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Practice and Procedure of SCM Index 1.


1.1 1.2 1.3 1.4

Objective Methodology Limitation Scope

2. Concept and Idea

2.1 2.2 2.3

The Concept of SCM The Concept of SCM in Industry Flow of Demand

3. Steps of SCM

3.1 3.2

Strategy ..

4. Observation


Company Profile Negotiation




4.2.2 Price Negotiation 4.2.3 Quality Negotiation 4.2.4 Time Negotiation

4.3 Practice of SCM in AMAN KNITTINGS

5. Conclusion

6. Reference Books

7. Appendix 1. INTRODUCTION

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). 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 (supply chain). Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM. 1. PlanThis is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big piece of

SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. 2. SourceNext, companies must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And then, SCM managers can put together processes for managing their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments. 3. MakeThis is the manufacturing step. Supply chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery. This is the most metric-intensive portion of the supply chainone where companies are able to measure quality levels, production output and worker productivity. 4. DeliverThis is the part that many SCM insiders refer to as logistics, where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. ReturnThis can be a problematic part of the supply chain for many companies. Supply chain planners have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have problems with delivered products.

Objectives of this assignment & about supply chain management are given below: Gather more knowledge from practical field. For gather more detail information about supply chain management.
For improve our knowledge, concept & idea about supply chain management. Achieve huge knowledge in sourcing and out sourcing. To get knowledge buyer and supplier Gain Knowledge about different strategies and ideas of buyer and suppliers. Different recommendations for SCM department. To know how to develop the supply chain management system in apparel industry. To know about the commercial activities like PO, PI, PL, LC etc.

Follow our class lectures.
Visit different garments and buying house and collect necessary date. Discuss with different corporate personnel and management of a factory or buying house Go through different books and resources. Discussion with teachers. Go through internet.

We faced many problems to discuss with merchandiser. Limitations on online reading books.
We do not have any strong backup to manage a Factory or Buying

We have some time limitation due to our semester final examination purpose. The communication system of factory was not comfortable at all.

Scarcity of supply chain related books in the library.

I got help from many source. Helpful sources are given below:
Had the opportunity to Discussed with my class teacher, friends, & senior students. Visit factories. Opportunity to discuss with different business personnel and management.


The concept of Supply Chain Management is relatively new and in this article we seek to provide a basic understanding of the origins and components of Supply Chain Management. Supply chain management can be defined as bellows is an integrative approach to deal with the planning and control of production flow and materials from the suppliers to end users. More common and accepted definitions of supply chain management are:

Global supply chain forum - supply chain management is the integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders (Lambert, 2008).

A customer focused definition is given by Hines (2004:p76) "Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value. Throughout efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements."

Supply Chain Management as a concept has been widely accredited to a Booz Allen consultant named Keith Oliver who in 1982 defined the concept as follows: Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements 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. This seems to be the earliest published definition and therefore places the concept of Supply Chain Management at approximately 26 years old. We can see that Supply Chain without the Management is referenced in the definition, so we know that the general idea of a supply flow through a business was recognised prior to Olivers definition. What Oliver really captured was the conscious and deliberate control, integration, and management of the business functions contributing to, and affecting that supply flow through the business, for the purpose of improving performance, costs, flexibility etc, and for the ultimate benefit of the end customer.

The concept has been defined in simpler terms since that time and is often captured with five words: Plan, Source, Make, Deliver, Return. Both of these definitions allude to a manufacturing origin but of course Supply Chain Management is as relevant to service, retail, distribution, and most other types of companies as it is to manufacturing.


The elements of Supply Chain Management have always existed in business. What changed was the willingness of businesses to recognize the inter-relationship of the various sub areas, and to pursue the benefits generated through coordination and integration, both from a strategy / planning perspective and operationally. The sub areas comprising a supply chain include: Forecasting / Planning Purchasing / Procurement Logistics Operations Inventory Management Transport Warehousing Distribution Customer Service

The sub areas comprising Supply Chain Management are defined further below: Forecasting / Planning: All business need to forecast and plan. To look forward and predict what will be required in terms of resources and materials in order to deliver their product or service to their customer in a timely manner. In this area we find activities such as demand planning, inventory planning, capacity planning etc Purchasing / Procurement:The commercial part of the supply chain is purchasing. Otherwise known as Buying or Procurement. This is where a business identifies suppliers to provide the products and services that it needs to acquire in order to create and deliver its own service or product. Costs and terms of business are negotiated and agreed and contracts created. Thereafter the suppliers performance and future contractual arrangements will be managed in this area.

