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
 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 re-
evaluates 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
Demand Forecasting
Material Requirement Planning Demand Planning

Component Production
Requirement 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 1.2 Million PC/Yr. 13 Transshipment Country-wide

(International) Glasgow U.K. 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

ARIBA Spend Management: It helps

companies driving down enterprise wide spend

mySAP SCM: A complete supply chain

planning solution

iBann: A complete solution suite from demand

collaboration to order management
 Results
 Reduced inventory levels by 10-15%

 Reduced markdown & scrap by 10-15%

 Used resources10-20% more efficiently Companies that

utilized best-in-
 Improved delivery reliability by 95-95%
class SCM solutions
 Reduced outages to 0-5% have

 Reduced cycle time by 10-20%

 Reduced transportation cost by 10-15%

Thank You !!!