Description
Supply Chain Management and Logistics involves optimizing the delivery of goods, services and information from supplier to customer. An effective supply chain makes companies competitive and profitable. Information is essential to making optimal supply chain decisions because it provides the global scope needed to make optimal decisions. Information technology (IT) provides the tools together this information and analyses it to make the best supply chain decisions.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
429
Status of Supply Chain Management in India
M. Venkata Ramana Reddy
Associate Professor, Department of Mechanical Engineering, G.Narayanamma Institute of Tech. and Science,
Shaikpet, Hyderabad, India
Abstract: Supply Chain Management and Logistics
involves optimizing the delivery of goods, services and
information from supplier to customer. An effective
supply chain makes companies competitive and
profitable. Information is essential to making optimal
supply chain decisions because it provides the global
scope needed to make optimal decisions. Information
technology (IT) provides the tools together this
information and analyses it to make the best supply
chain decisions. Latest and the state of art
technologies and management tools ERP, CRM, and
SRM along with auto ID technique RFID have to be
used for improving the performance of Supply Chain
Management and Logistics in India.
Key words: SCM and Logistics, IT, CPFR, ERP,
CRM, SRM and RFID.
I. INTRODUCTION
Supply Chain Management has gained significant
importance in the 21
st
century. It is so because small
companies like Wal–Mart, Dell, and Amazon owe their
entire success to their agile and adaptive supply chain.
These were small companies virtually unknown not so
long ago and suddenly they became the most competitive
and admired companies on the stock bourse. However
some Indian companies are moving towards making their
supply chain and logistics efficient, most of them have
done very little or nothing. If companies choose to
compete in the global environment, they will have to
look for ways to reduce expenditures of their suppliers
and channel partners, logistics or distribution partners.
This reduction in cost will leads the revamping of supply
chains and significant investment in information
technology, because information technology tools and
techniques plays very important role in improving the
status of the SCM.
1.1 SCM and Logistics defined
The Council of Logistic Management (CLM) (2000)
defines SCM as “the systematic, strategic coordination of
the traditional business functions and tactics across these
business functions within a particular organization and
across business within a supply chain for the purpose of
improving the long term performance of the individual
organizations and the supply chain as a whole”.
II. LITERATURE SURVEY
The traditional protective economic, industrial and
organizational boundaries have been demolished. To
compete successfully today„s marketplace, organizations
need concurrently to manage effectively and efficiently
the activities of design, manufacturing, distribution,
service and recycling of their products and services to
customers.
The size of the Indian logistics market is estimated as
US$ 14.31 billion in 2004 and is expected to grow to
US$19.54 billion in 2009. The logistic cost as percentage
of the gross domestic product (GDP) stood 13% in India
in 2004. Close to 22% of the aggregate sales, amounting
to US$ 25 billion is tied up in inventories in the supply
chain network countrywide. Indian organizations are
looking for collaboration with supply chain partners to
cope up with the increasing uncertainty of supply
networks, globalization of business proliferation of
product variety and shortening of product life cycles.
According to Lee „top performing supply chain
possesses? three very different qualities. They are –
1. Agility
2. Adoptability and
3. Alignment
The above qualities cannot be attained without
collaboration, optimization and connectivity.
The recent technological advances in IT have made it
possible to make supply chain lean and thin. Holistically
speaking, without IT systems in place, no supply chain
could be agile nor could adapt and align fast to the
changing business needs.
III. IT TOOLS AND TECHNOLOGIES
Information is essential to making supply chain and
logistic decisions because IT provides the global scope
needed to make optimal decisions. Best in class
companies world wide have successfully used
sophisticated IT systems to streamline process and enable
effective decision making. The information necessary to
achieve global scope, corresponding to the different
stages of the supply chain as 1) supplier information 2)
manufacturing information 3) distribution and retailing
information and 4) demand information.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
430
According to the Zillur Rehman?s paper, in a survey
of India that most popular use of IT is in transportation,
followed by order processing, managing vendor relations,
purchasing/ procurement and customer services.
Information technology in accessing real time
information regarding product availability, inventory
level, shipment status and product requirements, thereby
improving supply chain efficiency . Also for designing
the appropriate network structures, best practice
companies are moving from traditional rule of thumb to
using advanced IT tools and technologies.
