Supply Chains in the Age of E-Business

Amir Subhani, Jindal Global Business School, Sonipat, Haryana.

(E-mail: 12jgbs-asubhani@jgu.edu.in, Mobile: +91 9050423280)

For shorter product life cycle, firms need to manage their supply chain efficiently. The present day information technology system has become powerful tool for efficient supply chain process especially retailers and manufacturers. Industries have started to renovate by applying new management theme to fulfill the requirement for face to face interaction, resulting in the shorter lead time and reduced warehousing.

Internet not only provides consumers more power to compare prices but also allows companies to find more distributors easily without paying commission to brokers. It also helps in effective tracking of goods. Supply chain in e-Business focus to minimize transaction process which ultimately benefits customers. For example in case of Levi Strauss, executives were unable to track its moving products. They were unknown to the quantity of jeans manufactured in different factories as well as the amount in trucks or in distribution centers. These inefficiencies caused major control issues over its distribution channels due to which only 65% Levi Strauss’s products were able to reach the customers on time. For Levi Strauss, they are required to meet the needs of Wal-Mart and other major retailers. One of the major requirements of Wal-Mart and other major retailers is that their supplies be reliable so that the shelves are always stocked. This means that Levi Strauss’s success largely depends on their supply chain which it improved and leveraged information technology in its supply chain. The figure 1 shows the outlook of E-Business module for enhanced Supply Chain Management.

Figure 1: E-Business module for Supply Chain Management

(Source: M. Eric Johnson, Seungjin Whang, Fibre2fashion.com)

Internet has brought the revolution in conducting business. Dell showcases its product through the medium of internet. Solectron and Ford increased product design collaboration using this service. UPS and Federal Express have provided the facility of tracking their packages just through internet. E-Business allows firms to enhance revenues by direct sales to customers by bypassing retailers. It can enhance revenues by speeding up collection of funds.

 

Figure 2: E-Business Environment and Strategies

(Source: http://www.prudens.com/images/ebusenvirstrat2.gif )

 

The following are some of the software applications are being used in E-business for better supply chain management:

 

Software	Manufacturer
ASSIST4	AEB, GERMANY
Electronic Data Interchange(EDI)	ACOM Solutions, ACT data services
Microsoft Dynamic NAV	Microsoft
Logistic Functions in SAP	SAP

E-Business module creates the e-Business environment and strategies as shown in figure 2, which enhances the supply chain management and deriving the maximum benefits by shortening the business process with the advances of information technology companies also, can restructure the logistics flows of their products to gain efficiencies.

References:

1. M. Eric Johnson, Seungjin Whang, e-Business and supply chain management: An overview and framework, [Retrieved from fibre2fashion.com].
2. http://www.kellogg.northwestern.edu/faculty/VanMieghem/htm/e-business-SCMR-April26.pdf
3. http://www.avyg86.dsl.pipex.com
4. http://voices.yahoo.com
5. http://www.saycocorporativo.com
6. http://www.pearsoned.ca
7. http://www.scribd.com/doc/55494080/Enterprise-Systems

Challenges and Implications of Storage Capacity (warehousing) in India

J.Joshuva Alexander, Jindal Global Business School, Sonipat, Haryana.

(E-mail: jos237@gmail.com, Mobile: +91 8053464429)

Warehousing, the most important auxiliary service for development of logistics industries in India also plays a critical role in developing economy of a country.The growth potential of warehousing sector is huge and it is expected to grow at a rate of 30% to 40% per year. [Sanjay, 2011]. Warehousing plays a crucial role in supply chain in sorting and handling the commodities and helps to bridge the demand gap from supply of goods to on time for the products to reach the customer. It helps to sustain in scarcity or in high demand period. The warehousing capacity available in India, in public, cooperative and private sector is about 108.75 million MTs (Planning commission of India, Twelfth five year plan). Storage facilities in India are provided by Central warehousing corporation, State warehousing corporation, Cooperatives and private.  [Dr. D.P. Patra, Jt. General Manager (Mktg) IFFCO]. The planning commission of India given the storage capacity of different warehouses sectors in India in the twelfth five year plan is as follows:

 

S.No.	Name of the Organization /Sector	Storage Capacity in Million MTs
1.	Food Corporation of India (FCI)	32.05
2.	Central Warehousing Corporation (CWC)	10.07
3.	State Warehousing Corporations (SWCs)	21.29
4.	State Civil Supplies	11.30
5.	Cooperative Sector	15.07
6.	Private Sector	18.97
Total		108.75

Table 1: Storage capacity in India (Source: planningcommission.nic.in)

 

 Warehousing has been typically dominated by small players with common issues like small capacities and poor deployment of handling, stacking and monitoring technologies. Government run warehouses are in even poorer conditions with overstocking, lack of maintenance and obsolete technologies when observed in the present scenario. Other fact that has affected both the location as well cost of operating a warehouse has been the “octroi tax”. Other factors that challenges the growth of warehousing in India are:

1. Lack of Government regulations and policies regarding licensing, performance, and accountability
2. Unorganized participants, including small-time trucking companies, have been taking advantage of this situation by cannibalizing business from professional warehousing providers.
3. High turnaround time due to lack of infrastructure, inadequate docking facility etc.
4. Poor service provided by 3PL providers leads the customers to dissatisfaction
5. Lack of cold storage space
6. Inadequate transport facilities like less rail freight, high container costs, less number of reefer vans
7. Low penetration of IT practices in the warehousing industries
8. Lack of training to build skilled manpower

For the better development and growth of warehousing companies in India,  the services provides has to look in the three key essentials for warehouses: 1) the warehouse should be logistical, i.e. right location of the warehouse.  2) well defined norms is needed for the growth of warehousing industries and to enhance the supply chain, in the form of Warehousing Regulation & Development Act (WRDA) 2001 and Goods and Services Tax (GST) [Frost & Sullivan Research Service, 2009]. These regulations will eliminate the non-registered and warehousing companies and standardize the warehousing rates across the country and finally all the operations data should be to synchronize with the IT systems.  Moreover these three key essentials would enhance the efficient distribution and supply chain in logistics sector which would create a demand for the more storage and warehousing services in India.
 

 Reference:

1.      Dr. D.P. Patra, Jt. General Manager (Mktg) IFFCO, Logistics Planning For The Fertiliser Sector

2.      http://planningcommission.nic.in/aboutus/committee/wrkgrp12/pp/wg_ware.pdf

3.      Strategic Analysis of Growth Opportunities in Indian Warehousing Market, Frost & Sullivan Research Service, 14 Dec 2009. Retrieved from http://www.frost.com/prod/servlet/report-brochure.pag?id=P354-01-00-00-00

4.      Sanjay Khanna, (September, 2011), CARGOTALK. Retrieved from http://www.cargotalk.in/pdfs/sept11.pdf 

5.  Building Warehousing Competitiveness, “Adopt the Best”, conference proceedings, 29-30 July 2009, New Delhi. Retrieved from http://www.ciilogistics.com/building_warehousing_adopt_the_best.pdf