Nidhi Ajmera

SCM OF MAHANAND DAIRY
A PROJECT REPORT ON
“MAHANAND DAIRY”
SUBMITTED BY
NIDHI K. AJMERA
T.Y.B M S [SEMESTER V]
N. K. COLLEGE
MALAD (W) , MUMBAI 400 064
SUBMITTED TO
MUMBAI UNIVERSITY
ACADEMIC YEAR
2010-2011
PROJECT GUIDE
PROF. SWAPNA
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DECLARATION
I, NIDHI K. AJMERA, OF N. K. COLLEGE OF TYBMS [SEMESTER V] HEREBY

DECLARE THAT I HAVE COMPLETED MY PROJECT, TITLED ‘MAHANAND
DAIRY’ IN THE ACADEMIC YEAR 2010-2011.

THE INFORMATION SUBMITTED HEREIN IS TRUE AND ORIGINAL TO THE
BEST OF MY KNOWLEDGE.
SIGNATURE OF STUDENT
(NIDHI K. AJMERA)
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CERTIFICATE
I, PROF. SWAPNA, HEREBY CERTIFY THAT MISS. NIDHI K. AJMERA OF N.

K. COLLEGE OF TYBMS [SEMESTER V] HAS COMPLETED HIS PROJECT,
TITLED ‘MAHANAND DAIRY’ IN THE ACADEMIC YEAR 2010-2011.
THE INFORMATION SUBMITTED HEREIN IS TRUE AND ORIGINAL TO THE
BEST OF MY KNOWLEDGE.
___________________
PROF. SWAPNA
(PROJECT GUIDE)
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ACKNOWLEDGEMENT
Many hands have toiled to ensure that this project finally sees the
daylight. It required continuous guidance, inspiration and support from many
people and without their cooperation; this project would not have been
completed.
We would like to thank our project guide, Prof. Rajiv Joshi for his
inspiration and unwavering support without which it would be impossible to
complete this project within the stipulated time.
Special mention needs to be made about all those Executives and
esteemed Managers of MAHANAND DAIRY that I visited, as they owed
their precious time out of their busy schedule to fill up my questionnaire and
also guide me in every possible way. No words can describe my feeling of
gratitude for them.
Finally, I would also like to give due credit to all those, who
knowingly or unknowingly have guided, supported and helped me in the
completion of this project.
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Table of Contents
1. Introduction of Supply Chain Management 08

2. Functions of Supply Chain Management 19
3. Supply Chain Management Process Integration 22
4. Supply Chain Decisions 28
5. Supply Chain Modeling Approaches 32
6. Governing Body 36
7. Mahanand Dairy 37
8. Suppliers of Mahanand Dairy 39
9. Verities of milk offered by Mahanand 40
10. Agencies offered by Mahananad 41
11. Flow chart of SCM used by Mahanand 42
12. Distribution network of Mahahnand Dairy 43
13. Processes used for increasing shelf life of milk 45
14. Transportation 47
15. Storage system 48
16. Conclusion 49
17. Bibliography 50
18. Annexure (Certificate) 41
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1. INTRODUCTION OF SUPPLY CHAIN

MANAGEMENT
The supply chain Management is a term now commonly used

internationally; it encompasses every effort involved in producing and
delivering a final product or service, from the supplier's supplier to the
customer's customer. Supply Chain Management includes managing supply
and demand, sourcing raw materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and order management,
distribution across all channels, and delivery to the customer.
Supply chain management is the process of planning, implementing,

and the operations of the supply chain as efficiently as possible. Supply
Chain Management is mainly deals with storage of raw materials, work-in-
process inventory, and finished goods from point-of-origin to point-of-
consumption.
A supply chain is a collection of inter-dependent steps that, when

followed, accomplish a certain objective such as meeting customer
requirements. Supply-chain management is a generic term that encompasses
the coordination of order generation, order taking, and offer
fulfillment/distribution of products, services, or information. Numerous,
independent firms and customers are involved in a supply chain (e.g.,
manufacturers and parts suppliers; parcel shippers, senders and receivers;
wholesalers and retailers).
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1.1 DEFINATION OF SUPPLY CHAIN MANAGEMENT
One American Professional Association has defined Supply

Chain Management as, it encompasses the planning and management
of all activities involved in sourcing, procurement, conversion, and
logistics management activities. Importantly, it also includes
coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers, and customers.
The Council of Logistics Management defines Supply Chain