3.1 Collaborative Planning Forecasting and
Replenishment (CPFR)
CPFR model was developed by SCOR (Supply Chain
organization) and “at its essence, CPFR is a set of
business processes that helps eliminate demand and
supply uncertainty through improved communication
between supply chain trading partners”. Nine CPFR is a
model to develop collaboration and this to happen there
should be a complete integration between manufacturer,
their suppliers, shipper, and logistics partner. The
primary benefit of integration is that all business units
and supply chain partners share the same data,
synchronize action and minimize distortions and
bullwhip effect in demand management”. This
integration would require technology platforms such as
ERP, SRM or CRM platforms or legacy systems
connected through web service.
3.2 Enterprise Resource Planning (ERP)
ERP provides the transactional tracking and global
visibility of information from any part of a company and
its supply chain that allows intelligent decisions to be
made. This real time information helps a supply chain to
improve the quality of its operational decisions. This
ERP software has been successful in improving data
integrity within the supply chain.
3.3 Customers Relations Management (CRM)
In the changing Global environment, increasing
customer satisfaction is one of key success factors in all
industries so also in supply chain management. So it is
very much essential to make all policies keeping in view
customer and availability of technology. In traditional
method of CRM, phone, paper, personal interaction etc
are used for communication and relationship. But with IT
enabled SCM with CRM software can store customer
details, while making transactions with the customer
monitors buying and behavior of decision of different
customers minimize internal fault, help in the automation
process, automatic tracking and response, bill finalization
and analysis of communication pattern.
3.4 Supplier Relation Management (SRM)
Supplier Relation Management is to streamline and
make more effective the process between an enterprise
and supplier. SRM includes both business practices and
software and is a part of the information flow component
of SCM. According to the proponents, the use of SRM
software leads to lower production costs, higher quality
but lower priced end product.
3.5 Electronic Supply Chain (E-Supply Chain)
With the quick development of Electronic commerce,
SCM can be made more effective through electronic
means. For instance through web site each member in the
chain can access the shared database.
E-Supply chains can be designed and studied through
a systematic approach, which considers the various levels
at which information technology can be applied in a
traditional supply chains.
3.6 Integrated supply chain network
An integrated supply chain network is a group of
independent companies, often located in different
countries, forming a strategic alliance with the common
goal of designing, manufacturing, and delivering right-
quality products to customer groups faster than other
alliance groups and vertically integrated firms. The
structure of an integrated supply chain network held
together by a logistics and information network is shown
in Figure. Such an integrated supply chain provides the
basis for application of various information technologies
that transformed it into e-supply chains.
Figure: Integrated Supply Chain Network
3.7 Radio Frequency Identification (RFID)
Radio Frequency Identification is a type of automatic
identification system. The purpose of RFID system is to
enable data to be transmitted by a portable device called
tag, which is read by RFID reader and processed
according to the needs of a particular application.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
431
The data transmitted by the tag provides
identification or location information or specifies about
the product tagged, such as price, colour date of purchase
etc.
A basic RFID system consists of three components
namely an antenna or coil, a transceiver, and a
transponder (RF tag) electronically programmed with
unique information.
The antenna emits radio signals to activate the tag and
read and write data to it. Antennas are the conduits
between the tag and transceiver, which controls the
system data acquisition and communication. When an
RFID tag passes through the electronic magnetic zone, it
detects the readers activating signal. The reader decodes
the data encoded in the tag?s integrated circuit and it is
passed to the host computer for processing.
Wal-Mart has successfully tested the technology with
the top 100 suppliers, it is now taking steps to expand roll
out of the new technology across other suppliers and
stores.
In India very few companies are implementing this
technology. Because of the high cost of implementation
of the system, most of the Indian companies are not in
favour of RFID technology. This high cost is associated
with retooling, extensive partner relationship across
channel members particularly, manufacturers and
retailers. In future, with a prospect of cost effectiveness,
RFID may be put to use extensively.
3.8 Web Services
Not all companies can afford to deploy the recent
ERP, SRM, CRM and other software modules as these
are expensive and because replacing the legacy ones
entail huge cost and effort. However, it is necessary to
integrate the old traditional system with the company and
supplier and other channel partners. The web services do
exactly that to integrate the old legacy system with one
another thus saves cost on the deployment of the costly
new IT systems.
