Title of the Paper

SUPPLY CHAIN MANAGEMENT

Authors:
Miss. Swati S. Wadekar,
B. Tech.(Agril. Engg.), M.B.A. (Human Resources Mgmt.)
Assistant Professor,
Dept. of Business Administration,
SSBTs College of Engineering & Technology,
Bambhori, Jalgaon

Prof. Dr. S. K. Wadekar

M.Com. M.Phil. Ph.D.
BOS and Faculty Member
(Insurance and Transport)
University of Pune,
Reader in Commerce and HOD
in Marketing, M.S.G. College,
Malegaon Camp (Nashik).

Er. Pankajkumar A. Anawade

B. E. (Mech. Engg.), M.B.A. (Marketing Mgmt.)
Assistant Professor,
Dept. of Business Administration,
SSBTs College of Engineering & Technology,
Bambhori, Jalgaon

ABSTRACT
Companies face growing demand to speed time-to-market and improve customer service while
reducing costs and increasing efficiency. A set of approaches used to efficiently integrate suppliers,
manufacturers warehouses, distribution centers so that the product produced is distributed in the right
quantities, to the right location, at the right time, at minimum cost. Shorter product life cycles of hightechnology products, less opportunity to accumulate historical data on customer demand, wide choice
of competing products makes it difficult to predict demand.
Importance of supply chain management deals with uncertain environment. Boeing
announced a $2.6 billion write-off in 1997 due to raw materials shortages. Hewlett-Packard and Dell
found it difficult to obtain important PC components from Taiwanese suppliers in 1999 due to a
massive earthquake.
Information technology is the key driving force for moving material management to supply
chain management in the second half of the 20th century. Stages of the business model evolution
consists of Bill of Materials (BOM) processor in early 60s, Material Requirement Planning (MRP) in
70s, Manufacturing Resource Planning (MRPII) in 80s, Enterprise Resource Planning (ERP) in 90s,
and supply chain management(SCM) packages in the early 21st century. (e.g., SAP, Baan, Oracle, JD
Edwards)
In the present research paper, practical approach in the form of case studies has been studied
w. r. t. Advanced Supply chain which is logistics operator & five core disciplines are drawn. i.e. View
your supply chain as a strategic asset, Develop an end-to-end process architecture, Design your
organization for performance, Build the right collaborative model, Use metrics to drive business
success.

Keywords: Enterprise resource planning, Bill of materials, material requirement planning etc.

Paper - Supply Chain Management

Introduction to the concept:
A set of approaches used to efficiently integrate Suppliers Manufacturers Warehouses Distribution
centers So that the product is produced and distributed in the right quantities To the right locations
And at the right time System-wide costs are minimized and Service level requirements are satisfied.
Suppose a companys new annual report claims their costs of goods sold for the year is $160 million
and their total average inventory (production materials + work-in-process) is worth $35 million. This
company normally has an inventory turn ratio of 10. What is this years Inventory Turnover ratio?
What does it mean? = $160/$35 = 4.57 Since the companys normal inventory turnover ration is 10, a
drop to 4.57 means that the inventory is not turning over as quickly as it had in the past. Without
knowing the industry average of turns for this company it is not possible to comment on how they are
competitively doing in the industry, but they now have more inventory relative to their cost of goods
sold than before.

Importance of Supply Chain Management:

Dealing with uncertain environments matching supply and demand Boeing announced a $2.6 billion
write-off in 1997 due to raw materials shortages, internal and supplier parts shortages and
productivity inefficiencies U.S Surgical Corporation announced a $22 million loss in 1993 due to
larger than anticipated inventories on the shelves of hospitals IBM sold out its supply of its new
Aptiva PC in 1994 costing it millions in potential revenue Hewlett-Packard and Dell found it difficult
to obtain important components for its PCs from Taiwanese suppliers in 1999 due to a massive
earthquake U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998.
Shorter product life cycles of high-technology products Less opportunity to accumulate historical data
on customer demand Wide choice of competing products makes it difficult to predict demand The
growth of technologies such as the Internet enable greater collaboration between supply chain trading
partners If you dont do it, your competitor will Major buyers such as Wal-Mart demand a level of
supply chain maturity of its suppliers Availability of SCM technologies on the market Firms have
access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal
processes.

