MIS-Project

SUPPLY CHAIN MANAGEMENT

Anil Kumar .V.M - 552 Banita Sharma Jatinder Pal Singh Kalsi Premanand Lotlikar Sudeep Barve

- 546 - 521 - 532 - 502

NMIMS PT-MBA - 1Yr , Div-F ,Group 7 6th Dec,2004

AGENDA
Introduction to SCM
Case - AMUL IT role in AMUL-SCM Comparative Study Conclusion

What is SCM ?
Supply chain consists of facilities (factories, terminals, ports, stores, warehouses), transport and LIS (logistics information system).

Logistics is the flow of material, information and money in the supply chain connecting the suppliers supplier and customers customer of the enterprise.

SCM - Definition

Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.

Simple SCM Model & Process

SCM

Suppliers

Manufacturers

Distributors

Retailers

Consumer

SCM Process

Design Product, Process & Supply Chain.

Introduce Product

Promote,Price and Merchandise Product

Fulfill Product Demand

Recycle, Reuse/Dispose Of Product

SCM - Flows
SCM can be divided into 3 main flows :

The product flow The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow The information flow involves transmitting orders and updating the status of delivery.
The finances flow The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.

SCM - Objectives
Enhancing Customer Service Expanding Sales Revenue Reducing Inventory Cost Improving On-Time Delivery Reducing Order to Delivery Cycle Time Reducing Lead Time Reducing Transportation Cost Reducing Warehouse Cost Reducing/Rationalize Supplier Base Expanding Width/Depth of Distribution Having Products in Stock

Whats New in Supply Chain?

Global competition More powerful well informed customers Customer expectations Shorter product life cycle New, low-cost distribution channels Internet and E-Business strategies

SCM Practices In India*

Supply Chain Processes - Critical Processes
Warehousing Promotion Planning Import Export Management Distribution Management Transportation Product Development Manufacturing Order Processing/Fulfillment

Inventory Management
Demand Management Customer Service 0 1 2 3 Criticality Score 4 5

* Source : FICCI research on Indian SCM practices

Supply Chains Implementation

What are the benefits achieved by supply chain implementation?
Measurable Indicators 1. Sales Revenue Increased 2. Profits Increased 3. Order to Delivery Cycle time Reduced 4. Inventory Reduction a. Raw Material b. WIP c. Finished Goods 5. On Time Delivery Improved 6. Customer Base Increased Extent of Improvement 20.2% 15.5% 32.8% 25.1% 38.7% 32.1% 33.4% 27.7%

CASE STUDY - GCMMF (AMUL)

A drop of milk.A ray of hope

Supply Chain AMUL

In the 1940s, the life of a farmer in Kaira District of Gujarat was as

miserable as that of his counterpart in other parts of India. Before: Over dependence on seasonal crops, erratic climatic conditions, gross exploitation by strong middlemen who controlled marketing channel, absence of Proper distribution Network, traveling long distances to deliver milk, perishable nature of milk and milk derivatives, Govt. monopoly to Polson Dairy, low selling prices, lack of infrastructural support. All this led to the creation of AMUL the co-operative movement with slogans Remove Middlemen in Gujarat. Sardar Vallabhai Patel and Korari Desai along with Tribhuvandas Patel, the founder leader of this movement understood the professionalism in management of cooperatives. The Kaira District Co-operative Milk Producers Union Ltd, Anand was born on 14th Dec, 1946 with 2 villages and 247 litres of milk.

Anand - Pattern
The Anand Pattern of Dairy Co-op includes the Dairy co-op at village level societies and processing unit at distribution level at Union. To market the products of Milk Unions,GCMMF was formed in 1973. Gujarat Co-operative Milk Marketing Federation- GCMMF is an apex Co-operative Organization. It consists of 12 Member Dairies/ District Milk Union and has its own manufacturing Unit called Mother Dairy at Gandhi agar. GCMMF dominance over Milk Supply chain is similar to Land OLakes Worlds largest Co-operatives in US set up in 1921 in Minnesota.

