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Introduction

What is Supply Chain?

Supply Chain is the network created amongst different companies producing, handling

and/or distributing a specific product. Specifically, the supply chain encompasses the steps

it takes to get a good or service from the supplier to the customer.

The Council of Supply Chain Management Professionals (CSCMP) defines Supply Chain

Management as follows: Supply Chain Management encompasses the planning and

management of all activities involved in sourcing and procurement, conversion, and all

logistics management activities. Importantly, it also includes coordination and collaboration

with channel partners, which can be suppliers, intermediaries, third-party service providers,

and customers.

In essence, supply chain is the entire network of entities, directly or indirectly interlinked

and interdependent in serving the same consumer or customer. It comprises of vendors

that supply raw material, producers who convert the material into products, warehouse

that store, distribution centres that deliver to the retailers, and retailers who bring the

product to the ultimate user. Supply chains underlie value-chain because, without them,

no producer has the ability to give customers what they want, when and where they want,

at the price they want.

Supply chain management is a crucial process for many companies, and many companies

strive to have the most optimized supply chain because it usually translates to lower costs

for the company. Most producers compete with each other only through their supply

chains, and no degree of improvement at the producers end can make up for the

deficiencies in a supply chain which reduce the producer's ability to compete.

Importance of Supply Chain

The importance of efficient supply chain to companies can be judged from the fact that

supply chain operations of companies have moved from a cost focus to a customer focus

and now currently to a strategic focus. A great supply chain strategy, linked with

operational excellence, has become the need of the hour and is the only way to provide

success for not only the company in question but also its partners and customers.



A supply chain strategy defines how the supply chain should operate in order to compete

competitively. Supply chain strategy is an iterative process that evaluates the cost benefit

trade-offs of operational components. Market demands, customer service, transport

considerations, and pricing constraints all must be understood in order to structure the

supply chain strategy effectively. These are all factors, which change constantly and

sometimes unexpectedly, and an organization must realize this fact and be prepared a

strategy to adapt the structure the supply chain accordingly.

A supply chain strategy is so important because it operationalizes and supports your

business strategy. Supply chain strategy also focuses on driving down operational costs

and maximizing efficiencies. For example, an organization may choose a strategy directed

at supplier management as a way to remain competitive. By providing a clear purpose, the

organization keeps sight of the strategy and is able to devise tactical steps to achieve these

goals.

Another reason for having a competitive, effective and well defined supply chain strategy is

to establish how you work with your supply chain partners, including suppliers,

distributors, customers, and even your customers customers. As the marketplace

becomes more competitive, it is critical to reinforce existing relationships and work

together. And for all these reasons, a well executed supply chain strategy results in value

creation for the organization.

Supply chain strategy if implemented properly, will provide a new dimension to competing

quickly introducing new customized high quality products and delivering them with

unprecedented lead times, swift decisions, and manufacturing products with high

velocity.



P arts of a Supply Chain

A supply chain is the stream of processes of moving goods from the customer order

through the raw materials stage, supply, production, and distribution of products to the

customer . It is a bi-directional. Supply chain management flows can be divided into three

main flows:

y THE PRODUCT FLOW

y THE INFORMATION FLOW

y THE FINANCES FLOW

The product flow includes the movement of goods from a supplier to a customer, as well as

any customer returns or service needs.

The information flow involves transmitting orders and updating the status of delivery.

The financial flow consists of credit terms, payment schedules, and consignment and title

ownership arrangements.

All organizations have supply chains of varying degrees, depending upon the size of the

organization and the type of product manufactured. These networks obtain supplies and

components, change these materials into finished products and then distribute them to the

customer.

Supply chain management involves managing and coordinating the movement of

materials, information and funds across the supply chain. Effective management of supply

chain must take into account coordinating all the different pieces of this chain as quickly as

possible without losing any of the quality or customer satisfaction , while still keeping costs

down.

The first step in supply chain is obtaining a customer order, followed by production,

storage and distribution of products and supplies to the customer site. Customer

satisfaction is paramount. Included in this supply chain process are customer orders, order

processing, inventory, scheduling, transportation, storage, and customer service. A

necessity in coordinating all these activities is the information service network.