Supply Chain Management Key issues:

There is a strong correlation between supply chain maturity and superior performance. Supply
chain performance is all about integration, integration of strategy, processes, organization, and
information systems. On information systems next-generation supply chain tools will emphasize
collaboration and information availability more than speed and efficiency and support three
fundamental characteristics such as transparency, flexibility, and simultaneity.

On making change happen, given the complexity of the supply chain and the hundreds of
potential practices and competing priorities requires a multi-dimensional plan a roadmap to take you
from where you are to where you want to be. On the next generation supply chain, as technologies
continue to evolve and supply chain practitioners become more comfortable with their effectiveness,
strategies, processes, and organizational capabilities will evolve in parallel.

An Evolution from Material Management to Supply Chain Management Information technology is the key driving force for moving material management to supply
chain management in the second half of the 20th century. In 1970, the cost of one megahertz of
computing power was $7,600. By the end of the century, it was 17 cents. The cost of storing one
megabit of data was $5,256 in 1970. It is less than 17 cents now2.
Ever since the 1960s, technology has enabled business to create tools to ease the management
of materials. The stages of the business model evolution as shown in diagram consists of Bill of
Materials (BOM) processor in the early 60s, Material Requirement Planning (MRP) in the70s,
Manufacturing Resource Planning (MRPII) in the 80s, Enterprise Resource Planning (ERP) in the 90s,
and supply chain management (SCM) packages in the early twenty-first century.

Fig. No.: 1 - The stages of the business model evolution

The impact in the evolution of advanced technology and computer power on materials and
supply chain management is phenomenal. Companies face growing demand to speed time-to-market
and improve customer service while reducing costs and increasing efficiency.
International team of supply chain experts has managed supply chain management projects for
over 75% of the Fortune 500 companies in the last 5 years. These projects range from management
consulting and systems integration to outsourcing of supply chain processes. Specialists of Capgemini
have expertise working with the top software and hardware vendors in each area of the supply chain.
Capgemini presents one of the broadest supply chain management portfolios on the market.
With their extensive industry knowledge and experience in management consulting, systems
integration and IT & business process outsourcing, it deliver end-to-end services for large-scale global
supply chain transformations and targeted project support.

Success factors for Supply Chain Visibility:

Process manufacturers must sense and respond accurately to customer demand to improve
operational performance and reduce their operating costs. Accurate forecasts increase agility and
enable manufacturers to transcend risk mitigation and focus on innovation and continuous
improvement.

Align strategy with the manufacturing network: Drive business strategies with
standardized business

processes,

design-for-manufacturing improvements

and asset

optimization

Measure performance accurately: Leverage metrics for real-time insight into quality, safety,
efficiency, and costs to identify gaps in supply chain performance

Apply manufacturing metrics: Use metrics to improve responsiveness and flexibility of

product supply. A demand-driven value network ensures customer-focused, just-in-time
manufacturing.

Gain an integrated view of performance: Capture and present metrics on a common

platform to drive continuous improvement. An integrated view enables compliance with
reporting requirements and regulations.

How To Customerise:

The basic idea behind customer satisfaction is to create a customer advocate for the company.
All rewards to a company come only from one source, every rupee from the customer only. Self
managed terms practicing good conduct can give maximum customer satisfaction. All parts of a
company must interact with the customer.
Table No. 1 A value chain
Focus
Developing

on Reduce

individual

development

customerised

customer

periods

products

Customaries
Manufacturing
Customer

Value

Feed Back

Addition

the

shop

floor
Target
Marketing

individual
customer
Deliver

Delivering

Develop

the

Reduce cycle Produce low

times
Cut

cost product
down

order
processing
cycle time

to Cut

customer

Market
customaries
products

down Deliver

individual

delivery

effect

customer

periods

products

cos-

In a highly-competitive market, where switching costs are low, it makes sense to target the
loyalist, the delighted customer. Who will keep coming? As the customer is singled out for delight, the
ripple effect will be felt on the secondary customer, the fence-sitter, who is bound to be swayed in the
process. By contrast, the cost of attracting new customers who will demand no less can be far higher.
To generate delight:
1.

