mba f suppy chain management project report

7/25/2019 MBA F Suppy Chain Management Project Report

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A

Training Report

On

Supply Chain Management

A Training report file submitted in partial fulfillment of the requirements for

the degree of MBA

At

Submitted to: Submitted by:

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Certificate




PREFACE




PREFACE

I have undertaken training from................company working on one of their project “Supply Chain

Management “It has been taken care that this documents elicits the system development process in

a lucid and an understandable manner. The contents have been divided into segments, all of which

have been explained in detail in the following pages. I have tried my best to elucidate all the relevant

detail to the project to be included in the report. While in the beginning I have tried to give a general

view if the project, to make it clear in the later stages, I have included the portion that was

specifically assigned to me and also described where that part is actually being used.




Acknowledgement




Acknowledgement

I would like to thank respected Mr…….. and Mr. ……..for giving me such a wonderful opportunity

to expand my knowledge for my own branch and giving me guidelines to present a project report. It

helped me a lot to realize of what we study for.

Secondly, I would like to thank my parents who patiently helped me as i went through my work and

helped to modify and eliminate some of the irrelevant or un-necessary stuffs.

Thirdly, I would like to thank my friends who helped me to make my work more organized and well-

stacked till the end.

Next, I would thank Microsoft for developing such a wonderful tool like MS Word. It helped my

work a lot to remain error-free.

Last but clearly not the least, I would thank The Almighty for giving me strength to complete my

report on time.




Index

Supply Chain Management

Introduction

Company profile

Tapir Traditional company

Resource involve in supply chain operations

Analysis

Recommendations

Value of project to learning




Supply Chain Management:-

Supply chain management is a set of approaches utilized to efficiently integrate suppliers,

manufacturers, warehouses, and stress, so that merchandise is produced and distributed at the

right quantities, to the right locations, and at the right time, in order to minimize system wide

costs while satisfying service level requirements.

In other words, the Supply Chain Management Program integrates topics from manufacturing

operations, purchasing, transportation, and physical distribution into a unified program.

Successful supply chain management, then, coordinates and integrates all of these activities

into a seamless process. It embraces and links all of the partners in the chain. In addition to

the departments within the organization, these partners include vendors, carriers, third party

companies, and information systems providers.

We can say it takes into consideration every facility that has an impact on cost and plays a

role in making the product conform to customer requirements from supplier and

manufacturing facilities through warehouse and distribution centers to retailers and stores.

The objective of supply chain management is to be efficient and cost-effective across the

entire system, total system wide costs, from transportation and distribution to inventories of

raw material, work in process and finished goods, are to be minimized. Thus the emphasis is

not on simply minimizing transportation cost or reducing inventories but, rather, on taking

systems approach to supply chain management.




Introduction

Drinking tea has become part of life for many people. Only secondary to drinking water in

the world, tea has become even more popular than coffee. However, most people have no

idea of tea production process from processing, blending, packaging, transportation and sale,

as well as the major players involved in this process that spans agriculture, industry and

retail, let alone the impact of tea consumption and production upon the tea growers and

workers' lives.




Company Profile

Tapri

Tea may not run in the blood of Indians, but it sure comes close. India is the largest consumer

of the beverage in the world, consuming nearly 25 percent of the global tea production,

according to a December 2011 report by trade association ASSOCHAM.

Reading the tea leaves, one may be forgiven for thinking that India would be a land where tea

lounges exist in every corner, with their owners laughing all the way to the bank. The reality,

however, is different. In India, tea rules the homes, while coffee rules the streets. National

chains specializing in hot beverages exist all over the country, but they serve coffee, not tea.

A Café Coffee Day or Barista running hundreds of cafes in all parts of India is yet to emerge

on the tea-scope of this part of the world.

“We wanted to do tea and not coffee because the potential lying under ‘thadi’ [local tea stall]

has still not been recognized in India. We were totally fixated on opening up a ‘Chai ki

dukaan’ and were sure of setting up a new trend – in this I think we have succeeded,” says

Ankit Bohra ,owner of Tapri which sells 40 types of tea in Jaipur and is planning to open a

second outlet in a few months.

“Tea is a common man’s drink, but there are many uncommon tea types – white, oolong,

pearls, green and herbal, to name a few – yet to be experienced by him. That is where the

opportunity lies.” Over the last one year, Bohra has seen many start-up tea bars emerge in tea.

