Supply Chain Management [Paperback] by Narayan Rangaraj,G. Raghuram,Mandyam S...

551 Pages·2008·42.498 MB·English

by  Mandyam Srinivasan Narayan Rangaraj , G. Raghuram

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ABOUT THE AUTHORS
Narayan Rangaraj is Professor of Industrial Engineering and Operations Research at
the Indian Institute of Technology, Bombay since 1990. He is a Ph.D. from the
Johns Hopkins University and a B.Tech from IIT Bombay.
He has worked in areas of transport operations management, inventory and other
aspects of supply chain management, and applications of operations research
techniques to various sectors. His recent areas of work are railway operations,
containerisation, the aviation sector and pricing/revenue management.
G Raghuram is Indian Railways Chair Professor in Rail Transport and Infrastructure
Management at the Indian Institute of Management, Ahmedabad. He has been on
the faculty there since 1985. He is a Ph.D. from Northwestern University, PGDM
from IIM-Ahmedabad and holds a B. Tech degree from IIT-Madras.
He has specialised in logistics and supply chain management, and infrastructure
and transportation systems. His areas of research, consultancy, case studies and
publications include railways, ports and shipping, air and road sector, service
organisations and issues in logistics and supply chain management. Raghuram has
taught at Northwestern University and Tulane University, USA. He has been a
visiting faculty at universities in USA, Canada, Yugoslavia, Singapore, UAE and
several institutions in India. He has consulted for over 95 organisations in the area of
Logistics and Supply Chain Management, and Infrastructure Development. Also, he
has published over 30 papers and written over 100 case studies.
Mandyam M Srinivasan is the Ball Corporation Distinguished Professor of Business
at the University of Tennessee, Knoxville, USA. He has taught at this university since
1992. He has a Ph.D. from Northwestern University, a PGDM from IIM-
Bangalore, and an M Tech degree from IIT-Madras.
Srinivasan has many years of experience in the automobile industry. He has
consulted with, and trained senior executives from numerous U.S. Fortune 500
organisations on how to build and manage lean supply chains. He has also trained
senior executives in India, Germany, Taiwan, Sweden, Singapore, China, Mexico and
Romania. Srinivasan has published over forty papers in peer-reviewed journals and
has written many articles for trade journals and magazines. He received the Franz
Edelman Award for Achievement in Operations Research from the Institute for
Operations Research and Management Sciences in 2006. He is the Editor of IIE
Transactions on Design & Manufacturing.
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Narayan Rangaraj
Indian Institute of Technology, Bombay
G Raghuram
Indian Institute of Management, Ahmedabad
Mandyam M Srinivasan
University of Tennessee, USA
Tata McGraw-Hill Publishing Company Limited
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Supply Chain Management for Competitive Advantage: Concepts & Cases
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Preface
This book is positioned to serve two audiences: the MBA and senior student in a
business programme, and the professional working in industry who wishes to gain a
deeper understanding of supply chain management and logistics especially in an
Indian context. The book thus provides an overview of concepts as well as intensive
material for analysis and training in the area that has come to be known as Supply
Chain Management. The topics covered are far reaching in practical scope.
A special feature of the book is the collection of detailed cases. All cases are
situated in the Indian business environment, as it makes a transition from traditional
business practices to new ones in an arena of global competition. This attempts to fill
a stated gap in the academic and business literature in the area. The cases are all
drawn from real organisations and many are presented with actual data and
descriptions that provide a realistic picture of issues in supply chain management.
The conceptual material in the book presents a set of integrative viewpoints on the
area. Chapter 1 discusses the drivers of supply chain management, such as
technology, and increased consumer power in a global market. The chapter discusses
how supply chain management practices have evolved over time to cope with these
drivers and highlights organisations that have benefited from better supply chain
management. Chapter 2 analyses the dynamics in a supply chain, and shows how
lead time reduction and better information management are vital to supply chain
performance. The importance of big picture thinking is underscored in this chapter.