Management as "the process of planning implementing controlling
efficient and cost effective flow of raw materials, in-process inventory,
finish goods and related information from point of origin to point of
consumption for the purpose of confirming to customer requirements".
In other words SCM is the integration of key business process from end
user through original suppliers that provide products, services and
information that add value for customer and other stakeholders.
In the simplest terms, supply chain management (SCM) in an
organization gets the right goods and services to the place they're
needed at the right time, in the proper quantity and at an acceptable
cost. Efficiently managing this process involves overseeing relationships
with suppliers and customers, controlling inventory, forecasting demand
and getting constant feedback on what's happening at every link in the
chain.
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"A company that fails to manage its supply

chains at a strategic level is unlikely to meet
its business objectives effectively."
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1.2 WHAT IS SUPPLY CHAIN MANAGEMENT?
Supply chain management (SCM) is the oversight of materials,

information, and finances as they move in a process from supplier to
manufacturer to wholesaler to retailer to consumer. Supply chain
management involves coordinating and integrating these flows both
within and among companies. It is said that the ultimate goal of any
effective supply chain management system is to reduce inventory (with
the assumption that products are available when needed). As a solution
for successful supply chain management, sophisticated software systems
with Web interfaces are competing with Web-based application service
providers (ASP) who promise to provide part or all of the SCM service
for companies who rent their service.
/
Supply chain management flows can be divided into three main flows:
• The product flow
• The information flow
• The finances flow
The product flow includes the movement of goods from a

supplier to a customer, as well as any customer returns or service needs.
The information flow involves transmitting orders and updating the
status of delivery. The financial flow consists of credit terms, payment
schedules, and consignment and title ownership arrangements.
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There are two main types of SCM software, they are planning
applications and execution applications. Planning applications use advanced
algorithms to determine the best way to fill an order. Execution applications
track the physical status of goods, the management of materials, and
financial information involving all parties.
Some SCM applications are based on open data models that support the
sharing of data both inside and outside the enterprise (this is called the
extended enterprise, and includes key suppliers, manufacturers, and end
customers of a specific company). This shared data may reside in diverse
database systems, or data warehouses, at several different sites and
companies.
By sharing this data "upstream" (with a company's suppliers) and

"downstream" (with a company's clients), SCM applications have the
potential to improve the time-to-market of products, reduce costs, and allow
all parties in the supply chain to better manage current resources and plan
for future needs.
Increasing numbers of companies are turning to Web sites and Web-

based applications as part of the SCM solution. A number of major Web
sites offer e-procurement marketplaces where manufacturers can trade and
even make auction bids with suppliers.
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1.3 BASIC COMPONENTS OF SUPPLY CHAIN

MANAGEMENT
Supply chain management (SCM) is the combination of art and

science that goes into improving the way of company finds the raw
components it needs to make a product or service and deliver it to
customers. The following are five basic components of SCM.
1. Plan: This is the strategic portion of SCM. You need a strategy for
managing all the resources that go toward meeting customer demand for
your product or service. A big piece of planning is developing a set of
metrics to monitor the supply chain so that it is efficient, costsTess and
delivers high quality and value to customers.
2. Source: Choose the suppliers that will deliver the goods and services
you need to create your product. Develop a set of pricing, delivery and
payment processes with suppliers and create metrics for monitoring and
improving the relationships. And put together processes for managing
the inventory of goods and services you receive from suppliers,
including receiving shipments, verifying them, transferring them to your
customers.
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3. Make: This is the manufacturing step. Schedule the activities

necessary for production, testing, packaging and preparation for
delivery.
As the most manufacturing facilities and authorizing supplier payments.
Metric-intensive portion of the supply chain, measure quality levels,
production output and worker productivity.
4. Deliver: This is the part that many insiders refer to as logistics.

Coordinate the receipt of orders from customers, develop a network of
warehouses, pick carriers to get products to customers and set up an
invoicing system to receive payments.
5. Return: The problem part of the supply chain. Create a network for
receiving defective and excess products back from customers and
supporting customers who have problems with delivered products.
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S C
U PLAN
P1 Plan P2 Plan Supply
U
P
Resources Chain
S
P Source Make Deliver T
L S1 Suppliers M1 Make-Stock
D1 Deliver Stock
Product
O
I Develop Strategy
M2 Make
Product
D2 Deliver Retail
Product
M
E E
R Return Return R
Source Deliver
S S
SUPPLY CHAIN OPERATIONS
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1.4 IMPORTANCE OF SUPPLY CHAIN

MANAGEMENT
The objective of every supply chain is to maximize the overall

value generated. The value a supply chain generates is the difference
between what the final product worth to the customer and the effort the
supply chain expands in filling the customer requirement. For most
commercial supply chain, value will be strongly correlated with supply
chain profitability, the difference between the revenue generated from
the customer and overall cost across the supply chain.
To remain competitive, industrial organizations are continually

faced with challenges to reduce product development time, improve
product quality, and reduce production costs and lead-times.
Increasingly, these challenges cannot be effectively met by isolated
change to specific organizational units, but instead depend critically on
the relationships and interdependencies among different organizations
(or organizational units). With the movement toward a global market
economy, companies are increasingly inclined toward specific, high-
value-adding manufacturing niches. This, in turn, increasingly
transforms the above challenges into problems of establishing and
maintaining efficient material flows along product supply chains. The
ongoing competitiveness of an organization is tied to the dynamics of
the supply chain(s) in which it participates, and recognition of this fact is
leading to considerable change in the way organizations interact with
their supply chain partners.
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1.5 BENEFITS OF SUPPLY CHAIN MANAGEMENT
There are a number of clear benefits to contracting authorities of improved

efficiency and transparency in the management of public sector supply
chains:
→ Better risk allocation. In an increasingly complex delivery

landscape, effective risk allocation is a critical consideration in
procurement. Risk should always be allocated according to the party best
placed to manage it, and a better understanding of the way in which the
requirement can be delivered allows the authority to assess how risk can be
allocated across the SC and how they can be managed most effectively.
→ Greater visibility of subcontracting opportunities for a diverse

range of organizations who can bring increased competition, dynamism and
particular skills or strengths to the public sector, including organizations
such as SMEs, VCOs, BMEs, women-owned businesses and social
enterprises. This can increase competition and allow organizations with
particular skills or strengths to get involved in the public sector
marketplace.
→ Greater opportunities for innovation. Supplier innovation in the

