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A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.C:\Users\ADITYA\Desktop\SCM\scm.jpg



The House of SCM illustrates the many facets of SCM. The roof stands for the ultimate goal of SCM - competitiveness - customer service indicates the means. Competitiveness can be improved in many ways, e. g. by reducing costs, increasing flexibility with respect to changes in customer demands or by providing a superior quality of products and services.


The roof rests on two pillars representing the two main components of SCM, namely the integration of a network of organizations and the coordination of information, material and financial flows. The figure also shows that there are many disciplines that formed the foundations of SCM.

The two main components which incur some degree of novelty will now be broken down into their building blocks. Firstly, forming a supply chain requires the choice of suitable partners for a mid-term partnership. Secondly, becoming an effective and successful network organization, consisting of legally separated organizations calls for actually practicing inter-organizational collaboration. Thirdly, for an inter-organizational supply chain, new concepts of leadership aligning strategies of the partners involved are important.

The coordination of flows along the supply chain can be executed efficiently by utilizing the latest developments in information and communication technology. These allow processes formerly executed manually to be automated. Above all, activities at the interface of two entities can be scrutinized. Process orientation thus often incorporates a redesign followed by a standardization of the new process.

For executing customer orders, the availability of materials, personnel, machinery and tools has to be planned. Although production and distribution planning as well as purchasing have been in use for several decades, these mostly have been isolated and limited in scope. Coordinating plans over several sites and several legally separated organizations represents a new challenge.


After having the understanding of what a supply chain management is, we need to know who the participants of SCM are.

It includes suppliers and customers of not just your products, but also suppliers of suppliers and customer of customers. The whole end-to-end supply has to be considered.

Also important are the competitors of you as a firm and also competitors of your suppliers and buyers so as to check the negotiating skills of you as a firm.


Gain an understanding of the marketplace

An understanding of the business environment is needed in order to determine where the supply chain management strategy can be applied to best effect. Identify the market characteristics of each product or service. Consider:

• customer needs

• pressures from suppliers

• the level of competitor activity.

Carry out a SWOT analysis (Strengths/Weaknesses/Opportunities/Threats) and look at your current position. Consider what other organisations are doing to compete on quality, service, delivery and value.

Analyse your business

Summarise and review the existing core competences of the organisation. What business are you in? Which operations are core to the operation and which could be outsourced? Combine the information on customer needs and strategic priorities to identify key business areas where an integrated supply chain management can have a benefit. Analyse where you sit within the supply chain. Who are your suppliers and customers? Do you have good relationships with them? What level of cooperation currently exists?

Analyse your existing supplier base

Produce a list of the suppliers for each product area. Evaluate them against a set of performance criteria. These might include price, reliability, responsiveness, delivery arrangements, use of quality systems, and product specification. How many suppliers do you need? Most organisations use far too many suppliers. The main causes of this are:

• the belief that being single-sourced is risky

• poor supplier performance forcing you to look for alternatives

• a growth in demand which cannot be met by an existing supplier

• the idea that competition between suppliers keeps the price down.

Having too many suppliers increases both the management task of controlling them and the associated administrative costs. Reducing the total and moving towards single-sourcing can produce such benefits as:

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• lower administration costs

• more time to manage each supplier

• an improvement in the relationship between you and the supplier

• more responsive problem solving, resulting from a greater understanding of difficulties and requirements

• better communication.

Categorise your suppliers with the aim of reducing the overall total

Use some criteria, such as underperforming, preferred and strategic. Look to working with each category to bring cost reductions to your business and to the supply chain. Those that are underperforming are likely to bring few improvement ideas to the supply chain. Each represents a cost in terms of negotiation time and servicing. A substantial reduction in their number will free up time to spend on more productive supplier activities. Enter into negotiations with preferred suppliers to explore the potential to reduce inventory, distribution, handling, and warehousing costs. Cost transfers may be negotiable in return for commitments to longer-term supply. Give consideration to your customers. Are you a preferred supplier or a strategic supplier to them? Have you discussed inventory, distribution, handling and warehousing costs with them? Have you been offered a commitment to long-term supply?

