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DISSERTATION
2010
Submitted for the partial fulfilment of the requirement for the award
Of
POST GRADUATE DIPLOMA IN MANAGEMENT
SUBMITTED BY
ASHUTOSH SHARMA
8014
Department Of Management
INSTITUTE OF MANAGEMENT EDUCATION,
SAHIBABAD
CERTIFICATE
………………………………….
Signature of the Guide
Place:
Date:
ABSTRACT
The aim of this study is to empirically investigate the relative effects of supply chain integration,
supply chain information sharing and supply chain design on supply chain performance.
Supply chain performance and effective management of supply chains have been increasingly
recognized as critical factors in gaining competitive advantage for firms.
Coordination and information sharing increases the ability of supply chains to react sudden
changes in volatile demand environments.
The flow of information in a supply chain has a priority over the physical flow of goods and
materials, inventory reductions and efficient use of resources becomes possible.
Well-designed supply chains can meet the changing needs of customers through sufficient
capacities, optimally located suppliers and distributors, and good relationships between channel
members.
ACNOWLEDGEMENT
I hereby acknowledge that the information provided in this project is true to the best of my
knowledge and ability.
Perseverance, inspiration and motivation have always played a key role in the success of any
venture. A successful and satisfactory completion of any dissertation is the outcome of valuable
aggregate contribution of different person fully in radial direction, explicitly or implicitly.
Whereas vast, varied and valuable reading efforts lead to substantial acquition of
knowledge via books and allied information sources, true expertise exclude from collateral
practical work and experience.
Not word has ever seemed so inadequate as now when I am endeavoring to express my
gratitude at the culmination of my project, to all those who have made it possible. Even the best
efforts are vested without proper guidance and advice.
Last but not the least I would like to thank all staff members of IME SAHIBABAD for their
kind help and co-operation.
Ashutosh Sharma
CONTENT PAGE
1. Chapter I : Introduction
- Need of the study
- Background
INTRODUCTION
INTRODUCTION:
Studies on supply chain performance can be classified under two major areas. The first category
of research is about how to measure supply chain performance. The second groups of studies
focus on several predictor factors that could be used in explaining why some supply chains
perform better than others.
Despite the abundance of research on the effects of integration and information sharing on
supply chain performance, there is little empirical work on the effects of design factors on supply
chain performance. What is the relative effect of supply chain design as it is compared with the
other factors? For example, if a supply chain is not sufficiently designed to satisfy the needs of
the customer, is it possible to achieve high performance only through sophisticated information
systems?
Supply chain performance and effective management of supply chains have been increasingly
recognized as critical factors in gaining competitive advantage for firms
Earlier studies on supply chain modelling utilized several different performance measures
including cost, customer responsiveness, and activity time. Most of these studies had mainly
relied on the use of cost as a primary measure of supply chain performance since it was easier to
implement in quantitative models, argued that the use of such simple performance measures that
are limited in scope might be inconsistent with the strategic goals of an organization. The supply
chain performance measurement system should not ignore any important tradeoffs among
different objectives. Based on this argument, developed a framework for the selection of
performance measures for supply chain systems. In this framework, three types of performance
measures were identified as the necessary components of a supply chain performance
measurement system: flexibility, resource, and output. Flexibility is the ability to respond
changes. Supply chains should be evaluated based on their ability to respond any changes in
products, delivery times, volume, and mix. Therefore, flexibility measures include new product
flexibility, delivery flexibility, mix flexibility and volume flexibility. Resource measures are
concerned with the efficiency in using the resources in a supply chain system. Resource
measures include the costs of using several resources, inventory levels in the supply chain, and
the return on investments. Output measures include customer satisfaction (in terms of on-time
deliveries, order fill rate, and response times), sales quantities, and profit. In the current study
these three measures of supply chain performance have been operationalized by using
questionnaire items to represent the extent to which supply chains operate in each of these
dimensions.