“The reason behind opening up a tea lounge was that we thought we should take this ki nd of

ownership to take the category to the next level. From being a poor man’s beverage, we

wanted to take tea to the level of coffee. We wanted people to enjoy our tea. Also, we wanted




to educate people about the different kinds of tea available, apart from the regular ones. We

are providing our customers with 45 varieties of tea.”

With its first outlet that begun in Jaipur in August 2010, Tapri the tea house has been able to

attract approx 300 footfalls a day. It has an area of about 1000 sq.feet with sales of

Rs.40/day/sq. feet.




Traditional company

Road Side Tea Stall:-

It is a road side tea stall at Pratap Nagar, Jaipur owned my Mr. Mahveer Prasad Gautam who

established it two years back with the intention of capture the market near Sanganer Bus

Depo with localites. He has a “chai ki Thadi” with Average 56 Sq. Ft. area. Where his sales

are average 100-160 cups per day. To make Tea he use normally following Supply Chain

Operations:-

1.

Procure the raw material for Tea making like Milk, Tea, Ginger, Water, Sugar,

Masala etc. and to get all these material he make contacts with different wholesalers

or Sales people who provide these things to him on daily basis. And the costs of this

supply transportation bear by the Company or wholesaler.

2. Storage of raw material:-to store all these raw material he has some small containers

in which he store all these things and use it according demand.

3. Demand forecasting:-on the past basis record he forecast the demand of tea for every

day and accordingly he store the raw material like

in working day the more people are coming to take

Tea but on Sundays or holydays the customer

demand is decrease. Seasonal factors are also play

an important role in demand forecasting because in

winter the demand of Tea is normally increase by

80%-90% while in summers it decrease by 5%-10%.




4. Just in Time:-he normally make Tea on Just in Time concept because he make tea for

customer only when they demand, he not make extra tea. And it helps him to reduce

his risk of disposal or wastage.

5. Network Planning:-In his business the importance of network planning is very critical

because some time the demand of raw material is increasing on such duration the

networking with wholesaler is very useful and he store it in extra amount.

6.

Distribution Strategy:-To distribute Tea he actually not uses any special strategy

because he serves tea to their customer directly on their demand.

7. Profit margin: - In his business profit margin is not fixed because it depends on the

number of customers if no. of customers are limited then he make tea with good

quality but when large number of customers are order Tea at one time then he

compromise with the quality of Tea and mix more water so the profit margin is vary

according customers Numbers.

8. Customer Value:-To add customer value he also provide the facility of “Fans”,

“Mathari” and other snacks for their customers with Tea on reasonable price.

9. Risk management:-because he use milk and ginger in his Tea and both these things

can be waste after some time so to reduce the risk of wastage of these items he

manage orders of these items in limited numbers. And continuously boil milk twice or

thrice in a day as well as use cold storage.




Resources involve in Supply Chain Operations:

To perform a supply chain management from raw material to distribute final product many

resources are used by Mr. Mahaveer Prasad Gautam and Tapri as well ,they are as following:-

1.

Transportation:- first of all to get the raw material from the wholesaler or retailer Mr.

Mahaveer use his motor cycle for transportation because to get ginger and milk he

required his vehicle and the cost of this transportation is born by himself. While in

case of milk, sugar, Tea and other thing are provide by sales people so the

transportation charges of this are pay by company or wholesaler itself. While Tapri

gets it supplies from the distributers where the cost is born by the latter itself.

2.

Storage: - as above mention the consumption of Tea is almost 100 to 150 cups per day

so there is need of storage area to store all material so for that Mr. Mahaveer has some

small containers where he put all his raw material which required for making Tea.

And to purchase these container some fixed cost bear by Mr. Mahaveer. Where as in

case of Tapri most of the operations are based on just in time concept there by

eliminating the need of large storage facilities.

3. Equipments:-to fulfill the demand of customer for Tea there is need of some

equipments which are used to make Tea so the Tea making machine or Stove etc. are

manage by Mr. Mahaveer to start his business which increase his fixed cost. And he

uses it on regular basis to prepare the Tea. So was the case with Tapri as Startup.

