REPORT

ON
BENCHMARKING
OF
FMCG INDUSTRIES IN INDIA

BY:

SHASHANK CHAUHAN
TABLE OF CONTENTS

CONTENT PAGE NUMBER

1. Acknowledgements ………………………………………………02
2. Declaration……………………………………………………......03
3. Introduction……………………………………………………….05
4. Executive Summary………………………………………………06
5. Industry analysis………………………………………………….07
6. About industry……………………………………………………08
7. Structural analysis of Indian FMCG industry………………….. 08-09
8. Distinguish feature of Indian FMCG business…………………...09
9. Analysis of marketing and distribution of Indian FMCG……….09-10
10. Reason for competition of Indian FMCG………………………...10
11. Company Analysis………………………………………………..11
12. Company profile (Cadbury India Ltd.)…………………………...12-13
13. Company profile( Johnson & Johnson India Ltd…………………14
14. Company profile (Nestle India Ltd.)……………………………...15-17
15. Comparison of sales of Cadbury India Ltd……………………….17
16. Comparison of net profit of Cadbury India Ltd…………………..18
17. Comparison of sales of Johnson………………………………….18
18. Comparison of Net profit of Johnson India Ltd…………………19
19. Comparison of sales of Nestle India Ltd………………………….19
20. Comparison of Net Profit of Nestle India Ltd…………………… 20
21. Comparison of sales of three industry……………………………..20
22. Comparison of net profit of three industry………………………..21
23. Comparison of yearly growth of three company………………... 21
24. Comparison of profit increased of three company………………..22
25. Research Methodology…………………………………………... 23
26. Data Analysis………………………………………………………24-33
27. Opportunity analysis……………………………………………... 30-31
28. Analysis of internal supply chain efficiency……………………… 32

2
29. Analysis of internal supply chain working capital productivity……33
30. Conclusion----------------------------------------------------------------- 34
31. Recommendation---------------------------------------------------------- 34
32. Reference------------------------------------------------------------------- 34

3. INTRODUCTION

This project is about finding the Issues, Constraints, Relevant alternatives, develop an implementation
plan & mapping Supply Chain and doing benchmarking of three various companies. This project is done
mainly for academic purpose in the subject of Supply Chain Management for the course of PGDSCOM
(08-10). At the macro level, Indian economy is poised to remained buoyant and grow at more than
7%.The economic growth would impact large proportions of the population thus leading to more money
and

the hands of the consumer. Changes in demographic composition of the population and thus the market
would also continue to impact the FMCG industry.

Recent survey conducted by a leading business weekly, approximately 47

percent of India’s 1+billion people wear under the age of 20, and teenagers among them
numbered about 160 million. Together, they wielded INR 14000 Cr worth of discretionary
income, and their families spent an additional INR 18500 Cr on them every year, by 2015,
Indians under 20 are estimated t make up 55% of the population- and wield proportionately
higher spending power. Means, companies that are able to influence and excite such consumers
would be those that win in market place.

3
 4. EXECUTIVE SUMMARY

The accomplishment of the report mainly depends upon research methods viz. industry analysis,
and internal benchmarking of supply chain management.

The project was assigned to perform the analysis three company of the same industry.

In this project opportunity analysis has been done with the data of holding period of the firm’s
Raw material, Semi finished goods, and Finished goods.

Analysis of internal supply chain efficiency has been done for the same companies.

Internal supply

Internal supply chain working capital productivity analysis has been done with the data of
Working Capital Productivity and Inventory, Accounts receivable, and Accounts payable and
reached the conclusion that only internal supply chain analysis cannot suggest the whole cost
reduction we also need to analyze the external factors.

4
INDUSTRY ANALYSIS

5
 ABOUT INDUSTRTY

The Indian FMCG market has been divided for a long time between the organized
sector and the unorganized sector. While the latter has been crowded by a large
number of local players, competing on margins, the former has varied between a
two-player –scenario to a multi- player one

Unlike the U.S market for fast moving consumer goods (FMCG), which is dominated
by a handful of global players, India’s Rs. 460 billion FMCG market remains highly
fragmented with roughly half the market going to unbranded, unpackaged home
made products This presents a tremendous opportunity for makers of branded
products who can convert consumers to branded products. However, successfully

Launching and growing market share around a branded product in India presents
tremendous challenges. Take distribution as an example. India is home to six million
retail outlets and super markets virtually do not exist. This makes logistics
particularly for new players extremely difficult. Other challenges of similar
magnitude exist across the FMCG supply chain. The fact is that FMCG is a
structurally unattractive industry in which to participate. Even so, the opportunity
keeps FMCG makers trying.

