Major Supply Chain

Project
Scion International

Indran Sundarkumar (3815707)

Palvai Praveen Kumar (3869559)
Ghani Khan (3858457)
Table of Contents
Executive Summary.........................................................................................................................3
1. Company Background.................................................................................................................4
2. Research Method.........................................................................................................................5
3.Supply Chain & Logistics Audit...................................................................................................6
3.1 Importance of the Supply Chain............................................................................................6
3.2 Current Supply Chain.............................................................................................................6
3.3 Description of the supply chain process................................................................................7
3.4 Key Observations...................................................................................................................7
3.5 Challenges Faced...................................................................................................................8
4. Scion International Supply Chain and Requirements..................................................................9
4.1 Customer Requirements.........................................................................................................9
4.2 Supplier Requirements...........................................................................................................9
4.3 Distribution Centres & Warehouses....................................................................................10
4.4 Order Winning Criteria........................................................................................................10
5.Strategic Vision & Plan Formation............................................................................................11
6. Conclusion.................................................................................................................................13
7. References..................................................................................................................................14

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Executive Summary
This report focuses on a Middle Eastern based company called Scion International, which
manufactures and distributes cosmetic products. The current supply chain of one of its most popular
products, namely perfumes, is analyzed and its various components ranging from physical storage to
transportation have been examined. While conducting this audit, the possible areas which could
benefit with improvements, have been identified. These issues are addressed and the proposed
solutions are outlined through the development of a strategic supply chain and logistics plan.
.

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1. Company Background
Scion International is a multinational company that was established in 1974 and they are primarily
involved with the development, manufacturing and distribution of various perfume fragrances. In
addition to this, they also produce a wide variety of personal care products ranging from skin care to
bath care. Their head office is located in the United Arab Emirates, with the factory being situated in
the Emirate of Sharjah (Scion Website).

The company has a well organized distribution structure, which is responsible for the efficient supply
of specialized products to over 80 countries around the world. They have a independent research and
development centre, which helps to provide new and innovation products in order to meet the ever
changing tastes of different customers.

The major brands that are produced by the company include Creation Lamis, Precious Secrets, Dorall
Collections and Stitch. A few of Scion's local customers include Carrefour, Lulu Supermarket, Geant,
KM Trading & Landmark. Some of their international customers include Sunray Cosmetics (South
Africa), Firstnode Perfumes (Belgium), Arion Perfumes Inc (USA), Suntara Cosmetics ( India) and
Frostbland Pvt Ltd ( Australia).

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2. Research Method
For the purposes of obtaining information about the supply chain currently functioning at Scion
International we decided to interview Mr.Nagendran Sundarkumar, who is the Director of Corporate
Affairs & Sales Administration. Mr.Sundarkumar is also in charge of the major supply chain and
logistics activities that occur within the organisation, and as such would be very useful is helping us
gain the required information . The details we were able to get from him were essential in us being
able to successfully complete our analysis.

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3.Supply Chain & Logistics Audit

3.1 Importance of the Supply Chain

Scion, being an international organization with worldwide distribution, relies heavily on an efficient
and effective supply chain management to make its operation successful. With manufacturing
operations in UAE, India and China and with distribution network in over 80 countries, it is not an
exaggeration to claim that an excellent supply chain management is the back bone of the group. The
components for production come from various parts of the world and the end product is distributed to
different parts of the world. Hence, everything starts with supply chain and ends with supply chain.

3.2 Current Supply Chain

The primary product that we are focusing on in this report is the perfumes manufactured by the
company and supply chain involved in getting it from the factory to the final customer. The basic
supply chain for Scion International consists of the actual perfume bottles, which are manufactured in
the factory, being transported to the company's warehouse. They are then taken to the shipping port,
where they will be made available to be shipped overseas. Once the shipping to the international
customers is completed, the customers will then distribute them to the respective national
wholesalers, who will in turn distribute them to the local departmental / retail stores.

Factory => Warehouse => Shipping Port => International Customers =>

Wholesalers => Local Departmental / Retail Stores

In the case of local customers, it is directly transported from the factory to the warehouse of the
respective local wholesaler or individual store. These are then sent to the shelf and made available to
the store customers.

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3.3 Description of the supply chain process

When it comes to receiving orders for perfumes at Scion International, a large portion of the work is
done automatically by the computer systems. The company generally receives the orders by
telephone, fax or E-mail and when the order has been placed, the various departments are informed of
the different components of the perfume bottle that are to be used. Each perfume bottle is broken
down into different components like bottles, caps, actuators, pumps, fragrances, alcohol, outer
cartons or shippers, collars, inserts and shrinking wrap, for the purposes of managing the inventory.
The inventory management system displays the current stock of the required components and
calculates the quantity required of each component to complete the order. The required perfumes are
then transferred to the packing department, where they are carefully wrapped for transportation. They
are transported to the loading docks for shipment, with the help of 3 tonne and 5 tonne trucks. When
the perfumes goods are ready to be shipped, the customer is informed of the likely date or probable
dates of shipment. Accordingly an invoice, packing list, certificate of origin is prepared and handed
over to the shipping agents on the date of completion of the stuffing of the container.