4. Distribution:-to distribute the tea to the customer Mr. Mahaveer has two kinds of

Cups one which made by the glass and other one made with disposal. So on the




requirement of customer he serves the Tea in Glass cup or disposal cup. Whereas

Tapri realize on ethnic and traditional cutlery to serve its clients.

5. Communication Channel:-to make an order to wholesaler Mr. Mahaveer has a mobile

phone which is very helpful for him because whenever he needs anything he ordered

that thing with the help of his mobile phone and it is used as an important

communication channel for him. While for Tapri their networking strategies help a lot

while making use of basic facilities like telephone and internet.

Supply chain Operations:-

Tea Growers

Consumers

(2.Tea House)

Primary Processing

Factory

Dealers

Refining

Brand Owner

Brand tea

factor

Fresh Leaves

Fresh LeavesSelf processed

crude tea

Ultimate consumer

1. Local

Tea




A. TEA

After picking fresh tea leaves, tea growers have two options: selling the leaves

directly or selling self ‐ processed tea. As processed tea is more expensive than fresh

leaves, to get more profit, skilled tea growers tend to process tea themselves and sell

the remaining fresh leaves to primary processing factory and brand tea factory.

There are mainly three distribution channels that turn fresh leaves picked by tea growers into

finished tea.

I.

Tea growers sell fine tea leaves they handpicked to brand tea factories which

process the leaves into tea and then sell it to dealers. Through wholesale and retail

the tea is sold to tea store, teahouse, supermarket and other stores, and finally to

consumers.

II.

Tea growers sell both leaves and buds to processing factories for mass‐

producing

tea. After the processing factories have turned them into crude tea, the refineries

will buy it and reprocess it into finished tea after sorting and selection. Refineries

mainly engage in tea mass production, and tea mass produced, after entering the

distribution channel, is sold in the market mainly through wholesale. Such tea is

mainly supplied to places such as hotels and restaurants

that provide free tea.

III. Tea growers process fresh leaves into tea and sell it

themselves. On the one hand, tea growers sell their

roughly processed tea to refineries, brand tea factories

and businessmen that come to their place to buy tea. On the other hand, tea




growers further process crude tea into high‐end tea and sell it in the township‐ or

county‐level retail market. In the genuine tea areas, as the tea available is limited

but expensive, dealers and consumers will also go to the tea growing households

to buy tea directly.

There is another different distribution channel, which consists of tea growers, brand owners

and consumers. The brand owners here refer to comprehensive tea companies that engage in

production, supply and marketing. Such companies usually have their own production bases

and processing factories, and place orders to tea growers for fresh leaves and have their own

tea chain stores directly selling tea products to consumers.

B) MILK AND OTHER INGREDIENTS

In the tea houses like Tapri, the orders are placed regularly likewise the orders for grocery,

vegetables, milk and etc. They place orders mostly over phone. And some suppliers provide

things on regular basis without any intimation.

In case of local tea vendor, distributors visit him quite often, take orders and deliver on

regular basis. There is a regular supply of Saras Milk.

Comparing supply chain operations of formal organization and traditional

organization i.e. Tapri vs. .local Tea Vendor

a) Demand Forecasting and Seasonal Factors affecting the same




Tapri teahouse: - Like any other organized firm, there is a well established system of record

keeping. The stock reports keep track of regular purchases, depicting their trend thereby

enabling estimation of sales turnover.

Sudden rains, post- examination period, IPL matches or other significant cricket matches

make sales a sensitive issue and deriving impacts of more of such occasions are determined

purely on common sense.

Unlike Tapri, a local vendor merely assumes the footfall of a day. To handle any shortages he

maintains good relations with the distributers-who tend to be just a phone call away.

b) Network Planning

The Tapri believes that Network planning plays role when it comes to sourcing tea from

different gardens. A well established network helps getting right product at right time.

Whereas there exist no similar criteria with a local vendor.

c) Value of information

In circumstances like expected price rise, Tapri stocks well in advance. It seconds the fact

that “Information is Money”. Whereas it’s just the assumptions on basis of their experiences

that local vendors work upon.

d) Over stocking, shortage or wastage at stores

Tapri has undergone such problems. As is evident from the incidence when it had ordered

5000 kulhad (earthen mugs) without arranging space for same. A lot got wasted because of

improper stocking. Also, there occurs a problem of shortage in stock with bakery products as




they outsource them to a bakery, and because they don’t have good shelf life, they have

problem managing stuff in short notice.

