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‘Chain to Excellence’ Session

An Overview of 

 Supply Chain in FMCGSector

- Siva  09!!"9#9

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What is a Supply Chain?

All sta$es involve%& %irectly or in%irectly& in ful'llin$

acusto(er re)uest*

Sourcin$ Manufacturin$

+arehousin$ ,istri-utor

.lannin$

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Planning (Forecasting):

/,e(an% for pro%ucts an% services is usually uncertain

Forecastin$ is use% for

Short Range Forecast (0-1 yr)

.ro%uction an% operations plannin$

SCM 1Sourcin$& 2nventory& 3esources4

Mediu !er Forecast (1-" yr)

 Finance an% accountin$ 1-u%$ets an% cost controls4

#ong !er Forecast ($" yr)

Strate$ic plannin$

Mar5etin$ 1future sales& new pro%ucts4

Capacity .lannin$

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.lannin$ 6 7estle

Factor in .ro(otional activities& 8ren%& Seasonality& etc*

 8op ,own .lannin$ at O

/ ,isa$$re$ate% .lannin$/ :ase% on Co(pany Financial 8ar$ets

:otto( ;p .lannin$ at :ranches

/ A$$re$ate .lannin$/ :ase% on Sales .ush

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Sourcing:

- Set of -usiness processes re)uire% to purchase $oo%s <services

Sourcing Processes in%ol%ed:

Supplier scorin$ an% assess(ent Supplier selection an% contract ne$otiation ,esi$n Colla-orations .rocure(ent Sourcin$ plannin$ an% analysis

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Supplier scoring and assessent:

- Supplier perfor(ance shoul% -e co(pare% on the -asis of thesupplier’s ipact on total cost * 8otal cost is in=uence% not >ust -y purchase price& -ut also -y late orpartial or%er %elivery& poor )uality& supplier =exi-ility& via-ility& etc*

Supplier Selection- &uctions and 'egotiations :

-Supplier selection can -e perfor(e% throu$h co(petitive -i%s&reverse auctions& an% %irect ne$otiations

Procureent:

- 8he process in which the supplier sen%s pro%uct in responseto or%ers place% -y the -uyer 1,irect an% 2n%irect Materials4

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Manuacturing:

Production Planning Past %s* Future

- +n-house (,M) %s* "P (CM)

.ara(eters consi%ere%?  8echnolo$y

Capacity @uality Govt 3e$ulations Flexi-ility 3elia-ility

Manufacturin$ acility layout strategies  .rocess focus 1hi$h volu(e4 .ro%uct focus 1low volu(e4 Fixe%/position

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+arehousin$

/ Factors to -e consi%ere% while settin$ a warehouse

/ .u/ Spoe concept in +arehouses

/ 2(pact of 2S! on current warehouses syste(

3P+s in Warehousing:

/Space utiliBation/Or%er ful'll(entrush or%ers/Or%er pic5in$ an% asse(-ly/Cross/%oc5in$& consoli%ation an% -rea5 -ul5& etc*

/ A +arehouse is nothin$ -ut a storehouse

/ General Strate$y a%opte% across in%ustry is F+F,

/ ,e%icate% vs 3an%o( Stora$e Approach

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,istri-ution

/ !otal 4eli%ered Cost 18,C4 is the pri(ary concern

/ 3oute Opti(iBation

/ 8ruc5 ;tiliBation 1opti(al (ix4

/ ".D to .D Strate$y

/ u- < Spo5e Mo%el

/ Clusterin$ Al$orith(

/ Mil5run Strate$y

/ 3elation -etween 2nventory < ,istri-ution .lannin$ 1,3.4 acrossco(panies

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2nventory?

/ 8he (ost fun%a(ental role that inventory plays is that of facilitatin$

the -alancin$ of %e(an% an% supply/ Excess Stoc5 -uilt to han%le any ;ncertainties

.ipeline Stoc5  2nventory store% to co(pensate Stoc5 in 8ransit

E*$* 8he +arehouse hol%s extra %ays of inventory if the 8ransit ti(e -etween.lant an% + is %ays

Cycle Stoc5 2nventory to satisfy $ap in replenish(ents

E*$* 8he +arehouse hol%s extra "0 %ays of inventory if its replenishe% onlythrice a (onth

Safety Stoc5 2nventory to capture other aria-ilities in overall chain li5e,e(an% ;ncertainties& Supply ;ncertainties& 8ransit %elay& Service Devel etc*

E*$* 8he +arehouse hol%s extra %ays of inventory if its

Forecastin$ Accuracy / H0I & Service Devel 9I

Supply Accuracy / 90I& Av$ 8ransit ,elay " %ay

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2nventory Classi'cations

:y .rocess?

3M inventory& +2. inventory& Finishe% Goo%s 2nventory

:y 2(portance?

A:C Classi'cation/ assi$n relative priority to the ri$ht cate$ory*

E*$* A Class ite(s are the high %alue ites* ence the inventory level is(aintaine% at opti(u( levels for A cate$ory an% any excess inventory canhave hu$e a%verse i(pact in ter(s of overall value*

:y Cycle 8i(e?

FS7 Classi'cation Fast Movin$& Slow Movin$ an% 7on Movin$ 2nventory

:y 7uisance alue?

E, Classi'cation ital& Essential an% ,esira-le 2nventory

Others? S,E& JKL *

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