Investigate supply chain partnerships

Partnerships are the natural next level in the evolution of the supply chain. Partnerships allow organisations to work together to take advantage of market opportunities and to respond to customer needs more effectively than they could in isolation. Partnering means:

• sharing risk with others and trusting them to act in joint best interests

• a strategic 'fit' between partners so that objectives match and action plans show synergy

• finding complementary skills, competences and resources in partners

• sharing information which may have been privileged or confidential

• involving suppliers at the earliest stages of design of a new product.

Start with one particular supplier with whom you already have a good relationship or an emerging, forward-looking supplier.

Establish a partnering champion within your organisation - someone at senior level who will become responsible for laying the foundation of the partnership and making it work in the start-up phase.

The actions needed to move towards a partnership include:

• inviting participation to improve relationships and find mutual cost benefits

• encouraging the suggestion of ideas of benefit to both parties

• starting the process of developing trust.

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Set up a supply chain network

This stage involves broadening these partnerships to include your suppliers' suppliers and your customers.

A process map of the entire supply chain can help. Use this map to explore total costs and movements. Does the map identify any areas of wastage? Gaining real commitment from all members of the supply chain means that total costs can be kept to a minimum to the benefit of everyone. Allow plenty of time for a win/win scenario to emerge. Trust takes time to develop and can be quickly lost. Each organisation is responsible primarily for its own survival however and cannot always put the needs of others before its own.

Monitor the chain

Setting up a supply chain is only the first step. Ensuring that it operates as planned and delivers the benefits to all parties is a critical ongoing activity. Ensure that appropriate measures and indicators are analyzed on a regular basis to ensure that everything is working to plan, so that any shortcomings can be quickly identified and action taken if necessary. For example, delivery delays could be due to short-term problems, such as a strike at a port, or due to a potentially serious longer-term problem, such as materials shortages.

Performance indicators should help quantify the benefits of the chain in terms of reduced costs, reduced delivery times, improved quality, and reduced administration and, above all, improved customer satisfaction.

Managers should avoid

• forgetting to put your own house in order first

• ignoring areas of potential conflict

• entering into partnerships without the genuine commitment from senior management in each organization.


According to a report published by market research firm RNCOS in April 2010, titled 'Indian Food and Drinks Market: Emerging Opportunities' the Indian food and beverages market is expanding rapidly and is projected to grow at a compound annual growth rate (CAGR) of about 7.5 per cent during 2009-13 and would touch US$ 330 billion by 2013.

The food retail industry, currently at US$ 70 billion is predicted to grow more than double to US$ 150 billion by 2025, according to KPMG, a global audit and advisory firm. India's food retail industry is poised for exponential growth. With the evolution of innovative food processing capacity and the emergence of organized retail, change in consumption patterns along with fast changing demographics and habits is fuelling the next growth trajectory for the food industry in India.

The Indian fast food market is growing at an annual rate of 25-30 per cent; according to a report published by market research firm RNCOS in September 2010, titled 'Indian Fast Food Market Analysis'. Foreign fast food chains are aggressively increasing their presence in the country. For instance, Domino's has planned to open 60-65 outlets every year for the next three years (2010-2012) while Yum Brands Inc is also preparing for massive expansion across the country with plans to open 1000 fast food outlets by 2015.


Exports of agricultural products from India are expected to cross around US$ 22 billion mark by 2014 and account for 5 per cent of the world's agriculture exports, according to the Agricultural and Processed Food Products Export Development Authority (APEDA).

Exports of floriculture, fresh fruits and vegetables, processed fruits and vegetables, animal products, other processed foods and cereals stood at US$ 7,347.07 million in 2009-10, according to DGCIS annual data published by APEDA.

Moreover, India exported schedule products, floriculture and seeds, fruits and vegetables, processed fruits and vegetables, livestock products, other processed foods and cereals worth US$ 1.77 billion between April-June 2009-2010, according to APEDA.


The export of spices and spice-based value added products during April-August 2010 increased 13 per cent in volume and 19 per cent in value terms. The increase in dollar terms was 25 per cent. According to the latest estimates of the Spices Board, a total of 239,850 tonnes, valued at US$ 564.85 million, was exported as against 211,950 tonnes valued at US$ 450.50 million in April-August 2009.