At the macro-level, over the long term, the efforts on the infrastructure
front (roads, rails, power, and river linking) are likely to enhance the living standard
across India. Till date, India’s per capita consumption of most FMCG product is much
bellow world averages. This is the latent potential that most FMCG companies are
looking at. Even in the much penetrated categories like soaps/detergents
companies are focusing on getting the consumer up the value chain. Going forward,
much of the battle will be fought on sophisticated distribution strengths.

STRUCTURAL ANALYSIS OF FMCG INDUSTRY:

Typically, a consumer buys these goods at least once a month. The sector covers a
wide gamut of products such as detergents, toilet soaps, toothpaste, shampoos,
creams, powders, food products, confectioneries, beverages, and cigarettes.
Typically characteristics of FMCG products are:-

6
 1. The products often cater to 3 very distinct but usually wanted for aspects-
necessity, comfort luxury. They meet the demands of the entire cross-
section of population. Price and income elasticity of demand varies across
products and consumers.

2. Individual items are a small value (small SKU’s) although all FMC products
put together account for a significant part of the consumers budget.

3. The consumer spends little time on the purchase decision. He seldom over
looks at the technical specifications. Brand loyalties or recommendations
of reliable retailer/dealer drive purchase decision s.

4. Limited inventory of these products (many of which are perishable) are

kept by consumer and prefers to purchase them frequently, as and when
required.

5. Brand switching is often induced by heavy advertisement,

recommendation of the retailer or word of mouth

DISTINGUISH FEATURES OF INDIAN FMCG BUSINESS:

FMCG companies sell their products directly to consumers. Major features that
distinguish this sector from the others include the following:-

Design and manufacturing

1. Low capital intensity- Most product categories in FMCG require in FMCG

requires relatively minor investment in plant and machinery and other fixed
assets. Also, the business has low working capital intensity as bulk of sales
from manufacturing take place on cash basis.

2. Technology-Basic technology of manufacturing is easily available. Also,

technology for most products has been fairly stable. Modifications and
improvements rarely change the basic process.

3. Third party manufacturing- Manufacturing of products by third party vendors

is quite common. Benefits associated with third party manufacturing include
(1) flexibility in production and inventory planning; (2) flexibility in controlling
labor cost; and (3) logistics-sometimes it is essential to get certain products
manufactured near the market.

Marketing and distribution:

Marketing function is sacrosanct in case of FMCG companies. Major features of the
marketing function include the following:-

7
 1. High initial launch cost – New products require a large front ended
investment in product development, market research, test marketing and
launch. Creating awareness and develop franchise for a new brad requires
enormous initial expenditure on launch advertisements, free sample and
product promotions. Launch costs is as high as 50-100% of revenue in the
first year.

For established brands, advertisement expenditure varies from 5-12%

depending on the categories.

2. Limited mass media options-The challenge associated with the launch and/or
brand building initiatives is that few no mass media options. TV reaches 67%
of urban consumers and 35% of rural consumer .Alternatives like wall
paintings, theaters, video vehicles, special packaging and consumer
promotions become an expensive but required activity associated with a
successful

FMCG.

3. Huge distribution network- India is home to six million retail outlets,

including 2 million in 5,160 towns and 4 million in 627,000 villages. Super
markets virtually do not exist in India. This makes logistics particularly for
new players extremely difficult. It also makes new product launches difficult
since retailers are reluctant to allocate resources and time to slow moving
products. Critical factors for success are the ability to built, develop, and
maintain a robust distribution network.

Competition
Significant presence of unorganized sector –Factors that enable small,
unorganized players with local presence to flourish include the following:

1. Basic technology for most products is fairly simple and easily available.

2. The small scale sector in India enjoys exemption/lower rates of excise duty,
sales tax etc. This makes the more price competitive vis-à-vis the organized
sector.

3. A highly scattered market and poorly transport infrastructure limits the ability
of MNCs and national players to reach out to remote rural areas and small
towns.

