Xi Annual International Som Conference 2007


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This Paper I worked with my Respected Guide Dr. H. M. Jha (Bidyarthi) & was presented in 11th International Conference on Operations excellence at SIOM Nasik.

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Xi Annual International Som Conference 2007

  1. 1. XI Annual International SOM Conference 2007 On Redefining Operations Excellence – The Art and Science
  2. 2. Bullwhip Effect Study in Supply Chain Management of Local Floriculture Industry Authors H. M. Jha “Bidyarthi” Professor Department of Business Administration and Research Shri Sant Gajanan Maharaj College of Engineering Shegaon, Maharashtra, INDIA Email; [email_address] , [email_address] And L. B. Deshmukh Lecturer Department of Business Administration and Research Shri Sant Gajanan Maharaj College of Engineering Shegaon, Maharashtra, INDIA Email: [email_address]
  3. 3. <ul><li>Floriculture in India is viewed today as a high growth industry resulting into a shift from traditional floriculture to commercial floriculture </li></ul><ul><li>This industry is prominently marked by the perishable feature of its products i.e. flowers and trade of its products in domestic market correlated to religious sentiments, religious places and religious festivities of the country. </li></ul>
  4. 4. <ul><li>According to a report of the APEDA, the total area under flower crops is estimated around 34,000 hectares, which includes 24,000 hectares under traditional flowers such as marigold, jasmine, aster, rose, chrysanthemum, tuberose and 10,000 hectares under modern flowers like cornation, rose, gerbera, gladiolous, anthurium. </li></ul><ul><li>Returns from floricultural products are estimated at Rs.205 Crores, which includes Rs.105 Crores from traditional and Rs. 100 Crores from modern flowers according to the data collected by National Horticultural Board </li></ul>
  5. 5. <ul><li>The total business of floriculture products in India in 2005 was Rs.8174 Lacs while it increased to Rs.10117 Lacs by April 2006 </li></ul><ul><li>The domestic flower production goes on increasing annually </li></ul>
  6. 6. <ul><li>The local place i.e. Shegaon – a taluka place of Buldhana district under Maharashtra State - is a place of pilgrimage for lacs of people all around the country who have faith in the Saint Gajanan Maharaj of 20th century. </li></ul><ul><li>The place is endowed with diverse agro-climatic conditions like </li></ul><ul><li>good quality soils, </li></ul><ul><li>suitable climate, </li></ul><ul><li>low labor cost with only problem of lack of abundant water supply. </li></ul><ul><li>Cultivation of traditional flowers in this part also suffers from traditional mind set where farmers do try to use scientific farming method but are found to be unaware of modern management practices to synchronize their farming with trading practices and thus optimize their returns. However they are blessed with a very remunerative market available locally itself for all their floriculture produces. </li></ul>
  7. 7. <ul><li>On an average more than 15,000 pilgrims visit Gajanan Maharaj Temple and offer flowers and prasad – sweets - at the samadhi of the saint. The abundance of market and remunerative returns seem to have made the local floriculture producers complacent. As a result, the perishable nature of floriculture produces takes its own toll of the profitability in this industry here. It is therefore also presumed that the farmers of this country engaged in floriculture and pushing their produces in the traditional market follow the similar practices leaving a huge chunk of returns out of their hands due to ignorance of modern management practices. This prompted the authors to thoroughly study the local floriculture industry from supply chain management point of view focusing on the bullwhip effect phenomenon in this industry. </li></ul>
  8. 8. <ul><li>The local floriculture trade employs all typical channel members in its distribution system. They are the farmers – producers, distributors, wholesalers, retailers, hawkers and customers. It thus warrants a true condition of supply chain management. </li></ul>
  9. 9. Bullwhip effect <ul><li>The bullwhip effect accounts for the variability in the inventory of the produces (flowers0 at different channel members point to accommodate the fluctuating demand. Theoretically, the variability in the inventory position rises in degree as we move backward from customers’ ends to producers’ (farmers) ends in arithmetic progression if not in geometric progression as shown in the following graphs </li></ul>
  10. 10. Bullwhip effect Customers Intermediaries Producers This variability combined with the perishable nature of flowers causes a huge loss which is borne by the parties at the either extremes i.e. the farmers and the customers
  11. 11. <ul><li>The demand for flowers is more on Sunday and Thursday. </li></ul><ul><li>The demand is on peak on auspicious days. </li></ul><ul><li>The remaining days demand is comparatively stable. </li></ul><ul><li>This variation in demand draws first graph on </li></ul><ul><li>This demand pattern has been studied and appropriate forecasts is being developed on that basis to neutralize the bullwhip effect in this industry and thus help floriculturists of the region to grow in their business. </li></ul>
  12. 12. <ul><li>The present study is being conducted through survey using structured questionnaire. Correlation and regression techniques will be used to analyze the data and model the supply chain management system in the local floriculture industry to counter bullwhip effects and optimize return for the farmers. Number of drivers will be identified underlying the SCM through this study. </li></ul>
  13. 13. Observations