Project on logistic and scm in mahindra

Project on logistic and scm in Mahindra

INDEX Project on logistic and scm in Mahindra..........................................................1 INDEX..............................................................................................................2 1.1 MEANING.....................................................................................................................................5 1.2 Definition.....................................................................................................................................6 1.3 Business logistics..........................................................................................................................6 1.4 Production logistics......................................................................................................................7 1.5 Logistics Management ................................................................................................................7 1.6 Importance of logistic..................................................................................................................8 1.7 Third-party logistics (3PL)  ........................................................................................................9 1.8 Fourth-party logistics (4PL)..........................................................................................................9

INTRODUCTION TO SUPPLY CHAIN MANAGEMENT.......................................10 2.1 Definition...................................................................................................................................10 2.2 Elements of the Supply Chain....................................................................................................11 2.3 Supply Chain Management Technology.....................................................................................12 2.4 Importance of supply chain management.................................................................................12 2.5 Components of supply chain management?..............................................................................13 2.6 Supply chain business process integration ................................................................................14 2.7 Tax efficient supply chain management....................................................................................14 2.8 Supply chain sustainability.........................................................................................................15 2.9 Components of supply chain management...............................................................................15 2.10 Problem addressed by supply chain management..................................................................16 2.12 Internal and external measurement........................................................................................19 2.13 Historical developments in supply chain management............................................................20 2

2.14 Key Issues in Supply Chain Management.................................................................................22 2.15 The key issues in contemporary supply chain management are:.............................................22 2.16 There are six key elements to a supply chain:..........................................................................24 2.17 WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASIC COMPONENTOF SCM?................................................................................................................................................27 2.18 Reasons to Implement Supply Chain Management.................................................................28 2.19 Implementing the Supply Chain Management.........................................................................28 2.20 Elaborating Analysis................................................................................................................29 2.21 The Complex Nature of Supply Chain Management Analysis..................................................30 2.22 Strategy and Analysis...............................................................................................................30 2.23 BENEFITS OF SUPPLY-CHAIN IMPROVEMENT..........................................................................30 2.24 Warehouse in supply chain management................................................................................32 Meaning.......................................................................................................................................32 B Need for warehouse.................................................................................................................32 C Types of warehouse..................................................................................................................35 2.25 Packaging.................................................................................................................................37 2.26 Process of Supply Chain Management.....................................................................................38 2.27 Supply Chain Now...................................................................................................................40 2.28 Logistics v/s. Supply Chain Management.................................................................................41

3 Mahindra & Mahindra Limited...................................................................43 3.1 History .......................................................................................................................................45 3.3 SAP SUPPLY CHAIN MANAGEMENT...........................................................................................46 PLANNING, EXECUTION, AND COLLABORATION ACROSS THE RESPONSIVE SUPPLY NETWORK.. .46 3.4 Key Execution Benefits of SAP Supply Chain Management With SAP SCM, you benefit from:................................................................................................................................................46 3.5 SAP Supply Network Collaboration, included in SAP SCM, helps you connect to and collaborate with:.................................................................................................................................................47 3.6 Key Collaboration Benefits of SAP Supply Chain ManagementWith SAP SCM, you can gain these benefits:.................................................................................................................................47 3.7 Logistics Service Provider (LSP)..................................................................................................48 Practice Overview | Service Offerings | OTM | Customer Speak/Credentials.................................48 3.8 About Supply Chain Management at Mahindra ........................................................................51 3.9 SUPPLY CHAIN MANAGEMENT OF MAHINDRA & MAHINDRA: .................................................52 3.10 About Mahindra People Transport Solutions ..........................................................................53

3

3.11 Mahindra Logistics to Go Global, Looks For Partner in China Posted by Jayashankar Menon 4 months ago......................................................................................................................................54 3.11 Supply Chain Solutions.............................................................................................................55 3.12 People Logistics Solutions........................................................................................................55 3.13 Manufacturing & Supply Chain Management .........................................................................55 3.14 Compliant Supply Chain...........................................................................................................56 3.15 BPO Services............................................................................................................................57 3.16 Logistics and supply chain strategy..........................................................................................58

INTERVIEW....................................................................................................59 CUNCLUSION.................................................................................................62 REFERANCE...................................................................................................63

4

LOGISTIC AND SUPPLY CHAIN MANAGEMENT 1. INTRODUCTION The word "logistics" has many applications however only one intrinsic meaning. The word itself is a plural noun that can be treated as both singular and plural. The Oxford English Dictionary defines logistics as "the detailed organization and implementation of a complex operation". From this one definition two individual meanings can be derived, the former of these two involves organization of the movement of equipment or people for a purpose. An example of this could be logistics within the army, where the logistics of moving troops needs to be addressed for an attack to be carried out effectively. The second is probably the more commonly used of the two meanings and it relates to the commercial activity of transporting goods to customers. UPS (United Parcel Service) who are one of the world's largest packaging and Logistics Company have recently had an advertising campaign based around the slogan "We? Logistics."Many of their adverts show different parts of their shipping and distribution lines, demonstrating the wide variety of things that the term "logistics" can refer to. Ranging from packing in a factory to shipping on container ships or cargo flights.

The word logistics has its origins in Greek, coming from the word "logistiki" to mean financial organisation or accounting. It was originally used to mean military movement, and there was a position in the Roman, Greek and Byzantine armies with the title of Logistikas who had the role of organising financial matters in the army and distributing supplies. Later the term became used for the movement of raw materials.

1.1 MEANING Logistics is the process of planning, implementing and controlling the efficient, costeffective flow and storage of raw materials, in- process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements The mission of logistics is to get the right goods or services to the right place, at the right time, and in the desired condition and quantity in relation to customers order

5

Main logistics activities and decisions: 

cooperate with marketing to set customer service levels,



facility location decisions



transportation activities (eg. transportation mode selection, vehicle scheduling, carrier routing



),



inventory management (inventory short -term forecasting, planning and control,



cooperate with production to calculate EOQ, sequence and time production),



information collection and flows and order processing,



warehousing and materials handling,



packaging and packing,

1.2 Definition “ The process of planning, implementing and controlling the efficient, effective flow and strong of goods, service, and related information from point of origin to point of consumption for the purpose of conforming to consumption to customer requirements.”

1.3 Business logistics A logistics provider's warehouse of goods being stacked on pallets with a forklift.

Logistics as a business concept evolved in the 1950s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for experts called supply chain logisticians. Business logistics can be defined as "having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer", and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see supply chain management). The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities.

6

1.4 Production logistics The term production logistics is used to describe logistic processes within an industry.

The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right time. The concern is not the transportation itself, but to streamline and control the flow through value-adding processes and eliminate non–value-adding ones. Production logistics can be applied to existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.

1.5 Logistics Management Logistics is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer and legal requirements. A professional working in the field of logistics management is called a logistician.

Logistics management is known by many names, the most common are as follows: •

Materials Management

•

Channel Management

•

Distribution (or Physical Distribution)

•

Business or Logistics Management or

•

Supply Chain Management

The Chartered Institute of Logistics & Transport (CILT) was established in the United Kingdom in 1919 and was granted a Royal Charter in 1926. The Chartered Institute is one of the professional bodies or institutions, for the logistics and transport sectors, that offers professional qualifications or degrees in logistics management.

7

1.6 Importance of logistic The importance of logistics systems lies in the fact that it leads to ultimate consummation of the sales contract. The buyer is not interested in the promises of the seller that he can supply goods at competitive price but that he actually does so. Delivery according to the contract is essential to fulfilling the commercial and legal requirements. In the event of failure to comply with the stipulated supply of period, the seller may not only get his sale amount back, but may also be legally penalized, if the sales contract so specifies. There is no doubt that better delivery schedule is a good promotional strategy when buyers are reluctant to invest in warehousing and keeping higher level of inventories. Similarly, better and/or timely delivery helps in getting repeat orders through creation of goodwill for the supplier.

