Final Om Term Paper (1)

8/7/2019 Final Om Term Paper (1)

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Table of Contents

SUPPLY CHAIN MANAGEMENT................................................................................................................. 2

Definition:- ............................... ........................ ................................ ...................... .......................... 2

KEY ISSUES IN SUPPLY CHAIN MANAGEMENT ...................................................................................... 3

Supply Chain Integration and Strategic Partnering ........................................................................... 5

Outsourcing and Off-shoring Strategies ........................ ................................ ....................... ............. 6

Product Design ............................ ......................... ................................ ...................... ...................... 6

Information Technology and Decision-Support Systems ........................................ ...................... ..... 7

Customer Value ............................................................................................................................... 7

Smart Pricing.................................................................................................................................... 7

Supply Chain Management in Service Industry ........................... ............................... ............................. .. 8

SUPPLY CHAIN MANAGEMENT IN HEALTH CARE INDUSTRY:..................................................... ............ 8

Supply Chain Management in Indian Retail Industry:....................... ............................. ...................... 10

Role of supply chain management in retail industry: .................................................. .................... 11

SUPPLY CHAIN MANAGEMENT IN FUTURE GROUP: ............................. ................................ ............... 14

SUPPLY CHAIN MANAGEMENT IN WALMART AND BHARTI:........................................... ..................... 15

APPLICATION OF INFORMATION TECHNOLOGY IN SCM: ............................... ......................... ................ 18

ELECTRONIC COMMERCE: .............................................................................................................. 18

ELECTRONIC DATA INTERCHANGE: ......................... ................................ ....................... ................. 19

BAR CODING AND SCANNER:.......................................................................................................... 19

DATA WAREHOUSE: ....................................................................................................................... 19

ENTERPRISE RESOURCE PLANNING (ERP) TOOLS: ....................................... ...................... .............. 20

RFID : ............................................................................................................................................. 23


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SUPPLYCHAIN MANAGEMENT

Fierce competition in todays global markets, the introduction of products with shorter life

cycles, and the heightened expectations of customers have forced business enterprises to invest

in, and focus attention on, their supply chains. This, together with continuing advances in

communications and transportation technologies (e.g., mobile communication, Internet, and

overnight delivery), has motivated the continuous evolution of the supply chain and of the

techniques to manage it effectively. In a typical supply chain, raw materials are procured and

items are produced at one or more factories, shipped to warehouses for intermediate storage, and

then shipped to retailers or customers. Consequently, to reduce cost and improve service levels,

effective supply chain strategies must take into account the interactions at the various levels in

the supply chain. The supply chain, which is also referred to as the logisticsnetwork, consists of

suppliers, manufacturing centers, warehouses, distribution centers, and retail outlets, as well as

raw materials, work-in-process inventory, and finished products that flow between the facilities.

Definition:-

Supply chain management is a set of approaches utilized to efficiently integrate suppliers,

manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the

right quantities, to the right locations, and at the right time, in order to minimize systemwide

costs while satisfying service level requirements.

This definition leads to several observations. First, supply chain management takes into

consideration every facility that has an impact on cost and plays a role in making the product

conform to customer requirements: from supplier and manufacturing facilities through

warehouses and distribution centers to retailers and stores. Indeed, in some supply chain analysis,

it is necessary to account for the suppliers suppliers and the customers customers because they

have an impact on supply chain performance. Second, the objective of supply chain management


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is to be efficient and cost-effective across the entire system; total systemwide costs, from

transportation and distribution to inventories of raw materials, work in process, and finished

goods, are to be minimized. Thus, the emphasis is not on simply minimizing transportation cost

or reducing inventories but, rather, on taking a systems approach to supply chain management.

Finally, because supply chain management revolves around efficient integration of suppliers,

manufacturers, warehouses, and stores, it encompasses the firms activities at many levels, from

the strategic level through the tactical to the operational level.

Elements of the Supply Chain

y Customery Planningy Purchasingy Inventoryy Productiony Transportation

KEYISSUES IN SUPPLYCHAIN MANAGEMENT

In this section, we introduce some of the supply chain management issues that we

discuss in much more detail throughout the remaining chapters. These issues span a large

spectrum of a firms activities, from the strategic through the tactical to the operational level:

Thestrategic leveldeals with decisions that have a long-lasting effect on the firm.

This includes decisions regarding product design, what to make internally and what to outsource,

supplier selection, and strategic partnering as well as decisions on the number, location, and

capacity of warehouses and manufacturing plants and the flow of material through the logistics

network.

