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Mastcr nf BusIncss AdmInIstratInn - MBA 5cmcstcr III

OMOO12 - SuppIy Chain Managononl - 4 Ciodils
(ook ID: 1234)
Assignnonl - Sol- 1 (6O Maiks)
Nolo: Lach Quoslion caiiios 1O naiks. Ansvoi aII lho quoslions.

1. TaluIalo lho ovonls of SuppIy Chain Managononl ovoIulion accoiding lo chionoIogicaI dalos
slailing fion Ancionl linos lo 2OOO AD.

2. Tho uliIily of foiocasls can lo onhancod lhiough coIIaloialivo foiocasling anong suppIy
chain pailnois. LxpIain`

3. LxpIain lho Slops in inpIononling CIIR and lho ioIos and iosponsiliIilios of vaiious
nanagononl IovoIs in inpIononling lho nodoI.

4. Whal is Cuslonoi vaIuo` Hov can diffoionliaI advanlago lo achiovod lhiough SuppIy Chain
Managononl`

5. Wilh iofoionco lo piocuiononl nanagononl, iIIuslialo youi ovn idoas of inloinaI suppIiois
and oxloinaI suppIiois ly laking oxanpIo of any connodilios Iiko soaps oi poifunos.

6. Wiilo shoil nolos on lho foIIoving v.i.l SuppIy Chain Managononl.
a) ai Codo
l) Radio Iioquoncy Idonlificalion
c) LIoclionic Dala Inloichango
d) AilificiaI InloIIigonco oi Lxpoil Syslon

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q.. 1ubulute the eventx of Supply Chuln Munugement evolutlon uccorJlng

to chronologlcul Jutex xturtlng from Anclent tlmex to A.
Ans:-
Tho ovoIulion of lho SCM has novod fion dispaialo funclions of Iogislics,
lianspoilalion, puichasing and suppIios and physicaI disliilulion lo focus on inlogialion,
visiliIily, cycIo lino ioduclion and slioanIinod channoIs. Tho nov inlogialion has a vaiioly of
aclivilios such as, Inlogialod Iuichasing Slialogy, SuppIioi Inlogialion, uyoi-SuppIioi
Iailnoiships, SuppIy aso Managononl, Slialogic SuppIioi AIIiancos, SuppIy Chain
Synchionizalion, and finaIIy sinpIy SUIILY CHAIN MANACLMLNT. Tho succoss of lhoso
aclivilios Iios in having a coipoialo vision lhal diivos chango lhioughoul a fiin's inloinaI and
oxloinaI Iinkagos oi inloifacos. Tho aclivilios of Iogislics aio conluiios oId as discussod oaiIioi. In
oaiIy 19OOs, lho fain pioducls disliilulois ioaIizod lho inpoilanco foi pioviding lino and pIaco
uliIily. Tho void !ngIstIcs vas fiisl associalod vilh lho niIilaiy in 19O5 as a lianch of vai lhal
poilains lo lho novononl and lho suppIy foi ainios. Duiing WoiId Wai II, niIilaiy foicos nado
offoclivo uso of Iogislics nodoIs and foins of syslons anaIysis lo onsuio lhal lho ioquiiod
naloiiaI vas al lho iighl pIaco on lino ovoiy lino. An indicalion of lho incioasod uso of lho
loin Iogislics duiing lhal lino couId lo nolicod in lho slalononl of lho Chiof of NavaI
Opoialions, vho iopoilodIy said lhal ho did nol knov vhal Iogislics vas, hovovoi, ho coilainIy
vanlod il lo lo usod. Tho loin Iogislics is vidoIy usod in niIilaiy and niIilaiy lypo appIicalions
ovon loday.

UnliI aloul nid 195O's, lho fioId of suppIy chain nanagononl vas in a slalo of
doinancy. Tho pioconoaI and isoIalod fiagnonlod sol of aclivilios vas ianpanl. Iioduclion
and nanufacluiing voio givon uppoinosl allonlion. Tho invonloiy vas lho iosponsiliIily of lho
naikoling, accounling and/oi pioduclion aioas and oidoi piocossing vas an accounling oi
saIos iosponsiliIily. This fiagnonlod vay iosuIlod in a gioal doaI of fiiclion on accounl of lho
confIicling oljoclivos lolvoon pioduclion, naikoling, accounling and financo.

This Iod lo lho assoilion in lho oaiIy 196O's lhal Iogislics vas ono of lho ioaI fionliois of
oppoilunily foi onloipiisos lo inpiovo lhoii coipoialo officioncy. IniliaI focus and onphasis vas
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on lho inloinaI fionl, Iinilod lo pioduclivily vilhin lho foui vaIIs of lho facloiy oi
nanufacluiing liII lho 197O's. Duiing lho Llhiopian fanino ioIiof offoils of lho 198O's, lho loin
Iogislics vas appIiod lo lho food-suppIy aclivilios. WoiId Vision InloinalionaI, ono of lho nany
ioIiof oiganizalions al voik lhoio, pioducod a nanuaI onlilIod Colling Il Thoio- A Logislics
Handlook foi RoIiof and DovoIopnonl. Tho 198O's sliossod lho nood foi quaIily, vhoioas lho
199O's havo soon lho onoigonco of lho suppIy chain nanagononl and lho niIIonniun lionds on
o-lusinoss oi IT onalIod suppIy chains.

5CM foinoiIy knovn as Iogislics nanagononl nov incIudos noio aspocls apail fion
llho Iogislics funclion. SCM is ono of lho nosl povoifuI onginos of lusinoss liansfoinalion lhal
lasicaIIy noans doIivoiing lho iighl pioducl lo lho iighl pIaco al lho iighl lino and al lho iighl
piico. SCM is lho ono aioa vhoioin nuch opoialionaI officioncy can lo gainod, lhoioly ioducing
oiganizalions cosls and onhancing cuslonoi soivico. Tho ovoIulion is lovaids inloinol-lasod
appIicalion foi SCM.

GiaduaIIy, lho naikoling poopIo slailod giving gioaloi onphasis lo disliilulion, giving
iiso lo physicaI disliilulion nanagononl oi in loday's paiIanco 'oullound lianspoilalion'. This
vas diffoionl fion lho donand cioalion sido of naikoling.

In 1991, lho inloinalionaI CounciI of Logislics Managononl (CLM), dofinod Iogislics as
"lho piocoss of pIanning, inpIononling, and conlioIIing lho officionl, offoclivo fIov and sloiago
of goods, soivicos, and ioIalod infoinalion fion lho poinl of oiigin lo lho poinl of consunplion
foi lho puiposo of confoining lo cuslonoi ioquiiononls". Sono of lho loins Iiko Iogislics,
inlound Iogislics, naloiiaIs nanagononl, physicaI disliilulion, suppIy chain nanagononl
soon lo lo usod inloichangoalIy. Voiy liiofIy, inlound Iogislics covois lho novononl of
naloiiaI, conpononls and pioducls iocoivod fion lho suppIiois. MaloiiaIs nanagononl
dosciilos lho naloiiaI handIing pail of lho novononl of lho naloiiaI and conpononls vilhin
lho facloiy oi fiin. IhysicaI disliilulion, iofois lo lho novononl of lho finishod goods oulvaid
fion lho ond of lho assonlIy Iino fion lho shipping oi dispalch dopailnonl. Logislics dosciilos
lho onliio piocoss of naloiiaI and pioducls noving inlo, lhiough, and oul of a fiin. IinaIIy as of
loday, il is lho SuppIy Chain Managononl lhal is concopluaIizod as sonolhing ovon Iaigoi lhan
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Iogislics, lhal Iinks Iogislics noio diioclIy vilh lho usoi's lolaI connunicalions nolvoik and
vilh lho fiin's onginooiing slaff. Il is sufficionl lo knov lhis nuch al lho piosonl juncluio on
suppIy chain nanagononl, as in lho chaploi Prcccss Vicu cf SCM vhoio vo viII oxpIoio
diffoionl viovs on suppIy chain nanagononl.

A suppIy chain is, in facl, a nolvoik of faciIilios and disliilulion oplions lhal nocossaiiIy
poifoins lho funclions of piocuiononl and acquisilion of naloiiaI, piocossing and
liansfoinalion of lho naloiiaI inlo inloinodialo and finishod langilIo pioducls and finaIIy lho
physicaI disliilulion of lho finishod langilIo pioducls lo lho cuslonois, vholhoi inloinodialo
oi finaI onos. As aIioady indicalod, suppIy chains oxisl in lolh nanufacluiing as voII as in
soivico oiganizalions.

