Role of Vendors

 Central Vendor
 Supply of dry items to centrlised location
 Located in and around delhi

 Local Vendor
 Supply of preishable items (milk, cream,
etc) locally
 Citywise supply

 Food Vendors
 DailySupply of all eatables
 Cold Supply Chain maintained
Baristas Key Features
Inventory costs are 2.6% of sales, while the
industry
average for such formats is 4.5%

 Keep stocks on the road

 more stocks moving on trucks instead of being

held at a central point (inventory turnover 9
days; industry 15 days)
 From a static model to a dynamic system
 charged for part-load moved rather than on a
per truckload payment system
 Regionalise, rationalise
 Contracts with vendors were signed on a
Vendor Management
 Depth of relationship: costs associated
with developing and maintaining a
strategic relationship with the vendor
 Five Steps of Vendor Management

Step 1
 Match the vendor management
model to organizational goals
 Creating a dedicated vendor
management staff
 Creating a project/program management
office
 Creating a vendor management office
Step 2
 Categorize existing relationships
 Strategic, tactical, commodity, or niche
players
 Dry, Perishable, Food, etc
Step 3
 Establish a selection process
 Establishing the degree and openness of
interactions with the vendor during the
process
 Establishing proper Standards of
Procedure
 Engaging outside consultants or legal
counsel to assist in selecting the right
vendor
Step 4
 Measure, monitor, and resolve
 Establishing a governance structure for
working with the vendor
 Continuous evaluation of the vendor
 Standards of Procedure for Evaluation
 Proper training of vendors
 Lending personnel & technical support
Step 5
 Define the partnership
 Determining when to share organizational
goals and future strategy
 Determining accountability for the overall
success of the relationship
 Agreeing on the circumstances for
terminating the relationship
Role of Inventory
 Centralised inventory for dry items with
inventory turnover of 9 days
 Part Load warehousing
 Perishable inventory sourced locally on
daily basis
 Food inventory sourced locally on daily
basis


 It is the inventory management that

allows Barista to keep the operational
costs down.
Inventory Model
 Requirements
 Minimize Inventory Costs
 Keep it as fresh as possible
 High Inventory Turnover
 Solution
 Just in Time Inventory Model
 Average inventory required can be
calculated using existing data.
Benefits of JIT
 Improved Quality – Freshness
 Lower Costs – Holding costs are lowered
 Economic Order Quantity Savings – Lower
total cost of ordering
 Safety Stock Reductions – Reduces lead
time & varitions in lead time
 Vendor Managed Inventory – Regionalised
contract fullfillment
Role of 3PL
 Delivery Costs Reduced – 3PLs Core
Competenct, Part Loading
 Liability Minimized – Warehousing &
transporting done by 3PL
 Enables JIT inventory
 Helps to focus on core competency
 Administrative Costs Lowered
 Capital Investment in Vehicles Eliminated
 Delivery Costs Are Defined and
Consistent
Evaluation of 3PL
 Linear weighting models - place a weight
on each criterion and provide a total
score
 Artificial intelligence - expert systems and
case-based reasoning (CBR)
 Statistical/probabilistic approaches
 Mathematical programming models
 Hybrid Intelligent Model- Combination
 Hybrid Intelligent Model
 Evaluation Criteria 1  Evaluation Criteria
– Strategic Aspects 2 – Business
 Financial stability Aspects
 Successful track  Information
record technology
 Similar size  Performance