There are six key elements to a supply chain:



y Production

y Supply

y Inventory

y Location

y Transportation

y Information

Production

Strategic decisions regarding production focus on what customers want and the market

demands. This first stage in developing supply chain agility takes into consideration what

and how many products to produce, and what, if any, parts or components should be

produced at which plants or outsourced to capable suppliers. These strategic decisions

regarding production must also focus on capacity, quality and volume of goods, keeping in

mind that customer demand and satisfaction must be met. Operational decisions , on the

other hand, focus on scheduling workloads, maintenance of equipment and meeting

immediate client/market demands. Quality control and workload balancing are issues

which need to be considered when making these decisions.

Supply

An organization must determine what their facility or facilities are able to produce, both

economically and efficiently, while keeping the quality high. But most companies cannot

provide excellent performance with the manufacture of all components. Outsourcing is an

excellent alternative to be considered for those products and components that cannot be

produced effectively by an organizations facilities. Companies must carefully select

suppliers for raw materials. When choosing a supplier, focus should be on developing

velocity, quality and flexibility while at the same time reducing costs or maintaining low

cost levels. In short, strategic decisions should be made to determine the core capabilities of

a facility and outsourcing partnerships should grow from these decisions.

Inventory

F urther strategic decisions focus on inventory and how much product should be in -house. A

delicate balance exists between too much inventory, which can cost anywhere between 20

and 40 percent of their value, and not enough inventory to meet market demands. This is a

critical issue in effective supply chain management. Operational inventory decisions



revolved around optimal levels of stock at each location to ensure customer satisfaction as

the market demands fluctuate. Control policies must be looked at to determine correct

levels of supplies at order and reorder points. These levels are critical to the day to day

operation of organizations and to keep customer satisfaction levels high.

Location

Location decisions depend on market demands and determination of customer satisfaction.

Strategic decisions must focus on the placement of production plants, distribution and

stocking facilities, and placing them in prime locations to the market served. Once

customer markets are determined, long-term commitment must be made to locate

production and stocking facilities as close to the consumer as is practical. In industries where

components are lightweight and market driven, facilities should be located close to the end -

user. In heavier industries, careful consideration must be made to determine where plants

should be located so as to be close to t he raw material source. Decisions concerning location

should also take into consideration tax and tariff issues, especially in inter -state and

worldwide distribution.

Transportation

Strategic transportation decisions are closely related to inventory decisions as well as

meeting customer demands. Using air transport obviously gets the product out quicker and

to the customer expediently, but the costs are high as opposed to shipping by boat or rail.

Yet using sea or rail often times means having higher levels of inventory in-house to meet

quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a

product is encompassed by transportation, using the correct transport mode is a critical

strategic decision. Above all, customer service levels must be met, and this often times

determines the mode of transport used. Often times this may be an operational decision,

but strategically, an organization must have transport modes in place to ensure a smooth

distribution of goods.

Information

E ffective supply chain management requires obtaining information from the point of end -

use, and linking information resources throughout the chain for speed of exchange.

Overwhelming paper flow and disparate computer systems are unacceptable in today's

competitive world. Fostering innovation requires good organization of information.



Linking computers through networks and the internet, and streamlining the information

flow, consolidates knowledge and facilitates velocity of products. Account management

software, product configurators, enterprise resource planning systems, and global

communications are key components of effective supply chain management strategy.

The key to the success of a supply chain is the speed in which these activities can be

accomplished and the realization that customer needs and customer satisfaction are the

very reasons for the network. Reduced inventories, lower operating costs, product

availability and customer satisfaction are all benefits which grow out of effective supply

chain management.



Supply Chain of an Apparel Retail

Organization

Introduction to Fabindia Fabindia is one of Indias fastest growing retail chains in India with 117 stores across the

length and breadth of the country and 6 stores abroad. The company markets hand crafted

products created by using traditional skills and techniques and is committed to bringing the

best of rural craftsmanship to discerning urban markets. Over the past few years it has

grown to spread its reach across India in terms of both retail outlets and an expanding

supply base. The companys distinctive products - both textile and non-textile - have helped

redefine the concept of the handmade which is being recognized as a sought after, viable

alternative to the mass produced.

Supply Chain Model of the Organization.

Being a craft based organization fabindia continuously endeavours to find out new rural

crafts that can be incorporated into the fabindia collections of craft. this job is done by

members of the SUPPLIER REGIONAL CHANNEL. SRC are present in 21 states of India and in

total there are 14 SRC .