IV. PROBLEMS TO OVERCOME IN IMPROVING
PERFORMANCE OF THE SUPPLY CHAIN
MANAGEMENT
4.1 High cost of Supply Chain: The Indian industry
spends an exceptionally high amount of 13% of its GDP
on logistics and 22% of the aggregate sales are tied up in
inventories.
4.2 Inadequate infrastructure scenario required for
efficient Supply Chain: The fifth largest country in terms
of gross national product (GNP) and purchasing power
parity, consumer base of over a billion people (Centre for
Monitoring Indian Economy, 2000), India is the fastest
growing market in the world.
4.3 Inadequate investments in IT: Though India is a
leading exporter of IT products, Indian companies are
unfortunately least inclined to use them. Hence, the IT
penetration in India is low. This is not surprising that
Indian companies are 1.3% of the gross sales. For
companies that use IT systems, there seem to be a clear
bias towards using stand-alone IT systems. Using these
systems would mean that collaboration would be low as
these stand-alone systems are not friendly when it comes
to implementing recent supply chain models like CPFR,
VMI etc. in the present scenario the supply chain around
the world is On-Demand, using technology such as
internet, mobile, wireless, RFID etc, whereas Indian
supply chain is still to come out of this slumber.
4.4 Lack of proper logistic infrastructure: Country wide
infocomm B2B network, and poor conditions of roads
results in capital being tied up in huge stock piles of
obsolete goods both in terms of moving inventory as well
as at the factory site, and lack of professionally
competent logisticians.
V. WAYS AHEAD OF IMPROVING THE SCM
5.1 Investment in IT
If the Indian companies are to adopt global supply
chain standards and benchmarks against the global
companies there is a long way ahead. In addition, this
way starts with investment in information technology.
This investment will go towards making companies
connect with suppliers and partners. This connectivity
will improve the visibility in the chain and thus
collaboration can take place with partners. This
collaboration will make the supply chain agile and align
itself to the changing market demand.
5.2 Leverage IT Capabilities
The IT talent is not hard to find in India and Indian
companies can use it to their advantage. They can
employ trained IT engineers at lower cost as compared to
the counterparts in other countries and thus become
competitive.
5.3 Align Supply Chain Strategy with Business Strategy
So far, Indian companies have marketing, personnel,
accounts and other departments but no supply chain
department to speak of little. Purchase or procurement
section has more or less carried out the supply chain and
logistic functions. These departments however are not
aligned to follow supply chain as a strategic area and are
often not in harmony with other departments or with
partners. Now the time is ripe to align competitive
advantage, increase profitability, and market share in
these challenging times.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
432
5.4 Collaborative Product Development (CPD)
Is a business strategy, work process and collection of
software application that facilitate different organizations
(may be partners or competitors) to work together on
development of a product and thus saves costs.
Coming up with new products is time
consuming. This can be done by CPD.
The major benefits of CPD:
1. Acceleration of time to market provides improved
customer satisfaction, greater profit potential and
gain in market share.
2. Reduces costly design flaws and improves quality
and reduces time to market the products.
3. Effective data sharing ‘any time any place’ keeps
everyone on the same page, eliminating costly errors
and delays.
4. Effective communicative capabilities help ensure
that right information reaches the right person in
right a way.
5.5 As mentioned obstacles in 4.4, if those systematic
obstacles are overcome, significant benefits can be
reaped through the multiplier effect of logistics in all
economic sectors.
5.6 Potential savings for India - is possible if logistic
costs decreases by 1%, approximately $ 4.8 billion per
year as Indian GDP is 480 billions( Indian logistic cost
per GDP is 13%).
VI. CONCLUSIONS
Effective Supply Chain Management and Logistics
contributes to competitive advantage to organizations.
This paper conveys the conceptual idea of SCM and
Logistics as well as importance of information
technology tools and technologies for improving the
performance of SCM and Logistics in India. To achieve
this improved performance, organizations should focus
on applying techniques which offer a strategic
opportunity for companies to gain an increase in revenue.
This is possible by refocusing on integrating IT with
supply chain management and Logistics The desired
technology platform can capture enterprise-level data and
deliver information to support the specific needs of their
global manufacturing or distribution. Organizations must
realize that they must harness the power of IT to
collaborate with their business alliances.