GCMMF:
Indias largest organised collector and distributor of milk and milk products.
Founded in 1973
No. of Producer Members:
2.36 million

650+ Employees

No. of artificial insemination: 2.08 million Cattle-feed manufacturing

Capacity: 1450 Mts per day

No. of Village Societies: 11,400 Total Milk handling capacity:

6.7 million litres per day

Milk Drying Capacity:

Milk collection (Total - 2003-04): 510 metric Tons per day 1.86 billion litres Milk collection (Daily Avg 2003-04):
5.08 million litres

12 Member Unions

Rs 2882 Crores

The Milk Chain

Dairy Coop. Societies Milk Unions

GCMMF

Zonal Offices

Depots and C&F

WDs
Retailers

Consumers

Business Process Flow

Village Societies Raw Milk Chilling Centre Chilled Milk Manufacturing Plant

Mother Dairy GCMMF Depots, Distributors, Retailers,Local,Others Dispatch

Dairy Products

Stores

Consumers

Accounts

The Amul Model Three tier

Tier I Each Village has a DCS VILLAGE CO-OPERATIVE
owned by farmers,co-op has milk colln. Centre and farmers gets paid as per quality and quantity.

SOCIETY.

Tier II- Each VDCS is a part of

the Union and there are 12 such Unions.

DISTRICT MILK PRODUCERS UNION GUJARAT CO-OP.MILK MARKTNG FEDERATION(GCMMF)

Tier III- Responsible for

processing and marketing the entire range of AMUL products.

Sales Turnover

Distribution Network

Product Line

GCMMF has come a long way. Along with Sustained Brand Building exercise over the past two decades,GCMMF is in a position to leverage all its assets for exports.

AMUL is not a food company, it is an IT company in the food business.

Production units

Inbound Logistics
Around 11 thousand separate villages spread across 12 districts. More than 2.1 million milk producing members (called as farmers). Approximately 6 million liters of milk collected everyday. Poor village infrastructure makes collection and co-ordination of milk is an extremely difficult task.

Early Systems
In the late 1940s, the fat content of milk was determined by a time consuming method and in the absence of the farmer. The quantity of milk was measured by volumetric measurement (called Gerber method). The lead-time for payment was a few days.

IT steps in
This is where the installation of AMCS made the entire operation look simple. GCMMF invited 5 to 6 software companies to explore the possibility of automating the process of estimating the fat content in the milk Installation of over 4500 Automatic Milk Collection System (AMCS) units at village societies to capture member information, milk fat content, volume collected, and amount payable to each member.

Milk Collection Operation

Each farmer is given a plastic card for identification At the milk collection counter, the farmer drops the card into a box and the identification number is transmitted to a personal computer attached to the machine.

Milk Collection Operation

The milk is then weighed and the fat content of the milk measured by an electronic fat testing machine. Both these details are recorded in the PC.

Milk Collection Operation

The computer then calculates the amount due to the farmer on the basis of the fat content.

The value of the milk is then printed out on a slip and handed over to the farmer, who collects the payment at the adjacent window.

Milk Storage
Collected milk is stored in units called chilling centers. Chilling center keeps the milk at 4 degree celcius temperature. Typical size of a chilling center is 2000 liters.

Number of AMCS operational

Advantages of AMCS
There is a comparative reduction of more than 75% of time thats spent on each deal Using AMCS the transaction of milk collection takes only 20 seconds. A ten-minute savings per farmer each day amounts to a total savings of 180,000 man-days per month. Today Amul makes about 10 million payments daily amounting to transactions worth Rs 170 million in cash. More than 5,000 trucks move the milk from the villages to 200 dairy processing plants twice a day Other benefits are reduction of pilferage, reduced human errors, reduced human errors and transparency of operation.

Advantages of AMCS

Dairy Information System Kiosk (DISK)

DISK project was conceived with two components :
An application running at the society level that could be provided Internet connectivity Dairy Portal at the district level serving transactional and information needs of all members and staff in the district cooperative structure

Dairy Information System Kiosk (DISK)

Dairy Information System Kiosk (DISK)

Software used at the society level was developed to provide
Data analysis and decision support to help a rural milk collection society in improving its performance i.e. increasing milk collection. Data analysis to improve productivity and yield of milch cattle. Provide farmers with facilities to place orders for goods and services offered by different agencies in the co-operative sector and seek information on subjects of interest.