This area of the business is sometimes referred to as purchasing, sometimes, procurement, buying, sourcing, etc. However, all titles relate to the acquisition of materials and services. The difference between purchasing and procurement is largely academic as, whilst there is a theoretical difference between them, businesses use the titles interchangeably for the two variations of activity. You will for example find manufacturing companies with purchasing departments that are actually doing procurement roles, and you will find service based organisations with procurement departments but in fact doing purchasing roles. In its strictest definition purchasing is limited to the actual commercial transaction and no more, whilst procurement includes the wider elements of the acquisition, including logistics and performance management. Logistics: In its strictest definition logistics refers to the movement of goods or materials, whether inbound, through, or outbound. In some manufacturing businesses forecasting and planning will be found within a logistics department, in other businesses logistics will be exclusively managing the movement and transportation of goods and materials. Operations: Operations is a general management type activity ensuring that a business uses its resources effectively to meet its customer commitments. Usually referring to the conversion activity of the business, i.e. the point where the acquired resources and/or materials are converted into the product or service that the business is selling on to its customers. Inventory Management: Sometimes found within Logistics Management, or Demand Planning or Operations, Inventory Management typically takes responsibility for both the replenishment of physical stock, the levels of physical stock, and of course storage and issue of physical stock. Stock may be materials and goods sourced from suppliers, work in progress, or finished goods awaiting sale/dispatch. Transport: Transport management can involve the control of a company owned fleet of vehicles, collecting, moving, or delivering materials and goods, or managing transport services sourced from a 3rd party transport provider. Warehousing: Like transport management, warehousing can involve the control of company warehouse space, or managing warehouse space sourced from 3rd party providers. Distribution: Distribution involves the physical distribution of the companys products to the sub-distributor or directly to the customer base. Typically this is a combined transport and warehousing operation, responsible for storing and delivering products to meet the customers needs. Again this combined activity will often be placed with a 3rd party service provider who will control and implement the processes. Customer Service: Most people do not recognise customer service as part of supply chain management, but it is in fact the final piece in the jigsaw. Having taken the business inputs,

created and delivered a product or service, the final element is to check that the customers expectations were achieved, and manage any actions necessary to meet your customer obligations and commitments. Supply Chain Management has matured from a compelling method of deriving competitive advantage, to a ticket to ride. Its is now a baseline expectation for any company wishing to compete in the 21st Century, and with that the professions and occupations comprising Supply Chain Management are now firmly entrenched in the armory of essential business executives.


Each industry has its own specific supply chain management challenges and issues. The articles on this page will examine how decisions that are made in specific industries such as automotive, retail, pharmaceuticals, apparel and energy. ZARA: Fashion Follower, Industry Leader The global apparel market is a consumer-driven industry. Also, globalization and new Technologies have allowed consumers to have more access to fashion. As a result, consumers are Changing, competition is fierce, and companies are evolving to meet these demands. Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to Maintain that advantage and growth they must confront certain challenges that face traditional Retailers in the apparel industry. Strategic Advantages Zara has been able to achieve excellent financial status due to its core competencies that provide the chain with a competitive advantage over traditional retailers in the industry. Zara is an apparel chain that works differently from traditional retailers. Generally, a traditional retailer such as Express owned by Limited Brands (a top U.S. specialty retailer group), outsources all of its production while focusing on distributing and retailing those goods. This is due to the fact that the global apparel industry is highly-labor intensive rather than capital intensive (2). Fashion retailers and apparel manufactures are always seeking to lower costs by outsourcing production to developing countries where the lowest labor rates are found. In contrast, Zara is a chain that has developed a successful diverse method of doing business in the fashion industry. Zara by working through the whole value chain is very vertically integrated and highly capital intensive. Vertical integration, a distinctive feature of Zaras business model, has allowed the company to successfully develop a strong merchandising strategy (Herreros). This strategy has led Zara to create a climate of scarcity and opportunity as well as a fast-fashion system. Zara

