supply chain ans logistics

8/6/2019 Supply Chain Ans Logistics

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SUPPLY CHAIN AND LOGISTICSSUPPLY CHAIN AND LOGISTICS

INDUSTRYINDUSTRY

1

PRESENTED BY:-

ASHISH SINGHALMBA- (AB) 1stYEAR


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FLOW OF PRESENTATIONFLOW OF PRESENTATION

y Definition

y Indian and Global scenario

y Types and elements of supply chain

y Supply chain in different sector

y

Agribusiness supply chain modelsy Case on ITC e chaoupal

y Bull whip effect

y Modes of logistics

y Elements of logistics cost in India

y 3PL

y Growth drivers

y Major players

y Government policies

y Impact of WTO

y Contemporary issue2


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DEFINITIONDEFINITION

y Supply chain is a network of facilities and distributionthat performs the functions of procurement of material,transformation of these material into intermediate andfinished products and the distribution of these finished

products to customers.

Supply Chain Management

y It is the integration of supply chain activities through

improved supply chain relationship to achieve andattain sustainable competitive advantage.

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WHY SUPPLY CHAINWHY SUPPLY CHAIN

y Improve operations

y Optimizing transportation costs

y Competitive advantage

y

Efficiency towards globalizationy Increasing importance of e-commerce

y Manage inventories

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GLOBAL SCENARIOGLOBAL SCENARIO

y The annual cost of supply chain and logistics in theworld is $500 billion(2009)

y USA constitute 25 % of the global industry but spendsonly 9 % of its GDP on supply chain and logisticsservices while other countries spend

Europe --- 11%

Japan --- 11.4 %

China --- 16- 20 %

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INDIAN SCENARIOINDIAN SCENARIO

y Indian supply chain and logistics industry accounts for 2 %of the global supply chain and logistics industry

y India spends 13 % of its GDP on supply chain and logisticsindustry

y Logistics accounts for 15 25 % of the cost of goods inIndia

y About 65 70 % of the products are still transported byroad and 30 35 % by rail

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SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

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SUPPLIERSINTERNAL

SUPPLY CHAINCUSTOMERS

Produc

tion

/Proces

sor Market Custo

mers

Purcha

sers

Distrib

ution

Suppli

ers


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TYPES OF SUPPLY CHAIN ANDTYPES OF SUPPLY CHAIN AND

CHANNEL RELATIONSHIPSCHANNEL RELATIONSHIPS

y Basic Supply Chain

y Ultimate Supply Chain

y Partnerships or Alliances

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ELEMENTS OFAGRIELEMENTS OFAGRI--SUPPLYSUPPLY

CHAINCHAIN

y Transfer of product from farmers to consumers

y Transfer of money from consumers to farmers

y Transfer of ownership from farmers to consumers

y Transfer of information from consumers to farmers

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TYPICAL AGRI SUPPLY CHAINTYPICAL AGRI SUPPLY CHAIN

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Assembly/Utilizationof Production Factors

Production (crops,livestock, aquaculture)

Post-harvest Handlingand Storage (raw products)

Transformation(processed food products)

Manufacture(finished products)

Marketing and Sales

Transport and Distribution

Manufacture(intermediate products)


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FOOD SUPPLY CHAIN CLUSTERFOOD SUPPLY CHAIN CLUSTER

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SUPPLY CHAIN MODEL FORSUPPLY CHAIN MODEL FOR

FRUITS AND VEGETABLEFRUITS AND VEGETABLE

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OPPORTUNITIES FOR IMPROVINGOPPORTUNITIES FOR IMPROVING

THE FOOD SUPPLY CHAINTHE FOOD SUPPLY CHAIN

y Investments in real estate and cold chain infrastructure(100% FDI allowed).

y Increasing role of third party logistics.

y Incentives for setting up of processing plants in agri-

export zones (100% FDI allows in food processingindustry).

y Size of Indian retail industry (US$ 350 billion).

