Supply Chain Management Assignment Management Essay

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.

To compete successfully in today’s market, the companies must have effective and efficient supply chain network.

Due to globalisation and expanding of multinational companies the supply chain network has become crucial for the success of the Organisations. Technological changes had brought the cost factor for information flow quite low thus increasing the flow of information and coordination among the members of the supply chain network.

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Supply chain management is the backbone of business in global and competitive world market. Supply chains are increasingly becoming more complex and dynamic. The success of the business often depends on the success of your supply chain. A leaner supply chains enabling through process and IT related interventions in planning, execution and collaboration are indeed the need of modern retail companies.

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Designing of Supply Chain

The following activities are considered for designing of Supply chain network:

Strategic

Tactical

Operational activities.

Strategic

Strategic network optimisation. It includes the number, location and size of warehousing, distribution centers and facilities.

Creating reliable partnership with suppliers and distributors. Right and useful exchange of information and feedback system.

Product life cycle management.

Modern Technology for designing and executing supply chain operations.

Decision regarding outsourcing or manufacture, and selection of source of supply.

Ensuring supply strategy in align with organisational business strategy.

Tactical

Purchasing and source of supply selection.

Production planning and scheduling, decision to outsource or in house manufacturing.

Decision in regard to Inventory and warehousing facilities.

Transportation strategy.

Meeting the quality standard and services of competitors by implementation of best practices.

Scheduling of Payments.

Keeping customer demand in mind.

Innovative marketing techniques and new launches.

Operational

Production and distribution schedules.

Forecasting of demand and coordination with suppliers and distributors.

Sourcing and planning of material.

Inbound operations, including transportation from suppliers and receiving inventory.

Production operations, inventory consumed and finished product.

Transportation and warehousing management.

Ordering at right time and proper accounting.

Inventory control.

Quality control system.

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Supply chain management is getting the right things to the right places at the right times, for profit. New information and communications technologies have revolutionised today’s supply chains making them extraordinary better, faster and cheaper.

The Cigarette supply chain involves a process from buying tobacco leaf to turning into smoke by customers. Procurement through farmers or government cooperatives or auction, proper storing, processing and transportation activities form the critical process of the system..

COMPONENTS OF THE SUPPLY CHAIN

The cigarette consists of:

Filter made of 95% cellulose acetate.

Tipping paper to cover the filter.

Rolling paper to cover the tobacco.

Tobacco blend.

Sourcing the right tobacco

The tobacco crop will be procured through auctions and farmers based on customers demand, orders from the regions, processing plant and logistics. Procurement managers and his staff go to various tobacco growing villages and remote areas to buy tobacco leaf. The staff is always in touch with the product development people, sales team support and farmers. The tobacco leaf are stacked in piles and stored in warehouses.

Sufficient inventory of variety of tobacco leaf is maintained to meet off-season customer needs, it helps to provide the preferred product all round the year.

Procurement process

The procurement of tobacco leaf is directly done from farmers or Government cooperatives. The product is delivered to warehouses and the payments are made to the farmers or government cooperatives. The material is sourced from various sources. The procurement process is fully linked to MIS system and proper resource planning, supply sourcing, negotiation, order placement, storage and quality assurance are carried out. The other raw material like paper filters, packaging and chemicals etc. needed are bought from the short listed vendors after proper validation.

Leaf utilisation

Leaf utilisation competence is critical to meet and exceed customer specifications. Our well trained classification team is adept in consistently delivering homogenous blocks based on physical, chemical and smoke parameters with a sound understanding of supply demand dynamics and over all utilization requirements. The leaf utilisation team works for optimizing the efficiency and reduce the cost.

Warehousing

The warehousing facilities are of international standards for phytosanitary, hygiene and infestation control. We manage our customers’ inventory and facilitate just-in-time delivery.

To enhance shelf life of processed tobacco the warehouse are cooled refrigerated storage facility, which maintains controlled humidity and temperature. Sufficient stock of quality leaf is maintained to meet the off season demand for preferred product type.

The systems and procedures are conforming to all quality and service specifications, which are supported by an ERP system. It helps in proper accounting and inventory control.

Processing

The state of art technology, modern electronic controls and instrumentation with feedback loops, high quality control enables a consistent product. The plant is fully automated and air-conditioned to ensure leaf-opening quality, right threshing, low curl redried product, good density and accurate weights in packed cartons.

The rolling of cigarette sticks, also known making process and packing process are fully automatic. Cigarettes are categorized in different segment based on filter or non-filter type, cigarette length, circumference, pack style, filter length and cigarette placement. Finished products are supplied from factory to warehouses using road and rail transportation.

Logistics

Logistics is a key activity for a quality of supply chain solutions that we provide to the customer. The logistics is the value chain partner for the customer and has been serving various, delivering in accordance to customer specifications. The logistics is designed for committed to drive the philosophy of “On Time in Full”. It is important to deliver right product at right time.

Transportation

Pull vs. Push Systems:

The product are delivered to final destination i.e. customer by Pull and Push system approach. In Pull system, which is based on sales forecast the product is delivered from factory to distributing centre. The delivery of product from factory based on actual demand is done forp Push system.

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In a Push system, as the product is based on sales forecast, the forecasting has to be correct and accurate otherwise it can lead to storage of product at distribution point leading to extra cost for storing and relocation. It lead to losses and increases inventory at particular place.

Increased stock level

Increases cost at Distribution centre for storing and selling.

Higher stock transfer rates.

The logistics and supply chain has a tremendous impact on revenue as direct customer dealing and huge cost related with transportation and storage is associated with it.

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Distribution Channel

C&FA Agent (Carry and forward agent)

C&F agent is important link in supply chain. He receives fixed amount for his services. The stock is stored at their godowns. He performs the following functions:

Receives goods from the factory and updates the SAP.

Prints out Invoices/Delivery Orders.

The deliveries are made according to the deliver summary which he gets from the branch everyday.

Physical stock reconciliation is done every evening and a record of it is kept on a board.

Maintenance of the godown according to the prescribed norms.

Wholesale Distributor

Wholesale distributor is intermediary between the company and retailer.

Distributes product to retailer.

Maintain sufficient stock level

Maintain infrastructure like warehouse, sales/ distributing team, MIS system.

Information System

MIS system is the backbone of supply chain management. SAP and ERP are used for the

effective and efficient control of information. Computers and internet based Information

Technology system is used to get the feedback from factory, customers, retailers and

warehouses. Information is the driver that serves as nervous system to create a coordinated

Information must have the following characteristics to be useful:

Information should be accurate.

Information should be accessible in a timely manner.

Information must be of the right kind.

Information provides the basis for supply chain management decision like:

Inventory Transportation.

Facility.

Supply chain risk management

Supply chain risk management forms the link between the organisation, customers, suppliers and business environment: it reduces dependency and promotes synergy.

Supply chain risk refers to an uncertainty or unpredictable event affecting one or more of the parties within the supply chain or its business setting, which can (negatively) influence the achievement of company’s business objectives.

Supply Chain Business Process Integration

The integration of various business activities effectively is very important for success of supply chain. The purchasing, production, storing, warehousing, marketing and transportation, distribution and suppliers activities are interlinked and for proper coordination it has to be integrated into information system. Flow of right and useful information is important for reliable and efficient supply chain management. Real time customer behavior feedback helps in forecasting customer demand and planning of production and distribution strategy.

Effective supply chain management needs efficient Information system which align and help you to execute your organisation plans with customers and suppliers, collaborate with in house system and outside contacts in real time for information and feedback, adapt to a dynamic environment, and measure performance to objectives.