Supply Chain Mgmt Final

Project report

on

supply chain management

Submitted To: Submitted From :

Mr. Veerendra Bahadur Singh. Rohit joshi.

Inventory controller (UND), MBA 2ND sem.

Rudrapur.

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ACKNOWLEDGMENT

I wish to express my heartfelt Gratitude to the Management of APC India private

limited Rudrapur (Uttarakhand) for extending co-operation and guidance to me during the

Summer Training. They provide me an excellent, disciplined and cordial work environment

throughout the training. The pages that follow comprise a report on “Supply Chain

Management”. Before we get into think of things.

I would like to add a few heartfelt words for the people who were a part of this

project in numerous ways. I would like to express my gratefulness in particular “ Mr.

ANEET SINGH (HR Manger) for accepting me as a summer trainee in his highly esteemed

organization.

I humbly acknowledge the help and support rendered by Mr. Veerendra Bahadur

Singh (Inventory Controller ) for there outstanding co-operation.

The successful completion of this project in very short time has been possible due

to the personal interest taken by Mr.Pooran Joshi (IC), Mr. Sanjay Singh (IC), Mr. Anurag

Choudhry and Mr. Sunil Daangi ” there outstanding co-operation was instrument in the

smooth completion of this report. there knowledge helped me in making this project more

comprehensive.

This is a combined effort of so many people both inside and outside of the

organization without their help it would have been very difficult for me to the present

shape to the project.

ROHIT JOSHI (MBA 2nd SEM)

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Contents :

SECTION – I (page no. 1 – 8)

About APC (history, infrastructure, key application area, mission ,vision, philosophy, merger with Schneider )

SECTION – II (page no. 9-43)

Introduction of SCM. Basic concept. Definitions. Logistic and SCM. Decision areas of SCM (Production, Inventory, Location,

transportation )

Component of SCM. Supply chain structure . Objective of SCM. Function of SCM :

Benefit of SCM: Benefit to organization. Benefit to customer.

Problem of SCM. Older and new concept of SCM. Integrated SCM.

SECTION – III

SUMMARY (page no. 44- 45)

Conclusion.

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In today's "always on, Always available" world where businesses can't stop and

downtime is measured in dollars, American Power Conversion (APC) provides protection

against some of the leading causes of downtime, data loss and hardware damage: power

problems and temperature. As a global leader in network-critical physical infrastructure

(NCPI) solutions,

Known for its quality, innovation and industry leading service and support, APC

has perhaps the longest list of accolades in its industry. Not satisfied with this, APC is

working diligently to achieve its corporate mission of creating delighted customers by

improving the manageability, availability and performance of information and

communication systems through the rapid delivery of innovative solutions to real customer

problems.

HISTORY :

American Power Conversion, incorporated in March 1981, was founded by three

electronic power engineers from the Massachusetts Institute of Technology. At the time,

the research and development efforts of these three men were focused on solar electricity.

Over the next few years, government funding and incentives in the solar arena began to dry

up. In response, APC shifted its focus to power protection, introducing its first UPS in

1984, the 750. The need for capital to support this growing business was satisfied in July

1988 when APC became a publicly traded company. The stock, trading under the symbol

"APCC," was priced at $.125 per share when adjusted for stock splits.

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APC'S CORPORATE MISSION :

The mission of APC is to create delighted customers by improving the

manageability, availability, and performance of information and communication systems

through rapid development and delivery of innovative solutions to real customer problems.

GLOBAL PRESENCE : APC’s corporate offices are located in

West Kingston, Rhode Island. The Company has sales offices throughout the world;

manufacturing facilities in the U.S., Ireland, Switzerland, Denmark, Philippines, China,

India, and Brazil; and ships product to approximately 160 countries. In 2005, 52% of

APC’s revenues were in the Americas (North and Latin America), 30% were in Europe, the

Middle East and Africa and 18% were in Asia. As of December 31, 2005, APC had

approximately 7,580 full-time employees worldwide.

Products: APC manufacturers of Structure, Racks and Accessories, Cooling

Solutions, UPS, Management tools, Surge Protection and Power Conditioning Power

Distribution, Power Generation, Broadband Power Systems, Inverters, Notebook and

Mobility Solutions, Networking and Cable Solutions, UPS Battery Replacement &

Upgrade Selector.

KEY APPLICATION AREAS :

Today, the Company focuses its efforts on four key application areas: 

Home/Home Office.

Business Networks .

Access Provider Networks .

Data Centers and Facilities .

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Each requires customized efforts for products, sales and marketing, but each has a

common theme: high availability is increasingly essential. APC is positioning itself to be

the preferred brand worldwide in all four of these application areas.

RECOGNITION AND AWARDS :

Over the years, APC has received hundreds of awards worldwide-- more than any

other UPS manufacturer.  Such designations have recognized APC both for its reliable

solutions and its overall business performance. The company is among the most recent

Fortune 1000 companies and is part of the closely watched S&P 500 Index and the Nasdaq

100 Index. For its products, APC receives global recognition for its reliability and

innovation.