Thus, as effective logistics system contributes immensely to the achievements of the business and marketing objectives of a firm. It creates time and place utilities in the products and thereby helps in maximizing the value satisfaction to consumers. By ensuring quick deliveries in minimum time and cost, it relieves the customers of holding excess inventories.

It also brings down the cost of carrying inventory, material handling, transportation and other related

activities

of

distribution.

In

nutshell,

an

efficient

system

of

physical

distribution/logistics has a great potential for improving customer service and reducing costs.

Logistics has gained importance due to the following trends • Raise in transportation cost.

• Production efficiency is reaching a peak • Fundamental change in inventory philosophy • Product line proliferated • Computer technology • Increased use or computers • Increased public concern of products Growth of several new, large retail chains or mass merchandise with large demands & very sophisticated logistics services, by pass traditional channel & distribution.

• Reduction in economic regulation • Growing power of retailers • Globalization 8

As a result of these developments, the decision maker has a number of choices to work out the most ideal marketing logistics system. Essentially, this system implies that people at all levels of management think and act in terms of integrated capabilities and adoption of a total approach to achieve pre-determined logistics objectives.

Logistics is also important on the global scale. Efficient logistics systems throughout the world economy are a basis for trade and a high standard of living for all of us. Lands, as well as the people who occupy them, are not equally productive. That is, one region often has an advantage over all others in some production specialty. An efficient logistics system allows a geographical region to exploit its inherent advantage by specializing its productive efforts in those products in which it has been an advantage by specializing its productive to other regions. The system allows the products’ landed cost (production plus logistics cost) and quality to be competitive with those form any other region. Common examples of this specialization have been Japan’s electronics industry, the agricultural, computer and aircrafts industries of United States and various countries dominance in supplying raw materials such as oil, gold, bauxite, and chromium.

1.7 Third-party logistics (3PL)   Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself.[4] According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in-house. If, for example, a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries.

1.8 Fourth-party logistics (4PL) The concept of Fourth-Party Logistics (4PL) provider was first defined by Andersen Consulting (Now Accenture) as an integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third party logistics (3PL) service provider targets a function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor who manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer.

9

INTRODUCTION TO SUPPLY CHAIN MANAGEMENT 2 MEANING A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm. Below is an example of a very simple supply chain for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately, customers. Realistic supply chains have multiple end products with shared components, facilities and capacities.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns.

2.1 Definition Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

10

2.2 Elements of the Supply Chain A simple supply chain is made up of several elements that are linked by the movement of products along it. The supply chain starts and ends with the customer.

1. Customer: The customer starts the chain of events when they decide to purchase a product that has been offered for sale by a company. The customer contacts the sales department of the company, which enters the sales order for a specific quantity to be delivered on a specific date. If the product has to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production facility.

2. Planning: The requirement triggered by the customer’s sales order will be combined with other orders. The planning department will create a production plan to produce the products to fulfill the customer’s orders. To manufacture the products the company will then have to purchase the raw materials needed.

3. Purchasing: The purchasing department receives a list of raw materials and services required by the production department to complete the customer’s orders. The purchasing department sends purchase orders to selected suppliers to deliver the necessary raw materials to the manufacturing site on the required date.

4. Inventory: The raw materials are received from the suppliers, checked for quality and accuracy and moved into the warehouse. The supplier will then send an invoice to the company for the items they delivered. The raw materials are stored until they are required by the production department.

5. Production: Based on a production plan, the raw materials are moved inventory to the production area. The finished products ordered by the customer are manufactured using the raw materials purchased from suppliers. After the items have been completed and tested, they are stored back in the warehouse prior to delivery to the customer.

6. Transportation: When the finished product arrives in the warehouse, the shipping department determines the most efficient method to ship the products so that they are delivered on or before the date specified by the customer. When the goods are received by the customer, the company will send an invoice for the delivered products.

11

2.3 Supply Chain Management Technology If a company expects to achieve benefits from their supply chain management process, they will require some level of investment in technology. The backbone for many large companies has been the vastly expensive Enterprise Resource Planning (ERP) suites, such as SAP and Oracle. These enterprise software implementations will encompass a company’s entire supply chain, from purchasing of raw materials to warranty service of items sold. The complexity of these applications does require a significant cost, not only a monetary cost, but the time and resources required to successfully implement an enterprise wide solution. Buy-in by senior management and adequate training of personnel is key to the success of the implementation. There are now many ERP solutions to choose from and it is important to select one which fits the overall needs of a company’s supply chain.

2.4 Importance of supply chain management Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy. In Peter Ducker’s (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies.

During the past decades, globalization, outsourcing and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities (Scott, 1993). This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories (Powell, 1990). It is not clear what kind of performance impacts different supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms. Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players. Therefore, the choice of an internal management control structure is known to impact local firm performance.

12

In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors were identified, complementing the earlier "Just-InTime", "Lean Manufacturing" and "Agile Manufacturing" practices. Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination among the members of the supply chain network.

Many researchers have recognized these kinds of supply network structures as a new organization form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation", “Global Production Network", and "Next Generation Manufacturing System�.

In general, such a structure can be defined as "a group of semi-independent organizations, each with their capabilities, which collaborate in ever-changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration"

2.5 Components of supply chain management?

Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM. 1. Plan: -this is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

2. Source: - next, companies must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And then, SCM managers can put together processes for Managing their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments.

3. Make: - this is the manufacturing step. Supply chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery. This is the most

13

metric-intensive portion of the supply chain—one where companies are able to measure quality levels, production output and worker productivity.

2.6 Supply chain business process integration Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. An example scenario: the purchasing department places orders as requirements become known. The marketing department, responding to customer demand, communicates with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information shared between supply chain partners can only be fully leveraged through process integration.

Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information. According to Lambert and Cooper (2000), operating an integrated supply chain requires a continuous information flow. However, in many companies, management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The key supply chain processes stated by Lambert (2004) are: •

Customer relationship management

•

Customer service management

•

Demand management style

•

Order fulfillment

•

Manufacturing flow management

•

Supplier relationship management

•

Product development and commercialization

•

Returns management

2.7 Tax efficient supply chain management Tax Efficient Supply Chain Management is a business model which considers the effect of Tax in design and implementation of supply chain management. As the consequence of Globalization, business which is cross-nation should pay different tax rates in different countries. Due to the differences, global players have the opportunity to calculate and optimize supply chain based on tax efficiency legally. It is used as a method of gaining more profit for company which owns global supply chain.

14

2.8 Supply chain sustainability Supply chain sustainability is a business issue affecting an organization’s supply chain or logistics network and is frequently quantified by comparison with SECH ratings.

SECH ratings are defined as social, ethical, cultural and health footprints. Consumers have become more aware of the environmental impact of their purchases and companies’ SECH ratings and, along with non-governmental organizations(NGOs), are setting the agenda for transitions to organically-grown foods, anti-sweatshop labor codes and locally-produced goods that support independent and small businesses. Because supply chains frequently account for over 75% of a company’s carbon footprint many organizations are exploring how they can reduce this and thus improve their SECH rating.

For example, in July, 2009 the U.S. based Wal-Mart corporation announced its intentions to create a global sustainability index that would rate products according to the environmental and social impact made while the products were manufactured and distributed. The sustainability rating index is intended to create environmental accountability in Wal-Mart's supply chain, and provide the motivation and infrastructure for other retail industry companies to do the same.