manufactures 60% of its own products. By owning its in-house production, Zara is able to be flexible in the variety, amount, and frequency of the new styles they produce. Also, 85% of this production is done through the season, which allows the chain to constantly provide its costumer with very updated products (Ghemawat 9). Traditional retailers lack this flexibility. Traditional retailers are obligated to place production orders to manufacturers overseas at least 6 months in advance of the season. Zaras in-house production purposely creates a rapid product turnover since its runs are limited and inventories are strictly controlled (12). This rapid product turnover creates a climate of scarcity and opportunity in Zaras retail stores. The climate also increases the frequency and rapidity with which consumers visit the stores and buy the products. Regular customers know that new products are introduced every two weeks and most likely would not be available tomorrow. Therefore, Zaras scarcity climate allows the company to sell more items at full price. This strategy minimizes Zaras total cost because it reduces 15-20% of markdown merchandise compare to a traditional retailer. Furthermore, Zaras unique quick response system, composed of human resources as well as information technology, allows Zara to respond to the demand of its consumer better than the competition. Zara, who focuses on the ultimate consumer, places more emphasis on using backward vertical integration to be a very quick fashion follower than to achieve manufacturing efficiencies (12). It is extremely important for Zara to speed the information flow of consumer desires to their apparel designers. For that reason, Zara has human resource teams in the retail and manufacturing environment that work exclusively toward this goal. Zaras quick response communication strategy is effective due to its management and corporate culture. Amancio Ortega, the founder of Inditex, still owns 60% of Zaras shares. Mr. Ortega has effectively transmitted the values of the company, which are: freedom, perfectionism, responsibility, rapidness, flexibility and respect to others, to his management team (Zara). This has created a very autonomous and flexible corporate culture for Zara. Also, this has allowed the company to work horizontally with an open communication environment rather than a hierarchal one. Due to this, Zaras managers work in teams in the countries where the chain is located. These divisional headquarter teams are composed of a head country manager who is constantly communicating with local managers and reporting to top management (Ghemawat 18). The constant flow of information between managers allows the company to keep its customers happy, which results in increased sales. Moreover, Zaras centralized distribution facility gives the chain a competitive advantage by minimizing the lead-time of their goods. Zaras internally or externally produced merchandise goes to the distribution center. This is cost-effective due to the close proximities of the distribution center in Arteixo and their factories in Corua. In the distribution center, products are inspected and immediately shipped, since Zaras distribution center is a place where merchandise is moved rather than stored (12). Then, to increase delivery speed, the shipments are scheduled by time zones and shipped by way of air, and land. The typical delivery time within and outside Europe is between 24 to 48 hours (11). Strategic Drawbacks Although Zara has a successful business model that differs from that of traditional

retailers, it also has disadvantages that can affect its sustainable growth. Due its model, Zaras weaknesses also differ from the traditional retailer. Zara holds around 86% of Inditexs total international sales-a significantly high number for an organization that has 7 other chains (Ghemawat 15). With that, Inditex is putting all of their eggs into one basket by sinking a great deal of capital into Zara. Inditex has contributed their extensive international sales to Zara and said Zara was the principal reason Inditexs sales were increasingly international (15). If Zara fails in the future, Inditex will have to totally re-formulate their firms strategies and may possibly face an internal meltdown. Zara also has an inability to penetrate the American apparel market. This may be due to American tastes that differ from European preferences. More importantly, however, Zara has not been able to develop a strong supply chain strategy in the U.S. like they have in Europe. Their European strategy includes, having a strong production and distribution facility in their home country in order to have short production and lead times. Zara has not invested in distribution facilities in the Americas, which is a threat to their U.S. selling abilities since the U.S. makes up 29% of the total apparel market (19; 4). This may make them subject to diseconomies of scale, which means that though are aware of how to quickly supply 1,000 stores, they may not be able
to supply more retail locations due to their centralized logistics model (12). Save Money. Live Better. The first of the three initiatives is called Save Money, Live Better. This initiative has a number of components that ZARA is following.

Price Leadership The Company is well known for its Every Day Low Pricing, but ZARA is aiming to give the consumer greater value for each product category. By achieving price leadership ZARA hopes to ward off attempts by other retailers such as Target from gaining market share. Consumables This component is an area where ZARA are looking to reduce outlay. Changes will be made in promotional cadence, seasonal advertising and in store signage.