APC's Vision: APC products ensuring availability wherever data is created,

transmitted or stored.

APC's Mission : To create delighted customers by improving the manageability,

availability and performance of information and communication systems through the rapid

delivery of innovative solutions to real customer problems.

APC's Philosophy :

To listen to our customers.

Their wants, needs and wishes are our strategic blueprint.

To justify our expenditures as they relate to our goals.

To quantify all aspects of our business in order to create benchmarks for success.

To avoid bureaucracy.

Employees must make direct contributions to our goals.

To emphasize quality.

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APC believes that good enough never is.

To respond quickly and decisively to opportunity.

To create an environment where ideas are encouraged, recognized and rewarded.

To help employees grow personally and professionally.

To work together toward our goals and be rewarded together when they are

achieved.

American Power Conversion Shareholders Approve

Merger with Schneider Electric :

WEST KINGSTON, R.I. and RUEIL MALMAISON, France   –

January 16, 2007 – American Power Conversion Corporation (Nasdaq: APCC) (APC)

and Schneider Electric announced that at a special meeting held today the shareholders of

APC approved the merger of APC with a wholly-owned subsidiary of Schneider Electric. 

As previously announced on October 30, 2006, APC and Schneider Electric entered

into an agreement and plan of merger, which provides, among other things, for each share

of APC common stock to be converted to the right to receive $31.00 in cash.   APC and

Schneider Electric continue to expect the transaction to close in the first quarter of 2007

pending receipt of outstanding antitrust regulatory approvals.

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Schneider Electric :

Schneider Electric (Euro next: SU) is a French global company. It was

founded in 1836 by two brothers, Eugene I and Adolph Schneider.

In the first part of the 20th century, Schneider electrical Cie associated itself with

Westinghouse Systems, a major international electric group at the time. The group began

manufacturing electric motors and locomotives. After the Second World War, the

armaments businesses were abandoned in favor of electrical engineering, and iron and steel

works. The company remained in this sector until the early 1980s.

In 1981, Group Schneider was broken up, focusing on the electrical and controls

industry. This was followed by strategic acquisitions of Telemecanique (1988), Square D

(1991) and Merlin Gerin (1992) and it is these brands that are the core products of the

company's offering.

In 1999, Group Schneider was renamed Schneider Electric. The Schneider company

also acquired The Lexel Group that year.

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Today, the company has grown into a world leader in Power and Control solutions

through further acquisitions: Power Measurement in 2005, MGE UPS Systems, Clipsal,

TAC, Nulec, Andover Controls, GET plc and Citect in 2006, American Power Conversion

in 2007, and Gutor Electronic LLC in 2008.

INTRODUCTION OF SUPPLY CHAIN MANAGEMENT (SCM)

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.

Supply chain management is typically viewed to lie between fully vertically

integrated firms, where the entire material flow is owned by a single firm and those where

each channel member operates independently. Therefore coordination between the various

players in the chain is key in its effective management.

Cooper and Ellram [1993] compare supply chain management to a well-balanced

and well-practiced relay team. Such a team is more competitive when each player knows

how to be positioned for the hand-off. The relationships are the strongest between players

who directly pass the baton (stick), but the entire team needs to make a coordinated effort

to win the race.

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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. The flow of

materials is not always along an arbores cent network, various modes of transportation may

be considered, and the bill of materials for the end items may be both deep and large.

To simplify the concept, supply chain management can be defined as a loop: it

starts with the customer and ends with the customer. All materials, finished products,

information, and even all transactions flow through the loop. However, supply chain

management can be a very difficult task because in the reality, the supply chain is a

complex and dynamic network of facilities and organizations with different, conflicting

objectives.

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.

Unlike commercial manufacturing supplies, services such as clinical supplies

planning are very dynamic and can often have last minute changes. Availability of patient

kit when patient arrives at investigator site is very important for clinical trial success.

This results in overproduction of drug products to take care of last minute change in

demand. R&D manufacturing is very expensive and overproduction of patient kits adds

significant cost to the total cost of clinical trials. An integrated supply chain can reduce the

overproduction of drug products by efficient demand management, planning, and inventory

management.

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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. The result of these factors is that there is not a single, integrated

plan for the organization, there were 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. Basic Concepts of Supply Chain Management :

Supply chains encompass the companies and the business activities needed to

design, make, deliver, and use a product or service. Businesses depend on their supply

chains to provide them with what they need to survive. Every business fits into one or more

supply chains and has a role to play in each of them. The pace of change and the

uncertainty about how markets will evolve has made it increasingly important for

companies to be aware of the supply chains they participate in and to understand the roles

that they play. Those companies that learn how to build and participate in strong supply

chains will have a substantial competitive advantage in their markets

Nothing Entirely New. . . Just a Significant Evolution

The practice of supply chain management is guided by some basic underlying

concepts that have not changed much over the centuries. Several hundred years ago,

Napoleon made the remark, “An army marches on its stomach.” Napoleon was a master

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strategist and a skillful general and this remark shows that he clearly understood the

importance of what we would now call an efficient supply chain. Unless the soldiers are

fed, the army cannot move.

