logistic and scm in mahindra

8/3/2019 logistic and scm in mahindra

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INDEX

1. INTRODUCTION...........................................................4

1.1 MEANING........................................................................................................4

1.2 Definition..........................................................................................................5

1.3 Business logistics................................................................................................5

1.4 Production logistics.............................................................................................6

1.5 Logistics Management..........................................................................................6

1.6 Importance of logistic...........................................................................................7

1.7 Third-party logistics (3PL) ....................................................................................8

1.8 Fourth-party logistics (4PL)...................................................................................8

2.INTRODUCTION TO SUPPLY CHAIN MANAGEMENT............9

2. MEANING.......................................................................................................9

2.1 Definition..........................................................................................................9

2.2 Elements of the Supply Chain...............................................................................10

2.3 Supply Chain Management Technology..................................................................11

2.4 Importance of supply chain management.................................................................11

2.5 Components of supply chain management?..............................................................12

2.6 Supply chain business process integration................................................................13

2.7 Tax efficient supply chain management...................................................................13

2.8 Supply chain sustainability..................................................................................14

2.9 Components of supply chain management................................................................14

2.10 Problem addressed by supply chain management......................................................15

2.11Supply Chain Decisions....................................................................................17

2.12 Internal and external measurement.......................................................................18

2.13 Historical developments in supply chain management...............................................19

2.14 Key Issues in Supply Chain Management...............................................................21

2.15 The key issues in contemporary supply chain management are:....................................21

2.16 There are six key elements to a supply chain:..........................................................23

2.17 WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASICCOMPONENTOF SCM?.........................................................................................26

2.18 Reasons to Implement Supply Chain Management....................................................27

2.19 Implementing the Supply Chain Management.........................................................27

2.20 Elaborating Analysis........................................................................................28

2.21 The Complex Nature of Supply Chain Management Analysis......................................282.22 Strategy and Analysis.......................................................................................29

2.23 BENEFITS OF SUPPLY-CHAIN IMPROVEMENT................................................29

2.24 Warehouse in supply chain management................................................................30


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A Meaning.......................................................................................................30

B Need for warehouse..........................................................................................31

C Types of warehouse..........................................................................................32

2.25 Packaging......................................................................................................33

2.26 Process of Supply Chain Management...................................................................34

2.27 Supply Chain Now..........................................................................................36

2.28 Logistics v/s. Supply Chain Management...............................................................37

3 Mahindra & Mahindra Limited...........................................38

3 INTRODUCTIONS............................................................................................39

3.1 History...........................................................................................................40

3.3 SAP SUPPLY CHAIN MANAGEMENT................................................................41PLANNING, EXECUTION, AND COLLABORATION ACROSS THE RESPONSIVESUPPLY NETWORK.............................................................................................41

3.4 Key Execution Benefits of SAP Supply Chain Management With SAP SCM, you benefitfrom:..................................................................................................................41

3.5 SAP Supply Network Collaboration, included in SAP SCM, helps you connect to andcollaborate with:....................................................................................................42

3.6 Key Collaboration Benefits of SAP Supply Chain ManagementWith SAP SCM, you can gainthese benefits:.......................................................................................................42

3.7 Logistics Service Provider (LSP)...........................................................................43

Practice Overview | Service Offerings | OTM | Customer Speak/Credentials..........................43

A. Practice Overview........................................................................................43

B. Service Offerings.........................................................................................44

C. Oracle Transportation Management (OTM).........................................................44

D. Customer Speak/Credentials............................................................................45

3.8 About Supply Chain Management at Mahindra.........................................................46

3.9 SUPPLY CHAIN MANAGEMENT OF MAHINDRA & MAHINDRA:..........................47

3.10 About Mahindra People Transport Solutions...........................................................48

3.11 Mahindra Logistics to Go Global, Looks For Partner in China Posted by Jayashankar Menon4 months ago........................................................................................................49

3.11 Supply Chain Solutions.....................................................................................50

3.12 People Logistics Solutions.................................................................................50

3.13 Manufacturing & Supply Chain Management..........................................................50

3.14 Compliant Supply Chain....................................................................................51

3.15 BPO Services.................................................................................................523.16 Logistics and supply chain strategy.......................................................................53

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INTERVIEW..............................................................................54

CUNCLUSION............................................................................57

REFERANCE..............................................................................58REFERANCE

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LOGISTIC AND SUPPLY CHAIN MANAGEMENT

1. INTRODUCTION

The word "logistics" has many applications however only one intrinsic

meaning. The word itself is a plural noun that can be treated as both singular and

plural. The Oxford English Dictionary defines logistics as "the detailed organization

and implementation of a complex operation". From this one definition two individual

meanings can be derived, the former of these two involves organization of the

movement of equipment or people for a purpose. An example of this could be

logistics within the army, where the logistics of moving troops needs to be addressedfor an attack to be carried out effectively. The second is probably the more commonly

used of the two meanings and it relates to the commercial activity of transporting

goods to customers. UPS (United Parcel Service) who are one of the world's largest

packaging and Logistics Company have recently had an advertising campaign based

around the slogan "We? Logistics."Many of their adverts show different parts of their

shipping and distribution lines, demonstrating the wide variety of things that the term

"logistics" can refer to. Ranging from packing in a factory to shipping on container

ships or cargo flights.

The word logistics has its origins in Greek, coming from the word "logistiki"

to mean financial organisation or accounting. It was originally used to mean military

movement, and there was a position in the Roman, Greek and Byzantine armies with

the title of Logistikas who had the role of organising financial matters in the army and

distributing supplies. Later the term became used for the movement of raw materials.

1.1 MEANINGLogistics is the process of planning, implementing and controlling the efficient, cost-

effective flow and storage of raw materials, in- process inventory, finished goods and related

information from point of origin to point of consumption for the purpose of conforming to

customer requirements

The mission of logistics is to get the right goods or services to the right place, at the

right time, and in the desired condition and quantity in relation to customers order

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Main logistics activities and decisions:

cooperate with marketing to set customer service levels,

facility location decisions transportation activities (eg. transportation mode selection, vehicle scheduling, carrier

routing

),

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

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

information collection and flows and order processing, warehousing and materials handling,

packaging and packing,

1.2 Definition

The process of planning, implementing and controlling the efficient, effective flow and

strong of goods, service, and related information from point of origin to point of consumption

for the purpose of conforming to consumption to customer requirements.

1.3 Business logistics

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

Logistics as a business concept evolved in the 1950s due to the increasing complexity of

supplying businesses with materials and shipping out products in an increasingly globalized

supply chain, leading to a call for experts called supply chain logisticians. Business logistics

can be defined as "having the right item in the right quantity at the right time at the right

place for the right price in the right condition to the right customer", and is the science of

process and incorporates all industry sectors. The goal of logistics work is to manage the

fruition of project life cycles, supply chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus

(outbound logistics) covering the flow and storage of materials from point of origin to point

of consumption (see supply chain management). The main functions of a qualified logistician

include inventory management, purchasing, transportation, warehousing, consultation and the

organizing and planning of these activities.