The tactical levelincludes decisions that are typically updated anywhere between

once every quarter and once every year. These include purchasing and production

decisions, inventory policies, and transportation strategies, including the frequency with which

customers are visited.


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The operational levelrefers to day-to-day decisions such as scheduling, lead time

quotations, routing, and truck loading. Below we introduce and discuss some of the key issues,

questions, and trade-offs associated with different decisions.

Distribution Network Configuration Consider several plants producing products to serve a set of

geographically dispersed retailers. The current set of warehouses is deemed inappropriate, and

management wants to reorganize or redesign the distribution network. This may be due, for

example, to changing demand patterns or the termination of a leasing contract for a number of

existing warehouses. In addition, changing demand patterns may require a change in plant

production levels, a selection of new suppliers, and a new flow pattern of goods throughout the

distribution network. How should management select a set of warehouse locations and

capacities, determine production levels for each product at each plant, and set transportation

flows between facilities, either from plant to warehouse or warehouse to retailer, in such a way

as to minimize total production, inventory, and transportation costs and satisfy service level

requirements? This is a complex optimization problem, and advanced technology and approaches

are required to find a solution.

Inventory ControlConsider a retailer that maintains an inventory of a particular product. Since

customer demand changes over time, the retailer can use only historical data to predict demand.

The retailers objective is to decide at what point to reorder a new batch of the product, and how

much to order so as to minimize inventory ordering and holding costs. More fundamentally, why

should the retailer hold inventory in the first place? Is it due to uncertainty in customer demand,

uncertainty in the supply process, or some other reasons? If it is due to uncertainty in customer

demand, is there anything that can be done to reduce it? What is the impact of the forecasting

tool used to predict customer demand? Should the retailer order more than, less than, or exactly

the demand forecast? And, finally, what inventory turnover ratio should be used? Does it change

from industry to industry?

Production SourcingIn many industries, there is a need to carefully balance transportation and

manufacturing costs. In particular, reducing production costs typically implies that each

manufacturing facility is responsible for a small set of products so that large batches are

produced, hence reducing production costs. Unfortunately, this may lead to higher transportation


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costs. Similarly, reducing transportation costs typically implies that each facility is flexible and

has the ability to produce most or all products, but this leads to small batches and hence increases

production costs. Finding the right balance between the two cost components is difficult but

needs to be done monthly or quarterly.

Supply ContractsIn traditional supply chain strategies, each party in the chain

focuses on its own profit and hence makes decisions with little regard to their impact on other

supply chain partners. Relationships between suppliers and buyers are established by means of

supply contracts that specify pricing and volume discounts, delivery lead times, quality, returns,

and so forth. The question, of course, is whether supply contracts also can be used to replace the

traditional supply chain strategy with one that optimizes the entire supply chain performance. In

particular, what is the impact of volume discount and revenue-sharing contracts on supply chainperformance? Are there pricing strategies that can be applied by suppliers to provide incentives

for buyers to order more products while at the same time increasing the supplier profit?

Distribution StrategiesAn important challenge faced by many organizations is

how much should they centralize (or decentralize) their distribution system. What is the impact

of each strategy on inventory levels and transportation costs? What about the impact on service

levels? And, finally, when should products be transported by air from centralized locations to the

various demand points? These questions are not only important for a single firm determining its

distribution strategy, but also for competing retailers that need to decide how much they can

collaborate with each other. For example, should competing dealers selling the same brand share

inventory? If so, what is their competitive advantage?

Supply Chain Integration and Strategic PartneringAs observed earlier, designing and implementing a globally optimal supply chain is quite

difficult because of its dynamics and the conflicting objectives employed by different facilities

and partners. Nevertheless, Dell, Wal-Mart, and Procter & Gamble success stories demonstrate

not only that an integrated, globally optimal supply chain is possible, but that it can have a huge

impact on the companys performance and market share. Of course, one can argue that these

three examples are associated with companies that are among the biggest companies in their


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respective industries; these companies can implement technologies and strategies that very few

others can afford. However, in todays competitive markets, most companies have no choice;

they are forced to integrate their supply chain and engage in strategic partnering. This pressure

stems from both their customers and their supply chain partners. How can integration be

achieved successfully? Clearly, information sharing and operational planning are the keys to a

successfully integrated supply chain. But what information should be shared? How should it be

used? How does information affect the design and operation of the supply chain? What level of

integration is needed within the organization and with external partners? Finally, what types of

partnerships can be implemented, and which type should be implemented for a given situation?