Dairy Information System Kiosk (DISK)

Services to be offered at these centres would include: Delivery of information related to dairying, including best practices in breeding and rearing milch cattle, scheduling of government and other private sector agency services, and collecting feedback on the quality of service provided to the catchment area. Access to a multimedia database on innovations captured by SRISHTI (an NGO working with IIMA) from hundreds of villages, covering agricultural practices, medicinal plants, home remedies, tools and implements etc. Use as a communication centre offering services like email, fax and Internet telephony. A way for farmers to download Government Forms, receive documents (from a Government site) and order supplies and agricultural inputs from manufacturers

Enterprise wide Systems: EIAS & GIS

A need was felt to look for a strategy to make IT operations competitive and streamline the collection and distribution of milk products with the help of IT tools. Thrust was given to integrate the existing applications with ICT tools through re-design/re-organization of existing software applications. The focus was to provide a seamless flow of information leveraging for the decision making process. Company zeroed on ERP as means to keep pace with dynamically changing business environment. It assigned the ERP software development project named as Enterprise-wide integrated application system (EIAS) on a turnkey basis to Tata Consultancy Services.

EIAS Introduced
The customized ERP-EIAS has been implemented across the organization integrating various operational departments.

EIAS
The customized ERP- EIAS is designed in such a way that it can be plugged into various points of the supply chain and external system. Moreover, the software is platform independent and can work on any operating system. Each of Amuls offices is connected by e-mail and all of them send a daily report on sales and inventory to the main system at Anand Also, sales offices, C&F points and wholesale distributors of GCMMF have been connected through the Internet for timely exchange of information. EIAS system covers a plethora of operations like market planning, advertsing and promotion, distribution network planning, stock planning, stock planning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management

Geographic information system - GIS

Amul is using GIS for business planning and optimization of collection and distribution processes. Using the Indian map in GIS, the company is in a position to plot zone/depot boundary as well as a pointer for zone, depot and distributor locations, which are superimposed by product-wise sales data.

At collection level as it captures the farmer-member census information as well as animal census data This has enabled to decipher information regarding milk production and productivity of animals, region wise in Gujarat. It helps in forecasting milk production according to the region and suggests remedies, if any, for a region that has a lower milk production rate. GIS system can also be used for monitoring veterinary health and controlling the outbreak of diseases.

GIS Implementation - Ice cream outlets at Ahemdabad

In Ahmedabad metro there was no outlet mapping available from which area wise market share along with benchmarking with companys outlets could be done. Area mapping with the help of Sales and Marketing office was done for each and every outlets along with that of competitors. 2500 outlets were mapped in 3 weeks, entire area was broken up into 400 grids and detailed analysis performed. BENEFITS: All Ice cream outlets are now available online along with details like Name of the area, products offered, annual sales etc, just by a click on the screen by giving the brand name. Help in planning sales and marketing strategies more efficiently.

 According to MR Subbarao Hegde (CIO), Amuls integrated system has proved to be extremely effective in streamlining the demand versus supply data activity on a continuous basis

E-Initiatives @ AMUL

Depot Order Forwarding thru

Email / Fax / Phone

B2C Model www.AMUL.com Nearest AMUL Distributor AMUL CYBERSTORE Back End Delivery Order Copy No.1

To Depot Office

Payment

Operations To Head Office Order Copy No.2

Customer

Customer Feedback Direct Customer Relationship

Head Office

Other Initiatives

Banaskantha

Mother Dairy

Uttarsanda

Vidya Dairy

Other Initiatives
Banaskantha
WLL Network , 25 kms radius Web cam for farmers

Uttarsanda
ERP , Oracle 9i Strong connectivity with VSATs DISK

Comparative Study
Nestle

Nestle Milk SCM

Direct procurement from villages Bulk Coolers Computerized Milk collection and sale Health Monitoring Quality improvements

Nestle Coffee SCM

Buying Direct (1986)
Farmer gets fair price on the spot Widely advertised Nestle price and a minimum base price

Competitive prices High quality 1998 90% of green coffee bought directly for its two instant factories Dealers in UK

Nestle cutting lead times

45% - Partner processes 36% - Non-aligned systems 19% - Incomplete data and poor communications Less feedback from retailers

SCM Benefits
Product
Less wastage / Full utilization Time reduction on procurement Improved Quality

Information
Improved Business planning Forecasting Monitoring

Finance
Quick payments for farmers Cost Control

Other Benefits
Flexible Organization Total Supply Chain Coordination Improved Communications Inventory Investments Supplier Relationships Improved Customer Response

Conclusion
Supply Chains in the perishable business can be leveraged for tremendous & sustainable competitive advantage. Success in Supply Chain Management is a result of the integration between commonsense and e-sense. The supply chain takes on a great significance in developing and improving the lives of a large part of Indias population.

Happy Faces

Lambhvel Village Society

Thank You