More recently, the US Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama in July 2010 contained a supply chain sustainability provision in the form of the Conflict Minerals law. This law requires SEC-regulated companies to conduct third party audits of the company supply chains, determine whether any tin, tantalum, tungsten or gold (together referred to as "conflict minerals") is made of up ore mined/sourced from the Democratic Republic of the Congo(DRC), and create a report (available to the general public and SEC) detailing the supply chain due diligence efforts undertaken and the results of the audit. Of course, the chain of suppliers/vendors to these reporting companies will be expected to provide appropriate supporting information.

2.9 Components of supply chain management The SCM components are the third element of the four-square circulation framework.

The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of components added to the link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more management components or 15

increasing the level of each component can increase the level of integration of the business process link.

The literature on business process re-engineering, buyer-supplier relationships, and SCM suggests various possible components that must receive managerial attention when managing supply relationships. Lambert and Cooper (2000) identified the following components: •

Planning and control

•

Work structure

•

Organization structure

•

Product flow facility structure

•

Information flow facility structure

•

Management methods

•

Power and leadership structure

•

Risk and reward structure

•

Culture and attitude

2.10 Problem addressed by supply chain management Supply chain management must address the following problems: 1. Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.

2. Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL).

16

3. Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. This trade-offs are key to developing the most efficient and effective Logistics and SCM strategy.

4. Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.

5. Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.

6. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain. Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain.

The flow is bi-directional One could suggest other key critical supply business processes which combine these processes stated by Lambert such as: •

Customer service management

•

Procurement

•

Product development and commercialization

•

Manufacturing flow management/support

•

Physical distribution

•

Outsourcing/partnerships

•

Performance measurement

•

Warehousing management

17

1.11 Supply Chain Decisions We classify the decisions for supply chain management into two broad categories -strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy (they sometimes {\it are} the corporate strategy), and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain.

There are four major decision areas in supply chain management: 1) Location, 2) Production, 3) Inventory, and 4) Transportation (distribution) and there are both strategic and operational elements in each of these decision areas.

1.

Production Decisions The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends the degree of vertical integration within the firm.

Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

2.

Inventory Decisions.

These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw materials, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of 18

inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels 3.

Transportation Decisions The mode choice aspect of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm's transport strategy.

2.12 Internal and external measurement According to experts, internal measures are generally collected and analyzed by the firm including •

Cost

•

Customer Service

•

Productivity measures

•

Asset measurement, and

•

Quality.

External performance measurement is examined through customer perception measures and "best practice" benchmarking, and includes 1) customer perception measurement, and 2) best practice benchmarking.

19

2.13 Historical developments in supply chain management Six major movements can be observed in the evolution of supply chain management studies: Creation, Integration, and Globalization, Specialization Phases One and Two, and SCM 2.0.

1. Creation era The term supply chain management was first coined by a U.S. industry consultant in the early 1980s. However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line. The characteristics of this era of supply chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to the Japanese practice of management.

2. Integration era This era of supply chain management studies was highlighted with the development of Electronic Data Interchange (EDI) systems in the 1960s and developed through the 1990s by the introduction of Enterprise Resource Planning (ERP) systems. This era has continued to develop into the 21st century with the expansion of internet-based collaborative systems. This era of supply chain evolution is characterized by both increasing value-adding and cost reductions through integration.

In fact a supply chain can be classified as a Stage 1, 2 or 3 network. In stage 1 type supply chain, various systems such as Make, Storage, Distribution, Material control, etc. are not linked and are independent of each other. In a stage 2 supply chain, these are integrated under one plan and are ERP enabled. A stage 3 supply chain is one in which vertical integration with the suppliers in upstream direction and a customer in downstream direction is achieved. An example of this kind of supply chain is Tesco.

3. Globalization era The third movement of supply chain management development, the globalization era, can be characterized by the attention given to global systems of supplier relationships and the expansion of supply chains over national boundaries and into other continents. Although the use of global sources in the supply chain of organizations can be traced back several decades (e.g., in the oil industry), it was not until the late 1980s that a considerable number of organizations started to integrate global sources into their core business.

20

4. Specialization era: outsourced manufacturing and distribution In the 1990s, industries began to focus on “core competencies� and adopted a specialization model. Companies abandoned vertical integration, sold off non-core operations, and outsourced those functions to other companies. This changed management requirements by extending the supply chain well beyond company walls and distributing management across specialized supply chain partnerships.

This transition also re-focused the fundamental perspectives of each respective organization. OEMs became brand owners that needed deep visibility into their supply base. They had to control the entire supply chain from above instead of from within.

Contract manufacturers had to manage bills of material with different part numbering schemes from multiple OEMs and support customer requests for work -in-process visibility and vendor-managed inventory (VMI).

The specialization model creates manufacturing and distribution networks composed of multiple, individual supply chains specific to products, suppliers, and customers who work together to design, manufacture, distribute, market, sell, and service a product. The set of partners may change according to a given market, region, or channel, resulting in a proliferation of trading partner environments, each with its own unique characteristics and demands.

5. Specialization era: supply chain management as a service Specialization within the supply chain began in the 1980s with the inception of transportation brokerages, warehouse management, and non-asset-based carriers and has matured beyond transportation and logistics into aspects of supply planning, collaboration, execution and performance management. At any given moment, market forces could demand changes from suppliers, logistics providers, locations and customers, and from any number of these specialized participants as components of supply chain networks. This variability has significant effects on the supply chain infrastructure, from the foundation layers of establishing and managing the electronic communication between the trading partners to more complex requirements including the configuration of the processes and work flows that are essential to the management of the network itself.

21

2.14 Key Issues in Supply Chain Management To ensure that the supply chain is operating as efficient as possible and generating the highest level of customer satisfaction at the lowest cost, companies have adopted Supply Chain Management processes and associated technology. Supply Chain Management has three levels of activities that different parts of the company will focus on: strategic; tactical; and operational.

1. Strategic level: At this level, company management will be looking to high level strategic decisions concerning the whole organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be manufactured and sales markets.

2.Tactical level: Tactical decisions focus on adopting measures that will produce cost benefits such as using industry best practices, developing a purchasing strategy with favored suppliers, working with logistics companies to develop cost effect transportation and developing warehouse strategies to reduce the cost of storing inventory.

3. Operational level: Decisions at this level are made each day in businesses that affect how the products move along the supply chain. Operational decisions involve making schedule changes to production, purchasing agreements with suppliers, taking orders from customers and moving products in the warehouse.

2.15 The key issues in contemporary supply chain management are: 1. Configuration of distribution network : This issue deals with the design of a distribution network to serve a specific market. This will consist of a set of warehouses and retail outlets, together with the manufacturing plant and supply sources. The design will be based on consideration of location and capacity of each of these elements. The total network cost will include the costs of inventory at various levels and costs of transportation between various facilities. This will also determine the level of service available to the customers.

2. Inventory control: This is concerned with the levels of inventory to be held at various points in the supply chain. As inventory represents costs, the sensible approach is to hold as low an inventory as possible but businesses are forced to hold inventories as a buffer 22

to counter the effects of an uncertain demand. How to minimise the uncertainty and therefore the necessity of holding unnecessary inventory which increases the cost at the end?? This is one of the key issues in supply chain management.

3. Distribution strategy: The distribution strategy is concerned with the distribution of the firm's products. There are several strategies available such as cross-docking, the classical distribution strategy or direct shipping. Which one is the best suitable for the firm to achieve its supply chain and corporate goals??

4. Supply chain integration and strategic partnering: This is concerned with the complex issue of strategic inter organisational partnership for achieving competitive advantage. This is about sharing of information and efficient use of the information for coordinating business processes to deliver a superior value to the customers. How to achieve this and what are the challenges? This is one of the emerging issues in supply chain management.

5. Product design: This is concerned with the design of the product and its impact on total cost of the product. How does the design of a product affect the various cost elements within the supply chain? It is possible that the design determines the strategies to be followed regarding inventory or transportation. The design may also determine the length of the product life cycle and the extent of uncertainty associated with demand for this product. How to leverage design to achieve supply chain management objectives.