Increasing the level of integration and information sharing among the members of a supply chain
has become a necessity for improving the effectiveness of supply chains. Such cooperative
behaviours of firms provide rapid access to the required information, more sensitivity towards
the needs of the customers, and faster response times than the competitors. Past studies report
positive relationships between the level of supply chain integration and performance .Well-
integrated supply chains create value for the shareholders by decreasing costs and increasing
market share. Firms that achieved a successful integration in their supply chains have fewer
inventories, shorter cash flow cycle times, reduced logistics and material purchasing costs,
increased workforce efficiency, and improved customer responsiveness.
Similarly, obtaining the demand information from the customers has been shown to decrease
inventory costs in a supply chain. When the flow of information in a supply chain has a priority
over the physical flow of goods and materials, inventory reductions and efficient use of resources
becomes possible.
Today, inventories can be replenished timely and quickly under the visibility and continuous
communication capabilities provided by the advanced technologies and information systems
demonstrated that sharing the supply and demand information with the supply chain helped
reducing the inventory costs and shortening the order cycle times. It is also suggested that
coordination and information sharing increases the ability of supply chains to react sudden
changes in volatile demand environments.
Supply chain design is another critical factor determining the efficiency and effectiveness of a
supply chain. It involves the decisions about number of suppliers, proximity to suppliers,
supplier selection and evaluation, planned capacities in each facility, definition of contractual
terms, and reactions to the possible disagreements between channel members. Supplier selection
and evaluation, for example, has been a primary concern in developing world class
manufacturers. Supporting the few supplier strategy, just-in-time philosophy stressed the
importance of selecting the best suppliers and establishing long-term relationships with those
suppliers. Similarly, supplier capacities and locations have some degree of impact on the
effective management of supply chains.
JUSTIFICATION/NEED OF FOR STUDY:
The aim of this study is to empirically investigate the relative effect sizes of integration,
information sharing, and supply chain design on the supply chain performance. Data collected
from 4 manufacturing firms in several industries in India have been used for analyzing the
relationships between the study variables. In the following sections, first, supply chain
performance and its predictors are defined. In the methodology section, measure development
and validation procedures are described. Next, the results of the statistical analysis are reported.
Finally, limitations and possible future extensions are provided.
BACKGROUNG OF STUDY:
Supply chains encompass the companies and the business activities needed to design, make,
deliver, and use a product or service. Businesses depend on their supply chains to provide them
with what they need to survive and thrive. Every business fits into one or more supply chains and
has a role to play in each of them.
The pace of change and the uncertainty about how markets will evolve has made it increasingly
important for companies to be aware of the supply chains they participate in and to understand
the roles that they play. Those companies that learn how to build and participate in strong supply
chains will have a substantial competitive advantage in their markets.
Supply chain management views the supply chain and the organizations in it as a single entity. It
brings a systems approach to understanding and managing the different activities needed to
coordinate the flow of products and services to best serve the ultimate customer. This systems
approach provides the framework in which to best respond to business requirements that
otherwise would seem to be in conflict with each other. Taken individually, different supply
chain requirements often have conflicting needs. For instance, the requirement of maintaining
high levels of customer service calls for maintaining high levels of inventory, but then the
requirement to operate efficiently calls for reducing inventory levels. It is only when these
requirements are seen together as parts of a larger picture that ways can be found to effectively
balance their different demands. Effective supply chain management requires simultaneous
improvements in both customer service levels and the internal operating efficiencies of the
companies.
CHAPTER II
RESEARCH
METHODOLOGY
Objective of the Study
- Resource performance.
- Output performance
Type of Research
Exploratory research is a type of research conducted because a problem has not been clearly
defined. Exploratory research helps determine the best research design, data collection method
and selection of subjects. Given its fundamental nature, exploratory research often concludes that
a perceived problem does not actually exist.
It seeks to find out how people get along in the setting under question, what meanings they give
to their actions, and what issues concern them. The goal is to learn 'what is going on here?'
