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Submitted in the partial fulfillment for the degree of
Master of Business Administration
Under The Guidance Of:
Mr. NAVEEN MBA FACULTY
Roll No: 8501
MBA 4th Sem.
Doon Valley Institute of Engineering & Technology(DIET) Karnal-132001(HARYANA)
Approved by AICTE,Government of Haryana & Affiliated to K.U.Kurukshetra [An ISO 9001:2000 Certified institute & institutional member of ISTE] (Session 2008-10)
“Knowledge is an experience gained in life, it is the choicest possession, which should not be shelved but should be happily shared with others”. In this regard I am extremely fortunate having Dr. Harish Abhichandani as the principal of Doon valley institute of engineering & technology, Karnal I am highly thankful to Mrs. Manisha Tanwar (HOD) Doon valley institute of engineering & technology, Karnal. He has been a consent source of inspiration and his critical evaluation our course in the institute has helped me to complete this project properly.
I wish to express my profound gratitude to my project guide Mr. Naveen (Faculty Guide), for her consistence direction, guidance and supervision, which has led to successful completion of project. It was pleasure to have you as my project guide.
Finally yet importantly, we would like to thank almighty for blessing me to do and complete this project
In today’s highly competitive, global marketplace the pressure on organizations to find new ways to create and deliver value to customers grow ever stronger. Gradually, in emerging economies as well as mature markets, the power of the buyer has overtaken that of customer. The rules are different in buyer market. In particular customer service becomes a key differentiator as the sophistication and demands of customers continually increase. At the same time, market maturity combined with new sources of global competition has led to over-capacity in many industries leading to an inevitable pressure on price. Price has always been a critical competitive variable in many markets and the signs are that it will become even more of an issue as the ‘commoditization’ of markets continues. A supply chain management is a network of facilities and distribution options that performs that function of procurement of materials, transformation of these material into intermediate and finished products, and the distribution of these finished products to customer supply chain exist both in service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm. Supply chain management is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work in process inventory, and finished goods from point of origin to point of consumption. The definition one American professional association put forward is that supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion and logistics management activities. Objective of supply chain management is maximize overall profit and make the supply chain management effective by manage product information flow and fund flow. Currently there exists a gap in the literature available in the area of supply chain management studies, on providing theoretical support for explaining the existence and the boundaries of supply chain management. Some authors such as halldorsson et al and lavassani et al had tried to -3-
provide theoretical foundations for different areas related to supply chain with employing organizational theories like resource based view, transaction cost analysis, knowledge based view, strategic choice theory, agency theory, institutional theory, system theory etc. the literature on business process reengineering, buyer supplier relationships and supply chain management suggests various possible components that must receive managerial attention when managing supply relationships. There are some components like planning and control, work structure, product flow facility structure, management methods, risk and reward structure etc. Classification of the decisions for supply chain management into two broad categories strategic and operational. As the term implies strategic decisions are made typically over a longer time horizon. On the other hand, operational decisions are short term and focus on activities over a day to day basis. There are four major decision areas in supply chain management that location, production, inventory, distribution and there are both strategic and operational elements in each of these decision areas. The models that describe decisions are huge and require a considerable amt of data to facilitate a concise review of the literature and at the same time attempting to accommodate the above polarity. In modeling we divide the modeling approach into three areas like network design, ‘Rough Cut’ methods and stimulation based methods. The six major movements can be observed in the evolution of supply chain management studies creation integration and globalization, specialisation1&2 and scm2.0. Study of supply chain management like distribution network configuration, distribution strategy. Supply chain management is a cross functional approach to manage the movement of raw materials into an organization, certain aspects of the internal processing of material into finished goods and then the movement of finished goods out of the organization towards the end customer.
To Whomsoever It May Concern
This is to certify that the project report of MBA entitled’’ Evaluation of Supply Chain Management” done by Mr. ABHISHEK SINGH .Roll No. 8501 is a bonifide work carried out by me. The matter embodied in this project work has not been submitted earlier .For award of any degree or diploma to the best of my knowledge and belief.
Signature of the student Name of the student: ABHISHEK SINGH
Faculty Guide Name:-Mr.To Whomsoever It May Concern Date: This is to certify that the summer training of MBA entitled” Evaluation of Supply Chain Management” done by Mr. 8501 is a bonifide work carried out by him under my guidance. ABHISHEK SINGH . Naveen Full Address: Doon Valley Institute of engineering and technology KARNAL-132001 TABLE OF CONTENTS -6- .Roll No. The matter embodied in this project work has not been submitted earlier for award of any degree or diploma to the best of my knowledge and belief.