 Comparable culture  Quality

 Similar values and  Cost

goals  Services
 Fit to develop a 

sustainable
relationship
Organizational Structure
 Functional Structure - O rg a n ize s
e m p lo ye e s a ro u n d sp e cific kn o w le d g e
o r o th e r re so u rce s ( m a rke tin g , su p p ly
ch a in )
 Benefits
 Permits greater specialization & simplifies training
 Easier supervision due to similar issues
 Creates an economy of scale owing to common pool of
talent
 Limitations
 Poorer coordination hence requires more controls
 Barriers in communication & cooperation
 Rigid and separate chains of command
 Response time to changes in the environment will be
slow
Organizational Structure
 Decision Making Authority – Decentralised
 Better
for quick decision making &
empowerment
 Span of Control – Narrow
 Higher Expenses
 Formalisation – Low
 GreaterFreedom but no Operating
Procedures
 Departmentalisation - High
 Common Resources
Improved Organizational
Structure
 Organic Structure
 Low horizontal differentiation
 Collaboration (vertical & lateral)

 Relaxed hierarchy; free flow of information

 Wide span of control

 Decentralized decision making

 Low formalization

 Informal communication, face-to-face

 Teamwork

 Adaptable duties
Supply Chain Operations
Reference Model (SCOR)
 The Primary Use of SCOR:
 To describe, measure and evaluate supply chain
configurations.
 SCOR contains:
 Standard descriptions of management processes
 A framework of relationships among the standard
processes
 Standard metrics to measure process performance
 Management practices that produce best-in-class
performance
 Enables the companies to:
 Evaluate and compare their performances with other
companies effectively
 Identify and pursue specific competitive advantages
 Identify software tools best suited to their specific
process requirements
SCOR Boundaries
 SCOR spans:
 All customer interactions, from order
entry through paid invoice.
 All product (physical material and
service) transactions, from supplier’s
supplier to customer’s customer,
including equipment, supplies, spare
parts, bulk product, software, etc.
 All market interactions, from the
understanding of aggregate demand
to the fulfillment of each order

 Five Distinct Management
Process
Plan-Source-Make-Deliver-Return
Plan

Deliver Source Make Deliver Sourc Make Deliv Source Make Deliver Source

Return Return e er Return Return

Supplie Retur Retur Customer’
r’s n n Customer s
Supplier
Supplie (Internal Customer
(Internal Your Company
r or
or
External) External)
Plan-Source-Make-Deliver-Return provide the organizational structure of the
SCOR-model
Scopes of Basic Management
Processes
 Plan (Processes that balance aggregate demand and supply to
develop a course of action which best meets sourcing,
production and delivery requirements)
 Balance resources with requirements
 Establish/communicate plans for the whole supply chain

 Source (Processes that procure goods and services to meet planned

or
 actual demand)
 Schedule deliveries (receive, verify, transfer)

 Make (Processes that transform product to a finished state to meet

planned or actual demand)
 Schedule production

 Deliver (Processes that provide finished goods and services to meet

planned or actual demand, typically including order
management, transportation management, and distribution
management)
 Warehouse management from receiving and picking product
to load and ship product.
Parameters for Performance
Measurement
 Outbound Freight Cost
 Inventory Count Accuracy
 Order Fill
 Finished Goods Inventory
Turns
 On Time Delivery
 Customer Complaints
 Over/Short/Damaged
 Out of Stock
 Returns & Allowances
 Inbound Freight Cost
 Perfect Order Fulfillment
 Cost to Serve
 Cash to Cash Cycle time
 Inquiry response time
 Equipment utilization vs.
 Inventory Obsolescence
 Order Cycle Time
 Incoming Material Quality
 Overall Customer
Satisfaction
 Inventory Carrying Cost
 Days Sales Outstanding
 Third Party Storage Cost
 Forecast Accuracy
 Invoice Accuracy
 Labor Utilization vs.
Capacity
 Equipment Downtime
 Processing Accuracy
 Order processed/ Labor
Unit
 Order processed/ Time Unit
Learnings
 Supply Chain Management Industry Specific
Overview
 Vendor Relationship Management
 Organisational Structure and its impact on
SCM
 SWOT & PESTE Analysis and its utility
 IT Enabling SCM for better efficiency
 Inventory Models & Management
 Effective Utilisation of 3PL
 Importance of Performance Measurement
Systems
 Flow of Information through the supply chain