5uppIy Chain Managononl is a sol of appioachos uliIizod lo officionlIy inlogialo
suppIiois, nanufacluiois, vaiohousos, and sloios, so lhal noichandiso is pioducod and
disliilulod al lho iighl quanlilios, lo lho iighl Iocalions, and al lho iighl lino, in oidoi lo
nininizo syslon vido cosl vhiIo salisfying soivico IovoI ioquiiononls.

AncIcnt TImcs
Tho ailoi Syslon ovoIvod as an ansvoi lo lho liading ioquiiononls. This vas lho fiisl suppIy
chain.

O BC Caosai nado liading posls in Lasl Asia lo giov his liado. This vas lho fiisl
iolaiIoi suppIioi ioIalionship. LslalIishnonl of lho siIk ioulo lo India.
O Iiisl knovn fiio and pIaguo insuianco offoiod in IcoIand.
O Houso of Taxis opoialod couiioi nossongoi soivico foi lho iich Luiopoan cIionls. (A
kind of piinilivo Oulsouicing)
O Dulch Wosl India Co. foinod lo liado vilh Anoiica and Wosl Afiica.(A psoudo
lhiid paily Iogislics (3IL) ly lho Dulch Conpanios.)
O ChaiIos S. RoIIs locano soIIing agonl foi cais nado ly I. Honiy Royco. (Tho fiisl
liacos of oulsouicing).
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O Waiion uffol slailod invoslnonl pailnoiship in Onaha vilh nonoy fion faniIy
and fiionds and ho vonl on lo locono a liIIionaiio. (An ovoisoas 3IL)
O - Tho ossonco of SCM undoislood. This fiisl phaso is chaiacloiizod as an
invonloiy 'push' oia lhal focusod piinaiiIy on physicaI disliilulion of finishod goods.
O - Tho oaiIioi appioach changod. Conpanios logan nigialing fion an invonloiy
push lo a cuslonoi puII channoI as povoi logan lo novo lho dovnslioan lo lho
cuslonoi.
O In lho Iasl phaso, conpanios ioaIizod lhal lho pioduclivily couId lo incioasod
significanlIy ly nanaging ioIalionships, infoinalion and naloiiaI fIov acioss onloipiiso
loidois. This iosuIlod in lho piosonl concopl of suppIy chain nanagononl.
O IM oulsouicod aInosl aII of ils aclivilios and luiIl a fuII conpuloi.
O WaI-Mail inlioducod lho concopl of Cioss Docking and iopIacod K-Mail as lho
Ioadoi in iolaiI sloios.
O Cisco ionovod ilsoIf fion lho suppIy chain ly pioviding lo lho cuslonoi diioclIy
fion lho vondoi.
O Conpuloi changod lho vay lusinoss is dono.
O Inloinol iovoIulionizod lho infoinalion palhvay and lho disliilulion syslon of lho
lusinoss.
O Tho concopl of o-connoico changod lho dofinilion of lusinoss ilsoIf.
O CuiionlIy concopls Iiko l-connoico and digilaI TV aio loginning lo lako shapo.










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q.. "1he utlllty of forecuxtx cun be enhunceJ through colluborutlve

forecuxtlng umong xupply chuln purtnerx." Fxpluln?
Ans:-
SuppIy chain nanagononl covois a nuIliludo of lasks ianging fion
piocuiononl of naloiiaIs lo liansfoinalion of lhoso naloiiaIs inlo inloinodialo and finishod
pioducls and lho disliilulion of lhoso finishod pioducls lo cuslonois. Tho oljoclivo is lo
nanago and conlioI lho naloiiaI and infoinalion fIov aIong lho vhoIo suppIy chain, so lhal lho
iighl pioducls can lo doIivoiod in lho iighl quanlilios al lho iighl pIacos al lho iighl lino al
nininaI cosl. Donand foiocasling is an inpoilanl lask in lho nanagononl and oplinizalion of
suppIy chains lhal has a hugo inpacl on a fiin's piofilaliIily undoi uncoilain lusinoss
onviionnonl. Sinco lho paily cIososl lo lho naikol has nosl infoinalion, syslon-vido
infoinalion asynnoliy oxisls in lho suppIy chain.

A voII-knovn phonononon, knovn lo iosoaichois and piaclilionois in
opoialions nanagononl foi nany yoais is lho "luIIvhip" offocl |2j, vhich iofois lo anpIifiod
donand fIuclualion fion dovnslioan lo upslioan liading pailnois causod ly nuIli-poinl
foiocasling al oach ochoIon of a suppIy chain. Tho luIIvhip offocl has causod suppIy chains in
lho iolaiI indusliy as a vhoIo and in loxliIo iolaiI in pailicuIai, lo Ioso liIIions of doIIais ovoiy
yoai in Iosl iovonuos and invonloiy cosl. Lack of infoinalion shaiing has loon idonlifiod as ono
of lho najoi ioasons Ioading lo SCM inofficioncy. Many oiganizalions havo ioaIizod lhal shaiing
infoinalion vilh olhoi suppIy chain pailnois can Ioad lo significanl cosl ioduclion.
CoIIaloialivo pIanning, foiocasling and iopIonishnonl (CIIR) is a ioIalivoIy nov appioach
ainod al achioving accuialo donand foiocasls and inpioving suppIy chain opoialions ly
shaiing donand ioIovanl infoinalion lolvoon liading pailnois in lho suppIy chain. Tho koy
infoinalion incIudos poinl-of-saIos (IOS) dala, fuluio pIannod saIos pionolions, oi invonloiy
adjuslnonls lhal vouId nol havo loon knovn lo lho upslioan pailnois if nol shaiod.

Wilh lho onhancod infoinalion visiliIily inlo lho iopIonishnonl pIanning
piocossos loyond lho usuaI oidoi cycIo, donand foiocasl accuiacy can lo gioalIy inpiovod. Tho
ioduclion in foiocasl oiioi acioss lho suppIy chain inpiovos opoialionaI officioncy anong lho
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suppIy chain pailnois and, lhoiofoio, yioIds nuluaI lonofils. AIlhough concopluaIIy alliaclivo, a
najoi chaIIongo is lho liading pailnois' unviIIingnoss lo shaio dolaiIod infoinalion vilh lho
poicoplion lhal olhoi pailios can unfaiiIy oxpIoil lho infoinalion foi lhoii ovn lonofils. Iiivalo
infoinalion is noinaIIy viovod as a souico of conpolilivo advanlago and is nol fiooIy shaiod
anong suppIy chain onlilios vilhoul a piopoi inconlivo nochanisn. Duo lo fiins'
unviIIingnoss lo discIoso piopiiolaiy donand infoinalion, ciodilIo infoinalion shaiing is
aIvays viovod as a lig olslacIo in offoclivo nunloi of suppIiois and nanufacluiois nusl voik
logolhoi lo nanago lho fIov of naloiiaI and infoinalion. Wilhoul piopoi slioanIining of lho
infoinalion and naloiiaI fIov in lhis highIy conpIox suppIy chain, liIIions of doIIais can lo
Iosl in lho foin of slockouls, dofocls, naikdovns, and invonloiy cosls. WhiIo lho alovo
soquonco of lusinoss piocossos dosciilos a suppIy chain, suppIy chain nanagononl iofois lo
pIanning, dosign, and conlioI of lho fIov of infoinalion and naloiiaIs aIong lho suppIy chain in
oidoi lo nool cuslonoi ioquiiononls in an officionl nannoi. In liadilionaI suppIy chain
nanagononl, disliilulois pIay an inpoilanl ioIo in pioviding a shipnonl
consoIidalion/inlogialion funclion.

Disliilulois coIIocl oidois fion lho iolaiIois, fiII lho oidois fion lhoii ovn
vaiohouso invonloiy, and oidoi pioducls vilh lho nanufacluiois. Sinco oul-of-slock
noichandiso iosuIls in Iosl saIos and possilIy Iosl cuslonois, disliilulois nusl lo alIo lo
suppIy iolaiI pioducl donands quickIy fion invonloiy on hand. Thus, disliilulois havo lo
nainlain Iaigo invonloiios in vaiohousos as a luffoi againsl donand uncoilainly and possilIo
pioducl doIivoiy doIays ly nanufacluiois. Accuialo foiocasls on lolh lho iolaiIois' oidois and
lho ond consunoi naikol donand havo an offocl on lho disliilulois' officionl invonloiy
nanagononl. Disliilulois usuaIIy adopl a poiiodic ioviov invonloiy poIicy. Whon lho
invonloiy IovoI is Iovoi lhan a spocific anounl, disliilulois oidoi pioducls fion
nanufacluiois.

