20277585 supply chain management of amul and wal mart (1)

8/12/2019 20277585 Supply Chain Management of Amul and Wal Mart (1)

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ASSIGNMENT

SUPPLY CHAIN MANAGEMENT

TOPIC

SUPPLY CHAIN MANAGEMENT IN WAL-MART & AMUL


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WAL-MARTS SUPPLY CHAIN MANAGEMENT


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supply function.Wal mart used sophisticated bar-coded technology and hand held computersystems, managing the center became easier and more economical. Every employee hadaccess to real time information regarding inventory levels of all products in the center.

Logistics management

An important feature of wal marts logistics infrastructure is that it was fast and responsive

transportation system. The distribution centers were serviced by more than 35 company

owned truc!s. This vast fleet allowed the company to ship goods from distribution centers to

stores within two days and replenishes the stores shelves twice a wee!. Wal mart generally

moved the merchandise loaded trailers from the distribution centers to the retail stores

serviced by each distributing center. "etail stores were considered as customers by the

distribution centers. To ma!e the distribution process more efficient wal mart made use of a

logistics techni#ue !nown as cross doc!ing. $n this system the finished goods were directly

pic!ed up from the manufacturing plant of a supplier sorted out and directly supplied to

customers. The system reduced handling and storage costs.

Inento!" management

Wal mart had developed an ability to cater to the individual needs of its stores . %tores could choose

from a number of delivery plans . &or instance there was an accelerated delivery system by which

stores located within a certain distance of a geographical center would receive replenishment within

a day. Wal mart invested heavily in $T and communication systems to effectively trac! sales and

merchandise inventories in stores across the country . wal mart set up its own satellite

communication system in '()3 . wal mart was able to reduce unproductive inventory by allowing

stores to manage their own stoc!s, reducing pac! si*es across many product categories and timely

price mar! downs. $nstead of cutting inventory across the board wal mart made full use of its it

capabilities to ma!e more inventories available in case of items customers most wanted while

reducing overall inventory levels. Wal mart networ!ed its suppliers through computers. $t also helped

in identifying items which were low in stoc! and automated


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ordering. $t also made use of bar-coding and "&$+ to manage its inventories . it invested billion to build a retail lin!. y ma!ing efficient use of technology in all its operationswal mart successfully provides uninterrupted service to its customers suppliers stoc!holders and trading partners

Conc#$sion

The benefits of an efficient supply chain management included reduction in lead time

faster inventory turnover accurate forecasting increased warehouse space reduction in

safety stoc! and better wor!ing capital utili*ation. $t also helped in reducing the

dependency on distribution center management personnel resulting in minimi*ation of

training costs and errors. %toc! outs were also completely eliminated


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AMUL SUPPLY CHAIN MANAGEMENT PRACTICES

A/0 is a dairy cooperative in the western $ndia that has been primarily responsible,

through its innovative practices, for $ndia to become the world1s largest mil! producer.

The distinctive features of this paradigm involves managing a large decentrali*ed

networ! of suppliers and producers, simultaneous development of mar!ets and

suppliers, lean and efficient supply chain, and brea!through leadership.

Every day Amul collects 2, litres of mil! from .' million farmers , converts the

mil! into branded, pac!aged products, and delivers goods worth "s 4 crore "s 4

million6 to over 5, retail outlets across the country.

To implement their vision while retaining their focus on farmers, a hierarchical networ!

of cooperatives was developed, this today forms the robust supply chain behind

78&1s endeavors. The vast and comple9 supply chain stretches from small

suppliers to large fragmented mar!ets.

anagement of this networ! is made more comple9 by the fact that 78& is directly

responsible only for a small part of the chain, with a number of third party players distributors,

retailers and logistics support providers6 playing large roles. anaging this supply chain

efficiently is critical as 78&:s competitive position is driven by low consumer prices

supported by a low cost system of providing mil! at a basic, affordable price.

T%e ist!i'$tion net(o!)

Amul products are available in over 5, retail outlets across $ndia through its

networ! of over 3,5 distributors. There are 2 depots with dry and cold warehouses to

buffer inventory of the entire range of products.

78& transacts on an advance demand draft basis from its wholesale dealers

instead of the che#ue system adopted by other ma;or &87 companies. This practice

is consistent with 78&:s philosophy of maintaining cash transactions throughout the

supply chain and it also minimi*es dumping.


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Wholesale dealers carry inventory that is ;ust ade#uate to ta!e care of the transit timefrom the branch warehouse to their premises. This ;ust-in-time inventory strategyimproves dealers: return on investment "


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member-farmers. $n what follows we elaborate on these aspects in more detail andprovide a rationale for the model and strategies adopted by 78&.

Sim$#taneo$s +ee#oment o. S$#ie!s an C$stome!s, &rom the very early stages of the

formation of A/0, the cooperative reali*ed that sustained growth for the long-term was

contingent on matching supply and demand. The member-suppliers were typically small and

marginal farmers with severe li#uidity problems, illiterate and untrained. A/0 and other

cooperative /nions adopted a number of strategies to develop the supply of mil! and assure

steady growth. &irst, for the short term, the procurement prices were set so as to provide fair

and reasonable return. %econd, aware of the li#uidity problems, cash payments for the mil!

supply was made with minimum of delay. This practice continues today with many village

societies ma!ing payments upon the receipt of mil!. &or the long-term, the /nions followed a

multi-pronged strategy of education and support. &or e9ample, only part of the surplus

generated by the /nions is paid to the members in the form of dividends

Managing T%i! Pa!t" Se!ice P!oie!s,

/nions focused efforts on these activities and related technology development . The

mar!eting efforts were assumed by 78&. All other activities were entrusted to third

parties. These include logistics of mil! collection, distribution of dairy products, sale of

products through dealers and retail stores, some veterinary services etc. $t is worth notingthat a number of these third parties are not in the organi*ed sector, and many are not

professionally managed. =ence, while third parties perform the activities, the /nions and

78& have developed a number of mechanisms to retain control and assure #uality and

timely deliveries. This is particularly critical for a perishable product such as li#uid mil!.

Coo!ination .o! Cometitieness

8oordination is one of the !ey reasons for the success of operations involving such an

e9tensive networ! of producers and distributors at 78&. %ome interesting

mechanisms e9ist for coordinating the supply chain at 78&.

These mechanisms are>


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Inte!-#oc)ing Cont!o#

The ob;ective for developing such an inter-loc!ing control mechanism is to ensure that the

interest of the farmer is always !ept at the top of the agenda through its representatives who

constitute the oards of different entities that comprise the supply chain. This form of direct

representation also ensures that professional managers and farmers wor! together as a team

to strengthen the cooperative. This helps in coordinating decisions across different entities as

well as speeding both the flow of information to the respective constituents and decisions.

Coo!ination Agenc", Uni/$e Ro#e o. 0ee!ation

$ts ob;ective is to ensure that all mil! that the farmers produce gets sold in the mar!et

either as mil! or as value added products and to ensure that mil! is made available to

an increasingly large sections of the society at affordable prices

S$#ie! En%ancement an Net(o!) se!icing

Their ob;ective is to ensure that producers get ma9imum benefit and to resolve all their

problems. They manage the procurement of mil! that comes via truc!s ? tan!ers from

the @%s. They negotiate annual contracts with truc!ers, ensure availability of truc!s for

procurement, establish truc! routes, monitor truc! movement and prevent stealing of

mil! while it is being transported.


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20277585 supply chain management of amul and wal mart (1)

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