Supply Chain Management

Supply chain management is the management of the flow of goods and services and includes all
processes that transform raw materials into final products. It involves the active streamlining of a
business's supply-side activities to maximize customer value and gain a competitive advantage in
the marketplace.

SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to product
development to the information systems needed to direct these undertakings.

How Supply Chain Management Works

Typically, SCM attempts to centrally control or link the production, shipment, and distribution of
a product. By managing the supply chain, companies are able to cut excess costs and deliver
products to the consumer faster. This is done by keeping tighter control of internal inventories,
internal production, distribution, sales, and the inventories of company vendors.

SCM is based on the idea that nearly every product that comes to market results from the efforts
of various organizations that make up a supply chain. Although supply chains have existed for
ages, most companies have only recently paid attention to them as a value-add to their
operations.

Factors Which Can Strengthen the Retail Supply Chain

 Top management commitment: it is very important the top management should be

committed towards their goals. The goal should company‘s objective as well as welfare
of society.

 Development of effective SCM strategy. Which leads proper supply chain process
planning of goods after manufacturing the firm should know there responsibility?
  Devoted resources for supply chain the company should maintain the resources like
information, manpower, material, capital and establish proper communication.

 Use of modern technologies, now every firm is update, and uses new technologies for
updating their resources and improving the work culture.

Basic Structure
In a basic supply chain, the lead company forms a series of relationships with companies that
buy and sell supplies from each other. Each company issues and processes purchase orders on
demand. There is no integration of supply or quality standards and little collaboration. Although
lead companies have access to suppliers, they may face problems caused by fluctuations in
supply capacity, delivery reliability or quality.
Organizational Structure Functions
The primary functions of a supply chain organizational structure include increasing the
efficiency and reducing the costs involved in supply chain management. These tasks also
include the management of suppliers and vendors on either end of the supply chain system.
Workers in the supply chain organizational structure can accomplish these goals with the
implementation of stringent quality control methods and an effective internal auditing
procedure throughout the entire supply chain.

Organization Structure Examples

The supply chain organizational structure incorporates elements of both horizontal and vertical
differentiation. The horizontal differentiation separates workers by task. In the supply chain,
workers assigned to the harvesting of raw materials are on an equal plane with those in the
manufacturing, distribution and retail links in the chain. The vertical differentiation orders
workers by rank, seniority and experience. A plant supervisor will oversee an assembly line
worker just as a retail manager will direct a member of the sales staff.
Supply chain planning
Supply chain planning is the process of planning a product from raw material to the consumer. It
includes supply planning, production planning, demand planning, and sales and operations
planning.

Supply Chain Planning – Food And Grocery

The food supply chain is complex, with perishable goods and numerous small stakeholders. In
India, the infrastructure facilities connecting these components are very weak. Each stakeholder
– farmers, wholesalers, food manufacturers and retailers work in silos. Demand forecasting, data
integration, financial flow management, supply-demand matching, collaborative forecasting,
information sharing and synchronisation of the movement of goods through efficient transport
scheduling have to find their way into the food supply chain.

“The focus of food retailers had been largely on capturing the consumers’ attention and
providing them with a new shopping experience.”

FOOD RETAILING

• Food retailing has come of age – Food items were sold in small road side grocer shops &
mandis, now being sold through supermarket stores.

• Shopping for groceries is no longer a strenuous and uncomfortable affair.

• Food & beverages is the major segment, in organized Retail of India, worth Rs 8,97,000 crore.

• Food retail has surpassed the dominating apparel and accessories sector.

• From simple trading activity, food retailing is now heading to the status of an industry.

 SOME FACTS ABOUT FOOD RETAILING IN INDIA

• Food Retailing is growing at 30% rate which makes it a major driving force of the economy.
• At US$ 175 billion today the food industry is likely to grow to US$ 400 billion by 2025.

• Modern state of the food retailing is not a demand led but the supply led one.

• Food has the largest consumption in the Indian economy and will remain the single largest
category.

• There are 10 million street vendors in India, of which 6 million only sell food.

• Indian consumers are happy with store goods than branded goods.

KEY SUCCESS FACTORS FOR FOOD RETAILING

 Increasing need for convenience

 Availability of quality retail space
 Retailers eye on the unbranded food space
 tastes and preference
 Willingness to travel

FOOD RETAIL FORMATS

“Food Retail Format” as a retail offering that can be segmented based on the different value that
it offers to the consumer along three key dimensions – Choice, Service and Price.

Consumer Durables
Consumer durables involve any type of products purchased by consumers that are manufactured
for long term use

 Classification… 1.Consumer Electronics includes VCD/DVD, home theatre, music players,

color televisions (CTVs), cameras, camcorders, portable audio, etc.

2. White Goods include dishwashers, air conditioners, water heaters, washing machines,
refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances, microwaves, built- in
appliances, tumble dryer, personal care products, etc.

3. Molded Luggage includes plastics

4. Clocks and Watches

5. Mobile Phones

Key Factors responsible

 Changed lifestyle
 Higher disposable income
 Changed taste
 Affordable prices
 Boom in housing and real estate industry
 Widened market- expansion of rural market 
 Increased scope for advertising
 Easy financing- zero interest EMI 
 Easy loans and credit card purchases
 Festival deals and discounts