SUPPLY CHAIN

MANAGEMENT: SHAHI
FOODS

GROUP MEMBERS :
M. AMJAD RAOOF (150872)
HAMZA KHAN (160029)
OUTLINE
1. Introduction
2. Organizational structure of Shahi factory
3. Supply chain drivers
4. Supply chain participants and structure
5. Supply chain operations
6. Chase, Level and Leverage approaches
7. Shahi`s aggregate strategy
8. The bullwhip effect and its causes
9. Issues facing by Shahi's supply chain
10. C.P.F.R (collaborative planning, Forecasting and Replenishment)
11. E.R.P (Enterprise Resource Planning)
12. E.D.I (Electronic Data Interface)
INTRODUCTION

• Shahi Foods began operations in late 70s.

• Major business in the industry of Snacks and Ethnic mouth-freshener.
• Certified from HACCP and ISO.
• Best selling is “Shahi Deluxe” An Ethnic Mouth-Freshener consists of Sonf, betel
nuts and dry dates.
• Shahi’s Vision is

“TO PROVIDE THE UTMOST QUALITY PRODUCTS AT AFFORDABLE RATES

TO CUSTOMERS”
ORGANIZATIONAL STRUCTURE OF SHAHI'S FACTORY
Factory Operations Manager

Finished goods Admin security Maintenance

Production manager Store keeper Packaging manager
manager manager Manager

Floor Manager Assistant Assistant

Packaging
Operators Electricians Labor
Security Mechanical employed
Department Guards Technical By the
Supervisor Laborers Laborers Chowkidar Staff thekedar
Peon
Cleaning
Staff
Laborers
SUPPLY CHAIN DRIVERS
SUPPLY CHAIN PARTICIPANTS & STRUCTURE
SUPPLY CHAIN OPERATIONS

• Planning
1. Demand forecasting
2. Product pricing
3. Inventory management
• Sourcing
1. Procurements from suppliers
2. Procurements from other sources
CONTD.…

• Making
1. Product design
2. Product scheduling
3. Facility management
• Delivering
1. Order management
2. Delivery scheduling
CHASE APPROACH

 Capacities of workforce level, production, and output rates are adjusted to match demand
requirements.

Advantages:

• Anticipation inventory is not required.

• Investment in inventory is low.

• High labor utilization.

Disadvantages

• High expenses on adjustments.

• Alienation of workforce.
LEVEL APPROACH

 Capacities of workforce levels, production schedules, and output rates keep constant.

Advantages:

• Stable output rates and workforce level

Disadvantages:

• Greater inventory investments

• Increased overtime and idle time

• Resource utilizations very overtime

LEVERAGE APPROACH
 Continuous varying levels of production capacity in order to match demand is the leverage
approach.

Advantages:

• Workforce can be maintained at a steady rate

• Low levels of inventory

• Lower average level of capacity utilization

Disadvantages:

• Changes in capacity has to be made fast

• Easily prone to bullwhip effect

SHAHI’S AGGREGATE STRATEGY

• “Shahi” uses level approach in a sense that they should have enough raw materials to
meet demand fluctuations.

• And leverage approach in manufacturing context by overworking on their capital and

other resources to fulfill the demand fluctuations with their finished products.
THE BULLWHIP EFFECT

• In the context of Shahi, the bullwhip effect means, the high effects on entire
supply chain from a one decision made by any single participant.

• A minor mistake in ordering, by a participant, can cause a pile ups or major

shortages, and the whole supply chain will suffer.
CAUSES OF BULLWHIP EFFECT

• Demand forecast updation: Forecasts variances are based on downstream

partners and Actual end user will differ, It amplifies at each level.

• Ordering batch: To Shahi’s upstream partners, order variances will increase,

due to

1. Transportation economy

2. Seasonal consumer demand

3. Order processing and handling cost

CONTD….

• Forward buying: Means that, at price reduction, Shahi buy raw materials in advance,
more than actual demand forecasts, then the product expiry has to be beard.

• Shortage gaming: When demand exceeds supply then production manager,

exaggerates the demand to ensure “Allocation”, and when the demand has fulfilled
the “Buffer” orders are canceled by the manager.
ISSUES FACING BY THE SUPPLY CHAIN
1. Forecasting: Supply chain distortions, Variances among, Methods, Data,
Information at each level of Supply chain.

2. Inventory: Stock pile ups, Shortages, Holding cost, Ordering cost,

Transportation cost.

3. Relationship: Customer Satisfaction.

4. Sales: On-and-Off Season.

5. Procurements.

6. Lack of internal Integration and coordination.

CPFR
Collaborative planning, Forecasting, And Replenishment (CFPR) is an idea with a process to
become more demand driven and to avoid exceptions throughout the supply chain.
Benefits:
1- Enhancements in relationships among all the supply chain members
2- Better forecasting informed all over the supply chain
3- increase sales and service levels
4- point out the discrepancies
5- Control on off and on seasons
6- inventory management improvements
7- improvement in ordering management
ENTERPRISE RESOURCE PLANNING (EPR)

• EPR is an automated software which helps to integrate all the practices of the production and
operations of the company
• Includes:
• Integration of information ( the same information to all players in supply chain).
• Logistics, Manufacturing, shipping, Distribution, Inventory, Shipping, Invoicing and Accounting.
• Provide the aid in control over H.R management, Production, Sales, Delivery, Billing, Inventory.
• Third party consulting company.
• Business consulting. (Current business process, to best match the corresponding process)
• Technical consulting. (programing, change in requirements)
ELECTRONIC DATA INTERFACE (EDI)

• Depicts the same data which was on paper. ( length, format and structure)

• Provide the rules to structure the documents( same across the supply chain).

• Make the whole company more systemized and resolve the issue of missing or wrong information.

• Make standards for inbound and outbound logistics.

• Includes translator which helps to interpret the documents for everyone in supply chain.

• Ordering miscommunication can be resolved through the implementation of EDI.