A

PROJECT REPORT

ON

“EVALUATION OF SUPPLY CHAIN MANAGEMENT”

Submitted in the partial fulfillment for the degree of

Master of Business Administration

Under The Guidance Of: Submitted By:

Mr. NAVEEN ABHISHEK SINGH
MBA FACULTY Roll No: 8501
MBA 4th Sem.

Doon Valley Institute of Engineering & Technology(DIET)

Karnal-132001(HARYANA)
Approved by AICTE,Government of Haryana & Affiliated to K.U.Kurukshetra
[An ISO 9001:2000 Certified institute & institutional member of ISTE]
(Session 2008-10)

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 ACKNOWLEDGEMENT

“Knowledge is an experience gained in life, it is the choicest possession, which should

not be shelved but should be happily shared with others”. In this regard I am
extremely fortunate having Dr. Harish Abhichandani as the principal of Doon valley
institute of engineering & technology, Karnal

I am highly thankful to Mrs. Manisha Tanwar (HOD) Doon valley institute of

engineering & technology, Karnal. He has been a consent source of inspiration and
his critical evaluation our course in the institute has helped me to complete this
project properly.

I wish to express my profound gratitude to my project guide Mr. Naveen (Faculty

Guide), for her consistence direction, guidance and supervision, which has led to
successful completion of project. It was pleasure to have you as my project guide.

Finally yet importantly, we would like to thank almighty for blessing me to do and
complete this project

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 PREFACE

In today’s highly competitive, global marketplace the pressure on organizations to

find new ways to create and deliver value to customers grow ever stronger.
Gradually, in emerging economies as well as mature markets, the power of the
buyer has overtaken that of customer.
The rules are different in buyer market. In particular customer service becomes a
key differentiator as the sophistication and demands of customers continually
increase. At the same time, market maturity combined with new sources of global
competition has led to over-capacity in many industries leading to an inevitable
pressure on price. Price has always been a critical competitive variable in many
markets and the signs are that it will become even more of an issue as the
‘commoditization’ of markets continues.
A supply chain management is a network of facilities and distribution options that
performs that function of procurement of materials, transformation of these
material into intermediate and finished products, and the distribution of these
finished products to customer supply chain exist both in service and manufacturing
organizations, although the complexity of the chain may vary greatly from industry
to industry and firm to firm. Supply chain management is the process of planning,
implementing and controlling the operations of the supply chain as efficiently as
possible. Supply chain management spans all movement and storage of raw
materials, work in process inventory, and finished goods from point of origin to
point of consumption. The definition one American professional association put
forward is that supply chain management encompasses the planning and
management of all activities involved in sourcing, procurement, conversion and
logistics management activities. Objective of supply chain management is maximize
overall profit and make the supply chain management effective by manage product
information flow and fund flow. Currently there exists a gap in the literature
available in the area of supply chain management studies, on providing theoretical
support for explaining the existence and the boundaries of supply chain
management. Some authors such as halldorsson et al and lavassani et al had tried to

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provide theoretical foundations for different areas related to supply chain with
employing organizational theories like resource based view, transaction cost
analysis, knowledge based view, strategic choice theory, agency theory, institutional
theory, system theory etc. the literature on business process reengineering, buyer
supplier relationships and supply chain management suggests various possible
components that must receive managerial attention when managing supply
relationships. There are some components like planning and control, work
structure, product flow facility structure, management methods, risk and reward
structure etc. Classification of 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. On the other hand, operational
decisions are short term and focus on activities over a day to day basis. There are
four major decision areas in supply chain management that location, production,
inventory, distribution and there are both strategic and operational elements in each
of these decision areas. The models that describe decisions are huge and require a
considerable amt of data to facilitate a concise review of the literature and at the
same time attempting to accommodate the above polarity. In modeling we divide the
modeling approach into three areas like network design, ‘Rough Cut’ methods and
stimulation based methods. The six major movements can be observed in the
evolution of supply chain management studies creation integration and
globalization, specialisation1&2 and scm2.0. Study of supply chain management like
distribution network configuration, distribution strategy. Supply chain management
is a cross functional approach to manage the movement of raw materials into an
organization, certain aspects of the internal processing of material into finished
goods and then the movement of finished goods out of the organization towards the
end customer.

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 To Whomsoever It May Concern

Date:

This is to certify that the project report of MBA entitled’’ Evaluation of

Supply Chain Management” done by Mr. ABHISHEK SINGH .Roll No. 8501 is a
bonifide work carried out by me. The matter embodied in this project work has not
been submitted earlier .For award of any degree or diploma to the best of my
knowledge and belief.