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1.6 Importance of logistic

The importance of logistics systems lies in the fact that it leads to ultimateconsummation of the sales contract. The buyer is not interested in the promises of the seller

that he can supply goods at competitive price but that he actually does so. Delivery according

to the contract is essential to fulfilling the commercial and legal requirements. In the event of

failure to comply with the stipulated supply of period, the seller may not only get his sale

amount back, but may also be legally penalized, if the sales contract so specifies. There is no

doubt that better delivery schedule is a good promotional strategy when buyers are reluctant

to invest in warehousing and keeping higher level of inventories. Similarly, better and/or

timely delivery helps in getting repeat orders through creation of goodwill for the supplier.

Thus, as effective logistics system contributes immensely to the achievements of the

business and marketing objectives of a firm. It creates time and place utilities in the products

and thereby helps in maximizing the value satisfaction to consumers. By ensuring quick

deliveries in minimum time and cost, it relieves the customers of holding excess inventories.

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

related activities of distribution. In nutshell, an efficient system of physical

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

Logistics has gained importance due to the following trends

Raise in transportation cost.

Production efficiency is reaching a peak

Fundamental change in inventory philosophy

Product line proliferated

Computer technology

Increased use or computers

Increased public concern of products Growth of several new, large retail chains or

mass merchandise with large demands & very sophisticated logistics services, by pass

traditional channel & distribution.

Reduction in economic regulation

Growing power of retailers

Globalization

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As a result of these developments, the decision maker has a number of choices to

work out the most ideal marketing logistics system. Essentially, this system implies that

people at all levels of management think and act in terms of integrated capabilities and

adoption of a total approach to achieve pre-determined logistics objectives.

Logistics is also important on the global scale. Efficient logistics systems throughout

the world economy are a basis for trade and a high standard of living for all of us. Lands, as

well as the people who occupy them, are not equally productive. That is, one region often has

an advantage over all others in some production specialty. An efficient logistics system

allows a geographical region to exploit its inherent advantage by specializing its productive

efforts in those products in which it has been an advantage by specializing its productive to

other regions. The system allows the products landed cost (production plus logistics cost)

and quality to be competitive with those form any other region. Common examples of this

specialization have been Japans electronics industry, the agricultural, computer and aircrafts

industries of United States and various countries dominance in supplying raw materials such

as oil, gold, bauxite, and chromium.

1.7 Third-party logistics (3PL)

Third-party logistics (3PL) involves using external organizations to execute logisticsactivities that have traditionally been performed within an organization itself.[4] According to

this definition, third-party logistics includes any form of outsourcing of logistics activities

previously performed in-house. If, for example, a company with its own warehousing

facilities decides to employ external transportation, this would be an example of third-party

logistics. Logistics is an emerging business area in many countries.

1.8 Fourth-party logistics (4PL)

The concept of Fourth-Party Logistics (4PL) provider was first defined by Andersen

Consulting (Now Accenture) as an integrator that assembles the resources, capabilities and

technology of its own organization and other organizations to design, build, and run

comprehensive supply chain solutions. Whereas a third party logistics (3PL) service provider

targets a function, a 4PL targets management of the entire process. Some have described a

4PL as a general contractor who manages other 3PLs, truckers, forwarders, custom house

agents, and others, essentially taking responsibility of a complete process for the customer.

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INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

2 MEANING

A supply chain is a network of facilities and distribution options that performs the

functions of procurement of materials, transformation of these materials into intermediate

and finished products, and the distribution of these finished products to customers. Supply

chains exist in both service and manufacturing organizations, although the complexity of the

chain may vary greatly from industry to industry and firm to firm. Below is an example of a

very simple supply chain for a single product, where raw material is procured from vendors,

transformed into finished goods in a single step, and then transported to distribution centers,

and ultimately, customers. Realistic supply chains have multiple end products with shared

components, facilities and capacities.Traditionally, marketing, distribution, planning, manufacturing, and the purchasing

organizations along the supply chain operated independently. These organizations have their

own objectives and these are often conflicting. Marketing's objective of high customer

service and maximum sales dollars conflict with manufacturing and distribution goals. Many

manufacturing operations are designed to maximize throughput and lower costs with little

consideration for the impact on inventory levels and distribution capabilities. Purchasing

contracts are often negotiated with very little information beyond historical buying patterns.

2.1 Definition

Another definition is provided by the APICS Dictionary when it defines SCM as the

"design, planning, execution, control, and monitoring of supply chain activities with the

objective of creating net value, building a competitive infrastructure, leveraging worldwide

logistics, synchronizing supply with demand and measuring performance globally

Supply chain management, then, is the active management of supply chain activities

to maximize customer value and achieve a sustainable competitive advantage. It represents aconscious effort by the supply chain firms to develop and run supply chains in the most

effective & efficient ways possible. Supply chain activities cover everything from product

development, sourcing, production, and logistics, as well as the information systems needed

to coordinate these activities.

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2.2 Elements of the Supply Chain

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

1. Customer: The customer starts the chain of events when they decide to purchase a

product that has been offered for sale by a company. The customer contacts the sales

department of the company, which enters the sales order for a specific quantity to be

delivered on a specific date. If the product has to be manufactured, the sales order will

include a requirement that needs to be fulfilled by the production facility.

2. Planning: The requirement triggered by the customers sales order will be combined

with other orders. The planning department will create a production plan to produce the

products to fulfill the customers orders. To manufacture the products the company will

then have to purchase the raw materials needed.

3. Purchasing: The purchasing department receives a list of raw materials and services

required by the production department to complete the customers orders. The

purchasing department sends purchase orders to selected suppliers to deliver the

necessary raw materials to the manufacturing site on the required date.

4. Inventory: The raw materials are received from the suppliers, checked for quality andaccuracy and moved into the warehouse. The supplier will then send an invoice to the

company for the items they delivered. The raw materials are stored until they are

required by the production department.

5. Production: Based on a production plan, the raw materials are moved inventory to the

production area. The finished products ordered by the customer are manufactured using

the raw materials purchased from suppliers. After the items have been completed and

tested, they are stored back in the warehouse prior to delivery to the customer.

6. Transportation: When the finished product arrives in the warehouse, the shipping

department determines the most efficient method to ship the products so that they are

delivered on or before the date specified by the customer. When the goods are received

by the customer, the company will send an invoice for the delivered products.

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2.3 Supply Chain Management Technology

If a company expects to achieve benefits from their supply chain managementprocess, they will require some level of investment in technology. The backbone for many

large companies has been the vastly expensive Enterprise Resource Planning (ERP) suites,

such as SAP and Oracle. These enterprise software implementations will encompass a

companys entire supply chain, from purchasing of raw materials to warranty service of

items sold. The complexity of these applications does require a significant cost, not only a

monetary cost, but the time and resources required to successfully implement an enterprise

wide solution. Buy-in by senior management and adequate training of personnel is key to thesuccess of the implementation. There are now many ERP solutions to choose from and it is

important to select one which fits the overall needs of a companys supply chain.