Along these same lines, there is another saying that goes, “Amateurs talk strategy

and professionals talk logistics.” People can discuss all sorts of grand strategies and

dashing maneuvers but none of that will be possible without first figuring out how to meet

the day-to-day demands of providing an army with fuel, spare parts, food, shelter, and

ammunition.

It is the seemingly mundane activities of the quartermaster and the supply sergeants

that often determine an army’s success. This has many analogies in business.

The term “supply chain management” arose in the late 1980s and came into

widespread use in the 1990s. Prior to that time, businesses used terms such as “logistics”

and “operations management” instead. Some definitions of a supply chain are offered

below:

DEFINITIONS :

“A supply chain is the alignment of firms that bring products or services to

market.”— from Lambert, Stock, and Ellram in their book Fundamentals of Logistics

Management.

Supply Chain Management in the Journal of Business Logistics.

“Supply chain management is the coordination of production, inventory, location,

and transportation among the participants in a supply chain to achieve the best mix of

responsiveness and efficiency for the market being served.”—from Essentials of supply

chain management. (John Wiley & Sons)

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Supply Chain Management (SCM) is the process of planning, implementing, and

controlling the operations of the supply chain with the purpose to satisfy customer

requirements 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.

According to the Council of Supply Chain Management Professionals

(CSCMP),

A professional association that developed a definition in 2004, Supply Chain

Management “encompasses the planning and management of all activities involved in

sourcing and procurement, conversion, and all 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.

According to Cohen & Lee (1988)

Supply Chain Management is “The network of organizations that are having

linkages, both upstream and downstream, in different processes and activities that produces

and delivers the value in form of products and services in the hands of ultimate consumer.”

Thus a shirt manufacturer is a part of supply chain that extends up stream through

the weaves of fabrics to the spinners and the manufacturers of fibers, and down stream

through distributions and retailers to the final consumer. Though each of these

organizations are dependent on each other yet traditionally do not closely cooperate with

each other. An integrated supply chain management streamlines processes and increases

profitability by delivering the right product to the right place, at the right time, and at the

lowest possible cost.

According to Ganeshan & Harrison (2001):

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Supply Chain Management is a “systems approach to managing the entire flow of

information, materials, and services from raw materials suppliers through factories and

warehouses to the end customer.”

Supply chain event management (abbreviated as SCEM) is a consideration of all

possible occurring events and factors that can cause a disruption in a supply chain. With

SCEM possible scenarios can be created and solutions can be planned.

Some experts distinguish supply chain management and logistics

management, while others consider the terms to be interchangeable. From

the point of view of an enterprise, the scope of supply chain management is

usually bounded on the supply side by your supplier's suppliers and on the

customer side by your customer's customers.

DIFFERENCE BETWEEN LOGISTICS MANAGEMENT

AND SCM :

Logistics Management Supply Chain Management

Logistics management is primarily

concerned with optimizing flows within

the organization.

Supply Chain Management deals with

integration of all the partners in the value

chain.

Logistics is essentially a framework that

creates a single plan for the flow of

products and information through a

business

Supply chain builds upon this framework

and seeks to achieve linkage and

coordination between process of other

entities in the pipeline i.e. suppliers and

costumers, and the organization it self.

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Decision areas of supply chain management :

Supply Chain must make decisions individually and collectively regarding their

actions in five areas:

Production

Inventory

Location

transportation

A : Production —

What products does the market want? How much of which

products

should be produced and by when? This activity includes the creation of master production

schedules that take into account plant capacities, workload balancing, quality control, and

equipment maintenance.

B : Inventory—

Inventory is spread throughout the supply chain and includes everything from raw

material to work in process to finished goods that are held by the manufacturers, distributors,

and retailers in a supply chain. Again, managers must decide where they want to position

themselves in the trade-off between responsiveness and efficiency. Holding large amounts of

inventory allows a company or an entire supply chain to be very responsive to fluctuations in

customer demand.

What inventory should be stocked at each stage in a supply chain?

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How much inventory should be held as raw materials, semi-finished, or finished goods? The

primary purpose of inventory is to act as a buffer against uncertainty in the supply chain.

However, holding inventory can be expensive, so what are the optimal inventory levels and

reorder points?

Why we want to hold inventory : improve customer service.

Reduce certain cost such: ordering cost , stock out cost .uninterrupted production system.

Inventory management :

Inventory management is a part of managing the stock to meet the customer need ,

management of row material . work in progress, and finish goods in the company or on the

way of distribution.