Outsourcing andOff-shoring Strategies

Rethinking your supply chain strategy not only involves coordinating the different

activities in the supply chain, but also deciding what to make internally and what to buy from

outside sources. How can a firm identify what manufacturing activities lie in its set of core

competencies, and thus should be completed internally, and what product and components

should be purchased from outside suppliers, because these manufacturing activities are not core

competencies? Is there any relationship between the answer to that question and product

architecture? What are the risks associated with outsourcing and how can these risks be

minimized? When you do outsource, how can you ensure a timely supply of products? And when

should the firm keep dual sources for the same component? Finally, even if the firm decides not

to outsource activities, when does it make sense to move facilities to the Far East? What is the

impact of off-shoring on inventory levels and the cost of capital? What are the risks?

ProductDesignEffective design plays several critical roles in the supply chain. Most obviously,

certain product designs may increase inventory holding or transportation costs relative to other

designs, while other designs may facilitate a shorter manufacturing lead time. Unfortunately,

product redesign is often expensive. When is it worthwhile to redesign products so as to reduce

logistics costs or supply chain lead times? Is it possible to leverage product design to compensate

for uncertainty in customer demand? Can one quantify the amount of savings resulting from such

a strategy? What changes should be made in the supply chain to take advantage of the new


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product design? Finally, new concepts such as mass customization are increasingly popular.

What role does supply chain management play in the successful implementation of these

concepts?

Information Technology and Decision-SupportSystemsInformation technology

is a critical enabler of effective supply chain management. Indeed, much of the

current interest in supply chain management is motivated by the opportunities that appeared due

to the abundance of data and the savings that can be achieved by sophisticated analysis of these

data. The primary issue in supply chain management is not whether data can be received, but

what data should be transferred; that is, which data are significant for supply chain management

and which data can safely be ignored? How frequently should data be transferred and analyzed?

What is the impact of the Internet? What is the role of electronic commerce? What infrastructureis required both internally and between supply chain partners? Finally, since information

technology and decision-support systems are both available, can these technologies be viewed as

the main tools used to achieve competitive advantage in the market? If they can, then what is

preventing others from using the same technology?

Customer Value Customer value is the measure of a companys contribution to its customer,

based on the entire range of products, services, and intangibles that constitute the companys

offerings. In recent years, this measure has superseded measures such as quality and customer

satisfaction. Obviously, effective supply chain management is critical if a firm wishes to fulfill

customer needs and provide value. But what determines customer value in different industries?

How is customer value measured? How is information technology used to enhance customer

value in the supply chain? How does supply chain management contribute to customer value?

How do emerging trends in customer value, such as development of relationships and

experiences, affect supply chain management? What is the relationship between product price

and brand name in the conventional world and in the online world?

SmartPricingRevenue management strategies have been applied successfully in industries such

as airlines, hotels, and rental cars. In recent years, a number of manufactures, retailers, and

carriers have applied a variation of these techniques to improve supply chain performance. In

this case, the firm integrates pricing and inventory (or available capacity) to influence market


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demand and improve the bottom line. How is this done? Can smart pricing strategies be used

to improve supply chain performance? What is the impact of rebate strategies on the supply

chain? Each of these issues and strategies is discussed in great detail in the remaining chapters.

As you will see, the focus in each case is on either the development chain or the supply chain and

the focus is on achieving a globally optimizedsupply chain or managing risk and uncertainty in

the supply chain, or both.

Supply Chain Management in Service Industry

Supply chain management (SCM) is a familiar concept in manufacturing, but service

industries are just now recognizing the value of successfully implementing it. Although certain

concepts should be applied while successfully managing a supply chain, companies coordinatetheir individual supply chains in many different ways. An effective supply chain is crucial to the

success of a business. Technology: Changes in technology have extreme effects on how a firm

manages its supply chain. Specifically, electronic commerce (EC) is extending value within the

SCM process. Businesses use EC to integrate their internal functions with the applications of

shippers, suppliers, and customers. Electronic commerce allows shipment status messages to be

received instantaneously and provides vendor-managed and continuous replenishment inventory

programs. This new technology decreases inventory risks and maximizes the sale of products

with short life cycles by reducing the time it takes to reach the broadest possible market. EC also

promotes competitive advantages by having a more accessible order-entry process, decreased

paper handling, and less re-keying of information.

