To Improvise Supply Chain Process at Sunflame Enterprises Pvt Ltd

by

Poornima N
III Semester MBA Reg.No : 12MB6583

Guide

Mr. Avinash (NSB) Mr. Ranganth (Sunflame)

Project Report submitted to the University of Mysore in partial fulfilment of the requirements of III Semester MBA degree examinations 2013

National School of Business #33, 22nd Main, 1st Cross, Phase II, JP Nagar, Bangalore 560 078

Contents

1. 2. 3. 4. 5. 6. 7. 8. 9.

Introduction Problem areas Research objective Research methodology Limitations of the project Chapter i - literature review Chapter ii - findings of purchase and production Chapter iii - findings of purchase and production Chapter iv - summary of findings

10. Chapter v - conclusions and suggestions 11. Bibliography 12. Appendix

Acknowledgement
Sunflame, a well-known FMCG company in India provided an opportunity to pursue a two month internship between Sep Oct 2013. I would like to thank Mr. Ranganath General Manager Marketing and Mr. Avinash (NSB) for extending co-operation and for their guidance during this period. This report is the culmination of the internship period.

Abbreviations
SCM PO CSL SKD LOP FIFO MRR IQC MPC AVL Supply Chain Management Purchase Order Component Shortage list Semi Knocked Down List of parts First in First Out Material Request Report Internal Quality Control Materials Planning chart Approved vendor list

1. INTRODUCTION
Supply chain management (SCM) is an essential element to achieve operational efficiency. SCM can be applied and measured to company success and customer satisfaction. It aims at improving the quality of company, which essentially means that implementing an effective SCM is inevitable for organizations. The Supply Chain Management Program integrates from manufacturing operations, purchasing, transportation, and physical distribution into a unified program. Successful supply chain management coordinates and integrates all of these activities into a seamless process. It embraces and links all of the partners like vendors, carriers, third-party companies in the supply chain, in addition to the departments within the organization. SCM process refers to the actual physical network that begins with supplier and end with customers. Internally to the company, SCM involves seamless integration of logistics with various departments and externally, works with Dealers to achieve a clean integration of all processes. Elements of the Supply Chain A simple supply chain is made up of several elements that are linked by the movement of products along it. The supply chain starts and ends with the customer. The Basic elements of SCM are: Customer Purchasing Planning Inventory

 Production Transportation SCM refers to streamlining of business supply side activities to maximize customer value and gain a competitive advantage in the market place. SCM represents an effort by suppliers to develop supply chains that are efficient and economical. To remain competitive, companies must seek new solutions to important SCM issues such as modal analysis, supply management, and load planning, route planning and distribution.

1.1 About Sunflame

Sunflame Enterprises Pvt Ltd was established in 1981 and is a leading manufacturer, wholesaler & trader of household appliances which has created a niche space for itself in kitchen appliances industry and has been making rapid strides for the last few years. Sunflame strives for constant innovation and focuses on zero-defect quality to excel further in the market. A complete one-stop solution to the kitchen needs is being offered by its extensive range of products that can enhance the cooking experience into a gourmet adventure. Its vision is to be most successful and respected home appliances company in India. Sunflame strives to meet and exceed customer expectations by providing quality products backed by technology, constant service and support to customers. It has established strong presence all over the country and has a firm foot hold in North India where majority of the households are its loyal customers. In South India it is a well-established brand where the customers have been using the product since decades with high level of satisfaction.

The idea behind opening the brand shop on Independence day was to liberate women from their traditional methods of cooking and offer them a bouquet of Sunflame products that are specially designed for todays women and very aptly Sunflame has the tag line which says Leave the kitchen to us. Sunflame has over 210+ products which span across: Geysers Chimneys and Hobs Cookwares Pressure Cookers Cooking ranges

Philososphy:

Sunflame is driven by passion for quality and commitment to customers. This drive is powered by constant innovation and a strong focus on zero-defect quality, which is totally customer-centric.

CoreValues Care for our customers. Commitment to creating value. Respect towards all stakeholders. Integrity in all corporate behaviour.

Manufacturing Competencies: Sunflame has a fully integrated in-house end-to-end manufacturing units that individually cater to all product categories we operate in. The integration process ensures that we are able to maintain stringent quality checks, ensuring that every product released into the market is nothing short of perfect.

Distribution Network: As a corporation that spans the length and breadth of the nation, Sunflame has a strong presence across all parts of the country. This is manifested through: A network of 25 Super Distributors, CF Agents and 300 Distributors. Presence in all major modern retail chains. Strong institutional sales partnerships with direct sales to other

institutions. A strong network of company-owned outlets namely Brand shops

1.2 Problem Areas

During the course of internship, a range of issues were encountered which can be summarised among the following areas. Huge costs which are associated with manual record keeping of stocks: Several employees in the company are not given training to update the stocks in the system. Hence they manually track the order received, sent and goods that are returned back due to damage. Loss of goods at several stages of the supply chains: This includes a variety of factors which include theft, pilferage, misplacement etc. Activities such as handling, storage, packaging and delivery of goods is accompanied by risks caused due to accidents at work, wrong handling of goods and non-compliance with procedures. Demand prediction: Predicting the demand in the market and producing the goods as per the demand would be the greatest challenge faced as it incurs stock holding costs. Warehouse needs to be sufficiently large to accommodate large volume of finished goods. Delay in delivery of goods to the distributor and retail outlets Transportation of finished goods as per the requirement of the distributor and retail outlet should be delivered in time. Sometimes the order to-delivery cycle is more than 2 days due to insufficient manpower and transport vehicles resulting in cancellation of the order at the distributor end