Production inventory.

MRO inventory.

In process inventory.

Finish goods.

To minimize the imbalance between demand and supply in supply chain

management company utilize the various method of inventory management. The problem

is complicated by the fact that demand is uncertain. and this uncertainty cause stock out

which inventory is depleted and order can not be completes.

Inventory management:

Properly maintaining adequate stocks to ensure uninterrupted services.

Inventory management involves knowing :

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What and how much stock you have.

When to order to supplier .

What and how much has been ordered.

When and how much fresh stock was received and by whom

Benefit of inventory management:

Ensure a continuous supply of row material.

Smooth production.

Reduce the material handling cost.

Helps to utilize the people and machine.

Avoiding risk.

Reduction of work load.

Minimum inventory investment.

Inducing confidence in customer and to create trust and faith.

FIFO :

FIFO is an acronym for First In, First Out, an abstraction in ways of organizing

and manipulation of data relative to time and prioritization. This expression describes the

principle of a queue processing technique or servicing conflicting demands by ordering

process by first-come, first-served (FCFS) behavior: what comes in first is handled first,

what comes in next waits until the first is finished, etc.

FIFO is an inventory costing method which assumes that the first items placed in

inventory are the first sold. Thus, the inventory at the end of a year consists of the goods

most recently placed in inventory. FIFO is one method used to determine Cost of Goods

Sold for a business.

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Determine if the price of the inventory being used is going up or down. This is

crucial in deciding whether FIFO is appropriate for the organization. If prices are going up,

the FIFO method works. If not, it may be wise to consider other options.

Assume that prices will consistently rise. Do the research and look at the historical

behavior on the prices of the inventory. Mark trends during certain periods to make the best

estimate of how prices will perform in the future.

Be consistent with your inventory accounting method. It is not appropriate to use

different methods from one year to the next in order to avoid being taxed for more

expensive inventory. Changing methods this way will be a red flag for any outside auditor.

If a change is made, make sure that it is thoroughly documented and based on sound

judgment.

Suggestion regarding FIFO application in warehouse :

The easiest and cheapest method to maintain "first-in-first-out" inventory is to keep

the newer product put away location in the back rather than the front pallet space.

1. At first we need to divide the whole warehouse into different area according to the

types of products. ( It may be flexible when the quantity is not certain.)

2. Then the stock which we scanned during last month and still in our warehouse need to

put in front during the starting days of next month. Because we have more time and

space during the starting days of month.( Stock rotation )

3. It will be beneficial during the process of rescan reliable and also for dispatching from

warehouse.

4. Suppose there is a chance of dispatching 4000 quantity, so only 5000 or 6000 quantity

need to be label. ( pricing )

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5. Colour code that is changed periodically, so from a distance we can see oldest code

when we get close grab the oldest one.

C : Location —

Where should facilities for production and inventory storage be located? Where are

the most cost efficient locations for production and for storage of inventory? Should existing

facilities be used or new ones built? Once these decisions are made they determine the

possible paths available for product to flow through for delivery to the final consumer.

Or

Location refers to the geographical setting of supply chain facilities. It also includes

the decisions related to which activities should be performed in each facility. The

responsiveness versus efficiency trade-off here is the decision whether to centralize activities

in fewer locations to gain economies of scale and efficiency, or to decentralize activities in

many locations close to customers and suppliers in order for operations to be more

responsive.

When making location decisions, managers need to consider a range of factors that

relate to a given location including the cost of facilities, the cost of labor, skills available in

the workforce, infrastructure conditions, taxes and tariffs, and proximity to suppliers and

customers. Location decisions tend to be very strategic decisions because they commit large

amounts of money to long-term plans. Location decisions have strong impacts on the cost

and performance characteristics of a supply chain.

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Once the size, number, and location of facilities is determined, that also defines the

number of possible paths through which products can flow on the way to the final customer.

Location decisions reflect a company’s basic strategy for building and delivering its products

to market.

D : Transportation —

How should inventory be moved from one supply chain location to

another? Air freight and truck delivery are generally fast and reliable but they are expensive.

Shipping by sea or rail is much less expensive but usually involves longer transit

times and more uncertainty. When is it better to use which mode of transportation?

company can choose from:

Ship :

Which is very cost efficient but also the slowest mode of

transport. It is limited to use between locations that are situated next to

navigable waterways and facilities such as harbors and canals.

Rail :

Which is also very cost efficient but can be slow. This mode is

also restricted to use between locations that are served by rail lines.

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Pipe lines :

Can be very efficient but are restricted to commodities that are

liquids or gases such as water, oil, and natural gas.

Trucks :

Are a relatively quick and very flexible mode of transport.

Trucks can go almost anywhere. The cost of this mode is prone to fluctuations

though, as the cost of fuel fluctuates and the condition of roads varies.