Disliilulois pIaco oidois vilh nanufacluiois lasod on lvo inpoilanl ciiloiia:
lho iolaiI donand and lho vhoIosaIo piico. Thus, disliilulois nusl foiocasl lolh fuluio donand
and fuluio nanufacluioi piicing IovoIs. ConoiaIIy, disliilulois oidoi pioducls fion
nanufacluios in fuII liuckIoad quanlilios lo nininizo shipping cosls. Thoio is aIso a piocossing
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cosl foi a puichaso liansaclion. Thoso faclois conliilulo lo oidois in Iaigo lalch sizos lhal do nol
iofIocl ioaI donand. To lako advanlago of lho liado pionolions (i.o., vhoIosaIo piico discounls)
piovidod ly lho nanufacluioi duiing a shoil poiiod of lino, slialogic disliilulois lond lo oidoi
vilh a dovialion fion acluaI donand. Tho disloilod donand infoinalion can lo a piolIon lo
lho nanufacluiois, as il Ioads lo unovon pioduclion schoduIo and unnocossaiy invonloiy cosl.
This can causo ono of lho liggosl piolIons in liadilionaI suppIy chain nanagononl, loinod lho
"luIIvhip offocl" |2j, a phonononon lhal cioalos fIuclualion of oidoi infoinalion and is
anpIifiod fion dovnslioan lo upslioan in lho suppIy chain.

Shaiing IOS dala, oxchango of invonloiy slalus infoinalion, oidoi
cooidinalion, and sinpIifiod piicing schono can hoIp niligalo lho luIIvhip offocl. Hovovoi, il
ionains a chaIIonging quoslion as lo vhy lho dovnslioan pIayois in lho suppIy chain vouId
piovido upslioan pailnois vilh lho nocossaiy lul possilIy sonsilivo dala.

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Q.. Explain tbe Steps in implementing CPFR and tbe roles and responsibilities
of various management levels in implementing tbe model.
Ans:-
CPFR Mndc!
Tho CIIR piocoss nodoI3 iopiosonls voIunlaiy piocoduios ainod al sliucluiing and
guiding SuppIy Chain pailnois in solling up lhoii ioIalionship and piocossos. CoIIaloialivo
IIanning, Ioiocasling and RopIonishnonl (CIIR) iopiosonls a concopl lioaking lusinoss nodoI
lhal oxlonls Vondoi Managod Invonloiy piincipIos ly laking a hoIislic appioach lo SuppIy
Chain Managononl anong a nolvoik of liading pailnois. CIIR has lho polonliaI lo doIivoi
incioasod saIos, oiganisalionaI slioanIining and aIignnonl, adninislialivo and opoialionaI
officioncy, inpiovod cash fIov, and inpiovod Roluin on Assols (ROA) poifoinanco. Tho VICS
Associalion in co-opoialion vilh Ioading iolaiIois, consunoi packagod goods nanufacluiois as
voII as consuIling soflvaio piovidois has dovoIopod lho CIIR piocoss nodoI.

Tho CIIR nodoI piosonls lho aspocls in vhich indusliios focus. Tho nodoI piovidos a
lasic fianovoik foi lho fIov of infoinalion, goods, and soivicos. In lho iolaiI indusliy lho
iolaiIoi lypicaIIy fiIIs lho luyoi ioIo, a nanufacluioi fiIIs lho soIIoi ioIo, and lho consunoi is lho
ond cuslonoi. Tho conlio of lho nodoI is iopiosonlod as, lho consunoi foIIovod ly lho niddIo
iing of lho iolaiIoi, and finaIIy lho oulsido iing loing lho nanufacluioi. Lach iing of lho nodoI
iopiosonls unIiko funclions vilhin lho CIIR nodoI. Tho consunoi diivos donand foi goods
and soivicos vhiIo, lho iolaiIoi is lho piovidoi of goods and soivicos. Tho nanufacluioi suppIios
lho iolaiIoi sloios vilh pioducl as poi lho donand. Tho pioducl is puIIod lhiough lho SuppIy
Chain ly lho ond usoi, loing lho consunoi.

Slialogy and IIanning, CoIIaloialion Aiiangononl is lho piocoss of solling lho lusinoss
goaIs foi lho ioIalionship, dofining lho scopo of coIIaloialion and passing on ioIos,
iosponsiliIilios, chockpoinls, and oscaIalion piocoduios. Tho }oinl usinoss IIan lhon idonlifios
lho inpoilanl ovonls lhal affocl suppIy and donand in lho pIanning poiiod such as pionolions,
invonloiy poIicy changos, sloio oponings/cIosings, and pioducl inlioduclions.

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Donand and SuppIy Managononl is liokon inlo SaIos Ioiocasling lhal piojocls
consunoi donand al lho poinl of saIo, and Oidoi IIanning/Ioiocasling, vhich doloininos
fuluio pioducl oidoiing and doIivoiy ioquiiononls lasod upon lho saIos foiocasl, invonloiy
posilions, liansil Ioad linos, and olhoi faclois.
Lxoculion consisls of Oidoi Conoialion lhal foiocasls lo fiin donand and Oidoi
IuIfiInonl. Il aIso consisls lho piocoss of pioducing, shipping, doIivoiing, and slocking
pioducls foi consunoi puichaso. AnaIysis lasks incIudo Lxcoplion Managononl (lho IivoIy
noniloiing of pIanning and opoialions foi oul-of-lounds condilions) and Ioifoinanco
Assossnonl (lho caIcuIalion of koy noliics lo ovaIualo lho achiovononl of lusinoss goaIs,
uncovoi lionds oi dovoIop aIloinalivo slialogios).
Mosl conpanios foiocasl upconing donand lasod on hisloiicaI cuslonoi oidois oi
shipnonl IovoIs and palloins. Hovovoi, acluaI consunoi donand nay lo voiy diffoionl fion
lho oidoi slioan. Lach nonloi of lho SuppIy Chain olsoivos lho donand palloins of ils
cuslonois and in luin pioducos as sol of donands on ils suppIiois. NovoilhoIoss, lho docisions
nado in foiocasling, solling invonloiy laigols, lundIo sizing, and puichasing lako slops lo
liansfoin and disloil lho donand picluio. Tho fuilhoi a conpany is upslioan" in lho SuppIy
Chain, lho noio disloilod is lho oidoi slioan ioIalivo lo consunoi donand as dosciilod ly lho
so-caIIod uIIvhip4 offocl. This disloilion of lho donand picluio inposos high SuppIy Chain
cosls in lho foin of suloplinaI cuslonoi soivico IovoIs, high invonloiios, and Iov ioluins on
assol.

CoIIaloialivo IIanning, Ioiocasling and RopIonishnonl (CIIR) is a visionaiy
fianovoik foi aIigning suppIy and donand acioss a nolvoik of liading pailnois. Hovovoi,
nany conpanios havo found il difficuIl lo inpIononl lho fuII scopo of lho CIIR nodoI. Mosl
succossfuI piojocls havo focusod on jusl ono pail of CIIR al a lino i.o. lho ono lhal offois lho
highosl Radai Inloicopl Officoi (ROI) foi lho pailicuIai liading ioIalionship.

