Operation & Supply Chain Management

MBA IGNOU SEM-II

NAZIA PARVEEN Roll No - 112162599

Operation & Supply Chain Management

Operation & Supply Chain Management

MODULE TITLE: OPERATIONS AND SUPPLY CHAIN MANAGEMENT

INSTRUCTIONS Students would carry a Plagiarism Check of the submitted document on VIPER and submit the report alongwith the assignment. He/she would also sign the Plagiarism check statement on the cover page. Weightage will be given to critical evaluation or reflection on the problem/issue being analyzed.

Q.1 Consider the Supply Chain for a product of your choice in the FMCG Sector.
(a) Study its Supply chain strategies and make a Report covering the following aspects: (50) Components of the Supply Chain for the industry chosen Different firms involved in Supply Chain What are the risks that unexpected events pose to this supply chain? Suggest measures, trade-offs and risk management technique which can be considered in handling risks and obstacles so as to make the supply chain more robust. What are the new technologies used in SCM of the product chosen

(b) An appropriate distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness. As a result, companies in the same industry often select very different distribution networks. As an entrepreneur, you have to launch a similar competitive product in the same market. (50) What factors you will be considering in design of the supply chain network. Derive and detail a logistics strategy emphasizing on logistics functions; Order Processing, Inventory Management, Warehousing, Transportation, Material Handling and Storage, Logistical Packaging and Information System.

Operation & Supply Chain Management

Introduction:Supply Chain Management as a concept has been widely accredited to a Booz Allen consultant named Keith Oliver who in 1982 defined the concept as follows: Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-ofconsumption. Operational supply chain decisions are made hundreds of times each day in a company. These are the decisions that are made at business locations that affect how products are developed, sold, moved and manufactured. The components of operation & supply chain management Forecasting / Planning Purchasing / Procurement Logistics Operations Inventory Management Transport Warehousing Distribution Customer Service

Operation & Supply Chain Management

FMCG:FMCGs are those products that are frequently purchased by consumers at relatively low cost, such as deodorant, toothpaste, detergents and packaged food and drink, along with non-durables including glassware, bulbs, batteries, paper products, plastic goods the list goes on. Or in broader terms: food, pharmaceuticals, consumer electronics, drinks and beauty products. FMCG sector in India has been experiencing a phenomenal pace of growth since last decade owing to increasing consumer incomes and rapidly changing consumer tastes and preferences. Large scale and low cost production, modern retailing strategies, branding and maintenance of intense distribution network have given FMCGs an edge over others in raising hovering revenues. At present Indian FMCG sector is worth Rs. 1300 billion and expected to be around a whopping value of Rs. 4000 to Rs. 6000 billion by 2020. Henceforth FMCG and its closest companion Retail sector, both are likely to create most of the jobs in India in the coming years primarily in functions like marketing, sales, advertising, supply chain, logistics, human resources, product packaging and development, finance, operations, general management, supervising and so on.

The company chosen by me is PARAS Dairy Overview of the Paras Dairy:PARASs history reflects back to 1960, when the procurement of milk started with 60 Liters of milk. The only fundamental that worked right from day one is the quality, which got reinforced everyday of progress. Ch. VedRam, the founder and promoter of our company is one of the connoisseurs in the dairy farm industry. Ved Ram & Sons started as our partnership company in April 1986. The first unit was established in 1987 under company's name VRS Foods Limited and since then In tune with the rapidly changing technology, production units are well armed with the latest equipment. These facilities enable us to cater to the needs of our clients by selling over 2, 50,000 liters of milk per day in Delhi Metro. MILK gets its unique, great taste from dedication to monitoring quality, special care, and attention to detail in the processing and packaging steps of production. Through our careful processing and packaging, we have been able to retain great taste. The company built a bigger, better facility, expanded the product line and opened retail stores. Whether we deliver right to your door, or you visit one of the dairy stores, you can be confident that our quality and service will always be "The Best". The company believe that milk should taste just like milk- pure and simple. We don't believe in adding anything to our milk. Quality is believed to be a dynamic process which requires continuous monitoring and up gradation. Thus it is our constant endeavor to make quality an integral part of the entire value chain rather than the end point. At the heart of the entire network of Paras are hundreds of Village level collection centers covering 5000 villages across Western U.P., Haryana, Rajasthan, Maharashtra and Gujarat from where the milk is collected everyday. The farmers are not only helped in Finance but also in buying

Operation & Supply Chain Management

cattle, feed, providing veterinary services and other infrastructure supports. The trust of the farmers has grown stronger and so has the network. There is continuous monitoring and up gradation of quality. The stress therefore is on ensuring sanitation and hygiene right from village level. Thats the reason why every Village level collection center is equipped for field testing, efficient chilling and speedy transport to processing and manufacturing facilities. Companys large manufacturing capacity at 5 different locations across most part of India is backed by an impressive distribution network, to ensure that the products find their way to every household in India.