Strive constantly to provide additional customer value in every transaction.

2.

Use a flexible service envelope around the core product to surprise benefits.

3.

Treat every customer as though he/she is the only customer whom the company wants.

4.

Look for expectation performance gap in order to identify opportunities to delight

Representation of Supply Chain Management

The primary objective of Supply Chain Management is to maximize customer value. Then
allow the customer to determine the quality standards. Products should be concerned with the
customer and marketing should be managed by cross-functional teams.

Figure No.: 2 - Representation of Supply Chain

Understand Customer

Priorities Customer

Cluster

Needs

Needs

into segment

Build

Brands

Create

Accordingly
Covey

Value

Complete

Package
Create delight

Reward

Associations

customer
Maintain

Good

Build

Communication
Make
follow

Needs

Necessary
ups

with

long

term

relation
Assure

life

time

Value

services

A Michael Porter explains that companies can gain competitive edge or advantage by disaggregating
their entire business, from purchasing to delivering after-sales service, into a sequence of strategically
relevant discrete steps, or, the value chain by analyzing the stages of the value chain in order to
understand the behavior of costs, and existing potential sources of differentiation so that there can be
redesigning of internal and external process to improve efficiency and effectiveness.

More Efficient Supply Chain Management Corporate Case Studies:

1. The Quicksilver The Customer Quiksilver are a global company with a portfolio of lifestyle brands such as
Quiksilver, Roxy, Hawk Clothing, Gotcha and DC Shoes. The firm
operates around 150 stand-alone stores in major cities worldwide and is widely distributed through
other outlets. Quiksilver is more than just a fashion apparel company owing to its roots in the
demanding world of extreme sports.
The Problem Quicksilvers previous logistics provider went out of business and they were left with stranded stock
and missed delivery dates.

the

The Reaction
Advanced had to move fast if the trading season was going to be saved for Quicksilver. A total of 500
pallets were collected in just two days from their different suppliers warehouse and a months worth
of orders were sent out to customers in the first week.
The Service Advanced may have had to act fast, but that didnt mean company let its service levels drop. Their
experience of dealing with all of the major names on the high streetand many more besidesmeant
we were able to achieve the necessary throughput without compromising on quality.
The Results Quicksilver were impressed by the levels of service they received, both in terms of pre-retail services
and delivery performance. Advanceds delivery record during Quicksilvers busy four-month summer
period in 2006 was 99.1% on a total of 365 deliveries.

2. The Smith & Brooks (S & B)

The Customer S & B Ltd are one of the UKs leading branded childrens wear companies. The
firm currently sells more than six million garments each year and its brands include: Barbie; Scooby
Doo; Looney Tunes; Marvel Heroes; My Little Pony; and The Simpsons.
The Problem S & B decided to target the European independent sector as in 2002, but this posed challenges for a
company with business systems designed to handle large volumes for a relatively small number of
customers. The companys first trading season with 400 new retailers threw up a series of problems
and Advanced, as a trusted partner, came to the table and proposed a solution.
The Solution Requirements of S&B regarding specifications 1. It must work with S&Bs legacy systems and interact to allow automatic updating of data.
2. The creation of packing lists should be controlled by the user, not the program, in order to
reduce the amount of fresh air being transported.
3. Invoices should be created directly from the packing list and sent out to S&Bs
customers by Advanced.
The Outcome
With Advanceds IT system having visibility one day after it has been dispatched and the new system
will provide visibility prior to despatch.
The Benefits of Expertise -

Advanceds expertise in IT allows both S&B & its clients work with software designed for our
specific needs. The case of S&B shows that another big plus is the ability to move
quickly to deliver a solution in time for the next trading season.