Business organizations must offer more value for less
money by utilizing the latest innovative technologies to
achieve continuous quality improvement by being highly
cost effective. In their search for excellence, the leading
business organizations of the world are using SCM,
which employs the latest and state-of-the-art IT
technologies and tools.
This leads to the much sought after cost effectiveness
by exploring leading-edge use of information technology
in supply chain integration. Hence, to succeed in today?s
global marketplace, Indian organizations must look at
streamlining their supply chain through the successful
deployment of information technology.
Many management gurus believe that India has the
potential to emerge as the economic super power of the
world in the near future. In order to achieve this status,
the Indian business organizations must strengthen their
practices learning a lesson from the global counterparts.
The day is not far when Indian professionals will
combine their expertise in IT with applications in SCM
and Logistics to emerge as winners.
REFERENCES
[1] Arshinder, Kanda, A., Deshmukh, S.G., 2008. “The supply chain
Coordination: perspectives, empirical studies and research
directions” international journal of production economics 115,
316-335.
[2] Arshinder, Kanda, A., Deshmukh, S.G., “Supply chain
Coordination issues: an SAP-LAP framework”, Asia pacific
journal of marketing and logistics, vol 10 no3 2007 pp 240-264
[3] “Basics of Supply Chain Management” by Lawrence
D.Fredenedll, Ed Hill, The St Lucia press/ APISC series on
Resource Management
[4] Bentit M.Beamon, “Measuring Supply Chain Performance and
Production Management,1999,vol-19, no:3 pp.4-16.
[5] B.S. Sahay and Ramaneesh Mohan, “The Supply Chain
Management Practices in Indian Industry”, International journal
of physical distribution of Logistic Management 2000, vol: 33, no
7 , pp582-606.
[6] David Simchi-Levi, Philip Kaminsky, Edith Simchi-Levi (2000).”
Designing and Managing the Supply Chain.” Burr Ridge, IL: The
McGraw-Hill Companies, Inc
[7] Lee I Hau “The triple a supply chain”, Harvard Business Review,
October 2004.
[8] Min.S, and Mentzer.J.T, “Developing and Measuring Supply
Chain Concepts”. Journal of Business Logistics 2004, Vol 24
No1.
[9] R.P Mohanty, S.G. Deshmukh, “Essentials of Supply Chain
Management”, 2004, Jaico publishing house.
[10] Sanjay Upendram, kaushika Madhavan, Arun Krishnan
“Competitive Automotive Supply Chains in India” white paper,
2004, November, in souvenir, Indian Institute of Materials
Management, Supply Chain expo 2005.
[11] Sunil Chopra and Peter Meindl “Supply Chain Management:
Strategy, Planning and Operations”. Pearson Education Pvt.Ltd.,
India.
[12] “Understanding the E Supply Chain Design and Future trends”,
N.Viswanadham and Roshan Gaonkar, The Logistic Institute-
Asia Pacific, National University of Singapore.
[13] “Understanding the Supply Chain Management: Critical Research
and Theoretical framework” L.J.Cheny and A.paulraj,
International Journal of Production Research, 2004, vol 42 No.1
[14] “Use of Internet in Supply Chain Management: A Study of Indian
Companies” Zillur Rehman, Industrial Management and Data
Systems, 2004, Vol: 104, No:1
doc_112186612.pdf
Supply Chain Management and Logistics involves optimizing the delivery of goods, services and information from supplier to customer. An effective supply chain makes companies competitive and profitable. Information is essential to making optimal supply chain decisions because it provides the global scope needed to make optimal decisions. Information technology (IT) provides the tools together this information and analyses it to make the best supply chain decisions.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
429
Status of Supply Chain Management in India
M. Venkata Ramana Reddy
Associate Professor, Department of Mechanical Engineering, G.Narayanamma Institute of Tech. and Science,
Shaikpet, Hyderabad, India
Abstract: Supply Chain Management and Logistics
involves optimizing the delivery of goods, services and
information from supplier to customer. An effective
supply chain makes companies competitive and
profitable. Information is essential to making optimal
supply chain decisions because it provides the global
scope needed to make optimal decisions. Information
technology (IT) provides the tools together this
information and analyses it to make the best supply
chain decisions. Latest and the state of art
technologies and management tools ERP, CRM, and
SRM along with auto ID technique RFID have to be
used for improving the performance of Supply Chain
Management and Logistics in India.
