SUPPLY CHAIN MANAGEMENT

BY

Udaya Lakshmi 2t2-15 Vineet Agarwal 2t2Nitesh Agarwal 2t2Swathi 2t2-38 Shad Ali 2t2-

Vision : To create a fully collaborative environment in which suppliers can deliver exactly what the company needs, when it needs it, and at a competitive cost.

Mission: To create India's largest automobile and automobilerelated products distribution network by providing dealers and customers with the largest choice of unique world-class products and services.

Samruddhi
Our reputation is customer satisfaction

Tractors & trucks

Demand Identification
1. Target Market Target Market for our project will be Agricultural sector accompanied with Construction and Transportation sector as the products are designed keeping the above sector needs in mind. 2. Market Scope Scope of the market for our products is ever lasting and needs to go hand in hand with the above sectors to make a successful supply chain.

 3. Market Share :The Market share for our company will be partially sold to investors and the majority of the share will be retained within the organization. 4. Process used for production :Our engineering team will design and builds digital mock-ups of every truck model long before the truck is assembled on the production line. Using these advanced simulations, we perfect the design, automate production processes and optimize robotics to meet exacting specifications. This level of advanced manufacturing ensures we produce the highest quality truck time and time again.

Supply Identification
Supply of raw materials for our end products mainly constitute the iron and steel. The other includes the various metals and rubber for the developing of the engine and other related parts. We will be outsourcing few manufacturing products for example Tyre, Seats, Livers of vehicle etc.,

Plant Location
o Plant Location for our manufacturing unit will be in industrial area of Patancheru as the area is well developed for the industrial requirements. o Process of obtaining legal licenses is much easier as there will not be any objection from the local community and the pollution boards. o Plant Layout;o o o o o Plant is expected to be on 10 acres of land. The following areas will be designed in the plant for the manufacturing. Research and development, Production , Quality assurance, Raw material inventory and finished gods inventory. Canteen for employees.

PRODUCTS

Commercial vehicles

Objective of scm at

Samruddhi
Reduce operating costs. Improve responsiveness & reduce cycle time. Improve customer service. Simplify operations. Improve quality. Support significant volume growth. Reduce improved return on capital. Providing end-to-end solutions and continuously innovate improvements to our partners value chain.

Main components of scm

Manufacturer. Retailer. Logistics. Supplier. Distributor.

Focus on SCM
Different departments of the company were handling different parts of the supply chain e.g Out bound logistics was handled by Marketing, Production planning was under Manufacturing, and Materials and Inbound Logistics was the responsibility of the Sourcing dept. As a result, if the customer requirements were not met, very often marketing dept. would blame Production, who would blame Sourcing etc. So the first step in the journey was to set up a SCM dept which would have under its control all the functions of SCM, namely Planning, Logistics, Materials and be fully accountable for meeting the customer requirements. That gave birth to the SCM dept (it was called SCPC-Supply Chain Planning & Control Dept)

Organizational Alignment
Similarly, the rest of the organization was also required to be aligned for SCM. The various departments which had worked as independent, separated by walls were now required to work in union and stretch themselves, and maybe make up for some other depts failures also. This required a huge shift in the mindsets of the department employees- a change from My Dept to Our Customer.

Change Management
To bring about a change in the mindsets of the people (internal and external to the company) across the supply chain, it was necessary to get their buy-in and involvement for making the change. This was done through communication at all levels, explaining the necessity for the change and the benefits to them. A plan was made for implementing the change at all levels which involved changes in MOPs (measures of performance), Performance management system, Planning process, Execution process, MIS and communication system, etc.

Readiness for Process changes

An assessment was made on their readiness to move from the existing system of Forecast based production and supply to a Pull-based production and Supply system, however, it was found that we were not ready to make the transition as yet.

Changing culture of Push-Sales

We had accumulated huge stocks in the pipeline especially with our dealers as a result of Push Sales in the past. Unless these stocks were brought down to reasonable levels, we realized there would be no Pull demand. Therefore a top-down policy was put in place and performance metrics were redefined to discourage push-sales and increase the focus on reducing dealer inventories.

Introduction of 3PL
As a first step towards the solution for the above they decided to implement a system of a transport vehicle collecting small lots daily or on alternate days from suppliers and consolidating the loads to make a full truck load so that transportation cost remains in control by ensuring full capacity utilization for the long haul vehicles. they also decided to outsource the logistics operations to third party logistics service providers who could handle the operations more efficiently than we could. To implement this system for inbound logistics, they first identified their supplier clusters and decided on a hub for each cluster. Then for each cluster we appointed a 3PL who had the requisite strengths for handling that cluster and route. An operating process was made for the 3PL and agreement entered into with them for adhering to the process and achieving specified KPI(key performance indicator).