4. Low brand awareness enables local players to market their spurious look-alike
brands.

5. Lower overheads due to limited geography, family management, focused

product lines and minimal expenditure on marketing.

8
A general analysis of this would lead to the conclusion that FMCG is not a
Structurally Attractive industry to Enter.

9
 COMPANY ANALYSIS

Cadbury India Ltd.

COMPANY PROFILE:

Cadbury plc (LSE: CBRY, NYSE: CBY) is a confectionery and beverage company with its headquarters
in London, United Kingdom, and is the world's largest confectionery manufacturer. The firm was
formerly known as "Cadbury Schweppes plc" before demerging in May 2008, separating its global
confectionery business from its US beverage unit, which has been renamed Dr Pepper Snapple Group Inc.
The company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It is
headquartered in Mayfair, City of Westminster, and Greater London

Early history

10
In 1824, John Cadbury began vending tea, coffee, and (later) chocolate at Bull Street in Birmingham in
the UK and sometimes in India. The company was later known as "Cadbury Brothers Limited".

After John Cadbury's retirement, his sons, Richard and George, opened a major new factory at
Bourneville, five miles south of the city. In 1893, George Cadbury bought 120 acres (0.5 km²) of land
close to the works and planned, at his own expense, a model village which would 'alleviate the evils of
modern more cramped living conditions'. By 1900 the estate included 313 cottages and houses set on 330
acres (1.3 km²) of land. As the Cadbury family was Quakers there were no Public houses in the estate; in
fact, it was their Quaker beliefs that first led them to sell tea, coffee and cocoa as alternatives to alcohol.

After World War I, Cadbury Brothers Limited undertook a financial merger with J.S. Fry & Sons
Limited, another chocolate manufacturer.

Merger

The Cadbury Schweppes logo used until the demerger in 2008Cadbury merged with drinks company
Schweppes to form Cadbury Schweppes in 1969.

Snapple, Mistic and Stewart's (formerly Cable Car Beverage) were sold by Trier to Cadbury Schweppes
in 2000 for $1.45 billion. In October of that same year, Cadbury Schweppes purchased Royal Crown from
Trier.

Demerger

In March 2007, it was revealed that Cadbury Schweppes was planning to split its business into two
separate entities: one focusing on its main chocolate and confectionery market; the other on its US drinks
business. The demerger took effect on 2 May 2008, with the drinks business becoming Dr. Pepper
Snapple Group Inc. Cadbury is selling its Australian beverage unit to Asahi Breweries.

11
The Cadbury Schweppes logo used until the demerger in 2008

Recent developments

In October 2007, Cadbury announced the closure of the Key sham chocolate factory, formerly part of
Fry's. Between 500 and 700 jobs would be affected by this change. Production transferred to other plants
in England and Poland.

In 2008 Monk hill Confectionery, the Own Label trading division of Cadbury Trevor Bassett (vs.), was
sold to Tangerine Confectionery for £58million cash. This sale included factories at Pontefract,
Cleckheaton & York and a distribution centre near Chesterfield, and the transfer of around 800
employees.

Johnson & Johnson Ltd.

COMPANY PROFILE:

Johnson & Johnson Ltd. is the most comprehensive manufacturer of healthcare products, selling more
than 100 different products in the consumer, pharmaceutical and professional markets. Since 50 years of
establishment in India, they have gained a reputation for delivering high-quality products at competitive

12
prices. Their success stems from our staunch commitment to caring for and catering to the needs of Their
customers and employees.

quest to provide high-quality, yet cost-effective products has led to active R&D efforts. Rich dividends
have led not only to innovations in the pharmaceutical industry, surgical science and diagnostics industry,
but have also earned us an important place in virtually every household. Their success has also helped us
introduce and continuously innovate on highly sophisticated products for new markets in India.

Nestle India Ltd.

Company profile:

13
Nestlé S.A. (French pronunciation: [nɛsle]) is a multinational packaged food company founded and
headquartered in Vevey, Switzerland, and listed on the SWX Swiss Exchange with a turnover of over 87
billion Swiss francs. It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products
established in 1866 by the Page Brothers in Cham, Switzerland, and the Farine Lacteal Henri Nestlé
Company set up in 1866 by Henri Nestlé to provide an infant food product. The two world wars both
affected growth: during the first, dried milk was widely used but the second war caused profits to drop by
around 70%. However, sales of the instant coffee Nescafe were boosted by the US military. After the
wars, growth was stimulated by acquisitions expanding its range and taking control of several well known
brands, so they now include Magi, Thom and Nescafe, that are known globally.