Signature of the student

Name of the student: ABHISHEK SINGH

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 To Whomsoever It May Concern

Date:

This is to certify that the summer training of MBA entitled” Evaluation of

Supply Chain Management” done by Mr. ABHISHEK SINGH .Roll No. 8501 is a
bonifide work carried out by him under my guidance. The matter embodied in this
project work has not been submitted earlier for award of any degree or diploma to
the best of my knowledge and belief.

Faculty Guide
Name:-Mr. Naveen
Full Address:
Doon Valley Institute of engineering and technology
KARNAL-132001

TABLE OF CONTENTS

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 Certificates

Preface

Acknowledgement

CHAPTER-1 Introduction
1.1 About Supply Chain Management
1.2 Objective of Supply Chain Management
1.3 Advantages of Supply Chain Management
1.4 Disadvantages of Supply Chain Management
1.5 Trends in supply chain management
1.6 Theories of Supply Chain Management
1.7 Steps in Supply Chain Management
1.8 Components of Supply Chain Management Integration
1.9 Supply Chain Decision
1.10 Approaches and Methods
1.11 Developments in Supply Chain Management
1.12 Supply Chain Business Process Integration
1.13 Supply Chain Management Problem
1.14 Activities and Functions

CHAPTER-2 Research Objectives

CHAPTER-3 Research Methodology

CHAPTER-4 Results & Findings

CHAPTER-5 Conclusion

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CHAPTER-6 Recommendation

CHAPTER-7 Bibliography

CHAPTER-8 Appendix

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CHAPTER-1

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INTRODUCTION
1.1 SUPPLY CHAIN MANAGEMENT

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. 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.

Supply chain management (SCM) is the process of planning, implementing and

controlling the operations of the supply chain as efficiently as possible. Supply
Chain Management spans all movement and storage of raw materials, work-in-
process inventory, and finished goods from point-of-origin to point-of-consumption.
The definition one American professional association put forward is that Supply
Chain Management encompasses the planning and management of all activities
involved in sourcing, procurement, conversion, and logistics management activities.
Importantly, it also includes coordination and collaboration with channel partners,
which can be suppliers, intermediaries, third-party service providers, and
customers. In essence, Supply Chain Management integrates supply and demand
management within and across companies.

Supply Chain Management can also refer to Supply chain management software
which is tools or modules used in executing supply chain transactions, managing
supplier relationships and controlling associated business processes.

Organizations increasingly find that they must rely on effective supply chains, or
networks, to successfully compete in the global market and networked economy. In

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Peter Drucker's management's new 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. 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. It is not clear what kind of performance
impacts that 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. 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.

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. . Purchasing contracts are often negotiated
with very little information beyond historical buying patterns. The result of these
factors is that there is not a single, integrated plan for the organization-there was as
many plans as businesses. Clearly, there is a need for a mechanism through which
these different functions can be integrated together. Supply chain management is a
strategy through which such integration can be achieved.

1.2 Objective of Supply Chain Management

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Effective supply-chain management is a powerful tool for business transformation.
It can dramatically increase company’s profitability while simultaneously
improving customer service. While today competitive environments are forcing
businesses in this direction, the steps to take are often not evident Problems of
supply-chain management can be complex, and their solution requires special
knowledge and experience. Some of the major objectives of the supply chain
management are as follows:

 To increase sales volume

 To counter a competitor’s sales promotion device
 To satisfy customer
 To maximize overall profit
 To assist salesman in selling
 To increase goodwill
 To contribute to continuous growth of enterprise
 Division of specialists
 Creation of demand
 Regular and timely contacts with customer

These all are the main objectives of the supply chain management. A integrated
supply chain management helps in achieving all the objectives perfectly. The
intensive level of competitive activity encountered in most markets has led to a new
emphasis on measuring performance not just in absolute terms, but rather in terms
relative to the competition, and beyond that to ‘best-practice

1.3 Advantages of Supply Chain Management

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 Corbett, Blackburn and Van Wassenhove (1999) show that successful business
partnerships yield a number of major benefits.
- Increased market share,
- Inventory reductions throughout the supply chain,
- Improved delivery service,
- Improved quality, and;
- Shorter product development cycles.
 Leverick and Cooper (1998) argue that greater competitive advantage can be
gained through effective supply chain management.
 Walters (2002) indicates that supply chain management can lead to:
- Complementary goals/ objectives between supply chain members.
- Greater coordination between supply chain members, enabling such
management philosophies as JIT to have a more beneficial affect.
- Greater cost management effectiveness through negotiating prices
more closely between supply chain partners as well as arranging more
effective purchasing arrangements.
 Leverick et al (1998) argue that effective supply chain management reduces risk.
By operating in a supply chain, risk is spread throughout the supply chain by
negotiating better inventory management between partners (reducing the risk of
obsolescence), by negotiating payment arrangements (so that cash can be
counted on within a certain timeframe) and even by collectively investing in
large projects.

