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INTRODUCTION: A supply chain is the stream of processes of moving goods from the customer order through the raw materials stage, supply, production, and distribution of products to the customer. All organizations have supply chains of varying degrees, depending upon the size of the organization and the type of product manufactured. These networks obtain supplies and components, change these materials into finished products and then distribute them to the customer. Managing the chain of events in this process is what is known as supply chain management. Effective management must take into account coordinating all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction, while still keeping costs down. DEFINITION: According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise

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Example of a Supply Chain:

Raw materials

Manufacturer

Distribution Centre

Customer

A typical Supply Chain flow of goods is shown above. In some models, the product is shipped from the Manufacturer to the Distribution Center as soon as it is manufactured. In other models, such as a Hub & Spoke model, the product is held at the manufacturer once produced. It is then sent out to the Distribution Center only when it is needed.

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SUPPLY CHAIN MANAGEMENT WORK FLOW:

1. This flow chart shows a typical manufacturing supply chain work flow detailing which areas of the business are involved. 2. The sales department identifies a need for a product. The sales department tell the marketing department about their idea and provide any supporting information / data. 3. The marketing department use business analysts to support the project and to complete the research. 4. Data and supporting evidence is passed back to the marketing department for completion of a business plan.

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5. A fully detailed business plan is forwarded to the Business Unit Manager / Directors. 6. This unit comprises of the senior business directors or managers who make a decision on the project. 7. After approval the plan is passed back to the analysts to prepare and implement the manufacturing process. 8. Details of raw materials and components passed to purchasing. 9. Purchasing work with logistics and transport to plan the purchase and delivery of the materials to the manufacturing plant. 10.Suppliers receive orders for product and then despatch on agreed transport on agreed dates. 11. Carriers approved by the business transport the raw materials and components to the manufacturing site. 12. Products are received into the warehouse and then moved to manufacturing. 13. Finished products are moved from manufacturing to the finished goods warehouse which might be situated locally or ina remote location. 14. Finished goods are put into inventory awaiting orders. The company computer system is updated. Product is now available to sales. 15. Customers place orders through customer services.

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16. Customer Services take orders and input them to the company computer system. 17. The central computer system maintains transaction records and provided visibility of product for sale. 18. An order is completed and a pick list sent to the warehouse. 19. A copy of the order is sent to the export department for completion of export documentation. 20. Export department manages the final dispatch of the product and produces any export documents. 21. Documents are sent to the warehouse to meet up with the finished order. 22. The order is dispatched by the warehouse. 23. The transport company collects the consignment and delivers it to the customer based upon the INCO terms of carriage. 24. As stock has now been used the computer system generates a request for new stock. 25. The re-order process generates a request to the purchasing department to place new orders with the suppliers.

ACTIVITIES/FUNCTIONS OF SUPPLY CHAIN MANAGEMENT:

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Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels . The CSCMP has adopted The American Productivity & Quality Center (APQC) Process Classification Framework SM a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint.

Strategic level

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Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. Strategic partnerships with suppliers, distributors, and customers, creating communication logistics. Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities. Tactical level Sourcing contracts and other purchasing decisions. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Operational level 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. channels for critical information and operational improvements such as cross docking, direct shipping, and third-party

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VALUE ADDED FUNCTIONS OF LOGISTICS: Efficient logistics contributes to added-value in four major interrelated ways: Production-Derived from the improved efficiency of manufacturing with appropriate shipment size, packaging and inventory levels. Thus, logistics contributes to the reduction of production costs by streamlining the supply chain. Location-Derived from taking better advantage of various locations, implying expanded markets and lower distribution costs. Time- Derived from having goods and services available when required along the supply chain with better inventory and transportation management, and the strategic location of goods and services. Control-Derived from controlling most, if not all, the stages along the supply chain, from production to distribution. This enables better marketing and demand response, thus anticipating flows and allocating distribution resources accordingly. REVERSE LOGISTICS: Reverse logistics stands for all operations related to the reuse of products and materials. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics. The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. In the case of reverse, the resource goes at least one step back in

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the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer. ROLE OF I.T IN SUPPLY CHAIN MANAGEMENT: In the development and maintenance of Supply chain's information systems both software and hardware must be addressed. Hardware includes computer's input/output devices and storage media. Software includes the entire system and application programme used for processing transactions management control, decision-making and strategic planning. Recent development in Supply chain management software is: 1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution Sciences Inc. which is useful for computing freight costs, compares transportation mode rates, analyze cost and service effectiveness of carrier. 2. A new software programme developed by Ross systems Inc. called Supply Chain planning which is used for demand forecasting, replenishment & manufacturing tools for accurate planning and scheduling of activities. 3. P&G distributing company and Saber decision Technologies resulted in a software system called Transportation Network optimization for streamlining the bidding and award process. 4. Logitility planning solution was recently introduced to provide a programme capable managing the entire supply chain.

