Logistic and SCM , IIPMB

1. Dr. V. G. Dhanakumar, Director
Indian Institute of Plantation Management (IIPM) Bengaluru
Logistics and Supply Chain Management (LSCM)

2. Top 10 Countries Least 10
Countries
Source: Connecting to Compete 2016 Trade Logistics in the Global Economy

3. Logistics
•Planning, execution and control of the movement/placement
of goods and/or people, and related supporting activities,
within a system designed to achieve specific objectives
Logistics Management
“Part of supply chain management plans, implements, controls
the {efficient, effective forward & reverse flow}, storage of
goods, services and related information {between the “point of
origin” and the “point of consumption” to meet customers’
requirements”}.
Logistics and Logistics Management

4. • Smoother flow of company processes &
procedures to increase performance
• Brings profits to company
• Increases efficiency & consumer
relationships
Why Logistics

7. Competition is no longer between
Companies
It is between “Supply Chains”

8. VGD@IIPM
Supply Chain
•Activities associated with flow and transformation
of goods from raw materials stage, through end
users, also associated information flows.
Supply Chain Management
•Integration of supply chain activities through
improved supply chain relationship to achieve and
attain sustainable competitive advantage.

9. VGD@IIPM
Materials Management
•Focuses on the co-ordination of goods, services,
materials & information from suppliers through
operation, and it is a subset of total supply chain
management.
Total Supply Chain Management
•Primary objective: proactively manage the two way
movement & co-ordination of goods, services and
information from raw materials to end user.

10. VGD@IIPM
• Vertical Channel
Integration
– Vertical Marketing Systems
(VMSs)
• Horizontal Channel
Integration
Supply Chain Management

11. Components of SCM
Suppliers Purchasers Production /
Processor
Distribution Customers
Suppliers Customers
Integrated Supply Chain
Internal
Supply
Chain
Market
Customers’
Customer
Suppliers’
Supplier

12. Supply Chain Management: Coffee Perspective
Suppliers Purchasers Production /
Processors
Distribution Market Customers
Coffee
Value Chain
Stakeholders Chain
Suppliers’
Supplier
Customers’
Customer
“Novel Ways to Create Value” *
?
* Substantial Value to Customers
VGD@IIPM

14. VGD@IIPM
Growing Proce-
ssing
Selling
Basic Value Chain

15. VGD@IIPM
Grower
Pack-
house Retailer
Importer
Fresh Vegetable Value Chain

16. VGD@IIPM
Japanese Market
G G G
Exporters E
I Importers I
Auction
F
F
F
F
F
F
F

17. • SUPPLY CHAIN INCLUDES :
–MATERIAL FLOWS
–INFORMATION FLOWS
–FINANCIAL FLOWS
Relationship
Management

18. VGD@IIPM
Types of Supply Chain and
Channel Relationships
Seller Buyer
Figure 1 - Partnership
Supplier Focal Firm Customer
Figure 2 – Basic Supply Chain

19. VGD@IIPM
Supplier’s
Supplier
Supplier Focal Firm Customer
Customer’s
Customer
Figure 3 – Extended Supply Chain
Initial
Supplier Supplier Focal Firm
Figure 4 – Ultimate Supply Chain
Financial
provider
Third Party
Logistics Supplier
Market
Research Firm
Customer
Ultimate
Customer

20. VGD@IIPM
Types of Supply Chain and Channel
Relationships
Basic Supply Chain
•Immediate supplier and an immediate customer directly
linked by one or more of the upstream and downstream
flows of products, services, finances and information.
Extended Supply Chain
•Suppliers of the immediate supplier and customers of
the immediate customer, all linked by one or more of
the upstream and downstream flows of products,
services, finances and information.

21. VGD@IIPM
Types of Supply Chain and Channel
Relationships
Ultimate Supply Chain
•Companies involved in all the upstream and downstream
flows of products, services, finances and information from
the initial supplier to the ultimate customer
Partnerships or Alliances
•Dyadic Relationships or Co-operative Relationships
between two companies that are distinct from supply
chains, because this type of relationship does not involve
any one company in simultaneous upstream and
downstream relationships.