Key words: SCM and Logistics, IT, CPFR, ERP,
CRM, SRM and RFID.
I. INTRODUCTION
Supply Chain Management has gained significant
importance in the 21
st
century. It is so because small
companies like Wal–Mart, Dell, and Amazon owe their
entire success to their agile and adaptive supply chain.
These were small companies virtually unknown not so
long ago and suddenly they became the most competitive
and admired companies on the stock bourse. However
some Indian companies are moving towards making their
supply chain and logistics efficient, most of them have
done very little or nothing. If companies choose to
compete in the global environment, they will have to
look for ways to reduce expenditures of their suppliers
and channel partners, logistics or distribution partners.
This reduction in cost will leads the revamping of supply
chains and significant investment in information
technology, because information technology tools and
techniques plays very important role in improving the
status of the SCM.
1.1 SCM and Logistics defined
The Council of Logistic Management (CLM) (2000)
defines SCM as “the systematic, strategic coordination of
the traditional business functions and tactics across these
business functions within a particular organization and
across business within a supply chain for the purpose of
improving the long term performance of the individual
organizations and the supply chain as a whole”.
II. LITERATURE SURVEY
The traditional protective economic, industrial and
organizational boundaries have been demolished. To
compete successfully today„s marketplace, organizations
need concurrently to manage effectively and efficiently
the activities of design, manufacturing, distribution,
service and recycling of their products and services to
customers.
The size of the Indian logistics market is estimated as
US$ 14.31 billion in 2004 and is expected to grow to
US$19.54 billion in 2009. The logistic cost as percentage
of the gross domestic product (GDP) stood 13% in India
in 2004. Close to 22% of the aggregate sales, amounting
to US$ 25 billion is tied up in inventories in the supply
chain network countrywide. Indian organizations are
looking for collaboration with supply chain partners to
cope up with the increasing uncertainty of supply
networks, globalization of business proliferation of
product variety and shortening of product life cycles.
According to Lee „top performing supply chain
possesses? three very different qualities. They are –
1. Agility
2. Adoptability and
3. Alignment
The above qualities cannot be attained without
collaboration, optimization and connectivity.
The recent technological advances in IT have made it
possible to make supply chain lean and thin. Holistically
speaking, without IT systems in place, no supply chain
could be agile nor could adapt and align fast to the
changing business needs.
III. IT TOOLS AND TECHNOLOGIES
Information is essential to making supply chain and
logistic decisions because IT provides the global scope
needed to make optimal decisions. Best in class
companies world wide have successfully used
sophisticated IT systems to streamline process and enable
effective decision making. The information necessary to
achieve global scope, corresponding to the different
stages of the supply chain as 1) supplier information 2)
manufacturing information 3) distribution and retailing
information and 4) demand information.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
430
According to the Zillur Rehman?s paper, in a survey
of India that most popular use of IT is in transportation,
followed by order processing, managing vendor relations,
purchasing/ procurement and customer services.
Information technology in accessing real time
information regarding product availability, inventory
level, shipment status and product requirements, thereby
improving supply chain efficiency . Also for designing
the appropriate network structures, best practice
companies are moving from traditional rule of thumb to
using advanced IT tools and technologies.
3.1 Collaborative Planning Forecasting and
Replenishment (CPFR)
CPFR model was developed by SCOR (Supply Chain
organization) and “at its essence, CPFR is a set of
business processes that helps eliminate demand and
supply uncertainty through improved communication
between supply chain trading partners”. Nine CPFR is a
model to develop collaboration and this to happen there
should be a complete integration between manufacturer,
their suppliers, shipper, and logistics partner. The
primary benefit of integration is that all business units
and supply chain partners share the same data,
synchronize action and minimize distortions and
bullwhip effect in demand management”. This
integration would require technology platforms such as
ERP, SRM or CRM platforms or legacy systems
connected through web service.
3.2 Enterprise Resource Planning (ERP)
ERP provides the transactional tracking and global
visibility of information from any part of a company and
its supply chain that allows intelligent decisions to be
made. This real time information helps a supply chain to
improve the quality of its operational decisions. This
ERP software has been successful in improving data
integrity within the supply chain.