SC can contribute to better quality, faster delivery and reduced whole life
costs. Effective SCM offers strong potential for innovation to be released
through the supply chain. A joint initiative between NHS Estates and the
DTI has been established to identify how to harness innovation in the
supply chain in healthcare construction.
→ Better-defined requirements through early supply chain
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involvement in the shaping of the business need. This could be

through market sounding for example. The case for early SC
involvement is likely to be stronger in output or outcome-based
approaches or where the requirement is complex or innovative.
Involvement of the SC at an early stage can be vital in establishing the
right requirements and the approach to meeting them.
→ Improved ability to identify risks or bottlenecks in contract
delivery through greater authority awareness of exactly how the contract
is going to be implemented and of the key SC dependencies.
→ Better quality solutions offered by suppliers as opportunities can
be more easily identified in their supply chains to improve quality,
increase delivery times and reduce costs. These benefits can lead to
increased value for money.
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2. F UNCTION OF SUPPLY CHAIN MANAGEMENT
Supply chain management is a cross-functional approach to managing

the movement of raw materials into an organization and the movement of
finished goods out of the organization toward the end-consumer. As
corporations strive to focus on core competencies and become more flexible,
they have reduced their ownership of raw materials sources and distribution
channels. These functions are increasingly being outsourced to other
corporations that can perform the activities better or more cost effectively.
The effect has been to increase the number of companies involved in
satisfying consumer demand, while reducing management control of daily
logistics operations. Less control and more supply chain partners led to the
creation of supply chain management concepts. The purpose of supply chain
management is to improve trust and collaboration among supply chain
partners, thus improving inventory visibility and improving inventor}'
velocity.
2.1 Strategic
• Strategic network optimization, including the number, location, and

size of warehouses, distribution centers and facilities.
• Strategic partnership with suppliers, distributors, and customers,
creating communication channels for critical information and operational
improvements such as cross docking, direct shipping, and third-party
logistics.
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• Product design coordination, so that new and existing products can be

optimally integrated into the supply chain, load management.
• Information technology infrastructure, to support supply chain
operations.
• Where to make and what to make or buy decisions
• Align overall organizational strategy with supply
strategy.
2.2 Tactical
• Sourcing contracts and other purchasing decisions.

• Production decisions, including contracting, locations, scheduling, and
• planning process definition.
• Inventory decisions, including quantity, location, and quality of
• inventory.
• Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and
implementation of best practice throughout the enterprise.
• Milestone payments
2.3 Operational
• Daily production and distribution planning, including all nodes in the

supply chain.
• Production scheduling for each manufacturing facility in the supply
chain (minute by minute).
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• Demand planning and forecasting, coordinating the demand forecast

of all customers and sharing the forecast with all suppliers.
• Sourcing planning, including current inventory and forecast demand,
in collaboration with all suppliers.
• Inbound operations, including transportation from suppliers

and receiving inventory.
• Production operations, including the consumption of materials and

flow of finished goods.
• Outbound operations, including all fulfillment activities

and transportation to customers.
• Order promising, accounting for all constraints in the supply chain,

including all suppliers, manufacturing facilities, distribution centers,
and other customers.
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3. SUPPLY CHAIN MANAGEMENT PROCESS

INTEGRATION
SCM requires a change from managing individual functions to

integrating activities into key supply chain processes. An example
scenario: the purchasing department places orders as requirements
become appropriate. Marketing, responding to customer demand,
communicates with several distributors and retailers, and attempts to
satisfy this demand. Shared information between supply chain partners
can only be fully leveraged through process integration.
Supply chain business process integration involves collaborative

work between buyers and suppliers, joint product development, common
systems and shared information. According to Lambert and Cooper
(2000) operating an integrated supply chain requires continuous
information flows, which in turn assist to achieve the best product flows.
However, in many companies, management has reached the conclusion
that optimizing the product flows cannot be accomplished without
implementing a process approach to the business. The key supply chain
processes are:
 Customer relationship management

 Customer service management
 Demand management
 Order fulfillment
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 Manufacturing flow management

