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Satish

Supriya S
Ullas Kamath
Supply-chain is a term that describes how organizations
(suppliers, manufacturers, distributors, and customers) are
linked together

Suppliers Service support Local Customers


Services
operations service
providers
Service Network Inputs Transformation Localization Output

Manufacturi
ng Suppliers Manufacturing Distribution Customers
Supply-chain management is a total system approach to
managing the entire flow of information, materials, and
services from raw-material suppliers through factories and
warehouses to the end customer

Supplier Manufacturer Distributor Retailer Customer


Process View
Customer
Customer
Order Cycle Pull
Retailer

Replenishme
nt Cycle Distributo
r

Manufacturi
ng Cycle ManufacturerPus
h

Procuremen
t Cycle Supplier
PLAN Strategy,
Metrics

SOURC Suppliers,
E Pricing

Manufacture,
MAKE
QC

DELIVE
R Logistics

RETUR Defects,
N Excess
Right Right Minimal
Right Time
Product Quantity Cost

Delivery Delivery Inventory


Flexibility
Reliability Time Level
 Timely product supplies
 Accurate pricing/discounts
 Simplified and faster payments process
 Online information (purchases, sales, inventory,
financials)
 Less duplication of job – utilization of human-
power in value adding roles
 Better warehousing and transportation
management
 Better plant maintenance
 Easy access to data /information
• Global competition
• Well informed more powerful
Customers
• Customer Expectations
• Shorter product life cycle
• New, low-cost distribution
channels
• Internet and E-Business
strategies
 Each organisation seek to solve the
problem from its own perspective
 Small changes in consumer demand
result in large variations in orders placed
upstream
 Dramatic order size variation
 Amplification of order size variation as one
moves up the supply chain
Delay 2 weeks Delay 2 weeks Delay 2 weeks

Supplier Manufacturer Distributor Retailer Customer

Orders 40 Orders 25 Orders 15 Buys 10


 Little
or no communication between
supply chain partners.
 Delay times between order
processing, demand, and receipt of
products.
 Over reacting to the backlog orders.
 Inaccurate demand forecasts.
 An IT-powered system has been implemented to
supply stocks to redistribution stockists on a
continuous replenishment basis. The objective is to
catalyse HUL's growth by ensuring that the right
product is available at the right place in right
quantities, in the most cost-effective manner. For this,
stockists have been connected with the company
through an Internet-based network, called RSNet, for
online interaction on orders, despatches, information
sharing and monitoring. RS Net covers about 80% of
the company's turnover. Today, the sales system gets
to know every day what HUL stockists have sold to
almost a million outlets across the country. RS Net is
part of Project Leap, HUL's end-to-end supply chain,
which also includes a back-end system connecting
suppliers, all company sites and stretching right upto
stockists.
 Hindustan Unilever, which once pioneered distribution
in India, is today reinventing distribution - creating
new channels, and redefining the way current
channels are serviced. In the process it is converging
product availability, with brand communication and
brand experience. 
 In the end it could be said that HUL's SCM is one of
the best in the world and it is quite difficult for any
company to challenge it. In India if we see, we will find
that LUX is available everywhere and it is through this
SCM only that HUL is able to do that. 
 Facilities
 Production/Storage Sites
 Responsiveness Vs Efficiency
Buy Back

Manufacturer Manufacturer
No risk Cost = Rs. 1 Cost = Rs. 1
Buy Back
Profit Rs. 4000 Sharing Profit Rs. 5520 at Rs. 3
Retailer Retailer
Cost = Rs. 5
of Cost = Rs. 5
Bears Q = 1000 Q = 1200
All risk risks
Profit Rs. 4000 Profit Rs. 5160
Customer Customer
Cost = Rs. 10 Cost = Rs. 10
Demand = 900 Demand = 1080
• GDP : Rs. 27.55 Lakh Crores*
• Inventory tied up : Rs. 1.17 Lakh Crores
• Logistics Cost : 14% of our GDP
• 1% Reduction in LC : Rs. 27550 Crorers
• 2% Reduction in LC : Rs. 55100 Crorers

* Economic Survey 2003-04


Country GDP (USD b)* Logistics Cost as %
of GDP

Asian Region

China Mainland 1237.1 14.5


India 460.0 14.0
Japan 3996.2 10.5
Korea 468.7 12.4
Singapore 87.0 12.4
Taiwan 281.5 13.5

* World Competitiveness Year Book 2003


Country GDP (USD b)* Logistics Cost as %
of GDP
European Region
France 1419.3 11.7
Germany 1987.0 11.8
Italy 1186.0 12.6
Netherlands 418.8 12.2
Spain 654.0 12.1
UK 1555.2 12.2
North American Region
Canada 729.3 11.8
Mexico 637.3 14.4
USA 10445.6 08.7
* World Competitiveness Year Book 2003
• Transportation 35% 
• Inventories 25% 
• Losses 14% 
• Packaging 11% 
• Handling and Warehousing 9% 
• Customers' shopping 6% 
 Global automobile manufacturers are consistently
streamlining their business process by outsourcing their
non-core activities to low-cost countries like India. Global
automobile manufacturers are under tremendous pressures
to innovate their manufacturing process and at the same
time, to reduce costs. In view of the present global
competitiveness, they must not only develop new features
to strengthen their customer requirements but also follow
the environmental and safety standards. In addition, the
base price of a car is expected to remain same over the
next decade. As a result, companies are forced to source
more components from low-cost countries like India
Global Automobile Market
Scenario
DIVERSE
HIGH COST DUE
CUSTOMER
TO
NEEDS
R&D

STRATEGIC REGULATIONS
ALLIANCES FOR
AMONG ENVIRONMENT
MANUFACTURES AND SAFETY
According to the Council of Logistics
Management Supply Chain Management, “the
process of planning, implementing and
controlling efficient and cost effective flow of
materials, in-process inventory, finished goods
and related information from point-of-order
to point-of-consumption, for the purpose of
conforming to customer requirements as
efficiently as possible”
 Product flow
 Information flow
 Finance flow
 Wikipedia
 Research papers on Ebsco, Emerald
 Interaction with Mr.Rajaram B K, ex-
Area Sales head(Delhi), HUL.
 MIS, Laudon & Laudon.