Supply Chain Management

1. Explain what is meant by trade of between front end and back end in the context
of supply chain management?

Ans: -  Supply chain management involves a great deal of diverse information–bills

of materials, product data, descriptions and pricing, inventory levels, customer and
order information, delivery scheduling, supplier and distributor information,
delivery status, commercial documents, title of goods, current cash flow and
financial information etc.–and it can require a lot of communication and
coordination with suppliers, transportation vendors, subcontractors and other
parties. Information flows in the supply chain are bidirectional. Faster and better
information flow enhances Supply Chain effectiveness and Information Technology
greatly transformed the performance

Product Flow includes movement of goods from supplier to consumer, as well as

dealing with customer service needs such as input materials or consumables or
services like housekeeping. Product flow also involves returns / rejections

In a typical industry situation, there will a supplier, manufacturer, distributor,

wholesaler, retailer and consumer. The consumer may even be an internal customer
in the same organisation. For example in a fabrication shop many kinds of raw steel
are fabricated into different building components in cutting, general machining,
welding centres and then are assembled to order on a flatbed for shipment to a
customer. Flow in such plant is from one process / assembly section to the other
having relationship as a supplier and consumer. Acquisition is taking place at each
stage from the previous stage along the entire flow in the supply chain.

In the supply chain the goods and services generally flow downstream from the
source or point of origin to consumer or point of consumption. There is also a
backward flow of materials, mainly associated with product returns.

The financial and economic aspect of supply chain management shall be considered
from two perspectives. First, from the cost and investment perspective and second
aspect based on from flow of funds. Costs and investments add on as moving
forward in the supply chain.  The optimization of total supply chain cost, therefore,
contributes directly to   overall profitability.  Similarly, optimization of supply chain
investment contributes to the optimisation of return on the capital employed in a
company. In a supply chain, from the ultimate consumer of the product back down
through the chain there will be flow of funds.

In any organization, the supply chain has both Accounts Payable and Accounts
Receivable activities and includes payment schedules, credit, and additional
financial arrangements – and funds flow in opposite directions: receivables and
payables. The working capital cycle also provides a useful representation of financial
flows in a supply chain. Great opportunities and challenges therefore lie ahead in
managing financial flows in supply chains. The integrated management of this flow
is a key SCM activity, and one which has a direct impact on the cash flow position
and profitability of the company.

A supply chain has a series of value creating processes spanning over entire chain in
order to provide added value to the end consumer. At each stage there are physical
flows relating to production, distribution; while at each stage, there is some addition
of value to the products or services.  Even at retailer stage though the product
doesn’t get transformed or altered, he is providing value added services like making
the product available at convenient place in small lots.

2. Draw a pictorial representation of pidilite supply chain network.

Ans: -

Manufacturing

Units
 Mother Godown

C&F Agents Company Depots

WSS( Wholesale
stocklist)

Wholesalers Retailers

3. What are POP strata...how does it impact supply chain choice?

Ans: - POP Strata refers to a type of sampling method. With stratified sampling, the
researcher divides the population into separate groups, called strata. Then,
a probability sample) is drawn from each group. Stratified sampling has several
advantages over simple random sampling. For example, using stratified sampling, it
may be possible to reduce the sample size required to achieve a given precision. Or
it may be possible to increase the precision with the same sample size.

The researcher can represent even the smallest sub-group in the population. There
are two types of POP Strata – one is proportionate stratified random sampling and
another is disproportionate stratified random sampling. In the proportionate
random sampling, each stratum would have the same sampling fraction. 

POP Strata is a common sampling technique used by researchers when trying to

draw conclusions from different sub-groups or strata. The strata or sub-groups
should be different and the data should not overlap. While using POP Strata, the
researcher should use simple probability sampling. The population is divided into
various subgroups such as age, gender, nationality, job profile, educational level etc.
POP Strata is used when the researcher wants to understand the existing
relationship between two groups.

Impact of POP Strata in supply chain: -

Different population growth rates: Nations with declining birth rates may see labour
shortages, while those with a burgeoning middle class may suddenly find
themselves with an increased demand in meat and dairy products. These are foods
that become more typical as cultures become more affluent. Without adequate
refrigeration infrastructure in the supply chain, problems may arise.