3.3 Customers Relations Management (CRM)
In the changing Global environment, increasing
customer satisfaction is one of key success factors in all
industries so also in supply chain management. So it is
very much essential to make all policies keeping in view
customer and availability of technology. In traditional
method of CRM, phone, paper, personal interaction etc
are used for communication and relationship. But with IT
enabled SCM with CRM software can store customer
details, while making transactions with the customer
monitors buying and behavior of decision of different
customers minimize internal fault, help in the automation
process, automatic tracking and response, bill finalization
and analysis of communication pattern.
3.4 Supplier Relation Management (SRM)
Supplier Relation Management is to streamline and
make more effective the process between an enterprise
and supplier. SRM includes both business practices and
software and is a part of the information flow component
of SCM. According to the proponents, the use of SRM
software leads to lower production costs, higher quality
but lower priced end product.
3.5 Electronic Supply Chain (E-Supply Chain)
With the quick development of Electronic commerce,
SCM can be made more effective through electronic
means. For instance through web site each member in the
chain can access the shared database.
E-Supply chains can be designed and studied through
a systematic approach, which considers the various levels
at which information technology can be applied in a
traditional supply chains.
3.6 Integrated supply chain network
An integrated supply chain network is a group of
independent companies, often located in different
countries, forming a strategic alliance with the common
goal of designing, manufacturing, and delivering right-
quality products to customer groups faster than other
alliance groups and vertically integrated firms. The
structure of an integrated supply chain network held
together by a logistics and information network is shown
in Figure. Such an integrated supply chain provides the
basis for application of various information technologies
that transformed it into e-supply chains.
Figure: Integrated Supply Chain Network
3.7 Radio Frequency Identification (RFID)
Radio Frequency Identification is a type of automatic
identification system. The purpose of RFID system is to
enable data to be transmitted by a portable device called
tag, which is read by RFID reader and processed
according to the needs of a particular application.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
431
The data transmitted by the tag provides
identification or location information or specifies about
the product tagged, such as price, colour date of purchase
etc.
A basic RFID system consists of three components
namely an antenna or coil, a transceiver, and a
transponder (RF tag) electronically programmed with
unique information.
The antenna emits radio signals to activate the tag and
read and write data to it. Antennas are the conduits
between the tag and transceiver, which controls the
system data acquisition and communication. When an
RFID tag passes through the electronic magnetic zone, it
detects the readers activating signal. The reader decodes
the data encoded in the tag?s integrated circuit and it is
passed to the host computer for processing.
Wal-Mart has successfully tested the technology with
the top 100 suppliers, it is now taking steps to expand roll
out of the new technology across other suppliers and
stores.
In India very few companies are implementing this
technology. Because of the high cost of implementation
of the system, most of the Indian companies are not in
favour of RFID technology. This high cost is associated
with retooling, extensive partner relationship across
channel members particularly, manufacturers and
retailers. In future, with a prospect of cost effectiveness,
RFID may be put to use extensively.
3.8 Web Services
Not all companies can afford to deploy the recent
ERP, SRM, CRM and other software modules as these
are expensive and because replacing the legacy ones
entail huge cost and effort. However, it is necessary to
integrate the old traditional system with the company and
supplier and other channel partners. The web services do
exactly that to integrate the old legacy system with one
another thus saves cost on the deployment of the costly
new IT systems.
IV. PROBLEMS TO OVERCOME IN IMPROVING
PERFORMANCE OF THE SUPPLY CHAIN
MANAGEMENT
4.1 High cost of Supply Chain: The Indian industry
spends an exceptionally high amount of 13% of its GDP
on logistics and 22% of the aggregate sales are tied up in
inventories.
4.2 Inadequate infrastructure scenario required for
efficient Supply Chain: The fifth largest country in terms
of gross national product (GNP) and purchasing power
parity, consumer base of over a billion people (Centre for
Monitoring Indian Economy, 2000), India is the fastest
growing market in the world.