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SEED SUPPLY CHAINSEED SUPPLY CHAIN

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FERTILIZER SUPPLY CHAINFERTILIZER SUPPLY CHAIN

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SUPPLY CHAIN MODEL FORSUPPLY CHAIN MODEL FOR

AGRO CHEMICALSAGRO CHEMICALS

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supplier production

Distri t r Retailers Farmer

Campaign & Demonstration

Life Cycle of Pest & Disease

Climatic Factors Mode of action of the chemical


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SUPPLY CHAIN FOR ORGANICSUPPLY CHAIN FOR ORGANIC

FARMINGFARMING

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Growersgroup

trader

of

origin

consum

erswholesalers


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AGRIBUSINESS SUPPLY CHAINAGRIBUSINESS SUPPLY CHAIN

MODELSMODELS

ITC e-Chaupal & Chaupal Sagar

Godrej Aadhar (Godrej Agro vet)

Haryali Kisaan Bazaar (DSCL)

TATA Kisan Sansar

Mahindra Subh Labh

HULs Shakti 18


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GREEN SUPPLY CHAINGREEN SUPPLY CHAIN

y The process of using environmentally friendly inputs.

y Products can improve or be recycled and improved.

y Outputs that can be reclaimed and re-used at the end oftheir life-cycle thus, creating a sustainable supply chain.

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LIMITATIONS OF SUPPLYLIMITATIONS OF SUPPLY

CHAINCHAIN

y Uneconomic scale of operation

y Lack of consistency in supply and quality

y Inadequate and inappropriate storage and distributioninfrastructure

y Lack of technical support for the agro-industrial sector

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A Case: ITCs eA Case: ITCs e--ChaupalChaupal

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TRADITIONAL SOYBEANTRADITIONAL SOYBEAN

SUPPLY CHAINSUPPLY CHAIN

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FarmersMandi*

Commission AgentsITC

Other Buyers

Processing

InboundLogistic

Display &Inspection Auction

Bagging &Weighing

OutboundLogistic

AuthorizedPrice

Price Discovery(By words of mouth)

Mandi: A government mandated market-yard where farmers sell their crops;[Agricultural Products Marketing Act of India]


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REENGINEERED SUPPLY CHAIN VIAREENGINEERED SUPPLY CHAIN VIA--

EE--CHOUPALCHOUPAL

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Farmers

Mandi

ITC

Other Buyers

Processing

InboundLogistic

Display &Inspection Auction

Bagging &Weighing

OutboundLogistic

e-ChoupalInternet Kiosk

Market

Conditions,

Weather, Best

Practices,

Community, Price

discoveryetc.

Sanchalak


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BULL WHIP EFFECTBULL WHIP EFFECT

Small changes in consumer demand result in largevariations in orders placed upstream

Dramatic order size variation

Amplification of order size variation as one moves up thesupply chain

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Supplier Manufacturer Distributor Retailer Customer

Buys 10Orders 15Orders 25Orders 40


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25

Logistic Industry


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MODES OF LOGISTICSMODES OF LOGISTICS

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Logisticsmodes

Road Railways Sea Air


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INDIAN ROAD NETWORK RAILWAYS

India has the second highestlargest road network of 3.3million km.

US has the largest road network

with 6.4 million km & China 1.8

million km.

National Highways-2% of total

road length.

But carry 40% of goods traffic of

India.

The Indian Railways boasts of being the worlds 2nd largest railnetwork spread over 81,511 km

and covering 6896 stations.

The freight segment accounts for

roughly two thirds of railwaysrevenues.

The tone/kilometer costs forIndian rail freight at three times

that of China.

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SEA AVIATION

12 major pots

187 minor ports 7517 km coastline

Major ports

76 % of traffic

West coast ports-70% of traffic

The size of the world air cargo

market is estimated at 27 milliontonnes valued at $200 billion.

India accounts for meagre 3% ofthe global air cargo market -

garments, pharmaceuticals, dyes,

chem-ical,perishables [fruit,vegetables, flowers, fish and meat].

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ELEMENTS OF LOGISTICSELEMENTS OF LOGISTICS

COSTININDIACOSTININDIA

35%

25%

9%

11%

14%

6%Transportation

Inventory

Hanlding andwarehousing

Packaging

Losses

Others

S Source ---Edelweiss Research, CygnusResearch, Cygnus Research e: Edelweiss Research, Cygnus Research Source: Edelweiss

Research, Cygnus Research

29Year - 2009


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33PLPL

y Third Party Logistics:-

Use of outside company to perform all or part of

companys material management and distributionfunction is termed asThird-party Logistics.

y 3 PL is one of the Business in Logistics as a frameworkfor StrategicAlliances to PerformWorld Class Business.

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THIRD PARTY LOGISTICSTHIRD PARTY LOGISTICS

y China & India -- 13-15%

y U.S. -- 57%

y Europe -- 30-40%

y

Japan -- 80%Source- SSKI survey titled Indian logistics industry

ADVANTAGES

Focus on core competencies

Best practices Enhanced technological capabilities

3PL in the country could touch $90million by2012, current $58 million.

