Page 10 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 1: 21st Century Supply Chains

Notes
Figure 1.3: Conceptual Diagram of a Supply Chain

Source: Upendra Kachru, (2010), “Exploring the Supply Chain,” Excel Books
In evaluating the success of the supply chain, the links between the manufacturer and the retailer
have to function at a desired level. Even when the performance at earlier stages of the supply
chain is outstanding, this is not important – if the product is not available to support retail sales.
This is because the end customer is the only source of revenue for the supply chain and the
linkage is the ultimate test to the success of the supply chain.
The basic objective of Supply Chain Management is to maximize the supply chain profitability.
A more successful supply chain will, therefore, have higher profitability. The profitability of a
supply chain is the difference between what the customer pays for the final product and the costs
the supply chain expends in filling the customer’s request.
FMCG major Hindustan Lever has reduced its inventory from about 45 days to less than 5 days;
Mahindra & Mahindra has been able to reduce its inventory by 20-50 days, while in LG’s case, the
reduction has been around 30 days. These companies attribute a significant part of their success
to the way they manage the operations of their supply chain.



Caselet Supply Chain Management of Dabbawala

s the story of the semi-literate tiffin-wallahs shows, a world-class supply chain
basically requires the coordination of information and activities from the
Ahousewife (she supplies the tiffin and is considered as the supplier in the supply
chain context) to the householder (he receives the tiffin and is the client), trust between the
tiffin-wallahs (firms) and management of relationships (NMTBSCT).
How does this supply chain system work? The tiffin is filled with lunch at the client’s
kitchen by the housewife and kept outside the door of the residence at 8.25 a.m. At 8.30
a.m., the tiffin-wallah arrives, picks up the tiffin and moves on, knocking at the door only
if the tiffin is not seen. Under normal circumstances, there is no interaction with any
member of the client’s household. By 8:38 a.m. the tiffin is placed on the bicycle or pushcart
together with tiffins collected from other customers.
Contd...

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