22. VGD@IIPM
Channel:
• LeadershipLeadership
• CooperationCooperation
• ConflictConflict
Supply Chain Management

23. VGD@IIPM
Supply Chains have room for improvement
Order
Processing
Order
Processing
Jobsite
Delivery &
Installation
Jobsite
Delivery &
Installation
Customer
Accepted
Order Quality
Credit Approved
Financin
g
Order Sourced
Order Released
Pick (ATO)
Stage
Value-Add
Stage
Pick (PTO)
In-Transit Receive
Stage
Value-
AddPick
Ship
Delivered
Installed
In-Transit
Receive
Putaway/Stage
Order
Pick
Ship
Supplier/Mfg.
Replenishment
Supplier/Mfg.
Replenishment Order
Fulfillment
Order
Fulfillment
Ship In-Transit
TransportationTransportation
TransportationTransportation
Receive
Stage
Pick
Scrap
Reman
Resell
In-Transit Receive
Stage
Value-Add
Stage
Pick
Schedule
Removed
RMA
TransportationTransportation
Disposition
Process
Disposition
Process
Returns
Management
Returns
Management
90%
85%
93%
89%
93%93%95%
95%
95%
Source: Viewlocity
Total Order Performance: 47%Total Order Performance: 47%

24. VGD@IIPM
Selection of Supply Chain
A. Single Supply Chain
• One supply chain for all the product
• Common in small companies
E.g., Kwality biscuits
Supplier
Manufacturing
Unit
• Sweet biscuits
• Salt biscuits
• Chocolate
Customers

25. VGD@IIPM
B. Multiple Supply Chains
• A separate supply chain for each product line
common in bigger companies
E.g., Procter and Gamble
Manufacturing
Units
Supplier Customer
Supplier Customer
Supplier Customer
Tooth pastes & mouth wash
Shampoo
Tablets

26. VGD@IIPM
C. Customer organized Supply Chain
• Customer instantaneously initiate the
supply chain
E.g., Insurance
Supplier
(Insurers)
Customer
(Claimants)
Manufacturing
(Processing)

27. VGD@IIPM
Flows in Supply Chain
Physical
Flow
Financial
Flow
Information
Flow

28. Incorrect to look at demand chain separately
Information Flow
Raw Materials
RETAILE
R
FACTORY DC RDCSUPPLIER
Finished Goods
DC – Demand Chain; RDC -- Retail Distribution Centre

29. SUPPLY CHAIN ELEMENTS
• Supply Chain Design
• Resource Acquisition
• Long Term Planning (1 Year ++)
Strategic
• Production/ Distribution Planning
• Resource Allocation
• Medium Term Planning (Qtrly, Monthly)
Tactical
• Shipment Scheduling
• Resource Scheduling
• Short Term Planning (Weekly, Daily)
Operational

30. Supply Chain Goals
Efficient supply chain management must
result in tangible business improvements and
characterized by a sharp focus on
– Revenue growth.
– Better asset utilization.
– Cost reduction.

31. • Optimizing flows within the
organization
• Single plan for flow of products
and information through a
business
How Does Logistics Differ from SCM
• Integration of all partners in
the value chain
• Achieve linkage & coordination
between processes of other
entities in the pipeline i.e.
suppliers & customers, and
organization itself.
Logistics management Supply Chain management

34. Is your supply-chain “sustainable”?

35. Reverse Supply Chain
Management (R-SCM)
[Forward Supply
Vs.
Backward Supply]

36. Supply Chain Management
Suppliers Purchasers Production
/ Processor
Distribution CustomersMarket

37. Reverse Supply Chain Management
• Series of activities required to retrieve a
used product from a customer and dispose
of it properly or reuse after processing .
• Connects end users with manufacturer in
reverse direction.