6. Information technology and decision support systems: The enabling role of information and communication technologies has been identified. The concerns of contemporary supply chain management are the efficient use of modern technology including the Internet and computerized decision support systems. The technology allows acquisition of vast quantity of data, information and their subsequent processing in accordance with selected decision criteria. Will these technologies emerge as key determinants of success in the management of supply chains?

7. Customer value: The key issue is the definition of customer value in an age of increasing consumer power. How will supply chains will be designed to provide value to the customers and how will firms define value?

23

2.16 There are six key elements to a supply chain:

•

Production

•

Supply

•

Inventory

•

Location

•

Transportation, and

•

Information

The following describes each of the elements: 1. Production Strategic decisions regarding production focus on what customers want and the market demands. This first stage in developing supply chain agility takes into consideration what and how many products to produce, and what, if any, parts or components should be produced at which plants or outsourced to capable suppliers. These strategic decisions regarding production must also focus on capacity, quality and volume of goods, keeping 24

in mind that customer demand and satisfaction must be met. Operational decisions, on the other hand, focus on scheduling workloads, maintenance of equipment and meeting immediate client/market demands. Quality control and workload balancing are issues which need to be considered when making these decisions.

2. Supply Next, an organization must determine what their facility or facilities are able to produce, both economically and efficiently, while keeping the quality high. But most companies cannot provide excellent performance with the manufacture of all components.

Outsourcing is an excellent alternative to be considered for those products and components that cannot be produced effectively by an organization’s facilities.

Companies must carefully select suppliers for raw materials. When choosing a supplier, focus should be on developing velocity, quality and flexibility while at the same time reducing costs or maintaining low cost levels. In short, strategic decisions should be made to determine the core capabilities of a facility and outsourcing partnerships should grow from these decisions.

3. Inventory Further strategic decisions focus on inventory and how much product should be in-house.

A delicate balance exists between too much inventory, which can cost anywhere between 20 and 40 percent of their value, and not enough inventory to meet market demands. This is a critical issue in effective supply chain management. Operational inventory decisions revolved around optimal levels of stock at each location to ensure customer satisfaction as the market demands fluctuate. Control policies must be looked at to determine correct levels of supplies at order and reorder points. These levels are critical to the day to day operation of organizations and to keep customer satisfaction levels high.

4. Location Location decisions depend on market demands and determination of customer satisfaction. Strategic decisions must focus on the placement of production plants, distribution and stocking facilities, and placing them in prime locations to the market served. Once customer markets are determined, long-term commitment must be made to locate production and stocking facilities as close to the consumer as is practical. In industries where components are lightweight and market driven, facilities should be 25

located close to the end-user. In heavier industries, careful consideration must be made to determine where plants should be located so as to be close to the raw material source.

Decisions concerning location should also take into consideration tax and tariff issues, especially in inter-state and worldwide distribution.

5. Transportation Strategic transportation decisions are closely related to inventory decisions as well as meeting customer demands. Using air transport obviously gets the product out quicker and to the customer expediently, but the costs are high as opposed to shipping by boat or rail. Yet using sea or rail often times means having higher levels of inventory in-house to meet quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a product is encompassed by transportation, using the correct transport mode is a critical strategic decision. Above all, customer service levels must be met, and this often times determines the mode of transport used. Often times this may be an operational decision, but strategically, an organization must have transport modes in place to ensure a smooth distribution of goods.

6. Information Effective supply chain management requires obtaining information from the point of enduse, and linking information resources throughout the chain for speed of exchange.

Overwhelming paper flow and disparate computer systems are unacceptable in today's competitive world. Fostering innovation requires good organization of information.

Linking computers through networks and the internet, and streamlining the information flow, consolidates knowledge and facilitates velocity of products. Account management software, product configurators, enterprise resource planning systems, and global communications are key components of effective supply chain management strategy.

26

2.17 WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASIC COMPONENTOF SCM?

As per Supply-Chain Operations Reference-model (SCOR®) which has been developed by Supply-Chain Council. This model organized and focused on the five primary management •

PLAN

•

SOURCE

•

MAKE

•

DELIVER

•

RETURN

1. Plan: This is vital part of SCM philosophy, where the companies normally need to make strategy for managing all the resource that go towards fulfilling the customer demand for the product and services that they offers. A big piece of planning is developing a set of matrices to monitor the Supply chain so that it would be efficient, cost effective and deliver high quality and value to the customer.

2. Source: It means processes that procure goods and services to meet planned or actual demand. This part of SCM consists of selecting right suppliers that will deliver the good and services that need to create your product. Developing a set of pricing, delivery and payment process with supplier is important. Also this will also take care of managing the inventory of goods, and services you receive from your suppliers, including receiving shipping, verifying them, transferring them into various facilities and authorizing supplier payment.

27

3. Make: This is basically a step where your company starts fulfilling the request or BUILT for products into finished state to meet planned or actual demand. Schedule activity necessary for production, testing, packaging and preparation for delivery.

4. Deliver: This is also called Logistic Process. This is the processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management.

5. Return - This is real pain of SCM model, which defined as processes associated with returning or receiving returned products for any reason.

2.18 Reasons to Implement Supply Chain Management There are a few reasons which might convince you to implement the supply chain management. The first one indicates that a reduction of about 2.5% in the procurement costs can actually produce the same profit that is generated by a 10% sale.

Another reason is that in general, the companies that opt for this process make about 70% more profit than the ones that lack this mechanism.

The businesses that adopt the supply chain management could enjoy opportunities that give them about 40% return of investment if and only if they lower the costs and improve the productivity.

2.19 Implementing the Supply Chain Management Those who are interested in implementing the supply chain management should check “Build Supplier Metrics, Build Better Products�. The highest efficiency of this mechanism can be achieved only through the optimization of different business’s parts.

This has as main scope the acquirement of the right resources which are able to provide the true value to their customers. These organizations have to also apply the right formulas that can generate profits by reducing the costs of the raw materials and fabrication processes. The professionals who want to implement these methods have to firstly identify the critical areas and the type of actions that are required.

28

2.20 Elaborating Analysis

In order to identify the critical areas of a

business, the professionals have to

complete some techniques that are based on two different types of analysis. These are divided by the quantitative and qualitative studies. The qualitative analysis provides the right support to discover the critical points through a process that implies interviews and report reviews.

The quantitative analysis actually consists in data collection which is followed by a profound analysis. This analysis can help the implementer to produce related information that shows what type of action should be taken. The tools that are requested to implement the supply chain management usually depend on the circumstances that defer from one business to another.

29

2.21 The Complex Nature of Supply Chain Management Analysis In order to be able to apply the supply chain management, the implementer needs to understand the managerial analysis. This actually means that this analysis should be considered as a very complex process and not a simple sales or revenue report.Because the analysis shows a complex nature, the specialist has to present a vast experience within this field in order to perfectly manage all areas of the supply chain management applicability.This way, he or she has to have the right understanding with regard to purchases, sources, logistics, inventories, supervision, inventory controls, stock Management, receiving, distribution, transportation, packaging, warehousing, service development, and anything else in between.

2.22 Strategy and Analysis For sure, a good strategy for the supply chain management cannot be developed without the right analysis. You can learn how to complete a perfect analysis through trainings, which will not only help you to analyze the implementation of the system but also to develop and optimize it based on the modern requirements. Besides this, you have to make sure that all workers maintain a constant communication with regard to supply chain management and company’s objectives. But keep in mind that prior to and even after implementing the system, the most important element remains analysis. This is because it represents the only technique that can reveal through various mechanisms everything you need to know about your business efficient.