As soon as a new craft, group of artisan performing an existing craft is identified by SRC

members, they purchase samples of the craft and send it across to PRODUCT SELE CTION

COMMITT EE .

In the identification of artisans the lead time is variable as it is occasional occurrence .It is

one of the greatest value addition to the organisation as a new craft adds most value to

the product range

IDENTIFICATION OF THEARTISANS BY SUPPLIER REGIONAL CHANNEL (SRC)

SRC identifies artisans in its region. They collect samples of the craft and

send its across to the Product Selection Committee (PSC).

SELECTION OF CRAFT

Product Selection Committee (PSC) evaluates the sample on the potential in

the market.



The product selection committee at Delhi evaluates the sample on the basis of merit. If it

finds it suitable to the F abIndia look and wants to incorporate the craft in its range then it

experts in the area of design visit the Artisans in the traditional ni che. If it does not find merit

in the craft then it guides the SRC members for to look for more improvements and

improvisations of the craft.

T he lead time here is very large as first the samples are sent to SRCs for evaluation and

then improvisation in the crafts had to be made to suit to the FabIndia look

After the craft is selected then the design team visit the SRC and the artisan to provide for

designs inputs and various innovations of the craft. financial help is also provided to assist

the growth of the craft.

T he lead time is variable and depends upon the proximity of the SRC to the Product

Selection Committee (PSC). And it is one of the greatest additions to the value chain of the

organisation

after a cordial

After building a cordial relationship between the artisans and F abindia, SRC along with theartisans (new and old) come to the PSC with the new products developed by them during the

season. New products are selected and best sellers reordered to be presented in the next

years collection. Delivery of merchandise is scheduled keeping in mind the selling season,

artisans capacity to deliver the merchandise and other schedule of deliveries.

SUPPLIER REGIONAL CHANNEL (SRC) VISIT

Product Selection Committee (PSC) members (experts from the field of

design and marketing) visit the artisan and provide them design inputs.

PRODUCT SELECTION FOR THE COMING SEASONS (SRC)

Product Selection Committee (PSC) experts select styles and designs to be

taken up in next years collection from the designs presented to them by the

artisans in presence of the SRC Head



If an Artisan is an fabric manufacturer then he/she starts the process of making the fabric of

defined quality in pre-decided colours. But if the artisan does a craft on fabrics then after

receiving an order; the artisans order fabric from predefined vendors of the company and

then the vendor supplies the fabrics ordered by all the artisans under one SRC to the SRC.

There by significantly reducing the transportation cost. Artisans with the assistance of SRC

collect their fabric and start the manufacturing of the final product.

After the inclusion of ERP the lead time in the issue and execution of orders to fabric

suppliers for fabric by artisans is greatly reduced. Orders are transmitted in matter of

seconds and status of delieveries can also be known through a quick response system.

it is inbound logistics that a fter the merchandise is ready it is delivered to the SRC warehouse

where it is checked for quality and quantity. The SKU level entry into the companys ERP

system is done and hand tags and price labels are attached to each product. The same

information is sent to PRODUCT SELE CTION COMMITT EE . Payment is made to the artisan

within 45 days of the delivery.

the lead time in this case is due to simplistic inventory stocking policy of the organisation.

The PSC then prepares the store wise distribution list for the style and decided the Minimum

Stock F loat (MSF ). MSF is the amount to merchandise to be stocked with SRC for repeat

order reference and future customer orders .

ISSUE OF ORDER TO FABRIC SUPPLIERS BY ARTISANS

Artisan source quality fabric from predefined fabric vendors of fabindia.

SUPPLY OF PRODUCTS BY ARTISANS TO SRC

Artisans supply the merchandise as per the schedule of deliveries to SRC.

SRC checks it for quality and quantity and reports the same to PSC

DISTRIBUTION LIST

Buyers at Product selection committee develop a distribution list to

distribute the merchandise to various stores.



M inimum stock float ( M SF) creates value not only for the company but also for the vendor.

Lead time here is minimal.

After the distribution list are prepared by PSC the they are sent to the Market Region Heads

(MRH) for approval called sign off. t his is outbound logistics The MRH can increase or

decrease the quantities for stores in his/her market region as per the sales of similar styles in

the previous season, provided that the total quantity in each size & colour is not greater than

the one allocated by PSC.