Inadequate space, manpower and infrastructure to manage day to day operations at warehouse leading to delay in deliveries. Sunflame has a wide range of kitchen utility products and maintaining stock of these products when in demand simultaneously will result in shortage of space which curbs the easy flow of stocks to the distributors at the required time. Inadequate technology to inventories the finished goods and raw materials. Sunflame warehouse is not technologically equipped with ERP systems and RFID scanners to track the movement of goods and raw materials. Manual entry of goods and raw materials is being followed resulting in heavy paper work and retrieving the data of a product at a particular time becomes difficult. Lack of Pre-delivery inspection Pre-delivery inspection of finished goods is not conducted prior to despatch of the goods to the C&F agent. There is a possibility of interchangeability of products bearing similar names and code. Hence wrong despatches happen to the distributor and there would be a mismatch of products despatched and invoice raised resulting a wrong inventory.

2. Research Objective
At Sunflame, supply chain management can be viewed as a decision making process between strategy and operation. Its also seen as a mechanism that lies in-between integrated departments where the whole operation takes place with the mix of coordination and effective management. Thus supply chain is like a relay team where there needs to be perfect coordination between various team for achieving the optimum results. Right now, information exists in regional pockets. Most of the nodes in supply chain require GO / No-Go directions from headquarters or regional leaders. This blocks clear movements and can lead to increased costs and unnecessary inventory pile ups. Although Sunflame has had dealer network across south India since a long time, it has recently started branch operations in Bangalore. The new branch caters to entire southern region. The logistics will be redefined and thus necessitates the need to study the existing SCM processes and bring in a very efficient system in place. To analyse and understand the supply chain management processes at Sunflame To identify the areas which could reduce the lead-times via company and supplier integration To Identify the areas where responsiveness can be fast which can improve internal operations If there is an identified gap, try and suggest processes which can improve the SCM process.

3. RESEARCH METHODOLOGY
The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the maximum information which are sometimes undocumented and also to verify the known facts. Research design Sample size : Descriptive type : 12 employees

Sampling procedure : non-probability purpose sampling

Descriptive research methodology was used mainly using surveys and factfinding enquiries of different kinds. The major purpose of descriptive research is to capture the description of the state of affairs as it exists at present. Data collection- The existing SCM at Sunflame was studied for the processes which were used right from Head office to factory to dealers. The processes were mapped and a study was conducted for the potential gaps in communication, process improvements, inventory planning, etc. Data was collected from various departments. This was collected via interaction mode from the department employees, distributors and wholesalers. Other data was collected via reports which helped in corroborating the information collected via other sources.

DATA SOURCE: Primary data Secondary data : Primary data is collected via interview methods : Company introduction, web and few magazines.

RESEARCH DESIGN A research design is the specification of methods and procedures for acquiring the information needed to structure or to solve problem. It is the overall operational pattern of frame work of the project that stipulates procedures. A research design is therefore defined as a plan, structure and strategy of investigation conceived so as to obtain answers to research question and control variances. There are four types of research design they are: 1. Explorative research design 2. Descriptive research design 3. Diagnostic research design 4. Experimental research design 1. Explorative research design: The design of exploratory studies is characterized by a great amount of flexibility and adhoc versatility. By definition, the research is involved in investigating an area or subject in which sufficient knowledge needs be obtained and formulated to a detailed research question. No clear hypotheses have been developed about the problem and seeking information that will enable to formulate specific research question or to state hypothesis about the problem. 2. Descriptive research design: Descriptive research in contrast to explorative research is marked by the prior formulation of specific research question. The problem, perhaps is a result of an exploratory study, before the project is initiated it should be able to define

clearly what needs to be measured and setup appropriate and specific means for measuring it. 3. Diagnostic research design: Diagnostic studies determine the frequency with which something occurs or its association with something else. Hence such studies seek to establish relationship between any two or more variable. 4. Experimental research design: In an experimental study, the researcher is expected to create an artificial situation with a view to obtain the relevant data to measure them effectively and accurately. The research design used for the study was descriptive research design. This type of research design is concerned with describing the characteristics of the particular individual or group of a situation. They are concerned with specific prediction with narration of facts and characteristics are of the unit studies. Choice of Design: I chose Explorative research design due to following reasons: Helps to get details via Literature search In-depth interviews can be conducted Focus groups techniques can be used to reduce the variance

Merits of Exploratory Research: Increased Understanding: The main objective of exploratory research is to improve the knowledge of research topic. It helps to set the initial context on why and how things happen. Flexibility of Data Sources: Resources utilized in exploratory studies include informal discussions, formal structured interviews, pilot studies or case studies. Strategic Planning: Exploratory design in some circumstances can save a lot of time and money by flagging dead ends early Better Conclusions: It is beneficial in guiding future research techniques. A better knowledge of a topic helps hone subsequent research questions and will significantly raise the effectiveness of a studys findings.