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1.4 Disadvantages of Supply Chain Management

 Fuller et al (1993) argue that supply chain management is too internally

focussed. They believe “we should look beyond our own internal process and see
the total value chain…consumers will not pay for our sloppiness”. The whole
notion of supply chain management has evolved as a better way to manage inter-
firm processes, with a focus on reducing time to delivery, costs, and improving
‘quality’. This approach has not necessarily delivered the maximum value for
supply chain members because customer needs are traditionally ignored in
favour of achieving some cost target assigned by ignorant management. When
value shifts occur, supply chain members often are unaware of it for far too long
due to their inward focus. This can lead to grave consequences.
 This internal focus leads to many problems, including:
- Rigidity of direction and organisation. A definite direction assigned by
supply chain members leads to solid structures within the supply chain. This
is disastrous in turbulent markets where practices such as JIT are
inappropriate.
- Ignorance of other stakeholders’ needs. Focussing on suppliers and
customers only is not contributory to improving stakeholder value unless
stakeholder value has common criteria. In other words, if every stakeholder
has the exact same requirements, then the supply chain will flourish and
work like a well-oiled machine. In reality, this is very rarely the case.
- A ‘last year plus 10 percent’ mentality. Organisations running under
a supply chain arrangement will usually not be hugely innovative or look for
new and exciting ways to gain profitability in the long-term. They tend to
focus their attention on developing better ways to improve operational
efficiency in the current operating environment.
 Kumar (1996) shows trust to be an essential aspect of operating within a supply
chain framework. Trust is not the easiest thing to come by, especially in tense
business relationships where each company is trying to get ahead, sometimes at
the expense of supply chain partners.

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 Kumar (1996) also shows that power relationships within supply chains lead to
the supply chain becoming ineffective. “Although exploiting power may be
advantageous in the short-run, it tends to be self-defeating in the long-run”.

1.5 Trends in Supply Chain Management

Hutt and Speh (1998) illustrate a number of trends that they have identified, in
supply chain management.
 Longer term and closer relationships with fewer suppliers (for example, over the
past decade, the number of suppliers utilised by Motorola, Chrysler, and Ford
have been reduced by 60% or more).
 Closer interactions among multiple functions - manufacturing, engineering, and
logistics as well as sales and purchasing - on both the buying and selling sides
(for example, through computer links with its suppliers, Motorola can change
specifications and delivery schedules).
 Supplier proximity to allow just-in-time delivery and to facilitate closer working
relationships targeted at improving product and service quality along the supply
chain (for example, Johnson Controls, a producer of auto seats and trim,
operates ten plants near its major customers, which include Ford, Toyota, and
General Motors).
 The increasing influence of Information Technology has led to increasing ability
to manage relationships and knowledge in real-time. This trend is set to continue
with improvements in technology and technology management.

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1.6 Theories of Supply Chain Management

Currently there exists a gap in the literature available in the area of supply chain
management studies, on providing theoretical support for explaining the existence
and the boundaries of supply chain management. Few authors such as Halldorsson,
et al. (2003), Ketchen and Hult (2006) and Lavassani, et al. (2008) had tried to
provide theoretical foundations for different areas related to supply chain with
employing organizational theories. These theories includes:

 Resource-based view (RBV)

 Transaction Cost Analysis (TCA)
 Knowledge-based view (KBV)
 Strategic Choice Theory (SCT)
 Agency theory (AT)
 Institutional theory (InT)
 Systems Theory (ST)
 Network Perspective (NP)

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 1.7 STEPS IN SUPPLY CHAIN MANAGEMENT

The steps involved

• Step 1- designing the supply chain

↓
• Step 2-Optimizing the supply chain

↓
• Step 3- Material flow planning
↓
• Step 4- Transaction processing and short term scheduling
• Step 1- designing the supply chain
o Determine the supply chain network
o Identify the levels of service required