3PL Implementation Challenges

The first challenge was to identify suitable 3PL companies. At the time When they started this initiative there were only a few foreign 3PL companies, Also they were expensive. option was to upgrade some their existing transporters to 3PL operators through training and facilities up gradation. It was a slower process but kept their costs under control and ensured continuity. As per the process established some items were brought directly to plants but some were taken first to a warehouse where they were deconsolidated and supplied as per daily pull requirements to the plants. Therefore the next challenge was to convince the suppliers to bear the extra costs that they would have to incur due to extra costs of warehousing as well as multiple loading and unloading activities involved due to warehousing. This required considerable effort in reaching out to suppliers and proving to them that the extra costs would offset other invisible costs and provide greater transparency and control.

Challenge posed by increasing

logistics costs
Diesel prices were increasing at a fast rate which directly impacted our logistics cost. they used to dispatch our tractors mounted sideways on open trucks as shown below fitting 5 or 7 per truck depending on the size of the truck. It had to be therefore accommodated lengthwise along the bed length. This meant that only 2 new tractors could be accommodated per truck instead of 5 of the existing models. By doing so, the cost of transportation of the new models was going to be double of the existing model.

Innovative solution to control logistics costs

Single line to double line.

IT-enabled Supply Chain

Planning
APO (Advanced Planner & Optimizer).

Issues with Forecast-based Planning

The input to APO was the Area-wise, model-wise, week-wise sales forecasts. Earlier, sales forecasts were quite reliable and producing as per forecasts did not pose much problem. However, with the market downturn and increased competition, it became more and more difficult to forecast reasonably accurately. Producing and supplying to area stockyards as per forecast resulted in excess stocks in some places where actual sales were much lower than forecasts and at other places where actual sales were much higher than forecasts, there were stock outs. In such cases stocks had to be rushed from one stockyard to another resulting in increased transportation costs. Ideally they should be producing and supplying only those goods which were being demanded by customers. This is what led us to look at the implementation of the Pull Production system.

Pre-Requisites & Challenges of

Pull-system Implementation
Operating a Pull-system essentially involves making robust stock norms, which can absorb the variations in supply and demand, and then frequently checking the gap between actual stocks against norms, and producing to replenish the gap. To operate such a system requires visibility of stocks across the supply chain, a process of scheduling production frequently to make what is required by the market and a system of pulling from suppliers, materials required based on actual consumption as required and whenever required. Considering that at the all levels, there can be wide variations in the demand on day to day basis, it demands a high degree of flexibility in distribution, production, procurement and planning. Period of fixing of production plans needs to be reduced drastically, and processes of distribution of finished goods and procurement need to be changed to pull-based processes which are a challenge in terms of change management. Convincing and enabling suppliers to respond to varying requirements at short notice (instead of fixed schedules for the month, which they prefer due to their own reasons) is also a challenge.

Road map for Pull-system Implementation

Considering the degree of challenge for changing the processes of internal and external entities across the supply chain, we decided to address the changes in a phased manner.

Pull-based replenishment of finished goods

This required fixing stock norms scientifically at area/model level, taking into consideration the lead times, demand variability and supply reliability. The stocks in each area were visible on-line. So what was required was to change our distribution planning system by finding area/model-wise gaps between actual stock and Norm and plan dispatches accordingly. However since they had not implemented Pull-production as yet, stocks were not always available as per pull-requirement and therefore there was a need to allocate insufficiently available stocks fairly as per certain rules and priorities. Since handling this volume of data and rules manually on daily basis was quite time consuming and managing daily replenishments were becoming a problem, we implemented the Deployment tool of APO with the help of Bristlecone. The Deployment module of APO was fed with stock norms and it drew info of stocks from SAP and allocated as per rules configured in the module. Distribution planning time was cut down to one hour instead of 6 hours manually, daily.

Implementation of Pull Production Planning

Although they implemented the process of Pull-based replenishment of vehicles, in the absence of Pull-based production system availability of the right model mix of vehicles as per pull requirement was an issue obviously, as mentioned before. So the next step was to change our production planning system. Instead of making a fixed production plan for the whole month, we had to make a production plan for just 3 days fixed which would enable us to respond to market demand changes at least every 3 days (bi-weekly). So the system adopted was that on every Tuesday and Friday, they planned production for 3 days at a time.