 Supplier relationship management
 Product development and commercialization
 Returns management
One could suggest other key critical supply business processes

combining these processes stated by Lambert such as:
a. Customer service management

b. Procurement
c. Product development and commercialization
d. Manufacturing flow management/support
e. Physical distribution
f. Outsourcing/partnerships
g. Performance measurement
a) Customer service management process
Customer Relationship Management concerns the relationship

between the organization and its customers. Customer service provides
the source of customer information. It also provides the customer with
real-time information on promising dates and product availability
through interfaces with the company's production and distribution
operations. Successful organizations use following steps to build
customer relationships:
I. determine mutually satisfying goals between organization and
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customers
II. establish and maintain customer rapport
III. produce positive feelings in the organization and the customers
b) Procurement process
Strategic plans are developed with suppliers to support the

manufacturing flow management process and development of new products.
In firms where operations extend globally, sourcing should be managed on a
global basis. The desired outcome is a win-win relationship, where both
parties benefit, and reduction times in the design cycle and product
development are achieved. Also, the purchasing function develops rapid
communication systems, such as electronic data interchange (EDI) and
Internet linkages to transfer possible requirements more rapidly. Activities
related to obtaining products and materials from outside suppliers requires
performing resource planning, supply sourcing, negotiation, order
placement, inbound transportation, storage, handling and quality assurance,
many of which include the responsibility to coordinate with suppliers in
scheduling, supply continuity, hedging, and research into new sources or
programmes.
c) Product development and commercialization
Here, customers and suppliers must be united into the product

development process, thus to reduce time to market. As product life cycles
shorten, the appropriate products must be developed and successfully
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launched in ever shorter time-schedules to remain competitive. According to

Lambert and Cooper (2000), managers of the product development and
commercialization process must:
I. Coordinate with customer relationship management to identify
customer-articulated needs;
II. Select materials and suppliers in conjunction with procurement, and
III. Develop production technology in manufacturing flow to
manufacture and integrate into the best supply chain flow for the
product/market combination.
d) Manufacturing flow management process
The manufacturing process is produced and supplies products to

the distribution channels based on past forecasts. Manufacturing
processes must be flexible to respond to market changes, and' must
accommodate mass customization. Orders are processes operating on a
just-in-time (JIT) basis in minimum lot sizes. Also, changes in the
manufacturing flow process lead to shorter cycle times, meaning
improved responsiveness and efficiency of demand to customers.
Activities related to planning, scheduling and supporting manufacturing
operations, such as work-in-process storage, handling, transportation,
and time phasing of components, inventory at manufacturing sites and
maximum flexibility in the coordination of geographic and final
assemblies postponement of physical distribution operations.
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e) Physical distribution
This concerns movement of a finished product/service to customers. In

physical distribution, the customer is the final destination of a marketing
channel, and the availability of the product/service is a vital part of each
channel participant's marketing effort. It is also through the physical
distribution process that the time and space of customer service become an
integral part of marketing, thus it links a marketing channel with its
customers (e.g. links manufacturers, wholesalers, retailers).
f) Outsourcing/partnerships
This is not just outsourcing the procurement of materials and

components, but also outsourcing of services that traditionally have been
provided in-house. The logic of this trend is that the company will
increasingly focus on those activities in the value chain where it has a
distinctive advantage and eveiything else it will outsource. . This movement
has been particularly evident in logistics where the provision of transport,
warehousing and inventory control is increasingly subcontracted to
specialists or logistics partners. Also, to manage and control this network of
partners and suppliers requires a blend of both central and local
involvement. Hence, strategic decisions need to be taken centrally with the
monitoring and control of supplier performance and day-to-day liaison with
logistics partners being best managed at a local level.
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g) Performance measurement
Experts found a strong relationship from the largest arcs of supplier

and customer integration to market share and profitability. By taking
advantage of supplier capabilities and emphasizing a long-term supply chain
perspective in customer relationships can be both correlated with firm
performance. As logistics competency becomes a more critical factor in
creating and maintaining competitive advantage, logistics measurement
becomes increasingly important because the difference between profitable
and unprofitable operations becomes narrower. A.T. Kearney Consultants
(1985) noted that firms engaging in comprehensive performance
measurement realized improvements in overall productivity. According to
experts internal measures are generally collected and analyzed by the firm
including
I. Cost
II. Customer Service
III. Productivity measures
IV. Asset measurement, and
V. Quality.
External performance measurement is examined through customer

perception measures and "best practice" benchmarking, and includes 1)
customer perception measurement, and 2) best practice benchmarking.
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4. SUPPLY CHAIN DECISION
We classify the decisions for supply chain management into two

broad categories — strategic and operational. As the term implies, strategic
decisions are made typically over a longer time horizon. These are closely
linked to the corporate strategy (they sometimes {\it are} the corporate
strategy), and guide supply chain policies from a design perspective. On the
other hand, operational decisions are short term, and focus on activities over
a day-to-day basis. The effort in these type of decisions is to effectively and
efficiently manage the product flow in the "strategically" planned supply
chain.
There are four major decision areas in supply chain management:
1. Location Decisions
2. Production Decisions
3. Inventory Decisions
4. Transportation (distribution) Decisions
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There are both strategic and operational elements in each of these

decision areas.
1. Location Decisions -
The geographic placement of production facilities, stocking

