SUPPLY CHAIN MANAGEMENT
THE INDISPENSABLE DISTRIBUTION WEB
A supply chain is a network of services and distribution options that performs the
functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished products
to customers. Supply chain management (SCM) is the combination of art and
science that goes into improving the way your company finds the raw
components it needs to make a product or service and deliver it to customers.
Supply chains exist in both manufacturing and service organizations, even if the
complexity of the chain may vary greatly from industry to industry and firm to firm.
Below is an example of a very simple supply chain for a single product, where
raw material is procured from vendors, transformed into finished goods in a
single step, and then transported to distribution centers, and ultimately to the
customers. Realistic supply chains have multiple end products with shared
components, facilities and capacities. The flow of materials is not always along
an arborescent network, various modes of transportation may be considered, and
the bill of materials for the end items may be both deep and large.
Traditionally, marketing, distribution, planning, manufacturing, and the
purchasing organisation along the supply chain operated independently. These
organizations have their own objectives and these are often conflicting.
Marketing's objective of high customer service and maximum sales dollars
conflict with manufacturing and distribution goals. Many manufacturing
operations are designed to maximize throughput and lower costs with little
consideration for the impact on inventory levels and distribution capabilities.
Purchasing contracts are often negotiated with very little information beyond
historical buying patterns. The result of these factors is that there is not a single,
integrated plan for the organization---there were as many plans as businesses.
Clearly, there is a need for a mechanism through which these different functions
can be integrated together. Supply chain management is a strategy through
which such integration can be achieved.
Supply chain management is typically viewed to lie between fully vertically
integrated firms, where the entire material flow is owned by a single firm, and
those where each channel member operates independently. Therefore
coordination between the various players in the chain is key in its effective
management. Cooper and Ellram have compared supply chain management to a
well-balanced and well-practiced relay team. Such a team is more competitive
when each player knows how to be positioned for the hand-off. The relationships
are the strongest between players who directly pass the stick, but the entire team
needs to make a coordinated effort to win the race.
DEFINITION OF SUPPLY CHAIN AND SUPPLY CHAIN
When a new concept is launched, there is always a great deal of confusion about
the definition, content and field of application.
Handfield and Nichols (2002) define supply chain and supply chain management
The supply chain encompasses all organizations and activities associated with
the flow and transformation of goods from the raw material stage, through to the
end user, as well as the associated information flow. Materials and information
flow both up and down the supply chain.
Supply chain management is the integration and management of supply chain
organization and activities through co-operative organizational relationships,
effective business processes, and high levels of information sharing to created
high performance value system that provide member organizations a sustainable
Christopher (2005) defines supply chain management as “ the management of
upstream and downstream relationships with suppliers and customers to deliver
superior customer value at less cost to the supply chain as a whole.
This definition of supply chain management focus on management of
relationships as a means of achieving better results for all members orf the
supply chain including customer.
“Supply chain management is a set of approaches utilized to efficiently
integrate suppliers, manufactures, warehouse, and stores, so that merchandise
is produced and distributed in the right quantities, to the right locations, and at
the right time, in order to minimize systems aside costs while satisfying service
DIFFFERENCE BETWEEN DISTRIBUTION, LOGISTICS AND
SUPPLY CHAIN MANAGEMENT
There has been much discussion in recent years of the differences between the
terms "distribution," "logistics," and "supply chain management." To many
people, those terms are synonymous. Yet they are different, and so it's important
to distinguish between them, not only to ensure clarity of communication, but also
as a way to understand the progressive levels of capabilities that companies
need to develop to successfully compete today.
Here are some definitions which can be find useful:
• Distribution involves the outbound flow of materials from the supplier or
manufacturer to customers. It naturally includes warehousing, transportation, and
inventory management activities.
• Logistics, according to the Council of Logistics Management, is "that part of the
supply chain that plans, implements, and controls the efficient forward and
reverse flow and storage of goods, services, and related information between the
point of origin and the point of consumption in order to meet customer
• Supply chain management, in my mind, is broader than logistics and includes
all activities involved in the sourcing, manufacturing or conversion, storage,
distribution, and delivery of goods to customers. It involves integration with
channel partners, including suppliers, distributors, and customers,
Supply chain management is a broader concept whereas Logistics
management is a narrower concept.
The concept of Supply chain management is relatively new whereas the
concept of Logistics management is relatively old.
Supply chain management is an extension of Logistics management.
Logistics management is primarily concerned with optimizing flows within the
organization whilst supply chain management recognizes that internal integration
by itself is not sufficient.
Logistics is essentially a planning orientation and framework that seeks to
create a single plan for the flow of product and information through a business.
Supply chain management builds upon this framework and seeks to achieve
linkage and co-ordination between processes of the other entities in the pipeline,
i.e. suppliers and customers, and the organization itself.
The focus of Supply chain management is upon the management of
relationships in order to achieve a more profitable outcome for all parties in the
chain where as the focus of Logistics management is upon the management of
resources within the organization.
OBJECTIVE OF SCM
“To reduce or eliminate the buffers of inventory that exists between organization
in a chain through the sharing of information on demand and current stock
Supply Chain Management or SCM as it is popularly known is also known as
Value Chain Management. This is nothing but handling through a single system,
all interaction that deals with people external to an organisation.
Supply Chain Management deals with two distinct areas; the customers and the
vendors. On the customer side it deals with all transactions dealing with the
customers; from inquiry to ordering to order execution to final delivery and
payment. Another part of the system would be there to handle returns from
customers as well as handling grievances. More transparent the system is to the
outside user, less is the interaction required on a personal level and greater is
the confidence that the customer builds on the organisation.
The upstream value chain consisting of suppliers, when integrated in the
company’s internal chain, leads to partnership between the two. With the onset of
this concept, the vendors are no longer considered as suppliers, but viewed as
partners in progress. This leads to the formation of narrow, but dedicated vendor
base, and who get committed to the buyers’ organisation. Similarly, the
downstream value chain encompasses the distributors and dealers, which when
integrated with the company’s internal value chain, results in better marketing
inputs such as product development, distribution, and customers’ services.