2.23 BENEFITS OF SUPPLY-CHAIN IMPROVEMENT

30

Improvement in supply-chain management is very significant in providing competitive advantages to the companies going for this. A recent survey in USA was conducted with sixty-five closely-associated engineers, project managers, director, and executives of firms dealing in supply-chain area (Savoie, 1998).

Their ranked-response regarding most important benefit of supply-chain improvement included: 1. reduce operating costs, 2. improve responsiveness and reduce cycle time, 3. improve customer service, 4. simplify operations, 5. improve quality, 6. support significant volume growth, 7. reduce improved return on capital, 31

8. effectively support a growing or diverse customer base, 9. effectively offer a greater variety of products, and 10. Focus on core competencies.

The benefits of supply-chain improvement can be harnessed by better integration of supply-chain in terms of information, material and money flows. Better coordination of different functions is possible through ERP implementation/SCM solution.

2.24 Warehouse in supply chain management Meaning We need different types of goods in our day-to-day life. We may buy some of these items in bulk and store them in our house. Similarly, businessmen also need a variety of goods for the year without any break. Take the example of a sugar factory. It needs sugarcane as raw material for production of sugar. You know that sugarcane is produced during a particular period of the year. Since sugar production takes place throughout the year, there is a need to supply sugarcane continuously. But how is it possible? Here storage of sugarcane in sufficient quantity is required. Again, after production of sugar it requires some time for sale or distribution. Thus, the need for storage arises both for raw material as well as finished products. Storage involves proper arrangement for preserving goods from the time of their production or purchase till the actual use. When this storage is done on a large scale and in a specified manner it is called ‘warehousing’. The place where goods are kept is called ‘warehouse’. The person in-charge of warehouse is called ‘warehouse-keeper’.

Warehousing refers to the activities involving storage of goods on a large-scale in a systematic and orderly manner and making them available conveniently when needed. In other words, warehousing means holding or preserving goods in huge quantities from the time of their purchase or production till their actual use or sale. Warehousing is one of the important auxiliaries to trade. It creates time utility by bridging the time gap between production and consumption of goods. Warehousing is necessary due the following reasons.

B Need for warehouse 1. Seasonal Production- You know that agricultural commodities are harvested during Certain seasons, but their consumption or use takes place throughout the year.

Therefore, there is a need for proper storage or warehousing for these commodities,

32

from where they can be supplied as and when required.

2. Seasonal Demand- There are certain goods, which are demanded seasonally, like Woolen garments in winters or umbrellas in the rainy season. The production of these Goods takes place throughout the year to meet the seasonal demand. So there is a Need to store these goods in a warehouse to make them available at the time of need. Takes place to meet the existing as well as future demand of the products.

Manufacturers Also produce goods in huge quantity to enjoy the benefits of largescale production, Which is more economical? So the finished products, which are produced on a large Scale, need to be stored properly till they are cleared by sales.

3. Quick Supply - Both industrial as well as agricultural goods are produced at some Specific places but consumed throughout the country. Therefore, it is essential to stock these goods near the place of consumption, so that without making any delay these Goods are made available to the consumers at the time of their need.

4. Continuous Production- Continuous production of goods in factories requires Adequate supply of raw materials. So there is a need to keep sufficient quantity of Stock of raw material in the warehouse to ensure continuous production.

5. Price Stabilization- To maintain a reasonable level of the price of the goods in the market there is a need to keep sufficient stock in the warehouses. Scarcity in supply of goods may increase their price in the market. Again, excess production and supply may also lead to fall in prices of the product. By maintaining a balance of supply of

33

goods, warehousing leads to price stabilization.

34

C Types of warehouse A. Private Warehouses - The warehouses which are owned and managed by the Manufacturers or traders to store, exclusively, their own stock of goods are known as Private warehouses. Generally these warehouses are constructed by the farmers near their fields, by wholesalers and retailers near their business centres and by manufacturers Near their factories. The design and the facilities provided therein are according to the Nature of products to be stored.

B. Public Warehouses - The warehouses which are run to store goods of the general public are known as public warehouses. Any one can store his goods in these warehouses on payment of rent. An individual, a partnership firm or a company may own these warehouses. To start such warehouses a licence from the government is required. The government also regulates the functions and operations of these warehouses. Mostly these warehouses are used by manufacturers, wholesalers, exporters, importers, government agencies, etc.

C. Government Warehouses -These warehouses are owned, managed and controlled by central or state governments or public corporations or local authorities. Both government and private enterprises may use these warehouses to store their goods.

Central Warehousing Corporation of India, State Warehousing Corporation and Food Corporation of India are examples of agencies maintaining government warehouses.

D. Bonded Warehouses - These warehouses are owned, managed and controlled by government as well as private agencies. Private bonded warehouses have to obtain licence from the government. Bonded warehouses are used to store imported goods for which import duty is yet to be paid. Incase of imported goods the importers are 35

not allowed to take away the goods from the ports till such duty is paid. These warehouses are generally owned by dock authorities and found near the ports.

E. Co-operative Warehouses - These warehouses are owned, managed and controlled by co-operative societies. They provide warehousing facilities at the most economical rates to the members of their society.

36

2.25 Packaging Packaging has a significant impact on the cost and productivity of logistics. Inventory control depends upon the accuracy of manual or automatic identification systems keyed by product packaging. Order selection speed, accuracy and efficiency are influenced by package identification, configuration, and handling ease. Handling efficiency is affected by package design, unitization capability and techniques, and communication or information transfer between channel partners. Transportation and storage costs are driven by package size and density. Customer service depends upon packaging to allow quality control during distribution to provide, customer education and convenience, and to comply with environmental regulations. Given the increasing length and complexity of global supply chains and the costs of locating new facilities, the concept of packaging postponement to achieve strategic flexibility is particularly important.

37

2.26 Process of Supply Chain Management a) Customer service management process

Customer Relationship Management concerns the relationship between the organization and its customers. Customer service is the source of customer information. It also provides the customer with real-time information on scheduling and product availability through interfaces with the company's production and distribution operations. Successful organizations use the following steps to build customer relationships: determine mutually satisfying goals for organization and customers establish and maintain customer rapport produce positive feelings in the organization and the customers b) Procurement process Strategic plans are drawn up with suppliers to support the manufacturing flow management process and the development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship where both parties benefit, and a reduction in time required for the design cycle and product development. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkage to convey possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs. c) Product development and commercialization Here, customers and suppliers must be integrated into the product development process in order to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched with ever shorter time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development and commercialization process must:coordinate with customer relationship management to identify customer-articulated needs;select materials and suppliers in conjunction with procurement, anddevelop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination. d) Manufacturing flow management process The manufacturing process produces and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow 38

process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand. Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations. e) Physical distribution This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g., links manufacturers, wholesalers, retailers). f) Outsourcing/partnerships This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage, and outsource everything else. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, managing and controlling this network of partners and suppliers requires a blend of both central and local involvement.

Hence, strategic decisions need to be taken centrally, with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level. g) Performance measurement Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. Taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer relationships can both be correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes more narrow. A.T. Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity.

39

2.27 Supply Chain Now  Faced with the challenge of increasing profits and cash flow, midsized companies need the ability to improve supply chain processes such as demand forecasting and supplies planning yet often don’t have the capacity or resources to implement and support a supply chain management solution in a traditional manner. JDA's Supply Chain Now™ is a fully maintained solution offering, delivered via the JDA Private Cloud. Supply Chain Now™ delivers a return on investment with reduced risk in as fast as four months.  JDA's solution combines unparalleled speed of deployment with the advanced capabilities that have made JDA a leading provider of supply chain management technology. Midsized companies using Supply Chain Now™ will be able to increase profits and achieve business objectives without burdening an already-taxed IT department with yet another initiative.  The expectations of customer for increased value addition, response time sensitivity, need for reliability, cost consciousness and information sensitivity.  The nature of competition favouring firms that have been in a position to decrease lead times as well as operational costs.  The recent revolution taken place in the field of information technology has enabled and encouraged the firms to initiate newer means in the field of distribution management.  Managers have realized and recognised the need for continuous improvement of process involved in marketing activity. The attitude of managers has changed in favour of integrating all activities in the chain from sourcing to consumption.  Perception of firms to have inventories has changed to JIT philosophy. While money locked up in inventories leads to poor use of working capital, higher inventories lead to higher lead times for procurement, manufacture and distribution.