6 Theories of Supply Chain Management 1.2 Objective of Supply Chain Management 1.13 Supply Chain Management Problem 1.Certificates Preface Acknowledgement CHAPTER-1 Introduction 1.14 Activities and Functions CHAPTER-2 Research Objectives CHAPTER-3 Research Methodology CHAPTER-4 Results & Findings CHAPTER-5 Conclusion -7- .4 Disadvantages of Supply Chain Management 1.3 Advantages of Supply Chain Management 1.8 Components of Supply Chain Management Integration 1.7 Steps in Supply Chain Management 1.1 About Supply Chain Management 1.5 Trends in supply chain management 1.12 Supply Chain Business Process Integration 1.11 Developments in Supply Chain Management 1.9 Supply Chain Decision 1.10 Approaches and Methods 1.
CHAPTER-6 Recommendation CHAPTER-7 Bibliography CHAPTER-8 Appendix -8- .
CHAPTER-1 -9- .
and finished goods from point-of-origin to point-of-consumption. to successfully compete in the global market and networked economy. Supply Chain Management can also refer to Supply chain management software which is tools or modules used in executing supply chain transactions.10 - .1 SUPPLY CHAIN MANAGEMENT A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials. where raw material is procured from vendors.INTRODUCTION 1. intermediaries. Supply chain management (SCM) is the process of planning. and customers. The definition one American professional association put forward is that Supply Chain Management encompasses the planning and management of all activities involved in sourcing. In essence. although the complexity of the chain may vary greatly from industry to industry and firm to firm. Supply chains exist in both service and manufacturing organizations. Supply Chain Management spans all movement and storage of raw materials. managing supplier relationships and controlling associated business processes. conversion. In . Importantly. Organizations increasingly find that they must rely on effective supply chains. procurement. Supply Chain Management integrates supply and demand management within and across companies. and ultimately. or networks. transformation of these materials into intermediate and finished products. transformed into finished goods in a single step. customers. An example of a very simple supply chain for a single product. work-inprocess inventory. implementing and controlling the operations of the supply chain as efficiently as possible. and the distribution of these finished products to customers. and then transported to distribution centers. it also includes coordination and collaboration with channel partners. which can be suppliers. third-party service providers. and logistics management activities.
11 - . companies in a supply network concentrate on the inputs and outputs of the processes. this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. planning. there is a need for a mechanism through which these different functions can be integrated together. and the purchasing organizations along the supply chain operated independently. the network structure fits neither "market" nor "hierarchy" categories. During the past decades. manufacturing. globalization. distribution. to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities. the choice of an internal management control structure is known to impact local firm performance. This inter-organizational supply network can be acknowledged as a new form of organization. outsourcing and information technology have enabled many organizations. with little concern for the internal management working of other individual players. integrated plan for the organization-there was as many plans as businesses. Clearly. Traditionally. The result of these factors is that there is not a single. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. These organizations have their own objectives and these are often conflicting. Traditionally. such as Dell and Hewlett Packard. . However. with the complicated interactions among the players. It is not clear what kind of performance impacts that different supply network structures could have on firms.2 Objective of Supply Chain Management . Purchasing contracts are often negotiated with very little information beyond historical buying patterns. 1.Peter Drucker's management's new paradigms. Therefore. Supply chain management is a strategy through which such integration can be achieved. marketing. and little is known about the coordination conditions and trade-offs that may exist among the players.
While today competitive environments are forcing businesses in this direction. and their solution requires special knowledge and experience.Effective supply-chain management is a powerful tool for business transformation. but rather in terms relative to the competition.3 Advantages of Supply Chain Management . The intensive level of competitive activity encountered in most markets has led to a new emphasis on measuring performance not just in absolute terms.12 - . Some of the major objectives of the supply chain management are as follows: To increase sales volume To counter a competitor’s sales promotion device To satisfy customer To maximize overall profit To assist salesman in selling To increase goodwill To contribute to continuous growth of enterprise Division of specialists Creation of demand Regular and timely contacts with customer These all are the main objectives of the supply chain management. the steps to take are often not evident Problems of supply-chain management can be complex. A integrated supply chain management helps in achieving all the objectives perfectly. and beyond that to ‘best-practice 1. It can dramatically increase company’s profitability while simultaneously improving customer service.
Blackburn and Van Wassenhove (1999) show that successful business partnerships yield a number of major benefits. by negotiating payment arrangements (so that cash can be counted on within a certain timeframe) and even by collectively investing in large projects. Improved quality. risk is spread throughout the supply chain by negotiating better inventory management between partners (reducing the risk of obsolescence). Leverick et al (1998) argue that effective supply chain management reduces risk. Increased market share. . more closely between supply chain partners as well as arranging more effective purchasing arrangements. Improved delivery service. Shorter product development cycles. Leverick and Cooper (1998) argue that greater competitive advantage can be gained through effective supply chain management. and.13 - . Corbett. Inventory reductions throughout the supply chain. Walters (2002) indicates that supply chain management can lead to: Complementary goals/ objectives between supply chain members. enabling such Greater cost management effectiveness through negotiating prices management philosophies as JIT to have a more beneficial affect. Greater coordination between supply chain members. By operating in a supply chain.