Chapter 3 talks about supply chain design and presents a roadmap for designing and
managing the lean supply chain. It discusses how the design can be adapted based on
the products managed by the supply chain. The role of performance measurements is
highlighted in Chapter 4. This chapter uses a case to demonstrate how organisations
within the supply chain can benefit by shared metrics. Chapter 5 discusses supply
chain efficiencies and the benefits gained by applying lean principles.
Manufacturing is presented as the primary driver of benefits in value addition in
material processing and transformation. The implications of this emphasis on supply
chain efficiencies on other parts of the supply chain are explored. From a single
supply chain player’s point of view, upstream and downstream interface management
are taken up in a symmetric manner in Chapters 6 and 7. A special focus of the book
is to look at transportation and transfer of material between supply chain entities in
vi Preface
the language of SCM, in Chapter 8. Chapter 9 presents the pervasive role of modern
information technology in supply chain management and finally, Chapter 10
presents a range of quantitative tools and techniques that are used in different facets
of decision making in this area.
The cases are then presented and are intended to be read as stand alone pieces of
analysis and as a tool for integrated learning. The very essence of supply chain
management is a holistic, multi-actor, multi-departmental view of decision making
and the cases reflect that concern. In some cases, a particular sub-area of decision
making can be isolated, but in general, the scope of analysis and decision making has
to be inferred and proposed in an open way. This delimiting of the scope of analysis
in a coherent manner is part and parcel of the learning objectives of the course.
We have instructor suggestions and teaching notes as support for many of the
cases, to be provided through the publisher. We also provide a teaching plan for
some typical course offerings in this area.
As a guide to students, a brief overview of each case, and some questions for
analysis and an approach is suggested. A case positioning matrix helps in selection of
cases for reading, and puts them in context. We emphasise that in our opinion, the
cases, although extensive, need to be read in their entirety and instructors and
students need to absorb the business logic and propose areas of analysis and
appropriate techniques from a wide selection. This breadth of vision and judgement
in selection is part of the training that distinguishes a true supply chain manager from
a routine application oriented view of highly specific techniques within artificial
functional boundaries.
The case material, while dealing with Indian companies, does have global
conceptual validity in the general concerns of supply chain management. However, in
appropriate places, the specific conditions of the Indian sub-continent in terms of
business practices and overall ethos, and of infrastructural realities are emphasised
upon.
Finally, the book provides some links to contemporary developments in the area
and can even serve as the starting point for some applied research. Apart from its use
as a textbook and as a guide to practitioners, it is of some value to researchers as well.
NARAYAN RANGARAJ
G RAGHURAM
MANDYAM M SRINIVASAN
Acknowledgements
I wish to acknowledge a number of people for their help and contributions: Suchir
Sinha, Sanjeev George, Manik Bahadur, Tilak Raj Singh, Piyush Verma and Manish
Singh for some of the exercises and collection of material and references, N.
Hemachandra and Jayendran Venkateswaran for professional inputs and Deepa Hari
for personal support during the writing of the book.
Narayan Rangaraj
I thank the following co-authors of the cases for allowing us to use the material for
publication in this book:
Tathagata Bandyopadhyay Bibek Banerjee
Faculty, IIMA Faculty, IIMA
Nishchal Chudasama Anusha Dhasarathy
Research Associate, IIMA PGP Student, IIMA
Rekha Jain Abraham Koshy
Faculty, IIMA Faculty, IIMA
D Kumar S Manikutty
Faculty, Railway Staff College, Faculty, IIMA
Vadodhara
Dilip Mathew Saral Mukherjee
Research Associate, IIMA Faculty, IIMA
Preeti Monippally Rohit Pathak
PGP Student, IIMA PGP Student, IIMA
Malavika Pillai R N Prasad
PGP Student, IIMA Faculty, Railway Staff College,
Vadodhara
Rohithari Rajan Neeraj Sisodia
PGP Student, IIMA Research Associate, IIMA
Chetan Soman
Faculty, IIMA
The organisations that have rendered direct support in the material development
efforts include:
Rajashree Cement, Grasim Industries and South Central Railway
Titan Industries Limited
CONCOR
Spices Board of India
viii Acknowledgements
Bayer CropScience Limited
FoodWorld
Airfreight Limited
and four others (who choose to remain anonymous)
Laxmi Transformers
Western Oil Limited
Farmaid Tractors Limited
Seth Dhaniram
We acknowledge the research assistance for case writing provided by:
Premlata Agarwal
Anita Basalingappa
Sushma Choudhary
Ameesh Dave
Kapil Jain
Sunil Jaryal
Vishal Kashyap
Darshana Padia
Biswajyoti Pal
Parvathy Raman
Shivani Shukla
We also thank Macmillan India Ltd for permitting us to print the cases Laxmi
Transformers and Airfreight Limited, and Vikalpa, the Journal for Decision Makers, for
the case Chilli in Soup (A).