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GROWTH DRIVERSGROWTH DRIVERS

y General growth of the Indian economy

y Manufacturing boom-for exports as well as for domesticmarket

y Expected rise in International trade from India

y MNCs setting up manufacturing in India-Nokia, Flextronics

y Implementation of VAT will lead to growth inwarehousing business

y Opening of organized retail sector -attracting retail chainslike Wal-Mart and Carrefour in addition to Indian playerslike Pantaloon and Reliance.

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GOVERNMENT INITIATIVESGOVERNMENT INITIATIVES

The Indian government is making great efforts by -

y Privatizing ports and airports

y Increasing the number of gateway ports

y Investing in highway projects

y Streamlining customs and excise procedures

y Improving the rail network

y

The government planed to invest $17 bn intransport infrastructure between 2006-2010

y Establishing free trade & warehousing zones (FTWZ)

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IMPORTANT PROJECTSIMPORTANT PROJECTS

y Amend in the National Highway Act to expedite landacquisition,permit private financing and allow tolling.

y Improvement in rural access by launch of the PrimeMinisters Rural Roads Program.

y Reduction of congestion on rail corridors andimprovement of port connectivity by launch of NationalRailway Development Program.

y Up gradation of infrastructure and connectivity in the

country's twelve major ports by initiating the NationalMaritime Development Program.

y Establishment of Tariff Authority for Major Ports to

regulate tariffs.

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MAJOR PLAYERSMAJOR PLAYERS

y Adani group

y National bulk handling corporation (NBHC)

y National collateral management services ltd (NCMSL)

y

Global agri. systemy TCI group

y Shree Subham logistic limited(SSLL-Kalptaru)

y GATI

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ADANI LOGISTICS LIMITEDADANI LOGISTICS LIMITED(ALL)(ALL)

y Adani Logistics Limited (ALL) provides integrated logisticssolutions for movement of commodities. Adani has secured an

all-India license to manage container train operations on Indian

Railways. In order to provide pan-India multi-modal-logistics

services, Adani Logistics Limited, has developed the facilities formovement of goods in containers by train, road and sea.

y Adani Logistics offers comprehensive end to end logistics

solutions for handling a wide range of cargo including

containers, break bulk dry and liquid cargo, perishables andproject cargo, in the form of full train load, full container load

and less than container load.

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GOVERNMENT POLICIESGOVERNMENT POLICIES

y Scope of exemptions from Excise Duty enlarged toinclude equipments needed for storage and warehousefacilities on agricultural produce.

y 40 lakh tonnes storage capacity by FY 2012

y 24 new cold storage projects sanctioned FY 2012

y Full exemption from basic Customs Duty to bio-asphaltand specified machinery for application in theconstruction of national highways

y Infrastructure spending to be up by 23%

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CONTDCONTD

y Rs 30,000 crore tax-free infrastructure bonds forRailways

y Exemption from Import Duty for spares and capitalgoods required for ship repair

y Two Committees set up for greater transparency andaccountability in procurement policy and forallocation, pricing and utilisation of natural resources.

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IMPACT OFWTOIMPACT OFWTO

y A reduction in tariffs allows for wider access to foreign

markets, making less expensive products available to a larger

customer base.

y Removal of non-tariff trade barriersimport license

requirements, inspections, and movement ofproduct.y The removal of tariff and non-tariff barriers t o trade has

encouraged direct investment by foreign companies in both

existing and emerging markets.

y While companies once exported and imported through agents

or distributors, globalization has compelled many organizationsto establish their own offices in foreign markets.

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CONTEMPORARY ISSUECONTEMPORARY ISSUE

y ERP for the Supply Chain

y India Aims to Invest $100 Billion in Ports, Shipping

y Tata plans umbrella logistics firm

y

India's logistics sector worth $125bn by 2010y India targets more links in Africas food supply chain

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CONTDCONTD

y Many large Indian corporates such as Tata and RelianceIndustries have been attracted by the potential of this

sector and have established logistics divisions.

y Large express cargo and courier companies such as

Transport Corporation of India (TCI) and Blue Dart havealso started logistics operations.

y Indian shippers are gradually becoming more aware of the

benefits of logistics outsourcing.

y The Indian government has focused on infrastructuredevelopment.

y In India, 100% FDI is allowed in logistics whereas in Chinaforeign investment was not allowed in domestic logistics.

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REFERENCESREFERENCES

y www.ilfsindia.com

y www.tcil.com

y www.indianrail.gov.in

y

www.nhai.orgy www.ipa.nic.in

y www.aai.aero

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supply chain ans logistics

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