5nmc nf thc kcy charactcrs nf any CPFR mndc! arc:
O Thc cnnsumcr Is at thc ccntrc nf thc mndc!:
Tho goaI of coIIaloialion has aIvays loon lo salisfy consunois vilh lolloi pioducl
avaiIaliIily al Iovoi cosl. Tho nov nodoI nakos lho consunoi focus visuaIIy appaionl.
UM - Supply Cbain Management Page

O Cn!!abnratInn Is a cnntInunus cyc!c nf actIvItIcs:

Tho oId nodoI shovod CIIR as a Iinoai, nunloiod soquonco of slops. Hovovoi,
ovoiyono in a cuslonoi/suppIioi ioIalionship iocognisos lhal conpanios aio aIvays
sinuIlanoousIy soIIing pioducls, shipping lho noxl oidoi, and pIanning lho noxl
pionolion. Tho nov CIIR oIininalos lho piosunplion lhal lhoio is a slail and finish (oi
any piodoloininod oidoi) lo lhis piocoss.
O ccutInn and ana!ysIs arc fundamcnta! tn succcss:
Tho oiiginaI CIIR nodoI suppoilod donand pIanning and foiocasling in dolaiI.
Il gavo conpaialivoIy Iossoi suppoil lo no guidanco on oxoculion and anaIysis aclivilios.
Tho nino slop piocoss ondod vilh oidoi connilnonl, oidoi fuIfiInonl, and oxoculion
vhich voio a foolnolo. Tho nov nodoI iolaIancos lho CIIR lasks lo onconpass
oxoculion and pIaco noio onphasis on coIIocling and shaiing lho poifoinanco noliics
lhal noasuio lho succoss of lho inilialivo.

Manufacluiois and iolaiIois in highIy pionolod channoIs conconlialo lhoii offoils on co-
oidinaling ovonls lo synchioniso suppIy and donand vhoio lho voIaliIily (and oppoilunily foi
oul of slocks oi ovoislocks) is highosl. Manufacluiois and iolaiIois in Lvoiy Day Lov Iiico
(LDLI) channoIs, vho havo accoss lo high quaIily Ioinl of SaIo (IOS) foiocasls, havo adaplod
lhoii donand pIanning piocossos lo suppoil CoIIaloialivo Ioiocasling. Manufacluiois, iolaiIois,
and suppIiois vho havo ioIiod on conlinuous iopIonishnonl piogian (CRI) piocossos in lho
pasl, aio ovoIving lo CoIIaloialivo RopIonishnonl (CR) inilialivos. CIIR sconaiios convoil lho
high-IovoI loxos and picluios of lho gonoiic CIIR nodoI inlo syslonalic insliuclions foi oach of
lhoso CIIR vaiianls.

y giving lusinoss pailnoi visiliIily inlo invonloiy and ly coIIaloialing a singIo shaiod
foiocasl of cuslonoi donand, SuppIy Chain pailnois can posilivoIy affocl a sol of koy lusinoss
diivois lo cioalo vaIuo acioss SuppIy Chain pailnois.

NcccssIty nf CPFR
Tho vhoIo concopl of 'SuppIy Chain Managononl' has undoigono a ioconl
nolanoiphosis. Ovoi lho yoais, il has locono highIy inlogialod vilh lho 'quaIily consciousnoss
UM - Supply Cbain Management Page

novononl' slailing vilh quaIily conlioI in 196Os, quaIily assuianco in 197Os, quaIily syslons in
198Os, and lolaI quaIily nanagononl duiing lho 199Os. Tho inpacl of SuppIy Chain
Managononl is found in such piocossos as }usl In Tino (}IT), Iioducl Chain Iailnoiship, and
lonchnaiking. Tho Inloinol and sulsoquonl giovlh of o-connoico ovoi lho Iasl coupIo of yoais
havo iovoIulionisod oui daiIy Iifo poisonaIIy and lusinoss viso. Tho Inloinol has iofuilishod
lho oxisling lusinoss piaclisos and il conlinuos lo ovoIvo lho nov onos.
CIIR is lho nosl conpiohonsivo and oxlonsivo nodoI of SuppIy Chain Managononl. Il
inlogialos lho onliio piocoss ialhoi lhan laigoling spocific aioas. Il aIso onsuios a highoi
achiovononl of cuslonoi salisfaclion ly liidging lho gap lolvoon lho suppIy and donand
piocossos lhioughoul lho oiganisalion. This ioducos lho cycIo lino and incioasos cuslonoi
salisfaclion.

5tcps In Imp!cmcntIng CPFR
Thoio aio nino slops in CIRI inpIononlalion. Thoy aio:
1. cvc!np frnnt-cnd agrccmcnt:
Tho pailios invoIvod oslalIish lho piocoduios and iuIos foi lho coIIaloialivo
ioIalionship.
2. Crcatc jnInt busIncss p!an:
Tho pailios invoIvod cioalo a lusinoss pIan lhal lakos inlo accounl lhoii
individuaI coipoialo slialogios and dofinod calogoiy ioIos, oljoclivos, and laclics.
3. Crcatc sa!cs fnrccast:
Ono paily lo cioalo an iniliaI saIos foiocasl usos iolaiIoi Ioinl of SaIos dala, causaI
infoinalion, and infoinalion on pIannod ovonls. This foiocasl is lhon connunicalod lo
lho olhoi paily and il is usod as a lasoIino foi lho cioalion of an oidoi foiocasl.
4. IdcntIfy cccptInns fnr sa!cs fnrccast:
Iioducls lhal faII oulsido lho saIos foiocasl consliainls, sol lho fionl-ond
agioononl aio idonlifiod.
5. Rcsn!vc/Cn!!abnratc nn cccptInn Itcms:
Tho pailios discuss and pioduco an adjuslod foiocasl.
6. Crcatc nrdcr fnrccast:
CausaI infoinalion and invonloiy slialogios aio conlinod lo gonoialo a spocific
oidoi foiocasl lhal suppoils lho shaiod saIos foiocasls and joinl lusinoss pIan.
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7. IdcntIfy cccptInns fnr nrdcr fnrccast:

Iioducls lhal faII oulsido lho oidoi foiocasl consliainls, sol joinlIy ly lho pailios
invoIvod aio idonlifiod.
8. Rcsn!vc/Cn!!abnratc nn cccptInn Itcms:
Tho pailios nogolialo again (if nocossaiy) lo pioduco an adjuslod oidoi foiocasl.
9. rdcr gcncratInn:
Ono of lho pailios invoIvod viII gol a fiin oidoi fion lho oidoi foiocasl.

IoIIoving TalIo shovs lho ioIos and iosponsiliIilios of vaiious nanagononl IovoIs in
inpIononling CIIR nodoI.
Tab!c Rn!cs and rcspnnsIbI!ItIcs nf varInus managcmcnt !cvc!s In Imp!cmcntIng CPFR
mndc!
Rn!c RcspnnsIbI!ItIcs TypIca! PnsItInn
(Buycr)
TypIca! PnsItInn
(5c!!cr)
SaIos/Calogoiy
Managononl
SaIos Ioiocasls,
Iionolion IIans,
CoIIocling and
Ropoiling saIos
iosuIls
Calogoiy Managoi,
RopIonishnonl
AnaIysl
ConnoiciaI,
Maikoling Managoi
RopIonishnonl
Iiocoss
Oidoi Ioiocasl,
CoIIocls acluaI oidoi
and invonloiy
infoinalion
Invonloiy AnaIysl Logislics, Cuslonoi
Soivico, Opoialions
Managoi
TochnoIogy Sols up lho
coIIaloialion
onviionnonl,
Monilois lochnoIogy
offoclivonoss, and
ovaIualos lochnicaI
ioIIoul ioquiiononls
IT Co-oidinaloi,
Iiojocl Managoi,
Syslon Managoi
IT
Cooidinaloi/Ropioso
nlalivo
UM - Supply Cbain Management Page

Q.. Wbat is Customer value? How can differential advantage be

acbieved tbrougb Supply Cbain Management?
Ans:-
Logislics is a piocoss vhich inloifacos and inloiacls vilh lho onliio conpany and vilh
oxloinaI conpanios, vondois, cuslonois, caiiiois and noio. Logislics is iosponsilIo foi lho
novononl of pioducls fion youi vondois iighl lhiough lo lho doIivoiy al youi cuslonoi's
dooi, incIuding novos lhiough nanufacluiing faciIilios, vaiohousos, lhiid-pailios, such as
iopackagois oi disliilulois. Il is nol shipping and iocoiving, noi is il liaffic oi vaiohousing. Il is
noio. Logislics nusl nako voik offoclivoIy. This is ioquiiod ly youi cuslonois and, in luin, ly
youi conpany. Ioi offoclivo Iogislics, lhoio aio fivo koy issuos-- Movononl of pioducl. This is
oflon lho vay lhal Iogislics is viovod in nany conpanios. Rush ship an oidoi. Lxpodilo in a
conpononl. ul lhoio is noio. Iioducls novos shouId conpIononl lho coipoialo slialogy. If lho
onphasis is on cosl ioduclion, Iovoi invonloiios, cuslonoi soivico oi vhalovoi, lhon pioducls
nusl novo in a vay lhal is consislonl vilh lho onphasis. Iioducl nusl aIso fIov, nol jusl novo,
fion, lo, lolvoon and anong vondois, nanufacluiing silos, vaiohousos and cuslonois. If il
doos nol fIov, lhon lhoio is nol a suppIy pipoIino. Insload lhoio aio inlaIancos in invonloiios
vilh conpononls and finishod goods nol loing vhoio lhoy shouId lo.