De-Merits of Exploratory Research: The primary disadvantage is that they rarely offer adequate answers to research questions, even though they can hint at the answers and give direction as to which research methods could provide definitive answers. Precisely why exploratory studies are rarely definitive is because individuals studied may not be typical of the larger population of interest. That is, the sample is likely not a representative one.

SAMPLING TECHNIQUES A sample, as the name implies is a smaller representation of a large whole, instead of studying every case which might logically be included in an investigation. Only a small portion is selected. A sample design is a definite plan for obtaining a sample from a given population. It therefore refers to the techniques or procedure. The researcher would adopt is selecting items for the sample.

Selection of a sample A sample is a miniature picture or a cross section of an entire group or an aggregate from which a sample from a given population. It refers to the techniques or procedure the research would adopt in selecting item for the sample. Because the population is divided into a number of districts and a district was selected that represents all the districts. Considering the purpose of the study, information is however collected from some units of the district. TOOL FOR DATA COLLECTION The following tools were used for data collection Personal interview Web, Magazines

Personal interview This method was also used to collect data. This had helped to collect valuable information from the company employees.

Collection of data All employees were approached on individually and questions were about their role in SCM. The employees were found to be co-operative. SOURCES OF DATA COLLECTION The data used for this study are both primary and secondary data. The source of primary data is where we collect firsthand information or data from the employees of Sunflame. interviews. A focus group is a form of qualitative research in which a group of people are asked about their perceptions, opinions, beliefs, and attitudes towards a product, service, etc. The advantages of this method are that it brings in Synergism, This methodology is known as focus group based

Spontaneity, Specialization and Speed. However, it can lead to misjudgment, moderation and misrepresentation. Secondary data is also known as documentary data. Secondary sources are those which provide information available to public like Internet and Magazines. .

4. Limitations of the project

Intent of the study was to understand the existing processes and map them to identify the gaps, which finally may result in optimized processes. The scope was limited to Southern India operations only, as the reach and time would be a limiting factor. During the course of this study, earnest effort was made to identify all the processes, but due to unknown factors, there could be few areas which may not be included as part of this project. Only the identified SCM processes were subjected for analysis and reporting. Also, optimization was not studied from a cost perspective. The result of the study relied upon the information furnished by the employees. Hence the information provided by them is subjected to personal bias. Only a sample of 25 employees were interviewed /surveyed due to limited resources available for this study. The entire employee under the study where only lower level employee and middle level employees.

Chapter I
5. Literature review
5.1 What is Supply Chain Management (SCM)

The best companies around the world are discovering a powerful new source of competitive advantage. It's called supply-chain management and it encompasses all of those integrated activities that bring product to market and create satisfied customers. The Supply Chain Management Program integrates topics from manufacturing operations, purchasing, transportation, and physical distribution into a unified program. Successful supply chain management, then, coordinates and integrates all of these activities into a seamless process. It embraces and links all of the partners in the chain. In addition to the departments within the organization, these partners include vendors, carriers, third-party companies, and information systems providers

5.2

What is the importance of Supply Chain Management

Since our childhood we all knew that "slow and steady wins the race". That may be been true anymore in today's demanding business environment, "slow and steady" won't get you out of the starting line in the race. Companies these days recognise that getting products to customers faster than the competition will improve their competitive position. To remain competitive, companies must seek new solutions to important Supply Chain Management issues such as modal analysis, supply chain management, load planning, and route planning and distribution network design. Companies must face corporate challenges that

impact Supply Chain Management such as reengineering globalisation and outsourcing. Why is it so important for companies to get products to their customers quickly? Faster product availability is key to increasing sales. There's a substantial profit advantage for the extra time that you are in the market and your competitor is not. If you can be there first, you are likely to get more orders and more market share. The ability to deliver a product faster also can make or break a sale. If two alternatives [products] appear to be equal and one is immediately available and the other will be available in a week, which one would we choose? Clearly, "Supply Chain Management has an important role to play in moving goods more quickly to their destination."

5.3

Supply Chain Management Today

If we take the view that Supply Chain Management is what Supply Chain Management people do, then in 1997 Supply Chain Management has a firm hand on all aspects of physical distribution and materials management. Seventy-five percent or more of respondents included the following activities as part of their company's Supply Chain Management department functions: Inventory management Transportation service procurement Materials handling Inbound transportation Transportation operations management Warehousing management

Moreover, the Supply Chain Management department is expected to increase its range of responsibilities, most often in line with the thinking that sees the order

fulfillment process as one co-ordinated set of activities. Thus the functions most often cited as planning to formally include in the Supply Chain Management department are: Customer service performance monitoring Order processing/customer service Supply Chain Management budget forecasting

On the other hand, there are certain functions which some of us might feel logically belong to Supply Chain Management which companies feel are the proper domain of other departments. Most difficult to bring under the umbrella of Supply Chain Management are: Third party invoice payment/audit Sales forecasting Master production planning

Today Supply Chain Management includes services such as: Operational Analysis and Design Materials Handling Distribution Strategy Operational Improvements, Distribution Management Computer Systems Warehouse Design Project Management Operational Commissioning Computer Simulation

5.4

Supply-Chain Principles

If supply-chain management has become top management's new "religion," then it needs a doctrine. Andersen Consulting has provided the needed guidance, what it calls the "Seven Principles" of supply-chain management. When consistently and comprehensively followed, the consulting firm says, these seven principles bring a host of competitive advantages. The seven principles are as follows:

1. Segment customers based on service needs. Companies traditionally have grouped customers by industry, product, or trade channel and then provided the same level of service to everyone within a segment. Effective supply-chain management, by contrast, groups customers by distinct service needs--regardless of industry--and then tailors services to those particular segments.