Cost reduction is a perennial concern of every well run organisation, and the only
way this can be achieved, is by re- engineering the supply chain. The supply
chain management concept will result in better control on deliveries, quality,
inventories, and prices, assuring a long term association between the vendor and
the buyer to a mutual benefit. In fact, the company can have a competitive edge
in the market by using its scarce resources on the activities that it can do the
best, i.e. by focusing on the core competency, and leaving the rest to the supply
The key to effective Supply Chain Management is supply chain integration –
ensuring that all parts of the supply chain work together, rather than at cross-
purposes. Supply chain integration is a state where timely information transmitted
among trading partners is in manner that lets them readily adjust to changes in
requirements for material, production, or delivery. The progress towards the idea
of supply chain integration as a source of competitive advantage will gain
momentum as the growth of ‘time based competition’ accelerates. In markets that
are increasingly volatile, responsiveness becomes a critical competitive
requirement. The critical decisions to be made are not about minimising costs but
about wherein the chain to position inventory and available production capacity in
order to hedge against uncertain demand. In the business of fashion almost 95%
of the products are completely new designs and the demand forecasts often err
by as much as 200%. This high uncertainty of demand is intrinsic and inherent to
fashion products. Devising a responsive supply chain alone can help cope up
with this phenomenon. Companies like Benetton and The Limited have gained
significant advantage through their ability to respond rapidly to fashion changes
in the markets they serve. Through the use of highly coordinated logistics and
supply chain structures, driven by the real- time capture of sales data, these
companies adapted their product range and their volumes in weeks rather than
months. A central theme of supply chain integration is “to identify the
unnecessary activities, which do not add value to the supply chain or activities
which would be better carried out at a different place or time in the supply chain,
address the inefficiencies caused by them and develop solutions by working
closely with supply chain partners.”
The competitiveness of international companies is highly dependent on their
ability to deliver customized product quickly and timely all over the world.
Therefore focus has moved form competition between firms at the same level in
the production process to competition between supply chain, from raw materials
to end customers. A company’s ability to create trust-based and long term
business relationships with customers, suppliers, and other strategic partners
becomes a crucial competitive parameter. The tendency towards increased
integration and co-operation between the enterprises in the supply chain results
in greater complexity in the management and control technology, which requires
increased co-ordination of resources and activities.
Most companies compete in and environment characterized by:
Turbulent and dynamic markets, where the customers requirements change
rapidly and unforeseeably.
Strongly segmented markets, where various customer have varying
requirement for products and services
Market requirements for multiple product varieties and customization of both
product and services.
Increase customer demand for “experiences” and not merely physical
Global competition, which forces companies to become faster, better and
These are the challenges that made supply chain management an important
management tool and competitive parameter for many firms.
FIVE BASIC COMPONENTS OF SUPPLY CHAIN MANAGEMENT
1. Plan – This is the strategic portion of Supply Chain Management. we need
a strategy for managing all the resources that go toward meeting customer
demand for your product or service. A big piece of planning is developing
a set of metrics to monitor the supply chain so that it is efficient, costs less
and delivers high quality and value to customers.
2. Source – We should choose the suppliers that will deliver the goods and
services you need to create your product. Develop a set of pricing,
delivery and payment processes with suppliers and create metrics for
monitoring and improving the relationships. And put together processes
for managing the inventory of goods and services that we receive from
suppliers, including receiving shipments, verifying them, transferring them
to your manufacturing facilities and authorizing supplier payments.
3. Make – This is the manufacturing step. Schedule the activities necessary
for production, testing, packaging and preparation for delivery. As the
most metric-intensive portion of the supply chain, measure quality levels,
production output and worker productivity.
4. Deliver – This is the part that many insiders refer to as logistics.
Coordinate the receipt of orders from customers, develop a network of
warehouses, pick carriers to get products to customers and set up an
invoicing system to receive payments.
5. Return – The problem part of the supply chain. Create a network for
receiving defective and excess products back from customers and
supporting customers who have problems with delivered products.
SUPPLY CHAIN DECISIONS
The decisions for supply chain management can be classified into two broad
categories -- strategic and operational. As the term implies, strategic decisions
are made typically over a longer time horizon. These are closely linked to the
corporate strategy, and guide supply chain policies from a design perspective.
On the other hand, operational decisions are short term, and focus on activities
over a day-to-day basis. The effort in these types of decisions is to effectively
and efficiently manage the product flow in the "strategically" planned supply
There are four major decision areas in supply chain management: 1) location, 2)
production, 3) inventory, and 4) transportation (distribution), and there are both
strategic and operational elements in each of these decision areas.
The geographic placement of production facilities, stocking points, and sourcing
points is the natural first step in creating a supply chain. The location of facilities
involves a commitment of resources to a long-term plan. Once the size, number,
and location of these are determined, so are the possible paths by which the
product flows through to the final customer. These decisions are of great
significance to a firm since they represent the basic strategy for accessing
customer markets, and will have a considerable impact on revenue, cost, and
level of service. These decisions should be determined by an optimization routine
that considers production costs, taxes, duties and duty drawback, tariffs, local
content, distribution costs, production limitations, etc. Although location decisions
are primarily strategic, they also have implications on an operational level.
The strategic decisions include what products to produce, and which plants to
produce them in, allocation of suppliers to plants, plants to DC's, and DC's to
customer markets. As before, these decisions have a big impact on the
revenues, costs and customer service levels of the firm. These decisions assume
the existence of the facilities, but determine the exact path(s) through which a
product flows to and from these facilities. Another critical issue is the capacity of
the manufacturing facilities--and this largely depends the degree of vertical
integration within the firm. Operational decisions focus on detailed production
scheduling. These decisions include the construction of the master production
schedules, scheduling production on machines, and equipment maintenance.
Other considerations include workload balancing, and quality control measures at
a production facility.