Whereas at local vendors, inventory is limited and so is the risk and associated problems.

Material handling requirements are low as the products as the products are consumable,

immediately.

e) Tackling problems

Unlike vendors, Tapri has options to store the surplus or the unpredictable ones at the

warehouse.

f) Importance of relationships

A lot of times monopoly lies with the vendors (in areas like taste, consistency or economy in

prices) In that case, Tapri people (owners) have to maintain relationship. And, be it any

relationship, it has to be like a marriage.

g) Preferred methods of making supply chain management effective

According to Ankit Bohra, a realistic approach towards forecasting and calculation of risk

could make a supply chain effective. Whereas the vendor Mr. Gautam had no clue as to what

a supply chain exactly was. To him SCM merely meant to be concept of timely transportation

and availability of product.

h) SCM vacuum

In absence of an effective Supply chain, Tapri tends to lose its revenues at times. A lot of

stuff in the Menu is not offered due to its unavailability. This is majorly the case with white

tea as it grows only for a particular period of time thus making its procurement a tough job.




Reverse is the case with the local Tea shop where the owner remains ignorant from taking

care of any of the supply chain operations. He maps his trivial profits with the proportion of

water that is used in preparation of tea.




Analysis:-

By doing the comparative analysis of both local “chai ki Thadi” and “Tapri” we found

following results which are very helpful to highlight the importance of this study:-

1. Demand forecast:-both the traditional outlets and retail stores are actually work on

demand forecasting and for that where traditional outlets are more focus on the past

data or records the retail outlets are focus on the market competition, trends and the

need of the customers. And both are almost maintain the output and forecasting in

balance so that the risk factor is minimize and it increase the profit of firm and

minimize its cost.

2. Suppliers:-both traditional outlets and retail stores are depend on their suppliers for

supply of the raw material which they required to make their product but there is a

huge difference in both approach where traditional outlets are more focus on those

suppliers who provide them more profit margin the retail outlets are focus on the

quality product because in market there are many kind of Teas are available but as we

know the consumption of “chai ki Thadi” is not so much so they are not concentrate

on quality but retail outlets purchase material in bulk so they can get good quality

product from the suppliers. In traditional outlets wholesalers or suppliers are

approaches them while in retail store they ask to selected suppliers for tender or some

other process to find out best from them.

3. Numbers of Suppliers:-As we already know that the demand of traditional outlets are

limited so they normally purchase their material from one or two suppliers while in

case of retail stores they approach to multiple Numbers of suppliers but as Mr. Ankit




Bohra founder of tapri said that there was monopoly of suppliers so the relationship

between suppliers and them is like a marriage where they both are cooperate with

each other.

4. Transportation:-The role of transportation is very important in their logistic activities

because both traditional as well as retail store required transportation for procure raw

material from the suppliers but as we know the purchase amount of raw material is

different for both the firms so the need of transportation is also different like for

traditional outlets they required limited amount of raw material on daily basis so there

is supply of these item with the help of two wheeler can be possible while Tapri

required raw material like Tea and sugar in bulk so they use “riksha trali” or “Pick

up” as a transportation.

5. Order:-If we talking about the order numbers then it is very clear that the traditional

outlets are required more order in respect of Tapri because the amount of investment

capacity is different for both. Where traditional outlets purchase raw material in less

amount so the no. of orders are increase the retailer stores are purchase raw material

in bulk so no. of orders are less in comparison of traditional outlets.

6. Warehouse:-by studying both kind of stores we found that the requirement of

warehouse is different for both and it is required because they both manage inventory

of raw material for their product Tea but the difference is this that the cost of

warehouse is less for traditional in respect of retail stores due to order amount if they

don’t have warehouse then there should be a problem like in case of Tapri due to lack




of warehouse in Mr. Bohra’s ordered 5000 “Kulhar” some are damage which increase

his cost and risk.

7. Inventory management:-Inventory management impact directly on the firm or their

profit because if a firm has good inventory management then in that case the optimum

utilization of inventory is there. Inventory management includes storage of inventory,

right amount of order for right quantity of raw material at right place.

8.