On the other hand descriptive research is aimed to find the complete description about an
existing problem or phenomenon
Here, during my project, the main focus was to find what is the effect of information sharing
with supply chain performance and how the industries are facing the new emerging trends in the
various performances like flexibility, resources, output are actually thinking about the industries
supply chain performance. What are the attributes and reasons are having by means of which
they are defeating performance process?
Sampling methods
When I started my project, my external guide asked me to do the site mapping, means to visit the
running sites and to collect the information from there and to forward that information to the next
level to perform their tasks. And above all to do the product promotion there, and find out the
stage of the sites and try to correlate the site stage and the usage of the industries performance in
those projects.
Sample area
The sample areas is U.P. including Narolac (Kanpur), LML(Kanpur), Saraya Distillery
(Gorakhpur), and PPEL (Greater Noida).
Methods of Data Collection
The task of data collection begins after we define the research problem. While deciding about the
methods of data collection to be used for the study, the researcher should keep in mind two types
of data viz. primary and secondary. The primary data are those data which are collected for the
first time and thus it is original in nature. The secondary data on the other hand are those which
have already been collected by someone else and which have already been passed to the
statistical process. The researcher would have to decide which sought of data he would be using
for his study and accordingly he will have to select one or the other method of data collection.
The methods of collecting primary and secondary data differ since primary data are to be
originally collected, while in case of secondary data the nature of data collection were is merely
that of compilation.
There are several methods through which we can collect primary data. Some of these are:
Observation methods:
In observational studies, the investigator doesn’t ask question to seek clarification
on certain issue instead he records the behavior, as it occurs, of an event in which he
is interested. Sometimes mechanical devices are also used to record the desired data.
Interviewing:
Interview can be conducted either face to face or over telephone. Such interviews provide an
opportunity to establish a rapport with the interviewer and help extract valuable information.
Questionnaire:
Questionnaire items for the dependent variable supply chain performance were adapted
conceptual framework, including five questions for flexibility performance, five questions for
resource performance, and seven questions for output performance. Independent variables were
supply chain integration, supply chain information sharing, and supply chain design. Supply
chain integration scale included five questions; Supply chain information sharing was divided
into two parts:
1 customers’ information sharing with suppliers; and
2 suppliers’ information sharing with customers.
Secondary data means data that are already available i.e. they refer to the data which have
already been collected and analyzed by someone else. When the researcher utilizes secondary
data, then he has to look into various sources from where he can obtain them. In this scale he is
certainly not confronted with the problems that are usually associated with the collection of
original data. Secondary data may either be published or unpublished. Usually published data are
available in various publications of the central, state, and local bodies. In technical and trade
journals, books magazines, newspaper, reports and publication of various associations connected
with business and industry, banks, stock exchanges etc.
Most of the secondary data I have used in this project have been collected from various websites
through net. Some of the basic information was provided by the Company.
Sample Size
The target sample size is 4 manufacturing industries and the research was conducted in almost in
U.P. Region.
CHAPTER III
DESCRIPTIVE WORK OF
SUBTOPICS OF THE
STUDY
Descriptive work of subtopics of the study
The project undertaken was to know the recent trends and the effect of supply chain performance
on several manufacturing industry to achieve competitive edge over various competitors and to
know about the present market demand and situation to determine the best marketing strategies
for the sales. Basically my research work is divided into three parts:
• Flexibility performance
• Resource performance.
• Output performance.
Market Survey
This was the first part of the project. This part deals in visiting so many running sites in the U.P.
region to know the status of that industry like stage performance of information etc.. The survey
will be helpful in understanding the current market scenario as well as the new emerging trends
in the manufacturing industry. The main purpose lies in interacting with the project managers
and site engineer who are the real promoter of supply chain. The comments regarding the various
performances of various stages are gathered and in particular of industry and by that we have to
measure the supply chain performance in information sharing. The positives and negatives of
each stage are noted. The issues such as customers’ information sharing with suppliers; and
suppliers’ information sharing with customers are to be observed. The basic purpose of market
survey was to understand the markets and the pros and cons of information sharing in supply
chain of industry.
