final scm report

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TTEERRMM RREEPPOORRTT SSPPRRIINNGG 22001122

Submitted To:

RAFAY ALI LHANSubmitted By:

Prince Kumar

Ghulam mustafa

SUPPLY CHAIN MANAGEMENT

SCM PRACTICES AT PREMIER GROUP


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LETTER OF TRANSMITTAL

Date: 15th

April 2012

Mr. Rafay Ali Khan

Institute of Business Management

Karachi

Dear Mr. Rafay

Following is the Term Report that you had given us as our final project. The

project is made on SUPPLY CAHIN MANAGEMENT PRACTES AT PREMIER

GROUP.

All the data used is authentic and real as on. All issues that were relevant tothe topic have been covered in this report in great detail. For further details

and queries about the compilation of this report you may feel free to contact

me.

Yours Sincerely,

Prince kumaR

Ghulam mustafa


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LETTER OF ACKNOWLEDGEMENT

Date: 15th APRIL 2012

This report is a comprehensive report covering all the topics given in the

report outline. This report has been prepared as a part of the course

requirement for SUPPLY CHAIN MANAGEMET. The material compiled and

presented in this report is a result of exhaustive work.

This report has proved to be a great experience. I would like to thank my

course instructor MR. RAFAY ALI KHAN who shared his knowledge in the

light of his vast experience.

Sincerely,

Prince kumar

Ghulam mustafa


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ABSTRACT

This report signify the key supply chain management

practices at the premier group all the information has beencollected through the questionnaire and discussed in a great

details among the group members. This report cover that

how distributor companies manage their order processing

and what are the key issues involved in the various

processes of supply chain partners. Distribution companies

mainly focus on the logistic activities because their key

expertise many companies outsource their services to thesecompanies


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INTRODUCTION

Premier Group of Companies are set in the following manner: Premier Distributors deals

mainly in Branded Food products and Premier Agencies deals in pharmaceutical products,

toiletries etc. In order to be an effective customer service oriented company, it takes farmore than good intentions or promotional tricks, it involves organization and leadership.

Premier understands this need and continuously strives towards being a customer-creating

and customer-satisfying organization. Premier sees itself as an innovative and professional

organization suited to the needs of the 21st century

Premier is one of those few Groups possessing clarity of vision and resolve to actboldly and decisively. Until 1970/71 the supply chain of consumer goods, including drugsand medicine, was comprised of manufactured / imported wholesaler / stockiest and theretailer.

With increase in the population and emergence of suburbs and satellite town thissupply chain became inadequate. In so far as the consumer was concerned his needs werenot fulfilled and as to the manufacturer / importer he had to deal with literally hundreds ofwholesale customer which was messy and costly. Premier realized that addition of aDistributor to the supply chain would relieve pressure from the manufacturer / importerand ensure market penetration. Indeed Premier realized and implemented marketingsupport to their principals which earlier had been the sale responsibility of themanufacturer / importer as the stockiest / wholesaler was neither interested norcompetent to assist. After the establishment of the first of the Group Companies PREMIERAGENCIES in 1971. PREMIER has come a long way. They have refined and fine tuned theiroperation and have enlarged their net work to 25 sales / distribution centers nation-widebecause fully motorized with the deployment of 3 hundred plus delivery and servicevehicles. Using latest computer networking systems to ensure better inventory controlaccelerated order execution system and more unspiritual providing regular sales statisticsto their respective principals


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factors, including supplier relations, economic conditions, and raw material supply. Manyfirms hold safety stock due to the time variance during product delivery and unknowndemand requirements. Uncertainty has traditionally been buffered with inventory (Ellramand Cooper, 1990). SCM strives to minimize the uncertainty involved in businesstransactions among firms in the supply chain which leads to building safety stock inventory