These refer to means by which inventories are managed. Inventories exist at
every stage of the supply chain as either raw materials, semi-finished or finished
goods. They can also be in-process between locations. Their primary purpose to
buffer against any uncertainty that might exist in the supply chain. Since holding
of inventories can cost anywhere between 20 to 40 percent of their value, their
efficient management is critical in supply chain operations. It is strategic in the
sense that top management sets goals. However, most researchers have
approached the management of inventory from an operational perspective.
These include deployment strategies (push versus pull), control policies --- the
determination of the optimal levels of order quantities and reorder points, and
setting safety stock levels, at each stocking location. These levels are critical,
since they are primary determinants of customer service levels.
The mode choice aspect of these decisions are the more strategic ones. These
are closely linked to the inventory decisions, since the best choice of mode is
often found by trading-off the cost of using the particular mode of transport with
the indirect cost of inventory associated with that mode. While air shipments may
be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile
shipping by sea or rail may be much cheaper, but they necessitate holding
relatively large amounts of inventory to buffer against the inherent uncertainty
associated with them. Therefore customer service levels, and geographic
location play vital roles in such decisions. Since transportation is more than 30
percent of the logistics costs, operating efficiently makes good economic sense.
Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and
scheduling of equipment are key in effective management of the firm's transport
SUPPLY CHAIN MANAGEMENT: A STRATEGIC TOOL
The role of customer service is to provide ‘time and place utility’ in the transfer of
goods and services between seller and buyer. There is no value in the
product or service until it is in the hands of the consumer. Availability is
one of the most important factors for success of any company in the
merging competitive scenario. A galaxy of factors, which together
constitute customer service, impacts upon availability. These factors
might include delivery frequency and reliability, stock levels and order
cycle time, etc. ultimately, customer service is determined by the
interaction of all those factors that affect the process of making
products and services available to the buyer. An effective supply chain
management strategy, which addresses all these factors, can improve
the customer service levels of an organisation significantly.
Effective supply chain management requires an in depth understanding of the
structure, economics, and requirements of, as well as the constraints
on, components of the system. But this internal perspective, while
necessary, is not sufficient. To succeed, companies must also have
several external perspectives- views of how supply chain policies being
implemented affect the overall competitiveness of the company in the
Supply Chain Modeling Approaches
Clearly, each of the above two levels of decisions require a different perspective.
The strategic decisions are, for the most part, global or "all encompassing" in that
they try to integrate various aspects of the supply chain. Consequently, the
models that describe these decisions are huge, and require a considerable
amount of data. Often due to the enormity of data requirements, and the broad
scope of decisions, these models provide approximate solutions to the decisions
they describe. The operational decisions, meanwhile, address the day to day
operation of the supply chain. Therefore the models that describe them are often
very specific in nature. Due to their narrow perspective, these models often
consider great detail and provide very good, if not optimal, solutions to the
To facilitate a concise review of the literature, and at the same time attempting to
accommodate the above polarity in modeling, we divide the modeling
approaches into three areas --- Network Design, ”Rough Cut" methods, and
simulation based methods. The network design methods, for the most part,
provide normative models for the more strategic decisions. These models
typically cover the four major decision areas described earlier, and focus more on
the design aspect of the supply chain; the establishment of the network and the
associated flows on them. "Rough cut" methods, on the other hand, give guiding
policies for the operational decisions. These models typically assume a "single
site" (i.e., ignore the network) and add supply chain characteristics to it, such as
explicitly considering the site's relation to the others in the network. Simulation
methods is a method by which a comprehensive supply chain model can be
analyzed, considering both strategic and operational elements. However, as with
all simulation models, one can only evaluate the effectiveness of a pre-specified
policy rather than develop new ones. It is the traditional question of "What If?"
versus "What's Best?".
GlaxoSmithKline (GSK) is a world leading research-based pharmaceutical
company with a powerful combination of skills and resources that provides a
platform for delivering strong growth in today's rapidly changing healthcare
environment. GlaxoSmithKline engages in the creation, discovery, development,
manufacture, and marketing of pharmaceutical and consumer health-related
products worldwide. Headquartered in the UK and with operations based in the
US, the new company is one of the industry leaders, with an estimated seven per
cent of the world's pharmaceutical market. GSK has over 100,000 employees
worldwide. Of these, over 40,000 are in sales and marketing, the largest sales
force in the industry. Around 35,000 employees work at 82 manufacturing sites in
37 countries and over 15,000 are in R&D. GSK R&D is based at 24 sites in 11
GSK's mission is to improve the quality of human life by enabling people to do
more, feel better and live longer.
GSK’s vision for the future is powered by their business drivers. It finds
purpose and direction with their strategic intent.
THE VISION FOR THE FUTURE
GlaxoSmithKline's vision is exciting and will give you the opportunity to make a
difference in the health of billions of people. Their value systems and operating
principles will provide the necessary guide on how they work at GSK. The key to
their success will be powered by the desire and passion to pursue GSK's
priorities, expressed by the business drivers.
GSK has four manufacturing units in India, located at Thane, Nashik, Mysore
Bangalore. GSK has its head office in Mumbai at Worli. Company has a
formidable presence in the domestic pharmaceuticals market with a market share
of above 5.9 per cent. GSK India markets a wide range of ethical formulations
and is the leader in therapeutic areas of respiratory, dermatology and vaccines,
besides having a significant presence in areas of gastroenterology, dietary
supplements, gynecology, neurology, cardiovascular and intensive care. GSK
India is also the undisputed leader in the animal health and fine chemicals
businesses. GSK also has leadership in four major therapeutic areas - anti-
infectives, central nervous system (CNS), respiratory and gastro-
intestinal/metabolic. In addition, it is a leader in the important area of vaccines
and has a growing portfolio of oncology products. The company also has a
Consumer Healthcare portfolio comprising over-the-counter (OTC) medicines,
oral care products and nutritional healthcare drinks, all of which are among the
Glaxo India completed 75 years of its operations in India in the year 1999 and
was named as India's most respected Pharmaceutical Company in a survey
conducted by Businessworld and the Indian Market Research Bureau (IMRB).