38. Reverse Supply Chain Management (RSCM)
[Forward Supply Vs. Backward Supply]
• Not limited to delivering products to the end
consumers, but responsible to return by the
consumers back to the company.
Example,
• RSCM - soft drink bottles pick up & delivery system and
reused repeatedly
• Return merchandise - goods worth over $100 billion are
returned to US retailers / annum due to damage, obsolete
equipment, restock, etc.
• Retailers / e-tailers are facing challenges as return
policies are becoming more lenient due to product
freshness
• EU legislation - recycle one used tire for every new tire
through RSCM
• Best RSCM translates into higher customer service and
revenue opportunity

39. Reverse Supply Chain Management (RSCM)
(contd…)
[Forward Supply Vs. Backward Supply]
• Nike - Encourages consumers to bring their
used shoes to make basketball court / running
tracks
• Understand where the RSCM will contribute
profits
• Gate keeping in RSCM - decide which product
to be allowed in RSCM for profitability and
uncertainty

40. Reverse Supply Chain Management (RSCM) (contd…)
[Forward Supply Vs. Backward Supply]
• RSCM technology:-
• Use real-time inventory tracking system (bar codes /
sensors) for returned goods processing as unique
system
• Use data warehouse with extranet and intranet
technology for successful RSCM
• RSCM Barriers
• Internal - preparedness of company in terms of
processes, system & infrastructure
• External - amenability of the customer

41. Corporates practicing reverse supply
chain
• Canon
• Xerox
• Kodak
• Exide
• Oce copiers
• IBM

42. Drivers of RSC Initiatives
• Environmental legislations
• Economic value from returns
• Green Image
• Material Resource constraints like
lead and other precious resources

43. Closed-Loop Supply Chain
• Taking back products from customers and recovering
added value by reusing the entire product, and/or
some of its modules, components and parts.
• Design, control and operation of a system to
maximize value creation of entire life-cycle of a
product

44. Closed Loop Supply Chain

46. (G2C2) - SCM

47. Global, Green, Carbon Foot Print & Cold (G2C2)
Supply Chain Management (SCM)

48. Global Supply Chain Management
(GSCM)
Inter-firm cooperative,
uses resources from
international participants
of the chain to
accomplish shared and
independent goals of its
members

50. 50

52. Components of GSCM
1. International distribution
2. International suppliers
3. Off-shore manufacturing
4. Fully integrated global supply chain

53. Types of International Sourcing Strategy
Dom estic In-House Sourcing
Dom estic
Offshore Subsidiary Sourcing
International
Intra-Firm Sourcing
Dom estic Purchasing Arrangem ent
Dom estic
Offshore Outsourcing
International
Outsourcing
Sourcing
A company procures
major components in-
house by procuring
them domestically
A company procures
major components
from its foreign
subsidiary
A company buys
major components
from independent
suppliers at home
A company buys
major components
from independent
suppliers
internationally
Source: Kotabe (2000)

54. Belfast
Carburetors
and
distributors
Treforest
Spark plug
insulators
Leamington
Foundry
production of
engine
components
Dagenham
Final
assembly
Bordeaux
Transmissions
Enfield
Instruments,
fuel and water
gauges, plugs
Basildon
Radiators, water
pump assembly,
engine
components
Genk Body
panels,
road
wheels
Wülfrath
Transmissi
on parts,
engine
component
s
Saarlouis
Final
assembly
Cologne Die-
cast transaxle
casings, gear and
engine
components
Valencia
Final
assembly
Ford Example-Global Chain

55. Carbon Footprint (CF)
• Total set of GHG (greenhouse gas)
emissions caused directly and
indirectly by an individual,
organization, event or product”
(UK Carbon Trust 2008).
• Everyone in this room has a FP

58. Largest Producers of CO2
Emissions Worldwide (2014)

59. Largest Producers of CO2
Emissions Worldwide (2016)

60. Let’s determine Carbon Foot
Printing (C-FP)

61. How Global Warming Works
Fossil fuels (coal, oil, natural gas)
Carbon Dioxide (CO2)

62. Sun’s energy passes
through the car’s
windshield.
• Energy (heat)
trapped inside car
and cannot pass
back through the
windshield,
causing inside of
car to warm up.
Example of the Greenhouse
Effect