Approval from all the market region heads ( M RH) is a time consuming task and normally

takes around 15 days

After receiving sign off the consolidated final distribution list is sent to SRC, from where the

merchandise is packed according to the stores in various market regions and dispatched

using rail road transport systems. There are only 8 Market Region Warehouses for all 117

stores.

T he lead time in this step is dependant upon the geographical proximity and cordial

relationships between the SRC and M RWs. At most the lead t ime in this step amounts to

two weeks.

SIGNOFF

Buyers at Product selection committee take a approval of the quantities

allocated to stores by the respective market region heads.

MOVEMENT OF GOODS FROM SRC TO MARKET REGION WAREHOUSE(MRW)

After sign off are received the SRC sends the products to the various market

region warehouses according to the quantities of the distribution list.



On receipt of goods market region warehouses sends goods received in good condition to thestores. There by effectively breaking the bulk and reducing the cost of transportation of each

SRC sending to each store. T his is outbound logistics. Customers buy these goods from the

stores.

T he lead time is generally one week as only goods are despatched weekly from warehouse

to stores

The merchandise left with the SRC after supplying to all the SRCs is added to B2B portal of

the company from where it is traded as per the order of the store.

T he lead time is dependent upon the availability of stock and geographical proximity of

the SRC or the stores/ M arket Region Warehouse ( M RH)

MOVEMENT OF GOODS FROM MARKET REGION WAREHOUSE (MRW) TO

STORES

After receipt of goods MRW sends the allocated quantities to various stores

where the finally reach the end user

MERCHANDISE LEFT WITH THE SRC

If merchandise is left with the SRC after the distribution according to the

distribution list, then it added on B2B portal of the companys ERP system so

that store can order according to their need.



P itfalls in the Supply Chain of the

Organization

Pitfalls are the point of congestion or bottlenecks in the supply chain of the organization. It

is the reasons for inefficient supply chain.

In Harley Davidson there was a three week strike at its largest manufacturing plant in

February 2007. As a result its first quarter shipments of motorcycles would be 20 percent

lower than planned and that its 2007 earnings-per-share growth would be in the 4-6 percent

range rather than in the projected 11-17 percent range.

Harley-Davidson was not the only company hit by an operations crisis that month. A

combination of icy weather and poor planning crippled JetBlue's operations for nearly a

week, leading to the cancellation of hundreds of flights. In addition to the negative publicity

and damage to its customer-service reputation, JetBlue estimated that the February crisis

could cost the airline more than $30 million. Examples such as these highlight the continuing

need for both manufacturing and service companies to develop robust and resi lient Supply

Chain.

Based on knowledge and experience from supply chain management in electronics, apparel

and, automobile companies, Lee and Billington identify 14 pitfalls in supply chain of an

organization. These are:

Lack of supply chain strategy

Inadequate definition of customer service

Inaccurate delivery status data

Inefficient information systems

Ignoring the impact of uncertainties

Simplistic inventory stocking policies

Discrimination against internal customers

Poor coordination

Incomplete analysis of shipment methods

Incorrect assessment of inventory costs



Organisational barriers

Product process design without supply chain considerations

Separation of supply chain design fro operational decisions

Incomplete supply chain strategy

Eight of which are found relevant to our organization which are discussed below :

P itfalls of Fab India·s Supply Chain Management

1. INACCURATE DELIVERY STATUS DATA

Inaccurate delivery status data is the problem of inaccurate delivery status data of shipment

in the supply chain of Fabindia. When stores place the orders they want to know the status

of the shipment and when their product will arrive, especially when the order is late.

In Fabindia enough attention is not paid to providing stores and Market Region Warehouses

with timely and accurate updates on the status of orders. The consequence is dissatisfaction

at the customer and store personnel level at the, confusion among the supply chain

managers and loss of goodwill of the brand.

Although Fabindia tries to keep the response time to its store orders to the minimal level,

but they need to implement accurate response to make their supply chain more effective.

Fabindias ERP system lack efficiency details in relation to transaction to goods in transit.

Commercial carriers such as federal express may be used to keep track the delivery

performance and manufactures can use this information to understand their delivery cycles.

