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Strategic decisions: strategic decisions are made typically over a longer time
horizon. These are closely linked to the corporate strategy (they sometimes the
corporate strategy), and guide supply chain policies from a design perspective.
Strategic network optimization, including the number, location, and size
of warehouses, distribution centers and facilities.
Strategic partnership with suppliers, distributors, and customers, creating
communication channels for critical information and operational
improvements such as cross docking, direct shipping, and third-party
logistics.
Product design coordination, so that new and existing products can be
optimally integrated into the supply chain, load management
Information Technology infrastructure, to support supply chain
operations.
Where to make and what to make or buy decisions
Align Overall Organizational Strategy with supply strategy
Tactical decisions:
Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, locations, scheduling, and
planning process definition.
Inventory decisions, including quantity, location, and quality of inventory.
Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and implementation
of best practices throughout the enterprise.
Milestone Payments
Location Decisions
The geographic placement of production facilities, stocking points, and sourcing
points is the natural first step in creating a supply chain. The location of
facilities involves a commitment of resources to a long-term plan. Once the size,
number, and location of these are determined, so are the possible paths by which
the product flows through to the final customer. These decisions are of great
significance to a firm since they represent the basic strategy for accessing
customer markets, and will have a considerable impact on revenue, cost, and
level of service. These decisions should be determined by an optimization
routine that considers production costs, taxes, duties and duty drawback, tariffs,
local content, distribution costs, production limitations, etc. Although location
decisions are primarily strategic, they also have implications on an operational
level.
Production Decisions
The strategic decisions include what products to produce, and which plants to
produce them in, allocation of suppliers to plants, plants to direct customers,
and direct customers 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 on the
degree of vertical integration within the firm. Operational decisions focus on
detailed production scheduling. These decisions include the construction of the
master production schedules, scheduling production on machines, and
equipment maintenance. Other considerations include workload balancing, and
quality control measures at a production facility.
Inventory Decisions
These refer to means by which inventories are managed. Inventories exist at
every stage of the supply chain as either raw material, semi-finished or finished
goods. They can also be in process between locations. Their primary purpose is
to buffer against any uncertainty that might exist in the supply chain. Since
holding of inventories can cost anywhere between 20 to 40 percent of their
value, their efficient management is critical in supply chain operations. It is
strategic in the sense that top management sets goals. However, most
researchers have approached the management of inventory from an operational
perspective. 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.
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Transportation Decisions
The mode choice aspects of these decisions are the more strategic ones. These
are closely linked to the inventory decisions, since the best choice of mode is
often found by trading-off the cost of using the particular mode of transport with
the indirect cost of inventory associated with that mode. While air shipments
may be fast, reliable, and warrant lesser safety stocks, they are expensive.
Meanwhile shipping by sea or rail may be much cheaper, but they necessitate
holding relatively large amounts of inventory to buffer against the inherent
uncertainty associated with them. Therefore customer service levels and
geographic location play vital roles in such decisions. Since transportation is
more than 30 percent of the logistics costs, operating efficiently makes good
economic sense. Shipment sizes (consolidated bulk shipments versus Lot-forLot), routing and scheduling of equipment are keys in effective management of
the firm's transport strategy.
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Demand flow
strategy
Collaboration
strategy
Supply chain
strategy
framework
Technology
integration
strategy
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Customer
service
strategy
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Customer
analysis
Purchasing
Manufacturing
Supply chain
management
Transportation
Materials
management
Cost benefit and
analysis
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BACKGROUND:
HISTORY OF BISCUITS:
Sweet or salty. Soft or crunchy. Simple or exotic. Everybody loves munching
on biscuits, but do they know how biscuits began? The history of biscuits can be
traced back to a recipe created by the Roman chef Apicius, in which "a thick
paste of fine wheat flour was boiled and spread out on a plate. When it had dried
and hardened it was cut up and then fried until crisp, then served with honey
and pepper."
The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and
'Coctus' (meaning cooked or baked). The word 'Biscotti' is also the generic term
for cookies in Italian. Back then, biscuits were unleavened, hard and thin wafers
which, because of their low water content, were ideal food to store.
As people started to explore the globe, biscuits became the ideal travelling
food since they stayed fresh for long periods. The seafaring age, thus, witnessed
the boom of biscuits when these were sealed in airtight containers to last for
months at a time. Hard track biscuits (earliest version of the biscotti and
present-day crackers) were part of the staple diet of English and American
sailors for many centuries. In fact, the countries which led this seafaring charge,
such as those in Western Europe, are the ones where biscuits are most popular
even today. Biscotti is said to have been a favorites of Christopher Columbus
who discovered America
Making good biscuits is quite an art, and history bears testimony to that. During
the 17th and 18th Centuries in Europe, baking was a carefully controlled
profession, managed through a series of 'guilds' or professional associations. To
become a baker, one had to complete years of apprenticeship - working through
the ranks of apprentice, journeyman, and finally master baker. Not only this, the
amount and quality of biscuits baked were also carefully monitored.