.Airplanes :

Are a very fast mode of transport and are very responsive. This is also

the most expensive mode and it is somewhat limited by the availability of appropriate

airport facilities.

Electronic Transport :

Is the fastest mode of transport and it is very flexible and

cost efficient. However, it can only be used for movement of certain types of

products such as electric energy, data, and products composed of data such as

music, pictures, and text.

Someday technology that allows us to convert matter to energy and back to

matter again may completely rewrite the theory and practice of supply chain

management.

Given these different modes of transportation and the location of the

facilities in a supply chain, managers need to design routes and networks for

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moving products. A route is the path through which products move and networks

are composed of the collection of the paths and facilities connected by those paths.

As a general rule, the higher the value of a product (such as electronic

components or pharmaceuticals), the more its transport network should emphasize

responsiveness and the lower the value of a product (such as bulk commodities like

grain or lumber), the more its network should emphasize efficiency.

COMPONENTS OF SUPPLY CHAIN

MANAGEMENT

The following are the five basic components of Supply Chain Management:

PLAN

SOURCE

MAKE

DELIVER

RETURN

Plan :-

This is the strategic portion of SCM. You need a strategy for managing all the

resources that go toward meeting customer demand for your product or service. A big piece

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of 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.

Source:-

Choose the suppliers that will deliver the goods and services you need to create

your product. Develop a set of pricing, delivery and payment processes with suppliers and

create metrics for monitoring and improving the relationships. And put together processes

for managing the inventory of goods and services you receive from suppliers, including

receiving shipments, verifying them, transferring them to your manufacturing facilities and

authorizing supplier payments.

Make :-

This is the manufacturing step. Schedule the activities necessary for production,

testing, packaging and preparation for delivery. As the most metric-intensive portion of the

supply chain, measure quality levels, production output and worker productivity.

Deliver :-

This is the part that many insiders refer to as logistics. Coordinate the receipt of

orders from customers, develop a network of warehouses, pick carriers to get products to

customers and set up an invoicing system to receive payments.

Return :-

The problem part of the supply chain. Create a network for receiving defective and

excess products back from customers and supporting customers who have problems with

delivered products.

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Participants in the Supply Chain :

Or

Supply chain structure

In its simplest form, a supply chain is composed of a company and the suppliers and

customers of that company. This is the basic group of participants that creates a simple

supply chain. Extended supply chains contain three additional types of participants. First

there is the supplier’s supplier or the ultimate supplier at the beginning of an extended supply

chain.

Then there is the customer’s customer or ultimate customer at the end of an extended

supply chain. Finally there is a whole category of companies who are service providers to

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other companies in the supply chain. These are companies who supply services in logistics,

finance, marketing, and information technology.

In any given supply chain there is some combination of companies who perform

different functions. There are companies that are producers, distributors or wholesalers,

retailers, and companies or individuals who are the customers, the final consumers of a

product. Supporting these companies there will be other companies that are service providers

that provide a range of needed services.

Producers

Distributer

Customer

Service provider

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Producers :

Producers or manufacturers are organizations that make a product. This includes

companies that are producers of raw materials and companies that are producers of finished

goods. Producers of raw materials are organizations that mine for minerals, drill for oil and

gas, and cut timber. It also includes organizations that farm the land, raise animals, or catch

seafood. Producers of finished goods use the raw materials and subassemblies made by other

producers to create their products.

Producers can create products that are intangible items such as music, entertainment,

software, or designs. A product can also be a service such as mowing a lawn, cleaning an

office, performing surgery, or teaching a skill. In many instances the producers of tangible,

industrial products are moving to areas of the world where labor is less costly. Producers in

the developed world of North America, Europe, and parts of Asia are increasingly producers

of intangible items and services.

Distributors :

Distributors are companies that take inventory in bulk from producers and deliver a

bundle of related product lines to customers. Distributors are also known as wholesalers.

They typically sell to other businesses and they sell products in larger quantities than an

individual consumer would usually buy. Distributors buffer the producers from fluctuations

in product demand by stocking inventory and doing much of the sales work to find and

service customers. For the customer, distributors fulfill the “Time and Place” function—they

deliver products when and where the customer wants them.

A distributor is typically an organization that takes ownership of significant

inventories of products that they buy from producers and sell to consumers. In addition to

product promotion and sales, other functions the distributor performs are inventory

management, warehouse operations, and product transportation as well as customer support

and post-sales service.

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A distributor can also be an organization that only brokers a product between the

producer and the customer and never takes ownership of that product. This kind of distributor

performs mainly the functions of product promotion and sales. In both these cases, as the

needs of customers evolve and the range of available products changes, the distributor is the

agent that continually tracks customer needs and matches them with products available.

Retailers

Retailers stock inventory and sell in smaller quantities to the general public. This

organization also closely tracks the preferences and demands of the customers that it sells to.

It advertises to its customers and often uses some combination of price, product selection,

service, and convenience as the primary draw to attract customers for the products it sells.