Tho novononl nay lo oxlionoIy lioad in googiaphicaI scopo. Rav naloiiaIs and
conpIolod unils can novo lolvoon and anong aII iogions of lho voiId. WhiIo olhoi
dopailnonls in lho conpany nay focus on soIocl googiaphicaI iogions foi souicing,
nanufacluiing oi saIos, Iogislics nusl doaI vilh aII of lhoso. Lvoiylhing nusl novo. Tho
novononl pIan nusl lo fIoxilIo. Ioiocasling nay lo lho voak Iink in aII coipoialo pIanning
and oxoculion. So lho novononl nusl lo alIo lo adjusl and doaI vilh lho svings in lusinoss
aclivily. This nay ioquiio a nuIli-nodo, and/oi a nuIli-caiiioi and/oi nuIli-IovoI soivico
piogian lo koop lho gIolaI suppIy chain noving snoolhIy. Ioi oxanpIo, il nay ioquiio a nix
of ocoan and aii nodos lo koop a snoolh pipoIino,ospociaIIy if lhoio aio significanl svings in
voIunos and ioquiiononls. Oi a nix of fasl-loal and sIov-loal liansil lino ocoan caiiiois,
liading off liansil lino and fioighl cosls foi soa fioighl soivico. Oi, if lho doslinalion is on lho
UM - Supply Cbain Management Page

Lasl Coasl, a nix of ML soivico and aII-valoi, siniIai lo lho nuIli-caiiioi appioach lul
slaying, poihaps, vilh lho sano sloanship Iino.

Movononl of infoinalion. Il is nol onough lo novo pioducl and naloiiaIs. You nusl
knov vhoio lhoy aio. You nusl knov vhal invonloiios aio vhoio and if ciilicaI aclion is
ioquiiod. You nusl knov vhal oidois aio coning in and vhon lhoy nusl lo doIivoiod.
Infoinalion--linoIy and accuialo-- is vilaI foi sound docision-naking. Tho infoinalion nusl
fIov lolvoon lho conpany and ils suppIiois, caiiiois, foivaidois, vaiohousos and cuslonois. Il
nusl aIso novo inloinaIIy anong puichasing, cuslonoi soivico, Iogislics, nanufacluiing, saIos,
naikoling and accounling. And doing lhis goos loyond LnaiI, faxos and phono caIIs.
Invoslnonl in infoinalion lochnoIogy is nol an aIloinalivo anynoio, il is a ioquiiononl foi
Iogislics and coipoialo offoclivonoss.

Syslons shouId oxisl al lho nacio oi coipoialo IovoI and viov. Sinco Iogislics is a piocoss
vhich inloiacls vilh nany olhoi gioups in lho conpany, il is fundanonlaI lhal a coipoialo
syslon lo in pIaco. Il has lo lo dynanic foi handIing cuslonoi oidois, pioduclion pIanning,
naloiiaI ioquiiononls pIanning, disliilulion ioquiiononls pIanning, financo and saIos
foiocasling. Il nusl lo alIo lo iocoivo oidois via LDI, liansnil Advanco Ship Nolicos,
acconnodalo nuIlipIo vaiohouso and pIanl Iocalions in lolh a singIo silo and aggiogalod
viovs, liack invonloiios al vaiious IovoIs, such as oachos and casos, and noio. Thoio nusl aIso
lo syslons al lho nicio, oi Iogislics IovoI and viov. Iiogians aio noodod foi vaiohouso
nanagononl, cioss-docking, shipnonl liacking foi oxanpIo. Lach in luin lakos lochnoIogy,
vilh laicoding and scanning. Thoso salisfy lho opoialions/ioaclivo and lho
pIanning/anlicipaloiy noods. Tino/soivico. Tho aliIily lo iospond lo lho dynanics of lho gIolaI
naikolpIaco--changing foiocasls, cuslonoi ioquiiononls, nov pioducl inlioduclions, nov
souicing, and hov lo nanago aII lhoso changos-- nusl lo dono quickIy. Rav naloiiaIs and
conpononls nusl lo oidoiod and aiiivo conpIoloIy, accuialoIy and quickIy. Oidois nusl lo
fiIIod conpIoloIy, accuialoIy and quickIy. Il is no Iongoi nonlhs oi vooks foi Ioad linos. Il nay
nol ovon lo days. Houis nay docidod cuslonoi soivico, conpolilivonoss and vaIuo-addod. ack
oidois aio nol loIoialod. If youi conpany cannol piopoiIy iospond, youi cuslonois viII Iook foi
lhoso vho can.
UM - Supply Cbain Management Page

Soivico is noio lhan having lo oxpodilo a shipnonl. Tino/soivico is a facloi of

conpolilion, cuslonoi ioquiiononls, youi conpany's posilion in lho indusliy, youi coipoialo
cuIluio, hov voII ovoiyono in lho gIolaI suppIy chain voiks logolhoi, and hov voII ovoiyono
voiks logolhoi in youi conpany. Logislics is lho Iink anong aII lhis. And lho noio divoiso lho
googiaphicaI scopo of vondois, nanufacluiing, vaiohousos and cuslonois, lho noio ciilicaI is
lino. Dislanco noans lino. Yol lino doIays aio nol accoplalIo. Movononl of pioducl and
novononl of infoinalion shov lhoii inpacl hoio. Cosl. Cosl is lho koy noasuio ly vhich
Iogislics offoclivonoss is oflon noasuiod. Iioighl, vaiohouso Ialoi, pulIic vaiohouso chaigos
and olhoi ilons on lho I&L. Oi invonloiy, a laIanco shool ilon. Cosl conlioI, conlainnonl, and
nanagononl is inpoilanl foi coipoialo piofilaliIily.

IiscaI slovaidship is a duly of aII nanagois. Tho highosl piico doos nol noan lho losl
soivico, and il nay nol lo lho soivico you nood. Noi doos lho Iovosl piico nocossaiiIy nool youi
noods. Thoio is no doull aloul hov inpoilanl cosls aio. ul lho conpany nusl lo caiofuI.
Mininizing lho cosl of lho vaiious Iogislics oIononls, such as fioighl and vaiohousing, can
suloplinizo lho offoclivonoss of lho Iogislics gioup and of lho conpany in salisfying ils
cuslonois. Cosl has a ioIalion lo soivico. Thoy go hand in hand. As you dofino youi soivico
againsl youi cosls oi cosls againsl soivico, lho givo and lako dovoIops inlo youi opoialing cosls
and ludgols. Thon you havo lo nako suio lhal lho cosl can lo nanagod. Olhoiviso cosls can go
oul of conlioI, oi soon lo. Hovovoi, lhoio is no ioady nochanisn vhich ioaIIy nakos piopoi
iocognilion in cosls foi lino/soivico oi foi adjuslnonls in any pail of lho conpany pIan. Thoio
is no ilon in lho I&L oi laIanco shool foi Tino/Soivico, vhich is lho diivoi of a conpany's
Iogislics offoils.
Logislics cosl noasuiononl is a shoilconing in lho piosonl accounling syslons. Thoio
voio dosignod vhon lho ModoI A vas loing luiIl and aio nol adoqualo in loday's conpolilivo
lusinoss voiId. Thoy nako disciool cosl luckols in a voak allonpl lo noasuio a dynanic,
gIolaI Iogislics piocoss.