40

2.28 Logistics v/s. Supply Chain Management  Logistics and Supply chain Management are two areas that are often felt that they could overlap. It is possible that different companies define them differently.

Logistics deals with strategy and coordination between marketing and production.  On the other hand supply chain management focuses more on purchasing and procurement. This is one of the main differences between logistics and supply chain management.  It is interesting to note that supply chain management can include factors relating to inventory, materials and production planning too in its concept. On the other hand logistics includes factors relating to demand management and forecasting in its concept. This is also an interesting difference between logistics and supply chain management.  Experts argue that logistics management is a part of the supply chain management that plans and implements the flow and storage of goods, services in order to meet the demands of the consumers. This is indeed an important study made by the experts.  On the other hand supply chain management encompasses the management of all activities involved in the procurement and conversion. In addition to these activities the supply chain management takes care of all the logistics management activities. It is important to note that supply chain management involves all movements and storage of raw materials.  In short it can be said that supply chain management takes care of the design, planning, execution, control, and monitoring of supply chain activities with the sole objective of creating net value and leveraging worldwide logistics.  On the other hand logistics can be simply defined as the management of the flow of goods and the services between the point of origin and the point of consumption in order to meet the requirements of customers. It is interesting to note that logistics is a business concept that was introduced for the first time in the year 1953. Business logistics is nothing but having the right item in the right quantity at the right time at the right place for the right price in right condition to the right customer.  It is also interesting to note that logistics management is known by many names such as materials management, channel management, distribution, business or logistics management, business or logistics management and supply chain management. This only shows that supply chain management can be called the subset of logistics but the converse is not true. There is a thin line of difference between the two.

41

42

3 Mahindra & Mahindra Limited

Type

: Public (BSE: 500520)

Industry

: Automotive

Founded

: 1945

Headquarters

: Mumbai, Maharashtra, India

Products

: Automobiles

Revenue

:

23,803.24 crore (US$4.52 billion) (2011).

:

2,871.49 crore (US$545.58 million)

Net income

( 2010).

Employees

: 119,900

Parent

: Mahindra Group

Website

: Mahindra.com

43

3 INTRODUCTIONS Mahindra & Mahindra Limited (BSE: 500520) is the flagship company of the Mahindra Group, a multinational conglomerate based in Mumbai, India. The company was set up in 1945 in Ludhiana as Mahindra & Mohammed by brothers K.C. Mahindra and J.C. Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was formed, Mohammed emigrated to Pakistan where he became the nation's first finance minister. The company changed its name to Mahindra & Mahindra in 1948.

Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59 billion Mahindra Group (F04 - US$ 1.96 billion, which has a significant presence in key sectors of the Indian economy. A consistently high performer, M&M is one of the most respected companies in the country.

Set up in 1945 to make general-purpose utility vehicles for the Indian market, M&M soon branched out into manufacturing agricultural tractors and light commercial vehicles (LCVs). The company later expanded its operations from automobiles and tractors to secure a significant presence in many more important sectors.

M&M has two main operating divisions - Automotive Division manufactures utility vehicles, light commercial vehicles and three wheelers. Tractor (Farm Equipment) Division makes agricultural tractors and implements that are used in conjunction with tractors, and has also ventured into manufacturing of industrial engines. Tractor Division has won the coveted Deming Application Prize 2003, making it the only tractor manufacturing company in the world to secure this prize. The Company has recently entered into a JV with Renaultof France for the manufacture of a mid-sized sedan, the Logan, and with International Truck & Engine Corporation, USA, for manufacture of trucks and buses in India.

44

3.1 History CEO OF MAHINDRA & MAHINDRA "We will be setting up three mega warehouses of 5,00,000 sq ft and another eight smaller ones of around 1,50,000-2,00,000sq ft," he said. The three mega warehouses will come up in North, South and West India. These will be leased out from developers who will build them according to the company's requirements, he added. On the revenue side, Sarkari said: "Last fiscal we crossed the Rs 1,000 crore marks and this year we are looking at a growth of 25 percent."

Out of the total, Rs 300 crore were from the people transport services provided to many BPOs, ITes and other corporate, he said, adding the rest Rs 700 crore were from the supply chain management vertical. Sarkari said the company has made investments of over Rs 10 crore in technology and "with a growing focus on transportation, warehousing and international logistics, we are set to become truly globally competitive".

Mahindra Logistics - a Mahindra group company is focused on offering end-to-end Supply Chain Solutions and people logistics Solutions. Mahindra Logistics supply chain solutions focus on key industry verticals including automotive, retail, telecom, pharmaceutical and express logistics. Mahindra Logistics is a market leader in People Logistics segment with dominance in the ITes and BPO industry.

Mahindra Logistics is a leading established player in the Indian logistics industry with over 200 major corporate clients. "We hold a strong presence in the automotive sector and are currently managing more than 35 automotive plants. Having a warehousing capacity of more than three million square feet, seconded by aggressive plans for expansion to meet growing customer needs, Mahindra Logistics will soon have a dominant presence in the warehousing segment", said the official.

"Our focus on select industry verticals ensures that we successfully partner with our customers and deliver value to them by offering customized integrated logistics solutions.

Our comprehensive and timely service support allows them to focus on their core business areas", said another official of the firm.

45

3.3 SAP SUPPLY CHAIN MANAGEMENT PLANNING, EXECUTION, AND COLLABORATION ACROSS THE RESPONSIVE SUPPLY NETWORK To meet the challenges of rapidly changing market dynamics, your company needs to synchronize all logistics, transportation, and fulfillment operations in a 24/7, alwayson, environment.

SAP SCM enables you to carry out supply chain planning and generate high efficiency at lowest possible cost. You can respond to demand through a responsive supply network in which distribution, transportation, and logistics are integrated into realtime planning processes. Features include: •

Order fulfillment

•

Procurement

•

Transportation

•

Warehousing

•

Real-world awareness

•

Manufacturing

3.4 Key Execution Benefits of SAP Supply Chain Management With SAP SCM, you benefit from: •Improved order, production, and execution tracking with RFID-enabled processes •Seamless integration and global visibility of different transportation process steps, and higher transparency •Improved warehouse efficiency and extend real-time visibility and control of warehouse operations •Reduced costs of goods sold throughout your company Read additional details about order-fulfillment, procurement, transportation, and warehousing activities.

Gets a complete view of supply chain planning capabilities with SAP SCM solution maps.

To meet pressure to reduce costs while increasing innovation challenges, you may do business in regions and countries where costs are lower, develop and maintain relationships 46

with global suppliers, or outsource nonstrategic activities to suppliers. To do so, you must foster collaborative relationships with suppliers, outsource manufacturers, and customers.

3.5 SAP Supply Network Collaboration, included in SAP SCM, helps you connect to and collaborate with: • Suppliers – Give them easy and seamless access to supply chain information to facilitate your ability to synchronize supply with demand.

• Customers – Provide broad capabilities for replenishment, including min/max-based vendor managed inventory (VMI) and for exclusion of promotions and transport load building.

• Contract manufacturers – Provide easy, seamless access to supply chain information by extending visibility and collaborative processes to their manufacturing processes.