63. Effects of Global Warming
Increased Temperature
Habitat Damage and
Changes in Water
Supply
Rising Sea Level

64. Portage Glacier
1914
• Alaska
2014

67. Greenhouses Gases
Greenhouse gases are made out of:
Water vapour
Carbon dioxide
Methane
Nitrous oxide
Ozone
Chlorofluorocarbons
Natural gases, but extra greenhouses gases made by
humans polluting

68. What one student uses…

72. How to Remove CO2?
• Carbon sink: Reservoir of carbon accumulates &
stores carbon for an indefinite period.
• Main sinks are:
– Absorption of carbon dioxide by the oceans
– Photosynthesis by plants and algae to turn the carbon
into plant matter
– Injection of CO2 emissions deep into geological
subsurface

73. • Supported in the UK (both in public & private sectors)
• ‘Build the carbon footprint of different products by analyzing
the carbon emissions generated by energy use across the
supply chain’ (Carbon Trust, 2006)
• Measuring carbon footprint product supply chain, minimize
footprint, by reducing carbon emissions required to deliver a
product to the end consumer
Guidelines for C-FP

74. • Carbon dioxide (CO2)
• Methane (MH4)
• Nitrous oxides (NOX)
• Hydrofluorocarbons (HFC)
• Perfluorocarbons (PFC)
• Sulphur hexafluoride (SF6)
Global Effects of Atmospheric
Pollution

75. • Acid rain caused by the emission of sulphur dioxide &
nitrogen oxides into the atmosphere
• Interferes with growth of flora & fauna and with
water-life.
Regional Effects of Atmosphere Pollution

76. • Adoption of low & ultra-low-sulphur diesel in the trucking sector,
by rail freight companies, land-based freight transport is
responsible for a very small proportion of acid rain
• High sulphur content of the bunker fuels used in shipping
causes serious environmental problem, particularly around
ports.
[International Maritime Organization (IMO) has implemented new regulations under
Annex 6 of its MARPOL conventions to radically reduce Sox emissions (IMO,
2008)]
Regional Effects of Atmosphere Pollution

77. • Ozone (O3) formed when nitrogen oxides and VOCs
react with sunlight .
• Exposures to high levels of ground level ozone can
lead to respiratory problems and nausea.
• Children with asthmatics and the elderly may be
more susceptible or vulnerable to the effects
(Royal Society, 2008)
Local Effects of Atmosphere
Pollution

78. Different Types of Carbon Footprint
(Carbon Trust)

79. Factors Affecting CO2 Emissions from
Road Freight Transport

80. How to reduce CFP?
Turn things off when not in use (lights, TV,
DVD player, Wi Fi, computers etc.)
Turn down heating slightly (1 to 2 degrees
C, 1 degree help to reduce heating about
8%)
Turn down water heating setting (2 degrees
Contd…..

81.  Check central heating timer setting - no point
heating house after left for school/office
 Fill dish washer and washing machine with full
load - save water, electricity, and washing
powder
 Fill kettle with as much water as needed
 Do weekly shopping in a single trip
 Hang out the washing to dry than tumble drying it

82. Moving from GSCM to “Gr.”SCM…
• Global Supply Chain Management
(GSCM)
VS
• “Green” Supply Chain Management
(“Gr.”SCM)

83. Integrating environment thinking into supply
chain management,
including - - - -
product design, material sourcing and selection,
manufacturing process, delivery of the final
product to the consumers,
and end-of-life management of the product after
its useful life.”
Integrating environment thinking into supply
chain management,
including - - - -
product design, material sourcing and selection,
manufacturing process, delivery of the final
product to the consumers,
and end-of-life management of the product after
its useful life.”
… with a “Sustainability” angle to GSCM