points, and sourcing points is the natural first step in creating a
supply chain. The location of facilities involves a commitment of
resources to a long-term plan. Once the size, number, and location of
these are determined, so are the possible paths by which the product
flows through to the final customer. These decisions are of great
significance to a firm since they represent the basic strategy for
accessing customer markets, and will have a considerable impact on
revenue, cost, and level of service. These decisions should be
determined by an optimization routine that considers production costs,
taxes, duties and duty drawback, tariffs, local content, distribution
costs, production limitations, etc. Although location decisions are
primarily strategic, they also have implications on an operational
level.
2. Production Decisions -
The strategic decisions include what products to produce, and

which plants to produce them in, allocation of suppliers to plants,
plants to DCs, and DCs to customer markets. As before, these
decisions have a big impact on the revenues, costs and customer
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service levels of the firm. These decisions assume the existence of

the facilities, but determine the exact path(s) through which a product
flows to and from these facilities. Another critical issue is the capacity
of the manufacturing faciiities—and this largely depends the degree of
vertical integration within the firm. Operational decisions focus on
detailed production scheduling. These decisions include the
construction of the master production schedules, scheduling
production on machines, and equipment maintenance. Other
considerations include workload balancing, and quality control
measures at a production facility.
3. Inventory Decisions -
These refer to means by which inventories are managed.

Inventories exist at every stage of the supply chain as either raw-
material, semi-finished or finished goods. They can also be in-
process between locations. Their primary purpose is to buffer against
any uncertainty that might exist in the supply chain. Since holding of
inventories can cost anywhere between 20 to 40 percent of their
value, their efficient management is critical in supply chain
operations. It is strategic in the sense that top management sets
goals. However, most researchers have approached the management
of inventory from an operational perspective. These include
deployment strategies (push versus pull), control policies — the
determination of the optimal levels of order quantities and reorder
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points, and setting safety stock levels, at each stocking location. These
levels are critical, since they are primary determinants of customer
service levels.
4. Transportation Decisions -
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
using the particular mode of transport with the indirect cost of
inventory associated with that mode. While air shipments may be
fast, reliable, and warrant lesser safety stocks, they are expensive.
Meanwhile shipping by 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 and geographic location play vital roles in
such decisions. Since transportation is more than 30 percent of the
logistics costs, operating efficiently makes good economic sense.
Shipment sizes (consolidated bulk shipments versus Lot-for-Lot),
routing and scheduling of equipment are key in effective management
of the firm's transport strategy.
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5. SUPPLY CHAIN MODELING APPROACHES
Clearly, each of the above two levels of decisions require a different

perspective. The strategic decisions are, for the most part, global or "all
encompassing" in that they try to integrate various aspects of the supply
chain. Consequently, the models that describe these decisions are huge, and
require a considerable amount of data. Often due to the enormity of data
requirements, and the broad scope of decisions, these models provide
approximate solutions to the decisions they describe. The operational
decisions, meanwhile, address the day to day operation of the supply chain.
Therefore the models that describe them are often very specific in nature.
Due to their narrow perspective, these models often consider great detail and
provide very good, if not optimal, solutions to the operational decisions.
To facilitate a concise review of the literature, and at the same time

attempting to accommodate the above polarity in modeling, we divide the
modeling approaches into three areas — Network Designand, ''Rough Cut"
methods and Simulation method.
Network Design Methods
As the very name suggests, these methods determine the location of

production, stocking, and sourcing facilities, and paths the product(s) take
through them. The network design methods, for the most part, provide
normative models for the more strategic decisions. These models typically
cover the four major decision areas described earlier, and focus
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more on the design aspect of the supply chain; the establishment of the
network and the associated flows on them. Such methods tend to be large
scale, and used generally at the inception of the supply chain. The earliest
work in this area, although the term "supply chain" was not in vogue, was by
Geoffrion and Graves [1974]. They introduce a multicommodity logistics
network design model for optimizing annualized finished product flows
from plants to the DCs to the final customers. Geoffrion and Powers [1993]
later give a review of the evolution of distribution strategies over the past
twenty years, describing how the descendants of the above model can
accommodate more echelons and cross commodity detail.
Finally, Arntzen, Brown, Harrison, and Trafton [1995] provide the

most comprehensive deterministic model for supply chain management. The
objective function minimizes a combination of cost and time elements.
Examples of cost elements include purchasing, manufacturing, pipeline
inventory, transportation costs between various sites, duties, and taxes.
Time elements include manufacturing lead times and transit times. Unique
to this model was the explicit consideration of duty and their recovery as the
product flowed through different countries. Implementation of this model at
the Digital Equipment Corporation has produced spectacular results —
savings in the order of $100 million dollars.
Clearly, these network-design based methods add value to the firm in

that they lay down the manufacturing and distribution strategies far into the
future. It is imperative that firms at one time or another make such
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integrated decisions, encompassing production, location, inventory, and