A ‘last year plus 10 percent’ mentality. especially in tense business relationships where each company is trying to get ahead. This internal focus leads to many problems. then the supply chain will flourish and work like a well-oiled machine. supply chain members often are unaware of it for far too long due to their inward focus. Kumar (1996) shows trust to be an essential aspect of operating within a supply chain framework. This is disastrous in turbulent markets where practices such as JIT are inappropriate. Trust is not the easiest thing to come by. They tend to focus their attention on developing better ways to improve operational efficiency in the current operating environment. They believe “we should look beyond our own internal process and see the total value chain…consumers will not pay for our sloppiness”. with a focus on reducing time to delivery. The whole notion of supply chain management has evolved as a better way to manage interfirm processes.4 Disadvantages of Supply Chain Management Fuller et al (1993) argue that supply chain management is too internally focussed.1. This can lead to grave consequences. Focussing on suppliers and customers only is not contributory to improving stakeholder value unless stakeholder value has common criteria. This approach has not necessarily delivered the maximum value for supply chain members because customer needs are traditionally ignored in favour of achieving some cost target assigned by ignorant management. sometimes at the expense of supply chain partners. . Organisations running under a supply chain arrangement will usually not be hugely innovative or look for new and exciting ways to gain profitability in the long-term. including: Rigidity of direction and organisation. Ignorance of other stakeholders’ needs.14 - . In other words. costs. this is very rarely the case. A definite direction assigned by supply chain members leads to solid structures within the supply chain. and improving ‘quality’. When value shifts occur. In reality. if every stakeholder has the exact same requirements.
a producer of auto seats and trim. engineering. which include Ford. operates ten plants near its major customers. 1. Supplier proximity to allow just-in-time delivery and to facilitate closer working relationships targeted at improving product and service quality along the supply chain (for example. over the past decade. “Although exploiting power may be advantageous in the short-run. Motorola can change specifications and delivery schedules). Toyota. and logistics as well as sales and purchasing . This trend is set to continue with improvements in technology and technology management. Johnson Controls. Kumar (1996) also shows that power relationships within supply chains lead to the supply chain becoming ineffective. and General Motors).15 - .5 Trends in Supply Chain Management Hutt and Speh (1998) illustrate a number of trends that they have identified.on both the buying and selling sides (for example. through computer links with its suppliers. Chrysler. in supply chain management. The increasing influence of Information Technology has led to increasing ability to manage relationships and knowledge in real-time. . and Ford have been reduced by 60% or more). Longer term and closer relationships with fewer suppliers (for example.manufacturing. Closer interactions among multiple functions . the number of suppliers utilised by Motorola. it tends to be self-defeating in the long-run”.
6 Theories of Supply Chain Management Currently there exists a gap in the literature available in the area of supply chain management studies. (2008) had tried to provide theoretical foundations for different areas related to supply chain with employing organizational theories. et al. (2003).16 - .1. These theories includes: Resource-based view (RBV) Transaction Cost Analysis (TCA) Knowledge-based view (KBV) Strategic Choice Theory (SCT) Agency theory (AT) Institutional theory (InT) Systems Theory (ST) Network Perspective (NP) . Few authors such as Halldorsson. Ketchen and Hult (2006) and Lavassani. on providing theoretical support for explaining the existence and the boundaries of supply chain management. et al.
7 STEPS IN SUPPLY CHAIN MANAGEMENT The steps involved • Step 1.designing the supply chain o Determine the supply chain network o Identify the levels of service required • Step 2-Optimizing the supply chain o Customer markets to distribution centers o Determine the pathways from supplier to end customer o Distribution centers to production plants o Raw material sources to production plants o Identify constraints at vendors.1.designing the supply chain ↓ • Step 2-Optimizing the supply chain ↓ • Step 3.17 - .Material flow planning ↓ • Step 4. plants and distribution centers o Get the big picture o Plan the procurement.Transaction processing and short term scheduling • Step 1. production and distribution of product groups rather than individual products in large time periods – quarter or years .
order fulfillment and physical replenishment 1.18 - . buyer-supplier relationships and SCM suggests various possible components that must receive managerial attention when managing supply relationships.Transaction processing and short term scheduling Customer order arrive at random This is a day to day accounting system which tracks and schedules every order to meet customer demand Order entry.• o o o • o o o Step 3.8 Components of Supply Chain Management Integration The management components of SCM The literature on business process reengineering.Material flow planning Determine the exact flow and timing of materials Arrive at decisions by working back from the projected demand through the supply chain to raw material resources Techniques-ERP (Enterprise resource panning) Step 4. Lambert and Cooper (2000) identified the following components which are: • • • • • • • • Planning and control Work structure Organization structure Product flow facility structure Information flow facility structure Management methods Power and leadership structure Risk and reward structure .