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Electronic Commerce: It is the term used to describe the wide range of tools and techniques utilized to conduct business in a paperless environment. Electronic commerce therefore includes electronic data interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic/optical data capture. Companies are able to automate the process of moving documents electronically between suppliers and customers. Electronic Data Interchange: Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business documents in a standard format. EDI describe both the capability and practice of communicating information between two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI are: 1. Quick process to information. 2. Better customer service. 3. Reduced paper work. 4. Increased productivity. 5. Improved tracing and expediting. 6. Cost efficiency.

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7. Competitive advantage. 8. Improved billing. Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information. Bar coding and Scanner: Bar code scanners are most visible in the check out counter of super market. This code specifies name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants. Data warehouse: Data warehouse is a consolidated database maintained separately from an organization's production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated. Enterprise Resource planning (ERP) tools: Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration

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by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data. Role of RFID in Supply Chain Management Introduction to RFID In general terms, Radio Frequency IDentification (RFID) is a means of identifying a person or object using a radio frequency transmission, typically 125 kHz, 13.56 MHz or 800-900MHz. There are several methods of identification, but the most common is to store a serial number that identifies a person or object, and perhaps other information, on a microchip that is attached to an antenna (the chip and the antenna together are called an RFID transponder or an RFID tag). The antenna enables the chip to transmit the identification information to a reader. The reader converts the radio waves reflected back from the RFID tag into digital information that can then be passed on to computers that can make use of it.

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Key components of RFID

An RFID tag consists of a microchip attached to an antenna. RFID tags are developed using a frequency according to the needs of the system including read range and the environment in which the tag will be read. Tags are either active (integrating a battery) or passive (having no battery). Passive tags derive the power to operate from the field generated by the reader. An RFID reader, usually connected to a Personal Computer, serves the same purpose as a barcode scanner. It can also be battery-powered to allow mobile transactions with RFID tags. The RFID reader handles the communication between the Information System and the RFID tag. An RFID antenna connected to the RFID reader can be of various sizes and structures, depending on the communication distance required for a given system's performance. The antenna activates the RFID tag and transfers data by emitting wireless pulses.

An RFID station, made up of an RFID reader and an antenna. It can read information stored into the RFID tag and also update this RFID tag with new information. It generally holds application software specifically designed for the required task. RFID stations may be mounted in arrays around transfer points in

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industrial processes to automatically track assets as they are moving through the process.

Figure 2: Key Components of RFID RFID over the years

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It was first developed by the British during World War II to determine whether an approaching aircraft was a friend or foe. During the 1960s and 1970s, RFID technology became widely used to help ensure the security of nuclear material. In the 1990s, the automotive industry employed the technology in its remote keyless entry systems. RFID in its present form has been in existence for more than 20 years and has been extensively used in applications such as toll collection, access control, ticketing, and car immobilization devices (also called immobilizers). In recent years, the technology has received increased attention due to a confluence of actions including technology advancement, heightened security concerns, supply chain automation, and a continuing emphasis on cost control within industrial systems. RFID Vs. Barcodes There is often a comparison between the advantages of RFID and bar codes. RFID is not necessarily "better" than bar codes. The two are different technologies and have different applications, which sometimes overlap. The big difference between the two is bar codes are line-of-sight technology. That is, a scanner has to "see" the bar code to read it, which means people usually have to orient the bar code towards a scanner for it to be read. Radio frequency identification, by contrast, doesn't require line of sight. RFID tags can be read as long as they are within range of a reader.

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Figure 3: The components of a 96-bit electronic product code, each represented as hexadecimals Bar codes have other shortcomings as well. If a label is ripped, soiled or falls off, there is no way to scan the item. And standard bar codes identify only the manufacturer and product, not the unique item. The bar code on one milk carton is the same as every other, making it impossible to identify which one might pass its expiration date first. Advantages of using RFID RFID technology, combined with the recent Auto ID initiatives led by the Massachusetts Institute of Technology, is gaining momentum. These advances offer a standardized and scalable approach that can be deployed across the extended enterprise to suppliers, manufacturers, distributors and logistics partners to provide very reliable and cost-effective visibility at the item, case or pallet level.

