Satish Supriya S Ullas Kamath
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Satish Supriya S Ullas Kamath
Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together
Services Service Network Manufacturi ng
Suppliers
Service support operations
Local service providers
Customers
Inputs
Transformation
Localization
Output
Suppliers
Manufacturing
Distribution
Customers
Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer
Supplier
Manufacturer Distributor
Retailer
Customer
Process View Customer Customer Order Cycle
Pull Retailer
Replenishme nt Cycle Manufacturi ng Cycle Procuremen t Cycle
Distributo r ManufacturerPus h Supplier
PLAN
Strategy, Metrics SOURC E
Suppliers, Pricing MAKE
Manufacture, QC DELIVE R
Logistics
RETUR N
Defects, Excess
Right Product
Right Quantity
Flexibility
Right Time
Delivery Reliability
Delivery Time
Minimal Cost
Inventory Level
Timely product supplies Accurate pricing/discounts Simplified and faster payments process Online information (purchases, sales, inventory, financials) Less duplication of job – utilization of humanpower in value adding roles Better warehousing and transportation management Better plant maintenance Easy access to data /information
• • • • • •
Global competition Well informed more powerful Customers Customer Expectations Shorter product life cycle New, low-cost distribution channels Internet and E-Business strategies
Each organisation seek to solve the problem from its own perspective Small changes in consumer demand result in large variations in orders placed upstream Dramatic order size variation Amplification of order size variation as one moves up the supply chain
Delay 2 weeks
Supplier
Delay 2 weeks Delay 2 weeks
Manufacturer
Distributor
Orders 40
Orders 25
Retailer Orders 15
Customer Buys 10
Little
or no communication between supply chain partners. Delay times between order processing, demand, and receipt of products. Over reacting to the backlog orders. Inaccurate demand forecasts.
An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. The objective is to catalyse HUL's growth by ensuring that the right product is available at the right place in right quantities, in the most cost-effective manner. For this, stockists have been connected with the company through an Internet-based network, called RSNet, for online interaction on orders, despatches, information sharing and monitoring. RS Net covers about 80% of the company's turnover. Today, the sales system gets to know every day what HUL stockists have sold to almost a million outlets across the country. RS Net is part of Project Leap, HUL's end-to-end supply chain, which also includes a back-end system connecting suppliers, all company sites and stretching right upto stockists.
Hindustan Unilever, which once pioneered distribution in India, is today reinventing distribution - creating new channels, and redefining the way current channels are serviced. In the process it is converging product availability, with brand communication and brand experience. In the end it could be said that HUL's SCM is one of the best in the world and it is quite difficult for any company to challenge it. In India if we see, we will find that LUX is available everywhere and it is through this SCM only that HUL is able to do that.
Facilities Production/Storage Sites
Responsiveness Vs Efficiency
Buy Back
No risk
Manufacturer Cost = Rs. 1 Profit Rs. 4000
Bears All risk
Retailer Cost = Rs. 5 Q = 1000 Profit Rs. 4000 Customer Cost = Rs. 10 Demand = 900
Manufacturer Cost = Rs. 1
Sharing of risks
Profit Rs. 5520 Retailer Cost = Rs. 5 Q = 1200 Profit Rs. 5160 Customer Cost = Rs. 10 Demand = 1080
Buy Back at Rs. 3
• GDP : Rs. 27.55 Lakh Crores* : Rs. 1.17 Lakh Crores • Inventory tied up : 14% of our GDP • Logistics Cost • 1% Reduction in LC : Rs. 27550 Crorers • 2% Reduction in LC : Rs. 55100 Crorers
* Economic Survey 2003-04
Country
GDP (USD b)* Logistics Cost as % of GDP
Asian Region
China Mainland
1237.1
14.5
India
460.0
14.0
Japan
3996.2
10.5
Korea
468.7
12.4
87.0
12.4
281.5
13.5
Singapore Taiwan * World Competitiveness Year Book 2003
Country
GDP (USD b)*
Logistics Cost as % of GDP
European Region France
1419.3
11.7
Germany
1987.0
11.8
Italy
1186.0
12.6
Netherlands
418.8
12.2
Spain
654.0
12.1
1555.2
12.2
Canada
729.3
11.8
Mexico
637.3
14.4
10445.6
08.7
UK North American Region
USA * World Competitiveness Year Book 2003
• • • • • •
Transportation Inventories Losses Packaging Handling and Warehousing Customers' shopping
35% 25% 14% 11%
9% 6%
Global automobile manufacturers are consistently streamlining their business process by outsourcing their non-core activities to low-cost countries like India. Global automobile manufacturers are under tremendous pressures to innovate their manufacturing process and at the same time, to reduce costs. In view of the present global competitiveness, they must not only develop new features to strengthen their customer requirements but also follow the environmental and safety standards. In addition, the base price of a car is expected to remain same over the next decade. As a result, companies are forced to source more components from low-cost countries like India
Global Automobile Market Scenario DIVERSE CUSTOMER NEEDS
STRATEGIC ALLIANCES AMONG MANUFACTURES
HIGH COST DUE TO R&D
REGULATIONS FOR ENVIRONMENT AND SAFETY
According to the Council of Logistics Management Supply Chain Management, “the process of planning, implementing and controlling efficient and cost effective flow of materials, in-process inventory, finished goods and related information from point-of-order to point-of-consumption, for the purpose of conforming to customer requirements as efficiently as possible”
Product flow Information flow Finance flow
Wikipedia Research papers on Ebsco, Emerald Interaction with Mr.Rajaram B K, ex-
Area Sales head(Delhi), HUL. MIS, Laudon & Laudon.
Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together
Services Service Network Manufacturi ng
Suppliers
Service support operations
Local service providers
Customers
Inputs
Transformation
Localization
Output
Suppliers
Manufacturing
Distribution
Customers
Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer
Supplier
Manufacturer Distributor
Retailer
Customer
Process View Customer Customer Order Cycle
Pull Retailer
Replenishme nt Cycle Manufacturi ng Cycle Procuremen t Cycle
Distributo r ManufacturerPus h Supplier
PLAN
Strategy, Metrics SOURC E
Suppliers, Pricing MAKE
Manufacture, QC DELIVE R
Logistics
RETUR N
Defects, Excess
Right Product
Right Quantity
Flexibility
Right Time
Delivery Reliability
Delivery Time
Minimal Cost
Inventory Level
Timely product supplies Accurate pricing/discounts Simplified and faster payments process Online information (purchases, sales, inventory, financials) Less duplication of job – utilization of humanpower in value adding roles Better warehousing and transportation management Better plant maintenance Easy access to data /information
• • • • • •
Global competition Well informed more powerful Customers Customer Expectations Shorter product life cycle New, low-cost distribution channels Internet and E-Business strategies
Each organisation seek to solve the problem from its own perspective Small changes in consumer demand result in large variations in orders placed upstream Dramatic order size variation Amplification of order size variation as one moves up the supply chain
Delay 2 weeks
Supplier
Delay 2 weeks Delay 2 weeks
Manufacturer
Distributor
Orders 40
Orders 25
Retailer Orders 15
Customer Buys 10
Little
or no communication between supply chain partners. Delay times between order processing, demand, and receipt of products. Over reacting to the backlog orders. Inaccurate demand forecasts.
An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. The objective is to catalyse HUL's growth by ensuring that the right product is available at the right place in right quantities, in the most cost-effective manner. For this, stockists have been connected with the company through an Internet-based network, called RSNet, for online interaction on orders, despatches, information sharing and monitoring. RS Net covers about 80% of the company's turnover. Today, the sales system gets to know every day what HUL stockists have sold to almost a million outlets across the country. RS Net is part of Project Leap, HUL's end-to-end supply chain, which also includes a back-end system connecting suppliers, all company sites and stretching right upto stockists.
Hindustan Unilever, which once pioneered distribution in India, is today reinventing distribution - creating new channels, and redefining the way current channels are serviced. In the process it is converging product availability, with brand communication and brand experience. In the end it could be said that HUL's SCM is one of the best in the world and it is quite difficult for any company to challenge it. In India if we see, we will find that LUX is available everywhere and it is through this SCM only that HUL is able to do that.
Facilities Production/Storage Sites
Responsiveness Vs Efficiency
Buy Back
No risk
Manufacturer Cost = Rs. 1 Profit Rs. 4000
Bears All risk
Retailer Cost = Rs. 5 Q = 1000 Profit Rs. 4000 Customer Cost = Rs. 10 Demand = 900
Manufacturer Cost = Rs. 1
Sharing of risks
Profit Rs. 5520 Retailer Cost = Rs. 5 Q = 1200 Profit Rs. 5160 Customer Cost = Rs. 10 Demand = 1080
Buy Back at Rs. 3
• GDP : Rs. 27.55 Lakh Crores* : Rs. 1.17 Lakh Crores • Inventory tied up : 14% of our GDP • Logistics Cost • 1% Reduction in LC : Rs. 27550 Crorers • 2% Reduction in LC : Rs. 55100 Crorers
* Economic Survey 2003-04
Country
GDP (USD b)* Logistics Cost as % of GDP
Asian Region
China Mainland
1237.1
14.5
India
460.0
14.0
Japan
3996.2
10.5
Korea
468.7
12.4
87.0
12.4
281.5
13.5
Singapore Taiwan * World Competitiveness Year Book 2003
Country
GDP (USD b)*
Logistics Cost as % of GDP
European Region France
1419.3
11.7
Germany
1987.0
11.8
Italy
1186.0
12.6
Netherlands
418.8
12.2
Spain
654.0
12.1
1555.2
12.2
Canada
729.3
11.8
Mexico
637.3
14.4
10445.6
08.7
UK North American Region
USA * World Competitiveness Year Book 2003
• • • • • •
Transportation Inventories Losses Packaging Handling and Warehousing Customers' shopping
35% 25% 14% 11%
9% 6%
Global automobile manufacturers are consistently streamlining their business process by outsourcing their non-core activities to low-cost countries like India. Global automobile manufacturers are under tremendous pressures to innovate their manufacturing process and at the same time, to reduce costs. In view of the present global competitiveness, they must not only develop new features to strengthen their customer requirements but also follow the environmental and safety standards. In addition, the base price of a car is expected to remain same over the next decade. As a result, companies are forced to source more components from low-cost countries like India
Global Automobile Market Scenario DIVERSE CUSTOMER NEEDS
STRATEGIC ALLIANCES AMONG MANUFACTURES
HIGH COST DUE TO R&D
REGULATIONS FOR ENVIRONMENT AND SAFETY
According to the Council of Logistics Management Supply Chain Management, “the process of planning, implementing and controlling efficient and cost effective flow of materials, in-process inventory, finished goods and related information from point-of-order to point-of-consumption, for the purpose of conforming to customer requirements as efficiently as possible”
Product flow Information flow Finance flow
Wikipedia Research papers on Ebsco, Emerald Interaction with Mr.Rajaram B K, ex-
Area Sales head(Delhi), HUL. MIS, Laudon & Laudon.
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