(Coyle, Bardi, and Langley, 1996). Reducing uncertainty can lower inventory levels heldwithin the chain by reducing the number of suppliers a firm deals with and enhancing therelationships with the remaining firms. Sharing information about anticipated demand,orders, and production schedules reduces uncertainty and can lead to lower safety stockinventory (Coyle, Bardi, and Langley, 1996). Inventory is not necessarily eliminatedcompletely from the channel, but rather only the redundant inventory levels (Cooper andEllram, 1993). For example, Xerox took over $700 million of inventory out of its operationwithin two years by applying SCM techniques (Stenger, 1994). Information sharing helps toreduce uncertainty and leads to lower inventory levels. It is not necessary that all channel

members have access to the same information, but only the information which is neededfor them to better manage their supply chain linkages (Cooper and Ellram, 1993). During

the 1980s, the idea of reducing uncertainty by exchanging information for inventory,received widespread recognition as a means of reducing costs and increasing effectivenessamong trading partners (Ellram and Cooper, 1990). Information sharing is an essentialcharacteristic of the SCM philosophy. A broken supply chain could occur if firms do notcommunicate. A broken supply chain has substantial stock at one point to enable another

node in the supply chain to skate by with minimal stock (Davis, 1993). This is aninefficient supply chain because there is more inventory being held than is required. TheSCM concept focuses on holding inventory where it is optimal for the entire chain (Ellramand Cooper, 1990). Each player in the supply chain optimizes its own position by holdingall of the inventory it needs or requiring other supply chain members to hold additionalinventory (Ellram and Cooper, 1990). There will always be some level of inventory within

the supply chain, but the real difficulty is knowing how much to hold and where to hold it(Davis, 1993). Coordination is the reason that SCM exists and has become increasinglypopular within firms.

Increase Customer Service

Companies have recognized that customer service can increase revenue and customersatisfaction. The driving force behind the emergence of SCM is pressure from the customerfor improved service (Giunipero and Brand, 1996). Coyle, Bardi, and Langley (1996) definecustomer service as a process for providing competitive advantage and adding benefits tothe supply chain to maximize the total value to the ultimate customer. Customer

satisfaction is referred to as the cumulative level of satisfaction based on the total

purchase and consumption experience with a good or service over time (Sharma, Grewal,and Levy, 1995). SCM is instrumental in delivering high customer satisfaction with reducedlead times and costs. Customer service affects company performance in two ways: 1)customer satisfaction and 2) cost expenditures (Dresner and Xu, 1995). An increase incustomer service levels will increase costs, but also will increase customer satisfaction thatin turn increases revenues. In other words, a satisfied customer will return and be willingto pay a premium for high customer service levels, resulting in higher profits. Whenimplementing a customer service program, each level of service is associated with some


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transportation and inventory costs. For example, inventory levels (and carrying costs) canbe lowered if air transportation is used, but transportation costs will be higher (Coyle,Bardi, and Langley, 1996). These costs can be justified if higher customer service levelsresult in a higher profit. A company needs to find a customer service level that balancestotal benefits and total costs. Langley and Holcomb (1992) identified several trends in

customer service including: 1) the ability to effectively manage information, 2) longer-termrelationships, and 3) sustainable competitive advantage Understanding and implementingthese trends are important because customer service becomes the link between logisticsand marketing activities (Langley and Holcomb, 1992). A company with a logistics andmarketing advantage will be an industry leader. Companies that can effectively manage andshare information within the supply chain have a significant customer service tool.Information is key to a companys ability to provide excellent service. An open

communication channel between buyers and suppliers is necessary to receive feedback oncustomer service. Information must be accessible and usable by the entire supply chain toensure proper customer service levels. In the traditional system, companies control allinbound and outbound information flows so they feel much more comfortable. The

information exchanged is limited to the needs of the current transaction (Cooper andEllram, 1993). According to Luis Fsolis, vice president of business development, GE CapitalLogistics, information has to capture the needs of customers better and most companieshave been capturing and managing information that only pertains to themselves

(Meachum, 1996). A shift from transactual to contractual relationships has resulted inlonger-term relationships (or partnerships) with buyers and suppliers. Partnerships evolvefrom a relationship between suppliers and satisfied customers who have become repeat

purchasers and loyal to a particular firm (Sharma, Grewal, and Levy, 1995). Close buyer-supplier relationships have come to the forefront of todays bus iness world as a result ofcompanies working to improve their levels of customer satisfaction. Customers experience

service improvements through reduced inventory levels, shorter cycle times, and more

timely and accurate information (Lambert, Emmelhainz, and Gardner, 1996). Enhancedcustomer service levels give companies a competitive advantage over competitors byensuring customers that service is a priority