Quality Assurance:Paras fresh milk represents Good Hygienic Quailty at source of milk collection. Paras Milk is collected from milk sheds of western UP belt with stringent quality control that ensures clean hands, clean utensils, clean utensils, clean hygienic sanitation at the time of milking the milch cattle, during storage and transportation to chilling centers, on way to hi-tech ISO 9001 and HACCP certified Paras Milk Plants at Gulaothi and Sahibabad.

Vision and Values:-

PARAS will continue to grow as an FMCG major, delighting national and international customers with quality products and services. The Values Which the Organization lives by are : Trust Opinions Commitment Integrity Growth Orientation Quality Value for Money Customers Orientation

Operation & Supply Chain Management

Presence:- In Domestic Market:-

International Market:-

Operation & Supply Chain Management

Paras Dairy Products

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Operation & Supply Chain Management

Paras Supply Chain Management Components of Supply Chain for Paras Dairy Location decision:At the heart of the entire network of Paras are hundreds of Village level collection centers covering 5000 villages across Western U.P., Haryana, Rajasthan, Maharashtra and Gujarat from where the milk is collected every day. The farmers are not only helped in Finance but also in buying cattle, feed, providing veterinary services and other infrastructure supports. The trust of the farmers has grown stronger and so has the network. There is continuous monitoring and up gradation of quality. The stress therefore is on ensuring sanitation and hygiene right from village level. Thats the reason why every Village level collection center is equipped for field testing, efficient chilling and speedy transport to processing and manufacturing facilities. The large manufacturing capacity of Paras at 5 different locations across most part of India is backed by an impressive distribution network, to ensure that the products find their way to every household in India.

Production decision:The production decision of Paras aimed at developing demand for its product. Consumers had limited purchasing power and consumption levels of milk and other dairy products at the time when Paras was formed. Thus Paras adopted a low-cost price strategy to make its products affordable consumers ensuring them value for money. Even though competition in higher value dairy products from firms such as Hindustan Lever, Nestle and Britannia, GCMMF ensures that the products introduced by Paras are at affordable prices.

Logistics decision:The logistic decision covers the following three areas: Logistics in collection- Around 6 litres of milk per day is collected from about 10600 village co-operative societies, which in turn collects it from 2.8 million milk collecting members. Logistics in co-ordination:Logistics co-ordination becomes very important in the collection and distribution of milk and allied products and as we know that logistic management is the core to operation of distribution intensive firms. So for better logistic management of amul has done several contract with third party logistic management services providing firms as and wherever it is needed. Some of them are mentioned below Om Logistics AFL Logistics Safexpress GATI

Warehousing decision:Paras milk is a perishable product and has a short life span. It cannot be stored for long and has to be consumed immediately (maybe a week). It needs to be refrigerated during its life cycle from the stage of production till it is distributed to consumer. Milk in sachet/pouch and flavored milk are kept in plastic crates and stored in cold storage facility and distributed to all retailers. The plastic crate in which milk is kept weigh 20-25kgs and can be handled by laborers and does not require any mechanized equipment for storage, retrieval, loading and unloading. The storage cost is minimized as

Operation & Supply Chain Management

stock can be stored vertically (6-8 crates on each other) ,thus reducing the area usage. One does not need any steel rack or pallet to store milk packets vertically.

Inventory decision:As we know that milk is a highly perishable product and its collection is also varies season to season and the supply chain is also being threatened by the unexpected risk posed to this. As per the Inventory manual Paras has made compulsory to its distributors to keep certain inventory stock for Allied products and Inventory management includes below: Warehouse Management (Self owned & Contract Based) In House stock level ( at Production unit itself ) Distributors Inventory level Retailers Stock level

FIRMS INVOLVED IN SUPPLY CHAIN

Involved Firms:In the entire network of the supply chain the firms involved are: The farmers Village co-operatives Diary plants GCMMF Distributors and Wholesalers Warehouses Retailers

VALUE CHAIN PROCESS:-

Operation & Supply Chain Management

There are large number of organizations and entity in the supply chain of Paras, hence effective co-ordination of all the firms /entities is required for efficiency and cost control. GCMMF plays a vital role in this process. GCMMFs main work is concerned with marketing and brand development of Paras. Its responsibility is to co-ordinate with the distributors to ensure timely supply of Paras milk to end consumer. GCMMF also works with the unions to develop production plan, determine product mix and product allocations. The Union (Paras) in turn co-ordinates for collection logistics and support services to member farmers. The unions main activity is processing of the milk. The suppliers are mainly the marginal farmers who are illiterate with no direct access to financial institutions.

RISK THAT UNEXPECTED EVENTS POSE TO THE SUPPLY CHAIN

As we can understand that the supply chain of milk is one of the most crutial supply chain , there may be some risks that may occur due to unexpected events , some of them are listed below

Transportation Problem or Risk:As we know that transportation plays a very critical role in not only the milk proccurement but also in the delivery of the finally packeged milk to the retail outlets and finally to the end consuers, if there is any problem in the carrier (Trucks & lorrys) the supply may get disrupt.

Loss in Transit:As we know that milk is carried in HCVS/CONTAINERS and in REFRIGERATED VAN so it may happen that there in any problem ( such as the cooling mechanism failure in REFRIDGERATED VAN) while milk is being carried in it . This type of loss in transit may also happen in the supply chain of Paras Milk supply chain.

Problems in the Deep Freezers in the Plant:As we know that milk is higly perishable product which has very short life span ,so if any how some problem occurs in the deep freezer in the plant itself , it may pose to a grave risk to the supply chain of milk and finally the delivery may get badly affected.

Sudden Fall in the Collection of Milk :In case there is a reduction in the collection of the milk ,it may also badly affect the supply chain of milk , suppose in some specific area the milk producing animal get affected by any unknown illness this may cause reduction in the milk collection so this way also the supply chain may face risk .

NEW TECHNOLOGIES OF THE PRODUCT CHOSEN Management System Policy: Apply state of the art technology and processes to enhance productivity that ensures quality at competitive price.

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Operation & Supply Chain Management

Apply processes for clean production, pollution prevention and optimize resource utilization in all operations Follow food safety management system and apply HACCP (Hazard Analysis Critical Control Points) principles to provide safe products to customers Comply with applicable regulations and legislations. Mother Dairy pledge to provide quality and safe products under clean and hygienic environment. The following steps are taken and ongoing efforts are continuously made as per "Management Systems Policy"Minimize Waste generation Conservation of resources Use of renewable energy Recycling & re-use As far as the environment management is concerned it has the following arrangements Solar Panels- In an effort to conserve fuel, Mother Dairy utilizes the solar enegy to preheat the water going into the boilers. This also minimizes the pollution caused by burning of fuels like coal.oil etc. Rainwater Harvesting- for maintaining groundwater level it has installed the plant in the premises. Effluent Treatment Plant- The water used for cleaning the equipment and tankers is treated at the effluent plant in the dairy before being discharged into the sewage system.

Energy Management Policy:Mother Dairy Food Processing Ltd. commits themselves for optimum utilization of energy in all manufacturing activities as well as in office by: Monitoring closely and controlling the consumption of various forms of energy through an effective Energy Management System. All round participation of all employees and educating them about energy conservation. Maximum utilization of renewable energy sources. Up gradation of processes, technology and use of energy efficient equipments. Optimum utilization of plant capacity. As a part of energy conservation and environment protection commitments, reduce the specific energy consumption. The main policy which focuses the customer is the Service along with Quality policy which states that the customer should be served in the best possible manner and should also get the quality up to the mark.

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Operation & Supply Chain Management

Part-II.........

Ans.II Even though the manufacturing process is complicated, the prerequisite for any supply chain is to develop a good expectation of what is demanded by the customer. In other words, it involves knowing what consumer wishes to buy, what they intend to buy, how much of a good will they buy, and finally when and where will they buy the goods. The next challenge that a company faces is to optimize its operations. That is, how to optimally manufacture the right product at the right time and how to design a structure that would ensure the distribution of goods from the distribution point to the consumption point, while keeping in mind the costs involved. As an entrepreneur, I would support a demand-driven supply chain and would like to employ performance-driven supply chain practices while carrying out the operations for the product. In todays business environment, to create a demanddriven supply chain it is necessary to sense and respond to the real-time signals of demand all through the customers, suppliers and employees. Let us see what factors would be needed to be taken care off while designing a Supply Chain for a competitive product that would be launched in the market. Factors considered while designing a Supply Chain would comprise of the following:-

Market Structure:A proper study of the market is necessary in order to design the supply chain for a product. The conditions prevailing in the market, the demand and supply graph, the trend towards the products are some of the factors that will determine the supply chain.

Demand Estimation:What are the products that are selling in the market? How much of a particular product is demanded in the market? What would be the scope of a particular product selling in the future? The answers to these questions would help design the supply chain in a better way.

Market Segment:Before the supply chain is put into process it is important to segment the market to understand what customers to target. This would enable a company to design its supply chain accordingly.

Procurement:It is the sub-department where the finished goods are put into the selling process. Therefore the procurement is the subject of constant monitoring and improvement.

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Operation & Supply Chain Management

Logistics Strategy
Order Processing:The whole process of Order Processing starts with the customer placing an order for the product. The order thus placed by the customer will be then forwarded to the manufacturer. This will be followed by the process of order processing where the order is checked and verified by the concerned department. On the checking the order, the content will be picked and loaded in to the truck and will be sent to the nest process. Thus the next step is where the order will shipped to customer. The order processing step shall end when the customer receives the order and gives his intimation of the same. This whole time span of the customer placing an order and ultimately receiving the order is termed as the order cycle time. Reducing the order cycle time leads to contributing to the overall effectiveness of the whole supply chain.

Inventory Management:Here in this step the whole focus would be on the act of balancing the inventory needed to achieve high levels of customer service and the cost of handling such inventory. The inventory needs to be checked on all levels in the supply chain; hence the effective control is necessary to maintain a healthy financial condition of our company. In order to achieve optimal inventory management, we shall focus on the following inventory management initiatives: Just In Time (JIT) Vendor Management Inventory (VMI) Continuous Replenishment Program (CRP)

Warehousing:The step of Warehousing stands to have an inter-linking function in the supply chain. The raw materials at first are purchased and stored. Later the raw materials enter the process of manufacturing and the finished product returns back to the warehouse. The three main functions in the warehouse would be: Receiving the raw materials from the transport facilities and updating the records of inventory in the warehouse. Order picking would involve the selecting of finished products from the warehouses and compile them as per the orders placed. Shipping shall include the actual movement of goods from the warehouses on to the transportation facilities for delivering to the customers.

Transportation:The supply chain function of transportation shall make use of both the internal and the external means of transportation. Transportation cannot be considered as relating to only one component of the supply chain. It is a link for all the parts of the supply chain. Our company would make extensive use of: Road Transport. Rail Transport. Air Transport.

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Operation & Supply Chain Management

Information System:In todays dynamic business environment, the business information plays a crucial role. Without the leads on proper information all the resources are of no use. If the company does not have proper information in relation to demands, it cannot plan its production. If there is no production, there would be no point in discussing on transportation. The function of marketing would be rendered useless. Thus it would lead to a distortion in the whole process of the good reaching the consumer from the place of production. Today, informative technology advances rapidly. So we would focus on using hardware support with devices such scanners, hand held terminals with remote connectivity, WiFi, RFID, GPS etc and thus give countless possibility to upgrade the information content, quality and speed.

BIBLIOGRAPHY
Empowerment Case Studies: National Dairy Development Board Opportunities and Challenges in the Indian Dairy Industry Dr. K. G. Karmakar and Dr. G. D. Banerjee www.indiadairy.com http://www.supplychainrecruit.com/content/supply-chain-explained-75.htm http://www.naukrihub.com/india/fmcg/ http://www.geospatialworldforum.org/2011/proceeding/pdf/sanjayfullpaper.pdf http://www.imagesfood.com/images/Research/Bovine%20Elevation_Jan_09.pdf http://www.business.com/retail-and-restaurant/dairy-producers/ http://www.afaqs.com/news/story.html?sid=3328 http://www.parasdairy.com/md_message.php http://www.parasdairy.com/overview.php http://www.google.co.in/#sclient=psyab&hl=en&source=hp&q=parag+milk&pbx=1&oq=parag+milk&aq=f&aqi=&aql=1&gs _sm=e&gs_upl=54739l58012l3l59971l13l11l0l0l0l5l1137l4217l41.0.3.1l5l0&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=6fd47b6df9e35721&biw=1024&bih=4 78

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