transportation, and such models are therefore indispensable. Although the
above review shows considerable potential for these models as strategic
determinants in the future, they are not without their shortcomings. Their
very nature forces these problems to be of a very large scale. They are often
difficult to solve to optimality. Furthermore, most of the models in this
category are largely deterministic and static in nature.
Rough Cut Method
"Rough cut" method, on the other hand, gives guiding policies for the
operational decisions. These model typically assume a "single site" (i.e.,
ignore the network) and add supply chain characteristics to it, such as
explicitly considering the site's relation to the others in the network. Most of
the integrative research (from a supply chain context) in the literature seems
to take on an inventory management perspective. In fact, the term "Supply
Chain" first appears in the literature as an inventory management approach.
The thrust of the rough cut models is the development of inventory control
policies, considering several levels or echelons together. These models have
come to be known as "multi-level" or "multi-echelon" inventory control
model.
Simulation method
Simulation method is a method by which a comprehensive supply

chain model can be analyzed, considering both strategic and operational
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elements. However, as with all simulation model, one can only evaluate the
effectiveness of a pre-specified policy rather than develop new ones. It is the
traditional question of "What If?" versus "What's Best?"
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6. GOVERNING BODY :
MAHARASHTRA RAJYA SAHAKARI DUDH
MAHSANGH,
MARAYADIT
(MRSDMM)
MRSDMM is an Apex Federation of District / Taluka milk

unions established to implement the Operation Flood programme in the
state of Maharashtra.
The main objective of MRSDMM is to procure milk from the

member milk unions at remunerative rates and distribute the same to the
consumers at reasonable rates.
MRSDMM is thus working as a vital link between the milk

producers and consumers and working for the economic development
and upliftment of the farmers in the rural areas.
MRSDMM was established on 09th June, 1967. At present

MRSDMM have 86 member unions (25 District + 49 Taluka +11 Multi-
state unions) with more than 20000 primary milk societies & 23 lacs
which includes appx.
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7. MAHANAND DAIRY
MAHANAND DAIRY is the unit run by the MRSDMM, Mahanand

Dairy has made significant growth and progress in the field of productivity
improvement, quality improvement, energy conservation, cost control etc.
due to sincere and dedicated efforts put at all the levels. The details of
significant growth, high lights and achievements of MRSDMM /
MAHANAND DAIRY are as under:
ENHANCEMENT IN MILK HANDLING
MAHANAND DAIRY was established on 18th Aug. 1983 with a

milk handling capacity of 4 LLPD and the capacity was expanded up to 6
LLPD during the year 1997-98.At present, Mahanand Dairy is distributing 7
LLPD in Mumbai with the help of two packing depots.
Page | 37
For excellence work performed by the MAHANAND, it is winner

of 8 NATIONAL AWARDS they are as follows
→ BEST ENERGY PRODUCTIVITY AWARD achieved in 1986-87.
→ SECOND BEST PRODUCTIVITY AWARD for consecutive three

years.
→ BEST PRODUCTIVITY AWARD in the year 1993-94.

CERTIFICATE OF MERIT AWARD for three years.
→ UDYOGRATAN AWARD by the chairman and managing

director of MAHASANGH.
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8. SUPPLIERS OF MAHANAND DAIRY
MAHANAND is created by MRSDMM. MAHANAND is achieving

the sale of 7 lac liters milk per day and because of this suppliers of
MAHASANGH is ready to provide milk in the require quantity.
MAHANAND obtain the raw milk from the 75 milk union who are the
members of MAHASANGH. Maharashtra government has fixed the standard
price for milk on the base of FAT and SNF involved in milk. There is daily
requirement of 7 lac litter milk.
When the suppliers send the tanker of milk to Mahanand, at the
entrance of Mahanand Quality control department take out the sample from
tanker and check quantity of FAT, Solid Not Fat (SNF) involved in milk. On
the basis of these report they identify that the supplied milk should be
accepted or rejected. Here they also use the Chemical test, Microbiological
test, Clot on Boiling (COB) method, from which they come to know the
condition of milk. If it is in good condition it won't form clot then it can be
use for the further process otherwise it will be rejected. After completing this
procedure tanker is send to Raw Milk Receiving Dock (RMRD).
In today's competitive world it is too important to maintain long term
relation with the suppliers and making them persuaded to supply to
MAHANAND. So for that the Board of Director has decided proportionate
percentage of profit to be allotted to suppliers with respect to the share of
milk that they have contributed in supplying total milk.
Page | 39
9. VERITIES OF MILK OFFERED BY MAHANAND
Taking into account the requirement and choice of

customers Mahanand has introduced various verities of milk.
Page | 40
No. Name of milk Prepared from FAT and SNF
Mahanand- 6.00 FAT and

1. Buffalo milk
Supreme 9.00 SNF

2. Cow milk (CM)
Annapurna 8.50 SNF
Tonned milk
3.00 FAT and
3. Mahanand- Tej prepared from
8.50 SNF
cow milk
Doubled tonned
4. milk prepared
Arogya 9.00 SNF
from cow milk
10. AGENCIES OFFERD BY MAHANAND
This Agency is designed for those retailers who want to sell
Page | 41
Mahanand's product. Normally, Agency obtainable through news papers

within Lok Satta, Lok Matt, Maharashtra Times etc. To obtain the benefits
of agency the retailer has to submit necessary documents such as BMC
registration, license and Gumasta certificate etc. Once the retailer is passed
through the paper work, he is called for an interview. In this interview they
check the behavior, experience in the field and creditworthiness' of a person.
By the end of this procedure the retailer will be approved for agency,
if he pays the amount of deposit within given period of time. With this now
retailer is permitted to sell Mahanand's product and he can sell as per
requirement by paying cash for day-to-day transaction.
Page | 42
11. FLOW CHART OF SUPPLY CHAIN USED BY