SUPPLYCHAIN MANAGEMENT IN HEALTH CARE INDUSTRY:

Increased revenues and enhanced service are key corporate objectives. With this in mind,

health care agencies are trying to figure out ways to cut costs but still keep their customerssatisfied, and many are now looking to their supply chains for the answers. A health care supply

chain deals with factors such as the expiration dates on products, product shipping and delivery

location, multiple product mix (to build custom packages for customers), multiple delivery

locations, multiple distribution points, and multiple accounts and customers. However, health

care is different from other industries because hospitals are unable to pinpoint the reasons for


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decreases in the demand for their services. This is because demand is based on each individual

patient, whose needs and insurance-related restrictions are difficult to predict effectively. Health

care agencies have to order many different types of equipment and supplies based on customers'

diverse needs, while still increasing revenues and satisfying the customer. This can be nearly

impossible to achieve. The position of a hospital material manager is becoming important

because of the decisions they make that deal with inventory. They have the responsibility of

choosing what, when, and how much to order.

Just-In-Time Inventory Management:

Within the health care industry, there has been a greater reliance on just-in-time (JIT) inventory

and total quality management (TQM). The concept of JIT, in particular, is taking hold and

companies are restructuring to accommodate it. Just-in-time inventory management is the

process of receiving inventory exactly when needed instead of having a stocked warehouse of

supplies. Advantages include better detection of quality problems, shorter product development

cycles, quicker customer response time, and lower holding cost. For these reasons, JIT systems

have made it possible to substantially increase revenues for many firms who use it. JIT can be a

direct link between what the customer desires and how a company can achieve it. Service

industries are always looking for better ways to serve their customers, and faster, more flexible,

better-quality service is what customers want. However, companies that choose to implement JIT

face the possibility of being left high and dry if their suppliers are unable to deliver, as shown by

the UPS strike.

Health care companies have made many improvements because they have used a just-in-time

system. Inventory costs are a significant liability for these companies, and, with JIT, a huge

portion of the liability is cut out of the equation. Hospitals that use ITT now have more room for

patients. Those who don't use this type of inventory system are experiencing excess inventory

and turnover difficulties. As an example, hospitals that have had expired drugs can't sell them at

a discount, because they have no market value. They are waste and have a direct negative affect

on the bottom line.

A better appreciation for the supply chain management process can be gained by understanding

service industries. A crucial example is the health industry, which is expected to be one of the


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fastest growing industries in the future. Health care is attempting to implement a supply chain

that delivers quality products at minimal cost. Some of the problems that have arisen have to do

with the lack of an efficient program to deal primarily with health care facilities and just-in-time

management. Benefits, limitations, and the implementation steps of SCM help show where the

new health care phenomena are headed. SCM is not a passing fad but rather an evolution in the

operations of services. We predict that services entering the SCM gate will save millions of

dollars that would otherwise be spent because of a dysfunctional supply chain. Since the SCM

concept is fairly new, it is vital that managers do not make a "leap of faith," so to speak, but

research the process thoroughly. This should enable them to choose a supply chain that will be

most beneficial in obtaining the main objective for any company, which is to make a profit.

Supply Chain Management in Indian Retail Industry:

The Indian retail industry is the fifth largest in the world. Comprising of organized and

unorganized sectors, Indian retail industry is one of the fastest growing industries in India,

especially over the last few years. Though initially, the retail industry in India was mostly

unorganized, however with the change of tastes and preferences of the consumers, the industry is

getting more popular these days and getting organized as well. With growing market demand, the

industry is expected to grow at a pace of 25-30% annually. The Indian retail industry is expected

to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010. It accounts for

over 10 per cent of the India's GDP and around eight per cent of the employment.

The organized retail industry in India had not evolved till the early 1990s. Until then, the

industry was dominated by the un-organized sector. It was a sellers market, with a limited

number of brands, and little choice available to customers. Lack of trained manpower, tax laws

and government regulations all discouraged the growth of organized retailing in India during that

period. Lack of consumer awareness and restrictions over entry of foreign players into the sector

also contributed to the delay in the growth of organized retailing. Foundation for organized retail

in India was laid by Kishore Biyani of Pantaloon Retails India Limited (PRIL). Following

Pantaloon's successful venture a host of Indian business giants such as Reliance, Bharti, Birla

and others are not entering into the retail sector.


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Strong Supply Chain

Critical components of supply chain planning applications can help manufacturers meet

retailers' service levels and maintain profit margins. Retailer has to develop innovative solution

for managing the supply chain problems. Innovative solutions like performance management,frequent sales operation management, demand planning, inventory planning, production

planning, lean systems and staff should help retailers to get advantage over competitors.

Role of supply chain management in retail industry:

The role of supply chain in Indian organized retail is very significant for on it depends the

growth of this sector. The Indian Supply Chain Council have been formed to explore the

challenges that a retailer faces and to find possible solutions for India.