• Step 2-Optimizing the supply chain

o Customer markets to distribution centers
o Determine the pathways from supplier to end customer
o Distribution centers to production plants
o Raw material sources to production plants
o Identify constraints at vendors, plants and distribution centers
o Get the big picture
o Plan the procurement, production and distribution of product
groups rather than individual products in large time periods –
quarter or years

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 • Step 3- Material flow planning
o Determine the exact flow and timing of materials
o Arrive at decisions by working back from the projected demand
through the supply chain to raw material resources
o Techniques-ERP (Enterprise resource panning)

• Step 4- Transaction processing and short term scheduling

o Customer order arrive at random
o This is a day to day accounting system which tracks and
schedules every order to meet customer demand
o Order entry, order fulfillment and physical replenishment

1.8 Components of Supply Chain Management Integration

The management components of SCM

The literature on business process reengineering, 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 which are:

• 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

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A primary level channel participant is a business that is willing to participate in the
inventory ownership responsibility or assume other aspects of financial risk, thus
including primary level components. A secondary level participant (specialized) is a
business that participates in channel relationships by performing essential services
for primary participants, thus including secondary level components, which are in
support of primary participants. Third level channel participants and components
that will support the primary level channel participants, and which are the
fundamental branches of the secondary level components, may also be included.

1) For customer service management: Includes the primary level component of

customer relationship management, and secondary level components such as
benchmarking and order fulfillment.

2)For product development and commercialization: Includes the primary level

component of Product Data Management (PDM), and secondary level
components such as market share, customer satisfaction, profit margins, and
returns to stakeholders.

3)For physical distribution, manufacturing support and procurement: Includes

the primary level component of enterprise resource planning (ERP), with
secondary level components such as warehouse management, material
management, manufacturing planning, personnel management, and
postponement (order management).

4)For performance measurement: Includes the primary level component of

logistics performance measurement, which is correlated with the information
flow facility structure within the organization. Secondary level components may
include four types of measurement such as: variation, direction, decision and
policy measurements. More specifically, in accordance with these secondary level
components, total cost analysis (TCA), customer profitability analysis (CPA),
and asset management could be concerned as well.

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 5)For outsourcing: Includes the primary level component of management
methods, and the strategic objectives for particular initiatives in key areas of
information technology, operations, manufacturing capabilities, and logistics
(secondary level component

1.9 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, 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 types 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

4) Transportation (distribution),

And there are both strategic and operational elements in each of these decision
areas.

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1) Location Decisions

The geographic placement of production facilities, stocking points, and sourcing

points is the natural first step in creating a supply chain. The location of facilities
involves a commitment of resources to a long-term plan. Once the size, number, and
location of these are determined, so are the possible paths by which the product
flows through to the final customer. These decisions are of great significance to a
firm since they represent the basic strategy for accessing customer markets, and will
have a considerable impact on revenue, cost, and level of service. These decisions
should be determined by an optimization routine that considers production costs,
taxes, duties and duty drawback, tariffs, local content, distribution costs, production
limitations, etc. Although location decisions are primarily strategic, they also have
implications on an operational level.

2) Production Decisions
The strategic decisions include what products to produce, and which plants to
produce them in, allocation of suppliers to plants, plants to Distribution Channel'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.

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3) 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
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

4) 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, routing and
scheduling of equipment are key in effective management of the firm's transport

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1.10 APPROACHES AND METHODS

Supply Chain Modeling Approaches

Clearly, each of the above two levels of decisions require a different perspective. The
strategic decisions are, for the most part, global or "all encompassing" in that they
try to integrate various aspects of the supply chain. Consequently, the models that
describe these decisions are huge, and require a considerable amount of data. Often
due to the enormity of data requirements, and the broad scope of decisions, these
models provide approximate solutions to the decisions they describe. The
operational decisions, meanwhile, address the day to day operation of the supply
chain. Therefore the models that describe them are often very specific in nature.
Due to their narrow perspective, these models often consider great detail and
provide very good, if not optimal, solutions to the operational decisions.

To facilitate a concise review of the literature, and at the same time attempting to
accommodate the above polarity in modeling, we divide the modeling approaches
into three areas --- Network Design, ``Rough Cut" methods, and simulation based
methods. The network design methods, for the most part, provide normative models
for the more strategic decisions. These models typically cover the four major
decision areas described earlier, and focus more on the design aspect of the supply
chain; the establishment of the network and the associated flows on them. "Rough
cut" methods, on the other hand, give guiding policies for the operational decisions.
These models typically assume a "single site" (i.e., ignore the network) and add
supply chain characteristics to it, such as explicitly considering the site's relation to
the others in the network. Simulation methods are a method by which a
comprehensive supply chain model can be analyzed, considering both strategic and
operational elements. However, as with all simulation models, one can only evaluate
the effectiveness of a pre-specified policy rather than develop new ones. It is the
traditional question of "What If?" versus "What's Best?”