The company dates to 1867, when two separate Swiss enterprises were founded that would later form the
core of Nestlé. In August of that year, Charles A. and George Page, brothers from Lee County, IL in the
United States, established the Anglo-Swiss Condensed Milk Company in Cham. In September, in Vevey,
Henri Nestlé developed a milk-based baby food and soon began marketing it. In the succeeding decades
both enterprises aggressively expanded their businesses throughout Europe and the United States. (Henri
Nestlé retired in 1875, but the company, under new ownership, retained his name as Farine Lacteal Henri
Nestlé.) In 1877 Anglo-Swiss added milk-based baby foods to its products, and in the following year the
Nestlé company added condensed milk, so that the firms became direct and fierce rivals
In 1905, however, the companies merged to become the Nestlé and Anglo-Swiss
Condensed Milk Company, retaining that name until 1947, when the name Nestlé Alimenting SA was
taken as a result of the acquisition of Barbeque de Products Magi SA (founded 1884) and its holding
company, Alimenting SA of Kempten, Switzerland. Magi was a major manufacturer of soup mixes and
related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company
was operating factories in the United States, United Kingdom, Germany and Spain. World War I created
new demand for dairy products in the form of government contracts; by the end of the war, Nestlé's
production had more than doubled.

14
After the war, government contracts dried up and consumers switched back to fresh milk. However,
Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw
Nestlé's first expansion into new products, with chocolate the company's second most important activity

Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6
million in 1939. Factories were established in developing countries, particularly Latin America.
Ironically, the war helped with the introduction of the company's newest product, Nescafe, which was a
staple drink of the US military. Nestlé's production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and
companies were acquired. In 1947 came the merger with Magi seasonings and soups. Crosse & Blackwell
followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a
shareholding in L’Oreal in 1974. In 1977, Nestlé made its second venture outside the food industry by
acquiring Alcon Laboratories Inc.

In 1984, Nestlé's improved bottom line allowed the company to launch a new round of acquisitions,
notably American food giant Carnation and the British confectionery company Row tree Mackintosh in
1988, which brought the Willy Wonk Brand to Nestlé

The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets
developed into more or less integrated trading areas. Since 1996 there have been acquisitions including
San Pellegrino (1997), Spillers Pet foods (1998), and Ralston Purina (2002). There were two major
acquisitions in North America, both in 2002: in June, Nestlé merged its U.S. ice cream business into
Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot
Pockets. In the same time frame, Nestlé came close to purchasing the iconic American company
Hershey's, though the deal fell through. Another recent purchase includes the Jenny Craig weight loss
program for US$600 million.

In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240 million. In January 2006
it took full ownership of Dreyer's, thus becoming the world's biggest ice cream maker with a 17.5%
market share.

In November 2006, Nestle purchased the Medical Nutrition division of Novartis Pharmaceutical for
$2.5B, also acquiring in 2007 the milk flavoring product known as Oval tine. In April 2007 Nestlé bought
baby food manufacturer Gerber for $5.5 billion.

15
In December 2007 Nestle entered in a strategic partnership with a Belgian chocolate maker Pierre
Marceline.

DIFFERENT COMPARISON BY CHARTS:

Comparison of sales of Cadbury India ltd.

16
17
18
19
20
RESEARCH METHODOLOGY:

There has been an increased awareness in recent years regarding the role and potential of supply chain
management in supporting corporate goals.

Benchmarking is one way of assessing performance based on these measures (Began and English
1994).Seltzer and Carr(19999) tested the relationship among benchmarking, strategic purchasing, and
firm’s performance and found that bench marking is positively related to firm’s performance and strategic
purchasing.

This research develops performance measures that was computed through publically available
information and demonstrates how benchmarking these measures may be useful to a firm.

STEPS DELINEATING THE BENCHMARKING FRAMEWORK

21
Selection of performance measures among the ones taken in this research by the firm depending on its
competitive focus, market niche, and strategy

Benchmarking exercise on the firms in the industry using the selected performance measure. This would
enable the identification of firms with “best performance’’ in terms of selected measures. Other
performance measures developed in this research may then be computed for the selected firms

The information about specific strategies of the “best performance” firms to be obtained from business
periodicals and other sources in public domain. This information can be extracted and be related to the
specific performance measures of the firms.