2. INEFFICIENT INFORMATION SYSTEMS

This problem encompasses the fact that the databases at different operating sites that

describe the systems environment, inventory/backlog status, future production plans, are

controlled manually at Product selection Committee in FabIndia. Consequently, retrieving

product information can be tedious, manual process at other point in the supply chain. This

leads to further the delays in information retrieval and transmission make it difficult to

quote details of shipment and product archives .



It also discourage or prohibit short production planning cycles, leading to gross forecast

errors and inventory accumulation at various levels of supply chain.

3. IGN

ORING

THE

IMPAC

TOF U

NCE

RT

AINTIE

S

There are many sources of uncertainties in supply chain. Supplier lead time and Delivery

performance are very much dependent on natural factors such as sun and rain for

handicraft and hand made products retailed by Fabindia. Qualities of incoming materials,

manufacturing process time are also very uncertain and are dependent upon natural factors

such as rain and natural calamities.

FabIndia is dependent upon the artisans for their supply; the artisans develops traditional

and aesthetic designs with the help of traditional techniques, which poses uncertainty to

output which can vary from high to low, owing to environmental factors, which they cannot

deny. The delivery quantity may fluctuate due to these factors.

To reduce the impact of these uncertainties supply chain managers must understand their

sources of supply and their magnitude of impact of uncertainties. Buffer time and quantities

must be always provided to supplier and these must always be additionally cushioned to

take into account uncertainties.

4. SIMPLISTIC INVENTORY POLICIES

Fabindia follows simplistic inventory policies. It is important to use inventory information to

drive inventory stocking policies. Fabindia does not rate its vendor on timely deliver and

quality of merchandise supplied. The company should offer incentives to supplier based on

their efficiencies. Some suppliers become more reliable in both delivery and quality than

others. Inventory stocking policies should be periodically adjusted to reflect changes in

vendor rating. More rigorous techniques on vendor base management must be included in

the ERP.



5. POOR COORDINATION

Coordination among the supply members is very important. Lack of coordination among the

chain members results in excessive delays, amplified bull-whip effect and ultimately poor

customer service. Lack of coordination may leads to Market Region Warehouses habitually

expediting deliveries, which is unnecessarily, creates a bull-whip effect in the chain and lead

to greater inventory holding cost and obsolescence.

Their exist lack of coordination between the Supplier Regional Channel and Market Region

Warehouses. Stores orders for quantity of product on B2B portal on their scheduled day

like, Mondays, Tuesdays specified for a particular region as per the ERP, but the SRC is

under no boundation to delivers the quantity as per the order sequence. Primarily the

region which orders first should be delivered first (FIFO), but SRCs follow convenience

regarding deliveries, they may deliver first to a region where it has cordial relationship or in

geographical proximity even though the order by that region was placed after some

unprocessed order. It shows lack of coordination.

As the supply chain becomes more and more complex, coordination becomes more

critical, to achieve greater efficiency and reduce the bull whip effect and ultimately

reduced cost..

6. INCORRECT ASSESSMENT OF INVENTORY COSTS

Incoorect assessment of inventory cost exists due to obsolescence owing to short product

life cycles of fashion apparel and large cost of reworking inventory.

At FabIndia distribution lists are prepared they are sent to the Market Region Heads (MRH)

for approval called sign off . The MRH can increase or decrease the quantities for stores in

his/her market region as per the sales of similar styles in the previous season, provided that

the total quantity in each size & colour is not greater than the one allocated by Product

Selection Committee. If there is demand for a particular style in a region increases, but the

MRHs cannot order more than the allotted quantity hence failing to achieve the increased

bottom line and loosing the opportunity cost, which also affect the reputation of the brand,

Similarly, if the MRHs do not order the minimum quantity owing to less demand in their



area, the stock may lie idle, hence increasing the inventory holding cost at the Supplier

Regional Channel.

7. ORGANISATIONAL BARRIERS

Generally supply chain belong to different organisations within a company, each

organisation having its own performance measures and evaluation responsibilities. It

includes difference in objectives and performance metrics, disagreements on inventory

ownership, and unwillingness to commit resources to help some other member of supply

chain.