3. The Makro:
The Customer Makro is one of the leading cash and carry networks in the UK and prides itself
on choice, value and service. Makro Fashion Department has a throughput of more than 4 million
hanging garments and 400,000 cartons from approximately 70 different suppliers.
The Problems
Purchase orders issued inconsistently, resulting in picking delays.
Loss of visibility of purchase orders in the supply chain.
14-day average lead-time from purchase order to store.
Inconsistent product presentation and labelling.
The Solutions Suppliers to warehouse their Makro contracted stocks.
Makro to issue bulk purchase orders on same day each week.
Bulk orders delivered to Advanced.
Suppliers to raise one invoice only for the total received at Advanced.
Advanced to conduct store pick allocation and labelling.
The Results
The proposed solution met all of Makros needs and more:
Lead-time from purchase order to delivery reduced by seven working days.
Pre-retail and distribution costs reduced by 10p per item.
Consistent and improved product presentation.
Store delivery claims eliminated.
Supplier invoice queries eliminated.
Wholesaler has total visibility of all outstanding purchase orders in the supply chain
99.95% stock file accuracy and the changes also had a positive impact on sales, as a result of
improved product presentation and availability in stores.

4. Matalan Matalan is the UKs original value retailer and the market they operate in
means that an efficient and cost-effective supply chain is imperative.

Matalans requirements To have capacity online within 3 months of agreement.

Improve processing quality.
Reduce prices.
Reduce other ancillary costs.
Reliable throughput times.
Provide low cost storage facility.
Improve visibility of audit trail.
The Proposed Solution
Advanced sourced equipment and know-how from throughout Europe to achieve these objectives and
installed the best quality equipment available. Data from this equipment was linked to Advanceds
existing IT systems to enable reduced administration costs,
enhanced data accuracy and increased consistency in terms of product quality.
The Result Advanced achieved the desired outcomes and the site opened for business at 50% operating capacity.
Site was fully operational with good productivity being achieved and high quality levels. The final
result was a very satisfied customer, with Advanced having proved its ability to react to a fast moving
situation and get a complex site operational in just three months.

Conclusion The detailed analysis of above mentioned cases has been done w.r.t. their customer
requirements, problems, solutions & result as far as service of Advanced logistics operator is
concerned & following core disciplines were drawn for superior performance.

View Your Supply Chain as a Strategic Asset:

Five key configuration components Operations strategy, Channel strategy, Outsourcing strategy,
Customer service strategy, Asset network. Four criteria of a good supply chain strategy Align with
your business strategy. Competing on cost, innovation, quality or service. Align with your customers
needs, multiple segments, multiple supply chains, Align with your power position, Become adaptive.

Develop an End-to-End Process Architecture:

Four tests of supply chain architecture Strategic fit (strategy drives architecture) End-to-end focus,
Simplicity, Supply chain configuration, Product and service proliferation ,Process and systems

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inconsistency, Over-automation Integrity (integration of applications and processes, data quality),

Architectural toolkits.

Design Your Organization for Performance:

Organizational change is an ongoing process. Evolution of the supply chain organization. Whats in a
name? Guiding principles for organizational design Form follows function (organization mirrors
process). Every process requires accountability. know and grow your core. What must you be really
good at? Gaining respect for the supply chain discipline Focus on the skills you need

Build the Right Collaborative Model:

Collaboration is a spectrum. Transactional collaboration, Cooperative collaboration, coordinated
collaboration, Synchronized collaboration. Finding the right place on the spectrum. The path to
successful collaboration. Master internal collaboration. first Define the appropriate degrees of
collaboration i.e., segment Share benefits, gains, and losses. An example of mutual gain Trust your
partners, but protect your interests, Use technology to support your collaborative relationships, Dont
forget to compromise

Use Metrics to Drive Business Success:

Linked to the business strategy, Balanced and comprehensive, Used as a continuous improvement tool
Implemented via a formal implementation plan, Highly visible and monitored at all levels of the
company, Based on both internal and external benchmarking, Based on targets that are aggressive, but
achievable

References:
1. Supply Chain Logistics Management , Donald Bowersox , David Closs, M. Bixby Cooper Tata McGraw Hill
2. Supply chain management by Janat Shah - Pearson
3. Logistic &Supply chain management by K.Shridhara Bhat -Himalaya Publications
4. Supply Chain Management by Sunil Chopra, Peter Meindl - PHI Publications

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