Leveraging this knowledge to find what bearing the firm’s performance measure have on their Specific
practices and policies. At this stage, management’s objective is to identify practices and policies that drive
superior performance.

Data analysis:

Table -1

2007 DRM DWIP DFG TOTAL LENGTH

CADBURY 48.75 4.95 19.11 72.82
JOHNSON 40.55 1.19 24.82 66.56
NESTLE 31.46 5.35 22.31 59.12

The cumulative lengths are

Table-2

LENTH AT THE LENTH AT THE LENGTH AT THE TOTAL LENGTH

22
 END OF RAW END OF WIP END OF FINISHED
MATERIAL STAGE GOODS STAGE
STAGE
CADBURY 48.75 53.70 72.82 72.82
JOHNSON 40.55 41.74 66.56 66.56
NESTLE 31.46 36.81 59.12 59.12

Table-3

LENTH AT THE LENGTH AT THE LENGTH AT THE

START DAY END OF RAW END OF WIP END OF FINISHED
MATERIAL STAGE GOODS STAGE
STAGE
CADBURY 0 48.75 53.71 72.82
JOHNSON 42.26 46.81 48 72.82
NESTLE 13.7 45.16 50.51 72.82

Table-4

CADBURY JOHNSON NESTLE

COST OF RAW 350.29 141.98 1647.46
MATERIAL
COST ADDITION IN 5.84 3.89 15.50
THE RAW MATERIAL
STAGE
COST AT THE END OF 356.13 284.60 1454.66
RAW MATERIAL
STAGE
COST AT THE END OF 1064.24 1416.92 2893.47
WIP STAGE
COST ADDITION AT 14.00 24.71
THE FINISHED GOODS 8.66
STAGE
COST AT THE END OF 1072.90 1430.92
FINISHED GOOD 2918.18
STAGE

23
Table-5

CADBURY JOHNSON NESTLE

NORMALIZED COST .32 .19 .49
OF RAW MATERIALS
NORMALIZED COST .33 .19 1.03
AT THE END OF RAW
MATERIAL STAGE
NORMALIZED COST .99 .99 .99
AT THE END OF WIP
STAGE
NORMALIZED COST 1 1 1
AT THE END OF
FINISHED GOOD
STAGE

Figure-1

24
Figure-2

25
Figure-3

Figure-4

26
Figure-5

Table-6

CADBURY
JOHNSON
NESTLE

27
Table-7

INTERNAL
SUPPLY

WORKING
CAPITAL
FOR TIME
PERIOD I
CADBU -182.89
RY

JHONS -103.07
ON

NESTL -396.52
E

Table-8

INTERNA
L SUPPLY
CHAIN
WORKIN
G
CAPITAL
ANALYSI
S

COMPANY

28
 CADBURY
JHONSON

NESTLE

Table-9

INTERAC
TION OF
THE
WORKIN
G
CAPITAL
COMPON
ENTS
AND
LOST
SALES

SENARIO

CADBURY
JHONSON
NESTLE

29
Opportunit
y Analysis

Table-11
shows the
inventory
holding periods
for the three
firms and
figure 5
presents the
cost profiles
for the three
firms and
industry
aggregate for
the year 2007

Table-10

SUPPLY
CHAIN
INEFFICI
ENCY
RATIO

CADBURY

JHONSON
NESTLE

30
Table-11

HOLDING
PERIOD
FOR THE
FIRMS

HOLDING
PERIOD
(NO.OF
DAYS)
2005
RAW
MATERIAL
WIP 5

FG 22

The following
conclusion can
be drawn from
figure 5 and
Table-11

1. Nestle
has the
least
days of

31
 raw
materia
l
invento
ry.
Also,
this
compan
y has
the
lowest
aggrega
te
length,
i.e. the
compos
ite
figure
includi
ng days
of raw
materia
l, WIP,
and
finished
goods.

2. Cadbur
y has
the
least
days of

32
 finished
goods
invento
ry.
Howev
er the
product
stays as
raw
materia
l for the
longest
time in
Cadbur
y.