Implementation of Kanban for Pull-based procurement

To ensure actual production as per the Pull-based production plan made, Samruddhi had to ensure that they had available the necessary raw materials and components required for the plan. Since the model-mix of the pull requirement varied substantially, supplier Kanban system was implemented to ensure material availability as per changing material requirement. Therefore a system of e-triggers generated by swiping barcoded kanban cards was implemented. Also the triggers were sent to the supplier website directly rather than through e-mails. Also changes were made in the SAP configuration Kanbans impact on stock levels.

Challenges faced for Kanban

Implementation
As expected, there was considerable resistance from suppliers for supplying in small lots as per Kanban triggers, as and when required by Samruddhi. Suppliers felt that the system would benefit only company and not them. since the uncertainness of company requirements would increase their inventories, lower their asset utilization and hike costs. We also offered our services to help them in changing their production processes and systems to increase their supply responsiveness and flexibility. Monitoring and control systems were also put in place for continuous improvement in the Kanban system.

Implementation of Supplier Initiatives

In a lean environment, dependability, reliability and commitment of suppliers assume greater importance. This led to rationalization of suppliers base. Further, to bridge the communication gap with suppliers, we implemented the SRM module of SAP. On the SRM supplier website Kanban Implementation After Kanban implementation Before Kanban implementation. Frequently suppliers can see their supply schedules, status of their supplys acceptance and payments etc.

e-Tracking of transportation

Vehicles
In a lean environment production planning is often done considering materials which are in transit. Therefore it becomes necessary to track the transport vehicles to know whether the materials would be received as assumed for the planning. In case a vehicle is not able to make it on time, then it should be known in advance so that it is possible to make necessary changes in the production schedules to avoid loss of production capacity.. A GSM based tracking system was implemented whereby company could get tracking information via the internet. This information was analyzed to find reasons for delays and actions were taken to reduce transit times .

Changes in Supply Chain Metrics

Earlier the Supply Chain performance was measured based on producing and dispatching as per weekly forecasts. However, the performance metric was changed to Daily model-wise availability at stockyards SCM had to ensure that there were no stock outs irrespective of the changes in demand Vs forecast. Along the supply chain also each node was measured based on fulfilling the needs of the next node.

End to - End IT-enabled

Supply Chain
The supply chain at Samruddhi, FES has been ITenabled from End-to-End. The Supply chain information flow is enabled with SAP ERP . Supply Chain planning has been enabled by and SAPAPO. Communications with external partners in enabled through websites interfacing with SAP ERP system.

Results
The companys sales doubled in the last 6 months. However, despite tremendous increase in the product varieties, demand uncertainty, and increased supply constraints, right time, right product availability was maintained which helped in taking advantage of sales opportunities to increase sales and market share. Further there was substantial reduction in inventories and increase in service levels. Overall demand fulfillment lead times end to end was reduced from 51 days earlier to around 22 days, a majority part of it being the physical transportation time (from suppliers to Plants and from plants to dealers) reduction of which has limitations.

Conclusions
With increased globalization and increased competition and demand uncertainty most companies face the challenge of making their supply chains more responsive, reliable and cost-efficient for taking advantage of the ever reducing windows of opportunities. Companies need to continuously assess the power of their supply chains honestly and critically vis--vis their competitors and make changes to make them more and more effective. And to know when it is time to sharpen the saw, there needs to be in place an effective set of metrics and a system for measuring the Supply Chain.

ERP
Enterprise resource planning (ERP) systems integrate internal and external management of information across an entire organization embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information.

Advantages of ERP to Samruddhi

The fundamental advantage of ERP is that integrating myriad businesses processes saves time and expense. Management can make decisions faster, and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include: Sales forecasting, which allows inventory optimization Chronological history of every transaction through relevant data compilation in every area of operation. Order tracking, from acceptance through fulfillment Revenue tracking, from invoice through cash receipt Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)

ERP systems centralize business data, bringing the following benefits:

They eliminate the need to synchronize changes between multiple systemsconsolidation of finance, marketing and sales, human resource, and manufacturing applications They bring legitimacy and transparency in each bit of statistical data. They enable standard product naming/coding. They provide a comprehensive enterprise view (no "islands of information"). They make realtime information available to management anywhere, any time to make proper decisions. They protect sensitive data by consolidating multiple security systems into a single structure.

Extensions of ERP
ERP systems can be extended with thirdparty software. ERP vendors typically provide access to data and functionality through published interfaces. Extensions offer features such as: Archiving, reporting and republishing Capturing transactional data, e.g. using scanners, tills or RFID Access to specialized data/capabilities, such as syndicated marketing data and associated trend analytics Advanced planning and scheduling (APS) Managing resources, facilities and transmission in realtime

JIT - Samruddhi
Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing inprocess inventory and associated carrying costs. Samruddhi wanted to implement JIT at their main plant as they were aware of the fact that JIT approach will help them to operate with minimal levels of inventory. Their business objective was to make all our suppliers active participants" in the production process.