Discount department stores attract customers using price and wide product selection.

Upscale specialty stores offer a unique line of products and high levels of service. Fast food

restaurants use convenience and low prices as their draw.

Customers :

Customers or consumers are any organization that purchases and uses a product. A

customer organization may purchase a product in order to incorporate it into another product

that they in turn sell to other customers. Or a customer may be the final end user of a product

who buys the product in order to consume it.

Service Providers:

These are organizations that provide services to producers, distributors, retailers,

and customers. Service providers have developed special expertise and skills that focus on a

particular activity needed by a supply chain. Because of this, they are able to perform these

services more effectively and at a better price than producers, distributors, retailers, or

consumers could do on their own.

Some common service providers in any supply chain are providers of transportation

services and warehousing services. These are trucking companies and public warehouse

companies and they are known as logistics providers. Financial service providers deliver

services such as making loans, doing credit analysis, and collecting on past due invoices.

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These are banks, credit rating companies, and collection agencies. Some service

providers deliver market research and advertising, while others provide product design,

engineering services, legal services, and management advice. Still other service providers

offer information technology and data collection services. All these service providers are

integrated to a greater or lesser degree into the ongoing operations of the producers,

distributors, retailers, and consumers in the supply chain.

Supply chains are composed of repeating sets of participants that fall into one or

more of these categories. Over time the needs of the supply chain as a whole remain fairly

stable. What changes is the mix of participants in the supply chain and the roles that each

participant plays. In some supply chains, there are few service providers because the other

participants perform these services on their own. In other supply chains very efficient

providers of specialized services have evolved and the other participants outsource work to

these service providers instead of doing it themselves.

OBJECTIVES/NEED FOR SCM :

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.

29

The result of these factors is that there is not a single, integrated plan for the

organization---there were 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.

Moreover, shortened product life cycles, increased competition, and heightened

expectations of customers have forced many leading edge companies to move from

physical logistic management towards more advanced supply chain management.

Additionally, in recent years it has become clear that many companies have reduced their

manufacturing costs as much as it is practically possible.

Therefore, in many cases, the only possible way to further reduce costs and lead

times is with effective supply chain management.

In addition to cost reduction, the supply chain management approach also facilitates

customer service improvements. It enables the management of:

inventories,

transportation systems and

whole distribution networks

so that organizations are able to meet or even exceed their customers' expectations.

The major objective of supply chain management is to reduce or

eliminate the buffers of inventory that exists between originations in chain through the

sharing of information on demand and current stock levels.

Broadly, an organization needs an efficient and proper supply chain management

system so that the following strategic and competitive areas can be used to their full

advantage if a supply chain management system is properly implemented.

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Fulfillment of raw materials:

Ensuring the right quantity of parts for production or products for sale arrive at the

right time. This is enabled through efficient communication, ensuring that orders are placed

with the appropriate amount of time available to be filled. The supply chain management

system also allows a company to constantly see what is on stock and making sure that the

right quantities are ordered to replace stock.

Logistics:

The cost of transporting materials as low as possible consistent with safe and

reliable delivery. Here the supply chain management system enables a company to have

constant contact with its distribution team, which could consist of trucks, trains, or any

other mode of transportation.

The system can allow the company to track where the required materials are at all

times. As well, it may be cost effective to share transportation costs with a partner

company if shipments are not large enough to fill a whole truck and this again, allows the

company to make this decision.

Smooth Production:

Ensuring production lines function smoothly because high-quality parts are

available when needed. Production can run smoothly as a result of fulfillment and logistics

being implemented correctly. If the correct quantity is not ordered and delivered at the

requested time, production will be halted, but having an effective supply chain

management system in place will ensure that production can always run smoothly without

delays due to ordering and transportation.

Increase in Revenue & profit:

Ensuring no sales is lost because shelves are empty. Managing the supply chain

improves a company flexibility to respond to unforeseen changes in demand and supply.

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Because of this, a company has the ability to produce goods at lower prices and distribute

them to consumers quicker then companies without supply chain management thus

increasing the overall profit.

Reduction in Costs:

Keeping the cost of purchased parts and products at acceptable levels. Supply chain

management reduces costs by increasing inventory turnover on the shop floor and in the

warehouse controlling the quality of goods thus reducing internal and external failure costs

and working with suppliers to produce the most cost efficient means of manufacturing a

product.

Mutual Success:

Among supply chain partners ensures mutual success. Collaborative planning,

forecasting and replenishment (CPFR) is a longer-term commitment, joint work on quality,

and support by the buyer of the supplier’s managerial, technological, and capacity

development.

This relationship allows a company to have access to current, reliable information,

obtain lower inventory levels, cut lead times, enhance product quality, improve forecasting

accuracy and ultimately improve customer service and overall profits.