Urbanization and the growth of megacities: Thoughtful planning, supply chain

solutions and distribution improvements will be needed to keep up with urban
growth. Workforce and labour opportunity growth in developing areas will set off a
chain reaction of development, including increased urbanization. He also indicates
that immigration policies will encourage more citizens of developing nations to
return to their home countries after college.

Aging of certain populations: An aging population will show changes in the rates and
patterns of consumption. For example, research that has shown that seniors use less
oil, meaning the cost of and demand of certain raw materials will likely shift.

Even if your company doesn’t operate outside of the U.S., we all participate in the
global supply chain by the nature of our industry. Ingredients, materials, and
demands in one nation can send ripples across oceans. As the changes mentioned
above begin to alter the landscape of our current supply chain infrastructure,
companies must remain flexible and adaptable to meet those needs and stay
competitive.

4. What is the basis of choice of warehousing locations share the factors that affect
the same?

Ans: - Basis of choice of warehousing location: -

a. Layout and Flow of Building: - The optimal design of any warehouse is
determined by the type of operations that would be conducted inside it.
Remember that the old buildings are not very useful in carrying out the
material flow for any business. Certain factors such as ceiling height, as well as
column spacing, can restrict the type of equipment that can be accommodated
in the given space. It can also hamper the inward flow of raw materials and the
outward flow of finished products. 
b. Availability of Skilled Workforce: - Purchasing a building at a remote location
will surely be pocket-friendly. However, finding a skilled workforce at such a
place can be a challenge. If you plan on moving your trained or trainable
workforce from a different location to the warehouse, it can be a pricey affair.
Therefore, it is recommended to have your warehouse in the area that will
have an adequate supply of mix skill sets of labour to facilitate the operations
adequately.
c. Zoning and Desired Customer Base: - How intense operations are you planning
to conduct in the warehouse? What are the future trends of this intensity? In
case your activity demands light assembly, you can choose the location of your
warehouse that has less intensive usage. However, you must also consider
other factors like emissions, noise levels and the availability of outdoor
storage. These requirements will also influence the districts that you can
target for your future operations.  Moreover, if your target audience lies in a
particular region, you can buy or construct a warehouse right there. It will
help you cater to their needs faster and understand their requirements in a
better manner.
d. Proximity to Major Linkages: - What are the most predominant means of
transport used by you? Do you prefer land, rail, and water or air
transportation to move your goods? So, whatever your needs are, it is
essential to have your site easily accessible to such a means of transport.
Besides this, proximity to your customers is another factor that you must
consider. For instance, if most of your products are exported by sea, and the
remainder is delivered via land to the retail locations, it is imperative for you
to have a comfortable railway and highway access. Always remember that
more than 20% of your cost comes from transportation of the goods.
Moreover, high gas prices, as well as the massive increment in the driver
wages, now and then, may nudge your decision towards rail transport as
opposed to shipment by truck. Moreover, if the goods are less perishable and
 shipments are not too sensitive then opting for rail transport can be an ideal
choice.  
e. Size of the Warehouse: - Size, of course, is an obvious criterion. Your
warehouse facility must be capable of accommodating your inventory and fit
in the size of your company’s requirements. For all start-ups and new
companies, it is essential to ensure that there is enough room around the
facility for expansion. This will help save time and money when your business
is riding high on the ladder of success. 

Factors that affect the choice of warehousing locations: -

a. Rent Rates & Taxes: - Cost will remain a key criterion when selecting the
right location of a warehouse, but it must not be the only one. Hidden costs
could offset any savings on cheap rental rates and therefore must be
considered. In addition to rates, attention must also be given to local
governmental regulations, tax structure and tax incentives. You could also
benefit from special local government programs intended to promote your
industry segment, so it pays to consider this as well.

b. Workforce Availability, Labour Skills & Costs: - Workforce availability,

skills, and labour costs are directly associated with local demographics. Not
every geographical location offers a workforce with the right skills at the right
price. Pay attention to the local demographics of the state/city being
considered. When evaluating workforce availability, consider supply and
demand: Low workforce availability and high demand will drive salaries up
(meaning operating cost will be higher). The opposite is also true. High levels
of workforce availability and low demand will drive salaries down.

c. Roads, Highways & Traffic Flow: - Accessibility to roads and highways as

well a local traffic density must also be considered, especially if trucking is the
main mode of transportation. Transportation costs are affected by some or all
of these variables and can impact the competitiveness of the company or the
attractiveness of the warehousing facility to customers. 

d. Proximity to Airport, Railway Stations & Ports: - In this case, the main
mode(s) of transportation used to receive or ship goods to and from the
warehouse must be prioritized. For example, if most of the cargo is
imported/exported via air, then you will want to be as close as possible to the
airport. If this is not possible, you should at least explore facilities with easy
access to highways and roads that offer a direct connection to the airport.
5. What is LIFO FIFO AND FMFO?