GlaxoSmithKline was named as India's most respected Pharmaceutical
Company in a survey conducted by Businessworld and the Indian Market
Research Bureau in the year 2003. GSK India has made a significant
contribution and is growing year by year. It figures among the top five markets
and so it is a cornerstone of the performance in the international markets. If GSK
India doesn’t do well, international division will also have a problem doing well
6VICE PRESIDENTS 1 EXECUTIVE DIRECTOR
SENIOR GENERAL MANAGER
orga ni za t ioN AL STRUCTURE
GlaxoSmithKline is a leading, global, research-based healthcare and
pharmaceutical company. In India, it is the Number One Pharmaceutical
company with a market share of 5.9 per cent. GSK commands the number one
position in six of the 10 therapeutic categories in which it operates. Other than
pharmaceuticals. GSK has other businesses - Qualigens Fine Chemicals
QUALIGENS FINE CHEMICALS (QFC):-
The Big Picture Qualigens Fine Chemicals (QFC) is a division of
GlaxoSmithKline Pharmaceuticals that manufactures and markets a range of
products required in a laboratory, including chemicals, diagnostic kits, glassware,
culture media, instruments, filter papers and more…
The word Qualigens is derived from two words—Quality and Genesis, which
means origin. Thus Qualigens can be translated to mean the Origin of Quality.
Qualigens is committed to manufacture and sell high quality products at
competitive prices. The objective is to provide everything a laboratory needs from
a single, reliable source. And the focus is on delighting the existing customers
and enlarging the customer base in terms of Quality, Service and safety.
QFC has over 750 products in its portfolio of fine chemicals. The nucleus of
QFC’s business is high quality and its products are manufactured and tested at
facilities that have ISO 9002 accreditation and highly skilled manpower and
The Qualigens Fine Chemicals (QFC) holds #1position in a highly fragmented
market of fine chemicals. It has an estimated market share of 27%. QFC has a
growing presence in Diagnostics, which covers the complete seriodiagnosis and
biochemical tests, and has achieved a sizable growth in diagnostic instruments.
Allied range of products including laboratory glassware has been successfully
launched. Complementing these ranges, QFC also deals in laboratory
requirements such as filter papers, disinfectants, dispowares and distillers. QFC
has also introduced filtration range of products and culture media, which are
seen as high growth products in the future.
QFC has a nation wide presence through 14 stock points, which serve as
regional distribution centers. The Central stock point is located at Bhiwandi,
Thane. QFC has 8 contract sites around Mumbai for manufacturing / packing
purposes. The overall product portfolio in different pack sizes extends to
approximately 2700 products. Quality is of paramount importance in the
laboratory chemicals business, QFC also has a Quality Assurance (QA) lab
which ascertain products comply with stringent quality parameters.
QFC's biggest customers are industrial and institutional laboratories. Besides
this manufacturing units requiring specialty chemicals are also major customers.
Many of the dealings happen through stock points or by means of trading parties.
Hence they form the direct customer interface.
DOCUMENTS USED FOR TRANSACTIONS IN THE CURRENT SYSTEM.
PO: - Purchase order is issued from procurement department to the suppliers
to order for RM / PM.
LR: - Lorry receipt or Lorry note is used to ascertain physical flow of good
from sites, CSP etc.
GRN: - Goods receipt note is issued to acknowledge goods from
suppliers or from sites to CSP.
GAN: - Goods Acceptance Note is issued by the QA when the products have
passed required quality parameters. GAN is used to finally accept
RDC: - Rejected delivery challan is used when goods are rejected and returned
PFI / STN is used to record material transfers between CSP and depots.
When excess goods are detected during physical stock check or goods of
STN/PFI due are not physically dispatched RSAN is issued to acknowledge
receipt and accept goods in stock
When Customer on whose favour the invoice is made returns goods then a RBP
is made to accept goods back in stock.
When damaged products are received and they have to be scrapped then an
ISAN is issued to record this loss of goods.
INVOICE is the final billing that is done to the customer.
Stock Factor Reeport is the monthly report containing data about stock levels
at various Stock points. It also contains information about forecasts about
products, this report is primarily used for planning and scheduling purposes.
DAN :- When materials are sent for sub processing from the sites they issue a
DAN containing instructions about the job to be done
A complete database of QFC products with product codes is maintained.
Products have five digit codes with the first four digits indicating the material
used and the fifth digit the pack type. When a new product is to be added
marketing has to decide a code for it. This updating of the database is done at
various stock points based on instructions from H.O.
Raw materials and Packing materials used for manufacturing or packing are
also coded for easy classification. Whenever any new material is to be added
Procurement at HO updates the database in PPMC systems.
Customers are also identified by codes. Depending upon the region and area
the customer falls under he is allotted a code. Whenever a new customer is to
be added the respective RBM, ABM approvals are needed, then the customer
is added to the database.
A standard bill of materials (BOM) is maintained.
A standard supplier database is also maintained for procurement purposes.
Addition of a new supplier to the database is done by Procurement from HO
All the databases will have to be edited either at the HO or on direct permission
THE EXISTING SUPPLY CHAIN AT GLAXOSMITHKLINE
THE FIRST SUPPLY CHAIN MODULE IS DEVELOPED FOR THE QFC
This is a broad overview of how the process of ordering
Packing/Manufacturing and dispatch occurs. This process is carried out at
manufacturing & packing sites namely, Sai Swaroop, Vasuda, Shreyas. Trichem,
Chemiline. The difference between production and packing sites is that for
production sites the Raw material as well as the finished goods is passed by the
QA labs, before final dispatch occurs.
Details regarding the depot functions were obtained from the Bhiwandi
depot as well as the CSP office at Worli. During each and every process
documents are generated to keep a record of the current transaction. Also it
passes information for the next-in-line Operation to be performed.