4.3 Inadequate investments in IT: Though India is a
leading exporter of IT products, Indian companies are
unfortunately least inclined to use them. Hence, the IT
penetration in India is low. This is not surprising that
Indian companies are 1.3% of the gross sales. For
companies that use IT systems, there seem to be a clear
bias towards using stand-alone IT systems. Using these
systems would mean that collaboration would be low as
these stand-alone systems are not friendly when it comes
to implementing recent supply chain models like CPFR,
VMI etc. in the present scenario the supply chain around
the world is On-Demand, using technology such as
internet, mobile, wireless, RFID etc, whereas Indian
supply chain is still to come out of this slumber.
4.4 Lack of proper logistic infrastructure: Country wide
infocomm B2B network, and poor conditions of roads
results in capital being tied up in huge stock piles of
obsolete goods both in terms of moving inventory as well
as at the factory site, and lack of professionally
competent logisticians.
V. WAYS AHEAD OF IMPROVING THE SCM
5.1 Investment in IT
If the Indian companies are to adopt global supply
chain standards and benchmarks against the global
companies there is a long way ahead. In addition, this
way starts with investment in information technology.
This investment will go towards making companies
connect with suppliers and partners. This connectivity
will improve the visibility in the chain and thus
collaboration can take place with partners. This
collaboration will make the supply chain agile and align
itself to the changing market demand.
5.2 Leverage IT Capabilities
The IT talent is not hard to find in India and Indian
companies can use it to their advantage. They can
employ trained IT engineers at lower cost as compared to
the counterparts in other countries and thus become
competitive.
5.3 Align Supply Chain Strategy with Business Strategy
So far, Indian companies have marketing, personnel,
accounts and other departments but no supply chain
department to speak of little. Purchase or procurement
section has more or less carried out the supply chain and
logistic functions. These departments however are not
aligned to follow supply chain as a strategic area and are
often not in harmony with other departments or with
partners. Now the time is ripe to align competitive
advantage, increase profitability, and market share in
these challenging times.
International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, Volume 2, Issue 7, July 2012)
432
5.4 Collaborative Product Development (CPD)
Is a business strategy, work process and collection of
software application that facilitate different organizations
(may be partners or competitors) to work together on
development of a product and thus saves costs.
Coming up with new products is time
consuming. This can be done by CPD.
The major benefits of CPD:
1. Acceleration of time to market provides improved
customer satisfaction, greater profit potential and
gain in market share.
2. Reduces costly design flaws and improves quality
and reduces time to market the products.
3. Effective data sharing ‘any time any place’ keeps
everyone on the same page, eliminating costly errors
and delays.
4. Effective communicative capabilities help ensure
that right information reaches the right person in
right a way.
5.5 As mentioned obstacles in 4.4, if those systematic
obstacles are overcome, significant benefits can be
reaped through the multiplier effect of logistics in all
economic sectors.
5.6 Potential savings for India - is possible if logistic
costs decreases by 1%, approximately $ 4.8 billion per
year as Indian GDP is 480 billions( Indian logistic cost
per GDP is 13%).
VI. CONCLUSIONS
Effective Supply Chain Management and Logistics
contributes to competitive advantage to organizations.
This paper conveys the conceptual idea of SCM and
Logistics as well as importance of information
technology tools and technologies for improving the
performance of SCM and Logistics in India. To achieve
this improved performance, organizations should focus
on applying techniques which offer a strategic
opportunity for companies to gain an increase in revenue.
This is possible by refocusing on integrating IT with
supply chain management and Logistics The desired
technology platform can capture enterprise-level data and
deliver information to support the specific needs of their
global manufacturing or distribution. Organizations must
realize that they must harness the power of IT to
collaborate with their business alliances.
Business organizations must offer more value for less
money by utilizing the latest innovative technologies to
achieve continuous quality improvement by being highly
cost effective. In their search for excellence, the leading
business organizations of the world are using SCM,
which employs the latest and state-of-the-art IT
technologies and tools.
This leads to the much sought after cost effectiveness
by exploring leading-edge use of information technology
in supply chain integration. Hence, to succeed in today?s
global marketplace, Indian organizations must look at
streamlining their supply chain through the successful
deployment of information technology.
Many management gurus believe that India has the
potential to emerge as the economic super power of the
world in the near future. In order to achieve this status,
the Indian business organizations must strengthen their
practices learning a lesson from the global counterparts.
The day is not far when Indian professionals will
combine their expertise in IT with applications in SCM
and Logistics to emerge as winners.
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