Presented by: Pradeep Mehta 41054 Div-A

Introduction…

Indian companies have started looking beyond traditional sources for raw material and manpower The result: a new supply chain

Do you Know ?

Last year,Tata Motors bought components worth Rs 1000 crore (7.74 per cent of total raw materials consumed) from abroad While the company sources steel from countries such as Russia, China, Japan & South Korea, it procures auto components from Malaysia, China, South Africa and Thailand

Emami sources peptides (used in fairness products) from the US and lipopearls (used in skin products) from Spain. It also sources raw material from South Korea, Singapore and China

Tata Steel, Ispat and JSW Steel are eyeing the rich coal deposits of South Africa, Nigeria and Mozambique for securing hard coking coal to run their plants in India  Tata Steel already sources its coke requirements from Australia as Indian coke has a very high ash content

Contents
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Introduction What is Sourcing-Types of Sourcing Global Supply Chain-Objectives Factors affecting choice of global supplier Advantages of Global SCM Why Indian cos. Are going Global Challenges in Building a Global SCM Tools in Sourcing

Definitions

Sourcing refers to a number of procurement practices , aimed at finding, evaluating and engaging suppliers of goods and services

Definitions
Global sourcing is a procurement strategy aimed at exploiting global efficiencies in production.  While a global sourcing process is usually initiated as a mechanism of exploiting cross-geographic arbitrages,it is now a standard step in the global expansion of firms.

Definitions

Low-cost country sourcing: a procurement strategy for acquiring materials from countries with lower labour and production costs in order to cut operating expenses

Strategic sourcing is a procurement process that continuously improves and reevaluates the purchasing activities of a company

Steps in Strategic Sourcing
Assessment of a company's current spend  Assessment of the supply market  Development of a sourcing strategy  Identification of suitable suppliers  Negotiation with suppliers  Implementation of new supply structure  Track results and restart assessment

What is a Supply Chain ?
 The facilities, functions, and activities

involved in producing and delivering a product or service, from suppliers to customers

Dynamics of Material Flow

Supplier

Plant

Warehouse

Logistics

Retailer

Dynamics of Order Flow

Supplier

Plant

Warehouse

Logistics

Retailer

Supply Chain Planning Processes
Material Requirement Planning Component Requirement Demand Forecasting Demand Planning

Production Plan

Supplier

Plant

Warehouse

Logistics

Retailer

Order Management

Supply Chain Planning Decisions

STRATEGIC TACTICAL OPERATIONAL
Procurement Manufacturing Distribution Logistics

What is a Global Supply Chain ?
The global supply chain is made up of the interrelated organizations, resources, and processes that create and deliver products and services to end consumers  In the instance of global supply, the chain is extended to many different countries around the world

Example of a Typical Supply Chain: IBM Europe PC Supply Chain

Warehouse

Port PC Assembly Plant Retailers

Suppliers (International)

1.2 Million PC/Yr. Glasgow U.K.

13 Transshipment Country-wide Points (TPs) in Europe Distribution Centers (DCs)

Objectives of Global Supply chain
Optimize pre and post-production inventory levels  Obtain greater efficiency from labour  Obtain greater efficiency from equipment and space

Objectives of Global Supply chain
Flexible planning and control mechanisms  Prompt and reliable delivery of high-quality products and services at the least cost  To effectively meet rising customer expectations

Factors affecting choice of global suppliers
Quality  Cost  Geographical proximity  Diversity  Internet & Technological changes  Proliferation of trade agreements

Advantages of Global SCM
Help companies compete all over the world  Expand business operations  Competitive advantage  Offer new services and applications to meet global customers needs

Why Indian companies are now looking to source globally ?

India’s Balance of Payments  Export revenues  Rupee appreciating against dollar Global Acquisitions  Building global manufacturing footprint  uncover new and interesting supplier leads

Why Indian companies are now looking to source globally ?
Pricing-pressure from low-cost competitors  The Cost factor  Eg. Nitco Tiles  Government Policies  Licensing, Quotas and Prohibitions  Reduction in import duties

Challenges in building a Global SCM
Finding the Right Supplier  Committing large volumes to new suppliers  Integration of domestic and Global SCM  Retaining the interest of global suppliers  Changing Product Requirements

E-sourcing

Locating suppliers can be a humongous job  Companies discover substantial savings using technology to source raw materials

E-sourcing

Over the last four years, Indian companies like Tata Motors, Dabur, Crompton Greaves and the Dalmia Group have used B2B applications to source goods worth Rs 40,000 crore ($8.88 billion) Ariba, a Sunnyvale, California-based spend management company, accounted for Rs 30,000 crore ($6.66 billion) or 75 per cent of the total spend. Total savings are estimated at $1.20 billion

About Ariba

Software Packages
i2 Six: A comprehensive solution suite for spend/
production/ revenue/ logistics/ fulfillment optimization

Solution suites for network design & optimization/ manufacturing planning & scheduling/ global logistics management/ service & parts management

JD EDWARD: The advanced planning software
to synchronize demand & planning/ network Optimization/ production & distribution planning

Software Packages
It helps companies driving down enterprise wide spend

ARIBA Spend Management:

mySAP SCM:
planning solution

A complete supply chain

A complete solution suite from demand collaboration to order management

iBann:

Results
 Reduced inventory levels by 10-15%  Reduced markdown & scrap by 10-15%  Used resources10-20% more efficiently  Improved delivery reliability by 95-95%  Reduced outages to 0-5%  Reduced cycle time by 10-20%  Reduced transportation cost by 10-15% Companies that utilized best-inclass SCM solutions have

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