Ans

a. LIFO: - (Last in, First out) stock management for warehouses is the
opposite method to FIFO, whereby the last unit load to enter the warehouse
will be the first one out. The LIFO method prioritises the last product
batches to enter the warehouse, while goods deposited previously on
the pallet racking systems will be stored until there is no other unit load in
front of them. Being the reverse method to FIFO, the products for which it is
used and the characteristics of the racking systems developed for this method
completely differ from one another.

The LIFO method, less used than FIFO, must be implemented in warehouses
with homogeneous products, which do not lose value over time and which
do not expire or are perishable. Once again, we see the reverse nature
compared to the FIFO method, as it meets storage needs not covered by this
method. Since LIFO prioritises the product that has most recently entered the
warehouse, unit loads stored previously will spend more time in stock and
should therefore be products that do not expire or lose value over time. A
classic example of an ideal product for LIFO management, for being
homogeneous and non-perishable products, are building materials such as
ceramics, glass and stone materials.

However, whenever possible it will always be more advisable to use the FIFO

method, as it generates more efficient stock turnover and allows us to
dispose of the oldest product which is an advantage even with homogeneous
and non-perishable products such as those mentioned.

The common feature with storage systems designed to facilitate LIFO warehouse

management method is that the area for loading and unloading goods is from
the same aisle. While its reverse method, FIFO, performs the loading task at one
end and unloading at the other, with LIFO, the operator will perform both tasks at
the same end, considerably reducing distances travelled in the warehouse. High-
density live storage system which pushes goods in order to store pallets at the
back. The palletised load moves along shuttles or rollers, and loading and
unloading is performed from the same end. This is a storage system which
compacts work aisles and has a single access aisle, so that the forklift can enter
the racking unit and load and unload the goods.
b. FIFO: - First in first out (FIFO) warehousing means exactly what it sounds like.
It’s an inventory control method in which the first items to come into the
warehouse are the first items to leave. Similar to the service industry concept
of “first come, first served”, the FIFO method focuses on products, not people.

The logic behind first in first out is simple: The items you received first are the
items you’ve held longest and therefore closest to obsolescence or expiry. In
order to avoid worthless inventory, business owners move these products
before they can’t be sold.

You want to know something else that’s interesting? The FIFO method applies
to both warehouse management and accounting where it’s used as an
inventory valuation method. With accurate inventory valuation methods, a
company’s financial statements reflect reality as accurately as possible. As a
leader, you can then make smart decisions. It’s a line item that smart investors
pay attention to as well.

A warehouse manager has to ensure that FIFO happens in practice. While a

corporate accountant is only concerned with the calculations, warehouse
management must ensure the successful implementation of FIFO inventory
control. There are several ways a warehouse can organize its pallets. However,
not all of these may be amenable to the FIFO method. For instance, block
stacking is the cheapest method since it involves no racking - pallets are
simply stacked on the floor. While this is easy to implement, block stacking
doesn’t work in a FIFO inventory management system since pallets are pulled
on a last in, first out basis.

c. FMFO: - First Manufactured, First Out, First-In, First-Out is one of the methods
commonly used to estimate the value of inventory on hand at the end of an
accounting period and the cost of goods sold during the period. This method
assumes that inventory purchased or manufactured first is sold first and
newer inventory remains unsold. Thus cost of older inventory is assigned to
cost of goods sold and that of newer inventory is assigned to ending inventory.
The actual flow of inventory may not exactly match the first-Manufactured,
first-out pattern.

In the simplest terms, FMFO warehousing compares to the method you might
use to keep your refrigerator at home organized. When you’re running low on
milk, you likely buy a new gallon and place it behind the almost empty gallon.
You wait until the old milk is gone before moving the new milk to the front
and using it on your cereal or pouring it in your coffee.

A FMFO warehouse system is an inventory management system in which the

first or oldest stock is used first and the stock or inventory that has most
recently been produced or received is only used or shipped out until all
inventory in the warehouse or store before it has been used or shipped out.