2.4 Importance of supply chain management

Organizations increasingly find that they must rely on effective supply chains, or

networks, to compete in the global market and networked economy. In Peter Duckers (1998)

new management paradigms, this concept of business relationships extends beyond

traditional enterprise boundaries and seeks to organize entire business processes throughout avalue chain of multiple companies.

During the past decades, globalization, outsourcing and information technology have

enabled many organizations, such as Dell and Hewlett Packard, to successfully operate solid

collaborative supply networks in which each specialized business partner focuses on only a

few key strategic activities (Scott, 1993). This inter-organizational supply network can be

acknowledged as a new form of organization. However, with the complicated interactions

among the players, the network structure fits neither "market" nor "hierarchy" categories(Powell, 1990). It is not clear what kind of performance impacts different supply network

structures could have on firms, and little is known about the coordination conditions and

trade-offs that may exist among the players. From a systems perspective, a complex network

structure can be decomposed into individual component firms. Traditionally, companies in a

supply network concentrate on the inputs and outputs of the processes, with little concern for

the internal management working of other individual players. Therefore, the choice of an

internal management control structure is known to impact local firm performance.

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In the 21st century, changes in the business environment have contributed to the

development of supply chain networks. First, as an outcome of globalization and the

proliferation of multinational companies, joint ventures, strategic alliances and business

partnerships, significant success factors were identified, complementing the earlier "Just-In-

Time", "Lean Manufacturing" and "Agile Manufacturing" practices. Second, technological

changes, particularly the dramatic fall in information communication costs, which are a

significant component of transaction costs, have led to changes in coordination among the

members of the supply chain network.

Many researchers have recognized these kinds of supply network structures as a new

organization form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual

Corporation", Global Production Network", and "Next Generation Manufacturing System.In general, such a structure can be defined as "a group of semi-independent organizations,

each with their capabilities, which collaborate in ever-changing constellations to serve one or

more markets in order to achieve some business goal specific to that collaboration"

2.5 Components of supply chain management?

Supply chain management (SCM) is the combination of art and science that goes into

improving the way your company finds the raw components it needs to make a product orservice and deliver it to customers. The following are five basic components of SCM.

1. Plan: -this is the strategic portion of SCM. Companies need a strategy for managing all the

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

piece of SCM planning is developing a set of metrics to monitor the supply chain so that it

is efficient, costs less and delivers high quality and value to customers.

2. Source: - next, companies must choose suppliers to deliver the goods and services they

need to create their product. Therefore, supply chain managers must develop a set of

pricing, delivery and payment processes with suppliers and create metrics for monitoring

and improving the relationships. And then, SCM managers can put together processes for

Managing their goods and services inventory, including receiving and verifying shipments,

transferring them to the manufacturing facilities and authorizing supplier payments.

3. Make: - this is the manufacturing step. Supply chain managers schedule the activities

necessary for production, testing, packaging and preparation for delivery. This is the most

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metric-intensive portion of the supply chainone where companies are able to measure

quality levels, production output and worker productivity.

2.6 Supply chain business process integration

Successful SCM requires a change from managing individual functions to integrating

activities into key supply chain processes. An example scenario: the purchasing department

places orders as requirements become known. The marketing department, responding to

customer demand, communicates with several distributors and retailers as it attempts to

determine ways to satisfy this demand. Information shared between supply chain partners can

only be fully leveraged through process integration.

Supply chain business process integration involves collaborative work between buyers andsuppliers, joint product development, common systems and shared information. According to

Lambert and Cooper (2000), operating an integrated supply chain requires a continuous

information flow. However, in many companies, management has reached the conclusion that

optimizing the product flows cannot be accomplished without implementing a process

approach to the business. The key supply chain processes stated by Lambert (2004) are:

Customer relationship management

Customer service management Demand management style

Order fulfillment

Manufacturing flow management

Supplier relationship management

Product development and commercialization

Returns management

2.7 Tax efficient supply chain management

Tax Efficient Supply Chain Management is a business model which considers the

effect of Tax in design and implementation of supply chain management. As the consequence

of Globalization, business which is cross-nation should pay different tax rates in different

countries. Due to the differences, global players have the opportunity to calculate and

optimize supply chain based on tax efficiency legally. It is used as a method of gaining more

profit for company which owns global supply chain.

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2.8 Supply chain sustainability

Supply chain sustainability is a business issue affecting an organizations supplychain or logistics network and is frequently quantified by comparison with SECH ratings.

SECH ratings are defined as social, ethical, cultural and health footprints. Consumers have

become more aware of the environmental impact of their purchases and companies SECH

ratings and, along with non-governmental organizations(NGOs), are setting the agenda for

transitions to organically-grown foods, anti-sweatshop labor codes and locally-produced

goods that support independent and small businesses. Because supply chains frequently

account for over 75% of a companys carbon footprint many organizations are exploring how

they can reduce this and thus improve their SECH rating.

For example, in July, 2009 the U.S. based Wal-Mart corporation announced its intentions to

create a global sustainability index that would rate products according to the environmental

and social impact made while the products were manufactured and distributed. The

sustainability rating index is intended to create environmental accountability in Wal-Mart's

supply chain, and provide the motivation and infrastructure for other retail industry

companies to do the same.

More recently, the US Dodd-Frank Wall Street Reform and Consumer Protection Act

signed into law by President Obama in July 2010 contained a supply chain sustainability

provision in the form of the Conflict Minerals law. This law requires SEC-regulated

companies to conduct third party audits of the company supply chains, determine whether

any tin, tantalum, tungsten or gold (together referred to as "conflict minerals") is made of up

ore mined/sourced from the Democratic Republic of the Congo(DRC), and create a report

(available to the general public and SEC) detailing the supply chain due diligence efforts

undertaken and the results of the audit. Of course, the chain of suppliers/vendors to these

reporting companies will be expected to provide appropriate supporting information.

2.9 Components of supply chain management

The SCM components are the third element of the four-square circulation framework.

The level of integration and management of a business process link is a function of the

number and level, ranging from low to high, of components added to the link (Ellram and

Cooper, 1990; Houlihan, 1985). Consequently, adding more management components or

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increasing the level of each component can increase the level of integration of the business

process link.

The literature on business process re-engineering, buyer-supplier relationships, and SCM

suggests various possible components that must receive managerial attention when managing

supply relationships. Lambert and Cooper (2000) identified the following components:

Planning and control

Work structure

Organization structure

Product flow facility structure

Information flow facility structure

Management methods

Power and leadership structure

Risk and reward structure

Culture and attitude

2.10 Problem addressed by supply chain management

Supply chain management must address the following problems:

1. Distribution Network Configuration: number, location and network missions of

suppliers, production facilities, distribution centers, warehouses, cross-docks and

customers.

2. Distribution Strategy: questions of operating control (centralized, decentralized or

shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD

(direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier,

including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer

on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishmentstrategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated,

private carrier, common carrier, contract carrier, or 3PL).