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Network Design Methods
As the very name suggests, these methods determine the location of production,
stocking, and sourcing facilities, and paths the products take through them. Such
methods tend to be large scale, and used generally at the inception of the supply
chain. The earliest work in this area, although the term "supply chain" was not in
vogue, was by Geoffrion and Graves [1974]. They introduce a multicommodity
logistics network design model for optimizing annualized finished product flows
from plants to the DC's to the final customers.
Breitman and Lucas attempt to provide a framework for a comprehensive model of
a production-distribution system, "PLANETS", that is used to decide what products
to produce, where and how to produce it, which markets to pursue and what
resources to use. Parts of this ambitious project were successfully implemented at
General Motors.

Finally, Arntzen, Brown, Harrison, and Trafton provide the most comprehensive
deterministic model for supply chain management. The objective function
minimizes a combination of cost and time elements. Examples of cost elements
include purchasing, manufacturing, pipeline inventory, transportation costs
between various sites, duties, and taxes. Time elements include manufacturing lead
times and transit times. Unique to this model was the explicit consideration of duty
and their recovery as the product flowed through different countries.

Clearly, these network-design based methods add value to the firm in that they lay
down the manufacturing and distribution strategies far into the future. It is
imperative that firms at one time or another make such integrated decisions,
encompassing production, location, inventory, and transportation, and such models
are therefore indispensable. Although the above review shows considerable potential
for these models as strategic determinants in the future, they are not without their
shortcomings. Their very nature forces these problems to be of a very large scale.
They are often difficult to solve to optimality

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Rough Cut Methods

These models form the bulk of the supply chain literature, and typically deal with
the more operational or tactical decisions. Most of the integrative research (from a
supply chain context) in the literature seems to take on an inventory management
perspective. In
Fact, the term "Supply Chain" first appears in the literature as an inventory
management approach. The thrust of the rough cut models is the development of
inventory control policies, considering several levels or echelons together. These
models have come to be known as "multi-level" or "multi-echelon" inventory
control models.

Multi-echelon inventory theory has been very successfully used in industry. Cohen
et al. describe "OPTIMIZER", one of the most complex models to date --- to
manage IBM's spare parts inventory. They develop efficient algorithms and
sophisticated data structures to achieve large scale systems integration.

Although current research in multi-echelon based supply chain inventory problems

shows considerable promise in reducing inventories with increased customer
service, the studies have several notable limitations. First, these studies largely
ignore the production side of the supply chain. Their starting point in most cases is a
finished goods stockpile, and policies are given to manage these effectively. Since
production is a natural part of the supply chain, there seems to be a need with
models that include the production component in them. Second, even on the
distribution side, almost all published research assumes an arborescence structure,
i.e. each site receives re-supply from only one higher level site but can distribute to
several lower levels. Third, researchers have largely focused on the inventory system
only. In logistics-system theory, transportation and inventory are primary
components of the order fulfillment process in terms of cost and service levels.
Therefore, companies must consider important interrelationships among
transportation, inventory and customer service in determining their polici

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1.11 Developments in Supply Chain Management

Six major movements can be observed in the evolution of supply chain management
studies: Creation, Integration, and Globalization (Lavassani et al., 2008),
Specializations and SCM 2.0.

Creation Era

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

Integration Era

This era of supply chain management studies was highlighted with the development
of Electronic Data Interchange systems in the 1960s and developed through the
1990s by the introduction of Enterprise Resource Planning systems. This era has
continued to develop into the 21st century with the expansion of internet-based
collaborative systems.

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Globalization Era

The third movement of supply chain management development, globalization era,

can be characterized by the attention towards global systems of supplier relations
and the expansion of supply chain over national boundaries and into other
continents. Although the use of global sources in the supply chain of organizations
can be traced back to several decades ago (e.g. 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. This era is characterized by the globalization of
supply chain management in organizations with the goal of increasing competitive
advantage, creating more value-added, and reducing costs through global sourcing.

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 the four walls
and distributing management across specialized supply chain partnerships. This
transition also refocused 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.

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.