Flow of information:-flow of information also play a vital role because the flow of

information is flow at time then only the supply chain can run smoothly like whenever

there is requirement of material it should be communicate to the supplier on time so

that he can provide raw material on time similarly the right information flow by the

customer to the person for Tea then only he can make Tea in that number and reduce

the chances of wastage. And different external or internal factors are also

communicated on right time to both the party then it reduced the chance of

misunderstanding. So we can say that the flow of information in both directions is

very useful.

9. Structure:-Structure includes the infrastructure of both “chai ki Thadi” and “Tapri”

and it shows the investment in fixed assts. Where “chai ki Thadi” required a nominal

space with some small equipments and furniture, a retail store (Tapri) required a big

space as well as they use latest technological equipments for Tea making they also use

good furniture and other facilities like Air conditioner, LCD and other products like

snacks, different Tea flavors etc. to enhance customer satisfaction. In structure we




also include the number of employees where in “chai ki Thadi” Mr. Mahaveer handle

all task in Tapri on different point of purchase different people are there.

Recommendations:-

On the basis of above analysis we want to recommend some suggestion to both traditional

and retailer store which help them to improve their profit and service as following:-

1. Like Mr. Mahaveer told us that he compromise with the quality of Tea according

number of customers but if he maintain their good quality for everyone in every

situation then it increase the trust and loyalty of his customers which helps him to

increase his market share.

2.

Although he has some snacks in his shops but in today’s scenario people not want

“mathris” and “fans” that much so to additional he can also store other snacks like

Chips, Kurkure etc. that give him additional benefits.

3. Normally Mr. Mahaveer purchase raw material from those supplier who provide him

it on cheaper rate but in my opinion he should go for quality product because if he

purchase good quality Tea, sugar or milk then indirectly it decrease his cost because

less amount of these things can increase the taste and quality of his Tea which attract

most of the people.

4. Mr. Mahaveer order each raw material on daily basis but in my opinion some raw

material like Tea and Sugar he can purchase in bulk or we can say in sufficient

amount because these things are not waste in early time period which decrease his




order cost and also provide uniformity to his product taste because normally Tea

comes from different places so some time the taste of tea become change. But the

question is if he purchases these things in bulk then the storage cost will increase but

actually Mr. Mahveer already has container with sufficient place so there is no

additional cost of storage is there.

5.

In my opinion near to this “chai ki Thadi” many small and big shops are there so if

Mr. Mahaveer also provide home delivery facility to them for distribute his product it

will increase his market share then again the question is that the wages of that person

is increase so in spite hire any person for it he can approach himself to those places

where he can easily distribute it.

6. As mention by the owner of the Tapri, the problem facing the firm is from the

supplier’s monopoly, at times. So it is advisable for the firm to keep suppliers offering

similar products as options.

7. Targeting the business class while designing ambience congenial to business meeting

(this could be an add – on to the upcoming brand to the jaipur.

8. Organization’s move in long run may undergo criticism for having hampered the

growth of local entrepreneur. So it is required that the company benefits the

participants of its supply chain. Also, it can employ a few local venders to prepare

offerings of Tapri against Justified payments.




Value of project to Learning:-

This project is valuable for us to understand the practical implication of Supply chain

management in to real market. During the analysis we found that the course design of

Supply chain management is very helpful for us and actually cover all the practical

aspects of supply chain management. Because normally we learn what kind of supply

chain management concept are used in market only theoretical but due to this project

during interviewing the concern person at both “chai ki thadi” and “Tapri” we found

that these all theoretical concepts are used by those people even they are literate or

illiterate. Like Mr. Mahaveer owner of “Chai ki thadi” is not so literate but even

though he used all the basic concepts of supply chain management like demand

forecasting, inventory management, network planning etc. in unorganized way while

Mr. Ankit Bohra founder of “Tapri” who has good knowledge of supply chain

management concept used all these thing in organize form.

And both the parties Mr. Mahaveer and Mr. Ankit bohra want to increase their profit

by reduce their cost which incur in transportation, warehouse, order of raw material to

supplier etc. by applying these supply chain management concepts.

Now we are able to understand that by using Supply Chain Management concept we

can enhance the performance of the organization and for that it is very important that

the flow of information is move in both direction smoothly.

Complexities within the entire network i.e. their exists too many supply chain within a

large supply chain. Lack of management amongst them could create hassle in the

entire process.

Before entering a niche, one must not only analyze growth factors but also understand

the interest that the stack holder will hold.




Bibliography

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