The suppliers also benefit from the cooperative relationship through increased

buyer input from suggestions on improving the quality and costs and though shared

savings. Consumers can benefit as well through higher quality goods provided at a lower

cost.

ACTIVITIES/FUNCTIONS OF SCM :

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Supply chain management is a cross-functional approach to managing the

movement of raw materials into an organization and the movement of finished goods out of

the organization toward the end-consumer. As corporations strive to focus on core

competencies and become more flexible, they have reduced their ownership of raw

materials sources and distribution channels.

These functions are increasingly being outsourced to other corporations that can

perform the activities better or more cost effectively. The effect has been to increase the

number of companies involved in satisfying consumer 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.

Several models have been proposed for understanding the activities required

managing material movements across organizational and functional boundaries. SCOR is a

supply chain management model promoted by the Supply-Chain Council.

Another model is the SCM Model proposed by the Global Supply Chain Forum

(GSCF). Supply chain activities can be grouped into strategic, tactical, and operational

levels of activities.

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.

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Products design coordination, so that new and existing products can be optimally

integrated into the supply chain.

Information Technology infrastructure, to support supply chain operations.

Where to make and what to make or buy decisions.

Tactical:-

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, locations, 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.

Operationa l:-

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.

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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. Performance

tracking of all activities.

Benefits :

The main benefit of RFIDs is that, unlike barcodes, RFID tags can be read

automatically by electronic readers. Imagine a truck carrying a container full of widgets

entering a shipping terminal in China. If the container is equipped with an RFID tag, and

the terminal has an RFID sensor network, that container's whereabouts can be

automatically sent to Widget Co. without the truck ever slowing down. It has the potential

to add a substantial amount of visibility into the extended supply chain.

The Benefits are divided into two parts :

1. Benefits to Organization.

2. Benefits to Consumers:

1: Benefits to Organization.

Inventory Management:-

Maintain a real-time view of tagged inventory as it flows through the supply chain.

Track discrete movement of tagged inventory.

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Trigger alerts around inventory movement based on business rules you construct. Allowing

just-in-time practices.

Maximizing warehouse space:-

With the high costs associated with storage real estate, the goal is to maximize

warehouse space. This will improve utilization without undermining the ease with which

goods can be moved in and out.

Minimizing goods shrinkage:-

Theft combined with imprecise inventory management can create a significant

shortfall in actual versus expected goods available. Within the retail environment goods

shrinkage is widely perceived to account for up to one per cent of stock, representing a

significant dent in profit margin.

2: Benefits to Consumers:

Value Innovation in customer service:

Marks & Spencer, a British retailer, has just extended a trial in which tags are

applied to suits, shirts and ties for men, allowing retailers to monitor and replenish stock

levels with far more accuracy at the end of each day to make sure that every size, style and

color remains in stock. Beyond improving efficiencies, the smart tags could help to drive

sales. One example of improving customer service: a customer could take a tagged suit to a

kiosk, which could then suggest a matching shirt and tie.

Minimizing errors in delivery :

Misdirected deliveries or incorrect orders can immediately result in on-shelf out-of-

stock situations leading to reduced sales and damaged customer relationships. Indeed, for

organizations relying on the delivery of specific components to fulfill their own order

schedule, such errors can have a serious impact on customer satisfaction.

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RFID tags represent a significant step forward from traditional bar code technology

and offer highly reliable data most notably, the US Department of Defense requires their

suppliers to ship products with RFID tags from 2006 onwards.

Therefore, the broad adoption of RFID is on its way. By 2010, RFID should be

ubiquitous throughout industries.

Right now the two biggest hurdles to widespread RFID adoption are the cost of

building the infrastructure and the lack of agreed-upon industry standards.

Some Key technologies which are going to change the face of SCM in coming days

are:

EDI (for exchange for information across different players in the supply chain);

Electronic payment protocols;

Internet auctions (for selecting suppliers, distributors, demand forecasting, etc.);

Electronic Business Process Optimization;

E-logistics;

Continuous tracking of customer orders through the Internet;

Internet-based shared services manufacturing; etc.

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SUPPLY CHAIN MANAGEMENT

PROBLEMS : Supply chain management must address the following problems:

Distribution Network Configuration:

Number and location of suppliers, production facilities, distribution centers,

warehouses and customers.

Distribution Strategy :

Centralized versus decentralized, direct shipment, cross docking, pull or push

strategies, third party logistics.

Information:

Integrate systems and processes through the supply chain to share valuable

information, including demand signals, forecasts, inventory and transportation.

Inventory Management:

Quantity and location of inventory including raw materials, work-in-process and

finished goods.

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INTEGRATED SUPPLY CHAIN

MANAGEMENT :

An integrated supply chain management streamlines processes and increases

profitability by delivering the right product to the right place, at the right time, and at the

lowest possible cost. Unlike commercial manufacturing supplies, clinical supplies planning

is very dynamic and can often have last minute changes. Availability of patient kit when

patient arrives at investigator site is very important for clinical trial success.