3.4 Key Observations

Scion has to plan the component requirements at least 120 days in advance, as it takes a minimum of
60 days from the date of the order to effect shipment. It takes another 30 days for the consignment to
reach the factory and another minimum of 30 days for production. For example, if a perfume is to be
produced in the month of January in any year, the components should be ordered at least during the
month of October in the previous year. Hence excellent planning coupled with effective supply chain
management is an absolutely must for the company to plan its production.

Once the products are ready, Scion has to ensure that the goods are shipped on time to reach the
customer to meet their requirements. The transit time for various destinations like India and South
Africa takes between 15 days to 60 days and to meet the requirements of a customer, they have to
plan the production at least 180 days in advance. The calendar year is broken down into four quarters,
aptly named from Q1 to Q4 and the distribution is then done in line with the plan, which enables
demand planning, production planning and supply planning to form an integral part of the total

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supply chain management system. For local delivery in UAE, Scion designs the local delivery plans
meticulously as any delay in delivery will result in cancellation of order. They have a delivery fleet,
which is part and parcel of our supply chain management system. Having understood the importance
of supply chain management, they have appointed a senior management who is in charge of supply
chain management and is supported by an efficient team to ensure efficient functioning of the
department. The senior manager reports to Mr.Sundarkumar himself and ultimately it is his
responsibility to ensure the supply chain department executes its responsibility and contributes to the
success of the organisation.

3.5 Challenges Faced

The entire operation is full of challenges and it is the company's constant endeavor to overcome the
challenges to achieve their goals. While they can plan and take care of controllable factors, managing
uncontrollable factors is their major challenge. Delays in supply, calamities, hijacking of cargo,
bankruptcy of suppliers, delay on the part of shipping company, wars, earthquake, sudden shortage of
components, unexpected price hikes and other relevant factors are constant challenges that they have
to overcome while trying to improve their supply chain management structure. Errors in forecasting,
delay in shipments, cancellations of orders by their distributors and change in order quantity all
threaten the efficient functioning of the supply chain. Hence, they have to be alert always and should
be proactive if they want to ensure efficient functioning of their supply chain. They have to
understand that it is a constant learning process and one which can never completely be finished
(Handfield & Nichols 1999).

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4. Scion International Supply Chain and Requirements

4.1 Customer Requirements

The first driving force for a supply chain is the needs of its end customers. In today’s world, customer
is the king and the customers have special and peculiar demands, which have to meet them in order to
stay in the business (Coyle et al 2008). Scion International understands its customer and has included
various factors in their system to take care of the customer demand. In comparison to well reputed
companies with high brand image and loyalty where one may be in a position to make the customer
accept your terms, for example companies like Coke, Pepsi, Proctor & Gamble, Unilever, Cadbury
and Nestle may be in a position to stick to their guns with the customers as their products have a very
high brand image and the customer needs these products to keep their business running. Hence these
companies can have a supply chain management system which will be accepted by the customers
even if the system puts them into difficulty.

In the case of Scion, their customers are in the budget/mass market sector selling unbranded items
and their success depends on the ability to meet all the demands of the customer. Hence their supply
chain management system is very dynamic and flexible to meet the specific and special requirements
of the customer. For instance, they keep high inventories to meet the unexpected and sudden demand
of the customer. Also, in case of an emergency they ship goods by air at their own cost to meet the
urgent requirements of the customer. On many occasions the faults on the part of the customers have
caused disruption to their system and they work hard to reduce the negative impact of such delays
(Chopra & Meindel 2002). It is the accommodating attitude and flexible customer service at Scion
that keeps them going and growing in this competitive business world and collectively customer’s
requirements provides the aim to their whole supply chain.

4.2 Supplier Requirements

Scion International follows a Standard supply chain model where products, parts and materials are
purchased from numerous suppliers to obtain all the raw material required to produce the required
goods. Also they order private and own label products from a few reputed suppliers which are
directly linked to their production plants and plan. Moreover they store their specific components and

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in some cases procure & store the components need for their products. Hence any delay on their part
will affect Scion’s system, but these suppliers generally want to reduce their supply time to make up
for the delay on their end. Further Scion, on their end tries to the best of their ability to take notice of
their demands such as on time payments etc, as they do not want to lose them.