2. Customise the supply chain management network. In designing their supply chain management network, companies need to focus intensely on the service requirements and profitability of the customer segments identified. The conventional approach of creating a "monolithic" supply chain management network runs counter to successful supply-chain management.

3. Listen to signals of market demand and plan accordingly. Sales and operations planning must span the entire chain to detect early warning

signals of changing demand in ordering patterns, customer promotions, and so forth. This demand-intensive approach leads to more consistent forecasts and optimal resource allocation.

4. Differentiate product closer to the customer. Companies today no longer can afford to stockpile inventory to compensate for possible forecasting errors. Instead, they need to postpone product differentiation in the manufacturing process closer to actual consumer demand.

5. Strategically manage the sources of supply. By working closely with their key suppliers to reduce the overall costs of owning materials and services, supply-chain management leaders enhance margins both for themselves and their suppliers. Beating multiple suppliers over the head for the lowest price is out, Andersen advises. "Gain sharing" is in.

6. Develop a supply-chain-wide technology strategy. As one of the cornerstones of successful supply-chain management, information

technology must support multiple levels of decision making. It also should afford a clear view of the flow of products, services, and information.

7. Adopt channel-spanning performance measures. Excellent supply-chain measurement systems do more than just monitor internal functions. They adopt measures that apply to every link in the supply chain. Importantly,

these measurement systems embrace both service and financial metrics, such as each account's true profitability. The principles are not easy to implement, the Andersen consultants say, because they run counter to ingrained functionally oriented thinking about how companies organize, operate, and serve customers. The organizations that do persevere and build a successful supply chain have proved convincingly that you can please customers and enjoy growth by doing so.

5.5

A Four Step integrated Approach

In view of the importance of Supply Chain Management to commercial success, making the right decision about which system is best is vital. Before deciding how to develop new service supply chain management chains and economical distribution centres, many factors must be considered, such as, the required customer service levels, optimum location, stock holding policies and EDP systems. To help organizations make the best decisions, companies need to have an integrated planning approach, consisting of four steps from planning to realization. The only way to manage the growing complexity in international supply chain management chains is through the integration of strategy, engineering and IT systems and methods. Potential analysis Concept study Detailed planning Project or change management

5.6

Where Supply Chain Creates Value

Supply chain management's ability to affect profitability and shareholder value should come as no surprise. Supply chain management affects virtually every aspect of a company's business. Enhanced revenues, tighter cost control, more effective asset utilization, and better customer service are just the beginning. Five areas in which supply chain management can have a direct effect on corporate values. They are as under:

1. Profitable

growth.

Supply

chain

management

contributes

to

profitable growth by allowing assembly of "perfect orders," supporting after-sales service and getting involved in new product development. The bottom-line numbers give the answer. According to A.T. Kearney's research, inefficiencies in the supply chain can waste up to 25 percent of a company's operating costs. With profit margins of only 3 to 4 percent, the consultants point out, even a 5-percent reduction in supply-chain waste can double a company's profitability.

2. Working-capital reductions. Increasing inventory turns, managing receivables and payables, minimizing days of supply in inventory, and accelerating the cash-to-cash cycle all are affected by supply chain execution. A typical case study had found that a consumer products company that took 20 minutes to make a product and five and a half months to collect payment for it.

3. Fixed-capital efficiency. This refers to network optimization--for instance, assuring that the company has the right number of warehouses in the right places, or outsourcing functions where it makes more economic sense.

4. Global tax minimization. There's a thousand ways to save money here if companies look at assets and sales locations, transfer pricing, customs duties, and taxes.

5. Cost minimization. This largely focuses on day-to-day operations, but it also may involve making strategic choices about such issues as outsourcing and process design.

5.7

Implementation Procedure

The framework below outlines the five key dimensions of supply chain management through the implementation procedure that are required to achieve superior performance. These areas must be addressed iteratively and, generally, in a hierarchical fashion: 1. Strategy--specifically, the alignment of supply chain strategies with the overall business direction. Key decision points for managers here include: What is required to align the supply chain with the business strategy? What level of customer service must we provide to each customer segment to compete effectively?

Which channels of distribution best meet our goals and our customers' needs?

2. Infrastructure, which affects cost-service performance and establishes the boundaries within which the supply chain must operate. Pertinent questions include: How must the physical network of plants and distribution be structured? Can we rationalize our current network? Can we use contract manufacturing or third-party logistics capabilities? What transportation services can best link together the network of facilities? Which activities should we outsource?

3. Process--the drive to achieve functional excellence and integration across all major processes. Managers must ask themselves the following: What are the core supply chains processes driving the business? How can we adapt best-in-class approaches to our core processes (e.g., manufacturing, integrated demand planning, procurement, cycle-time compression, dynamic deployment)? How can we build linkages with our suppliers and customers?

