Managing Bull Whip SCM Case Study

Case Abstract

Hindustan Oil Company (HOC) Case

How the company uses enterprise resource planning and vendor

managed inventory as tools to reduce the BWE.

Skittles India Limited -Case

The second study uses a modification of the classical inventory control

policies to eliminate BWE.

These case study briefly summarizes the managerial approaches on how

to tame BWE in two different contexts
What is new as SCM Challenge?
Challenges in HOC:
The challenge here is to
collaborate with sales and
marketing, using POS data, making
data available to the extended
supply chain in real time ,all to
improve supply chain visibility,
which is critical if supply chain
excellence is targeted.
Better usage of ERP to streamline
inventory flow and improve
distribution Cost.
Targets changes to secondary sales
to Primary sales to reduce excess
inventory
Challenges in Skittles:
SIL concentrated in converting the
inventory flow to a pull based
system(Make to Order).
Other challenges with skittles
controlling replenishment cycle for
different types of SKUs.
Controlling stocks maintained in
CWH based on manufacturing cycle
time and demand fluctuations on
the daily forecast sales all over the
country.
Solution Blueprinting
For HOC:

Usage of ERP Integrates

different Department

Demand Planning Data warehouse VMI integration

Forecast was improved Target based sales given

Dumping of stocks resorted and
using primary and less importance &
VMI used as policy to refill Stocks
secondary off takes last 3 months sales avg
in the market used as Forecast metrics.

Targets were based on

secondary sales rather than
primary sales
Solution Blueprintingcontinues
At SIL:
Elaborated Computer Communication N/W in CWH & branches

Replenishment policy &

Logistic Function

Replenishment system triggered by sale data from

each branch
Once invoiced orders were placed in CWH to refill
and responded by dispatch
If stocks are not available in CWH, refill order was
sent to factories
Role of SC Manager:
Supply chain managers must oversee the import or creation of raw materials to be used by the
company.

They must develop a delivery system that will ensure maximum product creation and
optimal shipments to customers or other manufacturers for further use.

Planning delivery timetables

Ensuring stores have enough stock

Making sure suppliers have enough stock to meet demand

Overseeing the ordering and packaging process

Monitoring stock levels

Tracking products through depots to make sure they arrive at their destination

Overseeing arrival of shipments

Scope for Optimization:

Need to concentrate more on Backward supply chain.

In SIL they must use SKU wise take off and daily fill rate of all SKUs
based on which stocks need to be managed

They need to concentrate more in implementation of Frameworks in order to improve results(SCOR)

SCOR Framework Application:

Both the companies operates in consumer product sector follows basic SCOR frame work integrated with
DCOR and CCOR frameworks which helps them to decide between buy or make the product.
 Economies of Scales / Scopes:

Economies of scope and economies of scale are two different economic concepts used to help cut a company's cost.

Economies of scope focuses on the average total cost of production of a variety of goods, whereas economies of scale focuses
on the cost advantage that arises when there is a higher level of production of one good.

HOC was inefficient with respect to Economies of scale and scope before implementing ERP, due to which their sales
were widely fluctuated.

SIL concentrated more on ROP and ROQ in order to achieve their Scale and scope metrics.
 Key Supply Chain Metrics:
Hence we have mentioned General key metrics for supply chain:

Customer Order Cycle Time: Measures how long it takes to deliver a customer order after
the purchase order (PO) is received.

Cash to Cash Cycle Time: The number of days between paying for materials and getting paid
for product.

Inventory Days of Supply: The number of days it would take to run out of supply
if it was not replenished.

Inventory Turnover: The number of times that a company's inventory cycles per year.

Perfect Order Measurement: The percentage of orders that are error-free.

Conclusion:

Both the cases corresponds to:

Multiple products and several SKUs

Operates under significant completive pressure
Elements of supply chain owned by organization
Complex supply chains and wide speeded across geographically