS FACED BY PACKING DEPARTMENT

The product that comes from the finishing plant is not properly arranged

so they have difficulty in spotting the product of particular blend and this leads

to delay.

The drums that are brought from the store are not properly kept and due

to which they have to repaint the drums for export before making and markings.

So painting and drying of drums consumes lot of times.


Arrange goods in WarehouseReceiving the packing advice and makes its entry

Check if material is available

Check if packing material is available

According to priority schedule packed

Pack both material National & International.

If not inform prod.

If not proc-ure

Wait until the tempo from warehouse

Forward Doc. to D.Q.C excise & warehouse

Make entry into Database

Make necessary mark on dry paint

Repaint the drums


3.6 DISPATCH

In east site they keep finished goods inventories so generally they do not

determine the critical time of dispatch. The critical time is determined by dyes

coming to the bonded warehouses in the West site. The palletisation of drums is

also done in the bonded warehouse.

For dispatch of the material they get intimation from logistics National

regarding dispatch of the material, then they make necessary arrangements. And

on the receipt of weight list from excise they keep cargo ready in the

dispatched area. The cargo is loaded in the presence of the security. Person

checks the materials according to the weight list. Incase if cargo is at east site

warehouse, then first the east site cargo is loaded then the truck comes to the

west site.

3.7 EXCISE DEPARTMENT:

They are responsible for giving ARE-I form, which is required for custom

purpose. On the day dispatched value sheet and invoice copy goes to them.

They also get the packing data from the packing department. These ARE-I

forms are made scheme wise and party wise. They hardly required any time to

make ARE-I form and weight list, which goes to the warehouse. Normally 6

copies of the ARE-I forms are made which are modified according to the

different purpose.

Among six copies original, duplicate and triplicate copy goes with the driver,

out of which original and duplication are returned back to the factory the third

copy is kept by driver. Before giving it to driver the triplicate copy goes to the

logistics international. After dispatch, some copies of ARE-I form goes to

central excise to the endorsement, this is done within 24hrs.



CHAPTER 4

SUGGESTION & RCOMMENDATION



SUGGESTIONS & RECOMMENDATION

Chemicals are mishandled at the shop floor at the plant site. Proper care

should be taken to avoid the wastage occurring due to spilling of the

chemicals.

Maximum utilization of the intermediate product should be there during

the production process so that it will help in getting more profit for the

company because sometime it is discharged into the river which pollutes

the water.

Production process is too lengthy so keen observation should be there

during the whole process to maintain the quality of the product because

sometime workers and employs become careless and due to the lack of

proper attention the whole batch of product become useless or have to sell

at lower price..

Arrangement of the finished products should be such that it becomes easy

to identify the product at the time of delivery if such arrangement is not

there than it becomes time consuming to load the container and deprtment

cant get the right information aout the stock of the finished products.

Proper care should be taken in weight of the product when the container

is loaded at the warehouse because any careless will rise into the delivery

of wrong amount of product and it will cost to the company.

Proper attention should be there at the time of documentation process and

be clear with the officer of the excise department regarding to all the

documents.



ANNEXURES

1 ) Key Products of Aromatics Division:

Para Cresol 99%

Para Anisic Aldehyde

Para Anisyl Alcohol

Para Cresidine

Meta Para Cresol

Ortho Cresol

Para Cresol Methyl Ether

Perfumery Grades

Para Anisic Aldehyde

Para Anisyl Alcohol

Para Anisyl Acetate

Para Cresyl Methyl Ether

Para Cresyl Acetate

Para Cresol

In organics

Manganese Sulphate Powder

Sodium Sulphite

Liquid Sulphur Dioxide

Oleum 65%

Oleum 25%

Sulphuric Acid 98%

New Additions

Anisole



Ortho Methoxy Toluene

Para Methoxy Acetophenone

Para Toluene Sulphonic Acid

Products Under Development

p-Cyanophenol

1,3-Cyclohexanedione

Benzophenone-12

4-Hexylresorcinol

These all Chemical products are used in the production process of dyes.

2 ) Key Products of Agrochemical Division:

Fungicides

Triazoles

Organo sulphur

Insecticides

Neonicotinoids

Pyrethroids

Carbamates

Intermediates

Chlorophenols

Benzyl Chloroformate



Centralite I (N,N’-Diethyl – N, N’ diphenyl urea)

These all Chemical products are used in the production process of



3 ) Key product’s of Colors Division:


Domestic

Atul Acid

Atul Direct

Atul Sulphur

Dermat

Duratic

Novatic

Procion

Solatic

Tulabase

Tulactiv

Tuladir

Tulasteron

Tulathon

International

Acid Dyes

Direct Dyes

Disperse Dyes

Leather Dyes

Naphthol & Dyes

Optical Brightners

Reactive Bifunctional /

VS Dyes

Reactive Cold Brand

Dyes

Reactive Hot Brand Dyes

Reactive Printing Dyes

Solubilised Vat Dyes

Vat Dyes


These all Dyes are used in the textile industries for the printing purpose. The following are the major buyer of these dyes.

Alok Industries. Welspun. Arvind Mills. Raymond. Vardhaman Industries.



BIBLIOGRAPHY:

Books Referred:

Kotler, P, 1994, Value Chain Analysis, United States, Pearson Education.

Websites Referred:

http://www.en.wikipedia.org/wiki/Supply_chain_management

http://www.supplylogistic.blogspot.com

http://www.EzineArticles.com/?expert=Razamith_Sovereign

http://www.coursework4you.co.uk/essays-and-dissertations/value-chain-analysis.php

Other References:

Reports of the Color Division, Atul Ltd.




http://www.EzineArticles.com/?expert=Razamith_Sovereign%20

http://www.supplylogistic.blogspot.com/

http://www.en.wikipedia.org/wiki/Supply_chain_management