In Fabindia organisational barriers too exists. There is no direct communication between

Production Selection Committee (employees of Fabindia) and the artisans (members of a

NGO or independent craftsmen). The interaction between both of these members is routed

through the Supplier Regional Channel (employees of Fabindia who work on commission

basis). Since the objectives of all three parties are different so misalignment of objectives

between them creates a barrier in developing a efficient supply chain. Besides this the

artisans cannot interact directly with the top management of the company for handling

their grievances and giving suggestions.

The Market Region Warehouses and Stores are dependent upon the PSC for the products

and for distribution list , and also there is no independence on part of their operations.

8. INCOMPLETE SUPPLY CHAIN STRATEGIES

Fabindias supply chain is in rudimentary state and there is no well defined supply chain

strategy to improve upon the present structure. Rigidity is followed while carrying out its

operations and efficient supply chain techniques such as Cross Docking and Just In Time are

not applied to the system to reduce cost and optimize efficiencies. Roles and

responsibilities of In bound and Out bound logistics are not well defined which leads to a

increased supply chain cost.



Going beyond the internal supply chain by including external suppliers and customers often

exposes new opportunities for improving internal operations of supply chain and open

avenues for greater strategic decisions which can be operationalized.

The true restructure of the supply chain starts with a good strategy and physical elements,

not the virtual (like ERP investments). Though Information transfer is critical to swiftly

moving parts through the chain of processes, but not the only one. Anal yzing the processes

in the supply chain can identify the causes and facilitate solutions to reduce overall

throughput time. Compressing time in the chain of events from the time a customer places

an order until the order is satisfied can provide a competitive edge without the burden of

carrying excessive inventory.



Development of Supply Chain for the

Apparel Retail Organization

In todays world compressing the time in the product spend in the supply chain i.e. from the

from the time a customer places an order until the order is satisfied can provide a

competitive edge without the burden of carrying excessive inventory.

So after analyzing the supply chain of the organization and determining the pitfalls in it we

have come up with a new model of supply chain for Fabindia.

Some changes in it supply chain would be short term and some which require huge

investment will be adopted over a period of time.

The new supply chain of the organization is as follows.

Supply Chain Model of the Organization.

Being a craft based organization fabindia continuously endeavours to find out new rural

crafts that can be incorporated into the fabindia collections of craft. this job is done by

members of the SUPPLIER REGIONAL CHANNEL. SRC are present in 21 states of India and intotal there are 14 SRC.

As soon as a new craft, group of artisan performing an existing craft is identified by SRC

members, they purchase samples of the craft and send it across to PRODUCT SELE CTION

COMMITT EE .

In the identification of artisans the lead time is variable as it is occasional occurrence .It is

one of the greatest value addition to the organisation as a new craft adds most value to

the product range

IDENTIFICATION OF THEARTISANS BY SUPPLIER REGIONAL CHANNEL (SRC)

SRC identifies artisans in its region. They collect samples of the craft and

send its across to the Product Selection Committee (PSC).

SELECTION OF CRAFT

Product Selection Committee (PSC) evaluates the sample on the potential in

the market.



The product selection committee at Delhi evaluates the sample on the basis of merit. If it

finds it suitable to the F abIndia look and wants to incorporate the craft in its range then it

experts in the area of design visit the Artisans in the traditional niche. If it does not find merit

in the craft then it guides the SRC members for to look for more improvements and

improvisations of the craft.

T he lead time here is very large as first the samples are sent to SRCs for evaluation and

then improvisation in the crafts had to be made to suit to the FabIndia look

After the craft is selected then the design team visit the SRC and the artisan to provide for

designs inputs and various innovations of the craft. financial help is also provided to assist

the growth of the craft.

T he lead time is variable and depends upon the proximity of the SRC to the Product

Selection Committee (PSC). And it is one of the greatest additions to the value chain of the

organisation

after a cordial

After building a cordial relationship between the artisans and F abindia, SRC along with theartisans (new and old) come to the PSC with the new products developed by them during the

season. New products are selected and best sellers reordered to be presented in the next

years collection. Delivery of merchandise is scheduled keeping in mind the selling season,

artisans capacity to deliver the merchandise and other schedule of deliveries.

SUPPLIER REGIONAL CHANNEL (SRC) VISIT

Product Selection Committee (PSC) members (experts from the field of

design and marketing) visit the artisan and provide them design inputs.

