DEPARTMENT OF MANAGEMENT STUDIES, IIT DELHI

Assignment
Supply Chain & Logistics Management

Sreejith Perumbilavil 2008SMF6599

Contents Indian Examples ....................................................................................................................................... 3 Eastern Condiments Pvt. Ltd.: A case of global sourcing .................................................................... 3 Hariyali Kisaan Bazaar: Model for vendor development ..................................................................... 3 FlipKart: The Indian Amazon? ............................................................................................................. 5 Inlogistics: Indias first private cargo train operator ............................................................................ 5 Spencers Retail .................................................................................................................................... 5 Maricos Copra Procurement: Developing a vendor portal .................................................................. 6 Tata Steel: Theory of Constraints ......................................................................................................... 6 Hero Hondas Haridwar Plant: Model for supplier development ......................................................... 6 Godrej Industries: Getting sales data directly from Retailers ............................................................... 7 Deccan 360: Hub and Spoke Model for Freight ................................................................................... 7 International Examples ............................................................................................................................. 8 Hyundai Motors: RFID-enabling a supply chain.................................................................................. 8 Apples Digital Supply Chain ............................................................................................................... 8 Mitsubishi Supply Chain ...................................................................................................................... 8 Boeing: A supply chain per model ....................................................................................................... 8 British Airways ..................................................................................................................................... 9 Genco and Sears Supply Chain ........................................................................................................... 9 Lenovo .................................................................................................................................................. 9 Sonys Supply Chain rationalization .................................................................................................. 10 Coca Cola: Improving conveyance ..................................................................................................... 10 Lockheed Martins Supply Chain Control Centre .............................................................................. 10

Indian Examples
Eastern Condiments Pvt. Ltd.: A case of global sourcing
Eastern Condiments Pvt. Ltd. is a company that produces ready to eat food and spice and curry powders. They have annual revenue of around Rs. 300 Crore, and aims to increase the same to Rs. 350 crore by the end of the year. For their operations, they used to procure from the spice markets all over India. Chilly and spices used to come from as far as Assam or Rajasthan. In the recent years, they have started procuring from abroad, especially ASEAN countries like Vietnam and Philippines, to take advantage of lower prices and exchange rate. They now have a dedicated purchase team to look over these purchases, and have signed a contract with leading spice-sellers in these countries. Proximity of their plant to Kochi port makes this a logical step, as it is convenient to transport these commodities even from abroad. They have, in 2007, started a new plant in Ras al Khaimah, UAE, which functions entirely on raw materials imported from over 40 countries. They also have tie-ups with shipping companies for distributing their finished goods to their distributers in the US, UK and the Middle East. They handle distribution in India on their own, and have tie-ups with more than 40,000 shops in 6 states. M.E. Meeran, Chairman of the group, believes that supplier and distributor relationships are vital in their being able to provide quality products at reasonable prices, which is one of his principles for success. Sources: 1. Thomason Rajan, Dr. K.S. Chandrashekhar, Brand the Kerala Products. Kerala Calling, June 2007 Page 34-35. 2. Hindu Business Line report on January 08, 2009: The Eastern Spice Route 3. Economic Times article on July 19, 2007: Meet the King of Spices 4. Eastern Condiments Pvt. Ltd. Website

Hariyali Kisaan Bazaar: Model for vendor development

DCM Shriram Consolidated Ltd. (DSCL) is a company with turnover of over Rs. 3500 crore. It operates in various sectors like Chemicals, PVC resins, cement, textiles, and agro-based industries like sugar, urea and hybrid seeds. Because of its deep involvement with the farmers both on the procurement and the selling side, DSCL has become an integral part of the lives of thousands of