Analysis of Various Brand Preference of Product
This is the second part of the project. This part deals with the knowledge of various product &
consumer preference. The reason of their held up, their restart time etc. There may be various
reasons of information sharing and some personal problem.
Working procedure
Here we have to approach various engineer, contractors, suppliers, project managers, and
various consultants etc. we are measuring there some performance like resource, flexibility,
output. We have to then go to some supplier and also ask them about the information sharing
with then. After talking with the manager/engineer, we try to analyze the recent marketing trend
and try to establish the new procedure for the sales and demand forecast. We have to submit
Daily report about each market and full information about each Site in those industries.
Questionnaire and observation method was used for collecting the information.
My own contribution
DATA ANALYSIS
&
INTERPRETATION
Analysis
The collected data have been analyzed in this section. The data is revelling various output as per
the data. In this analysis section the data is analyzed in one section i.e. study-1
Study-1.
Despite the significance of design issues in a supply chain, there seems to be a lack of attention
on this in the academic literature. Although there are studies dealing with some individual
dimensions of supply chain design, such as location factors, supplier selection, etc., a single
construct for measuring supply chain design has not been developed yet. For example,
investigate the relationships between location factors and manufacturing performance. Location
factors defined in their study is only one individual dimension of supply chain design. There are
several other factors (e.g., supplier selection, capacity planning, sufficiency of distribution
channels, etc.) that can be considered as the other dimensions of supply chain design. The current
study, therefore, first attempts to develop such a single construct for supply chain design, and
then, investigates the relative effects of supply chain design, integration and information sharing
on the performance of a supply chain. The research model is shown in Figure 1.
FLEXIBILITY PERFORMANCE 1 2 3 4 5
Ability to respond(demand variation),
Seasonality
Poor manufacturing performance
( machine break downs)
Poor supplier performance
As per given in the above table the company’s flexibility performance is evaluated in different
five heads. The ability to respond (demand variation) seasonality is good. The company’s
manufacturing performance in also good with 3 marks out of the 5. The supplier performance is
not very good but not poor also the same case with delivery whose poor ranking is 1 point. At
last, the company’s new product, new market or new competitor is good with 3 marks.
Cost of distribution
(transportation, handling cost)
Manufacturing, including labour,
maintenance and re-work costs.
Return on investments.
The resource performance of the company is divided into 4 heads. The total cost
of resources used is good; cost of distribution including transportation and handling cost
occupies good matter in the resource performance. the manufacturing performance is very good
with 4 points such as such the return on investment performance is outstanding.
OUTPUT PERFORMANCE 1 2 3 4 5
Sales
Order fill rates
On-time deliveries
Customer response time
Shipping errors
Manufacturing lead-time
Customer complaints
FLEXIBILITY PERFORMANCE 1 2 3 4 5
Ability to respond(demand variation),
Seasonality
Poor manufacturing performance
( machine break downs)
Poor supplier performance
Poor delivery performance
New product, new market, or new
competitors
The flexibility performance is divided in the five parts which are the one
of the evaluation criteria of the performance of flexibility. The company’s ability to respond is
very good wheather as manufacturing performance and supplier performance is very bad.
Delivery performance is not so good. At last, the companies have to face good competitions.
RESOURCE PERFORMANCE 1 2 3 4 5
Total cost of resource used
Cost of distribution
(transportation, handling cost)
Manufacturing, including labour,
maintenance and re-work costs.
Return on investments.
In the resource performance of the company, the total cost of resource, costs of distribution,
manufacturing performance are very good. The return of investment is outstanding.
OUTPUT PERFORMANCE 1 2 3 4 5
Sales
Order fill rates
On-time deliveries
Customer response time
Shipping errors
Manufacturing lead-time
Customer complaints
FLEXIBILITY PERFORMANCE 1 2 3 4 5
Ability to respond(demand variation),
Seasonality
Poor manufacturing performance
( machine break downs)
Poor supplier performance
Poor delivery performance
New product, new market, or new
competitors
The flexibility performance is divided in the five parts which are the one of the evaluation
criteria of the performance of flexibility. The company’s ability to respond is good wheather as
manufacturing performance is also good and supplier performance is very good. Delivery
performance is not so good. At last, the companies have to face good competitions.