3.6 Key Collaboration Benefits of SAP Supply Chain ManagementWith SAP SCM, you can gain these benefits: • Streamline collaboration with your suppliers, contract manufacturers, andcustomers • Significantly decrease procurement, sales, and inventory costs • Enhance supply chain visibility and increases overall speed, accuracy, and adaptability of your supply network • Reduce inventory levels while managing variations in supply and demand • Improve communications and reduces errors and processing costs Read more on the supply chain collaboration process support. For a more detailed overview, see the SAP SCM business maps.

47

3.7 Logistics Service Provider (LSP) Practice Overview | Service Offerings | OTM | Customer Speak/Credentials In the current dynamic and volatile global economy, the challenges faced by Logistics Service Providers (LSP) include changing supply chain structures, environmental concerns, increased focus on security compliance and government regulations, while shippers continue to expect significant cost reduction and improvement in service levels.

In essence, LSPs quest today, is to deliver varied services by moving up the value chain, complying with security regulations, imbibing various cultures and creating new footprints across the world. The LSP industry is addressing these challenges by introducing innovative strategies and creating new integrated services with global reach and enhancing the customer’s experience life cycle.

A. Practice Overview With in-depth experience that covers the entire LSP business cycle, Mahindra Satyam’s Logistics practice offers end-to-end solutions for LSPs. Our services span across enterprise solutions, supply chain management, customer relationship management, business intelligence, business process quality, engineering & product life cycle management, and infrastructure services. We have partnered with leading LSPs with operations in integrated services, lead logistics, 3PL, freight forwarding, trucking, LTL operations and railroads. We have been involved in implementing core industry solutions including transaction management

applications,

customer

solutions,

customer

on-boarding,

self-service

applications, portal, mobility and analytics solutions to help customers drive operational efficiency, deploy processes and integrated services for increasing the speed-to-market and integrated visibility.

The practice also has a strong relationship with its alliance partners and proven expertise in best-of-the-breed applications in the transportation and warehousing space.

Mahindra Satyam is the development partner for LSP process-integration packs for quote-tocash process across Oracle applications. While we leverage alliances with best-of-the-breed product vendors, we are also poised to provide customized IT solutions to the transportation and logistics industry.

48

B.

B. Service Offerings Mahindra Satyam is one of the first Indian companies to have an exclusive Logistics Practice. As a result, it has gained vast experience in logistics technology development and in leveraging technology for managed services in the Logistics sector. The service offerings cover areas such as Transport Management System (TMS), Warehouse Management system (WMS), back office, service parts logistics, visibility

solutions,

fleet

&

asset

management,

in

C. Oracle Transportation Management (OTM) A solution that enhances planning and optimization Mahindra Satyam: Partner for OTM development since 2003 Mahindra Satyam’s association with OTM dates back to 2003 when the solution was known as G-Log. Mahindra Satyam since then has worked with G-Log as a strategic partner in product development, custom enhancements, functional testing and regression testing. Our involvement in the

49

development gives an added advantage when we advise and implement solutions for customers.

Oracle Transportation Management Solution (OTM) enables organizations to meet their customer service and logistics objectives by managing all orders and shipments, both domestic and international, as a single, integrated global logistics business process across the multi-enterprise supply chain. OTM delivers robust transportation planning and execution capabilities to shippers and third party logistics providers. It integrates and streamlines transportation planning, execution, freight payment and business process automation on a single application across all modes of transportation; from full truckload to complex multi-leg air, ocean, and rail shipments OTM delivers the capabilities—such as tight integration, modular adoption regardless of the size or volume of customer business—that are required in an open, standards-based architecture that allows customers to start with a single component or a mix of components. It also provides the flexibility to grow easily, without installing or reinstalling added functionality. OTM can be used with an enterprise resource planning or legacy order management system, as well as any commercial best-of-breed or legacy warehouse management system

D. Customer Speak/Credentials joint know-how, proven business processes has resulted in a "next generation" supply chain management solution that will provide unparalleled cost effective business capabilities and benefits to our customers across multiple industries and marketplace�

Executive Chairman, A leading Asian 3PL

50

E. 3.8 About Supply Chain Management at Mahindra With a turnover in excess of a 1,000 crores last year, we are one of the largest integrated 3PL service providers in India today. Our supply chain activities span industries and verticals:

51

3.9 SUPPLY CHAIN MANAGEMENT OF MAHINDRA & MAHINDRA: Our focus has always been on providing end to end solutions. Our capabilities are a reflection of this focus.

Our capabilities span various logistics activities:

Allowing us to provide end-to-end solutions and continuously innovate improvements to our partner’s value chain:

52

Our extensive transportation and warehousing capabilities coupled with solutions customized to the need of our customers and industry verticals, allow us to continually add value.

3.10 About Mahindra People Transport Solutions Besides integrated supply chain management, Mahindra Logistics also provides people transport solutions to large organizations and corporates under our Mahindra People Transport Solutions division (a division of Mahindra Logistics). We are the country’s largest, corporate people transport solutions provider.

We provide end to end, integrated, technology enabled people transport solutions. We tailor our solutions to meet particular needs; different hybrids of the process defined hereunder are employed:

53

3.11 Mahindra Logistics to Go Global, Looks For Partner in China Posted

by Jayashankar Menon 4 months ago

Mahindra Logistics, the transportation and logistics arm of the Mahindra & Mahindra group says that it is scouting for a partner in China as it looks to expand its new foray into the international markets. The company, which clocked a turnover of Rs 1,000 crore last fiscal, is eyeing a growth of 25 percent this year, a PTI report said.

What is more, the logistics player is also contemplating on setting up eleven warehouses in North, South and West India in partnership with developers to enhance its supply chain management services ahead of the planned rolled out of Goods and Services Tax, said the report.

Pirojshaw Sarkari, the CEO of Mahindra Logistics told the agency: "We are looking at all the international markets for freight forwarding by both sea and air. The top two priority markets are the US and China". Considering the traffic between India and China, he said the company is 'looking for a partner in China to expand the freight business'. "As for the US market we are currently developing lane," he said, adding, the choosing a partner would come later.

It may be recalled that six months back, Mahindra Logistics had started its international vertical in sync with the global expansion of the M&M group and got into freight forwarding. On the domestic front, Sarkari said the company expects consolidation by many corporates in their logistics chain once GST is introduced in India and Mahindra Logistics would look to tap the opportunity by strengthening its warehousing facility.

54

3.11 Supply Chain Solutions Mahindra Logistics offers end-to-end supply chain solutions in key industry verticals of automotive, retail, telecom, pharma and express. After having developed expertise and proficiency in the automotive supply chain we have successfully diversified into other industries like organized retail, infrastructure logistics for telecom, specialized logistics requirements of Pharma and express industries.

3.12 People Logistics Solutions The genesis of People Logistics started with the movement of passengers in rural India in the year 2000, when fragmented and small service providers dominated the market.

Today Mahindra Logistics enjoys a leadership position in People Logistics Solutions with over 200 Corporate Clients, service delivery at more than 300 locations, fleet of over 15,000 vehicles, a wide range of customized offerings, and a highly experienced team, says its website.

Mahindra Logistics Products and Services are designed to support the complete customer value chain. "We leverage our infrastructure, networks, industry knowledge and experience to deliver integrated solutions for complex business needs. Our expert team works closely with you to understand your unique business flow, challenges and needs. Our experience in Logistics helps you get the most effective solution customized to give your business the cutting edge advantage", the official added.

3.13 Manufacturing & Supply Chain Management Mahindra Satyam’s manufacturing and Supply Chain Management (SCM) solution offerings allow our customers to benefit from IT-enabled services through the principles of Agility, Operational Excellence & Kaizen. Our rich SCM expertise provides solutions in Advanced Supply Chain Planning, Advanced Procurement and Sourcing Solutions, Order Management, Advanced Pricing Solutions, Mobile Supply Chain and Warehouse Management. All our Life Science Solutions & Consulting Services under Manufacturing & Supply Chain Management (SCM) directly integrate with other industry sub-groups ensuring that all solutions seamlessly interact with the client’s entire process flow.