2.3 FLOW OF DEMAND Supply chain management transformation provides fast access to relevant and accurate information. This timely supply chain information can pay off handsomely in lower costs, less inventory, improved throughput, shorter cycle times, and the highest levels of customer service. The very essence of supply chain management is effective information and material flow throughout a network of customers and suppliers. By using the Internet, companies simply have better and more far-reaching ways to speed up the information flow process and make it more effective. For many companies, it is now clear that the supply chain that best manages the flows of both information and material can significantly differentiate itself from its competitors. As customers and suppliers band together in mutually beneficial partnerships, the need for better and better supply chain management processes and systems becomes more critical. Within the boardroom,

improving supply chain management is getting lots of attention because forward-thinking management teams know it is the best strategy to increase and maintain market share while at the same time increasing profits. Experts now agree that in many industries, market share will be won and lost based on supply chain performance. Good supply chain practitioners know that information should be passed on only to those who need to know it, when they need to know it, and in the form they need to have it in. Changes in demand information, inventory positions, order fulfillment, supply management, and a whole host of other information exchange activities will transform how we sell products, supply products, and make and receive payments for goods and services. Tomorrows supply chain will link customers and suppliers together seamlessly throughout the world. The higher speed of information flow itself will in turn mandate faster flows of material, which only lean manufacturing operations can generate. Executive management is taking a good hard look at supply chains and finding a dysfunctional mix of processes, policies, systems, communications, performance measures, and organizational accountability (see Figure SC-1). Some of these processes are clearly functionally divided silos; those barricaded power pockets of the internally focused corporate hierarchical maze that was the standard for decades. Other processes are hybrid and include everything from manual order entry to faxes and phone communications and e-mail. Still other processes reveal the current trend toward full electronic communication and collaboration throughout the supply chain, including automated order entry, delivery tracking, and inventory planning systems. Whatever the exact mix, it is clear that most companies have a long way to go before they will have fully transformed their supply chain for the twenty-first century.

Figure SC-1 The standard manufacturing supply chain shows the traditional flow of information and materials to and from the customers and the suppliers through the company. The processes within the supply chain typically have a strong correlation to the traditional silo organizational functions within a manufacturing company, including sales, engineering, manufacturing, distribution, and accounting. The business process flows across an organization, but communication, accountability, and reward systems flow vertically. This organizational and process contradiction often impedes supply chain effectiveness.

Essential Components of SCM Like manufacturing processes, supply chain processes involve the flow of information and materials. The information flow precedes and causes material to continue (or stop) flowing through the supply chain. Thus, your supply chain material flow will, by and large, only be as good as the information that drives it. The supply chain management overview diagram (Figure SC-2) depicts the flows of information and material and their relative timing. Manufacturers need to develop supply chain management processes and systems to support this models components. It is important to understand the distinctions between these components and what position each holds in the supply chain.

Figure SC-2 This model shows the flows of information and material to and from suppliers and customers through the manufacturing company that uses supply chain management well. Although some of the activities go on continuously, others are positioned from top to bottom to indicate their approximate timing in the supply chain cycle. Collaborative Product Life Cycle Management

Objective is to share relevant information with appropriate partners and enlist their expertise in design activities at the earliest possible time in Product Life Cycle Management (PLM). Emphasis is to acquire and apply the skills, knowledge, and experience of your extended enterprise to develop the products that best serve customer needs at low cost in a short cycle time. Demand Planning Objective is to provide the entire extended supply chain network with the demand planning information needed for optimum planning and schedule execution. Emphasis is on accurate and real time, collaborative demand planning to support production and supply chain execution. Supply Source Planning Objective is to optimize projected customer demand with supply source planning through Collaborative Planning, Forecasting and Replenishment (CPFR) and subsequent schedule execution by supplier partners. Emphasis is on compatibility of collaborative business process and precise and timely communications to minimize nonperformance risk. Schedule Execution Objective is to make reliable, short-cycle, capable-to-promise schedules and achieve100% schedule performance. Emphasis is on schedule reliability and responsiveness to planned demand and unforeseen changes in demand. Logistics Management Objective is to optimally deliver product to customers as promised while minimizing logistics costs. Emphasis is on warehouse and transportation management systems that efficiently plan and control the movement of goods while continually seeking to lower logistics costs. Event Management Objective is to proactively monitor and trigger signals about undesirable events requiring action somewhere in the supply chain. In addition, logic may exist that will identify opportunities to minimize costs and increase customer service.

Emphasis is on preventing internal and external problems that are likely to interrupt material flow by sending alert messages to the first level and escalating the alert signal up the organization until the alert is shut down. Throughout the supply chain, there are some absolutely critical and predictive event questions your system should accurately and quickly answer:

When will specific orders really ship? Which orders will be late? Why will these orders be late? What are the specific problems that are delaying the schedule? What are the future schedule problems and when will they occur? What is the best schedule that can be executed now?