The Indian Fisheries occupies third position in global scenario in terms of production of fish which is 4.4 per cent of global fish production. The contribution of fisheries sector is 1.10 per cent to the total GDP and 5.3 per cent to the agricultural GDP. Fishery sector has emerged as the largest group in agricultural export of India with quantity of 5.20 lakh tonnes and value of US$ 1.78 billion, respectively. The sector employs 14.0 million of the population.

Food Processing

In order to further grow the food processing industry, the Ministry of Food Processing Industries (MOFPI) has formulated a Vision 2015 action plan under which specific targets have been set. This includes trebling the size of the food processing industry, raising the level of processing of perishables from 6 per cent to 20 per cent, increasing value addition from 20 per cent to 35 per cent, and enhancing India's share in global food trade from 1.5 per cent to 3 per cent.

The cumulative FDI received by the food processing industry from April 2000-September 2010 stood at US$ 1,102.03 million, according to data released by the Department of Industrial Policy and Promotion (DIPP).


According to a report published by market research firm RNCOS in August 2009, titled "Indian Non-Alcoholic Drinks Forecast to 2012", the Indian non-alcoholic drinks market was estimated at around US$ 4.43 billion in 2008 and is expected to grow at a CAGR of around 15 per cent during 2009-2012.

As per the report, the fruit/vegetable juice market will grow at a CAGR of around 30 per cent in value terms during 2009-2012, followed by the energy drinks segment which will grow at a CAGR of around 29 per cent during the same period.

Major investments

Some of the major investments in the industry are:

Chennai-based FMCG Company CavinKare is planning to invest around US$ 109.50 million over the next two years in various expansion plans, including a Greenfield facility for namkeen at Thane, cool drinks in the North and others.

Nestle, the fast moving consumer goods major, plans to invest US$ 50.49 million to set up its first research and development (R&D) centre in India at Manesar in adjoining Gurgaon district. The facility will be made operational by July 2012.

Packaged consumer goods company GlaxoSmithKline Consumer Healthcare (GSKCH) plans to invest over US$ 64.87 million on repositioning milk food drink Horlicks as the company's umbrella brand.

Yum! Restaurants India, the operator of the Pizza Hut, KFC and Taco Bell restaurant chains, plans to invest US$ 100 million to more than treble the number of eateries it operates across the country to 1,000 by 2015, said Niren Chaudhary, Managing Director, Yum! Restaurants India.

Field Fresh Foods, joint venture of the Bharti Enterprises and Del Monte Pacific Ltd, has inaugurated their Research and Development and manufacturing facility in Hosur, Tamil Nadu at an investment of US$ 25.93 million.

Agri solutions provider Buhler India plans to invest US$ 22.55 million in an integrated manufacturing unit and other expansion projects in the next four years, in line with its plans to achieve US$ 225.49 million turnover by 2014.

Soft drinks and snacks major PepsiCo is planning to invest US$ 500 million in India in the next two years.

Atlanta-based Coca Cola Company plans to invest up to US$ 120.75 million to set up a new bottling plant in Karnataka, India.

Government Initiatives

The Centre has announced a series of new initiatives which include a separate policy at the state level, thrust on contract farming and making the sector tax-free.

The government plans to open 30 mega food parks by the end of the 11th Five Year Plan (2007-2012).

In the Union Budget of 2010-11, the government has announced setting up of five more mega food park projects in addition to the ten already being set up. Moreover, external commercial borrowing will be made available for cold storage or cold room facility including for farm level pre cooling, for preservation or storage of agriculture and allied produce, marine products and meat.

As per information published on MOFPI

Income Tax rebate is allowed, 100 per cent of profits for 5 years and 25 per cent of profits for the next 5 years, for new industries to process, preserve and package fruits and vegetables.

Excise duty on ready to eat packaged foods and instant food mixes has been brought down to 8 per cent from 16 per cent.

Excise duty on aerated drinks has been reduced to 16 per cent from 24 per cent.