personnel management. 2)For product development and commercialization: Includes the primary level component of Product Data Management (PDM). which is correlated with the information flow facility structure within the organization. A secondary level participant (specialized) is a business that participates in channel relationships by performing essential services for primary participants. customer profitability analysis (CPA). . and postponement (order management). and which are the fundamental branches of the secondary level components. and asset management could be concerned as well. manufacturing planning.A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects of financial risk. manufacturing support and procurement: Includes the primary level component of enterprise resource planning (ERP). decision and policy measurements. may also be included. with secondary level components such as warehouse management. material management. and secondary level components such as market share. Third level channel participants and components that will support the primary level channel participants. 3)For physical distribution. in accordance with these secondary level components. Secondary level components may include four types of measurement such as: variation. thus including secondary level components. which are in support of primary participants. 1) For customer service management: Includes the primary level component of customer relationship management. profit margins. and secondary level components such as benchmarking and order fulfillment. customer satisfaction.19 - . direction. 4)For performance measurement: Includes the primary level component of logistics performance measurement. More specifically. thus including primary level components. total cost analysis (TCA). and returns to stakeholders.
and focus on activities over a day-to-day basis. operational decisions are short term. manufacturing capabilities. strategic decisions are made typically over a longer time horizon. The effort in these types of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain. and the strategic objectives for particular initiatives in key areas of information technology. 3) Inventory 4) Transportation (distribution). operations. There are four major decision areas in supply chain management: 1) Location.9 Supply Chain Decisions We classify the decisions for supply chain management into two broad categories -strategic and operational. 2) Production. and logistics (secondary level component 1. and guide supply chain policies from a design perspective.20 - . As the term implies. These are closely linked to the corporate strategy. On the other hand. .5)For outsourcing: Includes the primary level component of management methods. And there are both strategic and operational elements in each of these decision areas.
Although location decisions are primarily strategic. The location of facilities involves a commitment of resources to a long-term plan. Operational decisions focus on detailed production scheduling. . and DC's to customer markets. As before. and sourcing points is the natural first step in creating a supply chain. production limitations. but determine the exact path(s) through which a product flows to and from these facilities.21 - . These decisions assume the existence of the facilities. These decisions include the construction of the master production schedules. so are the possible paths by which the product flows through to the final customer. and location of these are determined. distribution costs. allocation of suppliers to plants. scheduling production on machines. costs and customer service levels of the firm. taxes. duties and duty drawback. these decisions have a big impact on the revenues. and will have a considerable impact on revenue. they also have implications on an operational level. and level of service.1) Location Decisions The geographic placement of production facilities. number. and equipment maintenance. etc. Once the size. plants to Distribution Channel's. tariffs. Another critical issue is the capacity of the manufacturing facilities--and this largely depends the degree of vertical integration within the firm. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets. local content. 2) Production Decisions The strategic decisions include what products to produce. These decisions should be determined by an optimization routine that considers production costs. stocking points. and which plants to produce them in. cost.
They can also be in-process between locations. Meanwhile shipping by sea or rail may be much cheaper. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. their efficient management is critical in supply chain operations.22 - . since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. However. routing and scheduling of equipment are key in effective management of the firm's transport . they are expensive. operating efficiently makes good economic sense. Since holding of inventories can cost anywhere between 20 to 40 percent of their value. These are closely linked to the inventory decisions. While air shipments may be fast. semi-finished or finished goods. Since transportation is more than 30 percent of the logistics costs. and warrant lesser safety stocks. Inventories exist at every stage of the supply chain as either raw materials. but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them.3) Inventory Decisions These refer to means by which inventories are managed. reliable. Shipment sizes. most researchers have approached the management of inventory from an operational perspective 4) Transportation Decisions The mode choice aspect of these decisions are the more strategic ones. It is strategic in the sense that top management sets goals. Therefore customer service levels and geographic location play vital roles in such decisions.
if not optimal. for the most part. and simulation based methods. meanwhile. for the most part. Simulation methods are a method by which a comprehensive supply chain model can be analyzed. ``Rough Cut" methods. give guiding policies for the operational decisions.. The network design methods. These models typically assume a "single site" (i.23 - . considering both strategic and operational elements. solutions to the operational decisions. global or "all encompassing" in that they try to integrate various aspects of the supply chain. address the day to day operation of the supply chain. the models that describe these decisions are huge. and require a considerable amount of data. These models typically cover the four major decision areas described earlier. these models often consider great detail and provide very good. and focus more on the design aspect of the supply chain. Due to their narrow perspective. The strategic decisions are. However. and at the same time attempting to accommodate the above polarity in modeling. and the broad scope of decisions.Network Design. Consequently. Therefore the models that describe them are often very specific in nature. these models provide approximate solutions to the decisions they describe.10 APPROACHES AND METHODS Supply Chain Modeling Approaches Clearly. as with all simulation models. on the other hand. To facilitate a concise review of the literature. each of the above two levels of decisions require a different perspective. ignore the network) and add supply chain characteristics to it. the establishment of the network and the associated flows on them. The operational decisions. It is the traditional question of "What If?" versus "What's Best?” . Often due to the enormity of data requirements. we divide the modeling approaches into three areas --. one can only evaluate the effectiveness of a pre-specified policy rather than develop new ones. such as explicitly considering the site's relation to the others in the network. provide normative models for the more strategic decisions.e. "Rough cut" methods.1.