4. Organization--providing the critical success factors of cohesion, harmony, and integration across organization entities. Questions to consider include:

What level of cross-functional integration is required to manage core processes effectively?

How can we leverage cross-company skills and abilities? What performance-measurement and reporting structure can help us achieve our objectives?

5. Technology, which empowers the supply chain to operate on a new level of performance and is creating clear competitive advantages for those companies able to harness it. Companies should address the following points: Does our IT platform and core applications software support worldclass SCM? Where will advanced decision-support capabilities have the greatest impact on business performance? What data is required to manage the core business processes outlined above? How can we capitalize on advanced communications (e.g., intranets and the Internet) in managing the supply chain? How can we leverage enhanced visibility of customer demand and other key operating parameters?

5.8

Implementing a competitive approach to Warehousing and Distribution

An organized approach to warehousing and distribution is crucial to the continued growth of any business. With emerging technologies and the pressure

to deliver a high level of customer service and turnaround of stock, tradition methods of warehousing and distribution are being replaced by those that are more sophisticated, aimed at reducing costs and maintaining that all important competitive factor. Implementing a carefully structured, cost-effective approach to warehousing and distribution issues now, will inevitably see an organization through to its long term business objectives and provide tangible financial pay backs. Developing the best strategy required is a complex issue. A wide range of parameters needs to be considered; business growth, purchasing, stock levels, customer requirements. The impact of changes over the next 5 to 10 years must be understood in order to assess the available options and develop appropriate solutions. Is it possible to take advantage of high technology to guarantee the future cost base, without sacrificing flexibility? Making the right decisions, with so many issues to take into account, is not an easy undertaking. Fig 1: Sunflame supply chain process:

Identification of supply chain management factors

In order to understand how a supply chain works, it is important to identify the factors affecting supply chain process at sunflame. The following sections show generic supply chain management factors and sub-factors that might affect supply chain Management activities. Environmental uncertainty: Environmental uncertainty refers to the environmental issues in the product chain, ie the unexpected changes of customer, supplier, competitor, and technology. Government support plays an important role for business success Environmental uncertainty is an important factor in the realization of strategic supply management plans. The increase of outsourcing activities in the industry has augmented the awareness of the importance of strategic supply management, which leads to better relationship among organizations. Under this factor, three sub-factors were identified: Environment, Government support, and Uncertainty aspects from overseas.

2.1.1 Environment

This sub-factor is related to the companys relationship with suppliers and their level of trust and commitment. Company environment is also related to the companys expectations of quality, on time delivery, competition in the sector, and the level of rivalry among firms.

In order to respond effectively to demand, companies realize that imports are a good option for obtaining flexibility in response, even though working with countries from overseas implies working with uncertainty .Uncertainty negatively affects company performance. But this can be reduced if a strategic relationship with critical suppliers is established. Thus, companies need to implement new strategies that allow them to deal with environmental uncertainties in the supply chain (Wu, 2006) in order to perform in a proficient manner.

2.1.2 Government support

The level of support that the company receives from the government when importing raw materials or products from overseas or using domestic materials. It includes the use of norms, regulations, policies, and advice for the sector. Government has to make a series of reforms which would increase manufacturing sectors competitiveness in the international market through logistics

competency. The increase of international trade for acquiring resources from other countries introduces complicated matters such as language barriers, transportation, transportation costs, exchange rates, tariffs, and administrative practices.

2.1.3 Uncertainty aspects from overseas

When requiring the outsourcing of raw materials or products, it is important to acknowledge the existence of environmental factors such as political

uncertainties in other countries that can increase risk for suppliers, provoke decisions of no investment, change business strategies, and in general influence business decisions. Social uncertainties such as religion, environment, language,

cultural issues, limitations of communication and also the technology used in other countries might interfere with supply chain planning and function.
2.2 Information technology

Telecommunications and computer technology allow all the actors in the supply chain to communicate among each other. The use of information technology allows suppliers, manufacturers, distributors, retailers, and customers to reduce lead time, paperwork, and other unnecessary activities. The managers will experience considerable advantages with its use such as the flow of information in a coordinated manner, access to information and data interchange, improved customer and supplier relationships, and inventory management not only at the national level but also. Also the advantages will include supply contracts via internet, distribution of strategies, outsourcing and procurement. All companies are looking for cost and lead time reductions with the purpose of improving the level of service but also to enhance inter-organizational relationships. A study carried out states that through the use of communication tools, such as the web sites, industrial organizations can build value in their supply chain relationships. Another key for supply chain management success is the use of planning tools and without the use of information systems, companies cannot handle costs, offer superior customer service and lead in logistics performance. Firms cannot effectively manage cost, offer high customer service, and become leaders in supply chain management without the incorporation of top of- the-line information technologies. Among 14 information technology tools, electronic data interchanges (EDI), enterprise resource planning (ERP) are the most important and are of utmost necessity. Three tools in terms of their primary purpose have been identified as effective: communication tools, resource planning tools, and supply chain management

tools. Given this classification, two sub factors are considered in this research: communication and planning tools.
2.2.1 Communication tools

