2. SUPPLY CHAIN MANAGEMENT
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
Supply Chain Management encompasses the
planning and management of all activities
involved in sourcing, procurement, conversion,
and logistics management activities.
Parties involved.
3. STRATEGIC ALLIANCES
An alliance is cooperation or collaboration which
aims for a synergy where each partner hopes that
the benefits from the alliance will be greater than
those from individual efforts
4. TYPES OF STRATEGIC ALLIANCES
Third Party Logistic: 3PL is the use of an outside
company to perform all or part of the firm’s material
management and product distribution functions.
Retailer-Supplier Partnerships: It’s the formation of
strategic alliances between the retailers and their suppliers.
Distributor Integration: This appreciates the value of the
distributors and their relationship with the end users and
provides them with the necessary support to be successful.
6. Alliance type Decision maker Inventory New skills
ownership required by
vendors
Quick Retailer Retailer Forecasting
response skills
Continuous Contractually Either party Forecasting
replenishment agreed-to levels and inventory
control
Advanced Contractually Either party Forecasting
continuous agreed-to and and inventory
replenishment continuously control
improved levels
Vendor Vendor Either party Retail
managed management
inventory
7. REQUIREMENTS FOR RSP
Advanced information systems
Top management commitment
Information must be shared
Power and responsibility within an organization
might change.
Mutual trust
Information sharing
Management of the entire supply chain
Initial loss of revenues
8. ISSUES IN RSP IMPLEMENTATION
Inventory ownership
Performance measures: Fill rate, inventory level,
inventory turns
Confidentiality
Communication and cooperation
9. ADVANTAGES OF RSP
Fully utilize system knowledge (retailer)
Manufacturer may predict demand better
Focus on retailing rather than logistics.
Reduce bullwhip effect (vendor)
Reduced inventory and/or increased service level
Ability to coordinate replenishments to different
retailers.
10. DISADVANTAGES OF RSP
Expensive advanced information technology is
required.
Supplier/retailer trust must be developed.
Supplier responsibility increases.
Expenses at the supplier often increase.
11. EXAMPLE
In 2003, Maruti produced 359,960 vehicles,
operating at a capacity utilization of 103%, against
the industry average of 57.8%.
Vendor management became an important area as
Maruti attempted to improve operational
efficiency.
Maruti procured components worth about
Rs.5,000 crores every year.
12. The company's top 10 vendors accounted for about
34 % of its aggregate purchases of components
from vendors in India.
Maruti was working on a 3.5% per annum
reduction in vendor prices by 2004-2005.
Maruti streamlined the sourcing and stocking of
materials and components through its Delivery
Instruction system, one of Suzuki's best practices.
13. This system provided details of Maruti's
component requirements for every 15 days, across
the different variants of the various models, to its
vendors.
Web initiatives helped Maruti to bring down
procurement time and costs.