Billings to customers and collections from them are received either at the
stock points or at the HO. This data is then transferred to the Finance
Department on monthly basis. In case of bounced Cheques both the Zonal Sales
Managers and respective stock points are informed about it. In case of Suppliers
the Bill is received by the procurement department and is verified against the
GAN from QA. This is then sent to the billing department and the QFC Finance
can get updated when data is updated in MFG Pro system.
Determination of requirements at stock points
based current stocks and previous three months
sales data. Based on this a manufacturing schedule
for the plants is generated.
Based on this monthly schedule the sites plan their
Manufacturing/ Packing process. RM and PM
requirements are also generated based on this
schedule and given to Procurement.
Other than the above planned / scheduled method, sometimes due to stock outs
at the stock points many times direct orders are placed by the customer or stock
points. The process for handling of such orders is given below.
in hand from the
The customer orders are checked against
current stock by the stock point or Head office is
notified about the requirements. On basis of this
indents are issued or billing is done
Indents and final Product transfer notes are
of two types Normal and Modvat.
In case of manufacturing plants the Raw
material has to be processed further.
Please see the process on the next page
Raw material & packing
material availability is
compared with BOM
and checked at site.
n and dispatch to
orders given to
At stock points
checked and material
is billed. If not then
If Raw material/Packing material is not
available then Vendors are to be
contacted and orders are placed for the
Plant sends back to
reorders on same
PTN is received from
the sites and a
commercial invoice as
well as lorry order is
sent to Worli (Parijat)
After GAN is
SUPPLY CHAIN PROCESS FOR THE DIAGNOSTICS DEPARTMENT
Most of the diagnostic products are traded. Some of them are
manufactured by Vendors in India or imported. Some of the products are
procured in bulk and then repacked in small units at the repackaging site at
Vasai. Since most of the items are imported with procuring the same requiring a
high lead time, hence maintaining a high inventory becomes inevitable. A three-
month rolling forecast given by the RBM's is used for planning purposes.
HO or at the
is directly at HO
or by DCS is
SUPPLY CHAIN PROCESS FOR THE ALLIED RANGE OF PRODUCTS
Allied Ranges of products consist of Laboratory products like Distillation units,
Filtration aids, Chromatographic test kits, Culture media, Laboratory glassware
etc. The selling method differs from other QFC products in that some of the
products are sold through quotations in a formal B2B format. All of these
products are traded items. Most of the products are procured only on demand
from the customer. Some of the fast moving segments have a small amount of
inventory maintained to avoid stock outs.
After order is received it
is verified against current
stocks, if available
products are billed else
indents are generated for
SALES ORDER PROCESSING
For Qualisystems orders are accepted on basis of advance payments through
DD only in which case the order is accepted and sales order processing
occurs. Currently this verification is done manually it should be integrated and
order processing instructions should be displayed.
Customer / Stock
Products not available
When excess goods are detected during
physical stock check or goods of STN/PFI due are
not physically dispatched RSAN is issued to
acknowledge receipt and accept goods in stock
Based upon RSAN the complaint is checked by HO
(Parag Kharkar) and if reworking etc is possible
then respective action is taken or goods are
scrapped, for this an ISAN is issued.
Until LN is received the invoice is treated as
pending invoice and the order has to be tracked.
When Customer returns goods on whose
Worli CSP Office
Invoice copy +
Invoice/Bill + Lorry Order
Worli Head office
favor the invoice is made then a RBP is made to
accept goods back in stock.
Worli Head office
Delivery Challan +
In case of packing material the PO
is generated annually estimating
the monthly demand. After a
shortage is detected as against the
order the components of a packing
material and their availability is
verified against the BOM and the
stock status from plants, to fulfill
the order. Vendors are then asked
to supply the material as against
the annual order.
SALES ORDER PROCESSING
PO # + LR
GRN + TEST
Based upon all the requirements
and available stocks a
requisition is generated and
purchase order is issued.
GRN + RDC in
case of rejection
BILL is sent in case of
BILL + GAN after verification
Mumbai is a densely populated city with a huge flow of traffic. Because of this,
lengthy commutes to workplaces are common, with many workers traveling by
train. Instead of going home for lunch or paying for a meal in a café, many office
workers have a cooked meal sent by a caterer who delivers it to them as well,
essentially cooking and delivering the meal in lunch boxes and then having the
lunch boxes collected and re-sent the next day. This is usually done for a
monthly fee. The meal is cooked in the morning and sent in lunch boxes carried
by dabbawalas, who have a complex association and hierarchy across the city. A
collecting dabbawala, usually on bicycle, collects dabbas from homes or, more
often, from the dabba makers (who actually cook the food). The dabbas have
some sort of distinguishing mark on them, such as a color or symbol (most
dabbawalas are illiterate).
The dabbawala then takes them to a designated sorting place, where he and
other collecting dabbawalas sort (and sometimes bundle) the lunch boxes into
groups. The grouped boxes are put in the coaches of trains, with markings to
identify the destination of the box (usually there is a designated car for the
boxes). The markings include the rail station to unload the boxes and the building
address where the box has to be delivered. At each station, boxes are handed
over to a local dabbawala, who delivers them. The empty boxes, after lunch, are
again collected and sent back to the respective houses.
Everyone who works within this system is treated as an equal. Regardless of
what function a dabbawala, everyone gets paid about 4,000 rupees (which
equals around 50 British pounds), not a lot of money when one considers that
they also return the lunch's packaging to the home.