RESOURCE PERFORMANCE 1 2 3 4 5
Total cost of resource used
Cost of distribution
(transportation, handling cost)
Manufacturing, including labour,
maintenance and re-work costs.
Return on investments.
The resource performance of the company is divided into 4 heads. The total cost of resources
used is good; cost of distribution including transportation and handling cost occupies good
matter in the resource performance. The manufacturing performance is very good with 4 points
such as such the return on investment performance is not so much outstanding.
OUTPUT PERFORMANCE 1 2 3 4 5
Sales
Order fill rates
On-time deliveries
Customer response time
Shipping errors
Manufacturing lead-time
Customer complaints
FLEXIBILITY PERFORMANCE 1 2 3 4 5
Ability to respond(demand variation),
Seasonality
Poor manufacturing performance
( machine break downs)
Poor supplier performance
Poor delivery performance
New product, new market, or new
competitors
The flexibility performance is divided in the five parts which are the one of the evaluation
criteria of the performance of flexibility. The company’s ability to respond is outstanding
wheather as manufacturing performance is also good and supplier performance is not good.
Delivery performance is not so good. At last, the companies have to face good competitions.
RESOURCE PERFORMANCE 1 2 3 4 5
Total cost of resource used
Cost of distribution
(transportation, handling cost)
Manufacturing, including labour,
maintenance and re-work costs.
Return on investments.
The resource performance of the company is divided into 4 heads. The total cost of resources
used is very good; cost of distribution including transportation and handling cost occupies good
matter in the resource performance. The manufacturing performance is good with 3 points such
as such the return on investment performance is not so much outstanding.
OUTPUT PERFORMANCE 1 2 3 4 5
Sales
Order fill rates
On-time deliveries
Customer response time
Shipping errors
Manufacturing lead-time
Customer complaints
In today’s competitive business environments, firms in a supply chain compete with other supply
chains and therefore they should manage their supply chains effectively and efficiently. While
integration and information sharing are the well-known manners for increasing the performance
in supply chains, design of a supply chain also has a critical role in the achievement of desired
performance levels. Well-designed supply chains can meet the changing needs of customers
through sufficient capacities, optimally located suppliers and distributors, and good relationships
between channel members. According to the implications of this study, flexibility, resource and
output performances of supply chains can be improved by emphasizing integration and
information sharing, and specifically by concentrating on the supply chain design.
References
Christopher, M. (1998), Logistics and Supply Chain Management: Strategies For Reducing
Costs and Improving Services, 2nd ed., Financial Times/Pitman Publishing, London.
Simchi-Levi, D., Kaminsky, P. and Simchi-Levi, E. (2000), Designing and Managing the Supply
Chain: Concepts, Strategies and Case Studies, International ed., McGraw- Hill, Singapore.
Chopra, S. and Meindl, P. (2004), Supply Chain Management: Strategy, Planning and
Operations, 2nd ed., Prentice-Hall, Upper Saddle River, NJ.
Fisher, M.L. (1997), “What is the right supply chain for your product?” Harvard Business
Review, Vol. 75 No. 2, pp. 105-16.
6. Is the title of your report appropriate? The title should be adequately Yes/No
descriptive, precise and must reflect scope of the actual work done.
Have the References been cited properly inside the next of the report? Yes/ No
Yes/ No
12. Have you written your report according to the guidelines? The report
should not be a mere printout of a power point presentation. Source
Yes/ No
code need not be included in the report.
13. A compact disk(CD) containing the soft copy of the final report and a Yes /No
copy of the final seminar presentation made to the supervisor
examiner (both preferably in PDF format only) has been placed in a
protective jacket securely fastened to the inner back cover of the final
report.
Declaration:
I certify that I have properly verified all the items in this checklist and ensure that
the report is in proper format as specified in the course handout.
Signature: Date: