T Lakshmi

DYNAMICS OF SUPPLY CHAIN MANAGEMENT
AN APPROACH TOWARDS EFFECTIVENESS & EFFICIENCY OF SUPPLY

CHAIN MANAGEMENT
AT
ITC LIMITED, Bangalore
“A project report submitted in partial fulfillment of the requirement for the

award of MBA”
BY
T.Lakshmi (02XQCM6061)
8QGHUWKH6XSHUYLVLRQRI
Dr.N.S.Mallavali
Principal,
M.P.Birla institute Of Management
Mr. Savio Suveire Mr. Vineeth Vishwambharam

Branch Finance Manager Asst. Branch Manager
ITC Limited, Bangalore. ITC Limited, Bangalore
M.P.Birla
Institute

Of
Management
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DECLARATION
I hereby declare that the research work embodied in the dissertation entitled
“Dynamics of supply chain management at ITC Ltd., Bangalore “ has been carried out
by me under the guidance and supervision of Dr. N.S.Malavalli, Principal,M.P.B.I.M ,
Bangalore (Internal Guide) and Mr. Savio ,Branch Finance Manager,ITC Ltd.
,Bangalore (External Guide).
I also declare that the dissertation has not been submitted to any
University/Institution for the award of any Degree/Diploma.
Place: Bangalore (T.Lakshmi)
Date:
ACKNOWLEGEMENT
I thank V.S.Vaidhyanathan,Sr. Vice President Corporate Affairs ITC Ltd. Delhi, and Mr.
Thomas Mathew ,H.R Manager of ITC Ltd. Bangalore, for giving me an opportunity to
do research in their company.
I extend grateful thank to Mr.Vineeth Vishwambharam, Asst Branch Manager and

Mr.Savio Suverrie, Finance Manager, ITC Ltd who provided expert guidance
throughout this research work. My special thanks are due to Mr.Arjun Bhatia, Mr.Kiran
and Mr. Arun for their personal interest and support.
I express my immense gratitude to Dr.N.S.Mallavali & Dr.K.V.Prabhakar for their

academic support..
Further, I indebted to all those who explicitly and implicitly helped me in completing my
work successfully.
Place: Bangalore (T.Lakshmi)
Date:
LIST OF Graph/Pictures
Figure 1: Distribution Network of ITC

Figure 2: Distribution Network of Perfetti
Figure 4: Clearing and Forwarding agents(C&F agent) in South India
Figure 5: Sources of Supply for ITC C&F Agent
Figure 6: Pictorial representation of supply from C&F agent Bangalore
Figure 7: Pictorial Representation of Food HUB Godown s Source and Flows.
Figure 8: CURRENT TRANSPORTATION MODEL WITH IN KARNATAKA
Figure 9: Scope of study
Figure 10: Flow diagram of SCM tool
Figure 11: DATA MINING PROCESS
Figure 12: Flow chart for the process of program
Figure 13:Model 1
Figure 14: Model 2
Figure 15: Chart comparing the current and proposed model
Figure 16: Wholesale Distributors investment pattern
LIST OF TABLES
Table 1: Shipments From ITC Food HUB Godown
Table 2: Overview of Research Area and Data Required
Table 3: Following table gives the pattern in which data was available for the study
Table 4 : Updated Routing for up-country Wholesale Distributors
TABLE 5: Number of trucks required to send ITC food products
Table 6: Kilometeres traveled by Trucks for the month of Sep 04 as per proposed
Model
Table 7: Space Requirement at the 43 Wholesale Distributors for the month of Sep 04
Table 8: Wholesale Distributors who can be directly shipped from Food HUB Godown with 9MT
capacity trucks
TABLE OF CONTENTS
INDEX CHAPTER PAGE No
1 Concept of SCM
2 COMPANY PROFILE
3 LITERATURE REVIEW
4 METHODOLOGY
4.1 BACKGROUND
4.2 PROBLEM STATEMENT
4.3 Research Design
4.4 Sample Design
4.5 Limitations of the study
4.6 Suggested tool
4.7 Limitations of the designed tool
5 ANALYSIS AND SUGGESTED MODELS
5.1 Data Mining
5.2 Incidental Findings
5.3 Major Findings
6 CONCLUSIONS AND RECOMMENDATIONS
Annexure
Bibliography
September 2004 Calculations As Per The Tool

CONCEPT OF SCM
Supply Chain Management
Definition
There are various definitions about supply chain management. Houlihan (1987) states
that SCM strives to balance conflicting activities such as promotion, sales, distribution
and production. SCM might be seen as a business philosophy that strives to integrate
the dependent activities between firms, e.g. logistics, purchasing, production, and
marketing. The Council of Logistics Management 16 defines logistics as: Logistics is
that part of the supply chain process that plans, implements, and controls the efficient,
effective flow and storage of goods, services, and related information from the point of-
origin to the point-of-consumption in order to meet customers’ requirements. This
definition implies that logistics is a sub-set of SCM.
Supply chain management is a major issue in many industries as firms realize the
importance of creating an integrated relationship with their suppliers and customers.
Managing the supply chain has become a way of improving competitiveness by
reducing uncertainty and enhancing customer service. The role of planning and
coordination in complex integrated systems and information technology to synchronize
the supply chain is described in a framework that creates the appropriate structure and
installs proper controls in the enterprise and other constituents in the chain.
During the past few years, supply chain excellence, optimization, and integration have
become the focus and goal of many organizations worldwide.
Many firms perceive strengthening the supply chain management as the way to
enhancing customer satisfaction and enabling profitable growth (AMR, 1997).
SCM - A Framework for Analysis

In order to gain a clear understanding of what a supply chain is about, its basic tenets
of linking structural strategies with prescriptive strategies. Many strategists agree that
firms may not be able to rely either on a price leadership role or on a differentiation
strategy alone to guarantee sustained market strength. To sustain long-term growth,
however, combinations of both strategies are typically needed to operate effectively
within constraints imposed by the environment. Such is also the case for a supply
chain of products and services offered by a firm. However, since a number of
Dynamics of Supply chain Management 2

autonomous business entities belong to the supply chain network, it becomes
imperative to develop a common mission, goals, and objectives for the group as a
whole, while pursuing independent policies at individual members' level. This scenario
offers opportunities for design, modeling, and implementation of supply chain networks
for maximum effectiveness, efficiency, and productivity in a dynamic environment.
As noted, a supply chain network, depicted in the above Figure, can be a complex web
of systems, sub-systems, operations, activities, and their relationships to one another,
belonging to its various members, namely, suppliers, carriers, manufacturing plants,
distribution centres, retailers, and consumers. The design, modelling and implementation
of such a system, therefore, can be difficult, unless various parts of it are cohesively tied to
the whole. The motivation in proposing a framework to manage a supply chain system is
to facilitate the integration of its various components through a common set of principles,
strategies, policies, and performance metrics throughout its developmental life cycle.
An example of a manufacturing supply chain network captures the essence of the
proposed framework. It has been derived from the general architecture of a supply
chain network depicted in following Figure

This supply chain is made up of a manufacturer and a two-level hierarchy of suppliers.
Each sub-system in the supply chain network incurs costs that are to be monitored and
controlled. At each level in the supply chain, delay due to procurement activity is
incurred, which has the potential of imposing waste, and thus incurring additional costs
in the system. This closed loop form of a supply chain system requires tight coupling
among its components. This rationale is adapted for the proposed framework.
The Logistical Measurements
The final target, for most of business operations, is to reap profit. Thus as far as it has
been established, the logistic of an enterprise is an integrated effort aimed at helping
create customer value at the lowest cost level. At a strategic level, logistic managers
seek to achieve a previously agreed quality of customer service through state-of-the-
art operating competency. The challenge is to balance service expectations and cost
expenditure in a manner that achieve business profitability.31 In following Figure the
traditional Du-Pont model is revised according to logistic operational perspective.

To measure the logistic effectiveness, one must be aware of the elements that affect
its performance profitability. According to Lumsden, the logistic efficiency can be
described in terms of service, cost and tied up capital. Their relations with yielding a
profit return can be illustrated by the following Figure
To have a full understanding of the three efficiency elements, one should not consider
them as isolated parameters without any interaction among each other. Actually, the
improvement of one parameter usually is on the sacrifices of the other two. For

example, if one wants to reduce the cost for transportation by using full truckload, then
it will keep larger volume in stock waiting for large enough shipment quantities. The
final consequences are increased inventory tied up capital and decreased customer
service level with lower shipment frequencies. Thus what we need to achieve is to
make a good balance among these three dimensions and optimize the total result.
The Logistics Players- From 1PL to 5PL As per Morgan Stanley’s
Logistics is the part of the supply chain process that plans, implements and controls
the efficient, effective flow and storage of goods, services and related information from
the point of origin to the point of consumption to meet customer’s requirement.
The Logistics Players- From 1PL to 5PL By Morgan Stanley’s
The concepts of 3PL (the third party logistics), and 4PL (the fourth party logistics)
reflect the evolving demands of manufacturer essentially to own and handle all
logistics functions, such as trucking and warehousing.
Most small businesses buying and selling in the same location are 1PL. As the
business expands geographically, the manufacturer’s logistics border grows, a 2PL
provider is generally a commodity capacity provider, such as a trucking company or a
warehouse operator, a 2PL provides service for a single or a small number of functions
in the supply chain. They face low returns, with high levels of asset intensity but low
barriers of entry. Next come the distributors, who through a dense network or

legislative protection have achieved higher returns, albeit on a sizeable cost base.
Examples are the express parcel operators that charge premium pricing for timely
delivery, and the postal operators. With the increasing demand for one-stop solutions,
many 2PLs have evolved into 3PLs by adding new logistics capabilities and integrating
their operations. It may or may not involve asset ownership. 3PL is a broader term that
is frequently used to cover businesses in freight forwarding or contract logistics.
It performs all or a large portion of a client’s supply chain logistics activities, and its
value adding is based on information and knowledge versus a non-differentiated
transportations service at the lowest cost. 3PL tends to be asset-light with high returns.
The 4PL provider is essentially a logistics integrator or a one-point contact for the
manufacturer’s logistics outsourcing requirements.
They are responsible for contracting various 2PL and 3PL providers, and for
assembling and managing those end-to-end solutions. The 4PL provider, with its
complete overview of the supply chain as well as strong logistics and IT capabilities,
can also offer high value added advisory services to the manufacturer.
The Real Sense Supply Chain Management
The 5PL solutions focus on providing overall logistics solutions for the entire supply
chain. Supply Chain Management (SCM) is the integration of the activities associated
with the flow and transformation of goods in the respective logistics networks through
improved supply chain relationships based on a common collaborative performance
measurement framework for attaining close, collaborative and well coordinated
network relationships to achieve a competitive advantage.
Actually, the supply chain management focuses on building the coordination in product
supply demand relation, from origin to destination. Achieving the success will require a
truly integrated approach to manage the supply and demand chain, the approach that
delivers what consumers want, where and when they want as efficiently as possible.
What does this mean in practice?

As the trends in the last decade were to define core competence for each enterprise,
the traditional full-scale company has abolished its purchasing or logistics function by
outsourcing from the professional company being responsible for it, and just focuses
on, for example, production. This is the way to reduce overall capital tied up at some
long term investment or inventory, hence reduce the risk. But since companies are
becoming more and more specialized, the information exchange is at a particular
point; the inventory may overlap because the property of each product is attributed to
different companies in various stages. The increased productivity calling for the
efficient product life cycle turns over in a faster and faster running loop. Supply chain
management is quite likely to cause these separate functional specialists become
reunified as before: the goal is shifting from outsourcing to strategic alliance in creating
win-win situations for all supply chain members, so that the information can be freely
exchanged. As used previously, different functional departments worked under a
general management, without any obstacle, the overall productivity can be achieved.

COMPANY PROFILE

COMPANY PROFILE
The Indian tobacco Company, ITC is one of India's foremost private sector companies
with a market capitalization of around US $ 6 billion and a turnover of US $ 2.6 billion.
ITC ranks third in net profit among India's private sector corporations and has even
featured as a world leading company in Forbes magazine. It has a diversified presence
in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business,
Branded Apparel, Packaged Foods, Confectionery, Greeting Cards and other FMCG
products. While ITC is an outstanding market leader in its traditional businesses of
Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining
market share even in its nascent businesses of Branded Apparel, Packaged-Foods,
Greeting Cards, & Confectionery. ITC employs over 15,000 people at more than 60
locations across India.
ITC made its entry into the branded & packaged Foods business in August 2001 with
the launch of the Kitchens of India brand. A more broad-based entry has been made
since June 2002 with brand launches in the Confectionery, Staples and Snack Foods
segments. Apart from the current portfolio of products, several new and innovative
products are under development in ITC’s state-of –the-art Product Development facility
located at Bangalore.
Vision
Sustain ITC’s position as one of India’s most valuable corporations through world class
performance, creating growing value for the Indian economy and the corporate
stakeholders.
Mission
To enhance the wealth generating capability of the enterprise in a globalising
environment, delivering superior and sustainable stakeholder value.

Core Values
. ITC's Core Values are aimed at developing a customer
-focused, high-performance
organisation, which creates value for all its stakeholders:
Trusteeship
/ As professional managers ITC believe that all stakeholders have given the
company to them in “trust”.
Customer Focus
/ Company is always focused to deliver what the customer needs in terms of value,
quality and satisfaction.
Respect for people

/ The Company gave importance to people and to uphold humanness and human
dignity.
Excellence
/ ITC believes that it should strive for excellence in whatever they do and they will do
what is right and try doing it well and winning.
Innovation
/ Company believes that it should constantly innovate and strive to better their
processes, products, services and management practices.
Ethical Corporate Citizen

/ Company should pursue exemplary standards of ethical behavior and will at all
times comply with the laws of the land.

The key Corporate Strategies
0 Continue to Focus on the core businesses of Cigarettes & tabacco, Hotels,
Packaging and Paperboard.
0 Ensure that each of it business meets the three criteria of sustainability, namely
Market standing, Profitability and Internal Vitality. Exit from businesses, which do
not meet these criteria within an agreed time frame.
0 Ensure that each business is internationally competitive in the Indian global market.
0 Create distributed leadership within the organization by nurturing talented and
focused top management teams for each of the businesses.
0 Institute and practice a system of corporate governance appropriate to ITC’s
character and constitution. Such a system of governance must achieve a
wholesome balance between the need for executive freedom foe management an
the requirement of a framework for effective accountability.
Secure the future growth of the company by creating new businesses, which leverage
the strength of its core competencies, residing in various businesses.
Figure 1
INDIAN TOBACCO COMPANY
ITD FBD PSPD IBD LRBD I3L
Where:
ITD – Indian Tobacco Division,
FBD - Food and Beverages Division,
PSPD – Paper Boards and Specialty Papers Division,
IBD – International Business Division,
LRBD – Lifestyle Retailing Business Division
I3L – IT division

The Foods business is today represented in 4 categories in the market. These are:
• Ready To Eat Products

• Staples
• Confectionery
• Snack Food
Awards
ITC has won numerous awards for its Quality, environmental management systems
and product excellence.
1 The Munger and Bangalore factories have received the prestigious Sword of Honor
Award from the British Safety council for highest standards of safety.
1 The Kolkata factory has won the Rajiv Gandhi National Quality Award for 1998.
1 ITC’s R&D center has also received awards for Best Research and Development of
new innovation Gold.
1 The Best Energy Conservation Implementation Gold Award for energy and eco-
conservation measures.
1 Special Commendation Safety Certificate from the Ministry of Labour, Government

of India.
1 Golden Peacock Environment Management Award in 1999 from the world

Environment Foundation.
1 Best Manufacturer of cigarettes in 2003 by Tobacco Board of India.
1 Third Best Exporter of Tobacco Products In 2003 by Tobacco Board of India.
1 CII-ENCON Award for paperboards in 2003.
1 Other than these ITC has won Numerous Awards in Hoteliering, Tobacco and foods
Business also.

ITC BUSINESSES
FMCG (FAST MOVING CONSUMER GOODS):
Cigarettes
ITC is the market leader in cigarettes in India. With its wide range of invaluable
brands, it has a leadership position in every segment of the market. Its highly popular
portfolio of brands includes India Kings, Gold Flake, Scissors, Capstan, Berkeley and
Bristol.
ITC's Lifestyle Retailing Business Division
ITC has established a nationwide retailing presence through its Wills Lifestyle chain of
exclusive specialty stores. ITC has also initiated a foray into the popular segment with
its men's wear brand John Players. Having established adistinctive presence in the
premium apparel segment in a short span of time with Wills Sport premium relaxed
wear and Wills Classic New Age formals, Wills Lifestyle launched Wills Clublife in May
2003 in the growing evening wear segment, thereby strengthening its portfolio in the
premium segment.
ITC has now become the second largest player in India's greeting cards industry with
its ‘Expressions’ range of Greeting Cards. ITC’s extensive India-wide distribution
network enables its greeting cards reach over 12,000 multi brand outlets in over 700
cities nationally.
Foods Division
The Foods business is today represented in 4 categories in the market. These are:
Ready To Eat Foods, Staples, Confectionery and Snack Foods.
Matches
ITC has commenced marketing safety matches sourced from the small-scale sector.
These matches are available in unique designs and with innovative value added
features. ITC's brands like IKno, Mangal Deep, Vaxlit, Delite Premium and Aim have

already become popular. The Aim brand of ITC Matches has already become the
largest selling brand of Safety Matches in India within just one year.
Agarbattis
ITC has commenced marketing Agarbattis (incense sticks) sourced from the small-
scale sector. ITC has launched brands like Spriha and Mangal Deep across a range of
fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and
Nagchampa. Attractively packaged, these brands have been appropriately priced to
appeal to a cross-section of consumers at various price segments. These agarbattis
are available in 'Fragrance locked' packets. 'Fragrance locking' is a unique concept of
packaging which helps to retain the fragrance for a longer period.
ITC-Welcomgroup Hotels
It consists of over 55 hotels across more than 45 destinations in India. These include
super deluxe and five star hotels, heritage palaces, havelis and resorts and full service
budget hotels. These hotels are managed by ITC's subsidiary, ITC Hotels Limited.
ITC's Packaging & Printing
ITC is one of the world's most modern and o

cntemporary manufacturers of packaging
boards. The Company's paperboard products include: packaging boards- coated
folding box boards, solid bleached sulphate boards, white lined chipboards, liquid
packaging boards, cast coated papers and boards. The Division also produces quality
printing & writing papers, eco-friendly papers, photocopier papers. ITC's Packaging &
Printing Business is the country's largest converter of paperboard into packaging. It
converts over 30,000 tonnes of paper and paperboard per annum into a variety of
value-added packaging solutions for the cigarette, liquor, food & beverage and
personal products and IT packaging.

ITC's International Business Division (IBD)
It is the country's second largest exporter of agri

-products with exports of over Rs.5
billion. It currently focuses on exports of:
N Feed Ingredients - Soya meal, Rapeseed Meal
N Food grains - Rice (Basmati & Non Basmati), Wheat &Wheat Products, Pulses,
Coffee, Pepper
N Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil
N Marine Products - Shrimps and Prawns
N Processed Fruits - Mango, Papaya and Guava Products
ITD – The Indian Tobacco Division
ITD, the Indian Tobacco Division, deals with the manufacturing, branding and sales of
cigarettes and tobacco. However, an interesting point to note is that ITD is also in charge
of the sales and distribution of all the other businesses which are Foods, matches,
greetings, gifts and stationary.
ITD functions throughout India and is broadly divided into 4 districts – North, South, East
and West. Each district has 19 branches.
Organizational Structure
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LITERATURE REVIEW
This chapter will give a broad theoretical framework to the subject Logistics and its
management. This is done to be able to see the impact of Logistics on the Distribution
System of ITC compared to the major players.
a. Demand & Supply Chain Management: a Logistical Challenge By Ad. R. Van Goor
b. Supply-Chain Operations Reference (SCOR) Model
c. Industry Practice- Brief description about the distribution structure of Major Players
in the industry
THEORETICAL FRAMEWORK
d. The Logistics Players- From 1PL to 5PL As per Morgan Stanley’s

Literature Review
Purpose of the Literature Review

The purpose of this Literature review is to explore a solution in the logistic area that
may improve efficiency and effectiveness of logistic system on the basis of physical
flow where Intermediaries could be more actively involved and benefited in the future.
Research Work By Ad. R. Van Goor

Demand & Supply Chain Management: a Logistical Challenge
The paper below was awarded as the best communications at ILC2001
EXTRACTS
Consumers and industrial customers are demanding more and different products and
services. The industry requires replenishment of small batches in high frequencies.
The consumer asks for a broad assortment with fresh products, tenable qualities and
short lead-times or direct deliverable. These developments in Business-to-Consumer
(B2C) markets and Business to Business (B2B) markets can be illustrated by a
number of different examples
The rise of Demand - or Demand driven - and Supply Chain Management (DSCM) can
be explained by the understanding that only combinations of companies are able to
meet customer requirements in a more efficient and better way than individual
companies can realize. Collaboration between suppliers, manufacturers and retailers
can improve the number of satisfied customers by reducing lead-times, improving
service levels and decreasing costs.
Customers and competitors force companies to co-operate with each other in one or
more chains or networks. For some companies this way of co-operation is the last post
to continue their existence. Other companies believe that DSCM is an enormous
opportunity to redefine their missions and to introduce innovative types of
constellations to meet customers demands on a high level in chaining market
conditions.

The need to collaborate can be illustrated by a statement of the Food Management
Institute: ‘To be a prime participant in the consumer replenishment process, requires a
range of capabilities bigger than a single enterprise’. They expect the rise of a number
of chains or networks in which an individual company only accounts for ‘ best of class’,
that means the contribution of activities in which the company is excellent. Although
the design of a chain is the first strategic step, the implementation, planning and
control and functioning of the chain are equal important steps. Or in terms of FMI: ‘The
dysfunctional supply chains of today cannot serve the consumer of 2005’. They
distinguish a number of different chains, but are not satisfied about their operations.
They conclude that both the design and the operations of a supply chain are closely
related to be successful implementation of DSCM-concepts.
Demand & Supply

According to their opinion the term Supply has a strong association with the idea that
SCM regards the management of the relations with suppliers. From a customer point
of view we propose to start with demand management. For almost every chain that
means that chain conversion should be the leading theme.
In figure 2 we picture a classical supply chain: a strongly push-driven chain, mostly
based on production dominance. Related to a pure marketing vision the demand chain
in figure 3 may be more realistic.

This presents the Demand and Supply Network. They emphasized that this figure can
be widened with logistics and ICT-service providers. Based on this idea the Center for
Supply Chain Management of Nyenrode University has formulated the most embracing
definition: “Demand and Supply Chain Management (DSCM) is the management of a
network that links customers and suppliers as one ‘single entity’ with the objectives to
create value and reduce waste through the voluntary integration and co-ordination of
the objectives of three or more - and ideally, all the - independent parties in the
network
They proposed to concentrate on Demand driven Supply Chain Management on the

integration of four functional areas within and between companies. From the demand
side it regards the marketing aspects of DSCM, while purchasing is the entrance from
the supply side.
Logistics and ICT are the essential facilitating functions for DSCM. The four
mentioned areas are according to our opinion the leading elements for the design,
planning and implementation of a Demand and Supply chain (Ploos van Amstel, van
Goor, 2002)(12). Figure below is the representation of that vision. Research in the field
of DSCM has to concentrate on the interfaces between the different points of view.

In the study the success of supply chain logistics was defined as the way in which the
logistical costs and/or the customer service level changed significantly due to co-operation
in supply chains. A combination of cost reduction and service level was sampled in a
report-mark. So the report-marks were the real independent variables to measure
success. From literature and empirical research a number of 56 variables were collected.
These variables had or could have a direct or indirect influence on the level of success in
supply chain logistics.
Supply-Chain Operations Reference (SCOR) Model
Background
In 1996, two Boston-based consulting firms: Pittiglio Rabin Todd & McGrath and AMR
Research decided to develop a standard approach to analysis and describe all the
aspects of supply chain processes. The outcome was the SCOR (Supply Chain
Operations Reference) model, which was released in 1996. The SCOR model was
designed with the objective of making it applicable to all industries. SCOR helps
companies to address supply chain issues, measure performance, identify
performance improvement objectives, and power the
development of SCM software. SCOR includes all the supply-chain metrics, the
formula associated with the metrics and a reference to best practices and their
associated technology.
Introduction of the SCOR
The SCOR model has been developed to describe the business activities associated
with all phases of satisfying a customer’s demand. The model itself contains several
sections and is organized around the five primary management process of Plan,
Source, Make, Deliver, and Return. Describing supply chains using these process
building blocks, the Model can be
used to describe supply chains that are very simple or very complex using a common
set of virtually any supply chain. The model has been able to successfully describe

and provide a basis for supply chain improvement for global projects as well as site-
specific projects.
The SCOR Model spans: all customer interactions (order entry through paid invoice),
all physical material transactions (supplier’s supplier to customer’s customer, including
equipment, supplies, spare parts, bulk product, software, etc.) and all market
interactions (from the understanding of aggregate demand to the fulfillment of each
order). It does not attempt to describe every business process or activity. Specifically,
the Model does not address: sales and marketing (demand generation), product
development, research and development, and some elements of post-delivery
customer support.
CONTRIBUTION TO THE STUDY

Effectiveness of Supply chain depends on:-
Internal variables
o Standardization of communication traffic
o Exchange of detailed forecasts
o Order-status tracking and tracing
o Use of logistics control systems
o Type of order picking/cross docking
o Situation of Order Penetration Point

Distribution Logistics
o Utilization level of transportation
o Number of distribution centers
o Frequency of replenishment day and night
o Tuning distribution packaging and pallets
o Standardization of materials handling equipment
Organizational aspects
o Management involvement
o Joint targets in a chain
o Shared information-technology
o Trust and risks between channel partners
o Presence of channel captain/central co-ordination

INDUSTRY PRACTICE
In order to get a better understanding of the FMCG Supply Chain in India, a study has
been made of 3 major players in the Industry namely, ITC, Perfitti Van Melle and
Hindustan Levers. A comparison has been made of their individual distribution structures.
Figure 1: Distribution Network of ITC
ITC’s DISTRIBUTION NETWORK

ITC
SUGGESTED
MODEL FOR
ITC FOODs
C & F AGENT (Carrying & Forwarding)
WD (Wholesale Dealer)
Key Account Supervisor DS (Salesman) SWD Stock Keeping

Points
Retailer
Consumer
The suggested model will bring ITC one-step closer to the consumer and in the
meanwhile reducing the overall cost and time too.

PERFETTI VAN MELLE’s DISTRIBUTION NETWORK
PERFETTI VAN MELLE FACTORY
C & F AGENT (Carrying & Forwarding)
Distributor
Wholesaler / Retailer
Consumer
Though Perfetii does not have as many products as ITC but it does provide a strong
competition in the confectionary segment to ITC.It is one of the leading players in the
Mint and Hard-boiled candies segment. And the its strength being reach to remote
places too. In another words strong distribution network.

HINDUSTAN LEVERS’ DISTRIBUTION NETWORK
Figure 3: Distribution Network of HLL

HINDUSTAN LEVERS
Distributor (CNF)
Trade
Modern Trade Channel General Trade Channel
HLL Supply Customer Service Marginal Key Wholesale Others

Provider Outlet Account
Channels
Metro Food Top End

World Supermarket
HLL is the main competitor for ITC in many segments. Like ITC HLL has many
products under its roof and has a complex structure of distribution, which brings many
intermediaries leading to increased handling of product before it reaches end
consumer. This also pushes the company away from its end consumers. To handle
this problem HLL is launching its direct marketing and distributors for handling small
accounts which may seem to be very minute but when taken on the whole makes a big
difference for the organizations sales.

METHODOLOGY

BACKGROUND
There is an increasing focus on supply chains in all types of businesses. Which means
that instead of optimizing their own activities companies work towards the best and
most cost efficient solutions for the whole supply chain. One really important area to
work with when one is working with supply chain improvements is Logistical
Management.
Logistical management includes the design and administration of systems to control

the flow of material, work-in process, and finished inventory to support business unit
strategy. The overall goal of logistics is to achieve a targeted level of customer service
at the lowest possible total cost. It is therefore important to study all causes and effects
when one is working with Logistics management
ITC has stood for quality products for over 90 years to the Indian consumer and
several of its brands are today internationally benchmarked for quality. ITC made its
entry into the branded & packaged Foods business in August 2001 with the launch of
the Kitchens of India brand. A more broad-based entry has been made since June
2002 with brand launches in the Confectionery, Staples and Snack Foods segments
Leadership in the Foods business requires a keen understanding of the supply chain
for agricultural produce and the streamlining of supply to grocery outlets.
This project mainly concentrates on the management of logistics for supply chain of
end products from the Atta factory, Food HUB Godown, clearing & forwarding agent
(C&F) all three located in Bangalore to Wholesale Distributors with in Karnataka. So to
do justification with this aspect, it is necessary to understand the supply chain model
with in India and especially south zone first.
The following section will deal in detail with the sources of supply of ITC’s end
products and there further flow to reach the Wholesale Distributors located in
Karnataka.

Sources Of Supply
The sources of supply depend upon the products; following are the different places
where ITC factories for different products are located.
1.Cigaratte
Factory Places: Bihar, Utranchal, Kolkatta, and Bangalore
2. Matches
ShivaKashi
3. Minto-Regular, Orange, Lemon
Nagpur
4. CandyMan/ HardBoiledCandies /Licks/ Eclairs
Ahmedabad
Hyderabad
5. Mangaldeep / Spriha
Pondichery
6. Kitchens Of India
Delhi
7. Ashirwad Atta & Salt
Delhi
Varanasi
Bangalore

8. Salt
Gandhidham
Tutukkuri
9. Aashirwad Ready Meal
Bangalore
Delhi
10. Multipurpose Cooking Paste
Delhi
There are totally 19 branches in India; each branch has at least one Clearing and
Forwarding agent
All the products except Cigarette arrives from the factory to HUB godowns situated at
various places in India, depending upon the requirement of central warehousing. From
there all the products are supplied to Clearing and Forwarding agent of all 19 branches
who make these products reach the Wholesale Distributors spread all over the nation.
Cigarette has a centralized ordering system.

Most of the Matches and Agarbatti making Factories are located in south India
so ITC has established a Central warehouse in Chennai from where all Clearing
and Forwarding agents are supplied
ITC Distribution structure in Southern India
Food HUB Godown’s that are owned and run by ITC

Southern Region has two Food Hub one located at Bangalore and the other at
Hyderabad.
There are five Clearing and Forwarding agent in Southern India, the area wise
bifurcation of their working is as follows

Figure 4: Clearing and Forwarding agents(C&F agent) in South India
Clearing and Forwarding agent

C&F
IN
AGENTS
SOUTHERN INDIA
Hyderabad Bangalore Chennai Ernakulam Coimbatore
50 % of Andhra Pradesh 50 % of Tamil Nadu
80 % of Karnataka 100 % of Kerela
50 % of Tamil Nadu
25 % of Andhra Pradesh
Pondicheri
Andaman & Nicobar
ITC Distribution structure in Karnataka
ITC has its FOOD Headquarter in Bangalore, which controls the operation of supply of
FOOD products within Karnataka. Bangalore is the prime location where in ITC has
the largest market share in every product category they have entered.

The most important reason is ITC’s strong distribution network with in the city, which is
managed by five Wholesale Distributors. Who believe?
“JO DIKHTA HAI VO BIKTA HAI”
“PAR DIKHTA VO HAI JO MILTA HAI “
The one that is seen is sold but to be seen there, on the shelf it needs to be available
to the Retailer and to be available the only means being strong distribution network of
a company.
And this distribution network requires smooth flow of products to the Wholesale
Distributors so that they can make it reach the retailers. On the whole the success of
FMCG goods lies on the supply chain management from start to end.
Apart from its ITC Headquarter it has ITD Marketing Branch office, which deals with
marketing of ITC’s FMCG and its supply to Wholesale Distributors with in Karnataka.
ITC has a Clearing and Forwarding agent, ITC Food HUB Godown and Atta Factory
with in Bangalore.
ITC Clearing and Forwarding agent (C&F Agent)
Clearing and Forwarding at Devanahalli in Bangalore is spread across 6000 sqft area.
As seen in Figure 1, He supplies to 80 % of Karnataka. Clearing and Forwarding
agent at Bangalore supplies only Cigarrette, Matches and Agarbattis to the Bangalore
city Wholesale Distributors whereas supplies even ITC Food’s products to all the
Wholesale Distributors up-country with in Karnataka.
The 5 city Wholesale Distributors are directly supplied from the Food HUB Godown
and ITC Atta Factory in Bangalore.
The following chart will give overview of the sources of supply to the C&F agent at
Bangalore and its flow from thereon.

Figure 5: Sources of Supply for ITC C&F Agent
ITC Cigarette Factory (With

in and Outside Karnataka) & Food HUB Godown, Atta Factory,
Matches Agarbatti HUB Bangalore Bangalore
Godown Chennai
C&F Agent
Clearing and Forwarding agent (C&F agent) is sourced directly from the Cigarette
factories, From Chennai HUB for Matches and Agarbatti and for ITC Food products,
Atta from ITC Food HUB Godown and Atta Factories respectively.
Clearing and Forwarding agent (C&F agent) supplies all ITC’s FMCG products, which
includes cigarette to all the up-country Wholesale Distributors whereas supplies only
Cigarrette to city Wholesale Distributors.
Figure 6: Pictorial representation of supply from C&F agent Bangalore
C & F Agent
Only Cigarette,
Agarbatti and ALL the
Matches FMCG
products
5 Wholesale Distributors 43 Wholesale Distributors

with in Bangalore Up-country within Karnataka

e. Problem Faced By C&F agent Bangalore
Currently the Clearing and Forwarding agent has insufficient space to meet the
growing demand of up-country Wholesale Distributors for ITC’s Food products and
Cigarette.
ITC Food HUB Godown
In 2001 when ITC entered Food’s market it hired the Karnataka Warehouse situated at
Whitefield, which acts as Food HUB Godown today supplying Food’s products to all of
southern C&F agents except Hyderabad. This Food HUB Godown is spread across
60000-sqft areas, which is maintained for meeting five years forecasted demand
pattern.
Out of ITC’s six Food Hub Godowns in India, It’s the largest and the only HUB Godown
that has a drive-in structure. Food HUB Godown receives products from different
sources enlisted in the previous pages so as to source further to different C&F agents
on the basis of their requirements. But apart from sourcing products to Clearing and
Forwarding agents it also supplies to Wholesale Distributors with in Bangalore
Table 1: Shipments From ITC Food HUB Godown
It has two kinds of shipments they are

SHIPMENTS SUPPLY TO TRUCKS USED
K1 Shipment Five Bangalore City Wholesale Distributors 4 Tonnes or 6 Tonners
K2 Shipment Supplying to five C&F agents 9MT or 16MT
Earlier the city Wholesale Distributors were supplied by the Clearing and Forwarding
agent but as it was becoming strenuous for Clearing and Forwarding agent to manage
such high demands of city Wholesale Distributors because of unavailability of space,
ITC felt supplying directly ITC Food products, Atta from Food HUB Godown and Atta
factory to city Wholesale Distributors will be much cost effective but as the demand for
ITC Food’s product was low at other Wholesale Distributors within Karnataka it was not

viable to do direct shipment to them so they were continued to be shipped for ITC’s
food products and Atta from Clearing and Forwarding agent at Bangalore with their
cigarette shipment.
Figure 7: Pictorial Representation of Food HUB Godown s Source and Flows.
PRODUCTS Places
SALT Tutukuri
MINTO Nagpur AASHIRWAD Atta
CANDY MAN Hyderabad Factory
KITCHENS OF INDIA Delhi Bangalore
AASHIRWAD READY MEALS Bangalore
MULTIPURPOSE COOKING PASTE Delhi
K1 Shipment: FIVE
Wholesale Distributors
Food HUB Godown Bangalore City
K2 Shipment All Food

C&F Agent Products
Except
Atta
K2 shipments from Food HUB Godown are directed towards the Clearing and
Forwarding agents of southern India baring Hyderabad Clearing and Forwarding agent
as he is supplied from Hyderabad’s Food HUB Godown directly.
It has a capacity of storing 3500 tones; in spite of supplying to almost ten destinations
the capacity of Bangalore Food HUB Godown is not utilized to the full extent till now
only 19% is being utilized.
Following page gives the overview of the transportation model that is used by ITC for
its distribution in Karnataka.

Figure 8: CURRENT TRANSPORTATION MODEL WITH IN KARNATAKA
FIVE Wholesale Distributors

BANGALORE CITY
Clearing and
Food HUB Godown Forwarding agent Atta Factory
(HUB) (C&F)
Up-Country Wholesale Distributors
Route 1
Route 7
Chintamani
Chitradurga
K.G.F.
Davangere
Kollar
Harihar
Route 2
Haveri
Arisikere
R.Bennur
Bhadravathy
Sirsi
Shimoga
Route 8
Sagar
Hiriyur
Route 3
Bellary
Kunigal
Gangavathi
Hassan
Hospet
Chikmagalur
Koppal
Route 4
Route 9
CR Nagar
Raichur
KANAKPURA
Yadgiri
Kollegal
Route 10
MANDYA
Karwar
RAMNAGAR
Kundapur
Route 5
Puttur
Hunsur
Udupi
Mercara
VS
Mysore
WC
Pandavpura
Route11
Periyapatna
Doddaballabur
Route 6 Tumkur
Attibele
Source: Modified from the Database of ITC

PROBLEM STATEMENT
Purpose Of The Study
To Evaluate the effectiveness/efficiency of supply chain for ITC FOOD’s products from
HUB godowns or Clearing and Forwarding Agent to Wholesale Distributors and to
recommend methods of improving its efficiency.
Research Objective
Feasibility of adding Up-Country Wholesale Distributors routes for direct

shipments of FOOD Products from HUB Godown (foods)/Atta Factory
(Bangalore).
With focus on: -
WD wise targets (expected volumes) for April 2004 to March 2005 (Month on
Month)
Space availability at Clearing and forwarding agent / Food HUB Godown

/Wholesale Distributors Point
Impact of recommended supply chain model on Whole Sale Distributors investment

due to increase or Decrease in Wholesale Distributors stock on hand due to:
o Frequency Of Supply
o Size Of the Load
o Number of delivery points sharing the load
Dynamics of Supply chain Management

Scope Of Study
Figure 9: Scope of study

o
Scope of
Study
Data Mining Required on
Projected Demand for each Wholesale Distributors on the basis of each product till
March 2005
Stocking Norms for each product category.
Conversion factor for each category of product in to Cubic Feet Capacity and 10M
Cubic Feet Capacity which is conversion in terms of 100000 cigarette sticks
Load Size of delivery vehicle.
Loads per Truck, Transport Rules & Regulation within Karnataka.
Space occupied by each product category in 100 sq ft area, Current routing from
C&F agent and HUB godown

Time taken to reach the last Wholesale Distributors in the Route.
Investment Pattern of Wholesale Distributors on the basis of companies’ norms.
Order procedure followed by Wholesale Distributors
Landing Cost of each product category to Wholesale-Distributor
What is to be measured? How?
Feasibility of adding Up-Country Wholesale Distributors routes for direct shipments

of FOOD product from Food HUB Godown /Atta Factory (Bangalore)
o This required a comparative analysis of existing Transportation Model
with proposed Model
o Effect on the Investment pattern and working capital of wholesale
distributors
o Space which needs to be maintained at Wholesale Distributors, Food
HUB Godown, Clearing and Forwarding agent with respect to increasing
demand and new supply chain model.
Approach to the Data

Information required to fulfill the research objective:
Projected Demand for each WD on the basis of each product
Information on stocking Norms, Conversion, Loads, etc.
Information about Space Requirements, Routing and Timing Detail
Information about the Investment Pattern of Wholesale-Distributors
Landing Cost to Wholesale Distributors for each product category.

Research Design
a. Degree of Research Question Crystallization: Formal Research

Research Question:
o Feasibility of adding Up-Country Wholesale Distributors routes for direct
shipments of FOOD product from HUB (foods)/Atta Factory (Bangalore)
o Goal of Research
Table 2: Overview of Research Area and Data Required
Research Area Data Required
Volume projection WD wise targets
Space requirement. Volume per unit and stacking norms
Frequency of orders /Shipments Types of vehicle available
Load Size of delivery vehicle Types of vehicle Available
Timing of Reach Idea of geography and distance
Safety stock/Emergency Reserves Company Norms and Statutory
compliances
Current Stock Insurance limits Statutory compliances
Current Routing Detail Routes currently supplied
WD investment Pattern and Value of stock and value per unit
concentrating on lockage of funds category
due to current supply chain model.
As the research has begun with the Research Question and Involves precise
procedures and data source specification this kind of research falls under the
purview of Formal Research.
b. Data Collection: Observational Studies

The research involved the study of current supply chain model and the feasibility study
of the new transportation model suggested, there is no requirement for the study of
any subject’s response in this study. This project is solely based on the effectiveness
of supply chain with focus on the projected demand.

The required details
Information from the marketing Department about the projected Demand for
each Wholesale Distributors on the basis of each product
Logistics department provided information on stocking Norms, Conversion,
Loads, etc.
Information from the Godown with respect to space requirements, routing and
Timing Detail
Information required being collected from Finance Department for knowing the
investment pattern of Wholesale Distributors.
And on the basis of the collected information, inferences were drawn explaining
the effect of suggested transportation model.
c. Type: Descriptive Research

As the research is based on the objective of evaluating the effectiveness of the supply
chain of end products with in Karnataka and requires recommendation for improving its
efficiency, requirement is to give a precise model that will remove the flaws in the
existing model. This required an in depth study of current model and explaining the
aspects of
Whom to deliver
What way to deliver [Single point or Multipoint delivery]
Where to deliver
When to deliver. [Time of reach on the basis of multipoint].
How much to deliver.
d. Time Design: Longitudinal
As this study is focused on the study of “Effect on the supply chain due to variation in
demand” , Conclusions were drawn from demand projected From July 2004 to March
2005 and its effect on the supply chain which in turn helped in recommending the new
model, which can combat with the increasing demand pattern in a much better
manner. This study falls under the longitudinal time design.

e. Topical Scope: Case Study
The demand pattern of all 43 up-country Wholesale Distributors within
Karnataka is studied so the sample consists of 100% of the population that
needs extensive study.
Though quantitative data is used this research place more emphasis on full
contextual analysis of fewer events or conditions and their interrelation. The
emphasis on detail in this study provides valuable insight for problem solving,
evaluation and strategy formulation as this gives a tool in the hands the
manager to understand the “Effect of Growing Demand on the supply chain”
f. Research Environment: Simulation
The research environment is of simulation where in the comparison is in terms of what
is currently happening and what will be it like when the new model will come in to place
is being checked.
The research design focus on the effect of proposed model on logistical aspects,
space requirement and investment pattern for the Wholesale Distributors and the
Company.
Sample Design-.
The basis idea of sampling is that by selecting some of the elements in a
population, we may draw conclusions about the entire population. A population
element is the subject on which the measurement is being taken. It is a unit of
study
But when it comes to this project my population is the 43 Wholesale Distributors
up-country with in Karnataka.
As I draw my inference on the basis of whole population i.e. the sample
constitute of 100% of the population there is no requirement for a specific
sampling technique
The data consists of month wise demand pattern for eight product categories for
all the Wholesale Distributors with in Karnataka and the routing details

Data Source
This project solely focuses on the secondary data source that can be classified on
the basis of sources as internal data as extracted from companies’ Data Bases.
Limitations of the study

New supply chain model will be on the basis of already projected demand. If
Demand varies supply chain model will require modification in future.
Introduction of new product will also affect the supply chain model, but the
program provided can be updated with slight modification
Effect on Investment pattern due to the implementation of new model cannot be

estimated accurately because of lack of data.
The percentage of demand for sub category of products is calculated on the

basis of sale proceeds of March so the variation in that will affect the calculation
carried further but can be re calculated if the actual bifurcations are available
with the help of the program developed.

SUGGESTED TOOL
SCM TOOL
This project required a systematic program to be developed which could help the
manager in strategic decision making with focus on the supply chain especially
concentrating on the flow from the company’s godown to Wholesale Distributors.
I used Microsoft Excel as the tool to develop this program, which needs very few
inputs from the user, and rest every thing is calculated on the basis of the formulas
already inserted. After inserting the data the user has to run a macro that will update
the program automatically.
This program performs the function as enlisted in the tailored logistics chart an
example is provided here.
START
Figure 10: Flow diagram of SCM tool
INPUT DEMAND See Annexure page 3 and 4

Atta – KG:43503
DEMAND BIFURCATION: Allocate demand See Annexure page 2

to the sub category as per your requirement
and estimation
Aashirvad Whole Wheat Atta(MP) 1kg .1
Aashirvad Whole Wheat Atta(MP) 2 kg .35
Aashirvad Whole Wheat Atta(MP) 5 kg .15
AAHIRVAAD MP ATTA - 10 KG .4
It calculates Kilos for each category, Units,
Cubic feet capacity, Space,Investment,10 M See Annexure page 6,7,12 and 15
Cubic feet capacity
Kilos Units CFC Space Investment

Aashirvad Whole Wheat Atta(MP) 1kg 4350.21 4350 145.01 73.98 86177.62
Aashirvad Whole Wheat Atta(MP) 2 kg 15225.72846 7613 507.52 258.94 294617.85
Aashirvad Whole Wheat Atta(MP) 5 kg 6525.312199 1305 217.51 110.97 123328.40
41 AAHIRVAAD MP ATTA - 10 KG 17400.83253 1740 580.03 295.93 297641.24
Total 1450 740 801765
The
sample shown here calculates only the investment and space requirement for Atta but
as shown in the Annexure the program calculates the total space requirement for all

products and the investment on the basis of landing cost for Wholesale Distributors
based on projected demand. The program further calculates the number of trucks
required to make the products reach its destination without considering multipoint
delivery and after that it calculates the routing aspect if the number of trucks required
by one Wholesale Distributor is less than 1 or slightly more than whole number.
See Annexure
There are three types of truck tonnage used in this model so that the manager can
select best feasibile option. The conversion factor of 10 M cig CFC is utilized.10 M
means 10000 cigarette sticks. Because of its 90 years of experience in this industry
ITC has an in depth knowledge of number of cigarette sticks required to fill in a truck
so all the other products are converted in terms of 10M cigarette so that it can be
estimated that how many trucks will be required.
See Annexure
o Number of Trucks from Food HUB Godown and Atta factory to
Wholesale Distributors for direct shipment for 4T, 9T and 16MT capacity
truck -- page 18 to 23
o Information of routing or direct shipment with respect to Model 1 and
Model 2 which will be highlighted in the next chapter – page 24,25
Limitations of the designed tool
The space requirement for future was estimated but the current space available
and space occupied are not known which can be updated in the program
designed which will give a better picture about the space occupied.
The percentage demand for individual product category can be bifurcated in the
model but it will remain same for all the Wholesale Distributors throughout
Karnataka

ANALYSIS AND SUGGESTED MODELS

DATA ANALYSIS
DATA MINING
The term data mining describes the concept of discovering knowledge from databases.
The idea behind data mining is the process of identifying valid, novel, useful, and
ultimately understandable pattern in data. Similar to traditional mining where we search
beneath the surface for valuable ore, data mining searches large databases for
indispensable information for managing an organization.
Figure 11: DATA MINING PROCESS
SAMPLE EXPLORE MODIFY
ASSESS MODEL
Lets go in detail in to the data mining process with respect to the project
a. SAMPLE & EXPLORE
As mentioned in the previous chapter that with respect to this project its very
essential to understand the effect and patters of each Wholesale Distributors and because
the data is not too large whole of the population can be used for the inference so sampling
should not be done.
Table 3: Following table gives the pattern in which data was available for the study
Wholesale Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Distributors Products 04 04 04 04 04 04 04 04 04 05 05 05
NAME ARM - Packets
NAME Atta - Tonnes
NAME Biscuits - Kilos
NAME Eclairs - Kilos
NAME HBC - Kilos
NAME Licks - Kilos
NAME Minto - Kilos
NAME Minto CL - Kilos
NAME Salt -Tonnes
SOURCE: FIELD INVESTIGATION

b. Modify
Based on the data obtained in the exploration phase the inferences were not easy
to be drawn as these data’s required modification. Firstly the data was converted into
single unit
ie Demand of every category was converted in terms of Kilos
Further the grouping was done on the basis of:
Month wise projection
Product category
Route of the Wholesale Distributors
As far as the current supply chain is concerned there are totally 11 routes operating
excluding city Wholesale Distributors, which was shown in chapter 1 while explaining
current supply chain model.
But when enquired the company sources explained that there is feasibility of combining
these routes further as the current routing was done on the basis of demand for all FMCG
products which included cigarette, matches and Agarbatti but if directly shipped for Atta
and Food products the routes can be further clubbed.
Following table gives the combined routes for the Wholesale Distributors which can be
supplied together
Table 4 : Updated Routing for up-country Wholesale Distributors
Route WD 4 Kollegal-MS 7 Bellary
1 CHINTAMANI-M 4 MANDYA 7 Gangavathi-Bel
1 DBPur-City 4 RAMNAGAR-M 7 Hospet-Bel
1 K G F-M 4 Total 5 7 Koppal-Bel
1 KOLAR-M 5 Hunsur-MS 7 Total 5
1 Tumkur-City 5 Mercara-MS 8 Raichur-Bel
1 Total 5 5 Mysore 8 Yadgiri-Bel
2 Arsikere 5 Pandavpura-MS 8 Total 2
2 Badravathy 5 Periyapatna-MS 9 Karwar
2 Sagar 5 Total 5 9 Kundapur
2 Shimoga 6 Chitradurga 9 Puttur
2 Total 4 6 Davangere 9 Udupi
3 Chikmagalur 6 Harihar 9 VS
3 Hassan 6 Haveri 9 WC
3 Kunigal 6 R.Bennur 9 Total 6
3 Total 3 6 Sirsi
4 CR Nagar-MS 6 Total 6
4 KANAKPURA-M 7 Hiriyur
SOURCE: FIELD INVESTIGATION

c. Model
On the basis of the modified data the model is constructed which helps in improving the efficiency
of the current model.
Following is the step-by-step process of tailored logistics, which is used for the process of decision
making in this project.
Tailored Logistics
Figure 12: Flow chart for the process of program
Collect Split & Group Convert in to Calculate

Projected in terms of Units, CFC & Space
Demand Sub Products 10M CFC Required at
C&F or HUB
Calculate Combine Number Of Calculating

Number Of Routes and TRUCKS WD Space
TRUCKS Calculate No. REQUIRED required &
REQUIRED On Trucks On MONTH compared to
MONTH BASIS Required And BASIS From Space
From Atta Time to Reach C&F Available
Factory and HUB
to WD
If not for Individual WD,

Compare And Check weather If Combined and feasible to
Check Weather Combining Routes Will route from hub and atta
Make It Feasible,. factory what is the effect on
Feasible
* If Not Now By When investment cycle by WD,stock
in transit, cash in transit and
stock on hand
SOURCE: Model Developed with the help of Literature Review and Field Investigation
On the basis of the tailored logistics process the models which are developed are as
follows

MODEL 1
BANGALORE CITY
Clearing and
(HUB) (C&F)
Only Cigarette Matches & Agarbatti

All Food
products Up-Country Wholesale Distributors
including
atta Route 1
Route 6
Chintamani
Chitradurga
K.G.F.
Davangere
Kollar
Harihar
Doddaballabur
Haveri
Tumkur
R.Bennur
Figure 13: Route 2 Sirsi
Arisikere
Route 7
Bhadravathy
Hiriyur
Shimoga
Bellary
Sagar
Gangavathi
Route 3 Hospet
Kunigal
Koppal
Hassan
Route 8
Chikmagalur
Raichur
Route 4 Yadgiri
Cr nagar
Route 9
Kanakpura
Karwar
Kollegal
Kundapur
Mandya
Puttur
Ramnagar
Udupi
Route 5 VS
Hunsur
Mercara WC
Mysore
Pandavpura
Periyapatna
SOURCE: Model Developed on the basis of Routes see Annexure
Route 6
The Above model shows the direct flow of all food products including Atta from the HUB-godown to
Attibele
Wholesale Distributors directly.So the atta is directed to HUB godown instead of C&F.
C&F agent supplies only Cigarette,Matches and Agarbatti to up-country Wholesale Distributors.

MODEL 2

BANGALORE CITY
Clearing and
(HUB) (C&F)
Only Cigarette Matches & Agarbatti
Food
products Up-Country Wholesale Distributors
except atta Route 6
Route 1 Chitradurga Atta directly being
Chintamani supplied to up-
Davangere
K.G.F. country Wholesale
Harihar
Kollar Distributors
Haveri
Doddaballabur
R.Bennur
Tumkur
Sirsi
Figure 14: Route 2
Arisikere
Route 7
Bhadravathy
Hiriyur
Shimoga
Bellary
Sagar
Gangavathi
Route 3 Hospet
Kunigal
Koppal
Hassan
Chikmagalur
Route 8
Route 4 Raichur
Cr nagar
Yadgiri
Kanakpura
Kollegal
Route 9
Mandya
Karwar
Ramnagar
Kundapur
Route 5 Puttur
Hunsur
Udupi
Mercara
VS
Mysore
WC
Pandavpura
Periyapatna
SOURCE: Model Developed on the basis of Routes see Annexure
Route 6
Attibele
This model shows the direct shipment of Atta from Atta factory to Wholesale Distributors and
Food products from Hub to Wholesale Distributors.So there are elimination of trucks within
Bangalore based godowns.
d. Assessment
As the model is ready the next step being assessment, which could indicate the superiority of this
model over the previous model.
CONCEPT: Logistical check
As the data is longitudinal data I have shown only Month data for the comparison and the result
varies from month to month
Figure 15: Chart comparing the current and proposed model
Logistical Infrence
ATTA Factory TO
200 HUB
ATTA FACTORY TO
150
C&F
Trucks
100 HUB TO C&F
50
Atta Factory To WD
0
Current Model 1 Model 2 HUB TO WD
Model
September 04 C&F TO WD
TABLE 5: Number of trucks required to send ITC food products

ATTA ATTA
SEPTEMBER C&F TO HUB TO Atta Factory To HUB TO FACTORY TO Factory TO
04 WD WD WD C&F C&F HUB Total
Current
Model 100 0 0 41 20 0 161
Model 1 33 67 20 120
Model 2 33 46 22 100
SOURCE: Table developed from the data calculated by SCM Tool, see Annexure
RESULT
Model 2 stands to be the best fit if the number of trucks is taken as the criteria for
evaluation of the model. As this model uses least number of trucks to reach the desired
destination. But next table shows the detailed analysis of the Kilometers covered by these
trucks which shows that Model 2 covers 27733Km and Model 1 covers only 23989 Km.
Which means Model 1 covers almost 3800 Km less than Model 2.

MODEL 1 MODEL 2
WD Distance (KM) KM From AF From HUB KM from Atta factory KM From HUB Total KM
CHINTAMANI-M 62.00 1.81 62.00 0.59 1.22 0.00 62.00 62.00
DBPur-City 45.00 0.94 0.00 0.63 0.32 0.00 0.00 0.00
K G F-M 121.00 1.93 121.00 0.63 1.30 0.00 121.00 121.00
KOLAR-M 84.00 0.89 0.00 0.32 0.58 0.00 0.00 0.00
Tumkur-City 82.00 1.15 82.00 0.35 0.81 0.00 0.00 0.00
Arsikere-Mang 180.00 0.71 0.00 0.17 0.54 0.00 0.00 0.00
Badravathy-Mang 256.00 1.20 256.00 0.17 1.03 0.00 256.00 256.00
Sagar-Mang 405.00 0.66 0.00 0.14 0.52 0.00 0.00 0.00
Shimoga-Mang 295.00 2.08 590.00 0.70 1.38 0.00 295.00 295.00
Chikmagalur-Mang 265.00 1.90 265.00 0.59 1.31 0.00 265.00 265.00
Hassan-Mang 200.00 2.65 400.00 1.10 1.55 200.00 200.00 400.00
Kunigal-Mang 90.00 0.47 0.00 0.08 0.39 0.00 0.00 0.00
CR Nagar-MS 270.00 0.35 0.00 0.09 0.26 0.00 0.00 0.00
KANAKPURA-Mand 80.00 0.51 0.00 0.09 0.42 0.00 0.00 0.00
Kollegal-MS 230.00 2.99 460.00 0.56 2.43 0.00 460.00 460.00
MANDYA-Mand 160.00 1.82 160.00 0.68 1.15 0.00 160.00 160.00
RAMNAGAR-Mand 110.00 1.45 110.00 0.50 0.95 0.00 0.00 0.00
Hunsur-MS 213.00 0.28 0.00 0.09 0.19 0.00 0.00 0.00
Mercara-MS 306.00 1.47 306.00 0.39 1.07 0.00 306.00 306.00
Mysore-MS 165.00 4.94 660.00 2.15 2.79 330.00 330.00 660.00
Pandavpura-MS 125.00 1.52 125.00 0.46 1.06 0.00 125.00 125.00
Periyapatna-MS 236.00 0.87 0.00 0.19 0.68 0.00 0.00 0.00
Chitradurga-Mang 200.00 1.57 200.00 0.53 1.05 0.00 200.00 200.00
Davangere-Mang 267.00 1.73 267.00 0.59 1.14 0.00 267.00 267.00
Harihar-Mang 281.00 1.23 281.00 0.28 0.95 0.00 0.00 0.00
Haveri-Mang 356.00 0.13 0.00 0.04 0.10 0.00 0.00 0.00
R.Bennur-Mang 321.00 0.77 0.00 0.12 0.64 0.00 0.00 0.00
Sirsi-Mang 421.00 0.71 0.00 0.19 0.52 0.00 0.00 0.00
Hiriyur-Mang 180.00 1.07 180.00 0.26 0.81 0.00 0.00 0.00
Bellary-Bel 325.00 3.13 975.00 1.03 2.10 325.00 650.00 975.00
Gangavathi-Bel 487.00 0.74 0.00 0.12 0.63 0.00 0.00 0.00
Hospet-Bel 382.00 4.17 1528.00 1.03 3.14 382.00 1146.00 1528.00
Koppal-Bel 422.00 0.53 0.00 0.12 0.42 0.00 0.00 0.00
Raichur-Bel 515.00 3.06 1545.00 0.53 2.53 0.00 1030.00 1030.00
Yadgiri-Bel 625.00 1.61 625.00 0.12 1.49 0.00 625.00 625.00
Karwar-Mang 675.00 1.02 675.00 0.29 0.73 0.00 0.00 0.00
Kundapur-Mang 485.00 2.28 970.00 1.05 1.23 485.00 485.00 970.00
Puttur-Mang 330.00 1.12 330.00 0.29 0.82 0.00 0.00 0.00
Udupi-Mang 455.00 1.62 455.00 0.65 0.97 0.00 0.00 0.00
VS-Mang 380.00 1.80 380.00 0.74 1.07 0.00 380.00 380.00
WC-Mang 380.00 6.44 2280.00 3.19 3.25 1140.00 1140.00 2280.00
Total KM 23989.00 27733.00
SOURCE: Generated by SCM Tool see Annexure
Table 6: Kilometeres traveled by Trucks for the month of Sep 04 as per proposed Model

INCIDENTAL FINDINGS:
Table 7: Space Requirement at the 43 Wholesale Distributors for the month of Sep 04
Safety Stock Space Current Space Total Requirement Of
WD Requirement Requirement Space
CHINTAMANI-M 46. 7 53
DBPur-City 26 4 30
K G F-M 47 7 54
KOLAR-M 22 4 26
Tumkur-City 28 4 32
Arsikere-Mang 20 3 23
Badravathy-Mang 28 4 32
Sagar-Mang 19 3 22
Shimoga-Mang 51 7 58
Chikmagalur-Mang 44 7 51
Hassan-Mang 64 10 74
Kunigal-Mang 13 2 15
CR Nagar-MS 9 1 10
KANAKPURA-Mand 13 2 15
Kollegal-MS 77 11 88
MANDYA-Mand 45 7 52
RAMNAGAR-Mand 37 6 43
Hunsur-MS 8 1 9
Mercara-MS 46 7 53
Mysore-MS 116 17 133
Pandavpura-MS 48 7 55
Periyapatna-MS 25 4 29
Chitradurga-Mang 37 6 43
Davangere-Mang 41 6 47
Harihar-Mang 32 4 36
Haveri-Mang 4 1 5
R.Bennur-Mang 18 3 21
Sirsi-Mang 19 3 21
Hiriyur-Mang 26 4 30
Bellary-Bel 78 11 89
Gangavathi-Bel 22 3 25
Hospet-Bel 107 15 122
Koppal-Bel 14 2 16
Raichur-Bel 80 12 92
Yadgiri-Bel 39 6 45
Karwar-Mang 26 4 30
Kundapur-Mang 53 8 61
Puttur-Mang 27 4 31
Udupi-Mang 40 6 46
VS-Mang 53 8 61
WC-Mang 151 22 173

In the similar manner the space requirement of coming months is also available, which will help
the Wholesale Distributors to prepare themselves for the growing demand
The space requirement for each category is calculated on the basis of Area occupied by
each category of product as shown in Annexure 1.This gives the value of total space
requirement for the whole month.
As the safety stock is to be maintained for 7 days as per companies norms, I have
calculated the required space for safety stock and added one day of space requirement to
it.
Note: Number of days in a month is taken to be 30.
Figure 16: Wholesale Distributors investment pattern
WHOLESALE DISTRIBUTORS INVESTMENT
PATTERN
10%
7%
7%
3% 50%
23%
Market Credit Stock On Hand Cash On Hand

Cash in Transit Stock in Transit Dues From ITC
SOURCE: Collected from personal enquiry notes

The above chart shows the prevailing pattern of investment where in the Wholesale Distributors
funds are locked up for 30 days in the following manner
Lockage Of Table 8: As it can be inferred from the table the lockage of funds
Funds Days
for the distributor is highest due to Market credit but in FMCG
Market Credit 15
Stock On Hand 7 market reducing market credit is not a viable option so only
Cash On Hand 1 suitable way for optimization is by reducing the stock on hand,
Cash in Transit 2
Stock in Transit 2 stock in transit and Dues from ITC which will be minimized by the
Dues From ITC 3 suggested model because when there is direct shipment of
Total 30 products the time taken for the product to reach the destination
reduces and frequency required is also less. So both the models will show a positive affect on the
Wholesale Distributors investment pattern by reducing the lockage period of their funds.

MAJOR FINDINGS OF RESEARCH
Product and Stacking norms for all category

o Cigaratte – 5
o Matches – 15
o Agarbatti – 5
o Candyman – 8
o Minto – 8
o Ready to Eat – 6
o Biscuits – 6
o Salt – 10
o Atta – 7
New Routing Schedule for ITC from Clearing and Forwarding agent, Food HUB Godown
and Atta Factory with the Kilometers so as to calculate the time taken to reach the
destination.
0 Aarco-City Hassan Sirsi
ATTIBELE-M Kunigal 6 Total
Bina-City 3 Total 7 Hiriyur
DA Sons-City 4 CR Nagar-MS Bellary
MD SONS-City KANAKPURA-M Gangavathi-Bel
Vijay-City30 Kollegal-MS Hospet-Bel
Vijay-City70 MANDYA Koppal-Bel
0 Total RAMNAGAR-M 7 Total
1 CHINTAMANI-M 4 Total 8 Raichur-Bel
DBPur-City 5 Hunsur-MS Yadgiri-Bel
K G F-M Mercara-MS 8 Total
KOLAR-M Mysore 9 Karwar
Tumkur-City Pandavpura-MS Kundapur
1 Total Periyapatna-MS Puttur
2 Arsikere 5 Total Udupi
Badravathy 6 Chitradurga VS
Sagar Davangere WC
Shimoga Harihar 9 Total
2 Total Haveri
3 Chikmagalur R.Bennur
The new routing was designed specifically for food products on the basis of route,
kilometers and demand pattern at these places

The following table provides the schedule of adding the Wholesale Distributors for direct
shipments from Food HUB Godown in 9 MT truck.
Table 8: Wholesale Distributors who can be directly shipped from Food HUB Godown with
9MT capacity trucks
MONTH Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Not till March 2005
CHINTAMANI KOLAR-M Badravathy R.Bennur Arsikere Sagar
KGF Badravathy Periyapatna Gangavathi Kunigal
Shimoga RAMNAGAR CR Nagar
Chikmagalur Mercara KANAKPURA
Hassan Chitradurga Hunsur
Kollegal Harihar Haveri
MANDYA Hiriyur Sirsi
DIRECT Mysore Yadgiri Koppal
SHIPMENT Pandavpura Karwar
Davangere Puttur
Bellary Udupi
Hospet
Raichur
Kundapur
VS
WC
SOURCE: Inferred from data generated by SCM Tool see Annexure
When calculated for the possibility of direct shipment to whole sale distributors from
Food HUB Godown as per Model 1,it shows that till March 2005, 80% of the Wholesale
Distributors up-country can be shipped directly for all Food products including Atta from
HUB godown Bangalore
But few of them as seen in the last column cannot be shipped directly, because of low
demand for the products at these places and the Wholesale Distributors who are
shipped directly cannot be supplied by direct shipments for their total demand as it does
not constitute full truck load so the best feasible option is multi-point delivery ie routing
as per the guidelines of the model combining such Wholesale Distributors who cannot
be directly shipped.
shipments from Atta Factory in 9 MT truck for Model 2

Table 9: Wholesale Distributors who can be directly shipped from Atta Factory with 9MT
capacity trucks
MONTH Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05

Hassan-Mang Udupi-Mang
Mysore-MS VS-Mang
Bellary-Bel
Hospet-Bel
DIRECT SHIPMENT
Kundapur-Mang
WC-Mang
SOURCE: Inferred from data generated by SCM Tool see Annexure

Inference
As clearly seen Model 2 with 9 MT is viable only if Multi-point delivery is considered because
out of 43 Wholesale Distributors only 8 distributors can be distributed if Model 2 is used for the
supply chain process.
shipments from Food HUB Godown in 16 MT truck.
MONTH Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05
CHINTAMANI Yadgiri Chitradurga Mercara RAMNAGAR
K G F- Udupi
Shimoga
Chikmagalur-
Hassan-
Kollegal
MANDYA
Mysore-
DIRECT SHIPMENT
Pandavpura
Davangere
Bellary
Hospet
Raichur
Kundapur
VS
WC-
Inference
As clearly seen Model 1 with 16 MT capacity can directly ship only to 50% of Wholesale
Distributors, which is very less in comparison to 9MT capacity, trucks

CONCLUSIONS
AND
RECOMMENDATIONS

CONCLUSION
Purpose
The basic objective of this study is finding: -
Improving Effectiveness and Efficiency of Supply chain management and checking
the feasibility of adding Up-Country Wholesale Distributors routes for direct
shipments of FOOD Products from HUB Godown (foods)/Atta Factory (Bangalore).
Two Strategies
Alternative one
If there is no change in the information available for ITC, they will have to adjust their business
through internal changes. After getting an idea about how ITC’s new transportation model will
affect ITC, ITC will be able to make internal changes towards a more effective supply chain.
Wherein all ITC food’s products can directly reach the Wholesale Distributors from the Food
HUB Godown.This way of going towards a more effective supply chain is the simplest solution
for the present situation since it does not include any new technical investments. The only
requirement will be increase in the K1 shipments from Food HUB Godown but in the
meanwhile K2 shipments will be decreased.[table ].Following this alternative ITC have to adjust
its transportation according to Model 1 , so as to make the products reach the destination in an
cost effective manner.
Alternative two
The next model suggested on cost aspects though is superior to Model 1 but when we focus
on the direct shipments from the Atta factory it shows that its not a feasible option as the cost
of loading and unloading will be higher when there is a multi point delivery.
But if there is an increase in demand Atta at up-country destinations within Karnataka the then
ITC should shift to Model 2 wherein Atta can directly reach the distributors from Atta Factory.
It is feasible to directly ship food products from Food HUB Godown, including Atta to

RECOMMENDATIONS
Integration of the supply chain has, for many years, been a powerful and compelling enabler
across a wide range of industries. As a result, many of the core supply chain concepts and
principles have been put into practice in a much more effective way. These concepts include:
information sharing, multi-party collaboration, design for supply chain management,
postponement for mass customization, outsourcing and partnerships, and extended or joint
performance measures. The information technology has allowed companies to come up with
highly innovative solutions that accelerated the adoption of these core supply chain principles.
The recommendation can be defined in all of the different branches of business for the
effectiveness of supply chain at ITC
SPECIFIC ASPECTS
Clearing and Forwarding agent
o Issue The two issues the clearing and forwarding agent is dealing with is
space and Locaton
o Solution
Godown must be located in Non residential area
Sufficient vehicles be provided
Training program for Labours and staff dealing with loading and unloading
Categories work space requirement be calculated by implementing
warehousing software
Extension of the Clearing and Forwarding agent
o Developing database with respect to the space available at each Wholesale
Distributors
o Participative management to deal with the problem of investment cycle
o Introducing central ordering system for ITC foods
o Concentration required from the companies side to develop a better investment
pattern, which reduces the lockage of funds for the Wholesale Distributors.
Food HUB Godown
o Though it’s the largest HUB in India for ITC, it lacks behind in basic infrastructures
like lighting facility, etc. it is needed that these aspects are immediately rectified.

The company should examine the mechanism to add value through logistics. The following
chart is quite helpful
Understand Monitor Inflow Replenishes

Distributors And Outflow stocks so as to
Needs Of Stocks lower their
inventories
ARE YOU
NO NETWORKED YES
WITH THEM
ENSURE
INCREASE IN MONITOR ENSURE
CUSTOMER DISTRIBUTORS DISTRIBUTORS
VALUE PERFORMANCE PROFITABILITY
NO
ARE YOU
YES NETWORKED
WITH THEM

Generic Aspect
Implementing Effective SCM Strategies
The primary purpose in establishing supply chains is to minimize the flow of

raw materials and finished products at every point in the pipeline in order to
enhance productivity and cost savings 17 . Successful supply chain ventures
manage some critical elements for parts such as individual business unit in
the entire supply chain. The strategy covered in different aspects contributes to
the overall performance.
Establish supplier relationships

It is important to establish strategic partnerships with suppliers for a
successful supply chain. Corporations have started to limit the number of
suppliers they do business with by implementing vendor review programs.
These programs strive to find suppliers with operational excellence, so the
customer can determine which supplier is serving well. The ability to have a
closer customer or supplier relationship is very important because these
suppliers are easier to work with. With the evolution toward a sole supplier
relationship, firms need information
such as financial performance, gain-sharing strategies, and plans for jointly
designed work. They may establish a comparable culture and also implement
compatible forecasting and information technology systems. This is because
their suppliers must be able to link electronically into the customer's system to
obtain shipping details, production schedules and any other necessary
information.
Increase customer responsiveness

To remain competitive, firms focus on improved supply chain efforts to Creating
Collaboration and Trust in the Supply Chain There are challenges in managing supply chain

relationships. The problem that greatly hinders the implementation is the relationship between
channel members.
Developing New Technology and The Solution

When developing a Supply Chain strategy, it should begin by evaluating how the links in a
supply chain fit together. Supply Chain Management (SCM) does not so much require the
employment of a specific technology or solution as it demands an understanding of the
business processes that must work together. Information technology has long been a major
factor, new innovation generated day by day with new possibilities provided. E-business, or the
Internet computing model, such as the simulation tools which has been developed in have now
emerged as perhaps the most enabling supply chain integration tools. Because opening,
standards-based and virtually ubiquitous, businesses can gain global visibility across their
extended network of trading partners and help them respond quickly to changing business
conditions such as customer demand and resource availability. The scoring model could be
another advanced standard in helping companies locating the problems in their supply chain.
Creating Information Visibility
Most likely, SCM solution will typically include, for example, material sourcing, forecasting,
warehousing, inventory planning, transportation, purchasing, and financials. Supply chain
integration must be accomplished not only within one enterprise but also within those of its
customers and suppliers (and often their customers' and suppliers' systems as well).
Processes within all of these organizations must be evaluated and updated or even overhauled
to meet efficiency and logistical expectations. Information visibility will help companies to
include more dynamic, collaborative communication networks in their offerings, giving birth to
collaborative commerce and helping to improve communication beyond the transactional
supply chain.
Use Of Information Technology yields the following
Prevents Inventory Buildup
Customize the logistics according to customer segments need
Service the distributors according to their needs
Sharing Benefits

Sharing benefits is an important success factor for many companies. Although there are a lot
of challenges to the implementation, the gains to be realized with the supply chain outweigh
the concerns and hence more and more organizations are moving towards automating their
supply chain. The benefits should be equally shared within supply chain members, it is not
good to sacrifice others benefit for gaining more, and this kind of relationship will not last long.

The Company can profitably use the following ‘checklists’
THE DIAGNOSTIC
Q Is the company reducing the intervals at YES NO
which it services its Wholesale Distributor?
Q Is the company trying to differentiate its YES NO
brand through its logistics system?
Q Is the company treating C & F agent and YES NO
Wholesale Distributor as internal customers
Q Is the company ensuring that its distributors YES NO
are servicing the retailers more frequently
Q Is the company ensuring an Information YES NO
Technology network to track its stock
movements
The company can follow the following cardinal laws of logistics:

o Home operations –The functional aspects of company’s logistics have to be very
efficient than those of its competitors.
o Channel company’s resources according to the configurations of the delivery system.
o Serve the end user.
o Attack the Inventories by linking the logistics Management to financials pay-offs in other
parts of value chain
o Apply vertical solutions – Strategic logistics will look beyond its own parish to check for
optimization at the other nodes on the company’s value chain.
o The company should focus on “Reverse Logistics”
o Reverse flow of products is mandatory
o Fourth party logistics in the supply chain outsourcing
o Virtual integrated logistics :One stop shop for all logistical requirements
Take a holistic view of the logistics as operations. The following chart highlights this:-

LOGISTICS AS OPERATIONS
Logistics Supply-Chain
Supply Chain Movement Transportation

Infrastructure Requirement Infrastructure
In-Bound Distribution
Network Network
Distribution Centres Customers

Products
Products
Products
Vendor Plants
Supply-Chain Transportation Shipment Vehicle Warehousing

Planning Planning Planning Routing
o Site Location o Site location o Outsourcing o Fleet Sizing o Warehousing
o Capacity Sizing o Fleet Sizing o Bid Analysis o ServiceDay layoput
o Sourcing o Fleet Sizing Balancing o Material handling
o Frequency design
Analysis
o Production o Routing Strategy o Consolidation o Routing Strategy o Storage Allocation
planning o Network strategy o Zone Alignment o OrderPicking
o Sourcing Alignment o Mode Strategy strategies
o Mrp,drp,erp o Load matching o Shipment o Vehicle o Order picking
dispatching dispatching

FUTURE WORK
ITC has vast experience in the field of distribution and it is ranked among the top players in most
of its product categories and considered to have the best of physical networks but as said there is
always an other side of the coin. There are certain areas which if not concentrated now will inhibit
ITC in future from sustaining its position as the leader. This project concentrated on the logistics
aspect of supply chain of finished products from ITC godown or Clearing and Forwarding agent to
Wholesale Distributors, while researching on this topic many aspects came in to picture which had
the scope of further research which are enlisted below
Feasibility of combining all FMCG and VFMCG (Cigarette) products at Food HUB
Godown for shipment to each Wholesale Distributors without moving through Clearing
and Forwarding agent.
FINANCE
Impact on Wholesale Distributors margin due to introduction of ITC FOOD products.
Revised landing cost of products to Wholesale Distributors on the basis of the new
transportation model
Framing new credit policy for helping the Wholesale Distributors in reducing their lockage
of funds.
MARKETING
Developing an EOQ model for ITC products.

Identifying the reason for the low demand pattern of consumers for ITC FOOD products
with in Karnataka unlike Bangalore and suggest ways of improving it.
Acceptance of each brand in the FOOD segment compared to the market leader in each
category and the effect of companies name on the sales of the product
63

ANNEXURE
Select Bibliography
Including Websites Surfed

BIBLIOGRAPHY
References
“Marketing of Management” by czinkota and kotabe , Thompson South western

publication,2003
“Business Logistics Management” by Ronald H Ballon , prentice – Hall publication
2000
“Logistical Management “ The Integrated supply chain management “ by Donald J
Bowersox and Dowill J class, MC Graw-Hill publication 1996
Dekker, H.C. and A.R. van Goor (2000), Supply Chain Management and
Management Accounting: A case study of Activity Based Costing.
International Journal of Logistics: Research & Applications, volume 3,
nr.1, pp.41-52
Eert, A. van, J. van Riet and A.R. van Goor (2000), Supply chain
directions in the food industry, Journal for Purchasing & Logistics
(Dutch), Vol.16, nr.12, December pp.8-13.
Gattorna, J.D. (1998), Strategic Supply Chain Alignment, Aldershot,
U.K., Gower Press.
Handfield, R.B. and E.L.Nichols (1999), Introduction to Supply Chain
Management, New York, Prentice Hall Inc.
Hoekstra, T. and J.H.J.M. Romme (1993), Integral logistics structures,
Mc Graw Hill, Maidenhead U.K.
Jones, T. and D.W. Riley (1985), Using Inventory for Competitive
Advantage through Supply Chain Management, The International
Journal of Physical Distribution and Materials Management, Vol.15, nr.5,
pp.16-26.
Koning, M.H. (1998), A logistics vision on SCM, Unpublished paper,
Amsterdam Free University.
Salmon Associates (1993), Efficient Consumer Response, Washington
D.C, Food Management Institu
D.C, Food Management Institu

H.L. and C. Billington (1992), Managing Supply Chain Inventory: Pitfalls
and Opportunities, Sloan Management Review, pp. 65-73.

Leew, S de .J. Ploos van Amstel and A.R. van Goor (1999), The
Selection of Distribution Control Techniques, The International Journal
of Logistics Management, volume 10, nr.1, pp. 97-112.

Porter, M. E. (1985), Competitive advantage, New York, Free Press.
Ploos van Amstel, M.J. and W., A.R. van Goor (forthcoming 2002).
European Distribution and Supply Chain Logistics, Pearson, U.K.
Database

ITC database
Journal

ICFAI Journal of Marketing
ICFAI Marketing Mastermind
Harvard Business Review
Business World
Business Today
Business
Magazines
Economic Times
Business Standard
Business Line

Web Links:
www.itc.co.in
http://www.mckinsey.de/_downloads/knowmatters/retail/deverticalisation_operations.pdf
www.anu.edu.au/people/Roger.Clarke/EC/EDIIntro.html
www.currentdirections.com/success/mfg-corrigated-materials--vendor-managed-
inventory.html
www.edifice-ins.com/vmi.htm
www.vendormanagedinventory.com
www.nova.btl.com/servlet/se.ementor.econgero.servlet.presentation.Main?data.
node.id=36&data.language.id=2&data.document.id=4364
www.reshare.com/understandingcc.htm
www.ARCweb.com/ inboundlogistics

ANNEXURE-2

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DYNAMICS OF SUPPLY CHAIN MANAGEMENT

AN APPROACH TOWARDS EFFECTIVENESS & EFFICIENCY OF SUPPLY

ITC LIMITED, Bangalore

“A project report submitted in partial fulfillment of the requirement for the

Mr. Savio Suveire Mr. Vineeth Vishwambharam

Place: Bangalore (T.Lakshmi)

I extend grateful thank to Mr.Vineeth Vishwambharam, Asst Branch Manager and

I express my immense gratitude to Dr.N.S.Mallavali & Dr.K.V.Prabhakar for their

Place: Bangalore (T.Lakshmi)

Figure 1: Distribution Network of ITC

INDEX CHAPTER PAGE No

4.2 PROBLEM STATEMENT

4.3 Research Design

4.4 Sample Design

4.5 Limitations of the study

4.6 Suggested tool

4.7 Limitations of the designed tool

5 ANALYSIS AND SUGGESTED MODELS

5.1 Data Mining

5.2 Incidental Findings

5.3 Major Findings

6 CONCLUSIONS AND RECOMMENDATIONS

September 2004 Calculations As Per The Tool

SCM - A Framework for Analysis

Dynamics of Supply chain Management 2

Dynamics of Supply chain Management 3

The Logistical Measurements

Dynamics of Supply chain Management 4

Dynamics of Supply chain Management 5

The Logistics Players- From 1PL to 5PL As per Morgan Stanley’s

The Logistics Players- From 1PL to 5PL By Morgan Stanley’s

Dynamics of Supply chain Management 6

The Real Sense Supply Chain Management

Dynamics of Supply chain Management 7

Dynamics of Supply chain Management 8

Dynamics of Supply chain Management 9

Dynamics of Supply chain Management 10

Respect for people

Ethical Corporate Citizen

Dynamics of Supply chain Management 11

ITD FBD PSPD IBD LRBD I3L

ITD – Indian Tobacco Division,

FBD - Food and Beverages Division,

PSPD – Paper Boards and Specialty Papers Division,

IBD – International Business Division,

LRBD – Lifestyle Retailing Business Division

Dynamics of Supply chain Management 12

• Ready To Eat Products

1 Special Commendation Safety Certificate from the Ministry of Labour, Government

1 Golden Peacock Environment Management Award in 1999 from the world

1 Best Manufacturer of cigarettes in 2003 by Tobacco Board of India.

1 Third Best Exporter of Tobacco Products In 2003 by Tobacco Board of India.

1 CII-ENCON Award for paperboards in 2003.

Dynamics of Supply chain Management 13

FMCG (FAST MOVING CONSUMER GOODS):

ITC's Lifestyle Retailing Business Division

Dynamics of Supply chain Management 14

ITC's Packaging & Printing

ITC is one of the world's most modern and o

Dynamics of Supply chain Management 15

It is the country's second largest exporter of agri

ITD – The Indian Tobacco Division

Factory Places: Bihar, Utranchal, Kolkatta, and Bangalore

Cigarette has a centralized ordering system.

50 % of Andhra Pradesh 50 % of Tamil Nadu

80 % of Karnataka 100 % of Kerela