"PLANETS". Brown. and Trafton provide the most comprehensive deterministic model for supply chain management. Harrison. although the term "supply chain" was not in vogue.24 - . Clearly. inventory. and sourcing facilities. stocking. The objective function minimizes a combination of cost and time elements. Time elements include manufacturing lead times and transit times. transportation costs between various sites. Their very nature forces these problems to be of a very large scale. encompassing production. They are often difficult to solve to optimality . was by Geoffrion and Graves . they are not without their shortcomings. They introduce a multicommodity logistics network design model for optimizing annualized finished product flows from plants to the DC's to the final customers. Arntzen. these network-design based methods add value to the firm in that they lay down the manufacturing and distribution strategies far into the future. which markets to pursue and what resources to use. Parts of this ambitious project were successfully implemented at General Motors. duties. where and how to produce it. Finally. and used generally at the inception of the supply chain. Examples of cost elements include purchasing. and such models are therefore indispensable. pipeline inventory. these methods determine the location of production. Such methods tend to be large scale. that is used to decide what products to produce. It is imperative that firms at one time or another make such integrated decisions. and paths the products take through them. Unique to this model was the explicit consideration of duty and their recovery as the product flowed through different countries. and taxes.Network Design Methods As the very name suggests. Breitman and Lucas attempt to provide a framework for a comprehensive model of a production-distribution system. manufacturing. and transportation. The earliest work in this area. location. Although the above review shows considerable potential for these models as strategic determinants in the future.
researchers have largely focused on the inventory system only. almost all published research assumes an arborescence structure. describe "OPTIMIZER". Third. In Fact. Therefore. there seems to be a need with models that include the production component in them. inventory and customer service in determining their polici . The thrust of the rough cut models is the development of inventory control policies. In logistics-system theory. Most of the integrative research (from a supply chain context) in the literature seems to take on an inventory management perspective.to manage IBM's spare parts inventory. and typically deal with the more operational or tactical decisions. Second. companies must consider important interrelationships among transportation. even on the distribution side. transportation and inventory are primary components of the order fulfillment process in terms of cost and service levels. considering several levels or echelons together. i. and policies are given to manage these effectively. Their starting point in most cases is a finished goods stockpile. one of the most complex models to date --. the term "Supply Chain" first appears in the literature as an inventory management approach. the studies have several notable limitations. They develop efficient algorithms and sophisticated data structures to achieve large scale systems integration. Multi-echelon inventory theory has been very successfully used in industry. Since production is a natural part of the supply chain.e. Although current research in multi-echelon based supply chain inventory problems shows considerable promise in reducing inventories with increased customer service. each site receives re-supply from only one higher level site but can distribute to several lower levels. these studies largely ignore the production side of the supply chain. These models have come to be known as "multi-level" or "multi-echelon" inventory control models. First.Rough Cut Methods These models form the bulk of the supply chain literature. Cohen et al.25 - .
The characteristics of this era of supply chain management include the need for large scale changes. However the concept of supply chain in management. Creation Era The term supply chain management was first coined by an American industry consultant in the early 1980s. reengineering.1. downsizing driven by cost reduction programs. 2008). This era has continued to develop into the 21st century with the expansion of internet-based collaborative systems. Integration Era This era of supply chain management studies was highlighted with the development of Electronic Data Interchange systems in the 1960s and developed through the 1990s by the introduction of Enterprise Resource Planning systems. Specializations and SCM 2.26 - . . was of great importance long before in the early 20th century.11 Developments in Supply Chain Management Six major movements can be observed in the evolution of supply chain management studies: Creation. and widespread attention to the Japanese practice of management..0. especially by the creation of the assembly line. Integration. and Globalization (Lavassani et al.
. and reducing costs through global sourcing. and outsourced those functions to other companies. the oil industry). They had to control the entire supply chain from above instead of from within. collaboration. Companies abandoned vertical integration.Globalization Era The third movement of supply chain management development. This changed management requirements by extending the supply chain well beyond the four walls and distributing management across specialized supply chain partnerships. Specialization Era -. creating more value-added. This era is characterized by the globalization of supply chain management in organizations with the goal of increasing competitive advantage. warehouse management. OEMs became brand owners that needed deep visibility into their supply base.Supply Chain Management as a Service Specialization within the supply chain began in the 1980s with the inception of transportation brokerages. it was not until the late 1980s that a considerable number of organizations started to integrate global sources into their core business. and non asset based carriers and has matured beyond transportation and logistics into aspects of supply planning.g.27 - . Specialization Era -. globalization era. can be characterized by the attention towards global systems of supplier relations and the expansion of supply chain over national boundaries and into other continents. sold off non-core operations. Although the use of global sources in the supply chain of organizations can be traced back to several decades ago (e. This transition also refocused the fundamental perspectives of each respective organization.Outsourced Manufacturing and Distribution In the 1990s industries began to focus on “core competencies” and adopted a specialization model. execution and performance management.