Looking ahead

According to an industry body and E&Y study on the Indian food industry called 'Flavours of Incredible India - Opportunities in the Food Industry', published in October 2009, investment opportunities in the Indian food industry are set to shoot up by a huge 42.5 per cent to US$ 181 billion in 2015 and to US$ 318 billion by 2020.

Exchange rate used: 1 USD = 46.95 INR (as of August 2010)

(Case Analysis of PeopleSoft.Inc has been done)


In this modern world with the abundance of technologies and the Internet, each business must cope up with fast paced trend to be able to survive competition. The food industry is not an exemption to this. Effective supply chain management is very important and critical to this industry because of the fact the food gets spoiled.

Big companies in the food industry like Nestle, Unilever, Magnolia, amongst others utilize an efficient SCM. They take advantage of the Internet to reach out to their end user-the customers to be able to get feedback and improve the quality of their products. The satisfaction or dissatisfaction of customers can directly be linked to the performance of the supply chain of the company. Each company changes their internal structure to welcome the e-Market place where everything can be done using modern technologies. Suppliers, wholesalers and distributors can easily be monitored here.

Why some companies lost a lot of money and even went on bankrupt when the food industry is one of the most profitable industries. Men continuously eat so there's no reason why the industry would lose its market. This is because of ineffective and incompetent SCM.

SCM is not only the management of the flow of goods or services and information from manufacturers until it reaches the customers, but it is a two way management of the flow of goods or services and information. The company is the one accountable for the goods or services delivered as it will be their brand name which the consumer will remember.

A consumer doesn't know who the suppliers of milk for his cheese nor do he cares who delivers it to the store from where he would purchase it; what matters to him is that he gets his cheese in the store when he needs it.

A consumer products company remains profitable if it has the right product at the right time and the right place. Achieving those three only happens when the entire supply chain works as one.


The garments industry in India is one of the best in the world. An extremely well organized sector, garment manufacturers, exporters, suppliers, stockists and wholesalers are the gateway to an extremely enterprising clothing and apparel industry in India. There are numerous garments exporters, garments manufacturers; readymade garments exporters etc. both in the small scale as well as large scale. 

In 2007 the world apparel market was worth US$345 billion and during the last decade the market grew at an average of 8 per cent per annum. Moreover, according to the Survey of Household Consumption levels in India, the per capita consumption of textiles for the year 2007 was 22.41 meters, a growth of 4.28 per cent and in value terms per capita expenditure on clothing grew by 8.07 per cent and 10.16 per cent in rural andurban areas respectively compared to 2006.

There had been a decline in the production of garments in developed countries primarily because of the relocation of production sites to low wage countries. As a result, world import of garments is mostly concentrated in developed countries. The US alone accounts for 27.2 per cent of the world imports of readymade garments in the year 2007 followed by Germany, UK, Japan, France, Hong Kong, Italy and Belgium together accounting for more than 75 per cent of imports.  

As regards exports from India, USA accounts for 30.54 per cent of the total garments and separately in exports of knitwear and woven garments the share of USA is 29.84 and 31.07 respectively. In the case of India the other major destination of exports are UK, Germany, France, UAE, Italy, Netherlands, Spain, Canada, Saudi Arabia, Denmark, Belgium and Japan. During the period 2007 to 2008 USA, UK, Germany, France and UAE were the top five destination countries accounting for more than 65 per cent share of India's garments exports. For the same period, exports to UAE increased by 50.32 per cent while exports to USA declined by 3.27 per cent.

The buyers of readymade garment segment are aware of the running trends, and demand the newest in fashion and products at a reasonable cost. At the front position of this evolution are the smaller players, which private labels that are thoroughly transforming the dressing way of men, women and children. With the supply chain limitations eased, organization in real estate markets, and rationale tax structure, the readymade garment segment has become more lucrative.

(Case Analysis of Benetton has been done)


The apparel industry goes through a number of business challenges. Due to certain trends like fashion and consumer preferences, companies operating in the industry often encounter the issue on demand uncertainty. In order to address this, apparel businesses utilize the concept of product variety. This technique however, would require certain activities such as production systems, forecasting and inventory management. This then emphasizes the need for the apparel industry to employ innovative systems to manage and handle its supply chains. Traditionally, the supply chain approach of apparel establishments is made up of the formation of inventories for raw materials, work processes and finished products. (1998) stated that with the traditional supply chain approach, apparel companies tend to react slowly to changing consumer trends as they establish similar inventory levels for both volatile and non-volatile goods. However, the development of SCM systems through innovative and more advanced tools allowed apparel companies to acquire useful benefits.