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At any given moment, market forces could demand changes within suppliers,
logistics providers, locations, customers and any number of these specialized
participants within supply chain networks. Supply chain specialization enables
companies to improve their overall competencies in the same way that outsourced
manufacturing and distribution has done; it allows them to focus on their core
competencies and assemble networks of best in class domain specific partners to
contribute to the overall value chain itself – thus increasing overall performance and
efficiency. The ability to quickly obtain and deploy this domain specific supply chain
expertise without developing and maintaining an entirely unique and complex
competency in house is the leading reason why supply chain specialization is gaining
popularity.

Outsourced technology hosting for supply chain solutions debuted in the late 1990s
and has taken root in transportation and collaboration categories most dominantly.

Supply Chain Management SCM 2.0

Building off of globalization and specialization, SCM 2.0 has been coined to describe
both the changes within the supply chain itself as well as the evolution of the
processes, methods and tools that manage it in this new "era".

Web 2.0 is defined as a trend in the use of the World Wide Web that is meant to
increase creativity, information sharing, and collaboration among users. At its core,
the common attribute that Web 2.0 brings is it helps us navigate the vast amount of
information available on the web to find what we are looking for. It is the notion of a
usable pathway. SCM 2.0 follows this notion into supply chain operations. It is the
pathway to SCM results – the combination of the processes, methodologies, tools
and delivery options to guide companies to their results quickly as the complexity
and speed of the supply chain increase due to the effects of global competition, rapid
price commoditization, surging oil prices, short product life cycles, expanded
specialization, near/far and off shoring, and talent scarcity.

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1.12 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 appropriate.
Marketing, responding to customer demand, communicates with several
distributors and retailers as it attempts to satisfy this demand. Shared information
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. 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 are:

 Customer relationship management

 Customer service management
 Demand management
 Order fulfillment
 Manufacturing flow management
 Supplier relationship management
 Product development and commercialization
 Returns management

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 One could suggest other key critical supply business processes combining these
processes such as:

a. Customer service management

b. Procurement
c. Product development and commercialization
d. Manufacturing flow management/support
e. Physical distribution
f. Outsourcing/partnerships
g. Performance measurement

Customer service management process

Customer Relationship Management concerns the relationship between the

organization and its customers. Customer service provides the source of customer
information. It also provides the customer with real-time information on promising
dates and product availability through interfaces with the company's production
and distribution operations. Successful organizations use following steps to build
customer relationships:

• determine mutually satisfying goals between organization and customers

• establish and maintain customer rapport
• produce positive feelings in the organization and the customers

Procurement process

Strategic plans are developed with suppliers to support the manufacturing flow
management process and 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 reduction times in the
design cycle and product development are achieved. Also, the purchasing function

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develops rapid communication systems, such as electronic data interchange (EDI)
and Internet linkages to transfer possible requirements more rapidly. Activities
related to obtaining products and materials from outside suppliers requires
performing resource planning, supply sourcing, negotiation, order placement,
inbound transportation, storage, handling and quality assurance, many of which
include the responsibility to coordinate with suppliers in scheduling, supply
continuity, hedging, and research into new sources or programmes.

Product development and commercialization

Here, customers and suppliers must be united into the product development process,
thus to reduce time to market. As product life cycles shorten, the appropriate
products must be developed and successfully launched in ever shorter time-
schedules to remain competitive. According to Lambert and Cooper, managers of
the product development and commercialization process must:

1. coordinate with customer relationship management to identify customer-

articulated needs;
2. select materials and suppliers in conjunction with procurement, and
3. Develop production technology in manufacturing flow to manufacture and
integrate into the best supply chain flow for the product/market combination.

Manufacturing flow management process

The manufacturing process is produced 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 process lead to shorter cycle times, meaning improved
responsiveness and efficiency of demand to customers. Activities related to planning,

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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.

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).

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 everything else it will outsource. 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, to manage and control 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.

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Performance measurement

Experts found a strong relationship from the largest arcs of supplier and customer
integration to market share and profitability. By taking advantage of supplier
capabilities and emphasizing a long-term supply chain perspective in customer
relationships can be both 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 narrower. According to
experts internal measures are generally collected and analyzed by the firm including

1. Cost
2. Customer Service
3. Productivity measures
4. Asset measurement, and
5. 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.

Components of Supply Chain Management are.