4.3 Distribution Centres & Warehouses

One of the major factors in effective delivery of goods to customers is the use of distribution centres
or warehouses to store goods close to customer locations (Franken et al 2009). They have huge
storage capacity attached to their production units in UAE and India with state of art facilities. They
seldom use the outside storage facilities as well which gives them the required freedom to store their
goods and act in line with the customer needs. They also have their own trucks in UAE which helps
them to plan their deliveries on time. In addition they have also arranged for contract vehicles in case
of urgent and emergency use whereas, in the normal course, their supply chain is not affected by lack
of warehousing facility or trucks availability. Even in their overseas distribution centres which work
on rented warehouse and contract delivery system, neither the space nor mode of delivery is a
constraint.

4.4 Order Winning Criteria

Scion International success relies on the ability to get their products and services to market fast,
reduce total cost of ownership, better utilize assets, and minimize risks in manufacturing environment
(Simchi et al 2000). They follow both “make-to-stock” and “make-to-order” approaches in the
manufacturing of their products. They have certain global lines which produces on the basis of annual
forecast and they normally keep 3 months stock with them. They also take specific orders from
customers for specific products. Such orders take a minimum of 120 days to produce. As indicated
earlier their success lies in meeting the demands of the customers. For them, being an integrated
group they have the facility and flexibility to meet the demands of the customer in a short notice.

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5.Strategic Vision & Plan Formation
The management of Scion International puts it forward as “A Group whose hallmark has been and
continues to be a relentless pursuit of excellence. Our expertise and experience in developing highly
creative products of superior quality and our global reach gives us a winning edge and plays a key
role in driving us towards our vision and success”.

From the opinion above, it can be said that the vision of Scion is to create more innovative products
for customers, preferably made on the basis of customer demands. Also they are suppliers to many
resellers which provides them a competitive advantage over their rivals. To remain competitive in
their market they need to keep their supply chain process as efficient as possible, so that the time to
market for any particular product is reduced to the utmost (Coyle et al 2008). Although they have a
reasonably efficient supply chain system but they are not satisfied with the same and they feel there is
lot of scope for improvement.

The main areas of concentration in their supply chain on which they want to improve are the
improvement of demand planning system to increase the accuracy of their planning. As the nature of
their business, changing demand pattern, seasonality factor, no accurate past trend and intense
competition are the challenges that they are facing daily in arriving at an accurate demand planning,
therefore the management feels that their demand planning which is only 60% accurate should
increase to at least 80% over the next three years (Handfield & Nichols 1999). For this purpose the
company is taking necessary actions to achieve this goal. They have implemented an effective
demand planning enterprise resource planning systems that is JD Edwards which connects all their
group companies to the corporate office.

Apart from this, the employees of the organization are given an intense level of training in order to
understand and appreciate the importance of supply chain management and improve their knowledge
and skill level to meet the ever increasing challenges. Moreover, the distributors being one of their
biggest strength are a main part of their strategy and vision and to keep them attached they try their
level best to have a positive relationship with them. Scion has expanded their sales force who visits

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the distributors regularly and understand their needs and requirements and then accordingly plan their
actions accordingly.

Further, Scion very well understands their products do not have a high brand image and therefore
their focus is more of volume rather than being a value driven company. Most of their profits come
from increased volume and not from increased value. Hence customer service is the key to their
success (Franken et al 2009). They manage to compete in their market only by offering excellent
services and for this to have an effective and efficient supply chain management system is a must,
which is well understood by everyone throughout the organizational levels. Also they have
implemented an excellent CRM (customer relationship management) department who keeps in
constant touch with the customers and put in their best efforts to meet their requirements. Moreover
they conduct bi-annual customer service satisfaction surveys to get feedback from their customers
and then necessary actions are taken to rectify the problems being pointed out by them, Also
necessary steps to implement the modifications are suggested by the customers themselves and if the
company finds the solution as feasible and applicable, it is then applied, thereby increasing the
customer satisfaction level.

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6. Conclusion
At Scion International, the organizational culture is very accommodating and they very well
understand that change in customer demands is the only thing that does occur. Hence they follow a
proactive approach to meet the requirements of their customers and they have proved this fact
through some of the positive customer satisfaction survey results, which indicate that their customers
are reasonably pleased with their performance.

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7. References

Chopra, S & Meindel, 2002, Supply Chain Management: Strategy, Planning, and Operation,
Prentice Hall of India.

Coyle, J et al, 2008, Supply Chain Management: A Logistics Perspective, 8th Edition, South Western
Cengage Learning.

Doyle,P (1994) Marketing Management and Strategy, Prentice-Hall International, New York.

Franken, A, Edwards, C & Lambert, R 2009, ‘Executing strategic change: understanding the critical
management elements that lead to success’, California Management Review, vol.51, no.3, pp.49-73

Handfield, B & Nochols, E, 1999, Introduction to Supply Chain Management, Prentice Hall, 1999.

Scion International Website <http:/>www.scionintl.com> Accessed on 4 October 2010.

Simchi, D et al, 2000, Designing and Managing the Supply Chain: Concepts, Strategies, and Case
Studies, Irwin McGrawHill.

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