More than 175,000–200,000 lunches get moved every day by an estimated
4,500–5,000 dabbawalas, all with an extremely small nominal fee and with
utmost punctuality. According to a recent survey, there is only one mistake in
every 6,000 deliveries. In fact, the American business magazine Forbes gave a
Six Sigma performance rating for the precision of dabbawalas. This rating
indicates a 99.999999 accuracy percentage of correctness, meaning one error in
every six million transactions—an astonishing (and perhaps unbelievable) degree
Mumbai’s Dabbawalas operation is confined to Mumbai only, which is the
commercial capital of India. Thousands of Mumbai residents leave for work
empty-handed, without anything to eat for lunch. Mumbai’s In Mumbai, there is a
small army of 'dabbawalas' who picks up 175,000 lunches from the customers
homes and delivers them to harried students, managers and workers on every
working day. They serve hot lunch to this harried person at their desk at 12.30
In Mumbai there are around 5000 dabbawalas who work as tiffin carriers. Just
like a well-oiled Olympic relay team. They collect, sort and transport the dabbas
to the respective destinations. They do this with absolutely zero documentation
and yet rarely has it happened that a lunch has missed its destined belly.
The service includes collection, transportation and delivery of lunch boxes from
home to office location in the morning. In the evening the (empty) lunch boxes
are moved in the reverse direction. More than four thousand five hundred semi-
literate dabbawalas collect and deliver 175,000 packages within hours. This is a
very unique, simple and highly well-organised logistics system of120-year which
is followed in Amchi Mumbai. The Mumbai dabbawallas operation is widely
recognized as an outstanding example of excellence in logistics.
Though the work sounds simple, it is actually a highly specialized trade that is
over a century old and which has become integral to Mumbai's culture. The
dabbawalas is a 113-year business run by a group of people with practically no
formal education, no investment and no technology. The task of accurately
delivering food to over 2 lakh customers daily in crowded Mumbai is something
that would daunt even the biggest management gurus. But the dabbawallahs,
with almost no formal management training, accomplish the task with such
precision that they have become a worldwide management and logistics
WHO IS A DABBAWALA?
The word "Dabbawala" means "one who carries a box”. Available literature on
the subject broadly identifies a Dabbawala as a carrier of tiffin boxes. Most of the
Dabbawala hail from a few places in rural Maharashtra, which are located closer
to Pune. These include district and towns such as Audar, Ambegoan, Akola,
Junnar, Mulshi, Mawal, Rajgurunagar, Sangamner and Khed. Most of them
belong to a certain community and so they share certain common beliefs and
values in area like work ethics, living styles, food habits, religious beliefs and so
on. They also speak common dialect. They also share similar customs and
traditions like gathering together for a week every April for a festival in their. They
follow a strict dress code which comprises of the conspicuous white Gandhi-Cap
and Khadi Kurtha Pyjamas – a loose white dhoti shirt or cotton Pyjama.
Economic necessity was the most important factor that drove them to migrate to
Mumbai for employment. Most have left behind their family, visiting them once in
a while, and live a Spartan life in Mumbai. All Dabbawalas share the same belief
that being “Annadattas” their role on the job is of prime importance. So their
single most important objective each day is to ensure that no individual,
subscribing to their services, would go hungry on any day.
The dabbawalas have a distinct local identity and are easily recognized in the
crowded and most busy location in Mumbai. Pedestrians and commuters yield to
the dabbawalas in order not to interfere with their service delivery. They are
always in a hurry they are known for their reliability and work ethics.
All are fueled by the overall objective the “work is worship” and “Atiti Devo
When we bring to perspective the essential characteristics of Dabbawala we
need to reflect o what are the intrinsic personality variables that distinguishes the
Dabbawalas. The Dabbawalas are called Mard Marathas, the worrier cast in
Maharashtra, and as “Vithoba Chi Fauz” i.e. the army of Lord Vishnu and are
also descendents of Shivaji. They carry in their collective consciousness a spirtit
of struggle and achievement of the highest order. Their work ethics and the belief
that in the sweat and toil of day to day living there is scope for transformation of
the spirit fuels them to work harder and with greater commitment of purpose. It is
these qualities of the spirit that distinguishes them form the others.
HISTORY OF DABBAWALA
The origin of the Dabbawalas' lunch delivery service dates back to the 1890s
during the British Raj. The history of tiffin box carriers run parallel to the history of
Mumbai's development. Saddled with growing population in the late19th century,
new settlements -- further from the original in the old Fort complex, started
cropping up in Mumbai. Ballard Pier and Fort still remained the business centers
though, as they housed most of the banks, government departments, insurance
houses, shipping companies, etc. The tiffin carrier service by Dabbawalas is
believed to have originated in the 19th century and has been evolved over a period
of over 100 years.
At that time, people from various communities migrated to Mumbai for work. As
there were no canteens or fast food centers then, if working people did not bring
their lunch from home, they had to go hungry and invariably, lunch would not be
ready when they left home for work.
As residential colonies kept moving further from the Fort, a lot of office goers
started finding it difficult to go home for their lunch in the afternoons. Carrying
lunch boxes while leaving home in the morning was not exactly fashionable. It
was a Parsi banker finally found a solution. In 1890, a Parsi broker working in a
Ballard pier employed a young man, who had come down from Pune district, to
fetch his lunch every afternoon. The idea caught on and this inspired many
unemployed people to become dabba carriers. The purpose of the service was to
collect the tiffin from the each house and deliver to the consigned persons and
after the lunch the respective tiffins are returned back to their houses
Business picked up through referrals and soon the pioneer tiffin-carrying entrepreneur
had to call for more helping hands from his village. Though there were no umbrella
organizations for the carriers then, the first informal attempt to unionize was made by
Mahadev Havji Bacche in 1930. A charitable trust was registered n 1956 under the name
of "Nutan Mumbai Tiffin Box Suppliers Trust". Even today every carrier is expected to
contribute Rs 15 (US $ 0.30) per month towards the trust. The commercial arm was
registered quite later in 1968 as "Mumbai Tiffin Box Carriers Association.
WHAT IS THE BASIC NEED ADDRESSED?
The value proposition that Mr. Madhu Havji Bache offered was very simple ensure
“timely supply” of “home food” to the working class. This involved pick up of lunch
boxes from individual homes and their delivery at the work place and again returning
these boxes back home. Though the job profile was simple, they were made aware that
non delivery of the boxes on time or abstention from work would seriously impact the
reputation of the Dabbawallas. No initial investment was required by him as he used the
available transport and infrastructure facilities for the task.
