IT ENABLED SUPPLY CHAIN MANAGEMENT IN FAST FOOD INDUSTRY

Transcription

1 IT ENABLED SUPPLY CHAIN MANAGEMENT IN FAST FOOD INDUSTRY Submitted by Pritesh Ranjan and Salil Chugh Supervisor Prof. Prem Vrat Mechanical Engineering Department Indian Institute of Technology Delhi May 2001

2 ABSTRACT Global Competitiveness in the present world has meant that the customers are supreme. Hence to be successful the enterprises today have to satisfy the customers to the utmost. They have to provide the goods and services to the customers in timely and cost-effective manner. Besides quality of the product or service that is being provided must be of the highest order. Hence it is imperative that the supply chain of the industry be managed in the most efficient manner so as to bring down the total cost and the lead times involved so as to delight the customers. The use of IT in managing the supply chain is highly desirable as it leads to proper integration of the whole supply chain right from the downstream vendors to the upstream distributors and retailers. In this project, the supply chain of a leading fast food company, ABC Company, has been studied. The project tries to streamline all the activities right from the procurement stage to distribution stage of the supply chain so as to decrease the leadtime, inventory held and the wastage throughout the chain. Also the scope of IT intervention in the Supply chain management of the company has been explored. Keywords: Supply Chain, Inventory, Lead Time, Wastage, Information Technology.

3 CERTIFICATE We, Mr. Pritesh Ranjan and Mr. Salil Chugh, are submitting this report detailing work done during the academic year We have written this report and all material taken from other sources (books, manuals, internet, other theses etc.) has been fully acknowledged. Pritesh Ranjan Salil Chugh Date: May 8, 2001 Mr. Pritesh Ranjan and Mr. Salil Chugh have worked under my supervision during the academic year I have read the report; it meets my expectations and it accurately reflects the work done by the students. Prof. Prem Vrat (Supervisor) Date: May 8, 2001

4 ACKNOWLEGMENTS We would like to express our intense gratitude to Prof Prem Vrat for his invaluable guidance and constant encouragement, and assistance provided throughout the course of our project work. We also express our gratitude to Prof. S.G. Deshmukh for providing us useful tips and assistance during our project work. We also acknowledge our sincere thanks to Prof. Subhash Wadhwa and Prof. Arun Kanda for their expert advice and support as a course coordinator at various stages. We offer our sincere thanks to Mr. Anand Srivastava, Vice-President, Supply Chain Management, ABC limited for allowing us to work in his company and providing us with his able guidance and support. We are also thankful to Mr. Ramu Thota of Convergent Software for providing us with the requisite information regarding the use of Information Technology in Supply Chain. r Pritesh Ranjan New Delhi Salil Chugh April 24, 2001 iv

5 CONTENTS Abstract ii Certificate iii Acknowledgements iv Table of Contents v Abbreviations viii List of Figures ix List of Tables x Chapter 1 INTRODUCTION 1.1 Motivation Previous work Problem Statement Expected Outcome Workplan 2 Chapter 2 REVIEW OF PAST WORK 2.1 An Overview Theoretical Background Supply Chain Supply Chain Management Bull Whip Effect Role of IT in SCM IT Solutions Options Electronic Data Interchange (EDI) Enterprise Resource Planning (ERP) E-Commerce Intranet/Extranet Advanced Planning Systems Decision Support Systems Other Enabling Technologies Issues in an IT Environment. "\i4..., _ Models of Information Sharing in a Supply Chain : 14 V

6 2.2.8 Stages in IT implementation Inventory Management Work Done at ITT Delhi Summary of Past Work 18 Chapter 3 PROPOSED METHODOLOGY 3.1 Introduction Methodology Third Party Model Assumptions Made in the Project 21 Chapter 4 SYSTEM ANALYSIS 4.1 Introduction Data Collection as per Schedule Details of the Organization Role of the members of the Supply Chain Vendors Factory Corporate Office Outlets-Customers Benchmarking-Comparison with the Competitors Supply Chain Performance Analysis 31 Chapter 5 PROBLEM IDENTIFICATION AND ANALYSIS 5.1 Introduction Identification of Critical Problem Inventory Management Effects of high Inventory Level Inventory Holding Cost Wastage Material Classification Development of Inventory Policy based on Classification Reducing Wastage Proposed System 46 VI

7 5.6.1 Reduction in inventory holding costs Reduction in wastage 51 Chapter 6 RECOMMENDATIONS 6.1 Implementation of the System Use of an Information Sharing model Issues in Implementation Benefit of It enabled Supply Chain in ABC Limited 57 Chapter 7 DISCUSSION 7.1 Deviations from the work plan Limitations of Present Work 60 Chapter 8 CONCLUSIONS 8.1 Concluding Remarks Recommendations for future work Difficulties Faced 62 References Appendix vii