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8/12/2019 20277585 Supply Chain Management of Amul and Wal Mart (1)
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ASSIGNMENT
SUPPLY CHAIN MANAGEMENT
TOPIC
SUPPLY CHAIN MANAGEMENT IN WAL-MART & AMUL
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WAL-MARTS SUPPLY CHAIN MANAGEMENT
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supply function.Wal mart used sophisticated bar-coded technology and hand held computersystems, managing the center became easier and more economical. Every employee hadaccess to real time information regarding inventory levels of all products in the center.
Logistics management
An important feature of wal marts logistics infrastructure is that it was fast and responsive
transportation system. The distribution centers were serviced by more than 35 company
owned truc!s. This vast fleet allowed the company to ship goods from distribution centers to
stores within two days and replenishes the stores shelves twice a wee!. Wal mart generally
moved the merchandise loaded trailers from the distribution centers to the retail stores
serviced by each distributing center. "etail stores were considered as customers by the
distribution centers. To ma!e the distribution process more efficient wal mart made use of a
logistics techni#ue !nown as cross doc!ing. $n this system the finished goods were directly
pic!ed up from the manufacturing plant of a supplier sorted out and directly supplied to
customers. The system reduced handling and storage costs.
Inento!" management
Wal mart had developed an ability to cater to the individual needs of its stores . %tores could choose
from a number of delivery plans . &or instance there was an accelerated delivery system by which
stores located within a certain distance of a geographical center would receive replenishment within
a day. Wal mart invested heavily in $T and communication systems to effectively trac! sales and
merchandise inventories in stores across the country . wal mart set up its own satellite
communication system in '()3 . wal mart was able to reduce unproductive inventory by allowing
stores to manage their own stoc!s, reducing pac! si*es across many product categories and timely
price mar! downs. $nstead of cutting inventory across the board wal mart made full use of its it
capabilities to ma!e more inventories available in case of items customers most wanted while
reducing overall inventory levels. Wal mart networ!ed its suppliers through computers. $t also helped
in identifying items which were low in stoc! and automated
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ordering. $t also made use of bar-coding and "&$+ to manage its inventories . it invested billion to build a retail lin!. y ma!ing efficient use of technology in all its operationswal mart successfully provides uninterrupted service to its customers suppliers stoc!holders and trading partners
Conc#$sion
The benefits of an efficient supply chain management included reduction in lead time
faster inventory turnover accurate forecasting increased warehouse space reduction in
safety stoc! and better wor!ing capital utili*ation. $t also helped in reducing the
dependency on distribution center management personnel resulting in minimi*ation of
training costs and errors. %toc! outs were also completely eliminated
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AMUL SUPPLY CHAIN MANAGEMENT PRACTICES
A/0 is a dairy cooperative in the western $ndia that has been primarily responsible,
through its innovative practices, for $ndia to become the world1s largest mil! producer.
The distinctive features of this paradigm involves managing a large decentrali*ed
networ! of suppliers and producers, simultaneous development of mar!ets and
suppliers, lean and efficient supply chain, and brea!through leadership.
Every day Amul collects 2, litres of mil! from .' million farmers , converts the
mil! into branded, pac!aged products, and delivers goods worth "s 4 crore "s 4
million6 to over 5, retail outlets across the country.
To implement their vision while retaining their focus on farmers, a hierarchical networ!
of cooperatives was developed, this today forms the robust supply chain behind
78&1s endeavors. The vast and comple9 supply chain stretches from small
suppliers to large fragmented mar!ets.
anagement of this networ! is made more comple9 by the fact that 78& is directly
responsible only for a small part of the chain, with a number of third party players distributors,
retailers and logistics support providers6 playing large roles. anaging this supply chain
efficiently is critical as 78&:s competitive position is driven by low consumer prices
supported by a low cost system of providing mil! at a basic, affordable price.
T%e ist!i'$tion net(o!)
Amul products are available in over 5, retail outlets across $ndia through its
networ! of over 3,5 distributors. There are 2 depots with dry and cold warehouses to
buffer inventory of the entire range of products.
78& transacts on an advance demand draft basis from its wholesale dealers
instead of the che#ue system adopted by other ma;or &87 companies. This practice
is consistent with 78&:s philosophy of maintaining cash transactions throughout the
supply chain and it also minimi*es dumping.
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Wholesale dealers carry inventory that is ;ust ade#uate to ta!e care of the transit timefrom the branch warehouse to their premises. This ;ust-in-time inventory strategyimproves dealers: return on investment "
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member-farmers. $n what follows we elaborate on these aspects in more detail andprovide a rationale for the model and strategies adopted by 78&.
Sim$#taneo$s +ee#oment o. S$#ie!s an C$stome!s, &rom the very early stages of the
formation of A/0, the cooperative reali*ed that sustained growth for the long-term was
contingent on matching supply and demand. The member-suppliers were typically small and
marginal farmers with severe li#uidity problems, illiterate and untrained. A/0 and other
cooperative /nions adopted a number of strategies to develop the supply of mil! and assure
steady growth. &irst, for the short term, the procurement prices were set so as to provide fair
and reasonable return. %econd, aware of the li#uidity problems, cash payments for the mil!
supply was made with minimum of delay. This practice continues today with many village
societies ma!ing payments upon the receipt of mil!. &or the long-term, the /nions followed a
multi-pronged strategy of education and support. &or e9ample, only part of the surplus
generated by the /nions is paid to the members in the form of dividends
Managing T%i! Pa!t" Se!ice P!oie!s,
/nions focused efforts on these activities and related technology development . The
mar!eting efforts were assumed by 78&. All other activities were entrusted to third
parties. These include logistics of mil! collection, distribution of dairy products, sale of
products through dealers and retail stores, some veterinary services etc. $t is worth notingthat a number of these third parties are not in the organi*ed sector, and many are not
professionally managed. =ence, while third parties perform the activities, the /nions and
78& have developed a number of mechanisms to retain control and assure #uality and
timely deliveries. This is particularly critical for a perishable product such as li#uid mil!.
Coo!ination .o! Cometitieness
8oordination is one of the !ey reasons for the success of operations involving such an
e9tensive networ! of producers and distributors at 78&. %ome interesting
mechanisms e9ist for coordinating the supply chain at 78&.
These mechanisms are>
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Inte!-#oc)ing Cont!o#
The ob;ective for developing such an inter-loc!ing control mechanism is to ensure that the
interest of the farmer is always !ept at the top of the agenda through its representatives who
constitute the oards of different entities that comprise the supply chain. This form of direct
representation also ensures that professional managers and farmers wor! together as a team
to strengthen the cooperative. This helps in coordinating decisions across different entities as
well as speeding both the flow of information to the respective constituents and decisions.
Coo!ination Agenc", Uni/$e Ro#e o. 0ee!ation
$ts ob;ective is to ensure that all mil! that the farmers produce gets sold in the mar!et
either as mil! or as value added products and to ensure that mil! is made available to
an increasingly large sections of the society at affordable prices
S$#ie! En%ancement an Net(o!) se!icing
Their ob;ective is to ensure that producers get ma9imum benefit and to resolve all their
problems. They manage the procurement of mil! that comes via truc!s ? tan!ers from
the @%s. They negotiate annual contracts with truc!ers, ensure availability of truc!s for
procurement, establish truc! routes, monitor truc! movement and prevent stealing of
mil! while it is being transported.
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