  Through supply chain management, the information between business partners are optimized and collaborated; most importantly, SCM systems help in reducing inventories, which in turn can lessen operational costs, compress order cycle time, enhance asset productivity as well as increase the companies' responsiveness to the market. Aside from these benefits, the apparel industry is able to achieve quick response (QR) through efficient SCM practices. Quick response is a concept pertaining to the collaboration and sharing or information among manufacturers, suppliers and distributors, allowing them to respond more rapidly to the needs of the customers. Previous studies have noted that QR concept brought about by supply chain management is advantageous to the apparel industry as well as to fashion-oriented businesses.


The relevance of supply chain management to the apparel industry is high as various SCM-related activities and factors are observed in clothing companies. One of which is the involvement of raw material suppliers in an apparel business' supply chain. Manufacturers of clothing merchandise order and buy various yarns, fabrics and other textile mill products from suppliers so as to make their finish products. As most manufacturers would have to deal with multiple suppliers for their highly-diversified product lines, a system to manage the suppliers is an important strategy. Moreover, the SCM technique is essential for apparel manufacturers to keep track of suppliers who specialize in multiple types of raw materials.

A supply chain management system is also relevant to the apparel companies as this helps in keeping track of the suppliers, in terms of the quality of their services and supplies. This aspect is particularly important since suppliers have the tendency to the supply chain off balance. By means of analyzing suppliers and assessing their performance, the uncertainty on the supplies of raw materials will lessen; in addition, the inventory performance of the apparel companies will also be improved. By efficient information exchange and communication brought about by SCM, apparel companies can deal with supplier that suit their needs. Data on the suppliers' product stocks, costs, speed and reliability can be obtained through SCM; in turn better inventory performance and strong company-supplier relations can be established.

Another factor that relates the apparel industry to SCM is the companies' connection with the retailers. While some apparel companies distribute their products directly to consumers, most manufacturers utilize the services of the retailers. The application of an SCM system on the other hand helps in strengthening the relationship between both parties as well as in achieving positive business outcomes.  Considering that the apparel sector encounters the problem of demand uncertainty, SCM allows the companies to communicate with their retailers; this feature of the SCM enables them to forecast product demand jointly. The participation of the retailers with the SCM system of the company helps the apparel companies to obtain valuable consumer data such as end-customer demand levels; this will then help in reducing the manufacturers' errors in determining raw material and production volume.


            There are a number of supply chain management models introduced in order to explain the different activities involved in the SCM process. One of the known SCM models is the SCOR model, which was developed and promoted by the Supply Chain Council in 1996 as the standard model for cross-industry SCM. The development of this SCM model was done in participation of over 70 major manufacturing companies worldwide. It serves as a process reference model which combines three important business concepts, including reengineering, process measurement and benchmarking (1999). The main objective of this model is to support effective communication among companies operating in one or several industries.

The SCOR model is made up of four management factors that comprise the SCOR Project Road Map (2004). These factors include PLAN, SOURCE, MAKE and DELIVER. In the PLAN factor, processes that help in balancing the aggregate demand with the supply so as to meet set business regulations are involved. Business process that enables the procurement of goods or services so as to meet the planned and actual demand falls under the SOURCE factor. The MAKE factor on the other hand, is focused on activities that transform goods into finished products in order to meet the planned or actual demand. Activities such as warehouse management, order management as well as transportation and installation management are considered the DELIVER factors; in general, these processes incorporate all processes that produced the finished products or services.


            In order to apply SCM practices, the utilization of information and communication technologies (ICT) is typically done. As ICTs have been implemented in the business industry, organizations have attempted to implement them on various operational processes. In supply chain management, information technology plays a number of significant roles. For instance, noted that ICT is applied to SCM so as to provide data visibility and availability. In addition, ICT also enables the development of a single contact for information, which in turn, facilitates decision-making. Furthermore, computer systems for SCM also have analytical features that are useful when managerial decisions are needed. Supply chain partners are also able to collaborate effectively through ICT. Information technologies allow information-sharing among supply chain partners that helps reduce transaction frictions and costs.