The English, Scotch and Dutch immigrants originally brought the first
cookies to the United States and they were called teacakes. They were often
flavored with nothing more than the finest butter, sometimes with the addition
of a few drops of rose water. Cookies in America were also called by such
names as "jumbles", "plunkets" and "cry babies".
As technology improved during the Industrial Revolution in the 19th century,
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the price of sugar and flour dropped. Chemical leavening agents, such as baking
soda, became available and a profusion of cookie recipes occurred. This led to
the development of manufactured cookies.
Interestingly, as time has passed and despite more varieties becoming
available, the essential ingredients of biscuits haven't changed - like 'soft' wheat
flour (which contains less protein than the flour used to bake bread) sugar, and
fats, such as butter and oil. Today, though they are known by different names
the world over, people agree on one thing - nothing beats the biscuit!
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in smaller quantities are hand weighed and added into the mixing bowl for each
batch of dough to be mixed.
2. The ingredients are then mixed to form dough in the mixing bowl according
to a specific mixing procedure.
3. The dough is then tipped into a hopper and gravity-fed into the dough
sheeting section of the machine. In this process the dough is fed through various
rollers to form a sheet of dough. Depending on what type of biscuit is being
produced, this process varies.
4. Different forming techniques are used to get the required shape and size of
the piece of dough which will form the biscuit.
5. The raw biscuits are transported through a gas-fired oven on a metal
conveyor band where they are baked to form fresh, warm and deliciously
smelling biscuits. While still hot, the savory biscuits are sprayed with oil and
one of a number of types of flavoring is added to produce what is required for
that particular biscuit.
6.Biscuits are baked rather than fried, so the oil merely assists the flavour
particles to cling to the biscuit surface. The flavored biscuits then travel along a
cooling conveyor in order to cool off.
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7. Once the biscuits have been cooled, they are packed into wrappers, cartons
and cases, ready for distribution to one of the warehouses
8. Quality checks are conducted at key points in the process to ensure process
control and product quality is constantly maintained at a high standard.
9. The finished product is then transported in cases to state-of-the-art
distribution warehouses. Stock is loaded as per delivery orders and sent to the
various customers
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Britannia Industries:
Britannia Industries Limited is an Indian company based in Kolkata that is
famous for its Britannia brand of biscuit, which is highly recognized throughout
the country. The Company's principal activity is the manufacture and sale of
biscuits, bread, Rusk, cakes and dairy products like cheese, butter and milk. The
brand names of biscuits include Vita Marie Gold, Tiger Variants, Nutri choice
Junior, Good Day, 50 50 variants and Good Morning. Its Non-Executive
Chairman is Mr. Nusli Wadia, and Chief Executive is Ms. Vinita Bali. The
Britannia's fame is largely acknowledged through the colorful Britannia logos,
Indian cricketers such as Virender Sehwag, and Rahul Dravid wear on their
bats.
Britannia's controlling stake is jointly with Groupe Danone and Nusli
Wadia. Groupe Danone is one of the leading players in the world in bakery
products business. The Company is based in the Indian city of Kolkata.
Britannia Industries Ltd (BIL) -- one of India's leading food companies & a
leading manufacturer of biscuits in the country has always been the pioneer in
product innovation. Biscuits contribute to nearly 90 % of Britannia's total
turnover, the rest coming from a rapidly growing portfolio that includes Cakes,
Bread and Rusks. Britannia is synonymous with 'biscuits' and its brands like
MarieGold, Good Day, 50-50, Treat and Tiger have become household names in
the country.
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Company overview:
The story of one of India's favorite brands reads almost like a fairy tale.
Once upon a time, in 1892 to be precise, a biscuit company was started in a
nondescript house in Calcutta (now Kolkata) with an initial investment of Rs.
295. The company we all know as Britannia today.
The beginnings might have been humble-the dreams were anything but. By
1910, with the advent of electricity, Britannia mechanized its operations, and in
1921, it became the first company east of the Suez Canal to use imported gas
ovens. Britannia's business was flourishing. But, more importantly, Britannia
was acquiring a reputation for quality and value. As a result, during the tragic
World War II, the Government reposed its trust in Britannia by contracting it to
supply large quantities of "service biscuits" to the armed forces.