3. Trade-Offs in Logistical Activities: The above activities must be well coordinated in

order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if

only one of the activities is optimized. For example, full truckload (FTL) rates are more

economical on a cost per pallet basis than less than truckload (LTL) shipments. If,

however, a full truckload of a product is ordered to reduce transportation costs, there will

be an increase in inventory holding costs which may increase total logistics costs. It is

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therefore imperative to take a systems approach when planning logistical activities. This

trade-offs are key to developing the most efficient and effective Logistics and SCM

strategy.

4. Information: Integration of processes through the supply chain to share valuable

information, including demand signals, forecasts, inventory, transportation, potential

collaboration, etc.

5. Inventory Management: Quantity and location of inventory, including raw materials,

work-in-progress (WIP) and finished goods.

6. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds

across entities within the supply chain. Supply chain execution means managing and

coordinating the movement of materials, information and funds across the supply chain.The flow is bi-directional

One could suggest other key critical supply business processes which combine these

processes stated by Lambert such as:

Customer service management

Procurement

Product development and commercialization

Manufacturing flow management/support Physical distribution

Outsourcing/partnerships

Performance measurement

Warehousing management

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1.11 Supply Chain Decisions

We classify the decisions for supply chain management into two broad categories --strategic and operational. As the term implies, strategic decisions are made typically over a

longer time horizon. These are closely linked to the corporate strategy (they sometimes {\it

are} the corporate strategy), and guide supply chain policies from a design perspective. On

the other hand, operational decisions are short term, and focus on activities over a day-to-day

basis. The effort in these type of decisions is to effectively and efficiently manage the product

flow in the "strategically" planned supply chain.

There are four major decision areas in supply chain management:

1) Location,

2) Production,

3) Inventory, and

4) Transportation (distribution)

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

1. Production Decisions

The strategic decisions include what products to produce, and which plants toproduce them in, allocation of suppliers to plants, plants to DC's, and DC's to

customer markets. As before, these decisions have a big impact on the revenues,

costs and customer service levels of the firm. These decisions assume the existence

of the facilities, but determine the exact path(s) through which a product flows to and

from these facilities. Another critical issue is the capacity of the manufacturing

facilities--and this largely depends the degree of vertical integration within the firm.

Operational decisions focus on detailed production scheduling. These decisionsinclude the construction of the master production schedules, scheduling production

on machines, and equipment maintenance. Other considerations include workload

balancing, and quality control measures at a production facility.

2. Inventory Decisions.

These refer to means by which inventories are managed. Inventories exist at

every stage of the supply chain as either raw materials, semi-finished or finished

goods. They can also be in-process between locations. Their primary purpose to

buffer against any uncertainty that might exist in the supply chain. Since holding of

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inventories can cost anywhere between 20 to 40 percent of their value, their efficient

management is critical in supply chain operations. It is strategic in the sense that top

management sets goals. However, most researchers have approached the

management of inventory from an operational perspective. These include

deployment strategies (push versus pull), control policies --- the determination of the

optimal levels of order quantities and reorder points, and setting safety stock levels,

at each stocking location. These levels are critical, since they are primary

determinants of customer service levels

3. Transportation Decisions

The mode choice aspect of these decisions are the more strategic ones. These

are closely linked to the inventory decisions, since the best choice of mode is oftenfound by trading-off the cost of using the particular mode of transport with the

indirect cost of inventory associated with that mode. While air shipments may be

fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile

shipping by sea or rail may be much cheaper, but they necessitate holding relatively

large amounts of inventory to buffer against the inherent uncertainty associated with

them. Therefore customer service levels, and geographic location play vital roles in

such decisions. Since transportation is more than 30 percent of the logistics costs,

operating efficiently makes good economic sense. Shipment sizes (consolidated bulk

shipments versus Lot-for-Lot), routing and scheduling of equipment are key in

effective management of the firm's transport strategy.

2.12 Internal and external measurement

According to experts, internal measures are generally collected and analyzed by the firm

including

Cost Customer Service

Productivity measures

Asset measurement, and

Quality.

External performance measurement is examined through customer perception measures

and "best practice" benchmarking, and includes 1) customer perception measurement, and 2)

best practice benchmarking.

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2.13 Historical developments in supply chain management

Six major movements can be observed in the evolution of supply chain management

studies: Creation, Integration, and Globalization, Specialization Phases One and Two, and

SCM 2.0.

1. Creation era

The term supply chain management was first coined by a U.S. industry consultant in the

early 1980s. However, the concept of a supply chain in management was of great

importance long before, in the early 20th century, especially with the creation of the

assembly line. The characteristics of this era of supply chain management include the need

for large-scale changes, re-engineering, downsizing driven by cost reduction programs,

and widespread attention to the Japanese practice of management.

2. Integration era

This era of supply chain management studies was highlighted with the development of

Electronic Data Interchange (EDI) systems in the 1960s and developed through the 1990s

by the introduction of Enterprise Resource Planning (ERP) systems. This era has

continued to develop into the 21st century with the expansion of internet-based

collaborative systems. This era of supply chain evolution is characterized by both

increasing value-adding and cost reductions through integration.In fact a supply chain can be classified as a Stage 1, 2 or 3 network. In stage 1 type

supply chain, various systems such as Make, Storage, Distribution, Material control, etc.

are not linked and are independent of each other. In a stage 2 supply chain, these are

integrated under one plan and are ERP enabled. A stage 3 supply chain is one in which

vertical integration with the suppliers in upstream direction and a customer in downstream

direction is achieved. An example of this kind of supply chain is Tesco.3. Globalization

era

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

be characterized by the attention given to global systems of supplier relationships and the

expansion of supply chains over national boundaries and into other continents. Although

the use of global sources in the supply chain of organizations can be traced back several

decades (e.g., in the oil industry), it was not until the late 1980s that a considerable number

of organizations started to integrate global sources into their core business.

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4. Specialization era: outsourced manufacturing and distribution

In the 1990s, industries began to focus on core competencies and adopted a

specialization model. Companies abandoned vertical integration, sold off non-core

operations, and outsourced those functions to other companies. This changed management

requirements by extending the supply chain well beyond company walls and distributing

management across specialized supply chain partnerships.

This transition also re-focused the fundamental perspectives of each respective

organization. OEMs became brand owners that needed deep visibility into their supply

base. They had to control the entire supply chain from above instead of from within.

Contract manufacturers had to manage bills of material with different part numberingschemes from multiple OEMs and support customer requests for work -in-process

visibility and vendor-managed inventory (VMI).

The specialization model creates manufacturing and distribution networks composed

of multiple, individual supply chains specific to products, suppliers, and customers who

work together to design, manufacture, distribute, market, sell, and service a product. The

set of partners may change according to a given market, region, or channel, resulting in a

proliferation of trading partner environments, each with its own unique characteristics and

demands.