3. Johnso
n has
the
longest
days of
finished
goods
invento
ry but
the
least
days as
WIP.

4. The
aggrega

33
te
industr
y
profile
shows
that for
the
industr
y as a
whole,
the
product
stays in
finished
goods
invento
ry for a
long
time
and the
compan
ies bear
signific
ant cost
in
keeping
the
product
as raw
materia
l.

34
The result
suggests that
the companies
strive to bring
down the level
of raw material
and finished
goods since
there is no
value added in
these stages
and the
company has
to bear the
inventory
carrying cost.
Nestle seems
to be
successful in
this objective.
However, the
product stays
in WIP stage
for the medium
time for this
company. This
suggests that
the company
attempts to
delay the
product

35
differentiation
to the last stage
of the
production
process.

Analysis of
internal
Supply chain
efficiency

Cadbury has
been
successfully in
bringing down
the internal
supply chain
inefficiency
ratio from
-0.149799 in
2005 to
-0.322037 in
2007 for nestle
this ratio has
decreased from
-0.340106 in
2005 to
-0.292786 in
2007.
Likewise, the
ratio has

36
increased for
Johnson
-0.322008 in
2005 to
-0.172492 in
2007.

This suggest
that the
industry in
general and
Cadbury in
particular seem
to be following
an integrated
logistic
strategy
,thereby
achieving cost
efficiency and
optimization in
the internal
supply chain
process. Nestle
has managed to
achieve the
highest
increase in
sales while, at
the same time
it increases the
internal supply

37
chain
inefficiency
ratio. It may be
further
observed that
the duration for
which the
product stays
in the finished
goods stage
was the least
for Cadbury.

Internal
supply chain
working
capital
productivity
analysis:

Table-12
shows the
breakdown of
working capital
for each of the
three
companies.

The following
conclusion can
be drawn from
Table-12 and

38
Table-13

1. Cadbur
y’s
workin
g
capital
product
ivity
has
increas
ed
steadily
over the
years,
buts its
account
payable
also
have
increas
ed
substan
tially
205.57
from in
2005 to
385.09
in
2007.
One
can

39
 infer
from
this
result
that the
internal
supply
chain
workin
g
capital
product
ivity
increas
e is
attribut
able to
the
deferral
of
paymen
ts to the
supplier
s.

2. For
Johnso
n, the
internal
supply
chain
workin

40
g
capital
product
ivity
has
decreas
ed
substan
tially
from
2005 to
2007.
Sales
have
gone
down
for this
firm,
but the
invento
ry and
account
s
receiva
ble
have
gone up
instead
of
coming
down

41
 proporti
onately
during
the
same
period.
This
phenom
enon
has
driven
internal
workin
g
capital
product
ivity.

3. Nestle
has
allowed
its
internal
supply
chain
workin
g
capital
product
ivity to
decreas
e from

42
 -2.9402
6 in
2005 to
-3.4154
6 in
2007.
This is
explain
ed by
signific
ant
increas
e in its
account
s
receiva
ble
from
112.08
in 2005
to
168.6
in
2007.

Table-12

43
 WORKIN
G CAPITA
PRODUCT
IVITY

CADBURY

JHONSON

NESTLE

Table-13

INVETOR
Y,
ACCOUN
T
RECEIVA
BLE, AND
ACCOUN
T
PAYABLE

2005
I 149.2
9

44
 AR
20.06

AP 205.57

Conclusion:

The above data

analysis results
point to the fact
that looking only
at internal
supply chain
working capital
productivity
parse would be
myopic and
would not
capture the total
performance of
the firm .Total
performance
needs to take
into account the
partnering
approaches of
the firm, which

45
is possible by
examining the
components of
the internal
supply chain
working capital.

Recommend
ation:

If a firm is very
large in
comparison to
its suppliers,
then it should be
more concerned
about keeping its
accounts
payable at lower
levels since the
cost of capital
faced by a small
player is much
higher.

On the sell side,

a firm may be
prone to offer
extensions of
credit and sell
more on credit
to generate
sales.

46
Reference:

1. Janet shah,
supply chain
management,
2009

2. Journal of
supply chain
management;
winter 2001;
37, 1,
ABI/INFORM
Global,
benchmarking
internal supply
Chain
performance:
Development
of a framework

3. PROWESS
DATA BASE
(CMIE).

47