As time moved on, the biscuit market continued to grow and Britannia
grew along with it. In 1975, the Britannia Biscuit Company took over the
distribution of biscuits from Parry's who till now distributed Britannia biscuits
in India. In the subsequent public issue of 1978, Indian shareholding crossed
60%, firmly establishing the Indianness of the firm. The following year,
Britannia Biscuit Company was re-christened Britannia Industries Limited
(BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark.
On the operations front, the company was making equally dynamic strides. In
1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new
corporate identity - "Eat Healthy, Think Better" - and made its first foray into
the dairy products market. In 1999, the "Britannia Khao, World Cup Jao"
promotion further fortified the affinity consumers had with 'Brand Britannia'.
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Britannia strode into the 21st Century as one of India's biggest brands and
the pre-eminent food brand of the country. It was equally recognized for its
innovative approach to products and marketing: the Lagaan Match was voted
India's most successful promotional activity of the year 2001 while the delicious
Britannia 50-50 Maska-Chaska became India's most successful product launch.
In 2002, Britannia's New Business Division formed a joint venture with
Fonterra, the world's second largest Dairy Company, and Britannia New
Zealand Foods Pvt. Ltd. was born. In recognition of its vision and accelerating
graph, Forbes Global rated Britannia 'One amongst the Top 200 Small
Companies of the World', and The Economic Times pegged Britannia India's
2nd Most Trusted Brand.
Today, more than a century after those tentative first steps, Britannia's
fairy tale is not only going strong but blazing new standards, and that miniscule
initial investment has grown by leaps and bounds to crores of rupees in wealth
for Britannia's shareholders. The company's offerings are spread across the
spectrum with products ranging from the healthy and economical Tiger biscuits
to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering
the trust of almost one-third of India's one billion populations and a strong
management at the helm means Britannia will continue to dream big on its path
of innovation and quality. And millions of consumers will savoir the results,
happily ever after.
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BRITANNIA Industries has sure come a long way from being a company
with a stodgy but well-recognized brand name and an inconsistent financial
performance in the mid-1990s.
After a thorough overhaul of the operational structure, a revamp of its
product portfolio and an ambitious foray into new areas, such as dairy products
and snack foods, the company has managed to turn in robust financial
performance over the past four years.
The stock market has also taken notice; re-rating the stock, pushing up its
price earnings multiple from 14-15 times in 1997 to around 30 times now. The
stock now ranks among the preferred investment options within the universe of
FMCG companies. So, what has driven Britannia's valuations and what are its
prospects?
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Global partners:
The Wadia Group of India along with Group Danone of France is equal
shareholders in ABIL, UK which is a major shareholder in Britannia Industries
Limited. GROUPE DANONE is an International FMCG Major specializing in
Fresh Dairy Products, Bottled Water and Biscuits/Cereals. One of the World
leaders in the food industry, these are some of the laurels it possesses:
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Milestones:
1892
1910
1921
1939 44
Advent
of
electricity
sees
operations
mechanized
1975
1978
1979
1989
1992
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1993
1994
1997
1999
2000
2001
2002
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by Forbes Global
Economic Times ranks BIL India's 2nd Most Trusted Brand
Pure Magic -Winner of the Worldstar, Asiastar and Indiastar award
for packaging
2003
2004
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Brand milestones:
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considering that the growth for Priyagold comes primarily from a limited
geographical coverage, it speaks volumes for the potential of the Indian market.
Priyagold hasn't succumbed to pressures from mega-brands Britannia and
Parle, which enjoy greater clout due to large product portfolios. Not all
distributors and retailers are happy with big brands, claims Agarwal: "We've
tried to give a healing touch to egos bruised by the arrogant attitude of the
MNCs and large companies." Hand-in-hand with better returns, it can work
wonders. And Agarwal gives margins that are far more attractive than those
offered by the large players. Distributors get seven per cent against 4-4.5 per
cent from Britannia, and retailers get 20-25 per cent rather than an industry
average of 10-15 per cent in the organized sector.
Unlike bigger companies, Agarwal ensures distributors operate in clearly
demarcated territories so they are able to cover all retail outlets in their areas
more efficiently. "This allowed a faster inventory turnover," says Agarwal. At
the same time, Agarwal identified newer segments and flavors where there was
virtually no competition, and launched variants like Kesar Bite, Cheese
Crackers and Cashew Chat Masala.