farmers. It is at this juncture that DSCL came forward with the idea, in sync with the time, of rural retailing. Hariyali Kisaan Bazaar is an initiative in this direction. Hariyali Kisaan Bazaar (HKB) is envisaged as a rural business centre, and is DSCLs initiative to cater to the base of the pyramid, i.e., that broad market that had been neglected by organized retail for long. Each HKB caters to farmers living around 20 kms from it. This translates to agricultural land of about 50000-70000 acres and approximately 15000 farmers. DSCL works heavily in agro-based industries, and, by developing a network of HKB centres throughout rural India, DSCL is on the way to develop its suppliers, i.e., farmers who give the raw material for its industries like sugar and textiles. DSCL provides consultancy to farmers in terms of agricultural information, information on hybrid seeds and fertilizers, and also helps in them getting easy finance through a tie-up with ICICI and crop insurance through ICICI Prudential. Thus, through HKB, DSCL develops its suppliers in its agro-based industries like sugar and textile. The farmers get better inputs at cheaper price, financial services and insurance, which are incentives for more production and better outputs, which are in turn essential to profitability of DSCLs other divisions. References 1. DCM Shriram Consolidated Ltd. About DCM Shriram Consolidated Ltd. [Online] [Cited: February 16, 2010.] http://www.dscl.com/AboutUs_OverView.aspx. 2. Hariyali Kisaan Bazaar. DSCL . [Online] [Cited: February 15, 2010.] http://www.dscl.com/Business_Agree_HarKisBzr.aspx?PID=27. 3. Agri-Biz and Commodities. The Hindu Business Line. [Online] July 2, 2009. [Cited: February 15, 2010.] http://www.thehindubusinessline.com/2009/07/03/stories/2009070351951800.htm. 4. Nidhi Nath Srinivas & Ratna Bhushan, ET Bureau. The Economic Times. [Online] February 4, 2010. [Cited: February 15, 2010.] 5. ICICI Prudential in strategic tie-up with Hariyali Kisaan Bazaar. IndiaPRWire. s.l. : IndiaPRWire, 2007.

6. Peer to Peer. Expert Computer Online. [Online] [Cited: February 15, 2010.] http://www.expresscomputeronline.com/20060313/management01.shtml.

FlipKart: The Indian Amazon?

FlipKart is an online book retailer. They provide hefty discounts on popular titles as well as free delivery anywhere in India. They have around 4 million titles on offer through their user-friendly website, and have tie-ups with publishers and 3PL providers like FirstFlight, Overnite, Blue Dart, etc. Where there are no courier services, the delivery is through registered post. In places like Delhi and Bangalore, they even provide overnight delivery. Books in stock get delivered by 3 business days. Others may take upto a week. They are planning to start regional centres in other Indian metros as well, and also plan to diversify into electronics and music. They provide a variety of payment options such as net banking, credit card, ATM/ debit cards and even cheques and DDs. Sources: 1. Startupduniya interview with founder Binny Bansal 2. Flipkart website.

Inlogistics: Indias first private cargo train operator

Inlogistics, or Innovate Logistics, is Indias first private cargo train operator. Currently, they provide end-to-end logistics solutions to customers in containerized cargo, as well as store the cargo and distribute it as per the requirements of the client. As of now, they have a warehousing facility at Ghaziabad with a built-up area of 120,000 sq. feet. They are soon planning to open container freight station, container terminals and logistics parks at strategic locations across India.

Spencers Retail
Spencers Retail, the retail chain owned by the RPG Group, has taken several steps to bring down its supply chain costs, which come to nearly 3 % of the total. They began by reducing space per distribution centre to reduce real estate costs and encouraging direct supply, especially to larger stores. They have also invested in IT for automatic replenishments. Within two months of its implementation, it brought down costs by almost 10 %. Also, they are closing smaller stores and focusing on larger ones so that direct shipping is possible.

Source: Business Standard, 17 June 2009: Spencers in costcutting, rightsizing mode.

Maricos Copra Procurement: Developing a vendor portal

Earlier, Marico used to procure copra in a very difficult mode, with lots of paperwork and communication through telephones. This created a lot of transaction losses. They wanted to make the process transparent and also provide real-time transaction information to the vendors, for which they developed a supplier portal. As a first step, they trained their vendors to use e-mails for all copra-related transaction. They got the portal designed in Malayalam and Tamil, with significant inputs from key suppliers. Training was given at the suppliers location. In a major shift from the usual, Marico asked suppliers to place their quotes rather than the company quoting a price. Soon, they convinced suppliers to invest in hardware and internet to access the portal, and also plan to provide them with connected PDAs so that they can access the portal at ease. Source: Express Computer Online article: Tweaking the supply chain