5. Specialization era: supply chain management as a service Specialization within the

supply chain began in the 1980s with the inception of transportation brokerages,

warehouse management, and non-asset-based carriers and has matured beyond

transportation and logistics into aspects of supply planning, collaboration, execution and

performance management. At any given moment, market forces could demand changes

from suppliers, logistics providers, locations and customers, and from any number of these

specialized participants as components of supply chain networks. This variability hassignificant effects on the supply chain infrastructure, from the foundation layers of

establishing and managing the electronic communication between the trading partners to

more complex requirements including the configuration of the processes and work flows

that are essential to the management of the network itself.

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2.14 Key Issues in Supply Chain Management

To ensure that the supply chain is operating as efficient as possible and generating thehighest level of customer satisfaction at the lowest cost, companies have adopted Supply

Chain Management processes and associated technology. Supply Chain Management has

three levels of activities that different parts of the company will focus on: strategic;

tactical; and operational.

1. Strategic level: At this level, company management will be looking to high level

strategic decisions concerning the whole organization, such as the size and location of

manufacturing sites, partnerships with suppliers, products to be manufactured and salesmarkets.

2.Tactical level: Tactical decisions focus on adopting measures that will produce cost

benefits such as using industry best practices, developing a purchasing strategy with

favored suppliers, working with logistics companies to develop cost effect transportation

and developing warehouse strategies to reduce the cost of storing inventory.

3. Operational level: Decisions at this level are made each day in businesses that affect

how the products move along the supply chain. Operational decisions involve making

schedule changes to production, purchasing agreements with suppliers, taking orders

from customers and moving products in the warehouse.

2.15 The key issues in contemporary supply chain management are:

1. Configuration of distribution network : This issue deals with the design of a

distribution network to serve a specific market. This will consist of a set of warehouses

and retail outlets, together with the manufacturing plant and supply sources. The designwill be based on consideration of location and capacity of each of these elements. The

total network cost will include the costs of inventory at various levels and costs of

transportation between various facilities. This will also determine the level of service

available to the customers.

2. Inventory control: This is concerned with the levels of inventory to be held at various

points in the supply chain. As inventory represents costs, the sensible approach is to hold

as low an inventory as possible but businesses are forced to hold inventories as a buffer

to counter the effects of an uncertain demand. How to minimise the uncertainty and

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therefore the necessity of holding unnecessary inventory which increases the cost at the

end?? This is one of the key issues in supply chain management.

3. Distribution strategy: The distribution strategy is concerned with the distribution of the

firm's products. There are several strategies available such as cross-docking, the classical

distribution strategy or direct shipping. Which one is the best suitable for the firm to

achieve its supply chain and corporate goals??

4. Supply chain integration and strategic partnering: This is concerned with the

complex issue of strategic inter organisational partnership for achieving competitive

advantage. This is about sharing of information and efficient use of the information for

coordinating business processes to deliver a superior value to the customers. How to

achieve this and what are the challenges? This is one of the emerging issues in supplychain management.

5. Product design: This is concerned with the design of the product and its impact on total

cost of the product. How does the design of a product affect the various cost elements

within the supply chain? It is possible that the design determines the strategies to be

followed regarding inventory or transportation. The design may also determine the

length of the product life cycle and the extent of uncertainty associated with demand for

this product. How to leverage design to achieve supply chain management objectives.

6. Information technology and decision support systems: The enabling role of

information and communication technologies has been identified. The concerns of

contemporary supply chain management are the efficient use of modern technology

including the Internet and computerized decision support systems. The technology

allows acquisition of vast quantity of data, information and their subsequent processing

in accordance with selected decision criteria. Will these technologies emerge as key

determinants of success in the management of supply chains?

7. Customer value: The key issue is the definition of customer value in an age ofincreasing consumer power. How will supply chains will be designed to provide value to

the customers and how will firms define value?

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2.16 There are six key elements to a supply chain:

Production

Supply

Inventory

Location

Transportation, and

Information

The following describes each of the elements:

1. Production

Strategic decisions regarding production focus on what customers want and the market

demands. This first stage in developing supply chain agility takes into consideration what

and how many products to produce, and what, if any, parts or components should be

produced at which plants or outsourced to capable suppliers. These strategic decisions

regarding production must also focus on capacity, quality and volume of goods, keeping

in mind that customer demand and satisfaction must be met. Operational decisions, on the

other hand, focus on scheduling workloads, maintenance of equipment and meeting

immediate client/market demands. Quality control and workload balancing are issues

which need to be considered when making these decisions.

2. Supply

Next, an organization must determine what their facility or facilities are able to produce,

both economically and efficiently, while keeping the quality high. But most companies

cannot provide excellent performance with the manufacture of all components.

Outsourcing is an excellent alternative to be considered for those products and

components that cannot be produced effectively by an organizations facilities.

Companies must carefully select suppliers for raw materials. When choosing a supplier,

focus should be on developing velocity, quality and flexibility while at the same time

reducing costs or maintaining low cost levels. In short, strategic decisions should be made

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to determine the core capabilities of a facility and outsourcing partnerships should grow

from these decisions.

3. Inventory

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

A delicate balance exists between too much inventory, which can cost anywhere between

20 and 40 percent of their value, and not enough inventory to meet market demands. This

is a critical issue in effective supply chain management. Operational inventory decisions

revolved around optimal levels of stock at each location to ensure customer satisfaction as

the market demands fluctuate. Control policies must be looked at to determine correct

levels of supplies at order and reorder points. These levels are critical to the day to dayoperation of organizations and to keep customer satisfaction levels high.

4. Location

Location decisions depend on market demands and determination of customer

satisfaction. Strategic decisions must focus on the placement of production plants,

distribution and stocking facilities, and placing them in prime locations to the market

served. Once customer markets are determined, long-term commitment must be made to

locate production and stocking facilities as close to the consumer as is practical. In

industries where components are lightweight and market driven, facilities should be

located close to the end-user. In heavier industries, careful consideration must be made to

determine where plants should be located so as to be close to the raw material source.

Decisions concerning location should also take into consideration tax and tariff issues,

especially in inter-state and worldwide distribution.

5. Transportation

Strategic transportation decisions are closely related to inventory decisions as well as

meeting customer demands. Using air transport obviously gets the product out quicker

and to the customer expediently, but the costs are high as opposed to shipping by boat or

rail. Yet using sea or rail often times means having higher levels of inventory in-house to

meet quick demands by the customer. It is wise to keep in mind that since 30% of the cost

of a product is encompassed by transportation, using the correct transport mode is a

critical strategic decision. Above all, customer service levels must be met, and this often

times determines the mode of transport used. Often times this may be an operational

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decision, but strategically, an organization must have transport modes in place to ensure a

smooth distribution of goods.

6. Information

Effective supply chain management requires obtaining information from the point of end-

use, and linking information resources throughout the chain for speed of exchange.

Overwhelming paper flow and disparate computer systems are unacceptable in today's

competitive world. Fostering innovation requires good organization of information.

Linking computers through networks and the internet, and streamlining the information

flow, consolidates knowledge and facilitates velocity of products. Account management

software, product configurators, enterprise resource planning systems, and globalcommunications are key components of effective supply chain management strategy.