Communication tools are used to facilitate data transfer and communication between the trading parts and this might include EDI, electronic fund transfer (EFT), intranet, internet, and extranet. Electronic Data Interchange (EDI) is used for procurement (purchase orders, order status, and order follow-up). EDI serves as electronic catalogs for customers who can get information, dimensions, and cost about a specific product. EFT provides trading partners with an effective way to transfer funds from one account to another through a value added network (VAN) or the internet. Intranets are corporate local area networks (LAN) or wide area networks (WAN) that communicate through the internet and are secured by firewalls. Usually this type of communication tool is used inside a corporation that features different locations. On the other hand, extranet allows business to communicate and share business with external collaborators with a certain degree of security and privacy. Another type of communication tool is the internet, a uniform interface that allows global communication with the use of browsers. The advances in information technology have made communication tools easier for users, allowing its presence in components to extend in the supply chain. Another significant communication tool is the internet based information and communication technology (ICT). Studies suggest that the use of ICT is a strategic communication tool that improves the organizations competitiveness, allowing cost reduction and permitting the companys effectiveness.
2.2.2 Planning tools

Supply chain management planning tools are intended to integrate the resource planning activities in a firm or organization. Some of the most common planning tools are: material requirement planning (MRP), manufacturing resources planning (MRPII), and Enterprise Resource Planning (ERP). A MRP is a tool that allows an organization to schedule production activities to meet specific deadlines based on the bill of materials, inventory levels, and master production schedule. An improvement of MRP tools is MRPII which integrates manufacturing capabilities and capacities with the benefits of MRP. An ERP tool allows the organization to integrate all processing information tasks related to all processes in the value chain. This is usually a single system that might include order management, inventory fulfillment, production planning, financial planning, and customer service in a company. It is the backbone of the logistic systems for a variety of firms. Some other IT tools exist that can be used to execute or manage the various activities and relationships in the entire supply chain.

Chapter II
6. Findings of the study
The study was conducted for over two months which spanned various departments. The study has been methodical in nature and the information with data that was collected has been analyzed. Below are the major findings from this study. Typical Procurement to distribution chain at Sunflame.

Sunflame has various suppliers who supply individual parts and components needed for manufacturing its various products. It includes both electronic and metal parts too. Some of the products are manufactured by procuring parts in a Semi knocked down condition from other countries. These are then assembled in one of the two manufacturing locations.

6.1

Planning

This is one of the core areas for a successful SCM. If the planning is incorrect, then everything will fail and falls like a stack of cards. At Sunflame, much

importance has been provided to planning and some of the key processes which aid in this are: Preparation / release of production plan of all products as per operation meeting and or target plan meet Update forecast and run the programs to generate shortages / stock mismatches / excess inventories Release month wise production Plan for all units. Based on month wise plan production plan released by materials planning chart (MPC), release day wise production plan & Kit loading plan for the month. Highlight all shortages if any before launching the job and follow-up with concerned buyer/MPC to full fill the shortages. Raise job order for sub-contractor loading & hand over BOMS to holding stores for kitting. Review of shortages and firming up Integration plan every day.

6.2

Production

Production is an important cog in the wheel, it should work as per the plan and keep the stocks ready without hurting inventories or backlogs. The production cannot afford to delay the product readiness nor afford to keep the inventories very high. Key observations of production are captured as below: Assemble & test various products as per work instructions. Follow quality system procedures to maintain high standards. Maintain and calibrate tools and equipments as per the schedule. Take corrective actions for defective items.

Highlight quality problems / shortages. Reduce process problems and improve quality. Generate monthly reports. Carry out analysis / test for improvement of product / part quality Carry out machine maintenance in time & prepare the reports. Interact with MPC and purchase team for any shortages / replacements.

Flow Chart Production Planning Process

Month wise plan

Release of weekly plan

Spare indent/ forecast

Review of inventory Shortages

Release Job order Receipt of materials at stores

Release of BOMs

Loading sub assy to subcontractor for prod & spares reqmt /prioritize as per reqmt.

Plan for Production loading.

6.3

Stores

Materials are received from Head office along with delivery Challan/invoice, MRR is prepared and offered to IQC for inspection. Accepted materials are moved to holding stores and rejected materials are moved to rejected material area for further disposition. Materials received without proper documentation are treated as disputed items and reported to purchase department. MRR will be prepared after resolving the dispute. Accepted materials are received from receiving stores along with MRR/Material Transaction by Job. before storage. Materials are issued to production/sub-contractor against valid stores requisitions. Materials received through SRN/STA are inspected by IQC. Stock purged items are moved out of holding stores and are disposed as per managements directive. Materials received from other divisions will be moved to holding stores only after IQC's inspection. Quantity of material is verified

6.4

Purchase

1. Selection of Vendor
Material required for Production is procured from approved vendors (AVL) only. Consumables and capital items, R & D new development requirements are procured from suppliers recommended by the user department, based on authorized purchase requisitions or capital asset

requisitions.(CAR) OR Special approvals Approval of the Factory Head/ Purchase Head will be taken for procurement of production items from unapproved vendors as and when essential. Such vendors may be assessed as per Vendor Assessment Procedure before subsequent orders are released.