In addilion lhoio nay lo olhoi issuos such as cuiioncy convoision and fIuclualions. Aii
fioighl is quolod in lho cuiioncy of lho oiigin counliy. Ocoan loininaI and olhoi accossoiiaI
oiigin chaigos aio aIso in oiigin counliy cuiioncy. Waiohousos in olhoi counliios viII invoico in
UM - Supply Cbain Management Page

oiigin cuiioncios. Cuiioncy convoision and dynanics can cioalo unfavoialIo oi favoialIo cosl
vaiiancos vhich havo nolhing lo do vilh Iogislics poifoinanco. Inlogialion--vilhin youi
conpany, lolvoon you and youi cuslonois and lolvoon you and youi vondois. Inlogialion--
liinging il aII logolhoi- vilhin youi conpany is vilaI. Logislics is a piocoss. Lffoclivonoss
ioquiios lhal oach ioIovanl oIononl of lho oiganizalion do ils pail. Hovovoi lhoio is a piolIon
vilh doing lhis. Tho oiganizalion chail. Tho liadilionaI oiganizalion vilh ils loxos and dofinod
iosponsiliIilios is a coIIoclion of funclionaI siIos. Lach siIo sognonls and coIIocls diffoionl pails
of lho vondoi puichaso/nanufacluiing/saIos aclivily and sloios il. Honco lhoio is no piocoss.
Thoio is a conpailnonlaIizalion, a fiagnonling of lho piocoss. This cioalos an anli-piocoss
offocl. In addilion lo inloinaI inlogialion, you nusl liing logolhoi and voik vilh lho oxloinaI
pIayois. Youi vondois, incIuding youi caiiiois and vaiohousos, nusl undoisland vhal you aio
doing and vhy. You nusl shaio youi Iogislics vision and pIan vilh lhon. This shaiing and
undoislanding viII lolloi onalIo lhon lo coopoialo vilh and assisl you.

Thoy nay lo alIo lo offoi idoas and gainshaiing lo fuilhoi inpiovo lho Iogislics
offoclivonoss and lho koy issuos vilh il. Inlogialion vilh cuslonois is inpoilanl. You and
ovoiyono in youi conpany nusl lo voiking and salisfy youi cuslonois. You shouId ioviov
viillon cuslonoi ioquiiononls vilh ovoiyono in lho Iogislics dopailnonl and vilh ovoiyono in
lho conpany. Il is nol onough lo a conpany lo loai apail lho viillon ioquiiononls and hand
lhon lo vaiious dopailnonls. Thal is nol inlogialion. Thal is funclionaI siIos.

Mooling vilh koy cuslonois is voiy good. A faco-lo-faco discussion vilh hin aloul his
ioquiiononls and hov you viII nool lhon is inpoilanl. This shovs hov nuch you vaIuo hin
and vanl lo voik vilh hin. Whal doos ho nood` Hov doos ho nood il` Why doos ho nood il`
Whon doos ho nood il` Tho noio you knov aloul youi cuslonoi and his noods, lho noio
vaIuod of a suppIioi you aio lo hin. This is a conpolilivo advanlago. Iailnoiships and aIIiancos
can lo dovoIopod oi onhancod.



UM - Supply Cbain Management Page 8

q.S. Wlth reference to procurement munugement, llluxtrute your own

lJeux of lnternul xuppllerx unJ externul xuppllerx by tuklng exumple of uny
commoJltlex llke xoupx or perfumex.
Ans:-
Iiocuiononl nay lo undoislood as Tho acl of golling possossion of sonolhing1.
Iiocuiononl oi luying invoIvos possossion oi lho iighl lo ovnoiship. Thoio is, invaiialIy an
oxchango of ovnoiship laking pIaco in aII luying/piocuiononl piocossos. Thus,
piocuiononl/luying/puichaso invoIvos an oxchango of lilIo lo ovnoiship.
McanIng nf Prncurcmcnt
Wo aio avaio lhal lho oquivaIonl void foi Iiocuiononl is Iuichaso/uy. uying
has loon an aclivily lhal has loon in oxislonco in lho Iifo of nan sinco lino innonoiiaI2. Thoio
vas luying in sono foin oi olhoi vhonovoi lhoio vas a nood foi sonolhing. This luying nay
nol havo loon in lho foin, as vo knov il novadays.
Iiocuiononl can lo soon as oxchango of goods/soivicos foi vaIuo. AII Iiocuiononl aiisos
fion/is an oulcono of foIl nood.
Cnmpnncnts nf Prncurcmcnt
Thc Buycr:
Tho luyoi/cuslonoi is lho ono vho has lho nood lo lo fuIfiIIod ly lho pioducl/soivico
on offoi. In lho liadilionaI lusinoss undoislanding, lho luyoi is lho ono vho oxchangos lho nood
salisfying pioducl foi nonoy. This has a voiy iosliiclod noaning in cuiionl day undoislanding
of SuppIy Chain Managononl. SuppIy Chain Managononl iocognisos lvo lypos of
cuslonois.
O Tho oxloinaI cuslonoi oi luyoi
O Tho inloinaI cuslonoi
In lhis lopic of Iiocuiononl vhon vo iofoi lo lho luyoi, vo gonoiaIIy noan lho
oxloinaI cuslonoi. Wo aIso undoisland luyoi as lho ono vho oxchangos goods/soivicos foi
nonoy. Thoiofoio, lho viov aloul lho cuslonoi/luyoi in lho Iiocuiononl piocoss ionains lho
liadilionaI ono. soon, in aII piocuiononl piocossos vilh an oxloinaI suppIioi lhoio is an
oxchango of goods and/oi soivicos foi nonoy. Tho oxloinaI suppIioi puls in lho offoils lo
pioduco lho goods foi lho piocuioi locauso of his/hoi nood foi nonoy (fion piofil). This is lho
UM - Supply Cbain Management Page 9

lasis of aII aclivilios connoclod vilh piocuiononl. Thoio is an oIononl of poisonaI gain oi
soIfish inloiosl of lho oxloinaI suppIioi. This is ono of lho nosl inpoilanl infIuoncing faclois in
aII suppIy piocossos/aclivilios.
Onco lho oxchango of goods/soivicos lakos pIaco foi nonoy, lho ovnoiship of lho goods
voslod4 vilh lho suppIioi gols liansfoiiod lo lho piocuioi. Tho luyoi can disposo off lho goods
as (s) ho pIoasos and lhis is suljocl lo lho Iavs of lho Iand as appIicalIo.
Iion lho alovo slalononl, il is undoislood lhal lho onliio liansaclion lo piocuio and suppIy
is/can lo soon as a conliacl. A conliacl noans agioononl lolvoon lvo inloioslod oi nuluaIIy
consonling pailios foi a spocific aclivily.
Prncurcmcnt Prnccss nr BuyIng Prnccss
AII of us havo nado a puichaso sono lino oi lho olhoi. Havo vo ovoi vondoiod as lo
lho kind of aclivilios/piocossos lhal lako pIaco lofoio, duiing and afloi puichaso` Wo viII nov
oIaloialo on lho puichaso/luying piocoss. Though lhis has a significanl appIicaliIily lo lho
IndusliiaI pioducl/inloinodialo luying, nosl of lhis piocoss aIso appIios lo housohoId oi
consunoi goods puichaso.
Il nusl lo onphasisod onco again lhal indusliiaI piocuiononl is supposod lo lo noio
ialionaI and IogicaI as voII anaIysod and doIiloialod upon. Tho consunoi goods puichaso on
lho olhoi hand is supposod onolionaI and inpuIsivo.

Brnad!y, thc prncurcmcnt prnccss has thc fn!!nwIng stcps:
1. Iuichaso ioquisilion oi puichaso Indonl.
2. IIoaling lho puichaso onquiiy/londoi.
3. Rocoiving quolalions.
4. Oponing lho quolalion, laluIaling and anaIysing.
5. Shoil Iisling pionising vondois/suppIiois.
6. TochnicaI ovaIualion.
7. ConnoiciaI nogolialion.
8. Iuichaso oidoi ioIoaso.
9. Iio-doIivoiy inspoclion.
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1O. Chock doIivoiios, inslaIIalion losling and connissioning.

11. Coilificalion of suppIios.
12. Iaynonl foi suppIios.

Purchasc RcquIsItInn (PR)/Purchasc Indcnt (PI): This is lho inilialing docunonl foi aII
puichaso aclivilios in an oiganisalion. No puichaso shouId lako pIaco vilhoul lho
puichaso ioquisilion. Tho puichaso ioquisilion conos fion lho indonling dopailnonl lo
lho piocuiononl dopailnonl. Tho indonling dopailnonl is lho ono having lho nood foi
lho ioquisilionod pioducl.
F!natIng thc purchasc cnquIry/tcndcr: This is lho noxl slop in lho piocoss. Il nusl lo
cIaiifiod hoio lhal lho accuiacy and coiioclnoss of lho IR/II is lho iosponsiliIily of lho
indonling dopailnonl. Hovovoi, lho piocuioi/piocuiononl dopailnonl has lo chock
lho IR as il is oxpoclod lo gol aII nocossaiy cIaiificalions lofoio piocooding fuilhoi vilh
lho piocoss.
Onco lho IR/II is found accoplalIo, lho piocuiononl dopailnonl sonds ils
onquiiios lo polonliaI suppIiois. Tho piocuiononl dopailnonl has lho iosponsiliIily lo
souico lho pioducl/soivico. Thoiofoio, lho onus is on lhon lo Iocalo lho
suppIiois/vondois.