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2.17 WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASIC

COMPONENTOF SCM?

As per Supply-Chain Operations Reference-model (SCOR) which has been

developed by Supply-Chain Council. This model organized and focused on the five

primary management

PLAN

SOURCE

MAKE

DELIVER

RETURN

1. Plan: This is vital part of SCM philosophy, where the companies normally need to make

strategy for managing all the resource that go towards fulfilling the customer demand for

the product and services that they offers. A big piece of planning is developing a set of

matrices to monitor the Supply chain so that it would be efficient, cost effective and

deliver high quality and value to the customer.

2. Source: It means processes that procure goods and services to meet planned or actual

demand. This part of SCM consists of selecting right suppliers that will deliver the good

and services that need to create your product. Developing a set of pricing, delivery and

payment process with supplier is important. Also this will also take care of managing the

inventory of goods, and services you receive from your suppliers, including receiving

shipping, verifying them, transferring them into various facilities and authorizing

supplier payment.

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3. Make: This is basically a step where your company starts fulfilling the request or BUILT

for products into finished state to meet planned or actual demand. Schedule activity

necessary for production, testing, packaging and preparation for delivery.

4. Deliver: This is also called Logistic Process. This is the processes that provide finished

goods and services to meet planned or actual demand, typically including order

management, transportation management, and distribution management.

5. Return - This is real pain of SCM model, which defined as processes associated with

returning or receiving returned products for any reason.

2.18 Reasons to Implement Supply Chain Management

There are a few reasons which might convince you to implement the supply chainmanagement. The first one indicates that a reduction of about 2.5% in the procurement

costs can actually produce the same profit that is generated by a 10% sale.

Another reason is that in general, the companies that opt for this process make about

70% more profit than the ones that lack this mechanism.

The businesses that adopt the supply chain management could enjoy opportunities that

give them about 40% return of investment if and only if they lower the costs and

improve the productivity.

2.19 Implementing the Supply Chain Management

Those who are interested in implementing the supply chain management should

check Build Supplier Metrics, Build Better Products. The highest efficiency of this

mechanism can be achieved only through the optimization of different businesss parts.

This has as main scope the acquirement of the right resources which are able to provide

the true value to their customers. These organizations have to also apply the right

formulas that can generate profits by reducing the costs of the raw materials andfabrication processes. The professionals who want to implement these methods have to

firstly identify the critical areas and the type of actions that are required.

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2.2

0

Elaborating Analysis

In order to identify the critical areas of a business, the professionals have to

complete some techniques that are based on two different types of analysis. These are divided

by the quantitative and qualitative studies. The qualitative analysis provides the right support

to discover the critical points through a process that implies interviews and report reviews.

The quantitative analysis actually consists in data collection which is followed by a profound

analysis. This analysis can help the implementer to produce related information that shows

what type of action should be taken. The tools that are requested to implement the supply

chain management usually depend on the circumstances that defer from one business to

another.

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2.21 The Complex Nature of Supply Chain Management Analysis

In order to be able to apply the supply chain management, the implementer needs to

understand the managerial analysis. This actually means that this analysis should be

considered as a very complex process and not a simple sales or revenue report.Because the

analysis shows a complex nature, the specialist has to present a vast experience within this

field in order to perfectly manage all areas of the supply chain management

applicability.This way, he or she has to have the right understanding with regard to

purchases, sources, logistics, inventories, supervision, inventory controls, stock

Management, receiving, distribution, transportation, packaging, warehousing, service

development, and anything else in between.

2.22 Strategy and Analysis

For sure, a good strategy for the supply chain management cannot be developed without

the right analysis. You can learn how to complete a perfect analysis through trainings,

which will not only help you to analyze the implementation of the system but also to

develop and optimize it based on the modern requirements. Besides this, you have to

make sure that all workers maintain a constant communication with regard to supply

chain management and companys objectives. But keep in mind that prior to and even

after implementing the system, the most important element remains analysis. This is

because it represents the only technique that can reveal through various mechanisms

everything you need to know about your business efficient.

2.23 BENEFITS OF SUPPLY-CHAIN IMPROVEMENT

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Improvement in supply-chain management is very significant in providing competitive

advantages to the companies going for this. A recent survey in USA was conducted with

sixty-five closely-associated engineers, project managers, director, and executives of

firms dealing in supply-chain area (Savoie, 1998).Their ranked-response regarding most important benefit of supply-chain improvement

included:

1. reduce operating costs,

2. improve responsiveness and reduce cycle time,

3. improve customer service,

4. simplify operations,

5. improve quality,

6. support significant volume growth,

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7. reduce improved return on capital,

8. effectively support a growing or diverse customer base,

9. effectively offer a greater variety of products, and

10.Focus on core competencies.

The benefits of supply-chain improvement can be harnessed by better integration of

supply-chain in terms of information, material and money flows. Better coordination of

different functions is possible through ERP implementation/SCM solution.

2.24 Warehouse in supply chain management

Meaning

We need different types of goods in our day-to-day life. We may buy some of these

items in bulk and store them in our house. Similarly, businessmen also need a variety of

goods for the year without any break. Take the example of a sugar factory. It needs

sugarcane as raw material for production of sugar. You know that sugarcane is produced

during a particular period of the year. Since sugar production takes place throughout the

year, there is a need to supply sugarcane continuously. But how is it possible? Here storage

of sugarcane in sufficient quantity is required. Again, after production of sugar it requires

some time for sale or distribution. Thus, the need for storage arises both for raw material as

well as finished products. Storage involves proper arrangement for preserving goods from

the time of their production or purchase till the actual use. When this storage is done on a

large scale and in a specified manner it is called warehousing. The place where goods are

kept is called warehouse. The person in-charge of warehouse is called warehouse-keeper.

Warehousing refers to the activities involving storage of goods on a large-scale in a

systematic and orderly manner and making them available conveniently when needed. In

other words, warehousing means holding or preserving goods in huge quantities from the

time of their purchase or production till their actual use or sale. Warehousing is one of theimportant auxiliaries to trade. It creates time utility by bridging the time gap between

production and consumption of goods. Warehousing is necessary due the following reasons.

B Need for warehouse

1. Seasonal Production- You know that agricultural commodities are harvested during

Certain seasons, but their consumption or use takes place throughout the year.

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

from where they can be supplied as and when required.

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2. Seasonal Demand- There are certain goods, which are demanded seasonally, like

Woolen garments in winters or umbrellas in the rainy season. The production of

these Goods takes place throughout the year to meet the seasonal demand. So there is

a Need to store these goods in a warehouse to make them available at the time of

need. Takes place to meet the existing as well as future demand of the products.

Manufacturers Also produce goods in huge quantity to enjoy the benefits of large-

scale production, Which is more economical? So the finished products, which are

produced on a large Scale, need to be stored properly till they are cleared by sales.

3. Quick Supply - Both industrial as well as agricultural goods are produced at someSpecific places but consumed throughout the country. Therefore, it is essential to

stock these goods near the place of consumption, so that without making any delay

these Goods are made available to the consumers at the time of their need.