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Figure 4: RFID in context Supply-chain visibility is a key contributor to increasing supply-chain performance, from both a financial and a service-level perspective. Greater visibility, as well as more accurate and timely information about supply-chain execution, allows for reduced safety stocks (thus optimizing cash-to-cash cycles and reducing inventory carrying cost) and increased on-time performance to customer commitments (thus driving additional revenue opportunities). Operating cost improves, as RFID (Radio Frequency Identification) significantly reduces the

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cost of cycle counting, receiving, picking and shipping. The technology also plays a critical role in addressing shrinkage and grey-market control concerns. Pricing and Promotion Demand and Revenue Management solutions track point-of-sale, on-shelf, and inbound inventory information to support real-time, store-level pricing and promotion optimization. These solutions provide vendors running programs in stores with the ability to optimally price and promote their products according to inventory position and sell-through rates. Through RFID, manufacturers and retailers have real-time visibility to what items are selling versus those that are not. Also, product-specific attributes can be monitored in real time, including: 1. Product spoilage 2. Product expiration 3. Product obsolescence By receiving real-time updates to what products are selling, price lists can be monitored and updated. Additionally, you can develop and run markdown and promotional strategies based on market information telling you exactly what is happening at the point of sale.

Shipping & Receiving The same tags used to identify work-in-process or finished goods inventory could also trigger automated shipment-tracking applications. Items, cases or pallets with RFID tags could be read as they are assembled into a complete customer order or

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shipment. The individual readings could be used to automatically produce a shipment manifest, which could be printed in a document, recorded automatically in the shipping system, encoded in an RFID tag, printed in a 2D bar code on the shipping label, or any combination. Having complete shipment data available in an RFID tag that can be read instantly without manual intervention is very valuable for cross-dock and high-volume distribution environments. Incoming shipments can be automatically queried for specific containers. If a sought-after item was present, it could be quickly located and selected. Regulatory Compliance Companies that transport or process hazardous materials, food, pharmaceuticals and other regulated materials could record the time they received and transferred the material on an RFID tag that travels with the material. Updating the tag with real-time handling data creates a chain of- custody record that could be used to satisfy regulatory reporting requirements. Returns & Recall Management Companies could supplement the basic shipment identification information by writing the specific customer and time of shipment to the tag immediately prior to distribution. Producing and recording this information would provide several benefits. In the event of a recall, companies could trace specific shipments to specific customers, which would enable a highly targeted notification and return operation and avoid a costly general recall. For general returns, companies could verify that the customer returning merchandise is actually the customer who received it, which would deter diversion, counterfeiting and other forms of return fraud.

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Service and Warranty Authorizations Authenticating the product and customer with proprietary information could also be used to authorize warranty and service work. Upon completion of repairs or service, a record of the activity performed could be encoded on the tag to provide a complete maintenance history that travels with the item. If future repairs or service are required, a technician could access the item's complete maintenance and configuration information without accessing a database simply by reading the tag. This application ensures workers have necessary information if no database access is available, and eliminates the need and expense of making phone calls or wireless data inquiries to access records. Transportation As with order management, RFID updates can drive substantial visibility and optimal adaptability to your transportation plan. Proactively detecting when an order is over, short, damaged, or incorrect enables you to take control of your transportation plan, which directly affects your financial and service level goals.

Concerns Surrounding RFID Privacy concerns Arguably the biggest concern about the RFID technology is the worry that it will infringe on the privacy of buyers. The RFID tags would be able to scan buyer behavior at the point of purchase and even after that. Many people consider it a

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breach of privacy. This is leading to a major public outcry against the use of RFID technology. High investment The initial investment by companies for adopting RFID is fairly large. So many organizations are shirking away from the idea of investing in RFID technology. There are others who are conducting an in depth cost benefit analysis before taking the plunge. Limited range So far the RFID technology has a limited range in terms of frequency. Therefore many are skeptical about the efficacy of the technology and are questioning the claims made by the developers. Health concerns Since RFID technology operates on the principle of radio frequency wave emission, health concerns are propping up. A long tem exposure to radio waves causes many diseases like cancer, ulcers and skin deformities.

