Introduction: What is a Supply Chain? A supply chain consists of the flow of products and services from: – – – – – Raw materials manufacturers Component and intermediate manufacturers Final product manufacturers Wholesalers and distributors and Retailers Connected by transportation and storage activities. and Integrated through information. Many large firms are moving away from in-house Vertically Integrated structures to Supply Chain Management . and integration activities. planning.

then the interest in supply chain management increased.S.S. Total Quality Management (TQM). and Business Process Reengineering (BPR) practices 2000s and Beyond Industrial buyers will rely more on third-party service providers (3PLs) to improve purchasing and supply management. . 1960s-1970s Introduction of new computer technology lead to development of Materials Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) to coordinate inventory management and improve internal communication 1980s & 1990s Intense global competition led U. D) Dramatic and sudden change in environment. Wholesalers/retailers will focus on transportation and logistics more & refer to these as quick response. With passage of time the uncertainty regarding supply chain management increased because of: A) Globalization of business. service response logistics. and integrated logistics Current situation of supply chain management system in India Since 1980 and after 1990 when Indian government liberalized the Indian economy. B) Proliferation of product variety. Because at that time all foreign companies entered in Indian market which obviously required the proper logistic and supply management so that the products and as well as services should reached to ultimate consumer. manufacturers focused on mass production techniques as their principal cost reduction and productivity improvement strategies. manufacturers to adopt Supply Chain Management along with Just-In-Time (JIT). c) Shortening of product life cycle.Origins of Supply Chain Management 1950s & 1960s U.

Logistics cost for manufactured products in India 30% of the total expenditure.P. as against 15-20% globally. Delay times between order processing. Amplification of order size variation as one moves up the supply chain CAUSES FOR BULL EFFECT. Inaccurate demand forecasts .of which 40 % is nearly due to transportation. LOGISTIC COST ESTIMATES FOR INDIA Logistic cost contributes nearly 10% of the total G. Small changes in consumer demand result in large variations in orders placed upstream. Almost one-third companies have no supply chain strategy. and receipt of products. demand. Bull Whip Effect Each organization seek to solve the problem from its own perspective.N. Over reacting to the backlog orders.Now due to all these reasons Indian organization forced to look beyond their four walls for collaboration with supply chain partners. • • • • Little or no communication between supply chain partners. Dramatic order size variation.

McDonalds India is working with 38 different suppliers in the long term. Bangalore. the last one in Calcutta (2007). McDonald’s distribution centres in India have come in the following order: Noida and Kalamboli (Mumbai) in 1996.DRIVERS OF SUPPLY CHAIN MANAGEMENT. Fast-food Company McDonald • The unique structure of the supply chain. • Today. but it also gives them an opportunity to reduce costs and increase profitability. which is not only to ensure the timely delivery of raw materials for McDonalds. • McDonald’s initiative to establish an effective system of supply and development of state-of-the art technology has changed the entire Indian food industry quickly and establish performance standards and international levels. combined with high standards of product quality. and many other independent restaurants a few people. 2004. .

McDonalds was reducing maintenance and waste.• Cold chain is one of the most unique concepts of supply chain “MacDonald’s” in the India. Ltd and Vista processed foods Pvt. Maharashtra. especially herbs and many oriental vegetables • McDonald’s India Pvt. very fresh and great value. • The system has led to a breakthrough. Ltd produces a range of frozen chicken and vegetable foods. Dell Inc DISTRIBUTION NERWORK . • Amrit supply (supplier of UHT long life milk and dairy products for frozen desserts) helps in the production of homogenized UHT (Ultra High Temperature) processed milk and dairy products. • Dynamix Dairy Industry (suppliers of cheese) . Maharashtra with a network of milk collection centers are equipped with bulk coolers. too many for the benefit of farmers at one end and allows customers to retail stores to get high quality food. World-class infrastructure at its plant in Taloja. who spent more than 6 years to the system. • Trikaya Agriculture (iceberg lettuce supplier): Implementation advanced agricultural techniques from McDonald allowed to developed specialty crops such as iceberg lettuce.Dynamix has brought enormous benefits to farmers in Baramati. • Through a unique cold-chain. and keep its freshness and nutritional value of raw and processed foods.

This option helped customers to get computers at a price lower than other brands. who guided consumers in their choice of systems. Dell collaborated closely with its suppliers based on four criteria . cost.• • Manufacturer storage with direct shipping Manufacturer storage with direct shipping and in transit merge OBJECTIVE OF DIRECT MODEL • • • • • • To achieve high flexibility and responsiveness Respond to wide range of quantities demanded Try to meet short lead time Handle a large variety of product Build high innovative product Handle supply uncertainty DESCRIPTION • • • • • • Dell has been following ‘direct build-to-order’ sales model for more than 20 years. and end users.quality. the manufacturer (Dell). In order to manage its operations with low inventory levels. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site Dell's supply chain consists of only three stages— the suppliers. . delivery and technology. Dell also began employing computer literate sales personnel.

Direct model .