ICT-based SCM systems enable business firms to perform mass production of goods with greater quality at a lesser time. Interacting with external partners has also improved significantly due to intranet systems and e-commerce platforms. Through the establishment of communication networks, manufacturers, suppliers and consumers are able to interact efficiently. Aside from these, handling valuable data becomes less tedious and costly as ICT systems allow automatic information gathering and processing. The performance of autonomous actions through ICT machineries helps in reducing human work load and effort. Moreover, the use of ICT in business has been critical to management due to other important benefits such as increased responsiveness to customer demands, lower order cycle times as well as higher business profitability. Indeed, knowledge transfer through ICT has been a significant source of competitive advantage for several companies.

Presently, various information and communication technologies are made available to business owners, from less-sophisticated to more advanced systems. The introduction of internet in SCM is among the important elements of this aspect's evolution. In particular, internet utilization facilitated the ease of interaction between business and business partners (B2B) and consumers (B2C). Through the internet, online deliveries, information searches as well as mass customization are all made available to the customers. Manufacturers, suppliers and distributors on the other hand, benefit from internet utilization through well-coordinated information sharing. Online auctions are even made possible with this breakthrough (2000). 


            While the implementation of SCM systems along with the utilization of ICT has been advantageous to many companies, some establishments are hesitant on applying this strategy. This tendency has been stressed further by researchers claiming that supply chain management and its benefits should not be taken in general.

            Some firms are hesitant on implementing advanced technology with their supply chain operations. This is mainly due to the companies' inability to see the benefit of online business transaction when this activity can be conducted through phone. This finding is somewhat correlated to the financial demands of implementing ICT for supply chain management. As some organizations would have to purchase and install new technologies to replace their traditional SCM systems, business owners are not as willing to use ICT for SCM enhancement, despite their awareness of its advantages.

As internet is used for electronic-based SCM, businesses become more exposed to internet related security issues. One of which is relevant to information system privacy where some people sell private or personal information through the internet. This security issue is brought about by purchases or transactions made online. With online access, profiles containing various information, from the user's activities, interests, location and contacts, can easily be acquired and sold to anyone who needs it for whatever purpose. Aside from customer information, company data may also be obtained illegally, putting the organization to a greater disadvantage. There is another common security challenge is the computer virus, which can be obtained from programs downloaded, e-mails and other online means of interaction. Although there are readily accessible methods to address these security problems, additional costs and preparations will have to be allotted to address them.

The researchers identified the different factors that hinder businesses from implementing ICT in their supply chain management systems. The results included financial costs, lack of standards as well as resistance among distributors, manufacturers and customers. Furthermore, some trading partners are unprepared for this advancement. Some firms also stated that their businesses do not need such technologies. From these factors, it can be said that one major limitation of electronic SCM is that ICT cannot be readily applied. The business would have to analyze its needs and resources first before it can be implemented. As some organizations lack the technical knowledge or financial resources to support ICT-based SCM systems, some businesses are not as willing to apply this strategic option.


Unpredictable demand and short-lived products are the hallmarks of the world market for apparel. Demand for fashion apparel, being a function more of taste than of objective consumer needs, long range forecasts tended to be highly inaccurate. Demand for many products like fashion garments, shoes, sportswear is highly seasonal, fluctuating and often hard to predict. Thus resulting shortages (stock outs) represent lost sales opportunities and surpluses result in lost revenues consequent to successive reductions (markdowns), often to a point below the cost of production. Thus "first time right quality", timeliness and frequent delivery of small lot sizes with a short lead time are the key success factors for any supplier country.


It is clear from the readings that the in order to win the battle against our competitors, we need to continuously find a way to deliver the desired products to the customers as quickly as possible and also efficiently as compared to competitors. Also, I have learnt that the Supply Chain Strategy adopted may vary from industry to industry as well as from firm to firm. The study provided me with an understanding that profitability of all the members of the supply chain s to be considered to be successful in the long run.