In the cream segment, which accounts for almost 40 per cent of the total
biscuit market by volume, Priyagold had the regular chocolate, orange and
elaichi. But Agarwal decided to target kids and launched new flavors like butter,
chocolate and strawberry. "We wanted to give consumers a new base of flavors
and train them to experience new tastes," he explains. Today he offers around 20
varieties, and retailers have begun to see Priyagold as an alternative to big
brands. Agarwal has gone more by gut feel and understanding of the consumer,
than relying on marketing textbooks.
In order to emphasize the value-for-money proposition, Agarwal focused on
economy packs and Priyagold was the first to enter the 250 gm segment when
its Butter Bite was launched in 1993. Seeing the success of Butter Bite,
Britannia's Good Day, which sold in 100 gm packs (priced at Rs 10), also
entered the 250 gm segment at Rs 18, the same as the former. Agarwal takes
pride in the fact Priyagold has strength to make big players react. Today
Priyagold biscuits come in 100 gm, 250 gm and ATC packs. When Britannia
introduced its Marie sachet of two, Priyagold responded with a pack of four at
the same price of one rupee. Agarwal is targeting hospitals like Apollo for these
sachet packs.
According to Radhika Roy, national qualitative head, NFO India, biscuits, as
a category, bring certain category boundaries. Overall, (barring the cream
variety) most formats are driven by 'rational' consumption triggers and aspects
like taste, indulgence and gratification are less dominant. "Often it's as a filler,
cheap hospitality item or sustenance that one buys biscuits," she says. And this
is the need gap that Agarwal wants to fill.
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The larger players have been trying to change this by imbuing the category
with higher order rational vales (health, vitamins etc). For Priyagold, it makes
sense to push sales through salience and retail measures. "The strategy in the
short term to build critical mass is good from their point of view. But when they
become significant players, they will have to look at more enduring and longterm initiatives", says Roy. That will be the challenge for people like Agarwal.
After all, the task of brand differentiation is a huge one, expensive and fraught
with many pitfalls.
Analysts agree that while not necessary for market leaders, for challengers,
the strategy adapted by Priyagold seems more prudent and effective. "Instead of
reinventing some of the issues, they've focused on value-adding, such as putting
more sugar or making biscuits softer and crunchier," adds Roy.
For six years since its launch in 1994, Priyagold clung to its obvious target
consumer, the middle and lower middle class in SEC B and C. Direct
competition came from local cousins in north India, like Apsara, Anmol,
Cremica and Crown. Agarwal had enough money (from his oil mills) to pump
into his new venture. Clearly savvier than local rivals, he communicated with
consumers by spending on the mass media.
This was enough for him to leave local rivals far behind and quickly become
acceptable to the middle class. Starting with UP and New Delhi, Priyagold
expanded into Punjab, Haryana, J&K and Rajasthan. While the brand got a
stronghold on the SEC B and C consumer segment, over the years, it distanced
itself from the high-end consumers, who turned to Britannia and Parle. "We're
still not acceptable to top-end consumers in the large cities," confides a senior
staffer in the company. Last year, Agarwal decided to take the brand to up
market retail shelves in Delhi to attract consumers in the upper income strata.
But resistance came from large retailers in localities like Greater Kailash and
Panchsheel Park. In a bid to convince them Agarwal undertook a complete
packaging overhaul across the entire range. Agarwal convinced big-time
retailers to let Priyagold set up a counter and was even willing to pay them says
a big Priyagold distributor. The results were good, if not amazing the brands
found a place in swanky outlets, like Morning Stores in Delhi. Although he
hiked Priyagold advertising budget from Rs 5 crores last year to Rs 7 crores,
Agarwal believes smaller players will not be able to match resources of national
marketers and MNCs when it comes to frills and imagery. "It's more essential to
improve processes in your back-end operations to convince people about quality
and hygiene," he says. That's surely one thing consumers evaluate while
considering local brands.
Therefore, Agarwal is pumping money into extensively modernizing his
factory. Surya is setting up a new integrated plant at Surajpur on the outskirts of
Delhi at a whopping Rs 50 crores, which will have flour, oil mill and biscuit
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company. Priyagold which currently has 23 varieties of biscuits, plans foray into
salty biscuits next year.
The company plans to hike its consolidated ad spend from Rs 5 crore last
year to Rs 8 crore this fiscal. Exports of Priyagold biscuits to markets such as
Dubai, Muscat and Oman are on the cards, and the first consignment is expected
to be shipped later this year.
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for promoting the juices. While tele-commercials have already begun on India
TV, the company is hopeful of running them on all other channels by the next
fortnight.
It is also in the process of sprucing up its exports operations. Currently it
exports its biscuits to countries such as Dubai and Nepal. According to Mr
Agarwal, "The high level of taxation in the domestic market, which is a major
concern, is one of the reasons why we are looking to increase export volumes."
