PROJECT PRESENTATION

Spring 2016

Table Of Content

The Role of the Internet in Supply Chain Management

■ Objectives........................................................................... 4-15

■ Review of Literature........................................................... 16 -20

■ Research Methodology........................................................ 21-22

■ Data analysis & Interpretation............................................ 23-24

■ Results & Discussions ......................................................... 25-26

■ Conclusion………………………………………………………………………. 27-28

The Role of the Internet in Supply Chain Management

Submitted in partial fulfilment of the requirements for the Degree of Masters of Business Administration

Submitted By:Chandan SinghMBA Final Year

Spring 2016

Objectives of Supply Chain Management

■ The fundamental objective is to "add value".

■ SCM is consists of all parties (Including Manufacturing, Marketer, Suppliers, Transporters, Warehousing, Retailers and even Customers) directly or indirectly involved in fulfilments of a customer. The main objectives of Supply Chain Management are to improve the overall organization performance and customer satisfaction by improving product or service delivery to customer.

■ Supply Chain Management involves Movements and Storage of all materials including Raw Material, WIP (Work In Progress) and Finished Goods.

■ An ideal company moves far beyond the traditional belief that buyer’s primary role is to obtain goods and services in response to internal needs. They:

■ Achieve Efficient Fulfillment

■ Drive Customer Value

■ Enhance Organizational Responsiveness

■ To Maximize Overall Value Generated

Supply Chain Circle

Why is supply chain management so important?

■ To gain efficiencies from procurement, distribution and logistics

■ To make outsourcing more efficient

■ To reduce transportation costs of inventories

■ To meet competitive pressures from shorter development times, more new products, and demand for more customization

■ To meet the challenge of globalization and longer supply chains

■ To meet the new challenges from e-commerce

■ To manage the complexities of supply chains

■ To manage the inventories needed across the supply chain

■ Why is supply chain management difficult?

■ Different organizations in the supply chain may have different, conflicting objectives

■ Manufacturers: long run production, high quality, high productivity, low production cost

■ Distributors: low inventory, reduced transportation costs, quick replenishment capability

■ Customers: shorter order lead time, high in-stock inventory, large variety of products, low prices

■ Supply chains are dynamic - they evolve and change over time

What Is the Role of the Internet in Supply-Chain Management in B2B?

■ B2B supply chains have partially migrated to the Internet, as online marketplaces reduce the cost of both supply-chain management and the carrying out of supply-chain functions. A key to the reduced cost is Internet-based, generally available information that increases the transparency and speed of transactions. Members of supply chains can quickly and reliably find the specific information they need to complete an exchange of goods or services, and receive rapid payment.

■ Procurement

■ The Internet reduces the cost of purchases by giving supply-chain partners quick access to information about sources, availability, pricing and technical data.

■ Members of the supply chain must cooperate in making this information available online, possibly in secure folders only accessible to account holders who are supply-chain partners. Once information required to make a purchase is available online from several sources, procurement is more efficient because the best source can be identified more quickly. While the actual prices paid do not necessarily diminish, the cost of the procurement transactions is lower.

■ Supply

■ On the supply side, the most important role of the Internet is to greatly increase the size of the accessible market. Suppliers using the Internet to market their goods and services can sell world-wide. With the Internet's greater transparency regarding pricing, suppliers have lost some of the strategic levers that allowed them to cultivate preferred accounts with higher margins.

■ The ability of competitive suppliers to achieve greater sales volumes balances this disadvantage. Once the supplier has found a customer, he benefits from similarly reduced transaction costs as the purchaser, because completing the transaction is quicker and more efficient.

■ Direct Transactions

■ For supply chains in general, the role of the Internet has been to reduce the power of intermediaries. Suppliers can offer their products and services directly to customers, and purchasers can find what they need directly from producers. This disintermediation has simplified supply-chain management by making real time data on changes in demand and supply available to the markets, rather than having the information filtered through re-sellers. This trend has been especially pronounced in B2B transactions, while intermediaries remain more important in retail.

■ Collaboration

■ While supply-chain management through the Internet is still in its infancy, the possibilities exist for even closer integration of supply and procurement functions. Suppliers are interested in having a high, predictable sales volume, while purchasers are looking for a reliable, low-cost source. Companies can satisfy both goals by providing data on production and on procurement needs to each other under long term relationships. The resulting high, steady volume allows the supplier to offer his products at lower cost, while the purchaser benefits from this cost reduction and receives a reliable supply.