It is the notion of a usable pathway. Supply chain specialization enables companies to improve their overall competencies in the same way that outsourced manufacturing and distribution has done. the common attribute that Web 2. tools and delivery options to guide companies to their results quickly as the complexity and speed of the supply chain increase due to the effects of global competition.0 is defined as a trend in the use of the World Wide Web that is meant to increase creativity. short product life cycles. market forces could demand changes within suppliers. methodologies. SCM 2. methods and tools that manage it in this new "era". logistics providers. information sharing. It is the pathway to SCM results – the combination of the processes. surging oil prices. Outsourced technology hosting for supply chain solutions debuted in the late 1990s and has taken root in transportation and collaboration categories most dominantly. customers and any number of these specialized participants within supply chain networks. expanded specialization.28 - . Supply Chain Management SCM 2. locations.0 brings is it helps us navigate the vast amount of information available on the web to find what we are looking for. The ability to quickly obtain and deploy this domain specific supply chain expertise without developing and maintaining an entirely unique and complex competency in house is the leading reason why supply chain specialization is gaining popularity. .0 Building off of globalization and specialization. At its core. SCM 2. Web 2. rapid price commoditization. it allows them to focus on their core competencies and assemble networks of best in class domain specific partners to contribute to the overall value chain itself – thus increasing overall performance and efficiency. near/far and off shoring.0 has been coined to describe both the changes within the supply chain itself as well as the evolution of the processes. and collaboration among users.At any given moment.0 follows this notion into supply chain operations. and talent scarcity.
responding to customer demand. Marketing. joint product development.1. Supply chain business process integration involves collaborative work between buyers and suppliers. The key supply chain processes are: Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management . in many companies. common systems and shared information. management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business.12 Supply chain business process integration Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. communicates with several distributors and retailers as it attempts to satisfy this demand. However. An example scenario: the purchasing department places orders as requirements become appropriate.29 - . Shared information between supply chain partners can only be fully leveraged through process integration.
The desired outcome is a win-win relationship. sourcing should be managed on a global basis. Successful organizations use following steps to build customer relationships: • • • determine mutually satisfying goals between organization and customers establish and maintain customer rapport produce positive feelings in the organization and the customers Procurement process Strategic plans are developed with suppliers to support the manufacturing flow management process and development of new products. Procurement c.30 - . It also provides the customer with real-time information on promising dates and product availability through interfaces with the company's production and distribution operations. Outsourcing/partnerships g. Physical distribution f. Performance measurement Customer service management process Customer Relationship Management concerns the relationship between the organization and its customers. the purchasing function . Manufacturing flow management/support e. Also. Customer service provides the source of customer information. Customer service management b. where both parties benefit.One could suggest other key critical supply business processes combining these processes such as: a. In firms where operations extend globally. Product development and commercialization d. and reduction times in the design cycle and product development are achieved.
customers and suppliers must be united into the product development process. According to Lambert and Cooper. As product life cycles shorten. supply continuity. such as electronic data interchange (EDI) and Internet linkages to transfer possible requirements more rapidly. 2. handling and quality assurance. hedging. and research into new sources or programmes. managers of the product development and commercialization process must: 1. changes in the manufacturing flow process lead to shorter cycle times. Develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination. select materials and suppliers in conjunction with procurement. and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. meaning improved responsiveness and efficiency of demand to customers. many of which include the responsibility to coordinate with suppliers in scheduling. order placement. Also. Activities related to planning. and 3. the appropriate products must be developed and successfully launched in ever shorter timeschedules to remain competitive. Activities related to obtaining products and materials from outside suppliers requires performing resource planning. Manufacturing flow management process The manufacturing process is produced and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes. coordinate with customer relationship management to identify customerarticulated needs. storage.develops rapid communication systems. negotiation. .31 - . Product development and commercialization Here. supply sourcing. thus to reduce time to market. inbound transportation.
g. but also outsourcing of services that traditionally have been provided in-house. This movement has been particularly evident in logistics where the provision of transport. thus it links a marketing channel with its customers (e. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing. the customer is the final destination of a marketing channel. strategic decisions need to be taken centrally with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level. to manage and control this network of partners and suppliers requires a blend of both central and local involvement.32 - . warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. such as work-in-process storage. handling. and the availability of the product/service is a vital part of each channel participant's marketing effort. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage and everything else it will outsource. In physical distribution. inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations. . transportation. Physical distribution This concerns movement of a finished product/service to customers. links manufacturers. Hence. wholesalers. retailers). Outsourcing/partnerships This is not just outsourcing the procurement of materials and components. Also. and time phasing of components.scheduling and supporting manufacturing operations.