The role of supply chain in the organized retail sector in India should be a shelf- centric

partnership between the retailer and the manufacture for this will create supply chains that are

loss free. This will also give rise to top and bottom line growth. In the organized retail sector in

India the presence of fresh produce (vegetables and fruits) is very small. This is so for the nature

of supply chain is very fragmented. This shows the important role of supply chain in the

organized retail sector in India. In the organized retail market in India the role of supply chain is

very important for the Indian customer demands at affordable prices a variety of product mix. It

is the supply chain that ensures to the customer in all the various offerings that a company decide

for its customers, be it cost, service, or the quickness in responding to ever changing tastes of the

customer. The infrastructure in India in terms of road, rail, and air links are not sufficient. And so

warehousing plays a major role as an aspect of supply chain operations. To overcome these

problems, the Indian retailer is trying to reduce transportation costs and is investing in logistics

through partnership or directly. The Indian organized retail sector is growing so the role of

supply chain becomes all the more important. It should become all the more responsive and

adaptive to customers demand. There is also need for the supply chain to be more cost efficient

and collaborative to win the immense competition in this sector.


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The role of supply chain in Indian organized retail has expanded over the years with the

boom in this industry. The growth of the Indian retail industry to a large extent depends on

supply chain, so efforts must be made by the Indian retailers to maintain it properly.

The supply chain management is logistics aspect of a value delivery chain. It comprises all of the

parties that participate in the retail logistics process: Manufacturers, Wholesalers, Third Party

Specialists like Shippers, Order Fulfillment House etc. and the Retailer. Here, logistics is the

total process of planning, implementing and coordinating the physical movement of merchandise

from manufacturer to retailer to customer in the most timely, effective and cost efficient manner

possible. Logistics regards order processing and fulfillment, transportation, warehousing,

customer service and inventory management as interdependent functions in the value delivery

chain. It oversees inventory management decisions as items travel through a retail supply chain.If a logistics system works well, the retail firm reduces stock outs, hold down inventories and

improve customer service all at the same time.

Logistics and Supply Chain enables an organized retailer to move or store products more

effectively. Efficient logistics management not only prevents needless movement of goods,

vehicles transferring products back and forth; but also frees up storage space for more productive

use.

Retail analysts say on-time order replenishments will become even more critical once the Wal-

Mart/ Bharti combine begins operations - the American retailer works almost entirely on cross-

docking and is likely to demand higher service levels, including potential levies for delays in

shipment.

The efficiency and effectiveness of supply chain and logistics management can also be

understood by the fact that modern retail stores maintain lower inventories than traditional retail.

In India, generally in the traditional kirana stores, three weeks inventories are kept; while in a

modern retail store like Hypercity, it's nine days and it's under two weeks for Food Bazaar.

Now, it is beneficial for both the manufacturer as well as the retailer. If we go through the

following food supply chain in India, we find that a lot can be improved by maintaining the

supply chain and logistics


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Food Supply Chain in India:

In India, about 60 percent of food quality is lost in the supply chain from the farm to the final

consumer. Consumers actually end up paying approximately about 35 percent more than what

they could be paying if the supply chain was improved, because of wastage as well as multiplemargins in the current supply structure. The farmer in India gets around 30 percent of what the

consumer pays at the retail store. Compare this with the situation obtaining in the USA, where

farmers can receive up to 70 percent of the final retail price and wastage levels are as low as 4 to

6 percent. One can easily understand the benefits that could be generated from emulating those

practices and tapping that expertise for the supply chain in India.

As supply chain Management involves procuring the right inputs (raw materials, components

and capital equipments); converting them efficiently into finished products and dispatching them

to the final destinations; there is a need to study as to how the company's suppliers obtain their

inputs. The supply chain perspective can help the retailers identify superior suppliers and

distributors and help them improve productivity, which ultimately brings down the customers

costs. At the same time, Market logistics helps planning the infrastructure to meet demand, then

implementing and controlling the physical flows of material and final goods from point of origin

to points of use, to meet customer requirements at a profit.

Till now most retailers in India have invested majorly into the front end, but relatively little on

the back end and supply chain. Even in countries like the USA, Germany and England, where

organized retail is highly developed; supply chain efficiency is a major concern. The nature of

retail sector in India is different from other countries around the world. The organized retail

sector in India is highly fragmented and there are huge inefficiencies in the supply chain.

The most important part of retailing business is to find a balance between investing in front-end

and back-end operations. The channel dynamics is going to change over next couple of years asthe retailers start growing in size and their bargaining power is likely to increase. Probably that

would bring some kind of mutual understanding between manufactures and retailers to develop

strong supply chain network. In such a scenario, both the existing operators and new operators

must put collaborative efforts to phase out inefficiencies in the supply chain network.