MAHANAND
Raw milk from members of

MRSDMM
Quality
check of
raw milk in
lab at Rejected
Mahanand
Accepted
Send back to
Forwarded to supplier
processes
Packaging and
Storing
Ex-Dairy Shop Supply to Bulk Commission

Distributors Distribution Customers Agents
CONSUME
R
Page | 43
12. DISTRIBUTION NETWORK OFMAHANAND DAIRY
 Ex- Dairy Distributors:
They distribute milk in their own vehicles to the customers in the

specific areas allotted to them. They operate on commission basis.
They have signed an agreement with Dudh Mahasangh which is to
be renewed annually. This is the major distribution system and
over 75% of the milk is distributed through this system.They sell
milk only through pouches. They have to pay the price of milk
before accepting the delivery of milk.
 Shop Distribution:
This system has been designed to ensure in built price control and
as a counter check to the Ex- Dairy Distribution system. In this
case, the shop identified is owned by the party and delivery of
packed milk is undertaken by the Mahasangh. The party has to
sell at the prescribed price only. Such shops have been
purposefully located in the areas of the Ex- Dairy Distributors.
This helps to ensure supply of milk at the prescribed price to the
customers.
 Supply to Bulk Customers:

Institutional buyers like hotels, canteen and hospitals are supplied
milk in loose. In this case, the institution has to pay deposit
equivalent to the price of milk for 1 1/2 months as advance and
pay the bills on monthly basis.
Page | 44
 Commission Agents:
In order to enhance the sale of milk, a new system called commission

agency has been introduced. In this system, the party has to operate
purely on contract basis for a specific period and specific quantity. For
such kind of agents agency is provided only after completing the
above mentioned procedure of offering agency.
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13. PROCESSES USED FOR INCREASING SHELFLIFE OF

MILK
In order to maintain the milk for longer period MAHANAND is

using the following techniques:
 Pasteurization:
This process was invented by Louis Pasteur in Japan.
Pasteurization means heating the every particles of milk at 70 °C to
75°C for 15 sec. So, this will kill pathogenic bacteria which are
within the milk. Then the milk is cooled at a temperature below 3
°C to 4°C. This technique is also used for perishable and liquid
item. The pasteurized milk should be stored at low temperature to
retard growth of microorganisms which survived pasteurization.
Precaution must be taken to prevent recontamination after
pasteurization.
 Homogenization:
Homogenization is done for proper mixing of fat particles. This
process breaks the fat globules formed. The size of fat globules
formed ranges from 8u. (micron) and this are broken down to
almost 1/4th i.e. from 2 to 3u size. The main purpose of
homogenization of milk is to give milk to its original taste and
freshness.
Page | 46
 MBRT process:
MBRT is Methylene blue dye reduction test. This is a rapid test for
determining the quality of milk. For this test, 1 ml of methylene blue
dye is added to 10 ml of milk in a tube. The contents in a tube are
mixed and the tube is kept in a water bath at 37 °C. The time taken for
decolourization is observed. Depending up on the time of
decolourization as per given in the table, the quality of milk is
decided.
Time of decolourization Quality of milk

Not decolourization in 8 hrs Excellent quality
6-8 hours decolourization Good
2-6 hours Fair
Less than 2 hours Poor
This process is followed to maintain and for improvement of

milk. This have a greater impact on shelf life of milk i.e. because of
this milk is maintained for 42 hours.
IMPACT OF PROCESSES ON SUPPLY CHAIN
With this process they have preserved milk for 42 hours. It

means they have created buffer stock for them in order to deal any
uncertainty.
Page | 47
14. TRANSPORTATION
Transportation moves product between different stages of supply chain.