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LOGISTICS INDUSTRY IN INDIA: India is being touted as the land of opportunity for logistics service providers all over the world. The Indian logistics market represents $ 50billion and is growing at a rate of 7 percent annually. Features of Indian Logistics IndustryA number of small-integrated players. Transportation costs account for nearly 40% of production costs. Logistics costs around 13% of GDP, compared to 8% in the US. Growth in Indian economy is the major driving factor for the demand in logistics industry. Chemicals, metals, FMCG, cement and textiles have been identified as the top five contributors to logistics revenues

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Major Roads Projects The Golden Quadrilateral (GQ; 5,846 km) connecting the four major cities of Delhi, Mumbai, Chennai and Kolkata .The North-South and East-West Corridors (NS-EW; 7,300 km) connecting Srinagar in the north to Kanyakumari in the south and Silchar in the east to Porbandar in the west. Port connectivity and other projects.

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Indian Rail Logistics The Indian Railways boasts of being the worlds 2ndlargest rail network spread over 81,511 km and covering 6896 stations. The freight segment accounts for roughly two thirds of railwaysrevenues. The tonne/kilometre costs for Indian rail freight at three times that of China. [Tata Iron & Steel]. Indian Ports India has 12 major and 184 minor / intermediate ports spread across the vast coastline of 7517km. The 12 major ports handle about 76 per cent of the traffic. India's West Coast ports handles almost 70% of traffic.

Indias Aviation Logistics Sector

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Aviation holds a small share of India s freight market. Air Freight is very expensive in India in comparison to road and rail. The size of the world air cargo market is estimated at 27 million tonnes valued at $200 billion. India accounts for meager 3% of the global air cargo market,Cargo-garments, machinery, components, pharmaceuticals, dyes, chemicals and perishables [fruit, vegetables, flowers, fish and meat]. Major International cargo airports-Mumbai, Chennai, Bangalore, Trichy, Hyderabad, Delhi, Coimbatore, Cochin. Major domestic cargo airportsAhmedabad, Goa, Lucknow, Visakhapatnam,Madurai in addition to the above. 25 non-metro airports identified by The Airports Authority of India for further development.. THIRD PARTY LOGISTICS IN INDIA: Reasons for Logistics Outsourcing -A survey by the Transport Corporationof India (TCI) and the Management Development Institute (MDI) shows less than 55% of Indian companies subscribe to 3PL, compared to more than 75% globally. about 57% of the companies planto outsource reverse logistics within the next five years .54% plan to outsource inventory management 53% order processing. more than 50% of the companies have outsourced activities like transportation, warehousing &customs clearing/forwarding.

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Indian & Foreign Logistics Players Investing to upgrade and move into 3PL arenaGati, Safexpress, Patel Logistics, Blue Dart. Recent IPO-All Cargo Global Logistics. Container Freight stations and Inland Container depots-Container Corporation of India, Gateway Distriparksand Balmer Lawrie & Company. Bharti, Taco MobiApps, Patni Computers and Reliance are focusing on telematics a technology based on telecommunications plus computing. Alliances & Acquisitions -DHL acquired Blue Dart, FedEx has a tieup with Prakash Airfreight,Rhenus AG has tied up with Seaways Shipping Ltd. In the port terminal business, Maerskand P&O Portsare consolidating their position by acquiring controlling stakes in private container terminals.

CHALLENGES FOR INDIAN LOGISTICS COMPANIES: Competition from Indian and Foreign logistics companies. Technology to keep pace with demand for real time information. Corporatization and lack of skill sets. Shedding local mindset and move to a global mindset. Integration of services and value added services. Funds to fuel expansion & growth. Inadequate infrastructure and complex tax laws. FUTURE PROJECTED TRENDS: The Indian logistics market is likely to grow at a CAGR of 7% during the next five years.

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The unorganized sector may find it difficult to exist at national level due to its inability to keep pace with technology & customer demand. Transportation costs are bound to come down in future with improvement in infrastructure and growth in cargo movement. 4th Party Logistics to take root in India. [In 4PL, logistics is controlled by a service provider that does not own assets to carry out logistics activities but outsources to sub-contractors, the 3PL]. CONCLUSION: World is shrinking day by day with advancement of technology. Customers' expectations are also increasing and companies are prone to more and more uncertain environment. Companies will find that their conventional supply chain integration will have to be expanded beyond their peripheries. The strategic and technological innovations in supply chain will impact on how organizations buy and sell in the future. However clear vision, strong planning and technical insight into the Internet's capabilities would be necessary to ensure that companies maximize the Internet's potential for better supply chain management and ultimately improved competitiveness. Internet technology, World Wide Web, electronic commerce etc. will change the way a company is required to do business.. That means using a new breed of SCM application, the Internet and other networking links to observe past performance and historical trends to determine how much product should be made as well as the best and cost effective method for warehousing it or shipping it to retailer