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SUPPLYCHAIN MANAGEMENT IN FUTURE GROUP:

Future Group is the country's leading retail business group that caters to the entire Indian

consumption space. It operates through six verticals: Future Retail (encompassing all lines of

retail business), Future Capital (financial products and services), Future Brands (all brands

owned or managed by group companies), Future Space (management of retail real

estate), Future Logistics (management of supply chain and distribution) and Future Media

(development and management of retail media spaces).

The group's flagship company, Pantaloon Retail (India) Limited operates over 5 million square

feet through 450 stores in 40 cities. Some of its leading retail formats include, Pantaloons, Big

Bazaar, Central, Food Bazaar, Home Town, EZone, Depot, Health & Beauty Malls and

online retail format,www.futurebazaar.com.

The group's joint venture partners include Italian insurance major, Generali, French retailer

ETAM group, US-based stationary products retailer, Staples and UK-based Lee Cooper and

India-based Talwalkar's, Blue Foods and Liberty Shoes.

Future Group is working on the vendor network as well as the logistics network. The company

has identified up to 40 anchor vendors, each with turnovers of US$45 million, to achieve

economies of scale. The group is also keen to ensure that its smaller vendors are able to reach

turnovers of around US$1 million and a growth rate of 40% annually, to be able to pass on the

benefits of scales. The company is also working towards bringing its 1,200 vendors online, like

Wal-Mart.

Going further in this direction, the Future Group has also launched Future Logistics initially

aimed at handling the supply chain logistics of the group. However, sensing immense

opportunity in this area, the company is now looking to offer its services to its 1000-odd vendors,

spread across consumer related goods, to reach a targeted turnover of about Rs.700 crore by

2010.The thrust at present will be on modes of surface transport like roads and rail only.

However, at a later stage, sea and air modes might also be considered as per the requirement,

said sources.


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In India, Future group derives significant economies of scale in managing their supply chain.

With more than 170000 products, the company maintains a strong supplier relationship in a

partnership mode, avoiding the exploitative supplier buyer transactional philosophy. The IT

enabled back-end operations and supply chain management increases the reliability and

efficiency of the business.

As part of the operation, Future Group is also undertaking to reduce its warehousing costs

through a consolidation process. In a country like India, where most retail stores are located in

the heart of the citywhere rents are high and storage space is scarcesupply chain

management has even more serious business implications. Future Logistics now handles two-

and-a-half million SKUs (or stock keeping units) a day across the Future Group's various retail

formats around the country. By 2010, this number is expected to increase to more than 30 millionSKUs a day. Even with 98% accuracy, some 600,000 pieces will not be delivered correctly,

resulting in an estimated sales loss of more than Rs 4 crore a day.

The biggest driver in consumer logistics is going to be zero defect in managing the supply chain.

While infrastructure, technology, automation, processes and people will all play an important

role, zero defect can only be achieved through vertical integration across the entire supply

chainfrom raw material supply, production, wholesale and retail. The different parts of the

supply chain will no longer be able to work in silos as they do today.

SUPPLYCHAIN MANAGEMENT IN WALMART AND BHARTI:

The success of Wal-Mart is well known all across the world. One of the major factors behind

their success is the right implementation of supply and logistics management. Now the same

Supply Chain and Logistics Management take a front seat here and that's why Wal-Mart is

coming to India in a joint venture with Bharti Group. Here, Wal-Mart is going to manage the

back end operation, while Bharti will manage the front end operations.

Wal-Mart has also stated that it would replicate its global supply chain model in India, while

taking into account the unique features of the Indian market. They are also going to emphasise

on local sourcing of goods. Besides sourcing locally, Wal-Mart, through its international

operations is also in a position to source globally. The company is set to roll out its first set of


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stores by the first quarter of 2008, in cities that have a population of one million. Wal-Mart

claims it will take 35% of the Indian retail market by 2015.

It is the sheer importance of the logistics management that Wal-Mart's fully-owned logistics

armGazeleyhas already confirmed its India foray and is going to look after the Wal-Mart and

Bharti retail venture. They are closely studying various logistics providers like Radhakrishnan

Foods, before they finally closes on its India model. Again, Bharti Enterprises is directly

negotiating with the rail authorities instead of negotiating with a logistics provider.

Wal-Mart and Bharti FieldFresh

Just like Reliance Fresh, Bharti Group in a joint venture with NM Rothschild is launching Field

Fresh to provide premium quality fresh produce to markets worldwide. It has over 5,000 acres of

land under cultivation all over the country producing many varieties of fruits and vegetables and

is planning to double land under cultivation by the end of 2007.