 They wanted that the suppliers should be "enabled" to know of any change in the whole production process and at the same time contribute actively. This was necessary to reduce the time-to-respond to a situation and help "just-in-time" approach in the production process

Objective
Make all our suppliers active participants in the production process. Suppliers should be able to know of any change in the whole production process and at the same time contribute actively.

 Update to best practices for supply strategies for 400 vendors, 150 vehicles per day and 1100 parts Improvement of the replenishment efficiency Reduction of stock at the assembly line favoring a flexible manufacturing

VSS Service
Concept planning for JIT and supply chain including definition of load units and their arrangement at the assembly line, definition of the replenishment trigger concept, design of stores and handling equipment and review of the method of supply from vendors Implementation of the proposed concept

Solution
Modular standard metal containers and totes based on Indian truck dimensions. Load units ergonomically presented to the workers 25 JIT parts identified (supplied in sequence), two-tier shelving system for totes with dynamic allocation and picking, containerized supply from local vendors with round pick up Reduced personnel and replenishment lead time; improved manufacturing flexibility

Benefits
By making our suppliers participant in the just-in-time" method of production, they could maintain the least inventory level. Suppliers could see real time the status of the supplies, bill settlement and host of other parameters. All active participants of a process, for instance, the process from a supplier to the dealer can handle change management with the help of a particular solution and a defined process.

 Set up times are significantly reduced in the warehouse. Cutting down the set up time to be more productive allowed the company to improve their bottom line to look more efficient. Having employee focused on specific areas of the system allowed them to process goods faster instead of having them vulnerable to fatigue from doing too many jobs at once and simplifies the tasks at hand. Increase emphasis on the supplier relationships

Quality policy
Customer First & Quality Focus are our core values. For this, we shall respond to the changing needs and expectation of the customers speedily & effectively.

Achieved by:
Understanding customer requirements Involvement of suppliers and other Business partners Setting the Annual Business objectives aligned with our vision Total employee involvement Adopting a Process Approach Delivering First Time Right Products

Management responsibility
President and COO through middle management provide evidence of quality commitment Communication about meeting requirements Establishing Quality Policy Ensuring Quality objectives are established for each area in line Conducting Management Reviews Review of Process Efficiency

Pre-TQM
Tractor division --sellers' market Focus was more on quantity No emphasis on development of new models Manufacturing activity was more inspection orienteddetection Interaction with suppliers --purely need based Sales and service activity lacked standardisation Rework rejection percentages were high Employee involvement in improvement activities was very limited Mindset, Factory Layout, Equipment -Road Blocks

TQM JOURNEY
The TQM journey was in three phases: Introduction phase Promotion phase Development phase

TQM journey introduction phase

The first phase objectives were improving manufacturing quality through process control, improving the quality of bought out components, and increasing productivity and reduce the cost of poor quality (COPQ) by solving chronic crossfunctional quality problems. Introduction of initiatives like Juran's process of quality improvement(JQI), statistical process control (SPC), supplier support activity and business process reengineering (BPR) in manufacturing

TQM JOURNEY PROMOTION PHASE

The focus was not only the standardisation of all operations as per international guidelines, but also to improve upon them. Certifications-ISO 9000 and automotive sector specific standard QS9000 were obtained Up gradation of manufacturing facilities Initiation of Deming Prize guidelines

TQM JOURNEY DEVELOPMENT

PHASE
Improvement in core processes like new product development, manufacturing, supplier management and sales and customer operations Introduction of policy deployment/daily work management technique Certification to environment management system standard ISO 14001 Continuous improvement activity stepped up to touch employee involvement of 100 per cent during this period

Benefits due to TQM

Reduction in rework, rejections Reduction in rejection at suppliers' end as well at receipt stage Reduction in no. of consumer complaints Increased productivity, customer satisfaction, employee involvement in continuous improvement Introduction of new models 4 models in 6 mnths.

SRM and CRM

Project Sankraman - SAP R/3 Enterprise

(4.7) Implementation on Centralized

Architecture
Samruddhi entered into a new phase in technology initiatives from january 2013 by virtue of two important events: Implementation of SAP R/3 Enterprise 4.7 on single instance and centralized architecture Centralization of all servers located across various units to a single server at secure data centre located at hyderabad.