Explaining further, he pointed out that high input costs and taxes are
affecting margins and profits. As fierce competition from other players is
preventing the company from increasing prices, he said, "High taxes are even
forcing manufacturing units to close down. In fact, we have already had to shut
down two out of six company's plants."
While speaking on the company's performance, he said, "We face immense
competition not just from competitors in organized retail but also from the
unorganized market which holds almost 40 per cent of the market share and has
the benefit of not being subject to any taxes." The government needs to look
into the matter before the situation worsens, he added.
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f. Outsourcing/ Partnerships
g. Performance Measurement
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g) Performance Measurement
Experts found a strong relationship from the largest arcs of supplier and
customer integration to market share and profitability. By taking advantage of
supplier capabilities and emphasizing a long-term supply chain perspective in
customer relationships can be both correlated with firm performance. As
logistics competency becomes a more critical factor in creating and maintaining
competitive advantage, logistics measurement becomes increasingly important
because the difference between profitable and unprofitable operations becomes
narrower.
According to experts internal measures are generally collected and analyzed by
the firm including
1. Cost
2. Customer Service
3. Productivity measures
4. Asset measurement, and
5. Quality.
External performance measurement is examined through customer perception
measures and "best practice" benchmarking, and includes:
1) Customer perception measurement
2) Best practice benchmarking
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SUGGESTIONS:
Among the factors, which have contributed the most towards growth are
market related factors and IT factors like rise in e-commerce and usage of
Internet.
The food and beverage industry has very small margins and is very
dynamic .for these accurate supply chain information is absolutely key, not just
for planning, but also for operational efficiency. Britannia biscuits industries has
a great opportunity to take advantage of the modern technologies available that
can help it to increase the level of customer service, create new operational
efficiencies, reduce risk, and increase profitability. Its still a vastly untapped
area of supply chain management.
The common factors which have contributed towards manufacturing and
service both are rise in e commerce and sourcing out. Globalisation and
Liberalisation policies have benefited the service sector more than the
manufacturing sector.
Improving supply chain processes requires better collaboration between
retailers and suppliers. So keep good relation with them.
The customers today are not very forgiving, referring to the consequences of
missed delivery schedules. If a company was able to manufacture a product
with the right quality and the right price but missed on delivery, the other two
got nullified. So company should deliver on right time. Services should be
standardized.
Managing the supply chain was not just about transportation of goods. It was
about managing the mismatch of stocks, looking at high inventory and
eliminating premium freight, and managing many suppliers.
There is the need for improving infrastructure to take advantage of the wave
of outsourcing.
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CONCLUSIONS:
During this thesis I have read lots of material about the organization and
their process of manufacturing the products. I find one similarity between these
is that the organizations want value for their money. They want quality and
quick services. This is because time saved is the money gained. So that
organizations fulfill the requirement of the customers with the satisfaction and
make good relations. Britannia industries also try to give maximum satisfaction
to their customers. The company main motive is to provide the right quality to
right customer at right time with satisfaction. Company is using supply chains
to control the cost.
The Britannia brand is all about eating healthy, to lead a better life. It
advocates values that stand for health, hygiene, family, trust and taste. It reflects
the strong link between physical and mental well-being that is so important to a
person, and is typically a result of what one eats. Today, Britannia, driven by a
passion for excellence, manifested by its innovative thinking, has been able to
weave itself into the fabric of the consumer's everyday life. While Britannia
strives to give consumers a healthier life, the consumer on the other hand, has
come to expect innovation from Britannia's offerings - a huge challenge for the
company.
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50
Websites:
http://www.thehindubusinessline.com.
www.whatiteez.com
http://www.mofpi.nic.in/fpipolicy.htm
http://www.britanniaindustries.htm
www.britannia .co. in/brandstories-tiger.htm
http://www.supply-chain.org/.
http://en.wikipedia.org/wiki/Supply_chain_management
http://www.lawson.com/.
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Books:
Frontiers of electronic commerce, KOLKOTA. Page-52, 53, 442.
Supply chain management: concepts and cases. page-33- 36
Lee, H. L. and C. billing ton. Material Management in Decentralized
Supply Chains. 835-847.
Lee, H. L., and C. Billington. Supply Chain Management: Pitfalls and
Opportunities. 65-73
Cooper, M. C. and L. M. Ellram. Characteristics of Supply Chain
Management and the Implications for Purchasing and Logistics Strategy.
13-24.
Houlihan J. B. 1985. International Supply Chain Management.22-38.
Lambert, D & Cooper, Industrial Marketing Management. Pages 65-83
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