Supply Chain Management.

1.

Introduction: -
Distribution can be simply defined as the movement of things from the point of
production to the point of delivery, i.e. to the ultimate consumer. Designing a
distribution network is a difficult task that necessitates careful consideration of
numerous variables. Every organization must create a network to suit its unique
demands, taking into account the type of product, technology available,
macroeconomic considerations, political concerns, and so on. The distribution
function has been simplified thanks to e-business. There is no single type of
distribution network suitable for all industries. It varies from industries to industries
as per their unique requirements.

Concept and Analysis: -

A distribution network is a path that things use to reach their final destination. It
consists of manufacturers as well as various members such as agents, wholesalers,
and retailers who serve as a conduit between consumers and manufacturers. The
three types of distribution network in supply chain are as follows: -
 Direct Distribution Network - There is no middleman in this distribution
network. As a result, manufacturers make products available to customers
directly through various channels such as manufacturer-owned retail
storefronts and door-to-door sales. Tupperware, Eureka Forbes, and Asian
Sky Shop.
 Indirect Distribution Network - One or more intermediaries are involved in
the distribution of items to clients. Wholesalers, agents, and retailers are
examples of middlemen in a distribution channel. Large-scale manufacturers

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 typically use this type of network since they create things in volume and
selling them directly is difficult. It has two parts i.e single party selling
network and multiple party selling system.
 Hybrid Distribution Network - It is a combination of multiple distribution
networks used to reach clients. Manufacturers can offer items and services
through a variety of distribution channels, including online stores,
wholesalers, retail stores, and vending machines, in this distribution network.
Customers' wants and expectations must be met, and items must be delivered on
time, therefore an organization's supply chain must be well-organized and
established. It is usually created after taking into account several components of a
supply chain, such as whether products or services will be distributed to customers
directly or through intermediaries such as wholesalers and retailers.
The different types of network design are as follows: -
 Manufacturer storage with direct shipping - Customers place product orders
with retailers, but they are not delivered to them directly. These orders are
assigned to corresponding producers, who supply products directly to clients.
All inventories are stored by the individual producers in this design. As a
result, the main advantage of drop shopping is inventory centralization. This
approach is best for low-volume, high-cost items with limited demand and
when clients are willing to wait for the order. To make drop shipping
successful, there should only be a few sourcing locations for each customer
order.
 Manufacturer storage with direct shipping and in transit merge: - Orders from
various manufacturers are bundled for a single customer in this design choice.
As a result, a consumer may have many orders yet only receive one delivery.
A dynamic and sensitive information infrastructure is required in this
architecture to facilitate order merging in transit. Its response time is
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 analogous to drop shipping, in which clients must wait for an extended period
of time. Customers, on the other hand, may have a better experience because
they will receive a single delivery for several orders. The sole disadvantage of
in-transit merging is that it necessitates extra effort on the part of the retailer
to merge orders.
 Distributor storage with package carrier delivery- Manufacturers do not keep
products in this design choice; instead, retailers and distributors do so at their
warehouses. From an intermediate point, products are delivered to customers
via package carriers. The utilization of cost-effective means of transportation,
such as truckload, reduces transportation expenses.
 Distributor storage with last mile delivery - Last mile delivery refers to when
things are delivered to customers directly rather than through a package
carrier. This delivery method is typically used to distribute high-demand, fast-
moving products such as groceries. As a result, this design option necessitates
a huge number of warehouses and a high inventory level. Because there is no
combined delivery in this scenario, the transportation cost is likewise very
high. When ordering in quantity, however, this expense can be justified. This
design choice has a faster response time and a simpler information
infrastructure.
 Manufacturer or distributor storage with consumer pick up - Manufacturers or
distributors keep merchandise in their warehouses in this design choice.
Customers place orders over the phone or through internet portals and select
their own pickup location. Because consumers are responsible for picking up
their own orders, the transportation cost is cheaper than with other design
possibilities.
 Retail storage with consumer pick up - Inventory is kept at retail outlets in this design
choice. Customers can either place an order over the phone or online, or visit a store
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 in person. Because products just need to be shipped from production units to stores,
transportation costs are substantially cheaper than any other distribution alternative.

Conclusion: -
ITC serves over a million shops directly across India. According to study, it has
depots in major states that are geographically distributed to reduce logistics
expenses. Specific retail stocking and display solutions leverage floor and air space
for ease of placing and great exposure for high-bulk, low-weight items (such as the
recently launched snack brand I Bischips). Local paanwalla networks are also used
by the corporation to help promote its brands. The firm, which is cash-rich and well-
connected, is capitalizing on the 2.5 million-strong force of such stores. Because
cigarettes are a high-value product with significant inventory carrying costs, the
group's experience with cigarettes has sensitized the system to fine-tune stock
control. Consumer research helps ITC supplement its distribution efforts. It spends
Rs12 crore on consumer research, according to the study. According to him, food
purchases account for 48 percent of annual household spending. Branded food
accounts for 5% of this, and as the economy improves, this number will rise. In five
years, it is estimated that food cost will reach Rs100 crore.

