Supply chain mgt
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Transcript of Supply chain mgt
A PROJECT OF SUPPLY CHAIN & DISTRIBUTION MANAGEMENT
(SDM) ON “CERAMIC TILES INDUSTRY”
To: Dr. Tejash PujaraBy: Group no. 4
Roll no. Name of student
54 Bharat Lalwani
75 Mayur Patadia
78 Rajkumar Patel
80 Bhavesh Patel
88 Mayank Pujara
116 Pintu Vaishnav01
OBJECTIVES• To understand following concepts in 2 different
companies (SME, LE) of same ceramic tiles industry:
“Supply chain issues & relationship, Distribution channel, Modes of transport, procurement, order cycle, inventory & demand management, roles of 3 PL and IT in supply chain”
• To identify pros & cons of supply chain of both companies.
02
INDUSTRY OVERVIEWRank Country name Capacity (mn sq.ft)
1 China 2200
2 Spain 635
3 Italy 589
4 Brazil 566
5 India 270
Total world consumption 7565
Sr. No Sector Revenue Share of production No. of companies
1 Large Enterprise 3500 cr 56% 16
2 Small Enterprise 3000 cr 44% > 250
• Ceramic tiles industry of India provide a direct 50,000 employment & 5,00,000 indirect employment.
Source: Indian ceramic industry, EXIM bank report, March 2005. 03
CERAMIC TILE INDUSTRY IN INDIA
• Growth of tiles industry is almost double than the growth of real estate industry.
• Per capita consumption of India is 0.15 sq. meter, while in European country demand is 2.5 sq. meter.
• Demand of ceramic tiles is increased due to following industries:– IT industry.– Housing industry.– Retail industry.
04Source: Indian ceramic industry, EXIM bank report, March 2005.
SWOT ANALYSISStrengths:• Consistent growth of 12-15 percent in spite of slowdown in economy.• The Indian ceramic export market is rising at the rate of 15 percent per annum. (44% of unorganized sector)
Weakness:• Not much importance given on brand building and network thus creating hindrance for export growth.• Low per capita consumption (0.15 sq.mt. p.a.) as compared to developed nations. 05Source: Indian ceramic industry, EXIM bank report, March 2005.
SWOT ANALYSIS Opportunities:• The construction and Housing Boom to provide bolstering demand for ceramic tiles.• The untapped rural market supported by a strong growth witnessed by Indian Agriculture provides tremendous potential for the domestic ceramic manufacturers.
Threats:• Freight, supply of power and gas remains the key cost-related issues impacting the industry.• Basic Customs Duty on import of ceramic tiles from China and raw materials imported from abroad should be corrected to prevent dumping of tiles from China. 06Source: Indian ceramic industry, EXIM bank report, March 2005.
FEW ORGANIZED PLAYERS
Asian granito India ltd.Euro ceramic Ltd.
H & R Johnson Ltd.
Kajaria ceramic Ltd.
Nitco tiles Ltd.
Somany tiles Ltd.
07
Company overview
• We have studied supply chain management of tiles industry in both large unit (30 production line) as well as small unit (2 line).
• H & R Johnson. • Atom ceramic.
08
Characteristics of both companies
Description Large enterprise Small enterprise
Sector LE SME
Extent of integration Highly integrated Less integrated
Location of Plant All around in World At Morvi (Rajkot)
Employment Not Available 250
Management Professional Traditional
Capacity Not available 2700 tons/ day
Prescence In World India & Gulf countries
09
Supply chain of ceramic tiles industry
10
Supply chain issuesSupply chain Issues Large unit Small unit
Supply chain network Strong (More intermediaries)
Weak (Less intermediaries)
Complexity of supply chain High Low
Inventory deployment Easy to achieve Difficult to achieve
Information / technology ERP system Email & Daily stock report
Efficiency / Effectiveness Effectiveness Efficiency
Organizational relationship Both internal & External Internal only
Performance measurement Financial as well as Non financial
Financial only
Transportation management
Road, Rail, Sea. Air (For sample only)
Supply chain security Highly secured (Customized software)
Less secured (General software)
11
Types of collaborationSmall unit
Supplier
Manufacturer
Distributor
Retailor
Large unit
Manufacture
Supplier
Manufacturer
Distributor
Retailor
Supplier
Manufacturer
Distributor
Retailor
Vertical collaboration Full collaboration 12
Models for developing supply chain relationshipStages of model Small unit Large unit
Strategic assessment Cost sensitive supply Chain
Flexible & Responsive supply
chainDecision to form
relationshipPlant to warehouse & construction site
Evaluate alternatives 2 or 3 preferred partner (Truck avail.
& order time)
1 right partner
Select partner With help of opposite party (EX:
Bangalore)
On basis of capacity and flexibility
Structure Operating model
Planning Priority
Improvement Almost nil Continuous
13
Third party logistics
Small unit• Transport base.• Forwarder base. (Export)
Large unit• Transport base.• Forwarder base. (Export)• Warehouse base.
• It is an external supplier that perform company’s logistic functions.