Mahanand is also receiving raw milk from its other plants and from members
of MAHASANGH. So for that they have their own 16 insulated tankers.
However for distributing to retailer they are using non-insulated trucks because
they are cheaper and for which have selected the transporter. The mode of
transport they used is road transport.
For the requirement of transporter they apply in news paper and provide
tender form to concerned transporter. With this it is also important to submit
the other relevant documents. At the time of appointing the transporter the
registration, license, experience, capacity of storing, speed and services are
considered. Afterward lowest rate offered by the transporter is selected. In this
transporter is fully responsible for the any damaged occurs with goods. If the
services provided by the transporter found at satisfactory level, it means at cost,
at service, at accuracy then they also make a long term contract of 1 year.
UNITIZATION
To make more comfortable for the transporter MAHANAND has used
the technique of unitization. Unitization is nothing but grouping of all small
products into one large unit. With this they are making optimum utilization of
space and it is also easy to handle.
In MAHANAND, they are using Crate which has capacity to store
either 10 bags of 1 liter of milk or 20 bags of 0.500ml of milk or 40 bags of
0.250 ml of milk.
Page | 48
15. STORAGE SYSTEM
At Raw Milk Receiving Dock (RMRD) there is 8 Silo's are there and
each of them have a capacity of storing 1 lac liter of milk. This Silo's are
fully insulated. The inner part is of stainless steal, outer part is of MS orSS.
In between this there is thermocol layer is there. This way they
maintain the temperature of 3°C in Silo. They also have storage tanks which
have capacity of storing 10,000 liter of milk inside it. These tanks are
mainly used for packaging.
They have also maintained cold storage which has capacity of storing
4, 85,000 liters milk. This cold storage plays an important role in increasing
the shelf life of the milk. This cold storage is fully insulated. Cooling is
maintained below the temperature of 3°C to 4°C. The main purpose of
maintaining this cold storage is that it does not allow the bacteria to grow or
survive in the milk. For easy handling they kept unitized product in it. With
this they are fully utilizing the space of cold storage.
Page | 49
16. CONCLUSION
Thus from the above content we can make out that the role of Supply
Chain Management is very important as far as Business organization is
concerned. Supply Chain Management helps to cut down cost to an
optimum level. So that maximum efficiency can be achieved.
The techniques of supply chain management has made it possible for

Mahanand to provide its milk and milk products to be supplied as well as
assuring their availabilities to the society at a lower price to the right place
and right time .
The upcoming measure for efficient supply chain management such

as-SCM software helps the company to keep a constant check on changing
business environment.
Thus the company can achieve its business objective efficiently by

using supply chain management.
Page | 50
17.BIBLIOGRAPHY
The following is the book referred:

Supply chain Management
By
Sunil Chopra
Kellogg School of Management,

Northwestern University
Peter Meindl,
Stanford University
The following are sites visited:
www.info.com
www.yahoo.com
www.google.com
www.mahananddairy.com
Page | 51

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SCM OF MAHANAND DAIRY

I, NIDHI K. AJMERA, OF N. K. COLLEGE OF TYBMS [SEMESTER V] HEREBY

DAIRY’ IN THE ACADEMIC YEAR 2010-2011.

I, PROF. SWAPNA, HEREBY CERTIFY THAT MISS. NIDHI K. AJMERA OF N.

daylight. It required continuous guidance, inspiration and support from many

inspiration and unwavering support without which it would be impossible to

complete this project within the stipulated time.

Special mention needs to be made about all those Executives and

esteemed Managers of MAHANAND DAIRY that I visited, as they owed

also guide me in every possible way. No words can describe my feeling of

gratitude for them.

knowingly or unknowingly have guided, supported and helped me in the

completion of this project.

1. Introduction of Supply Chain Management 08

1. INTRODUCTION OF SUPPLY CHAIN

The supply chain Management is a term now commonly used

Supply chain management is the process of planning, implementing,

A supply chain is a collection of inter-dependent steps that, when

1.1 DEFINATION OF SUPPLY CHAIN MANAGEMENT

One American Professional Association has defined Supply

The Council of Logistics Management defines Supply Chain

"A company that fails to manage its supply

1.2 WHAT IS SUPPLY CHAIN MANAGEMENT?

Supply chain management (SCM) is the oversight of materials,

The product flow includes the movement of goods from a

By sharing this data "upstream" (with a company's suppliers) and

Increasing numbers of companies are turning to Web sites and Web-

1.3 BASIC COMPONENTS OF SUPPLY CHAIN

Supply chain management (SCM) is the combination of art and

3. Make: This is the manufacturing step. Schedule the activities

4. Deliver: This is the part that many insiders refer to as logistics.

1.4 IMPORTANCE OF SUPPLY CHAIN

The objective of every supply chain is to maximize the overall

To remain competitive, industrial organizations are continually

1.5 BENEFITS OF SUPPLY CHAIN MANAGEMENT

There are a number of clear benefits to contracting authorities of improved

→ Better risk allocation. In an increasingly complex delivery

→ Greater visibility of subcontracting opportunities for a diverse

→ Greater opportunities for innovation. Supplier innovation in the

involvement in the shaping of the business need. This could be

2. F UNCTION OF SUPPLY CHAIN MANAGEMENT

Supply chain management is a cross-functional approach to managing

• Strategic network optimization, including the number, location, and

• Product design coordination, so that new and existing products can be

• Sourcing contracts and other purchasing decisions.

• Daily production and distribution planning, including all nodes in the

• Demand planning and forecasting, coordinating the demand forecast

• Sourcing planning, including current inventory and forecast demand,

in collaboration with all suppliers.

• Inbound operations, including transportation from suppliers

• Production operations, including the consumption of materials and

• Outbound operations, including all fulfillment activities

• Order promising, accounting for all constraints in the supply chain,

3. SUPPLY CHAIN MANAGEMENT PROCESS

SCM requires a change from managing individual functions to

Supply chain business process integration involves collaborative

 Customer relationship management

 Manufacturing flow management

One could suggest other key critical supply business processes

a. Customer service management

a) Customer service management process

Customer Relationship Management concerns the relationship

Strategic plans are developed with suppliers to support the