85. Definition of GSCM
• Sustainable raw materials
• Little or no hazardous waste
• Toxic wastes in the environment
• Procurement, production and distribution

88. Elements of the traditional configuration, extended to incorporate product,
packaging/ recycling /reuse / re-manufacturing operations within a semi-
closed loop
Extended Supply Chain

89. Traditional Supply Chain

90. Consistency between:
Customer “priorities” with competitive “strategy”
Vs
supply chain “capabilities” with supply chain “strategy”
to build “customer delight”
“3 steps to achieve Strategic Fit”
1.Understand the customer & supply chain uncertainty
2.Understand the supply chain capabilities
3.Achieve strategic fit
Supply Chain Management -Strategic Fit

91. Objectives of GSCM
– Eco-friendly business
– Achieve competitive advantage and high
performance through GSCM practices
– “Integrate the GSCM into the corporate policies
and strategies for smooth operations
– Make differences in its approach
– How important to conserve environment and
sustain natural resources and business activities
dependant on environment

92. Advantages of being “Green”
– Wal-Mart goal: 5 percent reduction in packaging by 2015 and
produce $3.4 billion in direct savings and roughly $11 billion in
savings across the supply chain.
– Johnson & Johnson’s energy efficiency program resulted in an
estimated $30 million in annualized savings over the 10 years
prior to the company’s 2006 sustainability report.
– Nestlé, through a combination of packaging source reduction,
re-use, recycling, and energy recovery, saved $510 million,
worldwide, between 1991 and 2006.

93. Mathematics of “Green” SCM
Green Procurement
+
Green Manufacturing/Materials Management
+
Green Distribution/Marketing
+
Reverse Logistics
----------is called-----------
Green (G) Supply Chain Management (GSCM)

94. Benefits of GSCM

95. Improvements By GSCM
• Improves operations by employing an environmental
solution
• Improves Agility: Green supply chain management
help mitigate risks and speed innovations
• Increases Adaptability: Green supply chain analysis
often leads to innovative processes and continuous
improvements
• Promotes Alignment: involves negotiating policies
with suppliers and customers, which results in better
alignment of business processes and principles.

96. Success Stories

97. Why need for GSCM?
• Increasing Environmental Constraints due to Global
Warming
• Corporate Social Responsibility (CSR)
• Beneficial for Organization
• Eco-friendly
• Increasing Environmental awareness in
stakeholders
• Evolving Consumer and Client Demand
•

98. Areas to GSCM
• Designing of Products
• Production
• Material Purchase
• Packaging
• Warehousing
• Logistics & Reverse Logistics

99. Designing Of Products
• Eco friendly design approach leads:
1) Less material usage
2) Minimum Operations
3) Proper use of Computational fluid
dynamics tools can used to reduce the
exhaust emissions at designing level

100. Purchase
• Implementing Green purchasing
policies
• Technical support to vendors to
reduce the emissions
• Guidelines for usage of less
hazardous materials

101. Production
• Achieving Economies of scale in
production
• Lean manufacturing approach
• Fuel efficient tools and machines
• Selecting less carbon intensive
energy sources

102. Packaging
• Mercury free
• Non toxic (minimize toxicity)
• PVC or DEHP free
• Recyclability
• Hazardous waste considerations
• Durability/Reusability
• Energy efficient

104. Logistics
• Optimized Truck loads
• Direct shipment to the
customer(Dell model)
• Routing of distribution
• Reverse Logistics

105. Summary

106. Other Initiatives
• Eco labeling: Labeling that identifies products that meet
certain environmental criteria e.g. cloth label, instead of
pasting over package
• LEED (Leadership in Energy and Environmental Design):
Design and Construction practices that significantly
reduces or eliminate negative impact of building on
environment
• Green sourcing: Sustainable procurement

107. Intention to become “Carbon
Neutral”
• Blackwell Publishing
• Dell
• DHL
• TESCO
• Travelocity
• Marks and Spencer

108. Traditional View: Cost breakdown of
a manufactured good
• Profit 10%
• Supply Chain Cost 20%
• Marketing Cost 25%
• Manufacturing Cost 45%
Profit
Supply Chain
Cost
Marketing
Cost
Manufacturing
Cost
Effort spent for supply chain activities are invisible to the customers.