Components of Supply Chain Management are. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage. Cost 2. Standardization 2. Customer Service 3. Asset measurement.33 - . By taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer relationships can be both correlated with firm performance. and 5. and includes 1) Customer perception measurement. According to experts internal measures are generally collected and analyzed by the firm including 1. Quality. Productivity measures 4. Customization . 1.Performance measurement Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes narrower. Postponement 3. and 2) Best practice benchmarking. External performance measurement is examined through customer perception measures and "best practice" benchmarking.
34 - . common carrier. push or hybrid).. motor carrier. replenishment strategy (e. warehouses. Trade-offs exist that increase the total cost if only one of the activities is optimized.). pool point shipping.13 Supply Chain Management Problems Supply chain management must address the following problems: • Distribution Network Configuration: Number. railroad. pull. cross-docks and customers. owner-operated.. Cross docking. location and network missions of suppliers. including truckload. contract carrier. inventory. and potential collaboration etc. distribution centers. work-in-process and finished goods. production facilities. mode of transportation (e. • Information: Integration of and other processes through the supply chain to share valuable information. and transportation control (e. It is therefore imperative to take a systems approach when planning logistical activities..g. . private carrier. DSD (direct store delivery). transportation. If. parcel. ocean freight. decentralized or shared). full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. direct shipment.1. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy. including demand signals. delivery scheme (e. intermodal. closed loop shipping). Trade-Offs in Logistical Activities The above activities must be coordinated well together in order to achieve the least total logistics cost. including TOFC and COFC. For example. forecasts. • Inventory Management: Quantity and location of inventory including raw materials. • Distribution Strategy: Including questions of operating control (centralized. airfreight). LTL.g..g. a full truckload of a product is ordered to reduce transportation costs there will be an increase in inventory holding costs which may increase total logistics costs.g. however.
certain aspects of the internal processing of materials into finished goods.35 - . while reducing management control of daily logistics operations. and then the movement of finished goods out of the organization toward the end-consumer. The purpose of supply chain management is to improve trust and collaboration among supply chain partners. thus improving inventory visibility and improving inventory velocity. .• Cash-Flow: Arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.14 Activities/functions Supply chain management is a cross-functional approach to manage the movement of raw materials into an organization. The effect is to increase the number of organizations involved in satisfying customer demand. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The flow is bi-directional 1. As organizations strive to focus on core competencies and becoming more flexible. Supply chain execution is managing and coordinating the movement of materials. they have reduced their ownership of raw materials sources and distribution channels. information and funds across the supply chain. Less control and more supply chain partners led to the creation of supply chain management concepts.
. Tactical Sourcing contracts and other purchasing decisions. location. including contracting. direct shipping. Strategic partnership with suppliers. creating communication logistics.36 - . including the number. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. and customers. and contracting. so that new and existing products can be optimally integrated into the supply chain. to support supply chain operations. distributors. location. including frequency. Production decisions. and planning process definition. Milestone payments Focus on customer demand. and third-party Product design coordination. channels for critical information and operational improvements such as cross docking. including quantity. distribution centers and facilities. scheduling. load management Information Technology infrastructure. and quality of inventory. routes. Where-to-make and what-to-make-or-buy decisions Aligning overall organizational strategy with supply strategy. Transportation strategy. and size of warehouses. Inventory decisions.Strategic Strategic network optimization.
including the consumption of materials and flow of finished goods.Operational Daily production and distribution planning. coordinating the demand forecast of all customers and sharing the forecast with all suppliers. and other customers. including all fulfillment activities and transportation to customers. Outbound operations.37 - . Inbound operations. in collaboration with all suppliers. including current inventory and forecast demand. including all suppliers. . Production operations. Order promising. Demand planning and forecasting. distribution centers. Sourcing planning. Production scheduling for each manufacturing facility in the supply chain (minute by minute). including transportation from suppliers and receiving inventory.. including all nodes in the supply chain. manufacturing facilities. accounting for all constraints in the supply chain..
.38 - .
To satisfy customer . Creation of demand. Division of specialists. Timely contacts with customer. .39 - . To maximize overall profit. To assist salesman in selling. To increase goodwill.CHAPTER-2 RESEARCH OBJECTIVES To increase sales volume. To contribute to continuous growth of enterprise.
CHAPTER-3 RESEARCH METHODOLOGY .40 - .