If management can accurately answer predictive questions, decision quality will greatly improve. Preventive actions can offset what were once unforeseen events. The supply chain will be managed more effectively and improve your chances of gaining a competitive advantage.

The first step to supply-chain excellence is a company operating well. That means a small or large retail operation thats well organized and poised for growth.


Supply chain strategy really is broader; it defines how the supply chain should operate in order to compete. Supply chain strategy is an iterative process that evaluates the cost benefit. Business strategy involves leveraging the core competencies of the organization surrounding what to offer (e.g., products and services), when to offer (timing, business cycles, etc), and where to offer (e.g., markets and segments) as a competitive plan. While the business strategy constitutes the overall direction that an organization wishes to go, the supply chain strategy constitutes the actual operations of that organization and the extended supply chain to meet a specific supply chain objective. That being said, most companies have a business strategy, but are unlikely to have overtly designed a supply chain strategy. So, why is a supply chain strategy so important? Well, one good reason is to

operationally and support your business strategy. At some point, a business strategy must be executed and typically this is done through the operational components of a company. Supply chain strategy also focuses on driving down operational costs and maximizing efficiencies. For example, an organization may choose a strategy directed at supplier management as a way to remain competitive. By providing a clear purpose, the organization keeps sight of the strategy and is able to devise tactical steps to achieve these goals. Another reason for having a supply chain strategy is to establish how you work with your supply chain partners, including suppliers, distributors, customers, and even your customers customers. As the marketplace becomes more competitive, it is critical to reinforce existing relationships and work together. 3.2 TACTICAL


Production decisions, including contracting, scheduling, and planning process definition. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Milestone payments. Focus on customer demand and Habits. Sourcing contracts and other purchasing decisions.



Outbound operations, including all fulfillment activities, warehousing and transportation to customers.

Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers.

Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company.

Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers.

Developing a Supply Chain Strategy Understand the Business Strategy: The first step is for supply chain executives to clearly understand how the enterprise chooses to compete. This is important not only for the obvious reason of working off the same play book, but also for the reason that it forces the supply chain operation to see itself as a customer facing entity serving the competitive goals of the enterprisenot merely an operational department. Supply chain strategy is not simply a linear derivative of the business strategy. At best, supply chain strategy can be the enabler of the business strategy. If the business strategy is to be the low cost provider, the supply chain strategy should support this. And just like when developing a business strategy, look to your core competencies, focus, and means of differentiation when developing a supply chain strategy. Being able to strategically source parts at an attractive price may support both your supply chain strategy and business strategy, but only if you have the capabilities to do so effectively. Look to your supply chain competencies and leverage what you do well. You may want to focus on a particular market or segment in which to gain supply chain

efficiencies. Or you may want to differentiate your organization operationally by providing lower costs to customers or providing services that other industry players are unable to do. Assess the Extended Supply Chain The next step is to conduct a detailed, realistic assessment of the capabilities that exist within the organization and even the extended supply chain. Begin by closely Scrutinizing your organizations assets and evaluate how well they support the strategy. Old machinery and disparate systems may mean high operational overhead and costly process inefficiencies and redundancies clearly not supportive of a low cost provider strategy. A formal supply chain assessment by a Non-biased outside party may assist you in better understanding your operational Strengths and opportunities for improvement. Look for a firm that can provide you with operational benchmarks both inside and outside of your industry in order to gauge core competencies. Once the assessment is complete, assemble a team to review and prioritize recommendations, validate the opportunities, define the risks, and the requirements for implementation. Ultimately, if there is a disparity between the supply chain strategy and the operational assets, you may have to make capital investments. Of course, the other alternative is to change your assumptions and alter your strategy all together!