The Advantages of Supply Chain Management Systems

■ Effective supply chains give businesses a competitive advantage in the marketplace and help mitigate risks associated with acquiring raw materials and delivering products or services. By implementing supply chain management systems, businesses are able reduce waste, overhead costs and shipping delays in a scientific way. The benefits of this systematic approach impacts areas ranging from product quality to order turn-around times.

■ Quality Assurance

■ Many manufacturers in the U.S. have relocated their operations to countries such as China, India and Russia in an effort to cut production costs.

■ This has caused experienced domestic personnel to opt for other job assignments. As a result, product quality within the supply chain has become a pressing issue. Defects and rework attributable to poor systems are raising the costs of doing business. One of the advantages of supply chain management is that it incorporates quality techniques, such as quality management systems, to improve operations.

■ Inventory Buffers

■ In almost every type of business, there is variability in customer spending. This requires companies to manage their inventories in a way that minimizes holding costs while providing enough flexibility to meet customer demands. If inventory levels fall too low, businesses may have to pay overtime to produce products or lose out on revenue by making customers wait or shop somewhere else. Supply chain management systems typically include inventory buffer levels that are pre-determined with careful analysis of historical trends.

■ Hipping Options

■ As e-commerce continues to grow globally, buyers have more options to order products than ever before. Shipping options need to keep pace with the demands of the marketplace, which requires companies to readjust their supply chains to meet customers’ preferences. Whether it is small parcel shipping or larger bulk orders, shipping in a quick and accurate fashion is key for business success. Supply chain management systems help companies determine the optimal ways to ship while reducing costs to the lowest possible level.

■ Risk Mitigation

■ Managing risk is a key responsibility for business leaders, and supply chain management systems allow for the identification of critical risk factors in an organization or with their suppliers. Whether it is product quality, compliance with applicable laws or operational safety, management must mitigate risk in an effective manner.

REVIEW OF LITERATURE

■ Types of IT use in SCM

■ The first construct, types of IT use in SCM, refers to the ways in which companies employ IT for the purposes of SCM. Based on prior research discussed above, three different types of IT use in SCM – transaction processing, supply chain planning and collaboration, and order tracking and delivery coordination – were identified and chosen to represent the first construct.

■ The first type of IT use, transaction processing stands for the use of IT for increasing the efficiency of repetitive information exchanges between supply chain partners. In this type of IT use the exchanged information is typically related to such tasks as order processing, billing, delivery verification, generating and sending dispatch advices, and producing order quotes. The second type of IT use,

■ supply chain planning and collaboration, represents the use of IT for sharing planning-related information such as demand forecasts and other demand information, inventory information, and production capacity information, with the

■ intention of increasing the effectiveness of the supply chain. Finally, the third type of IT use in SCM, order tracking and delivery coordination, refers to the monitoring of individual orders or shipments, which may consist of components or final products, with the aim of coordinating their delivery or conveying timely information of their location.

■ The importance of information in an integrated supply chain management environment:

■ Prior to 1980s the information flow between functional areas with in an organization and between supply chain member organizations were paper based. The paper based transaction and communication is slow.

■ Supply chain organizational dynamics:

■ All enterprises participating in supply chain management initiatives accept a specific role to perform. They also share the joint belief that they and all other supply chain participants will be better off because of this collaborative effort. Power within the supply chain is a central issue. There has been a general shift of power from manufacturers to retailers over the last two decades. Retailers sit in a very important position in term of information access for the supply chain. Retailers have risen to the position of prominence through technologies.

■ The Wal-Mart & P&G experiences demonstrate how information sharing can be utilized for mutual advantage. Through sound information technologies Wal-Mart shares point of sale information from its many retail outlets directly with P&G and other major suppliers.

■ The development of Inter organizational information system for the supply chain has three distinct advantages like cost reduction, productivity, improvement and product/market strategies.

1. Remote Input/output mode: In this case the member participates from a remote location within the application system supported by one or more higher-level participants.

2. Application processing node: In this case a member develops and shares a single application such as an inventory query or order processing system.