14
Information technology capabilities
Small unit• Only headquarter has
information regarding inventory at each stockiest as well as production schedule.
Large unit• Information available
throughout organization.• Also facilitate automatic
transmission order.• EX: Plant 1 for Ivory color
product, Plant 2 for Matt color product.
• {For consistent quality and to reduce production changeover}
15
Distribution channel
Large enterprise• Traditional channel (Multi
level)• Factory outlet (1 level)• Direct client (0 level) (Web
based service)• Export level (0 level)
Small enterprise• Traditional channel (Multi
level)
• Project order (0 level) Export level
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Manufacturing plant
Factory warehouse
Regional warehouse
Stockiest
Retailor
Client
Multi level 1 level
Manufacturing plant
Factory warehouse
Retailor (Factory outlet)
Client
Export
Manufacturing plant
Factory warehouse / Export division
Client
17
0 level for small enterprise Project order (Special type of order)
Order from customer to Mfg.
plant
Production department arrange schedule to minimize
production changeover
Warehouse department
arrange goods which minimize movements of
goods
Company ensure on time delivery
Complete the order by full payment
18
• JK tire from
0 level for large enterprise
19
Criteria 0 level 1 level Multi level
Lot size
Delivery time
Product variety
Min. Volume per order
Evaluation of each channel
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Types of distribution
Exclusive
• Gold plated
• Mirror tiles
Selective
• Current scenario
Intensive
• Catalogue &
Stockiest
21
Modes of transport
Modes H & R Johnson Atom ceramic
Rail road carrier Out bound ---
Motor or truck carrier Inbound + Outbound Inbound + Outbound
Water carrier Inbound (Chemicals)+ Outbound (Export tiles)
Outbound (Export tiles)
Air carrier Out bound (Sample) Out bound (Sample)
• 80% of raw materials has been arrived from near by area of Morvi, so Road transport is convenient modes.
• As a part of outbound logistics, Yet Morvi has not received rail facility from government, but process is still continued, it will help to SMEs to reduce outbound logistic cost.
22
Inventory
Inventory
Raw material
Diff. Clays
Chemicals
Finish goods Tiles
23
Diff. Clays
Parameters H & R Johnson Atom ceramic
Safety stock (Throughout year) 15 days 7 days
Safety stock (Rainy season) 21 days 15 days
Order system Fixed quantity system
Fixed quantity will be changed on basis of capacity utilization
Min. order quantity 1 truck 1 truck
Documents verify at warehouse Report of sample of clay, Weigh bridge report
80% of total raw material inventory
24
Chemicals
Parameters H & R Johnson Atom ceramic
Supplier Import from China Local supplier of Morvi
Payment Advance payment Credit payment
Ordering cost High Low
Priority Cost Inventory
Min. order quantity 1 container 5 or 10 kg
20% of total raw material inventory
25
Tiles
Parameters H & R Johnson Atom ceramic
Design variety Less High
Brand variety >1 1
Inventory at Mfg. plant Less inventory High inventory
Inventory of stockiest point High inventory Less inventory
Influencing factor Delivery time, Types of order
Availability of truck, Delivery time, Types of order
NOTES:-• SME has comparatively less number of stockiest point. • SME has less accurate forecasting system than LE.
26
Warehouse for finish goods
Parameters H & R Johnson Atom ceramic
No. of warehouses in India Approx. 50 Only 4
No. of Sub company Approx. 28 (EX: H & R J Maharashtra Ltd.)
Zero
Types of products Tiles, Sanitary-ware Only tiles
NOTES:-• Raw materials has been stored at manufacturing plant only.
27
Criteria for procurement
Large enterprise• By tender system, which
has been revised by 3 months.
• Price of raw material has been remained same for 3 months.
Small enterprise• Proximity (Geographical
area)• Credit policy of supplier.• Customer service of
supplier.
28
Order management cycle
Order entry
Routine order
Delivery date based
on production schedule
Credit policy
Dispatch of goods
Project order
Production schedule based on
date
Credit issue Dispatch of goods
Export order
No changeover is allowed (1 batch
product)29
Demand management• During rainy days, Construction company has been slow down its
construction,, so its ultimately leads to reduce demand of tiles.• On an average capacity utilization of tiles companies is 90 to 95%,
so during rainy season capacity utilization goes to 60%. (Because 50% is BEP)
• Generally maintenance or routine breakdown has been carried out during rainy season.
• But last 2 years are exception, because Italy and China tiles industry severely affected. So Indian tiles industry get benefit from it.
• On an average, demand management is easy for Small unit than large unit. (Because of single brand)
• Both types of unit outsourcing tiles as a part of demand management.
30
Learning outcomes
• Max. market share can only be achieved by more than 1 distribution channel.
• Selection of distribution channel depends on type of product, turnover, size of company & industry.
• Market leader always use product differentiation or innovation for sustain profitability.
• SME mainly concern for center for gravity.31
Acknowledgment
31
ANY QUERIES???
?32
Thank You
33
• Animation• SKU