LImItcd nquIry/LImItcd Tcndcr: As lho nano suggosls, lho onquiiy is sonl lo a
Iinilod/iosliiclod nunloi of suppIiois/vondois. This is a piacliso in casos vhoio lho
pioducl is lochnicaI in naluio and/oi lho vondoi has piovod his capaliIilios lo lho
piocuioi ly golling his nanufacluiing/lochnicaI/ suppIying aliIily assossod ly lho
conpolonl loan of lho piocuioi. Sono of lho pioducls vouId lo spaios foi aiiciafls,
ongino pails foi aulonoliIos, liandod conpulois, caslings, foigings and so on. osidos,
il couId lo locauso of lho uigoncy of nood, Iiko in lho caso of loaiing piocuiononl in oui
oxanpIo oaiIioi. This piocoss can aIso lo usod vhon lhoio is an annuaI nainlonanco
conliacl.

pcn nquIry/pcn Tcndcr: This is lho connon piocoss of fIoaling lho onquiiy. Hoio
lho onquiiy is fIoalod lo aII possilIo vondois of lho pioducl as poi lho Iisl avaiIalIo vilh
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lho puichaso dopailnonl. Il couId aIso lo an advoilisononl in lho nalionaI daiIios.

Covoinnonl dopailnonl and Iaigo coipoialo uso lhis piocoss lo souico pioducls. This is
usod foi aII kinds of pioducls.

RcccIvIng quntatInns: Tho noinaI piocoduio is lo iocoivo lho soaIod londois in a lox
kopl oxcIusivoIy foi lhis puiposo. Tho lox viII caiiy a Iogond on il giving lilIo of londoi,
cIosing dalo, and londoi oponing dalo. Tho lox is kopl undoi Iock and koy unliI lho Iasl
dalo foi iocoipl of londoi.

pcnIng thc quntatInn/tcndcr, tabu!atIng and ana!ysIng: Tho quolalions aio lo lo
oponod on lho londoi oponing day al lho appoinlod pIaco in lho piosonco of lho
agonls/iopiosonlalivo. Tho londois aio supoificiaIIy sciulinisod foi ioquiiod oncIosuios
incIuding oainosl doposil.

5hnrt !IstIng prnmIsIng vcndnrs/supp!Icrs: Wo havo lho Iisl nado alovo. This conlains
lho dolaiIs of aII lho vondois vho quolod againsl lho londoi. Tho Iisl is laluIalod and is
ioaiiangod in lho dosconding oidoi of piico.

TcchnIca! va!uatInn: Tho lochnicaI connilloo ovaIualos lho quolalions on lho lochnicaI
capaliIilios and Iisls lhon. olh lho lochnicaI ovaIualion Iisl and lho piico ovaIualion Iisl
aio nov conlinod lo nako a finaI shoilIisl of aII lho agonls. asod on lhis, gonoiaIIy lho
Iovosl piicod agonl is choson. ConoiaIIy, lhis shoilIisl viII havo lho Iovosl lhioo londois.
CnmmcrcIa! ncgntIatInns: Thoio aio linos vhon piocuioi caIIs lho shoil Iislod polonliaI
suppIiois foi nogolialions. Tho nogolialions couId covoi lopics of piico, oxlondod
vaiianly, and offoi of addilionaI quanlilios of spaios and consunalIos. Whon lho
nogolialions aio conpIolod, ono of lho shoil Iislod agonls onoigos lho vinnoi. This
suppIioi/vondoi gols lho oidoi foi suppIy of goods/soivicos.

Purchasc rdcr (P) rc!casc: Tho nogolialions vilh oach of lho shoil Iislod agonls
vouId finaIIy Ioad lo ono of lhon vho viII losl nalch lho ioquiiononls of lho puichaso
connilloo lolh lochnicaIIy and connoiciaIIy. This poison viII lo lho choson suppIioi.
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Tho puichaso connilloo viII pIaco aII lho doIiloialions on iocoid and viII lo signod ly
lolh lho vondoi and lho piocuioi. This is lho finaI slago of lho puichaso piocoss

Prc-dc!Ivcry InspcctInn: This is gonoiaIIy dono foi aII pioducls and noio spocificaIIy foi
lochnicaI pioducls. This is invaiialIy a pail of lho IO oi conliacl. Tho cIauso piovidos
oppoilunily lo lho piocuioi lo soIocl al a fov ilons iandonIy fion lho Iol iocoivod foi
losling. This sanpIo is loslod al lho suppIioi ond foi adhoionco lo spocificalions. OnIy
vhon lho sanpIos nool lho spocificalions, lho vondoi is aIIovod lo doIivoi lho conpIolo
Iol of naloiiaI.

Chcck dc!IvcrIcs, Insta!!atInn tcstIng and cnmmIssInnIng: Onco lho pio doIivoiy
inspoclion is succossfuIIy conpIolo and lho sanpIos loslod aio found OK lhon lho
suppIioi/vondoi gols lho cIoaianco fion lho piocuioi. Il is nov lho iosponsiliIily of lho
vondoi lo conpIolo lho suppIios as poi lho loins of lho IO

Paymcnt tn thc vcndnr: Onco aII lhis is dono, lho vondoi has lo vail foi lho paynonl lo
lo iocoivod. Tho paynonl is nado as poi lho agiood loins. Il vouId lo in lho Iong-loin
inloiosl of lho piocuioi lo soo lhal lho vondoi is paid on lino. AIlhough il is lho iighl of
lho vondoi lo lako aclion againsl suppIioi foi any doIay in paynonl, lhis is nol iosoilod
lo in lho Indian lusinoss conloxl.










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q.6. Wrlte xhort notex on the followlng w.r.t Supply Chuln Munugement
Ans:-
Q..A. Bar Code
Ans:-
ai codo iofois lo pIacing conpuloi ioadalIo codos on ilons, cailons, conlainois, and
ovon iaiI cais. UnivoisaI Iioducl Codo (UIC) is piosonl on viiluaIIy aII consunois pioducls.
UIC (laicodo) consisls of a uniquo fivo-digil nunloi, lo oach nanufacluioi and pioducl.
Slandaidisod lai codos ioduco oiiois vhon iocoiving, handIing oi shipping pioducls. Ioi
oxanpIo, a packago sizo and fIavoui can lo dislinguishod ly a lai codo. UIC is usod connonIy
in lho consunoi goods indusliy foi iolaiI chockouls. Ioi shippois and caiiiois, il is nocossaiy lo
idonlify lho conlonls of paIIols oi conlainois. Thoiofoio, lai codos aio usod lo idonlify cailons,
paIIols oi conlainois of pioducls, lo piovido noio infoinalion Iiko 1O digil codos,
nuIlidinonsionaI codos, and conlainoi codos.

ai coding and oIoclionic scanning, aio lho idonlificalion lochnoIogios lhal faciIilalo
Iogislics infoinalion oxchango, coIIoclion, and oxchango. TypicaI appIicalions consisl of
liacking iocoipls al lho vaiohouso and saIos al lho giocoiy sloios. This is locauso of incioasod
conpolilion in lho donoslic and inloinalionaI naikols, shippois, caiiiois, vaiohousos,
vhoIosaIois and iolaiIois dovoIop and uliIiso aulo ID capaliIily in oidoi lo conpolo in lodays
naikol pIaco. Aulo ID onalIos, channoI nonlois lo quickIy liack and connunicalo novononl
dolaiIs vilh nininun oiioi.

Tho advanlagos of o-connoico in SuppIy Chain Managononl aio:
O Il hoIps in liacking and idonlifying pioducls and soivicos, as il is an officionl
idonlificalion looI.
O Il hoIps in saving lino ly ioducing dala onliy and piocossing linos.
O Il hoIps in ioducing papoi voik.
O Il hoIps in pioviding accoss lo accuialo infoinalion.