3. Multi participant exchange node : In this case the member develops and shares a network interlinking itself and any number of lower level participants with whom it has an established business relationship.

4. Network control node: In this case the member develops and shares a network with diverse application that may be used by many different types of lower level participants.

RESEARCH METHODOLOGY

■ Supply Chain Methodology

■ Theoretically “Effective supply chain management is all about delivering the right product in the right quantity and in the right condition, to the right place, at the right time and at the right price.”

■ Practically this is the most difficult thing to do in a globalized internet-connected world economy. Talk to the Operations staff of any Company and all you will hear are the increasing complexities of serving the demands of a global customer base. With shrinking product life cycles and very low barrier to entry in most industries, no one can ever prepare for the next onslaught from a new competitor. Operations teams are always on their toes to keep the finished goods flowing while managing the cost of production, to keep their competitive edge. Reliance on complex software solutions is increasing to keep the wheel of global commerce going.

The steps of methodology are as described

Collecting & analysing data – both primary & secondary

Identifying the factors contributing to the problems

Prioritization of reasons contributing to the problem

Planning strategically the feasible solutions to the problem

Implementation of the solutions

Data Analysis & Interpretation

India to have 651 million smartphones, 18.7 million tablets by 2019

■ India, the second largest smartphone market globally, is expected to witness a mani-fold growth in the number of smartphones to over 650 million in the next four years, a study by networking solutions giant Ciscosaid today.

■ The country also considered one of the world's fastest growing Internet market, is expected to see the number of tablets hit more than 18 million by 2019, according to the US-based firm's Visual Networking Index (VNI) global mobile data traffic forecast for 2014 to 2019.

■ "In India, the number of smartphones grew 54 per cent during 2014, reaching 140 million in number and the number of smartphones will grow 4.7-fold between 2014 and 2019, reaching 651 million in number."

The number of tablets grew 1.7-fold during 2014, reaching 2. Million in number and is expected to grow 9.2-fold between 2014 and 2019, reaching 18.7 million

Results & Discussions

■ Overview of the Indian e-commerce industry

■ The e-commerce market in India was estimated at USD17.6 billion in 2014, and is expected to grow at a CAGR of 40 per cent to touch USD136 billion by 2020. The online travel segment at USD12 billion alone, comprises about 68 per cent of the ecommerce industry in

■ India, including travel and e-ticketing websites. Ticketing accounts for the largest share of the online travel market, with domestic air ticketing driving growth. At USD3 billion, e-commerce retailing is the second largest and fastest-growing segment. This is followed by the financial services and classified segments, job searches and online matrimony which contribute to about 15 per cent of the market by value.

The state-owned Indian Railway Catering and Tourism Corporation (IRCTC) has emerged as one of the largest online sites, with the website itself, attracting about 45 per cent of all visitors to travel websites in India and 19 per cent of the total internet audience.

Conclusion

■ Technology and logistics are key to the success of e-commerce businesses. Unlike other sectors where logistics is a support function, logistics here enables growth in e-commerce retail with respect to strategy and execution. Time-definite deliveries including same-day and next-day deliveries as well as delivery with in a particular time window could continue to gain prominence in the future. The service reliability for these segments is expected to remain critical for the success of e-commerce retailers and logistics providers. The ability to handle cash for COD transactions and timely cash remittance could be imperative for servicing the sector. The increasing network of e-commerce-focused retail logistics providers and

■ increasing emphasis of full-fledged LSPs on the e-commerce retail sector are expected to lead to intensified competition in the market, putting pressure on costs and margins.

■ The concept of captive logistics arms might be hived off since it is not a core business for e-commerce retailers. Also, while the e-commerce logistics sector is expanding at a rapid level, it might be difficult to scale the logistics infrastructure and capabilities at a

■ corresponding pace; thus leading to an increase in outsourcing as opposed to building in

■ house services. In the short-term, specialized services such as time bound deliveries, card swipe at delivery and other value added services could be managed in-house, while standard deliveries could be outsourced to 3PLs. However, in the long-term, with an increase in specialized services, these could also be outsourced to 3PL providers.

■ The government’s plan to implement GST is a positive step toward simplifying the tax structure on sale of goods and services. The government would require to study the taxation and jurisdictional laws to address the multi-jurisdictional nature of e-commerce transactions