The company is to supply fresh produce to the Bharti-Wal-Mart venture. To ensure best qualities

and varieties, Field Fresh has engaged ACM China, an industry leader in building greenhouses,

to set up state-of-the-art glass-based greenhouses at the Field Fresh Agri Centre of Excellence in

the Punjab. Field Fresh is also planning investments to the tune of US$220 million in the

backend, including investments in cold chains and warehouses. Bharti's Field Fresh will enter

this segment within the next three months. A number of companies are also venturing into this

segment to service the backend needs of retailers.


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Basic elements ofa retailing supply chain:

ACTIVITY INSTITUTION OTHER ACTIVITIES

Sourcing materials Materials supplier Warehousing, transport to producer

Producing the product Producer Design, warehousing, selling through

agents, transport to wholesaler

Wholesale distribution Wholesaler Warehousing, transport to retailer,

cash and carry

Retail distribution Retailer Regional and local distribution centres,

transport to store/home

Consumer


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APPLICATION OF INFORMATION TECHNOLOGYIN SCM:

In the development and maintenance of Supply chain's information systems both software

and hardware must be addressed. Hardware includes computer's input/output devices and storagemedia. Software includes the entire system and application programme used for processing

transactions management control, decision-making and strategic planning. Recent development

in Supply chain management software is:

1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution Sciences Inc.

Which is useful for computing freight costs, compares transportation mode rates, analyze cost

and service effectiveness of carrier.

2. A new software programme developed by Ross systems Inc. Called Supply Chain planning

which is used for demand forecasting, replenishment & manufacturing tools for accurate

planning and scheduling of activities.

3. P&G distributing company and Saber decision Technologies resulted in a software system

called Transportation Network optimization for streamlining the bidding and award process.

4. Logitility planning solution was recently introduced to provide a programme capable

managing the entire supply chain.

ELECTRONIC COMMERCE:

It is the term used to describe the wide range of tools and techniques utilized to conduct

business in a paperless environment. Electronic commerce therefore includes electronic data

interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic

bulletin boards, shared databases and magnetic/optical data capture. Companies are able to

automate the process of moving documents electronically between suppliers and customers.

Example : WWW.EBAY.COM and WWW.AMAZON.COM


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ELECTRONIC DATA INTERCHANGE:

Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business

documents in a standard format. EDI describe both the capability and practice of communicating

information between two organizations electronically instead of traditional form of mail, courier,& fax. The benefits of EDI are:

1. Quick process to information.

2. Better customer service.

3. Reduced paper work.

4. Increased productivity.

5. Improved tracing and expediting.

6. Cost efficiency.

7. Competitive advantage.

8. Improved billing.

Though the use of EDI supply chain partners can overcome the distortions and

exaggeration in supply and demand information by improving technologies to facilitate real time

sharing of actual demand and supply information.

BAR CODING ANDSCANNER:

Bar code scanners are most visible in the check out counter of super market. This code

specifies name of product and its manufacturer. Other applications are tracking the moving items

such as components in PC assembly operations, automobiles in assembly plants.

Bar Coding and scanners are mostly used in super makets.

Example : Reliance Fresh and big bazaar.

DATA WAREHOUSE:

Data warehouse is a consolidated database maintained separately from an organization's

production system database. Many organizations have multiple databases. A data warehouse is


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organized around informational subjects rather than specific business processes. Data held in

data warehouses are time dependent, historical data may also be aggregated.

ENTERPRISE RESOURCE PLANNING (ERP) TOOLS:

Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) As the core of

their IT infrastructure. ERP system have become enterprise wide transaction processing tools

which capture the data and reduce the manual activities and task associated with processing

financial, inventory and customer order information. ERP system achieve a high level of

integration by utilizing a single data model, developing a common understanding of what the

shared data represents and establishing a set of rules for accessing data.

Information flow is an important flow in the supply chain. Without the seamless flow ofinformation, the supply chain cannot operate effectively. Information flow enables coordination

between the members of the supply chain. Through the use of information systems ,trading

partners get access to and exchange information

IT systems also support the decision making processes of a firm. In this chapter we discussed the

importance and use of information in the supply chain and also how information technology

makes the supply chain more efficient and responsive. IT systems have evolved from mere

transaction processing systems to the decision support systems, which exist at present.

We discussed the IT options available for supply chain operations. These are EDI,

Internet technologies, ERP applications and supply chain management software. EDI enables the

electronic exchange of key business documents between trading partners. Internet technologies

include intranet, extranet, and e-business applications. Intranet is any private network set up

within organization.