1. Standardization

2. Postponement

3. Customization

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1.13 Supply Chain Management Problems

Supply chain management must address the following problems:

• Distribution Network Configuration: Number, location and network

missions of suppliers, production facilities, distribution centers, warehouses,
cross-docks and customers.
• Distribution Strategy: Including 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, including TOFC and COFC; ocean freight;
airfreight); replenishment strategy (e.g., pull, push or hybrid); and
transportation control (e.g., owner-operated, private carrier, common
carrier, contract carrier,). Trade-Offs in Logistical Activities

The above activities must be coordinated well together in order to achieve the least
total logistics cost. Trade-offs exist that 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.
These trade-offs are key to developing the most efficient and effective Logistics and
SCM strategy.

• Information: Integration of and other processes through the supply chain to

share valuable information, including demand signals, forecasts, inventory,
transportation, and potential collaboration etc.
• Inventory Management: Quantity and location of inventory including raw
materials, work-in-process and finished goods.

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 • Cash-Flow: Arranging the payment terms and the methodologies for
exchanging funds across entities within the supply chain.

Supply chain execution is managing and coordinating the movement of materials,

information and funds across the supply chain. The flow is bi-directional

1.14 Activities/functions

Supply chain management is a cross-functional approach to manage the movement

of raw materials into an organization, certain aspects of the internal processing of
materials into finished goods, and then the movement of finished goods out of the
organization toward the end-consumer. As organizations strive to focus on core
competencies and becoming more flexible, they have reduced their ownership of raw
materials sources and distribution channels. These functions are increasingly being
outsourced to other entities that can perform the activities better or more cost
effectively. The effect is to increase the number of organizations involved in
satisfying customer demand, while reducing management control of daily logistics
operations. Less control and more supply chain partners led to the creation of
supply chain management concepts. The purpose of supply chain management is to
improve trust and collaboration among supply chain partners, thus improving
inventory visibility and improving inventory velocity.

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Strategic

 Strategic network optimization, including the number, location, and size of

warehouses, distribution centers and facilities.
 Strategic partnership with suppliers, distributors, and customers, creating
communication channels for critical information and operational
improvements such as cross docking, direct shipping, and third-party
logistics.
 Product design coordination, so that new and existing products can be
optimally integrated into the supply chain, load management
 Information Technology infrastructure, to support supply chain operations.
 Where-to-make and what-to-make-or-buy decisions
 Aligning overall organizational strategy with supply strategy.

Tactical

 Sourcing contracts and other purchasing decisions.

 Production decisions, including contracting, scheduling, and planning
process definition.
 Inventory decisions, including quantity, location, and quality of inventory.
 Transportation strategy, including frequency, routes, and contracting.
 Benchmarking of all operations against competitors and implementation of
best practices throughout the enterprise.
 Milestone payments
 Focus on customer demand.

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Operational

 Daily production and distribution planning, including all nodes in the

supply chain.
 Production scheduling for each manufacturing facility in the supply chain
(minute by minute).
 Demand planning and forecasting, coordinating the demand forecast of
all customers and sharing the forecast with all suppliers.
 Sourcing planning, including current inventory and forecast demand, in
collaboration with all suppliers.
 Inbound operations, including transportation from suppliers and
receiving inventory.
 Production operations, including the consumption of materials and flow
of finished goods.
 Outbound operations, including all fulfillment activities and
transportation to customers.
 Order promising, accounting for all constraints in the supply chain,
including all suppliers, manufacturing facilities, distribution centers, and
other customers...

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- 38 -
 CHAPTER-2

RESEARCH OBJECTIVES

 To increase sales volume.

 To satisfy customer .

 To maximize overall profit.

 To assist salesman in selling.

 To increase goodwill.

 To contribute to continuous growth of enterprise.

 Division of specialists.

 Creation of demand.

 Timely contacts with customer.

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 CHAPTER-3

RESEARCH METHODOLOGY

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This part of the report i.e. Research Methodology is intended to give the details of
the conceptual framework within which the study has been carried out. This section
covers the following aspects:

 NATURE OF THE STUDY:

The research project relates to “EVALUATION OF SUPPLY CHAIN
MANAGEMENT.” In it the problem proposed is to be research is find out;
what is the behavior of the companies towards adopting supply chain
management.

 SAMPLE DESIGN:
The target for study was of distt kurukshetra etc. Survey has been done using
questionnaire method, open and close – ended Questions being included in the
questionnaire. Secondary data for the research study has been collected from
various magazines, newspaper, journals, books and website.

 OBJECTIVE OF STUDY:
• Increase one’s knowledge in the subject of supply chain management with an
integrated approach dealing with the various components which make up the
spectrum of supply chain management.
• Develop a solid knowledge required for systematic analysis of corporations’
supply chain networks and management
• Enhance one’s thinking process and problem analysis approach in dealing
with supply chain management issues and the optimization of a supply chain
process.