4. Continuous Production- Continuous production of goods in factories requires

Adequate supply of raw materials. So there is a need to keep sufficient quantity of

Stock of raw material in the warehouse to ensure continuous production.

5. Price Stabilization- To maintain a reasonable level of the price of the goods in the

market there is a need to keep sufficient stock in the warehouses. Scarcity in supply

of goods may increase their price in the market. Again, excess production and supply

may also lead to fall in prices of the product. By maintaining a balance of supply of

goods, warehousing leads to price stabilization.

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C Types of warehouse

A. Private Warehouses - The warehouses which are owned and managed by the

Manufacturers or traders to store, exclusively, their own stock of goods are known as

Private warehouses. Generally these warehouses are constructed by the farmers near

their fields, by wholesalers and retailers near their business centres and by

manufacturers Near their factories. The design and the facilities provided therein are

according to the Nature of products to be stored.

B. Public Warehouses - The warehouses which are run to store goods of the general

public are known as public warehouses. Any one can store his goods in these

warehouses on payment of rent. An individual, a partnership firm or a company may

own these warehouses. To start such warehouses a licence from the government is

required. The government also regulates the functions and operations of these

warehouses. Mostly these warehouses are used by manufacturers, wholesalers,

exporters, importers, government agencies, etc.

C. Government Warehouses -These warehouses are owned, managed and controlled

by central or state governments or public corporations or local authorities. Both

government and private enterprises may use these warehouses to store their goods.Central Warehousing Corporation of India, State Warehousing Corporation and Food

Corporation of India are examples of agencies maintaining government warehouses.

D. Bonded Warehouses - These warehouses are owned, managed and controlled by

government as well as private agencies. Private bonded warehouses have to obtain

licence from the government. Bonded warehouses are used to store imported goods

for which import duty is yet to be paid. Incase of imported goods the importers are

not allowed to take away the goods from the ports till such duty is paid. These

warehouses are generally owned by dock authorities and found near the ports.

E. Co-operative Warehouses - These warehouses are owned, managed and controlled

by co-operative societies. They provide warehousing facilities at the most

economical rates to the members of their society.

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2.25 Packaging

Packaging has a significant impact on the cost and productivity of logistics. Inventorycontrol depends upon the accuracy of manual or automatic identification systems keyed by

product packaging. Order selection speed, accuracy and efficiency are influenced by package

identification, configuration, and handling ease. Handling efficiency is affected by package

design, unitization capability and techniques, and communication or information transfer

between channel partners. Transportation and storage costs are driven by package size and

density. Customer service depends upon packaging to allow quality control during

distribution to provide, customer education and convenience, and to comply withenvironmental regulations. Given the increasing length and complexity of global supply

chains and the costs of locating new facilities, the concept of packaging postponement to

achieve strategic flexibility is particularly important.

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2.26 Process of Supply Chain Management

a) Customer service management process

Customer Relationship Management concerns the relationship between theorganization and its customers. Customer service is the source of customer information. Italso provides the customer with real-time information on scheduling and product availabilitythrough interfaces with the company's production and distribution operations. Successfulorganizations use the following steps to build customer relationships: determine mutuallysatisfying goals for organization and customers establish and maintain customer rapport

produce positive feelings in the organization and the customers

b) Procurement process

Strategic plans are drawn up with suppliers to support the manufacturing flowmanagementprocess and the development of new products. In firms where operations extend globally,sourcing should be managed on a global basis. The desired outcome is a win-win relationshipwhere both parties benefit, and a reduction in time required for the design cycle and productdevelopment. Also, the purchasing function develops rapid communication systems, such aselectronic data interchange (EDI) and Internet linkage to convey possible requirements morerapidly. Activities related to obtaining products and materials from outside suppliers involveresource planning, supply sourcing, negotiation, order placement, inbound transportation,

storage, handling and quality assurance, many of which include the responsibility tocoordinate with suppliers on matters of scheduling, supply continuity, hedging, and researchinto new sources or programs.

c) Product development and commercialization

Here, customers and suppliers must be integrated into the product developmentprocess in order to reduce time to market. As product life cycles shorten, the appropriateproducts must be developed and successfully launched with ever shorter time-schedules toremain competitive. According to Lambert and Cooper (2000), managers of the productdevelopment and commercialization process must:coordinate with customer relationshipmanagement to identify customer-articulated needs;select materials and suppliers inconjunction with procurement, anddevelop production technology in manufacturing flow tomanufacture and integrate into the best supply chain flow for the product/marketcombination.

d) Manufacturing flow management process

The manufacturing process produces and supplies products to the distribution channelsbased on past forecasts. Manufacturing processes must be flexible to respond to marketchanges 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 flowprocess lead to shorter cycle times, meaning improved responsiveness and efficiency in

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meeting customer demand. Activities related to planning, scheduling and supportingmanufacturing operations, such as work-in-process storage, handling, transportation, and time

phasing of components, inventory at manufacturing sites and maximum flexibility in thecoordination of geographic and final assemblies postponement of physical distribution

operations.

e) Physical distribution

This concerns movement of a finished product/service to customers. In physicaldistribution, the customer is the final destination of a marketing channel, and the availabilityof the product/service is a vital part of each channel participant's marketing effort. It is alsothrough the physical distribution process that the time and space of customer service becomean integral part of marketing, thus it links a marketing channel with its customers (e.g., linksmanufacturers, wholesalers, retailers).

f) Outsourcing/partnerships

This is not just outsourcing the procurement of materials and components, but alsooutsourcing of services that traditionally have been provided in-house. The logic of this trendis that the company will increasingly focus on those activities in the value chain where it hasa distinctive advantage, and outsource everything else. This movement has been particularlyevident in logistics where the provision of transport, warehousing and inventory control isincreasingly subcontracted to specialists or logistics partners. Also, managing and controllingthis 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 ofsupplier performance and day-to-day liaison with logistics partners being best managed at alocal level.

g) Performance measurement

Experts found a strong relationship from the largest arcs of supplier and customerintegration to market share and profitability. Taking advantage of supplier capabilities andemphasizing a long-term supply chain perspective in customer relationships can both becorrelated with firm performance. As logistics competency becomes a more critical factor increating and maintaining competitive advantage, logistics measurement becomes increasingly

important because the difference between profitable and unprofitable operations becomesmore narrow. A.T. Kearney Consultants (1985) noted that firms engaging in comprehensive

performance measurement realized improvements in overall productivity.

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2.27 Supply Chain Now

Faced with the challenge of increasing profits and cash flow, midsized companiesneed the ability to improve supply chain processes such as demand forecasting and

supplies planning yet often dont have the capacity or resources to implement and

support a supply chain management solution in a traditional manner. JDA's Supply

Chain Now is a fully maintained solution offering, delivered via the JDA Private

Cloud. Supply Chain Now delivers a return on investment with reduced risk in as

fast as four months.