This results in overproduction of drug products to take care of last minute change in

demand. R&D manufacturing is very expensive and overproduction of patient kits adds

significant cost to the total cost of clinical trials.

An integrated supply chain can reduce the overproduction of drug products by efficient

demand management, planning, and inventory management. Implementation of ERP

system (such as SAP) in R&D can have major ROI by an efficient supply and inventory

management system and also by reducing overproduction.

SCM PROCESS INTEGRATION

Successful SCM requires a change from managing individual functions to

integrating activities into key supply chain processes. The purchasing department placed

orders as requirements became appropriate and marketing, responding to customer demand,

interfaced with several distributors and retailers and attempted to satisfy this demand.

Shared information between supply chain partners can only be fully leveraged

through process integration. Process integration means collaborative working between

buyers and suppliers, joint product development, common systems and shared information.

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According to Lambert and Cooper (2000), operating an integrated supply chain requires

continuous information flows, which in turn assist to achieve the best product flows.

However, in many companies, such as 3M, management has reached the conclusion

that optimizing the product flows cannot be accomplished without implementing a process

approach to the business.

The key critical supply business processes stated by Lambert and Cooper are as

follows:

Customer service management process:

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 production and distribution operations

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 is achieved. Also, the purchasing function develops rapid communication

systems, such as electronic data interchange and Internet linkages to faster transfer possible

requirements.

Activities related to obtaining products and materials from outside suppliers

requires performing resource planning, supply sourcing, negotiation, order placement,

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inbound transportation, storage and handling and quality assurance Also, includes the

responsibility to coordinate with suppliers in scheduling, supply continuity & research to

new 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:

coordinate with customer relationship management to identify customer-

articulated needs;

elect materials and suppliers in conjunction with procurement, and

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 supplied 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 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, scheduling and supporting manufacturing operations,

such as work-in-process storage, handling, transportation, and time phasing of components,

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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.

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:

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:

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.

As Kearney Consultants (1985) noted that firms engaging in comprehensive

performance measurement realized improvements in overall productivity. According to

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…..

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SUMMARY

SCM) is the process of planning, organizing, implementing, and controlling the

operations of the supply chain for the purpose of satisfying he customers’ needs as

efficiently as possible. SCM irresponsible for all the storage and movements of raw

materials, work-in-process inventory, and finished goods inventory from point of origin to

point of consumption.

A supply chain network of an organization includes the location as well as

movement decisions in respect of procurement of raw materials and other inputs,

transformation of the senatorial into intermediate and finished products, and the

distribution of these finished products to customers. With effective and efficient Supply

Chain Management (SCM) company can improve the way it finds the raw components it

needs to make a product or service and deliver it to customers.

SCM insignificant for both service and manufacturing organizations, although the

complexity of the chain may vary greatly from industry to industry. Supply chain

management includes five basic activities: planning and strategy formulation, sourcing,

transformation process, delivery, and at last handling customer complaints and excess

stocks. Planning and strategy formulation:

Company needs a strategy for managing all the resources that go toward meeting

customer demands. Supply chain planning is carried out at corporate level as well as at

operation level. Strategy formulated at corporate level is for long term horizon and includes

decision on main objectives of supply chain in terms of customer service, formulating

policies, designing supply chain, strategic alliances, etc.

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CONCLUSION :

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.

It is the process of planning, implementing, and controlling the operations of the

supply chain with the purpose to satisfy customer requirements 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.

Supply chain management has emerged as the new key to productivity and

competitiveness of manufacturing and service enterprises. The importance of this area is

shown by a significant spurt in research in the last five years and also proliferation of

supply chain solutions and supply chain companies. All major ERP companies are now

offering supply chain solutions as a major extended feature of their ERP packages.

“ Kitabon k panoo ko palat k socta hu

K u palat jai meri jindagi to kya baat hai …….”

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“ Khwabon mai jo roj milti hai

Wo haqiqat mai mil jai to kya baat hai…….”

“Matlab k liye to sab dhoodte hai mujhko

Koi bina matkab k mere paas aa jai to kya baat hai…….”

“Qatal kar k to sab le jainge dil mera

Koi apni meethi baton se le jai to kya baat hai…….”

“Jo apno k begaanepan main a baat ho

Wo koi ajnabee kah jai to kya baat hai…”

“Apne jinda rahne tak dunga khushi sab ko

Kisi ko meri mout se khushi mil jai to kya baat hai…..”

DECLARATION

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I hereby declare that the Project Report

“ACCOUNTING SYSTEM” with special reference to

Minda Industries Limited submitted to Saraswati

Institute of Management & Technology,

Rudrapur in partial fulfillment of the requirement for

the degree of Master of Business Administration is my

original work and not submitted for the award of any

other Degree, Diploma or other similar title or prizes.

Place: RudrapurDate:

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