Secondary data for the research study has been collected from various magazines. journals. books and website. • Increase one’s value contribution in the subject of supply chain management through acquiring an understanding and application of the various components of supply chain • • To counter a competitor’s sales promotion device To maximize overall profit . open and close – ended Questions being included in the questionnaire.e. what is the behavior of the companies towards adopting supply chain management. • • Develop a solid knowledge required for systematic analysis of corporations’ supply chain networks and management Enhance one’s thinking process and problem analysis approach in dealing with supply chain management issues and the optimization of a supply chain process.41 - . OBJECTIVE OF STUDY: • Increase one’s knowledge in the subject of supply chain management with an integrated approach dealing with the various components which make up the spectrum of supply chain management. This section covers the following aspects: NATURE OF THE STUDY: The research project relates to “EVALUATION OF SUPPLY CHAIN MANAGEMENT. newspaper. SAMPLE DESIGN: The target for study was of distt kurukshetra etc.This part of the report i.” In it the problem proposed is to be research is find out. Survey has been done using questionnaire method. Research Methodology is intended to give the details of the conceptual framework within which the study has been carried out.
42 - . survey. company magazines. brochures & company reports & concern trade association report . which are companies manager & related staff. The primary data collection for judgment sampling has done this purpose has been formatted with both open & close ended structured questions. DATA COLLECTION: The relevant data for the research project is hybrid of primary & secondary data. the factual information historic background has been collected with the help of various trade /business journals. questionnaire & observation method the data has been collected from targeted focus group. • Primary data: Using personal interview technique.• • To assist salesman in selling To increase sales volume SAMPLE SIZE: The sample size of the research project has been taken of 5 companies. • Secondary data: In addition to the reactions of the selected companies.
43 - .CHAPTER-5 RESULTS & FINDINGS .
It was found that only 33% companies are able to manage their supply chain management properly.44 - . Only 27% companies are satisfied toward public policy regarding supply chain management. During the survey it was found: It was found that most of companies using supply chain management which is the part of logistics Most of companies use customer relation to support their supply chain management. .The training period has been a very valuable experience for me from the entire study conducted by me.
45 - ..
46 - .CHAPTER – 7 RECOMMENDATION .
Companies should maintain their supply chain management properly so every department of the company should be benefited. Still most of Indian companies have not proper knowledge regarding supply chain management. Make the system more transparent so that cost of the every product reduced.47 - . So focus on giving information regarding supply chain management. Make new laws for proper functioning of supply chain management. . Imparting proper training to personnel so that they are able to use the supply chain properly.
48 - .BIBLIOGRAPHY BOOKS: .
com www. second Edition(logistics and supply chain management) Singhal D. VK Enterprises..in .supplychainseminars. Third Edition (International marketing) Trehan mukesh.javelingroup.D.supplychainmanagement.49 - . (Advertising and Sales management) WEB LINKS: www. Arya Publishing.com www. Pearson Education.sdcexec.com www. Christopher martin.
QUESTIONARE FOR SUPPLY CHAIN MANAGEMENT .50 - .
How do you manage your supply chain? 1 Close partnership with suppliers . Fax 6. Name of Company 2. Tel 7. Position in company: 11. Sector Types: 12. Address 3. Which part of Logistics operation do you belong to? Supply Chain Management (SCM) 1 Reverse Logistics 2 Maritime Logistics 3 Freight Logistics 4 Other. Industry: No of employees: Manufacturing Food [______] Service Automotive Turnover 2008: Both Other (define) ___________________ [_________________] 5. E-mail: 1. Website 9.Company Profile 1. Contact person: 8. Please enter 5 2. Country 4.51 - .
2 3 4 5 6 7 Close partnership with customers JIT supply Few suppliers Supply Chain Benchmarking Many suppliers Holding safety stock 3. How successful do you think is your company in managing its supply chain in general? Not successful at all Not successful Somewhat successful Successful Very successful 4.52 - . Which of the following you think that your company needs to do in order to manage its supply chain better? Imepro v Close partnership with suppliers Close partnership with customers JIT supply Supply Chain Benchmarking Few suppliers Start Implementi ng Satisfied already Not appropri ate 5. Does your company have a separate logistics department? .
53 - .YES NO 6. What types of systems are currently in use in your company to support Supply Chain Management? Custom Material Requirements Planning (MRP) Supply Chain Management (SCM) Customer Relationships Management (CRM) Supplier Relationships Management (SRM) Just In Time (JIT) E-commerce Bar coding -made Standar d Not in use 8. How satisfied are you with the current public policy regarding SCM . Does your company have a clear logistics strategic plan? YES NO 7. How much did you actually benefit from using these systems? Not at all (1) Little (2) Average (3) Greatly (4) A lot (5) Don’t know 10.
54 - . How important are the following future measures for supporting your company effort in SCM somewha importan t (2) t (3) quite Very Not at all (1) More education. Improved information provision Increased regional cooperation Closer cooperation between Other (specify) importan importan (4) (5) .g.g. e.Not at all 1 Somewhat 2 Satisfied 3 Quite satisfied 4 Very satisfied 5 11. formal Easier access to vocational More funding and financial More inter-country regional Better infrastructure e.
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