FOCAL .AREAS WHERE FOCUS IS NEEDED…. A) Supply chain strategy B) Supply chain integration C) Inventory management D) Information technology A) Supply chain strategy “A set of dynamic. integrated decisions that one must make in order to position one’s business in the complex environment”..

B) Supply chain integration  The SC strategy cannot truly be overall business strategy. Minimising damage. or the service level of its competitors. up keep & assurance of adequate supply of goods in order to met am expected pattern of distribution of demand for given financial investment. component tools & equipment. Minimising time for ordering the consignment D) Information technology Information technology is considered to be useful in SCM. C) Inventory management  Inventory management means maintenance.  Effective integration is the key because if one of these links fail.  It is based on trust and information sharing. Minimising stockout scenario. For 3 most reasons • • • Data transfer Information retrieval Machine & process control . so that it can quick respond to customer’s demand. the organization’s performance may suffer and may not meet expectation of its customers.  Its functionally results into:    Ensuring balance flow of material.

customers have implemented ERP(enterprise resource planning) systems. Typically.” The challenges SCM faces in India will ensure that it does not totally take off as yet. In order to get comprehensive benefits out of an SCM implementation. The next and even more difficult challenge is the management of change.” One of the key challenges faced is the business process transformation required to exploit the best practices and tools of SCM. As a result. SCM requires a higher level of trust and openness among trading partners. which offer very basic SCM functionality. the endeavour would be to work with fewer suppliers and inculcate mutual respect.“A successful change management program determines the effectiveness of the SCM solution. This involves getting people who have been engaged in the same process for many years to change to best practices. companies work with many suppliers and are not happy with them.” Next. “Typically. It is difficult to implement the entire SCM solution at one go because that would involve putting a complex network in place with every single entity connected to the whole process. the business process integration of SCM solutions has suffered. “The problem is in most people treating SCM as ‘one more module’ to be implemented after ERP. This focuses attention more on the technology / IT part of the project rather than the significant rethink in business policies that need to accompany a supply chain improvement project. There are comparatively fewer people who have sufficient experience to guide organisations through successful supply chain improvement projects. like the informal ones including faxes and hot lists. . and they have carried out a BPR(business process reengineering) at that stage. Some new processes like closed-loop supply base responses will appear. This needs significant consulting input and can turn out to be a challenge if not managed well. whereas some existing processes would need modification. Some business processes will go away. customers normally have to revisit key processes and modify them. there is a lack of consulting experience in the field in India.The challenges faced in India What are the challenges facing increasing adoption of SCM solutions in India? The main one is the lack of awareness of the business potential of SCM solutions in India. based on a new attitude towards suppliers and customers. but after SCM implementation.

. Many Large Indian Corporate such as Tata. The Government of India have focused on Infrastructure Development. have started providing services to other corporate as well. there is growing interest among entrepreneurs to venture in. though the first supply chain planning (SCP) collaboration technologies were introduced some time ago. Large express cargo and courier companies such as TCI. and soon sensing the growth of the market.Prognosis for India But does this mean SCM has no future in India? “Not really”. Free trade and warehousing zones. DHL have also started operations. The Indian economy is growing at 7-9% for the last couple of years. Infosys have been attracted by the potential of this sector and have established Supply Chain divisions. Blue Dart. “Even in the US. Despite challenges. but it was not until the year 2000 that collaborative SCP pilots became a reality. which implies more output and more demand for specialized logistics services. They started providing in-house services. the Indian SCM industry is growing at 20 %. These companies enjoys the advantage of already having a large asset base and an all-India distribution network Since this service can be provided without assets. Examples: Golden Quadrilateral project connecting four major metros. In India 100% FDI is allowed in logistics. Reliance.

with changes imminent in the tax structures. some of the other industry sectors we see it picking up in a big way are FMCGs and the organized retail industry. There is a fundamental difference between SCM and SCO. particularly on integration with vendors of components and assemblies. It does not analyze the different options that are available. While not opposing its importance in that sector. KLG Systel. offers a Supply Chain Optimization (SCO) solution.” . then the SCM solution would not accept any other signature. “Suppose a company has a rule which says that all cheques above Rs 50 lakh have to be signed by the CEO. There are also immediate opportunities in the auto sector. “The popular opinion has been that the manufacturing sector is the one that is benefiting the most from SCM. Each and every transaction conducted is based in rules. oil and gas. Whereas SCO solution ensures that options are incorporated in the event of such a situation. for instance. SCM does not give any scope for breaking away from the set rules. SCM flavors Even SCM solutions come in different flavors. SCO will look at all these options and come up with a solution that will ensure optimization of the resources available. there are large opportunities in key supply chain areas such as logistics. automotive sector. In SCM the consultants capture all the processes and build it into the ERP system.” Moreover. retail. Everything is hardcoded into the system. network design and optimization. SCM does not do resource optimization the way SCO solution does. There may be a situation where the CEO may not be available and the cheque has to be signed urgently otherwise it could result in a loss.Beneficiaries Sectors What are the sectors that have been the biggest beneficiaries of SCM implementation in India? Industries that would see tremendous benefits include the manufacturing sector. FMCG.