Tata Steel: Theory of Constraints

Tata Steel applied Theory of Constraints to restructure its supply chain in mid 2005. The programme focuses on establishing a clear competitive edge by delivering more value to the customers and further reinforcing the supply chain process. It mainly focuses on steel business unit, which includes mines, collieries, iron and steel operations. This has given the company several benefits including the ability to provide a reliable service in terms of delivery at significantly reduced time in certain areas, a reduction in overall system inventory, aligning supply closely with demand, improving inventory situation at the distributor and customer levels and, as a cumulative effect of all these, increasing the return on capital. Business Line report: http://www.blonnet.com/2006/07/22/stories/2006072202080700.htm Tata Steel Press Release: http://www.tata.com/company/releases/inside.aspx?artid=qVjhctBuusA=

Hero Hondas Haridwar Plant: Model for supplier development

Hero Honda is investing Rs. 1900 cr for a new plant in Haridwar. The plant started production in 2008 April with an initial production of 500,000 units. The company invested Rs. 800 crore, whereas the rest was pitched in by various ancilliaries. They plan to upgrade the capacity to 1.5 million units. The two-wheeler major's upcoming factory premise accommodates around 12 suppliers also. To make the supply chain stronger, Hero Corporate Services Ltd, a subsidiary of the Hero Group, is also developing

two industrial parks around the facility for its various suppliers. The company has already acquired 250 acres of land for each park and it is in the process of being developed. Sources: Business Line article: http://www.business-standard.com/india/storypage.php?autono=262368 Hero Honda website: http://www.herohonda.com/media_current_releases.htm

Godrej Industries: Getting sales data directly from Retailers

Godrej, after linking all distributors, set out on linking all retailers, around 90,000 of them across India, to get accurate and timely details of retail sales data. Their initial project, Sampark, has linked around 1000 distributors across India. They plan to use Windows- based PDAs, given to field officers, to collect this information from Kinara stores. At the end of the day, the field officers return to the distributors office, from where the data is automatically synced with the main database. Source: http://biztech2.in.com/india/interviews/scm/godrej-to-connect-90000-retailers-acrossindia/19661/0

Deccan 360: Hub and Spoke Model for Freight

Deccan Cargo and Express Logistics Pvt. Ltd., or Deccan 360, an express transportation business, is the first Indian company to develop a hub-and-spoke model in the logistics industry. Once fully operational, Deccan 360 will offer next day connectivity to more than 85 % of the Indian GDP, according to its founder Capt. Gopinath. Their first overseas connection is to Hong Kong from Delhi, and will soon connect its hubs Delhi, Mumbai and Chennai with Dubai as well. These connections will be through A310 aircrafts, whereas these hubs will be connected to smaller airports in the hinterland through either identical or smaller ATR aircrafts, thereby providing air-delivery to smaller airports across India. They are in the process of developing their warehouses in Nagpur, Delhi and Hyderabad to handle its cargo. They claim to be able to deliver, from Hong Kong, the days produce, at Delhi, Mumbai, Chennai or Dubai, by the next day morning between 3 a.m. and 9.30 a.m. This is bound to revolutionize the way logistics is handled in India. Source: Project Monitor website interview with Capt. Gopinath: http://www.projectsmonitor.com/AIRPT/deccan-360-will-connect-more-than-85-of-indias-gdp

International Examples
Hyundai Motors: RFID-enabling a supply chain
RFID-enabling Hyundai Motorss shipments were done by Hyundai Motors logistics services affiliate, Glovis. Initially, corrugated boxes and packaging cases of automotive spares from five suppliers, bound for Hyundais factory in Alabama, US, were tagged with RFID tags. The second phase will see all shipments for and from Hyundai being tagged. RFID tagging will help Hyundai track the parts at various points in the supply chain, including delivery, repacking and outbound shipments at distribution centres. Source: RFID Journal: http://www.rfidjournal.com/article/view/3115

Apples Digital Supply Chain

Digital Supply Chain encompasses the process of the delivery of digital media by electronic means from the point of origin (content provider) to destination (consumer). Similar to physical supply chain, digital content also needs a supply chain to get the content delivered to the customer. In this supply chain, warehouses are to be replaced by data centres, containers by data and physical distribution system by internet and bandwidth. The main difference between conventional supply chain and digital one is that any item in the inventory can be sold many times. Apples iTunes is a product that helped shift supply chain investments to technology and infrastructure and provides a platform for higher margin hardware sales. It increases agility and turnaround times with on-demand content. Source: http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-37848