109. Cold Chain (CC)
• Optimization of product quality & safety
and minimization of wastage.
• Temperature monitoring at each step
within the production, storage and
transportation chain on inner and inter-
operation levels.

111. CC Network for Storage and
Distribution of Amul Milk

114. • Vaccines lose potency
on exposure to heat
above +8 degree C
• Damage is irreversible
CC in Pharmaceuticals

115. Nine Tips for Effective
Cold Chain

129. Life Cycle Assessment (LCA)
• Method for systematically identifying,
quantifying and inputs and outputs
throughout a technology or service's
life cycle.
• Life Cycle Management (LCM) is
process of Life Cycle Thinking in
practice

130. Life Cycle Thinking (LCT):
• Everyone in the whole chain of
technology's life cycle;
• Responsibility and role to play;
• Taking account of all relevant external
effects;
• Management strategies

131. • Graphic representation of maturity,
adoption and business application
of specific technologies.
Model helps to measure, monitor,
benchmark and predict the reaction
to an innovation.
The Hype Cycle

132. The Hype Cycle Curve
Technology
Trigger
Peak of Inflated
Expectations
Trough of
Disillusionment
Slope of
Enlightenment
Plateau
of Productivity
(Positive
Hype)
(Negative
Hype)
Don’t Join in Just Because It’s “In”
(Don’t Miss out Just Because It’s “Out”)

133. Hype Cycle in R&D
(Don’t Join in Just Because It’s “In”)
(Positive
Hype)
(Negative
Hype)
(Don’t Miss out Just Because It’s “Out”)

134. a) Technology trigger: Breakthrough or technology
launch, event generates significant press and
industry interest.
b) Peak of Inflated Expectations: Frenzy of publicity
generates over-enthusiasm and unrealistic
expectations.
- Some successful applications of a technology,
but more failures.
Five Stages of Hype Cycle

135. c) Trough of disillusionment: Fail to meet
expectations and quickly become unfashionable.
Press abandons the topic and technology.
d) Slope of Enlightenment: Press stopped covering
the technology, some businesses continue
through the "slope of enlightenment" and
experiment to understand the benefits and
practical application of the technology.
Five Stages to Hype Cycle
(Contd…)

136. e) Plateau of Productivity: Technology reaches
"plateau of productivity" and become widely
demonstrated and accepted.
- Technology increasingly stable and
evolves in second and third generations.
- Final height of the plateau varies according
to whether the technology is broadly applicable
or benefits only a niche market.
Five Stages to Hype Cycle

137. Goods and
Service Tax
(GST)

139. GST – WHY?

140. GST World Wide Rate

144. Goods and Services Tax (GST)
• Tax on goods and services
• Levialbe at each point of sale or provision of service
• Similar to VAT
• National level VAT on goods and services
• Rate of tax on goods and services are same
• Merging of:
– Tax on manufacture of goods (excise duty levied by Centre)
– Tax on sales of goods (CST/VAT levied by Centre and State)
– Tax on services (levied by Centre and State i.e. Entertainment tax, electricity
cess etc.)

145. GST World Wide
– Single VAT covers both goods and services
– All sectors taxed with few exemption
exceptions
– Full tax credits on input
– Canada and Brazil have dual VAT

147. Excise Duties including the
additional excise duties
Cesses in the nature of
excise duty /customs duty
Additional duties of customs
(ie CVD and ACD)
CST to be abolished
Service tax
Cesses and surcharges levied
by Union ie education cess etc
VAT/ Sales tax
Entry tax not in lieu of octroi
Entertainment tax (unless levied
by the local bodies)
Luxury tax
Taxes on lottery, betting and
gambling
Cesses and surcharges levied by
States, related to supply of
goods and services
Central Levies State Levies
Subsumation of
taxes
Central GST State GST
Purchase tax to
be subsumed
• Municipal levies - likely to be out
• Stamp duty - likely to be out
Taxes to be subsumed under GST