2. Preparation and approval of Purchase Orders

CSL is basis for releasing purchase order Spares requirements as per plan/forecast will be considered for ordering. During ordering, various factors like Minimum order qty, Batch qty, and buffer to take care of change in plan will also be considered. New Development item will be procured based on the list of parts (LOP). Purchase orders for items in the Bill of Material (Bom) should contain the Sunflame part number and description of the item and in case of components manufactured to our requirement, the revision number of the drawing. Manufacturers part number should be mentioned as

applicable on catalogued items. In case of branded items, approved brands should be referred in the purchase order. If the purchase orders are released on the original manufacturer, the brand name need not be mentioned in the PO. Prices are negotiated by the concerned purchase person and approved by the Purchase Head. In case of change in price, a price change note is raised. Approval of the head of Purchase is obtained. Payment terms, delivery schedules and other instructions and standard terms and conditions are printed on the Purchase order. All purchase orders are prepared by the purchase executives/ Assistants. Head. Any change in price or other terms and conditions in the Purchase orders are done through a Purchase order amendment. The procedure followed will be the same as for preparation of a PO. urgency soft copy of PO/ amendment will be sent by email. Every month material requirement to supplier will be given by PO delivery schedule. In case of Purchase orders are verified and approved by Purchase

Analysis of Purchase Department This analysis part of the purchase department deals about the lead time for the individual process is any of the purchasing process. Lead time for various processing processes PROCESS
Generation of indent Approval by Management 1 34

LEAD TIME (DAYS)

Preparation of purchase order Opening an LC Receiving the imported goods Customs Clearance Quality Check Inventory at Stores

1 3-4 20-25 23 1 1

6.5

Transportation
The mode choice aspect of these decisions is the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of particular mode of transport with the indirect cost of inventory associated with that mode. While road shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels, geographic location play vital roles in such decisions. Since transportation is the major component of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated shipments versus Lot-for-Lot), routing and scheduling of equipment are key factors in effective management of the firm's transport.

TABLE 1.1 Table showing Gender of respondents

GENDER NO. OF RESPONDENTS PERCENTAGE (%) Male 18 58 Female 7 42 Total 12 100

CHART 1.1 Chart showing Gender of respondents

8 7 7 6 5 5 4 3 2 1 0 Male Female 58% 42%

From the above chart shows 58% of respondents are males and remaining 42% are females.

TABLE 1.2 Which activities plays important role in Supply Chain Management?
IMPORTANT ROLE IN SCM Procurement Inventory WIP Distribution TOTAL NO. OF RESPONDENTS 7 8 4 6 15 PERCENTAGE (%) 28% 32% 16% 24% 100

CHART 1.2 Chart shows, which activities plays important role in Supply Chain Management
8 7 6 5 4 3 2 1 0 Procurement 28% 32% 16% Inventory WIP Distribution 24% 4 6 8 7

From the above charts shows 32% of respondents feels inventory plays important role in SCM, 24 % respondents feels Distribution of product feels important role in SCM, 16% and 28% respondent feels based on WIP and Procurement respectively.

TABLE 1.3 What is the main reason to go for outsourcing?

REASON FOR OUTSOURCING Cost Reduction Maximization Of Returns Lack Of Technology All The Above TOTAL NO. OF RESPONDENTS 5 9 6 10 30 PERCENTAGE (%) 17% 30% 17% 30% 100

CHART 1.3 Chart shows, Reason to go for Outsourcing

12 10 9 8 6 5 4 2 17% 0 Cost Reduction Maximization Of Lack Of Technology Returns All The Above 30% 17% 30% 6 10

From the above chart, 30% respondents feels that maximization of returns is the reason to go for outsourcing, 17% feel that reason for outsourcing based on cost reduction and lack of technology.

TABLE 1.4 Where the problems faced by organization during implementation of Supply Chain Management?

PROBLEMS ON SCM In Terms of Cost SKU Demand Forecasting Delivery of Product TOTAL

NO. OF RESPONDENTS 3 4 8 9 30

PERCENTAGE (%) 13% 17% 33% 33% 100

CHART 1.4 Chart shows, rating of problems faced by organization during SCM
10 9 8 7 6 5 4 3 2 1 0 In Terms of Cost SKU Demand Forecasting Delivery of Product 13% 17% 33% 38% 3 4 8 9

From the above chart, 38% of respondents feels Delivery of Product faces more problems on implementation of SCM, then Demand forecasting part, SKU, Delivery and Cost faces problems during implementation of SCM at 33, 17 and 13% respectively.

TABLE 1.6 Rate the critical problem faced by Organisation when outsourced?

PROBLEMS ON OUTSOURCING Loss of Control Loss of Customer Focus Lack of Clarity Loss of Confidentiality TOTAL

NO. OF RESPONDENTS 4 4 8 10 26

PERCENTAGE (%) 15% 15% 31% 38% 100

CHART 1.6 Chart shows, Critical problems faced by organization during SCM

Loss of Confidentiality

38% 10 31% 8 15% 4 15% 4 0 2 4 6 8 10 12

Lack of Clarity

Loss of Customer Focus

Loss of Control

From the above chart, 38% of respondent feels they are in loss of Confidentiality while outsourcing, 31% feels they is Lack of clarity, 15% feels they are in lack of customer focus and remaining feels they Loss of control during outsourcing. TABLE 1.7 Where would you recommend the company should improve?
PROBLEMS ON OUTSOURCING NO. OF RESPONDENTS PERCENTAGE (%)

Staff Training Technology Size of Office No. of Persons TOTAL

12 5 3 8 28

43% 18% 11% 29% 100

CHART 1.7 Chart shows, where company should improve.