In the beginning he had an informal arrangement to handle the job o pick up and delivery
of the dabbas. The areas covered were restricted to the geographic regions were work was
underway. Over the years this has evolved to meet the growing demand for supply of
“home food”. It was only in 1890, when this services delivery model was established that
Nutan Mumbai Tiffin Box Suppliers Charity Thrust was formed. The people working on
this job were formally called “Dabbawalas”.
THE NUTAN MUMBAI TIFFIN BOX SUPPLIERS TRUST
The Nutan Mumbai Tiffin Box Suppliers Association is a smooth 120-year-old
organisation with 5000 semi-literate members providing a quality door-to-door
service to a large and loyal customer base. 5000 semi-literate Dabbawalas
transport 1,75,000-boxes in a 3-hours period, through a 25-Km of public
transportation involving multiple transfer points at six sigma level of quality.
History: Started in 1880
Avg. Literacy Rate: 8th Grade Schooling
Avg. area coverage: 60 Km per Tiffin Box
Employee Strength: 5000
Number of Tiffins: 200000 Tiffin Boxes i.e.400000 transactions
Time taken: 3 hrs (9 am–12 pm delivery of carriers, 2 pm – 5 pm
collection of empty carriers)
Cost of service: Rs.200/month.
Turnover: Rs.50 crore per month approx.
Mr. Raghunath Medage.
Mr. Sabaji Medage.
Mr. Gangaram Talekar.
Mr. Damodar Manohar
BUILDING A CLIENTELE
The range of customers includes students (both college and school),
entrepreneurs of small businesses, managers, especially bank staff, and mill
They generally tend to be middle-class citizens who, for reasons of economy,
hygiene, caste and dietary restrictions or simply because they prefer whole-some
food from their kitchen, rely on the dabbawala to deliver a home cooked mid-day
Service charges vary from Rs 150 to Rs 300 per tiffin per month, depending on
location and collection time. Money is collected in the first week of every month
and remitted to the mukadam on the first Sunday. He then divides the money
equally among members of that group. It is assumed that one dabbawala can
handle not more than 30-35 customers given that each tiffin weighs around 2
kgs. And this is the benchmark that every group tries to achieve.
Typically, a twenty member group has 675 customers and earns Rs 100,000 per
month which is divided equally even if one dabbawala has 40 customers while
another has 30. Groups compete with each other, but members within a group do
not. It's common sense, points out one dabbawala.
One dabbawala could collect 40 tiffins in the same time that it takes another to
collect 30. From his earnings of between Rs 5,000 to Rs 6,000, every dabbawala
contributes Rs15 per month to the association. The amount is utilised for the
community's upliftment, loans and marriage halls at confessional rates. All
problems are usually resolved by association officials whose ruling is binding.
Meetings are held in the office on the 15th of every month at the Dadar. During
these meetings, particular emphasis is paid to customer service. If a tiffin is lost
or stolen, an investigation is promptly instituted. Customers are allowed to deduct
costs from any dabbawala found guilty of such a charge.
If a customer complains of poor service, the association can shift the customer's
account to another dabbawalas. No dabbawalas is allowed to undercut another.
Before looking into internal disputes, the association charges a token Rs 100 to
ensure that only genuinely aggrieved members interested in a solution come to it
with their problems, and the officials' time is not wasted on petty bickering.
Everyone who works within this system is treated as an equal. Regardless of a
dabbawalas function, everyone gets paid about 2000-4,000 rupees per month
(around 25-50 British pounds).
More than 175,000-200,000 lunches get moved every day by an estimated
4,500-5,000 dabbawalas, all with an extremely small nominal fee and with utmost
punctuality. According to a recent survey, there is only one mistake in every
6,000,000 deliveries. The American business magazine Forbes gave a Six
Sigma performance rating for the precision of dabbawalas.
The BBC has produced a documentary on Dabbawalas, and Prince Charles,
during his visit to India, visited them (he had to fit in with their schedule, since
their timing was too precise to permit any flexibility). Owing to the tremendous
publicity, some of the dabbawalas were invited to give guest lectures in top
business schools of India, which is very unusual. Most remarkably, the success
of the dabbawala trade has involved no modern technology. The main reason for
their popularity could be the Indian people's aversion to fast food outlets and their
love of home-made food.
The service is uninterrupted even on the days of extreme weather, such as
Mumbai's characteristic monsoons. The local dabbawalas at the receiving and
the sending ends are known to the customers personally, so that there is no
question of lack of trust. Also, they are well accustomed to the local areas they
cater to, which allows them to access any destination with ease. Occasionally,
people communicate between home and work by putting messages inside the
boxes. However, this was usually before the accessibility of telecommunications.
DABBAWALAS ON SMS
It is for their hard work that dabbawalas of Mumbai have got the Six-Sigma
certified. Less than two months after they went online, the 4,000-strong food
delivery experts have gone mobile, too. One can book their dabbawala through
their cell phone just by sending an SMS to 3636.
According to Raghunath Medge, president, Nutan Mumbai Tiffin Box Suppliers
Charity Trust,, “On receiving the message, a dabbawala contacts the sender on
his cell, and the delivery service can be started immediately.” Dabbawalas have
decided to accept messages from outside the city as well. “Anyone can send a
message from anywhere in India,” says Medge. “Interesting messages is
updated on the website under the “Mobile Blog” section.”Medge feels that the
mobile platform is just another way for people to access the dabbawala service.
“When they launched the web site, mydabbawala.com, they could manage their
databases in an organised manner. Now, the mobile phone messages help them
to engage more customers, and all those who did not know how to access their
services.” The website has been receiving new orders every day, even from
management students from around the world. “Two students from Singapore and
Scotland contacted them through the website, and are studying the dabbawalas
from a logistics point of view. In fact, several people have volunteered to work for
An important facilitating factor developed indigenously by these illiterates and
school level qualified dabbawala for smooth execution of the job has been the
system of coding. It comprises of the use of 3-4 symbols crudely painted on the
lunch boxes, in a combination of the colour which enable the dabbawala to easily
identify the dabba and facilitates accurate execution of the task. In this they are
guided by their intuition, spirit of teamwork, value and work ethics.
