INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the active management of supply chain activities to
maximize customer value and achieve a sustainable competitive advantage.

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.

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.

A supply chain is the connected network of individuals, organizations, resources, activities,

and technologies involved in the manufacture and sale of a product or service. A supply chain
starts with the delivery of raw materials from a supplier to a manufacturer and ends with the
delivery of the finished product or service to the end consumer. SCM oversees each touch
point of a company's product or service, from initial creation to the final sale. With so many
places along the supply chain that can add value through efficiencies or lose value through
increased expenses, proper SCM can increase revenues, decrease costs, and impact a
company's bottom line.
CHALLENGES FACED BY KIRANA STORES

We the group members visited chokha bazar at kalupur and had a word with some kirana
store owners like shamandas traders, Raspal brothers, to name a few. The main aim of the
visit was to know the challenges faced by them to maintain a smooth SCM.

1. MAINTAINING THE QUALITY:

It is very difficult to observe the same quality
from the same brands as far as the groceries are concerned. An example stated by one
of the kirana stores was Kohinoor basmati rice for an instance never provides the
same quality despite of the same packaging and pricing structure, which makes the
retailers in trouble as they are the ones to directly deal with the customers.

2. COST CONTROL:
As per the shopkeepers, this challenge has played an important
and also has been consistent over years. Since, the operational costs differ from day to
day.
3. PRICE VARIATIONS:
Groceries has a big market and plays an important role in a
day to day household activities. So, the demand is never fixed and so is the supply,
not forgetting the govt. policies which has a lot of variations in the price.

4. ENVIRONMENTAL ISSUES:
We’ve always heard about the natural calamities.
Despite of the natural calamities like , here can be some unnatural calamities like
hoarding, black marketing because of some sellers due to which the articificial
scarcity is created in the market.
5. 1. Managing Inventory:
One of the greatest challenges for retailers is managing
inventory. Many retailers have hundreds or thousands of locations and carry
thousands of items at each location.

Three specific issues getting a lot of attention are:

 Out of Stock
 Inventory Shrinkage
 Out of Date
 6. EMPLOYEE TURNOVER:

The rate of employee turnover for retail establishments often runs at rates that
would devastate organizations operating at upstream echelons.

Employee turnover is defined as the number of employees who have left in a given
period of time divided by the average number of employees.

It is very difficult for every retail business to control the labor turnover, which also has
a major part in not fulfilling demands, hence, Reduction of profit.

SOLUTIONS TO THE CHALLENGES

1. Automatic Purchasing

Continually monitoring inventory levels takes up too much time. Newer ERP systems with
Supply Chain Management (SCM) functionality feature automated purchasing. This means
that the ERP software can be programmed to automatically place orders with vendors when
inventory levels drop below a certain level. A critical part of any supply chain strategy is
being able to preemptively maintain inventory levels. Automatic purchasing will free up
employees to concentrate on other important duties.

2. Standardize

Process standardization is central to the success of any supply chain strategy. Having a
standardized ERP system will increase efficiency while saving time and money. Another
benefit is that employees will share a standardized system of tools, which will increase
accuracy, encourage teamwork and reduce miscommunication.

3. Increase Transparency

Waste, mistakes and even fraud are permanent supply chain strategy problems that can be
fixed with the right ERP system. One of the biggest problems of inventory management is
reconciling the software numbers with a physical inventory count. There are always products
or units that are forgotten about or simply disappear. Increasing internal SCM transparency is
critical to reducing unexplained inventory and financial losses.

4. Gain Data Insight

Decision making for your supply chain strategy depends on accurate and timely data and
information. Having real-time reports available at all times will provide valuable insight into
the supply chain health of your manufacturing business. ERP software allows both users and
management to be able to instantly access inventory, purchasing and production data for
critical decision-making purposes.
5. Real-Time Inventory Management

Traditional inventory management involves the overuse of spreadsheets and hand checked
lists. However, modern ERP software offers inventory features that provide real-time
visibility of exact inventory levels. In addition to this, traditional inventory management
software has limited scalability, while modern ERP software has unlimited flexibility that will
match your businesses’ growth and unique needs.

6. Monitor Vendor Performance

A smoothly running supply chain system depends on outstanding vendor performance.

Therefore, vendor performance needs to be monitored and rated through robust metrics
available through ERP systems. With a few clicks of a mouse, management can review
vendor cycle times and error rates. This data is invaluable during vendor re-negotiations.

7. Raise Cost Awareness

There are many uncontrollable factors and variables with supply chain management. As a
result, different managers along the supply chain often are unaware of each other’s expenses.
Having centralized financial data pinpoints exactly when and where the organization spends
money. This will encourage cost related communication and strategies for consolidating
expenses and streamlining processes.

8. Improve Returns Management

Every solid supply chain strategy needs an efficient returns management system.
Manufacturers must be able to effectively handle returns so they can quickly re-process or re-
manufacture returned products or units. Many manufactures understandably focus on
continually moving new products out the door and therefore, returns often fail to get the
attention they deserve. Being able to better manage returns will reduce waste and identify
consistent product problem factors.

9. Just-in-time (JIT)

ERP systems naturally work well with both just-in-time manufacturing and JIT Inventory
Management to decrease inventory costs and increase inventory turn around. As a result,
there will be less overhead costs and order fulfillment communication mistakes. Operate at
the optimal inventory levels and reduce warehouse costs.

10. Streamline Accounting

ERP systems are often integrated with different business areas, such as HR, management and
finances. An ERP system will reduce excessive paperwork and invoice mix-ups. In addition
to this, ERP systems are integrated with Electronic Data Interchange (EDI) and Electronic
Funds Transfers (EFT), which will drastically reduce payment processing administration and
associated wait times.