14 12 10 8 6 5 4 3 2 43% 0 Staff Training Technology Size of Office No. of Persons 18% 11% 29% 8 12

From the above chart shows, 43% respondent feels they are lack in Staff training, 18% feels they are in lack of technology, 11% feels size of organization is not enough and remaining 29% feels man power is needed for their company.

7. Summary of findings
In previous chapters, detailed findings were laid out and some analysis was made and presented too. In this section a summary of the same would be provided in

concise mode, which would help in easier analysis and could become starting point for next steps. Due to the lack of the integrated IT system in the purchase department the lead time taken for the purchase of the items is considerably long. My study shows that the total time taken for the purchase of the single item i.e. alone takes about 35 - 50 days. Tracking is not 100% reliable and some items were not tracked due to manual mode of the process. This would lead to exigencies sometimes and could delay the production and / shipment. Mostly the inventory levels that are maintained in stores are not updated periodically. this would lead to either excess of inventories or shortage of inventories. The worker knowledge on the inventory management and wastage prevention was low. The technical knowledge of the workers related to the modern techniques to maintain the inventory levels are low. Inventory pooling does not happen at regional level The information for goods movement is not planned well in advance and is mostly just in time. Pooling mechanism / re-direction of excess goods from one stock location to another is absent. Standard transport mechanism is being used, no alternatives are being identified. Tracking mechanism from source to destination is absent.

Chapter VI
8. Conclusion
The practical approach is the best way of learning and thus internship during the MBA course serves the same purpose. Industrial exposure during the internship helps in providing the real insight to the business world and show how theoretical concepts taught in the class rooms are actually applied in the business. A good and effective supply chain is very important for any power project to improve its efficiency and performance Analysis and recommendations made in this report can be taken as first step and can become basis for further refinements. Concerted efforts can be put into each of each of the areas and remarkable improvements can be made. Alternatively, this can be implemented in a smaller scale for a month and the results can cross verified for the continual improvement in the chain. Apart from the regular activities many departments are in light and proactive in nature which makes newer process implementation an easier one. I believe with an optimized SCM model, Sunflame will stand to gain in huge savings and also have better control on inventories and information. I have learned the difference between theoretical and practical implementation of concepts used in real business.

9. Suggestions
An earnest effort is being made to provide considerable number of suggestions which would go in a long way to help the company to reduce the wastages, costs and help improve efficiencies. Production In order to avoid setup time for changing one model to other model, the changeover mechanism should be applied during lunch time / between shifts, which help to reduce the waiting time. Regular maintenance of machines needs to be carried out and all need to be covered under annual maintenance. Also, training should be provided to workers how to handle the machines in case of problems A logbook should be kept for all the maintenance activities and analysis of how the problems are solved, which could help in solving the same in future speedier. Currently the company is using more manual workforce than automation. And every year the workers are changing. So this is main reason for regular trainings and more cost involved. Rework analysis should be done on the material worked.

Stores Ninety percent of the material used in the products are mechanical items and during the process of the inspection materials that are taken as per

the sample should undergo the functional test to avoid the delay in the process. Manpower in the stores is less to perform the day to day activities. Activities like improper location storage and issuing of material is getting delayed because of less man power. Materials should be stored as per the layout. It easily helps to inspect / move material without any mix-up / delay in process. MRR should be prepared only after IQC has given the clearance. Stores person should check the material as per the invoice and should forward the invoice to the IQC mentioning the shortage of the items and IQC should prepare the MRR based on acceptance or rejection because this reduces the delay in the process of raising right purchase requests.

Internal Quality Control Materials are to be cleared on the basis of First in First out (FIFO), but they are cleared on the basis of priority of the material required as per production plan. As result there is delay of over 3 days from MRR preparation date. Cleanliness is to be maintained in the inspection area and department. Areas of testing equipment and materials that are to be cleared can be easily identified. Improper storage leads to unnecessary delay in

identifying the right materials / products.

Clear segregation of defective pieces is not practised. Displaying the information helps to know the status of the defects over a period of time. It motivates employees towards focusing the area. MRR should be prepared after IQC given the clearance for the accepted material. This will eliminate the involvement of the stores and in making MRR and sense of urgency and importance will be created on IQC department in clearing the material on time. Finance Payments to vendor should be paid in time for smooth flow of material required but payments for the vendor are getting delayed even after the credit period according to PO terms is completed. As result of this credibility of the company is lost and vendors will not able to supply the raw material in time for smooth flow of material for production and if we lost the existing vendors and it takes time to search for new vendors. Company should try to reduce the delay by 10% recursively over a period of time, so that the credibility improves with suppliers.

10. Bibliography
http://www.supply-chain.org/ Logistics and Supply Chain Management : Strategies for Reducing Cost and Improving Service (Financial Times Management) -Christopher Martin

11. Appendix
Below is the list of Questionnaires that were used in this research.