PRODUCT SELECTION FOR THE COMING SEASONS (SRC)

Product Selection Committee (PSC) experts select styles and designs to be

taken up in next years collection from the designs presented to them by the

artisans in presence of the SRC Head



Possible remedies-:

Artisan must be allowed to visit the Product Selection Committee without the Supplier

Regional Channel Head so that their ideas and grievances are put forward to the Product

Selection Committee and grievances immediately addressed.

If an Artisan is an fabric manufacturer then he/she starts the process of making the fabric of

defined quality in pre-decided colours. But if the artisan does a craft on fabrics then after receiving an order; the artisans order fabric from predefined vendors of the company and

then the vendor supplies the fabrics ordered by all the artisans under one SRC to the SRC.

There by significantly reducing the transportation cost. Artisans with the assistance of SRC

collect their fabric and start the manufacturing of the final produc t.

After the inclusion of ERP the lead time in the issue and execution of orders to fabric

suppliers for fabric by artisans is greatly reduced. Orders are transmitted in matter of

seconds and status of deliveries can also be known through a quick response system.

Possible remedies-:

JUST IN TIME Supply Chain Strategy can effectively be applied to the process of fabric supply

by one vendor and issue of fabric to the other artisan for the manufacture at the SRC. This

would effectively reduce inventory holding cost of the SRC and would also be beneficial to

the artisan would receive fabric at the earliest and hence he could make the deliveries on

time.

ISSUE OF ORDER TO FABRIC SUPPLIERS BY ARTISANS

Artisan source quality fabric from predefined fabric vendors of fabindia.

SUPPLY OF PRODUCTS BY ARTISANS TO SRC

Artisans supply the merchandise as per the schedule of deliveries to SRC.

SRC checks it for quality and quantity and reports the same to PSC



it is inbound logistics that a fter the merchandise is ready it is delivered to the SRC warehouse

where it is checked for quality and quantity. The SKU level entry into the companys ERP

system is done and hand tags and price labels are attached to each product. The sameinformation is sent to PRODUCT SELE CTION COMMITT EE . Payment is made to the artisan

within 45 days of the delivery.

the lead time in this case is due to simplistic inventory stocking policy of the organisation.

Possible remedies-:

Although the artisans supply the merchandise the order as per the schedule of deliveries to

SRCs as per the schedule, but the supplies are more dependent on natural factors, whichcant be avoided and escaped, the remedy to this can be that every organisation maintains

its vendor rating, and has reliable and unreliable suppliers. Fabindia should provide buffer to

suppliers (on the basis of vendor rating) to avoid shortage in stock, and if there is overage of

stock it can make unreliable suppliers dispatch their supply first and make the reliable

supplier wait for some time although they will have to pay them extra for holding their

inventory supply, but it will help in avoiding fluctuations

Besides this the organisation can also implement RFID, utilising RF ID technology, large

quantities of information can be analysed and made available to internal and external

systems in near real time, which is proving crucial to improving the quality of businessoperations.

The PSC then prepares the store wise distribution list for the style and decided the Minimum

Stock F loat (MSF ). MSF is the amount to merchandise to be stocked with SRC for repeat

order reference and future customer orders .

DISTRIBUTION LIST

Buyers at Product selection committee develop a distribution list todistribute the merchandise to various stores.



M inimum stock float ( M SF) creates value not only for the company but also for the vendor.

Lead time here is minimal.

Possible remedies-:

the control and supervision while handling the ERP mainly lies with the product selection

committee(PSCs) which are also entrusted with the selection of designs, they are loaded

with more work which makes their performance of task time consuming, and delay in

handling the data owing to busy schedule, lea ding to difficulty in data mining, more manual

processing. Although WIPROs ERP is good but still improvement is required. The

organisation instead of giving the authority of handling the ERP related transaction to PSC

can give this responsible to dedicated experts of WIPRO, who are well proficient in handling

the data.

After the distribution lists are prepared by PSC they are sent to the Market Region Heads

(MRH) for approval called sign off. t his is outbound logistics The MRH can increase or

decrease the quantities for stores in his/her market region as per the sales of similar styles in

the previous season, provided that the total quantity in each size & colour is not greater than

the one allocated by PSC.