JDA's solution combines unparalleled speed of deployment with the advanced

capabilities that have made JDA a leading provider of supply chain management

technology. Midsized companies using Supply Chain Now will be able to increase

profits and achieve business objectives without burdening an already-taxed IT

department with yet another initiative.

The expectations of customer for increased value addition, response time sensitivity,

need for reliability, cost consciousness and information sensitivity.

The nature of competition favouring firms that have been in a position to decrease

lead times as well as operational costs. The recent revolution taken place in the field of information technology has enabled

and encouraged the firms to initiate newer means in the field of distribution

management.

Managers have realized and recognised the need for continuous improvement of

process involved in marketing activity. The attitude of managers has changed in

favour of integrating all activities in the chain from sourcing to consumption.

Perception of firms to have inventories has changed to JIT philosophy. While money

locked up in inventories leads to poor use of working capital, higher inventories lead

to higher lead times for procurement, manufacture and distribution.

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2.28 Logistics v/s. Supply Chain Management

Logistics and Supply chain Management are two areas that are often felt that theycould overlap. It is possible that different companies define them differently.Logistics deals with strategy and coordination between marketing and production.

On the other hand supply chain management focuses more on purchasing andprocurement. This is one of the main differences between logistics and supply chainmanagement.

It is interesting to note that supply chain management can include factors relating toinventory, materials and production planning too in its concept. On the other handlogistics includes factors relating to demand management and forecasting in itsconcept. This is also an interesting difference between logistics and supply chain

management. Experts argue that logistics management is a part of the supply chain management

that plans and implements the flow and storage of goods, services in order to meet thedemands of the consumers. This is indeed an important study made by the experts.

On the other hand supply chain management encompasses the management of allactivities involved in the procurement and conversion. In addition to these activitiesthe supply chain management takes care of all the logistics management activities. Itis important to note that supply chain management involves all movements andstorage of raw materials.

In short it can be said that supply chain management takes care of the design,

planning, execution, control, and monitoring of supply chain activities with the soleobjective of creating net value and leveraging worldwide logistics.

On the other hand logistics can be simply defined as the management of the flow ofgoods and the services between the point of origin and the point of consumption inorder to meet the requirements of customers. It is interesting to note that logistics is a

business concept that was introduced for the first time in the year 1953. Businesslogistics is nothing but having the right item in the right quantity at the right time atthe right place for the right price in right condition to the right customer.

It is also interesting to note that logistics management is known by many names suchas materials management, channel management, distribution, business or logisticsmanagement, business or logistics management and supply chain management. Thisonly shows that supply chain management can be called the subset of logistics but theconverse is not true. There is a thin line of difference between the two.

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3 Mahindra & Mahindra Limited

Type : Public (BSE: 500520)

Industry : Automotive

Founded : 1945

Headquarters : Mumbai, Maharashtra, India

Products : Automobiles

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

Net income

: 2,871.49 crore (US$545.58

million)

(2010).

Employees : 119,900

Parent : Mahindra Group

Website : Mahindra.com

39
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_Companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500520http://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Mahindra_Grouphttp://www.mahindra.com/http://en.wikipedia.org/wiki/File:Mahindra_&_Mahindra_Logo.svghttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_Companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500520http://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Mahindra_Grouphttp://www.mahindra.com/


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3 INTRODUCTIONS

Mahindra & Mahindra Limited (BSE: 500520) is the flagship company of theMahindra Group, a multinational conglomerate based in Mumbai, India. The company was

set up in 1945 in Ludhiana as Mahindra & Mohammed by brothers K.C. Mahindra and J.C.

Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was

formed, Mohammed emigrated to Pakistan where he became the nation's first finance

minister. The company changed its name to Mahindra & Mahindra in 1948.

Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59 billion

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

companies in the country.

Set up in 1945 to make general-purpose utility vehicles for the Indian market, M&M

soon branched out into manufacturing agricultural tractors and light commercial vehicles

(LCVs). The company later expanded its operations from automobiles and tractors to secure a

significant presence in many more important sectors.

M&M has two main operating divisions - Automotive Division manufactures utility

vehicles, light commercial vehicles and three wheelers. Tractor (Farm Equipment) Division

makes agricultural tractors and implements that are used in conjunction with tractors, and has

also ventured into manufacturing of industrial engines. Tractor Division has won the coveted

Deming Application Prize 2003, making it the only tractor manufacturing company in the

world to secure this prize. The Company has recently entered into a JV with Renaultof France

for the manufacture of a mid-sized sedan, the Logan, and with International Truck & Engine

Corporation, USA, for manufacture of trucks and buses in India.

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http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500520http://en.wikipedia.org/wiki/Mahindra_Grouphttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Ludhianahttp://en.wikipedia.org/wiki/Malik_Ghulam_Muhammadhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Finance_ministerhttp://en.wikipedia.org/wiki/Finance_ministerhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500520http://en.wikipedia.org/wiki/Mahindra_Grouphttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Ludhianahttp://en.wikipedia.org/wiki/Malik_Ghulam_Muhammadhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Finance_ministerhttp://en.wikipedia.org/wiki/Finance_minister


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3.1 History

CEO OF MAHINDRA & MAHINDRA

"We will be setting up three mega warehouses of5,00,000 sq ft and another eight smaller ones of around

1,50,000-2,00,000sq ft," he said. The three mega warehouses

will come up in North, South and West India. These will be

leased out from developers who will build them according to the company's requirements, he

added. On the revenue side, Sarkari said: "Last fiscal we crossed the Rs 1,000 crore marks

and this year we are looking at a growth of 25 percent."

Out of the total, Rs 300 crore were from the people transport services provided tomany BPOs, ITes and other corporate, he said, adding the rest Rs 700 crore were from the

supply chain management vertical. Sarkari said the company has made investments of over

Rs 10 crore in technology and "with a growing focus on transportation, warehousing and

international logistics, we are set to become truly globally competitive".

Mahindra Logistics - a Mahindra group company is focused on offering end-to-end

Supply Chain Solutions and people logistics Solutions. Mahindra Logistics supply chain

solutions focus on key industry verticals including automotive, retail, telecom,pharmaceutical and express logistics. Mahindra Logistics is a market leader in People

Logistics segment with dominance in the ITes and BPO industry.

Mahindra Logistics is a leading established player in the Indian logistics industry with

over 200 major corporate clients. "We hold a strong presence in the automotive sector and are

currently managing more than 35 automotive plants. Having a warehousing capacity of more

than three million square feet, seconded by aggressive plans for expansion to meet growing

customer needs, Mahindra Logistics will soon have a dominant presence in the warehousing

segment", said the official.

"Our focus on select industry verticals ensures that we successfully partner with our

customers and deliver value to them by offering customized integrated logistics solutions.

Our comprehensive and timely service support allows them to focus on their core business

areas", said another official of the firm.

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3.3 SAP SUPPLY CHAIN MANAGEMENT

PLANNING, EXECUTION, AND COLLABORATION ACROSS THE

RESPONSIVE SUPPLY NETWORK

To meet the challenges of rapidly changing market dynamics, your co

logistic and scm in mahindra

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