 Samruddhi was one of the First organizations to implement SAP R/3 way back in 2013. It was the largest site in the world on Windows NT platform at that time. Today SAP R/3 Enterprise (version 4.7) integrates all the organizational processes across all the locations. Built on this platform, Information Technology has been extended to integrate with business partner processes through New Dimension solutions such as: Supplier Relationship Management (SAP-SRM) - First to implement in Asia-Pacific region Advance Planner & Optimizer (SAP-APO) - First to implement APO in India. Dealer Management System - Customer Relationship Management (SAP DMS-CRM)

Supplier relationship management

Company involve its suppliers from beginning to end and maintains relation Company collaborated with suppliers on product design and development Company de centralised its vendor system and result better management resources and higher quality Suppliers set up their facility at companies plant

 Roll - out of SAP SRM (Supplier Relationship Management) The objective is to extend visibility of supply end of the value chain. The supplier portal www. Samruddhi.com - enables suppliers to do transactions and also track material supplied to Samruddhi from the stages of receiving, bill passing & payment. Samruddhi buyers get online information about einvoice created by suppliers. Suppliers are also able to view analysis related to their supplies. As a result of the roll-out, all major suppliers are now accessing SRM portal. Implementation of Strategic Sourcing supporting sourcing module is now under process.

Advance planner and optimizer

Implementation of SAP APO (Advance Planner and Optimizer) for Automotive Sector Implemented SAP APO at Farm Equipment Sector in F04, and rolled-out at Automotive Sector in F06. SCM processes are streamlined using SAP APO. Forecasting, planning, and decision support has been facilitated through on PPDS (Production Planning Demand Scheduling) & SNP (Supply Network Planning) modules. APO-DP (Demand Planning) facilitated collaborative planning between dealers and sales offices.

Customer relationship management

Implementation of SAP DMS-CRM (Dealer Management System - Customer Relationship Management) It is essential to keep in close contact with the end consumers, build brand loyalty and provide total customer experience. Implementation of centrally hosted Samruddhi Dealer Management System (DMS) covers - Marketing, Pre-sales, Sales, Services, Spares, Warranty, Dealer Financials, Analytics, CRM and Business Intelligence. The pilot involving 50+ dealer locations initiated last 6 months is in the final phase of implementation, to be followed by roll-out across Samruddhi Dealer Community. Appropriate infrastructure including dealer connectivity is being established.

 Implementation of SAP DMS-CRM has provided an additional opportunity to ensure process standardization and compliance across all dealers of Samruddhi. Enhanced the ability to integrate a change more easily across the entire dealer chain. Facilitated better customer information management, end-customer database, along with seamless integration with back-end SAP systems.

Warehouse management system

Bar-coding Enabled Warehouse Management System at Spares Business Unit The Spares Business Unit (SBU) has a Warehouse at gandipet. The spare parts required for Automotive & Farm Equipment Sector dealers are managed through this warehouse. Wireless hand-held terminals are used to scan the barcodes on the component packs. The same is integrated with SAP R/3 System and being used to track the material during Pre-packing, Binning, Picking & Packing and error-free warehouse processes. This has facilitated substantial improvement in productivity and efficiency of warehouse staff to support high volume needs of the business.

IT and Information security

Project Suraksha Considering the criticality of Information Security in current business environment an organization wide security project has been initiated leading to BS7799 Certification. The scope covers all Information assets in Paper or Digital format across all the locations of Samruddhi and underlying IT Infrastructure. Organization wide information security policies and all the relevant systems & processes have been documented and published on company intranet. All business heads/ department heads are directly responsible for ensuring policy compliance.

 All the information and IT assets across locations have been identified, risk analysis carried out, risk mitigation plan defined by the users and concerned departmental heads supported by Information Security team. A well defined Information Security organization structure consisting of Apex council, Information Security Councils at each location and departmental representatives is in place. Information Security Cell within Corporate IT coordinates all activities related to this initiative.

 Samruddhi has deployed a world class Security Infrastructure, designed to both protect and enable business, thus ensuring Confidentiality, Integrity and Availability of the information systems at all times. Among the Security Infrastructure components are Firewalls & Intrusion Detection System, Antivirus Architecture, Virtual Private Network and Web Access, Strong Authentication, Anti-spam & Content Filtering. What are the business benefits that the company derived and beneficiaries of the implementation of above mentioned initiatives? Samruddhi has always been in the forefront of Information Technology adoption for business benefits. Today, Information Technology touches every corner of the business and enhances capabilities of every process taking Samruddhi towards its IT vision of being the "Best IT Enabled Real-time Enterprise

Thank you..!!!