2.
Introduction: -
The spread of Covid-19 infection, resulted in a sudden peak in the demand of the
masks, sanitizers etc. During the initial period suppliers and producers couldn’t meet
the initial peak demand which resulted in loss of business and black market sell.
Slowly the production was increased and stocks were replenished as per the
demands. This lead to huge boom in this sector and the producers gained massive

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profits. But slowly with the decline with the covide-19 infection the demand of these
items also fell down and in most cases suppliers are left out with huge stocks of
theses sanitizers and safety PPE items which caused huge blockage of funds. Actual
product demand is never identical to predicted demand. Due to a variety of variables,
demand sometimes exceeds expectations. Falling product prices and shifting
customer expectations are examples of such factors. In such instances, a
manufacturer must meet the increased demand in order to meet the needs of
clients. Buffer stock, safety inventory, or reserve stock is inventory stored and used
to fulfil unexpected demand.

Concept and Analysis: -

Organizations keep safety inventory to ensure that products are delivered smoothly
even if they are out of stock. This issue arises when inventory utilization rates and
lead times fluctuate often. If an organization does not have a suitable amount of
safety inventory in this case, the delivery schedules of the organization may be
negatively impacted, thereby impacting customer satisfaction and organizational
success. In situations where demand and supply are unclear, safety inventory plays
an important role. As a result, determining an appropriate level of safety inventory
is critical for a supply chain manager. During the initial phase of the covid the
companies producing the sanitizers and PPE items faced with low stock issue and
followed this to meet the high demand. But with decrease in the infection rate the
manufacturers and suppliers are left with huge stocks with less demands.
So it is important to understand the required level of safety inventory to be
maintained. The reason for this is that keeping safety inventory costs a lot of money,
and having too much safety inventory can lead to waste and losses. The basic
formula for calculating the desired safety inventory is mentioned as follows: -

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Safety inventory = (Maximum usage rate – Average usage rate) * Lead time.
As there is no particular process of pointing out a perfect level of safety inventory,
organizations use a common process which are defined as follows: -
 Measuring demand uncertainty - Demand fluctuations occur as a result of a
variety of circumstances, including rising customer expectations and lower
product pricing. All of these elements are taken into account in this stage to
calculate the appropriate quantity of safety inventory to satisfy demand
fluctuations.
 Identifying lead time - Estimating the lead time between order placement and
expected delivery dates is part of this process. This can be performed by
closely collaborating with suppliers to determine the average time required to
handle orders of a specific number. Once the estimated delivery date from
suppliers is determined, adjustments in order quantity are made to ensure that
sufficient safety inventory is available to meet delivery schedules until each
subsequent order is processed and received by respective customers.
 Measuring product availability - The availability of items is measured in this
stage, which is described as a manufacturer's ability to meet client orders from
available inventories. Order fill rate, product fill rate, and cycle service level
are used to calculate it. The order fill rate is the percentage of orders filled
from available inventory. The product fill rate is the percentage of demand
met by the available product inventory. The cycle service level, on the other
hand, is the percentage of replenishment cycles that end when customer
demand is met.
 Deciding a replenishment policy - It is a method of replenishing safety
inventory by placing reorders. An organization must first choose the
replenishment policy that will be used to replenish inventory. Periodic review

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 and continuous review are the two most common replenishment policies used
by businesses.
 Identifying product defects and delivery lapses - There is always the
possibility of product problems and delivery delays. As a result, the reasons
for these product failures and delays are determined in this step. A percentage
difference is determined in the event of product failures and added to the new
order.
 Reviewing usage - This stage involves frequently monitoring inventory
consumption to determine variations in the level of safety inventory. Once a
month, once a week, or even twice a week, the evaluation is conducted. This
analysis aids in identifying differences in average daily consumption of items.
The information gathered from these reviews is utilized to determine the
quantity of the next purchase order to be placed.
It is also essential for the manufactures to keep in mind of the issue of supply of raw
materials for producing the products.