The coding system evolved by them is unique when viewed in its totality. These
have emerged from the needs of the job which has given freedom for individual
sub groups to develop their region specific coding system. Thus the dabbawala
in Central Mumbai would have their unique coding system while the dabbawalas
at Churchgate have what his group feel is best for their clientele and geographic
area covered. The logistics system revolves around its fit with the available
infrastructure, the culture of the people and the geographic characteristics. In
addition to the individual jobs at the micro level, it is important to know how this
complex system has worked consistently over the years in the most cohesive
STARTING JOURNEY 8.30 AM – 10.34 AM.
The day for the dabbawalas starts at 8.30 am, with collecting the dabba’s from
the various houses. The dabbawala goes to collects the tiffin on cycle.
People usually leave the dabba’s outside the door for them. In case they are late
the dabbawalas have to urge them to hurry up, else if it gets late they have to
leave if the clients Tiffin is not ready in time. He then picks up all the tiffins and
meets the other dabbawalas at the station.
The dabbawala is forced to do so because he is bound by the train time. The
departing train’s time is very crucial and must consider the time required for the
sorting process. There may, on the other hand, be further delays caused by other
customers too. It is extremely difficult, yet crucial to ensure that the entire pick up
of all tiffins takes place as per schedule. The scheduling has to include cushion
time for uncertainties such as these without which the whole system will, be
For example, the dabbawala picks up the tiffin from his customers houses and
meets the other group members at the designated spot at the station. This
particular group of 10 dabbawalas takes the 10.35 am Churchgate local train
everyday. Therefore, the dabbawalas have to make sure that they reach the
platform for the sorting process at least by 10.15 am in order to ensure a smooth
flow of their networking throughout their daily routine, this period in the morning
that includes picking up the tiffins and meeting at the designated spot at the
station is the most crucial part of the system. One bit delay in this aspect will
disrupt the whole system and will lead to a chaotic situation. Therefore, the
dabbawalas have to collect the tiffins in time and reach the station with enough
time left for sorting to take place before the train arrives.
SORTING 10.15 AM – 10.34 AM
The critical phase of the system is sorting. Sorting of all the tiffins according to
their destination station and arranging them into wooden crates take 20 to 25
minutes. The aim of the process is to segregate the tiffins and differentiate them
as per the destination of the each of them. The tiffins are then handed to different
dabbawalas at the destination station and sorting makes it easier to identify each
group of tiffins and less time consuming for the respective dabbawala. The
sorting makes the entire process error free. The process of sorting is similar to
that of a post office where letters are segregated according to their destinations.
Since each tiffin exchanges many hands, each of he lids of the tiffins is marked
with a colored code indicating the originating station, destination and building
with the floor number. The coding is the secret behind the efficient working of the
system and that’s why the network is “information rich”. This is a unique feature
as it requires no documentation or record keeping. There is no communication
between the 2 groups, but just coordination among them because the whole
blueprint is pre-decided by the dabbawalas themselves.
The Mukadam plays a key role here to ensure smooth working and co-ordination,
his responsibility is to know all the tiffins his group carriers. The responsibility of
the Mukadam is to the extent that he has to know all the tiffins that his group
carries. Therefore, he must be able to recognize these tiffins even if the codes on
them are barely visible. Also, if any member of the group abstains from his duty
for a particular day for some reason, then it is the responsibility of the Mukadam
to ensure that all the dabbas that the absentee was responsible for, are duly
picked up and delivered back on time. Hence, we see that the Mukadam plays a
critical role in this stage of sorting and allocating jobs.
The dabbas are collected, sorted out and sent to their destination based on a
numerical and alphabetical code. Every station has a numerical code and each
place has an alphabetical code. The tiffin carries the code of the source and the
destination. The codes help identify tiffin owners. Very simple system of sorting
exists with this dabbawala network. Every tiffin carrier has the mark of a circle or
a lower of a specific colour and a digital identity number. Take this Tiffin mark for
example K-BO-10-19/A/15. Where K is the identity letter of the dabbawala. BO
means Borivali i.e. the area from there the tiffin is collected. The figure 10 refers
to Nariman point area. 19/A/15 refers to the 19th
Building and the 15tj floor in
Nariman point area where the tiffin is to be delivered.
These codes have been developed over the years and began with simple
coloured threads. An employee delivers the dabbas, collected individually from
homes at the railway station nearest to the houses. At the station the destination
are sorted out, based on the codes, and then by train to respective stations.
JOURNEY TIME10.30 AM – 11.20 AM
The time period between 10.34 am to 11.20 am is the journey time for the
dabbawalas. They load the wooden cart filled with tiffins into the goods luggage
or goods compartment of the train. Generally they try to occupy the last
compartment as this help them to avoid the rush at the platforms and is easy to
be located and conveniently situated once the train arrives on the platform.
Mostly the commuter’s don’t get on this compartment as they are already filled
with crates and there is not enough room. This is a common understanding
among daily commuters and dabbawalas. In any case the platform is filled with
people and dabbawala have to unload the crates on the platform they start a
series of loud verbal comments warning everyone to make way of the unloading.
The unloading of this particular group takes place at Dadar, Lower Parel, Grant
road and finally Churchgate etc. Finally just six out of 10 dabbawala get off at
Churchgate. There are also others joining into the group from the station as they
have common destination points.
The allocation of manpower at each station depends on the number of tiffins that
have to be delivered in a particular area. E.g. if 150 tiffins are to be delivered in
Grant Road, 4 people are assigned to the station. This is done in keeping in mind
that one person cannot carry more than 35 dabbas. They will also be assigned
specific codes which are written on the top of the tiffin. This 4 dabbawala can be
from any groups and irrespective of any station. Their job is now to deliver these
150 tiffins irrespective of which group they belong to.