Approval from all the market region heads ( M RH) is a time consuming task and normally

takes around 15 days

Possible remedies-:

After receiving sign off from all the market region heads (MRH) the buyer must consider

reordering the stock if there is excessive demand for the style or if the style is accepted

more in one region then it must move the inventory to those regions and order the

development of new styles with fresh and more acceptable print suitable to that region.

SIGNOFF

Buyers at Product selection committee take a approval of the quantities

allocated to stores by the respective market region heads.



After receiving sign off the consolidated final distribution list is sent to SRC, from where the

merchandise is packed according to the stores in various market regions and dispatched

using rail road transport systems. There are only 8 Market Region Warehouses for all 117

stores.

T he lead time in this step is dependent upon the geographical proximity and cordial

relationships between the SRC and M RWs. At most the lead time in this link would be two

weeks.

On receipt of goods market region warehouses sends goods received in good condition to the

stores. There by effectively breaking the bulk and reducing the cost of transportation of each

SRC sending to each store. T his is outbound logistics. Customers buy these goods from the

stores.

T he lead time is generally one week as only goods are despatched weekly from warehouse

to stores

Possible remedies-:

Market Region Warehouses can implement the strategy of always sending FULL TRUCK

LOAD stock to each store so that it can effectively reduce its inventory cost. By coordinating

this activity with the store; the store would always be knowing when and what stock is to

arrive and can keep the retail shelf space and manpower ready to take the stock in

immediately.

MOVEMENT OF GOODS FROM SRC TO MARKET REGION WAREHOUSE(MRW)

After sign off are received the SRC sends the products to the various market

region warehouses according to the quantities of the distribution list.

MOVEMENT OF GOODS FROM MARKET REGION WAREHOUSE (MRW) TO

STORES

After receipt of goods MRW sends the allocated quantities to various stores

where the finally reach the end user



While in the movement of goods from SRC to market region warehouse MRWs and from

market region warehouse MRWs to stores, these two cases are of outbound logistic s and

require speedy and efficient data mining and retrieval, the ERP here needs improvement.

There can be two solution to this problem, for short term run, fabindia can outsource

services of FEDEX or DHL, outsourcing here means purchase of services from these

companies that were previously provided internally, who are technically equipped with day

to day data and its functioning on a large basis, while maintaining stability and efficiency

equally

On long term basis the ERP of fabindia instead of outsourcin g can merge with FEDEX or DHL

and incorporate such features in their ERP, that instead of outsourcing they can have speedy

data transmission and retrieval within the organisation, although the cost will move up by

incorporating such services but it will be nefit in the long run. It will facilitate effective

communication among the SRCs and MRWs and to the final destination that is the stores

Another remedy to this can be that fabndia should implement RFID in its supply chain

management as with the advent of time it has been observed that the companies investing

in RFID are experiencing new levels of supply chain efficiency. RFID offers a unique

combination of control and flexibility. Unprecedented levels of accuracy allow

manufacturers and retailers to operate and collaborate more effectively. This innovative

technology is increasing the visibility of goods across the chain and beyond. Utilising RFID

technology, large quantities of information can be analysed and made available to internal

and external systems in near-real time, which is proving crucial to improving the quality of

business operations. With the help of RFID, the organisation will be able to achieve:

y Improved tracking of high-value items.

y Reduced shrinkage and shipping errors.

y Inventory visibility, accuracy and efficiency.

y Improved production planning and smart recalls.

y Technology standards to drive down costs.s



The merchandise left with the SRC after supplying to all the SRCs is added to B2B portal of

the company from where it is traded as per the order of the store.

T he lead time is dependent upon the availability of stock and geographical proximity of

the SRC or the stores/ M arket Region Warehouse ( M RH)

Possible remedies-:

The organization must try to establish good relation between all SRCs and MRWs. This

would reduce Market Region Warehouse uncertainty to receive stock. Stores which have

some level of inventory in a particular category must be prohibited to order more stock in

that category so as to reduce the bull whip in the chain. Hence leading to alignment to

manufacturing with customer orders. It should be made mandatory for SRC to process

request in First In First Out format so that effective coordination can be achieved in the

supply chain.

s

MERCHANDISE LEFT WITH THE SRC

If merchandise is left with the SRC after the distribution according to the

distribution list, then it added on B2B portal of the companys ERP system so

that store can order according to their need.

redited remedies scm

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