Develop an Implementation Plan From this critical work emerges the go forward supply chain strategy directly tied to the business strategy, highly specific as to enablers and metrics, and with a defined set of implementation requirements and contingencies. The development of an implementation plan should include activities and tasks, roles, responsibilities, a corresponding timeline, and performance metrics. Establish a sub-team to shepherd the execution and provide project management responsibility to resolve issues and track status. Development Considerations Cooperate and Collaborate with Your Partners Throughout the development process remember to include your supply chain partners. While you dont necessary need to divulge the full details of your strategy, you can certainly communicate how you would like to do business. Ideally, seek out mutual goals that both organizations can execute on. Not only will you be one step closer to realizing your supply chain strategy, you will learn more about the companies that you do business with. For example, collaboration in product design may meet your need to stem R&D costs and also alert you to new product concepts that you wouldnt discover without working with your customer. Outsource Where Appropriate

Part of developing a supply chain strategy includes evaluating opportunities to outsource areas that are not your core competency. If someone else can do it cheaper, it may be worth outsourcing not only to drive down costs, but also to focus more resources on the core competencies your organization does well. UPS Supply Chain Solutions 3 Executing Supply Chain Strategy Performance Management Execution involves closely following your implementation plan and applying good project governance. You can improve your chances for success by managing performance throughout implementation and beyond. Tracking performance allows an organization to measure how successful it is in realizing the goals of a strategy. It also makes people understand their contribution and responsibilities, creating a more cohesive, in tune, organization. Performance management works best when people are rewarded for their performance and reporting is conducted on a regular basis. Moreover, performance goals should be used to communicate business expectations to outside entities as well. The more the extended supply chain is involved, the more the supply chain strategy is supported and reinforced. Iterate the Cost Benefit Evaluation Process On a periodic basis (e.g., annually) you should formally revisit your supply chain strategy. Did you meet the goals of the business strategy? Have the needs of your supply chain partners changed? How has the industry changed i.e., new competitors, business practices, products, technology? At this time, you may even want to reassess your supply chain organization, if the changes are significant enough to warrant it. Also, use this effort to look for new opportunities to further Position your organization for success. Keep Communicating with Your Partners Executing a supply chain strategy means dealing with many different entities, both internally and externally. Just as it is crucial to align the supply chain strategy with the business strategy, it is equally important to execute in a manner consistent with these different groups or stakeholders. The goals of your supply chain components and those that you deal with must be similar and conducted at the same speed. Your organization may be able to move at speeds other supply chain entities are unable to maintain, resulting in misalignment and poor efficiencies. And some of your supply chain partners may not have the resources to commit to realizing these goals. Good communication can keep the extended supply chain in sync. Rising from humble beginnings, Inamed, a leading medical device company, has seen itself grow to become a $300 million dollar company with its stock value increasing almost 200% over the last year. The company is credited with a clear business strategy of growth through acquisition and new product innovations. Anticipating continued growth and business success, Inamed needed a supply chain strategy consistent with an expanding organization. Faced with such challenging supply chain questions as what is ouroptimal distribution network?; should we outsource some supply chain activities? and how can costs be better managed and contained? the

company conducted a global supply chain assessment to identify supply chain costs and opportunities. In addition to offering supply chain strategy recommendations, the study provided a total picture of Inameds supply chain costs and compared them to industry and non-industry benchmarks. Over $4 million in process improvements and cost saving opportunities were identified. Now armed with a supply chain strategy, Inamed is in the process of implementing these changes. Solutions 4 Avoiding Potential Pitfalls Even before the well-publicized dot com collapes, business failures due to poorly implemented strategy were very frequent. Fortune Magazine reported in a study that CEO strategy failures occurred primarily (est. 70%) because of failure in execution, not with the vision and strategy development. The real problem isnt the high-concept boners the boffins love to talk about. Its bad execution. As simple as that: not getting things done, being indecisive, not delivering on commitments.1 And supply chain strategy is no different! During the build & implement phases, there are additional challenges including: Align the Supply Chain Strategy with the Business Strategy Most companies develop a supply chain strategy after the business strategy has been defined. While this approach can deliver some value, it does not support the infusion into the business strategy development of very powerful supply chain model options, which could significantly improve the business strategy. A supply chain strategy should always support the intent of the business strategy Dell broke into the big time by developing a business strategy and supply chain strategy that worked together. In the late 1980s and early 1990s Dells business strategy was differentiation through low cost, speed of delivery, and customer service. The major channel for sales was from customers to call centers. However, the emergence ofthe internet called for more differentiation and fundamental change. With a well understood business strategy, Dell began to formally integrate operational components (e.g., logistics, manufacturing, distribution, inventory management) and develop a supply chain strategy. The supply chain strategy focused at driving costs out of the supply chain being the low cost provider while at the same time supporting a business strategy emphasizing customer service.

4. OBSERVATION 4.1 Company Profile:



As on July 1109, 2011.