55

3.14 Compliant Supply Chain • Serialization& Pedigree Mahindra Satyam’s Life Sciences Practice developed the ePedigree framework to avert the probable losses due to drug counterfeiting and create drug pedigree. This service offering addresses the mandatory FDA and PDMA compliance requirements as well as enable track and trace of Life Sciences products across supply chain.

• Recalls Recall Management is the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. From the business perspective, Recall Management has been built on top of Pedigree framework for effective recalls. The objective of this service offering is to plug recalls management into forward logistics and hence optimize recall success for compliance.

• Cold Chain Management Cold Chain Management is a service offering from Mahindra Satyam’s Life Sciences Practice. It helps customers control the temperature during transportation of pharmaceutical products, biological, and active ingredients. The offering: o Keeps the material in the designated temperature range o Complies with all regulations (GMP and non-GMP) o Minimizes costs o Increases efficiency • SC Strategy & Excellence Mahindra Satyam has acquired S&V Management Consultants who are competent in defining and executing the supply chain strategy and align the performance targets to the supply chain strategy.

56

3.15 BPO Services •

Strategic Procurement:Strategic procurement from Mahindra Satyam’s Life Sciences Practice helps customers save significant costs through advanced planning, scheduling, and group buying initiatives.

•

Supplier Collaboration Supplier Collaboration is becoming an important parameter in today’s rapidly changing environment to ensure smooth supply chain process. Mahindra Satyam has identified this opportunity and leveraged the Internet as a platform to provide buyer and supplier with a web-based collaborative tool which helps the Life Sciences customers with immediate real time access to supply side transactions and other relevant information.

•

Contract Management This service offering on Contract Management helps the Life Sciences customers systematically and efficiently manages contract creation, execution, and analysis to maximize financial and operational performance and minimizing risk.

•

Packaging Artwork and Design Mahindra Satyam delivers high-end BPO offering in Global Pack Management, tracking from artwork design to final printing. Supporting GPM work flow, business process and the entire lifecycle are handled by offshore team except final label printing. Customer benefits include substantial cost savings, complying with regulatory norms and providing multilingual support.

The Mahindra First Choice Services value proposition: Mahindra First Choice Services Limited (MFCSL) is a 100% subsidiary of Mahindra and Mahindra. MFCSL is a chain of Multi brand car workshops with presence in key cities. Our vision is to create a unique world class car service experience by offering the best care for your car, value for your money and time.The network of MFCSL workshops is undergoing a major expansion through both company owned and franchisee operated models.

57

3.16 Logistics and supply chain strategy.

Mahindra Satyam has been investing in building service offerings focused on the LSP vertical in the areas of service and geography expansion, LSP platforms, operational efficiency and customer experience lifecycle management. While technology is being seen as one of the key drivers for business growth at LSPs, Mahindra Satyam zeroes in on reducing time-to-market for the LSPs growth-oriented technology initiatives. A lot of LSP growth expectations come from service and geography expansion. LSPs often have used M&A as a means of expanding into new geographies or acquiring new services. Mahindra Satyam brings in speed-to-market on LSP initiatives on expanding into new supply chain and logistics services as well as integrating existing services or customizing them for specific industries. Another focus area is platform solutions, which is relevant for integrated services across geographies and for all customers. Platform solutions enable speed to market for newer geographies. For example, an LSP that intends to provide contract logistics solutions at emerging economies like Brazil or Russia needs the IT application that takes care of local regulations as well. While in some cases, the solution could be a COTS application, in some others it may need re-engineering of the legacy applications. Mahindra Satyam has experience with both the models since it has had the opportunity to work with several LSPs on developing and enhancing their transaction applications. Mahindra Satyam not only is the leader in Oracle Transportation Management implementations for LSPs, but also has deep experience with building groundup, re-engineering and customizing transaction management application.

Operational efficiency remains one of the key means of differentiation for leading LSPs. The objective is to reduce the lead time and associated cost by eliminating waste.

Mahindra Satyam has teams with experience in Theory of Constraints, Six-sigma and Lean techniques and how analytics can be leveraged for the same. Similarly customer solutions are a key focus area for the Mahindra Satyam Logistics practice. The customer experience begins with customer solutions or RFP stage and goes through on-boarding to ongoing relationship management and addition of value-added solutions. Mahindra Satyam assists in solutions that accelerate customer acquisition, on-board customer quickly and at lower costs, mine existing accounts better and create more customer value-adds.

58

INTERVIEW I have take interview Mr. Solemon. He is production manager of Mahindra & Mahindra (kandivali ) 1. How do you supply your products to the final consumer?

After the vehicle is ready, it will go to inspection, quality result is 100%. And then it is dispatched to the final consumer.

2. What is the supply chain of your company?

Dealers –individuals 3. Who are your distributers?

We don’t have distributers; we our self only distribute the products. We have entered into agreement with Lego distributers.

4. How many employees are involved in doing this operation?

5000 employees are involved in it. {in mumbai} 5. How many places you are distributing your products?

All over India, china, Russia we distribute our product.

6. Do you face any difficulties in doing this operation?

No not at all. Because we are having well-trained professional in each and every department.

7. Which type of transportation you take to transport your product to other places?

We transport our product by road transportation. But few parts come with air transport.

8. How many places your company has been situated?

Nasik, Delhi, Chennai, Kolkata, Nagpur, jaipur, Bangalore, pune, all over India our company has situated.

59

9. When your company was incorporated?

The company was incorporated & converted into public limited in 1955 at Mumbai.

10. In which other field your company is dealing in spite of automobiles?

We operate in the key industries that gives economic growth, enjoys a leadership position in utility vehicles, it industries, aerospace, aftermarket, consulting services, financial services, real estate, energy, telecommunication.

11. How much time is required for supplying the product to the retail showroom?

It’s depends on the customers demand, and availability of the products.

12. Do you set any target for supplying the product?

Yes of course we set target for supplying the product 13. How much target you set as per month?

Approximately 60000 vehicles per month.

14. Who is the in charge of supplying the product?

There are many in charge of many divisions. As not specific.

15. How you handle your customer’s demand?

We listen to our customers demand, suggestion, and complaints. As customer care number is provide to the customers. Its toll free and also its chargeable. And there are also many departments who solve the problems of customers.

16. How you fulfill your employees demand?

Unions & the management handle all the demand of the employees. Union are appointed internally. No outsiders are involved in it.

Union leader: Rajiv sahani {auto sector, kandivali branch}

60

17. You have signed any agreement with the union?

We have signed a wage agreement with our union at automotive plant in kandivali, evolving a Mahindra production system. This is an amalgamation of latest work measurement technique & Toyota.

61

CUNCLUSION Mahindra Company was delivered any product after vehicle is ready, it will go to inspection, and quality result is 100% And then it is dispatched to the final consumer. Mahindra Company is do supply chain in individual dealer.

They are don’t have any distributer they are our self is doing the product and they make agreement for the lego. They are use the software in supply chain is SAT. When they are face any of difficulty they are solve internally because they have well trained professional in each and every department.

62

REFERANCE •

Packaging:- Christopher. M. (1998). Logistics and supply chain management: Strategies for reducing cost and improving service. (2nd ed.)..

Last Update: 22 May 1995

•

Terry P. Harrison, hbx@psu.edu

Production planning, inventory management,

distrbution and transportation, mathematical programming.

•

BIBLOGRAPHY www.wikipidya.com www.logistic supply chain.com www.supplychain.com www.mahinda.com

63