148. KEY GST Concept
Taxable event to
be ‘supply’
States to levy tax
on services
Taxable
event
Tax rates to change
for inputs and outputs
Initially 1% additional
tax on inter-state
sales
Place of
supply
Exemptions
Likely to either be
withdrawn or be
converted into refund
mechanism
Multiplicity of
taxes
Possible expansion of
credit base
Credit pool to be
maintained for each state
Credit
GST to subsume most current indirect taxes
To be replaced by CGST and SGST, IGST and
additional tax on inter-state supply
Destination based tax
Rules for services?
Rates
Likely to be consistent for all
goods and services – MRP
valuation may go
Classification
Valuation
KEY GST CONCEPTS

149. GST Includes
• Sale or supply includes sale of goods
• Lease of premises
• Hire of equipment
• Giving advice
• Export of goods and supply of other things
• Purchase: acquisition of goods or services
i.e. trading stock a lease, consumables etc.

154. ABPM

156. Supply Chain of
C Donald’s

157. Suppliers
Purchasers
Production /
Processor
Distribution
Customers
Market
Customers’
Customer
Suppliers’
Supplier
Integrated Supply Chain
Suppliers
Customers
Internal Supply
Chain

158. Quick facts about
•McDonald's was started by two brothers, Richard
and Maurice McDonald in California, US in the year 1937.
•Ray Kroc, distributor for milkshake machines,
expressed interest in the business, and he finalized a deal for
franchising with the McDonald brothers in 1954.
•In 1961, he bought out the McDonald brothers'
share for $2.7 million and changed the name of
the company to McDonald's Corporation.
In 1965, McDonald's went public…
C Donald’s:
Reference: mcdonalds.com

159. C Donald’s history India:
• Entered in India 1996.
• India is 50-50 JV partnership between C Donald’s Corp. USA
& two Indian businessman Amit Jatia and Vikram Bakshi.
• Trained extensively with their Indian management team in
Indonesia and
USA before launch.
• The entire menu was changed.
• 90% of C Donald’s business is
owned and run by independent franchisees in India.
Reference: mcdonaldsindia.com

164. - Coffee Chain

166. Extended Hours
Pricing Food Innovation
Operation
Excellence
Brand Trust
Key business drivers & potential:

167. 38 supplier throughout
India & several
standalone restaurants
working with it for
various requirements
Distribution Centers:
Reference: mcdonaldsindia.com

168. Where the food comes from: C Donald’s Supply Chain
Reference: logistics.bafree.net

169. Mc Donald’s India sources its ingredients from local
suppliers who are an integral part of the cold chain.
Refrigerated trucks with multi-temperature facility divided into 3 zones-
freezer,chiller, and ambient to ferry product demanding varying temperatures
from supplier location to the distribution centre.
Reference: National Retail Federatio
-Case Study

170. Distribution centre is also divided into multi-temperature
zones , as are the trucks for storing products. With freezer
at 0 degree F to 33 degree F , chiller at 33 degree F to 40
degree F, and room temperature.
Reference: National Retail Federation
-Case Study

171. Restaurants have in built cold storage units subdivided
into same aforesaid zones –freezer, chiller ,and ambient.
Reference: National Retail Federation
-Case Study

172. Consumer/outlets
38 suppliers
across
the country
Procurement
logisticFood /nonfood:
Frozen , chilled &
any dry goods
Warehousing & packaging
Distribution logistics
Food /nonfood:
Frozen , chilled &
any dry goods
C Donald’s Supply Chain (160 restaurants across
the country)
#