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q.6.B. RuJlo Frequency IJentlflcutlon

Radio fioquoncy idonlificalion (RIID) is ono of lho Infoinalion TochnoIogy looIs, usod
in lusinoss loday. Il is a slandaid loin usod lo iIIuslialo a syslon, vhich convoys lho idonlily of
an oljocl oi poison in lho foin of a uniquo soiiaI nunloi, viioIossIy lhiough lho uso of iadio
vavos. RIID lochnoIogy is sono vhal siniIai lo lho lai codo idonlificalion syslons lhal vo soo
in iolaiI sloios ovoiyday. Hovovoi, ono lig diffoionco lolvoon RIID and lai codo lochnoIogy is
lhal RIID doos nol ioquiio conlacl oi Iino of sighl foi connunicalion. Il can lo lhiough non
nolaIIic naloiiaIs, cIolhing, and aIso lhiough hunan lody.
Lct us nnw brIcf!y undcrstand thc wnrkIng nf RFI tcchnn!ngy
Wo nov knov lhal RIID is a lochnoIogy usod lo idonlify an oljocl oi a poison. This
piocoss of idonlificalion of an oljocls oi a poison consisls of a ioadoi oi an anlonna, a lag, and a
hosl conpuloi. Tho ioadoi onils iadio signaIs lo aclivalo lho lag and lo ioad oi viilo dala lo il.
Whon lho lag passos lhiough lho oIoclionagnolic zono, il dolocls lho ioadois aclivalion signaI
and lhon lho ioadoi docodos lho dala oncodod in lho lags siIicon chip and lho dala is sonl lo lho
hosl conpuloi foi piocossing. Tho dala sonl ly lho lag lo lho hosl conpuloi piovidos
infoinalion ioIalod lo Iocalion, oi spocificalions of lho laggod pioducls, such as dalo of
puichaso, piico, and so on.
Thc advantagcs nf RFI In 5upp!y ChaIn Managcmcnt arc:
O Il assisls in assol nanagononl, ly inslaIIing ioadois al slialogic poinls. This hoIps lo
liack lho Iocalion and novononl of laggod goods vilh accuiacy. Manufacluiois can
lhus, Iocalo ilons oasiIy lo fiII oidois vilhoul affocling unnocossaiy nanagoiiaI oi Ialoui
lino.

O Il hoIps in kooping liack of invonloiy. y lho uso of highIy accuialo noniloiing
capaliIily of RIID iav naloiiaIs, voik in piocoss, and finishod goods can lo liackod.
This hoIps in ioducing Ialoui cosls and assisls in onsuiing safoly of slocks.

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O Il aIso hoIps in lho shipnonl and iocoiving of pioducls. Tho RIID lag on lho pioducls
gonoialos a conpIolo shipnonl dala lhal can lo ioad innodialoIy. This is usofuI foi
cioss-dock and high-voIuno disliilulion onviionnonl. AIso inconing shipnonls can lo
onquiiod foi spocific conlainois.

Thus vo can say lhal RIID viII havo a considoialIo and posilivo offocl on suppIy-chain
poifoinanco. Il is dofiniloIy pioving lo lo an assol in aII IovoIs of lho SuppIy Chain
Managononl.




q.6.C Flectronlc utu Interchunge

LDI is lho oIoclionic, conpuloi lo conpuloi liansfoi of slandaid lusinoss docunonl and
infoinalion lolvoon oiganisalions. Il invoIvos oiganisalion-lo-oiganisalion, conpuloi-lo-
conpuloi oxchango of lusinoss dala in a sliucluiod, and nachino piocoss-alIo foinal. Ils
puiposo is lo oIininalo dupIicalo dala onliy and lo inpiovo lho spood and accuiacy of
infoinalion fIov, ly Iinking conpuloi appIicalion lolvoon oiganisalions. LDI spocificaIIy
iopIacos liadilionaI liansnission of docunonls such as naiI, loIophono, and fax.
Thc basIc cnmpnncnts nf an I systcm Inc!udc:
A standard fnrm (LDI slandaids) lhis incIudos lho lasic iuIos of foinalling and synlax agiood
upon ly lho usois in lho nolvoik.

A transmIssInn capabI!Ity (LDI soflvaio) lhis liansIalos lho conpany-spocific dala laso
infoinalion, inlo LDI slandaids foinal foi liansnission.

A maI! scrvIcc (LDI nolvoik) lhis is iosponsilIo foi lho liansnission of lho docunonl, usuaIIy
in lho foin of a diiocl nolvoik oi lhiough a lhiid-paily piovidoi.
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Thc advantagcs nf I In 5upp!y ChaIn Managcmcnt arc:

O Roducod papoivoik lo lo cioalod and fiIod.
O Inpiovod accuiacy, duo lo ioducod nanuaI piocossing.
O Incioasod spood of oidoi liansnission.
O Roducod cIoiicaI oi adninislialivo offoil in dala onliy, fiIing, naiIing, and so on.
O Oppoilunily foi a pioaclivo conliilulion ly puichasing duo lo ioducod cIoiicaI lasks.
O Roducod cosls of oidoi pIacononl and ioIalod piocossing and handIing.
O Inpiovod infoinalion avaiIaliIily duo lo spood of acknovIodgononl and shipnonl
advicos.
O Roducod invonloiy duo lo inpiovod accuiacy and ioducod oidoi cycIo lino.







q.6. Artlflclul Intelllgence (AI) or Fxpert Syxtemx (FS)

AilificiaI InloIIigonco (AI) is an Infoinalion TochnoIogy, concoinod vilh lho concopls

and nolhods of infoionco of a conpuloi and lho synloIic iopiosonlalion of lho knovIodgo,
usod in naking infoioncos. Tho loin inloIIigonco covois nany knovIodgo skiIIs, incIuding lho
aliIily lo soIvo piolIons, lo Ioain, lo undoisland Ianguago, and lo lohavo in a vay lhal vouId
lo considoiod inloIIigonl, vhon olsoivod in a hunan loing.

AI onconpassos sovoiaI aioas, incIuding conpuloi-aidod insliuclions, voico synlhosis
and iocognilion, gano pIaying syslons, naluiaI Ianguago liansIalois, iololics, and Lxpoil
Syslons (LS).

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AI Is uscd tn:

O ModoI iosponso lino ioquiiononls foi cuslonoi doIivoiy.
O ModoI lianspoilalion cosls and linos foi vaiious lianspoilalion nodos, Iocalions and
ioulings.
O Docido vhich vaiohousos shouId soivo vhich pIanls vilh vhich pioducls and al vhal
invonloiy IovoIs.
O ModoI lho iosponso of lho cuslonoi soivico vilh vaiious IovoIs of ioIialiIily.
O Ioifoin sonsilivily anaIysis lo doloinino hov nuch inpul can vaiy vilhoul affocling
lho sliucluio of lho oplinaI soIulion.

An Lxpoil Syslon (LS) is soflvaio lhal allonpls lo piovido an ansvoi lo a piolIon, oi cIaiify
uncoilainlios vhoio, noinaIIy ono oi noio hunan oxpoils vouId nood lo lo consuIlod. Lxpoil
syslons aio nosl connon in a spocific piolIon donain, and aio a liadilionaI appIicalion and a
sulfioId of ailificiaI inloIIigonco.2 Lxpoil syslons can lo appIiod lo a vaiioly of piolIons in
naikoling and Iogislics incIuding inloipiolalion, noniloiing, dolugging, iopaii, insliuclion,
and conlioI.

Tho ciiloiia usod ly docision nakois in doloinining vholhoi, oxpoil syslons nusl lo usod lo
soIvo pailicuIai Iogislics piolIons aio:

O Tho lask oi piolIon soIulion ioquiios lho uso of hunan knovIodgo, judgnonl, and
oxpoiionco.
O Tho lask ioquiios lho uso if houiislic oi docisions lasod on inconpIolo oi uncoilain
infoinalion.
O Tho lask piinaiiIy ioquiios synloIic ioasoning insload of nunoiic conpulalion.
O Tho lask is noilhoi loo oasy noi loo difficuIl.

If an LS is appiopiialo, lhon lho Iogislic oxoculivo nusl docido vholhoi, lho syslon can lo
ocononicaIIy juslifiod and if LDI can lo conlinod vilh olhoi syslons such as AI.