Mitsubishi Supply Chain

Mitsubishi in Australia is modifying its supply chain to support JIT manufacturing model that will be required to make its new model viable. In Australia, Mitsubishi is dealing with suppliers who are overseas or have primitive inventory management practices. They also set up quality gates in manufacturing set-up, mandatory entry and exit criteria necessary for the project to proceed to the next step. Their new IT setup is also of use in better shipment visibility, helping in vendor-managed inventory. Source: http://www.theage.com.au/news/management-focus/the-supply-chainsuperhighway/2005/07/18/1121538905366.html

Boeing: A supply chain per model

Each Boeing model of aircraft comes with a whole new supply chain. Boeing has contracted with an army of suppliers for individual parts and systems, who will design and build sections or components of plane, and ship them to Boeing for its final assembly and testing at Everett, Washington, US. Various components may even travel around the world, passing through various contractors, before reaching their final destination at the assembly plant. Thus, they target that each aircraft gets assembled over a three day period. To ensure this, they have entered a whole new level of

collaboration with key suppliers around the world. They have suppliers at 135 locations all over the world. Source: http://glscs.texterity.com/glscs/200703/?pg=38&pm=2

British Airways
British Airways Engineering employs 9,000 workers at more than 100 locations, to ensure timely and reliable service of its aircrafts. The new system will enable the airline to save money and also optimize the management of its $790 million worth of inventory without sacrificing the quality of service on its aircraft. Their improved procurement planning will raise service levels in the aircraft maintenance hangars and reduce the amount of spareparts they will have to keep on hand. The inventory management systems will also ensure that out-of-stock parts can be flown in within hours from another airport. Source: http://www.computerworld.com/s/article/54890/British_Airways_switches_to_Xelus_supply_chain_so ftware_

Genco and Sears Supply Chain

Sears is a leading retailer in the US. They have outsourced the handling of their white goods to Genco, a third party logistics company. Genco operates three DCs for Sears. They maintain the inventory and just ships to the Sears Market Delivery Operations. Sears Logistics Services handles all in-bound and outbound deliveries to and from the Genco DCs. Genco, on the other hand, uses Sears' warehouse management system so that its real-time inventory level is visible to managers in both organizations. Genco also handles most product returns from Sears stores, and handles four reverse logistics warehouses. Sources: http://logisticstoday.com/logistics_services/outlog_story_8382/

Lenovo
When Lenovo acquired IBMs PC division, they started with a global manufacturing footprint, with 10 plants around the world. However, it was not a largely outsourced model, as more than 75 % of the manufacturing is done at their plants. It is now looking for suppliers in areas where it traditionally self-sourced. To review suppliers as well as look for ways to cut costs, Lenovo employs teams comprising procurement, finance, engineering and supplier quality managers. To strengthen its supplier management strategy, Lenovo has instituted an annual supplier event where the company's senior management outlines the company's goals for suppliers in the coming year. Also, Lenovo also holds quarterly business reviews with suppliers to review supplier scorecards. Source: http://www.purchasing.com/article/228523-Lenovo_does_global_supply_chain_right.php

Sonys Supply Chain rationalization

Sony made plans to halve the number of its parts and materials suppliers over two years and thereby cut purchase costs by 20 % in 2009-10. By buying bigger volumes of parts from each supplier, Sony plans to cut costs by upto $5.2 billion. Generally, electronics manufacturers like Sony have at least two suppliers for key components for reliable backup in case of a spike in demand or defects. So most probably, they will retain key suppliers and terminate others. Source: http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2009/05/sony_prunes_sup.html

Coca Cola: Improving conveyance

Coca Cola is looking forward to change the way their direct delivery is carried out, with increased number of SKUs and retailers. Earlier, they used to deliver several pallets of same SKU to stores, but they discovered that many stores can no longer sell such quantities of the same SKU. Also, with the use of EDI and advanced shipping notices, the retailers preferred not to place orders that supported bulk pricing. Thus, Coca Cola had to build mixed-SKU pallets that have various products in right quantities, necessary to fulfill a particular stores order. Source: http://logisticsviewpoints.com/2010/04/15/coca-cola-enterprises-better-trucks-happy-driverslower-costs/

Lockheed Martins Supply Chain Control Centre

Lockheed Martin has started a control centre to support its maintenance activities on its war planes around the world. They will employ the latest technology from defence sector to oversee inventory forecasting, order management and distribution to ensure cost-effective and reliable operations. They also will manage their relation with small suppliers, who supplies as much as 80% of their components. Source: http://www.supplychainer.com/50226711/lockheed_martin_opens_supply_chain_command_center.ph p