173. Supply of ingredients:
Sesame seeds
Ghaziabad, UP
Buns
Shah & sons,
Khopoli ,MH &
Cremica Industries,
Noida
Iceberg lettuce
Trikaya Agriculture , Talegaon MH
Meena Agritech ,Delhi
Ferrocoa Farm, Dehradoon
Special vegetarian sauce
(Eggless)
Quaker Cremica,
Phillaur,Punjab
Batter & Breading
Cremica Industries
, Ludhiana ,Punjab
Vegetable Patty
(Made from fresh Peas,
Carrots,Green beans,
Potatoes and Rice)
Kiltran foods, Taloja MH
Reference: mcdonaldsindia.com

174. “The basic purpose of a supply chain
is to coordinate the flow of materials,
services, and information along the
elements of the supply chain to
maximize customer value.”
And this is what we did….
Ray Kroc

175. LESSONS:
•Look before you leap.
(Mc Donalds did an extensive research before venturing into this
nation for more than 4 years and put in 450 crores plus during those
times, to develop its supply chain)
•In Rome , do as Romans do!
Mc Donalds customized its products to Indian taste-buds, also to connect
to the public, avoided pork and beef products. In addition the processing
lines for vegetable and non-vegetable products are kept separate.
•Principle of mutual need: If one can assure one’s
vendor that both are interdependent on each other,
the trust must carry the relationship. In other words-“You must allow
market forces and not binding agreements to determine just who the
constituents of your supply chain will be”.

176. Thank
you…!!!

203. The steps involved
• Step 1: Designing the supply chain
– Determine the supply chain network
– Identify the levels of service required

204. Step 2 - Optimizing the supply chain
• Determine pathways from suppliers to the end
customer
– Customer markets to Distribution centers
– Distribution centers to production plants
– Raw material sources to production plants
– Identify constraints at vendors, plants and distribution centers
– Get the big picture
– Plan the procurement, production and distribution of product
groups rather than individual products in large time periods-

205. Step 3- Material flow planning
• Determine the exact flow and timing of
materials
• Arrive at decisions by working back
from the projected demand through the
supply chain to the raw material
resources
• Techniques
• ERP

206. Step 4 - Transaction processing and
short term scheduling
• Customer orders arrive at random
• Day to day accounting system tracks and
schedules every order to meet customer
demand
• Order entry, order fulfillment and physical
replenishment

207. VGD@IIPM
Drivers of Supply Chains Performance
• Facilities
– places where inventory is stored, assembled, or fabricated
– production sites and storage sites
• Inventory
– raw materials, finished goods within a supply chain
– inventory policies
• Transportation
– moving inventory from point to point in a supply chain
– combinations of transportation modes and routes
• Information
– data and analysis regarding inventory, transportation, facilities
throughout the supply chain
– potentially the biggest driver of supply chain performance
• Sourcing
– functions a firm performs and functions that are outsourced
• Pricing
– Price associated with goods and services provided by a firm to the

208. VGD@IIPM
Role of Logistics in SCM
– The success of supply chain management rests with logistics.
– Five Key Issues of Logistics Effectiveness which are core to
Supply Chain Management:
• Movement of Product
• Movement of Information
• Time / Service
• Cost
• Integration, both internal and external, both organizations and
systems
– Supply chain management requires a logistics model based on
quick order to delivery response. A model which focuses from
vendors' doors through to delivery to customers' doors.
– The model must meet the customers' demanding and specific
requirements. It requires organizational flexibility and
responsiveness, internal and external teamwork and demands the
use of processes and technology.

209. Drivers that Affect Logistics and SCM
• Global Commerce
• Security within Supply Chains
• Increasing Energy Costs
• Sustainable development practices
• Technology and innovation
•Current and future trends
•Competitive position in relation to leading firms within their
own sector
•Steps that can be taken to become more competitive.

210. Supplier
Supplier

211. Supplier
Supply

212. Purchase
r
Production

213. Producer/
Processor
Distributor

214. Customer
Distribution

215. Customer
Customer

216. Suppliers’
Supplier
Suppliers’
Supplier

217. Customers’
Customer
Customers’
Customer

218. Producer/
Processor