Build Competitive Advantage

As the market environment becomes more competitive, firms must develop a strategiclong-term (versus a traditional adversarial approach) competitive advantage to remain inbusiness. Strategic capabilities needed for a firms success and competitive advantageinclude being responsive to target markets, having low total distribution cost, and speedy,reliable delivery (Morash, Droge, and Vickery, 1996). Companies use strategic alliances toachieve these capabilities. An alliance is defined as a contractual relationship between two

independent entities in the logistics channel to achieve specific objectives and benefits(LaLonde and Cooper, 1989). Partnerships are the most informal and most common type ofstrategic alliance (Rogers and Daugherty, 1995).


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SUPPLY CHAIN MANAGEMENTPRACTICES AT PREMIER GROUP

ORDER PROCESSING

OUTWARDPremier distributor is engaged in providing best service to its principal; it provides distribution services

to all retailers and wholesalers and makes sure that all the products are timely available on the shelves

of the shops.

Our order processing includes the process of booking different orders from different shops by all DSFs

(Daily sales force). All the routes and plan is defined in the SAF (Sales area format)/PJP (permanentjourney plan). Supervisors and managers make sure that all the shops are visited. These orders are then

processed by IT department and data entry is made in the software. Summary sheet is generated by the

system and given to

the store manager.

Store manager is

responsible for the

timely loading of vans

so that all the shops

are covered. Sales

force makes sure thatall goods are delivered

and no returns are

made. Orders are

delivered to the right

customer at the right

place at the right time

payment is made.

Orders Booked

Order Processingby IT personel

Storesummary/Demand

generated

Invoices generated

Order picking

Vans loaded

Order delivered

Payment received


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INWARD

Monthly audits are done on regular basis in the warehouses and stock taking reports are made to

identify the exact needs of the warehouse. Our accounts manager places consolidated and purchase is

issued to the principal and they process orders accordingly. Deliver Challan is issued and invoice sent tothe distributor. Containers reach at the respective branches specified by Distributor head office. GRN is

provided and entry is made in the ledger.

Warehousedemand raised

Demandrequirement

consolidated

PO issued toPrincipal

Delivery

Challan/Invoice

Goods ReceiptNote

Ledger Entry


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Risk coverage

1. Cash in transit2. Cash in safe3. Cash & Goods in transit4. Fidelity Insurance5. Fire insurance6. Terrorism

Principals Organo diagram

NSM

RSM

ZM

SE

DSF


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Information Flow:

All the communication is done electronically with all the principals. We are using our software based on

visual basic. We have more than 1200 reporting formats. Multiple types of reports can be generated

from the software depending on the customer/Principal needs.

Key Processes in Supply Chain

Information flow

MVR Competitive analysis (principal) Surprise visits by TSO, BBM, AM, GM, director sales Target meetings

Target review meetings

Order

Booking

Procurement

StorageSupply

Services


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Logistics activities

An are operated from braches to different areas Geographical, departmentalization in house workshops and outsourced On rent when required.

Warehousing activities

Proper check and balance Fifo Weekly orders Primary/sec targets Safety stocks Loaders stock position Reshuffling Fire arrangements Temperature Monthly audit Stock taking reports Product plus section based


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Issues1. Pending Orders2. To secure Left over sales3. Cost of transport4. Managing Supply5. Managing Expiry of products6. Vans management7. Salesmen retention

Challenges

Oil prices Absenteeism Law & order Technology Workforce turnover

CONCULSION


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Our key finding has included the following points regarding the supply chain

process at PREMIER Group:

Highly sophisticated information software generating various reportscatering to the information needs of the management.

These include:

Daily, Weekly & Monthly sales reports Customer, Territory & Area wise reports Product & Category wise reports Target Achievement reports Salesman & customer productivity reports

Extensive distribution network all over Pakistan. Brilliance in planning and excellence in execution are our top priorities in what we

do and how we do it

Adequate Infrastructure & ResourcesOptimum level of infrastructure & resources enable us to perform the required task with

greater efficiency

REFERENCES


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final scm report

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