They have recognized the need for better coordination with upstream firms that supply inputsand the network of downstream firms responsible for the distribution of their products to

consumers. This has resulted in the emergence of the concept of supply chain management

(SCM). Today, firms compete not only on their end-products or services, but also on the strength

of their supply chains.


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They have discovered that they can differentiate their product offerings and provide

better value to their customers only when they make improvements in all the supply chain

processes.

Supply Chain Management examines the role of SCM in developing quality products and

meeting customer demand faster and better than the competitors. It adopts a process view of

SCM, which advocates the integration of various business processes performed across the supply

chain to provide better value to the end customer.

This book describes concepts and strategies to manage and integrate various supply chain

processes like demand management, purchase management, product and financial flow

management, manufacturing flow management, customer service management, order fulfillmentand returns management, to improve the overall efficiency and effectiveness of the supply chain.

Supply chain management software is possibly the most fractured group of software

applications on the planet. Each of the five major supply chain steps previously outlined is

comprised of dozens of specific tasks, many of which have their own specific software. Some

vendors have assembled many of these different chunks of software together under a single roof,

but no one has a complete package that is right for every company. For example, most

companies need to track demand, supply, manufacturing status, logistics (i.e. Where things are in

the supply chain), and distribution. They also need to share data with supply chain partners at an

ever increasing rate. While products from large ERP vendors like SAP's Advanced Planner and

Optimizer (APO) can perform many or all of these tasks, because each industry's supply chain

has a unique set of challenges, many companies decide to go with targeted best of breed products

instead, even if some integration is an inevitable consequence.

It's worth mentioning that the old adage about systems only being as good as the

information that they contain applies doubly to SCM. If the information entered into a demand

forecasting application is not accurate, then you will get an inaccurate forecast. Similarly, if

employees bypass the supply chain systems and try to manage things manually (using the fax

machine or spreadsheets), then even the most expensive systems will provide an incomplete

picture of what is happening in a company's supply chain.


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Information Technology is a principle driver of business productivity and profitability,

and an enabler of organizational process improvement and innovation. Information systems play

a central role in gathering, storing, and manipulating data to support internal and external

business processes and decision making in organizations. The Information Technology

Management (ITM) program emphasizes a balance between human, technical, and

organizational components in the application of information technology and the analysis of

business functional requirements. It prepares students to design, implement and integrate

information systems and technology into organizations. Careers in ITM include business

analysis, application development, systems analysis and design, database administration,

information security, networking, and technology management. Most courses are held in

computer lab/classrooms

To facilitate hands-on applications of concepts and help students gain experience with

state-of-the-art technology. Two tracks allow students to specialize in either Application

Development or Network Management. The Application Development track is appropriate for

students who are interested in interfacing with functional business units to define their needs,

then create or modify Information Systems. The Network Management track targets students

interested in network design, implementation, administration, and management, using

established and

Evolving technologies to support organization communication and data transmission

requirements.The Supply Chain Management (SCM) program integrates operational processes

from functional areas of the business with analytical techniques and skills necessary to manage

the movement of products and services through the organization. Classes emphasize real

applications and interaction with practitioners from local businesses and government. The SCM

major prepares students for work with both quality and customer issues in service and

manufacturing areas involving supply-chain management, manufacturing scheduling and lean

manufacturing systems,

Inventory control, and uses of technology and quantitative modeling and forecasting.

Students can add depth to their study through internships and independent study.


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RFID :

Radio-frequency identification (RFID) is a technology that uses communication via

electromagnetic waves to exchange data between a terminal and an electronic tag attached to an

object, for the purpose of identification and tracking. Some tags can be read from several meters

away and beyond the line of sight of the reader. The application of bulk reading enables an

almost parallel reading of tags.

Radio-frequency identification involves interrogators (also known as readers),

and tags (also known as labels).

Most RFID tags contain at least two parts. One is an integrated circuit for storing and

processing information, modulating and demodulating a radio-frequency (RF) signal, and other

specialized functions. The other is an antenna for receiving and transmitting the signal.

There are three types of RFID tags: passive RFID tags, which have no power source andrequire an external electromagnetic field to initiate a signal transmission, active RFID tags,

which contain a battery and can transmit signals once an external source ('Interrogator') has been

successfully identified, and battery assisted passive (BAP) RFID tags, which require an external

source to wake up but have significant higher forward link capability providing greater range.

RFID has many applications; for example, it is used in enterprise supply chain

management to improve the efficiency of inventory tracking and management.

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