G. Raghuram
I thank the College of Business Administration at the University of Tennessee,
Knoxville, for supporting this book project, and Cengage Learning (formerly
Thomson Learning) for permission to use material from two chapters in my book,
Streamlined: 14 Principles for Building and Managing the Lean Supply Chain,
published by Cengage in 2004. I wish to thank Dr. James Reeve for permission to use
the Integrity Motors case, and Dr. Kenneth Gilbert for his keen insights, support,
and encouragement.
Mandyam M Srinivasan
The authors wish to thank Milind Padalkar for his co-writitng of Chapter 9.
They also wish to thank and N. Kumar and N. Chandrasekaran, both associated
with the CII Institute of Logistics in Channai at the time, who played a big role in
bringing them (the authors) together to work on this book and thereby provided the
physical and mental space that sparked this joint initiative. The authors also acknowledge
the help provided by Tapas Maji, Anubha Srivastava and Hemant Jha of TMH.
Authors
Contents
Preface v
Acknowledgements vii
List of Abbreviations xiii
List of Cases xv
Decision Areas and Positioning of Cases xvi
Chapter 1. An Overview of Supply Chain Management 2
Introduction 3
1.1 Ownership of the Supply Chain 4
1.2 Supply Chain Drivers 4
1.3 Supply Chains in the Producer-Centric Era 6
1.4 Financial Management and Return on Investment 10
1.5 Supply Chains in the Customer-Centric Era 12
1.6 Examples of Well-run Supply Chains 15
Summary 32
References 33
Exercises 33
Chapter 2. Understanding Supply Chain Dynamics 36
Introduction 37
2.1 Supply Chain Dynamics in Action 38
2.2 The Bullwhip Effect 40
2.3 The Impact of Lead Times 46
2.4 Inventory Management and Supply Chain Dynamics 49
2.5 Offshoring and Outsourcing: on Supply Chain Dynamics and Costs 52
2.6 Lessons Learned 54
Conclusions 57
References 58
Exercises 58
x Contents
Chapter 3. Designing the Supply Chain 60
Introduction 61
3.1 Some Issues in Supply Chain Design 62
3.2 Steps for Designing and Managing Lean Supply Chains 63
Conclusions 87
References 88
Exercises 89
Chapter 4. Performance Measurement 90
Introduction 91
4.1 Measuring Supply Chain Performance 92
4.2 The Prisoner’s Dilemma 94
4.3 The Integrity Motors Case 96
4.4 Evolving Supply Chain Metrics 105
4.5 Performance Monitoring 108
4.6 Competences and Performance 117
Conclusions 118
References 118
Exercises 119
Chapter 5. SCM Effectiveness and Lean Thinking 120
Introduction 121
5.1 The Toyota Production System 122
5.2 Creating Flow: The Tools and Techniques of Lean Thinking 124
5.3 Continuous Improvement and the Pursuit of Perfection 149
Conclusions 150
References 151
Exercises 151
Chapter 6. SCM Across Organisations: Upstream Interface 154
Introduction 155
6.1 Procurement 157
6.2 Strategic Issues in Procurement: Sourcing 157
6.3 Operational Issues in Procurement: Purchasing 161
6.4 Items of Procurement 162
6.5 Contracts 164