Conclusion: -
In this situation of low covid-19 infection rates it is very important for the
manufacturers and suppliers of sanitizers and PPE items to follow the process of
maintaining the desired level of safety inventory. Because maintaining a huge stock
or inventory of these items in this period of low demand is useless and it will result
to fund blockage and ultimately financial losses as most of these items have their
expiry dates. Also it should be kept in mind that if there is a sudden spike in the
covid-19 infection rate, it will result to an immediate surge of demand of these
products. They should be ready in such a manner also to meet the then demands.

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3.
a>
Introduction: -
Aggregate planning is a strategy for maintaining a balance between product demand
and supply. Its major goal is to establish a production plan that makes the best use
of organizational resources in order to meet predicted demand, resulting in a more
efficient supply chain. It does so by focusing on maintaining a suitable workforce
and a consistent output rate by combining decision factors and matching demand
from one period to the next. It is a larger approach to planning in which planners
eschew focusing on specific products or services in favor of an organization's overall
production capability. It lays the groundwork for deciding on other parts of the
business, such as staff, budgeting, and marketing.

Concept and Analysis: -

Aggregate planning entails calculating the correct quantities of inputs and outputs,
as well as the appropriate time for their conversion, in order to match demand and
supply of products or services. In other words, it's a method for establishing the
optimal levels of production, capacity, inventory, subcontracting, stock outs, and
even price over time. When an organization uses aggregate planning, it aims to solve
challenges that require aggregated judgments while carrying out supply chain
activities. For example, an organization can determine the appropriate production
level that must be maintained in order to successfully meet the expectations of
customers. This helps in making a companywide strategic planning for resource
allocation, reducing production costs and reducing fund blockage in inventories and
increasing customer satisfactions. It assists a company in developing production
schedules that maximize the use of scarce resources, hence increasing supply chain

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efficiency. The following is an explanation of aggregation planning's involvement
in a supply chain:
 Aggregate planning is the process through which an organization organizes
the resources required for product production and delivery on schedule.
 In the event that demand shifts, aggregate planning aids in making operational
and marketing decisions to match product supply.
 Aggregate planning also serves as a foundation for developing an initial
budget for an organization's supply chain.
 Aggregate planning assists planners in making judgments on factors such as
employment levels, output rates, and inventory levels. These elements are
critical for a supply chain that is both efficient and responsive.

Conclusion: -
Aggregate planning is the act of creating, maintaining, and analyzing a company's
estimated scope of operations. Targeted sales estimates, inventory levels, and
production levels are frequently included. Aggregate planning aids in the
stabilization of production, the optimization of space and resources, the reduction of
operational costs, and the improvement of supply chain relationships. Aggregate
planning, in essence, can result in a more condensed and simplified manufacturing
process.

b>
Introduction: -
The process of planning the quantity and quality of resources required for the
production of diverse commodities and services is known as aggregate planning. An
adequate aggregate planning is expected to assist the businessman in making

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decisions and organizing the production process correctly, as well as evaluating
potential expenditures, production costs, and determining if the business is
successful or not. The merchant then assesses the required number of employees
who will be participating in the manufacturing process. He'll also look at what
attributes and talents each person should have in order to complete the job properly.

Concept and Analysis: -

Operations managers in manufacturing and some service organizations can use a
variety of capacity choice tactics in aggregate planning to fulfil future demand
estimates. Changing inventory level strategy is a capacity option in which the fast
food chain makes inventory modifications to match future demand. Some operations
managers are able to match solid output rates. Furthermore, the company should
conduct its overall planning effectively in order to succeed on the first try; otherwise,
the company would be unable to adapt to changes and unanticipated scenarios. In
this case the Snack Dunia fast food chain should also make study of the demand of
foods sold by them in different hours of the day. They should be following these
strategies: -
 Chase Strategy - This method aims to match a product's volume and demand
from one-time period to the next. This method is used by businesses when
safety inventory is not maintained and demand is unclear. This method
focuses on achieving synchronization between the people hired in response to
demand and the output capacity. The fundamental advantage of this technique
is that it helps an organization to keep inventory levels to a minimum by
focusing on a make-to-order approach.
 Capacity strategy - When machines are underutilized, organizations use this
method. To achieve a balance between demand and production, this method

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 changes the number of hours worked over time while keeping the number of
employees constant.
 Level Strategy - This method focuses on maintaining a consistent labour and
output rate. Production levels are kept consistent, and inventory is
accumulated during low-demand periods and then used during high-demand
periods, according to this technique. As a result, no attempt is made to
synchronize demand with production with this method. On the other hand,
consistent output increases the likelihood of big stocks accumulating and
product delivery delays. When back orders and inventory costs are low, this
technique might be adopted.

Conclusion: -
The Snack Dunia fast food center should follow the chase strategy to understand and
meet the most correct demand ratio of their food items during the different period of
the day.

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