• Increase one’s value contribution in the subject of supply chain management

through acquiring an understanding and application of the various
components of supply chain
• To counter a competitor’s sales promotion device
• To maximize overall profit

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 • To assist salesman in selling
• To increase sales volume

 SAMPLE SIZE:
The sample size of the research project has been taken of 5 companies.

 DATA COLLECTION:
The relevant data for the research project is hybrid of primary & secondary
data.

• Primary data:

Using personal interview technique, survey, questionnaire & observation

method the data has been collected from targeted focus group, which are companies
manager & related staff. The primary data collection for judgment sampling has
done this purpose has been formatted with both open & close ended structured
questions.

• Secondary data:

In addition to the reactions of the selected companies, the factual information

historic background has been collected with the help of various trade /business
journals, company magazines, brochures & company reports & concern trade
association report

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 CHAPTER-5

RESULTS & FINDINGS

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The training period has been a very valuable experience for me from the entire
study conducted by me. During the survey it was found:
 It was found that most of companies using supply chain management which
is the part of logistics
 Most of companies use customer relation to support their supply chain
management.
 It was found that only 33% companies are able to manage their supply chain
management properly.
 Only 27% companies are satisfied toward public policy regarding supply
chain management.

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- 45 -
 CHAPTER – 7

RECOMMENDATION

- 46 -
 Still most of Indian companies have not proper knowledge regarding supply
chain management. So focus on giving information regarding supply chain
management.
 Imparting proper training to personnel so that they are able to use the supply
chain properly.
 Make the system more transparent so that cost of the every product reduced.
 Make new laws for proper functioning of supply chain management.
 Companies should maintain their supply chain management properly so
every department of the company should be benefited.

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BIBLIOGRAPHY

BOOKS:

- 48 -
  Christopher martin, Pearson Education, second Edition(logistics
and supply chain management)
 Singhal D.D., Arya Publishing, Third Edition (International
marketing)
 Trehan mukesh, VK Enterprises, (Advertising and Sales
management)

WEB LINKS:

 www.supplychainseminars.com

 www.sdcexec.com

 www.javelingroup.com

 www.supplychainmanagement.in

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QUESTIONARE FOR SUPPLY CHAIN MANAGEMENT

- 50 -
 Company Profile

1. Name of Company

2. Address

3. Country

4. Tel 5. Fax 6. Website

7. Contact person: 9. E-mail:

8. Position in company:

11. Sector Types: Manufacturing Service Both

12. Industry: Food Automotive Other (define) ___________________

No of employees: [______] Turnover 2008: [_________________]

1. Which part of Logistics operation do you belong to?

Supply Chain Management (SCM)
1
Reverse Logistics
2
Maritime Logistics
3
Freight Logistics
4
Other, Please enter
5

2. How do you manage your supply chain?

1 Close partnership with suppliers

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 2 Close partnership with customers
3 JIT supply
4 Few suppliers
5 Supply Chain Benchmarking
6 Many suppliers

7
Holding safety stock
3. How successful do you think is your company in managing its supply chain in
general?

Not
Somewhat Very
successful Not successful Successful
successful successful
at all

4. Which of the following you think that your company needs to do in order to
manage its supply chain better?

Start Not
Imepro Satisfied
Implementi appropri
v already
ng ate
Close partnership with suppliers
Close partnership with customers
JIT supply
Supply Chain Benchmarking
Few suppliers

5. Does your company have a separate logistics department?

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 YES NO

6. Does your company have a clear logistics strategic plan?

YES NO

7. What types of systems are currently in use in your company to support Supply
Chain Management?

Custom Standar Not in

-made d use
Material Requirements Planning (MRP)
Supply Chain Management (SCM)
Customer Relationships Management (CRM)
Supplier Relationships Management (SRM)
Just In Time (JIT)
E-commerce
Bar coding

8. How much did you actually benefit from using these systems?

Not at all Little Average Greatly A lot Don’t

(1) (2) (3) (4) (5) know

10. How satisfied are you with the current public policy regarding SCM

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 Not at all Somewhat Satisfied Quite satisfied Very satisfied

1 2 3 4 5

11. How important are the following future measures for supporting your company
effort in SCM

somewha importan quite Very

Not at all
t t importan importan
(1) (2) (3) (4) (5)
More education, e.g. formal
Easier access to vocational
More funding and financial
More inter-country regional
Better infrastructure e.g.
Improved information provision
Increased regional cooperation
Closer cooperation between
Other (specify)

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