2. SUPPLY CHAIN MANAGEMENT
 Supply chain management spans all movement
and storage of raw materials, work-in-process
inventory, and finished goods from point-of-origin
to point-of-consumption
 Supply Chain Management encompasses the
planning and management of all activities
involved in sourcing, procurement, conversion,
and logistics management activities.
 Parties involved.

3. STRATEGIC ALLIANCES
 An alliance is cooperation or collaboration which
aims for a synergy where each partner hopes that
the benefits from the alliance will be greater than
those from individual efforts

4. TYPES OF STRATEGIC ALLIANCES
 Third Party Logistic: 3PL is the use of an outside
company to perform all or part of the firm’s material
management and product distribution functions.
 Retailer-Supplier Partnerships: It’s the formation of
strategic alliances between the retailers and their suppliers.
 Distributor Integration: This appreciates the value of the
distributors and their relationship with the end users and
provides them with the necessary support to be successful.

5. RETAILER SUPPLIER PARTNERSHIPS
 Types of Retailer-Supplier Partnerships
 Quick Response Strategy
 Continuous Replenishment Strategy Or Rapid
Replenishment
 Advanced continuous replenishment strategy
 Vendor-managed Inventory System.

6. Alliance type Decision maker Inventory New skills
ownership required by
vendors
Quick Retailer Retailer Forecasting
response skills
Continuous Contractually Either party Forecasting
replenishment agreed-to levels and inventory
control
Advanced Contractually Either party Forecasting
continuous agreed-to and and inventory
replenishment continuously control
improved levels
Vendor Vendor Either party Retail
managed management
inventory

7. REQUIREMENTS FOR RSP
 Advanced information systems
 Top management commitment
 Information must be shared
 Power and responsibility within an organization
might change.
 Mutual trust
 Information sharing
 Management of the entire supply chain
 Initial loss of revenues

8. ISSUES IN RSP IMPLEMENTATION
 Inventory ownership
 Performance measures: Fill rate, inventory level,
inventory turns
 Confidentiality
 Communication and cooperation

9. ADVANTAGES OF RSP
 Fully utilize system knowledge (retailer)
 Manufacturer may predict demand better
 Focus on retailing rather than logistics.
 Reduce bullwhip effect (vendor)
 Reduced inventory and/or increased service level
 Ability to coordinate replenishments to different
retailers.

10. DISADVANTAGES OF RSP
 Expensive advanced information technology is
required.
 Supplier/retailer trust must be developed.
 Supplier responsibility increases.
 Expenses at the supplier often increase.

11. EXAMPLE
 In 2003, Maruti produced 359,960 vehicles,
operating at a capacity utilization of 103%, against
the industry average of 57.8%.
 Vendor management became an important area as
Maruti attempted to improve operational
efficiency.
 Maruti procured components worth about
Rs.5,000 crores every year.

12.  The company's top 10 vendors accounted for about
34 % of its aggregate purchases of components
from vendors in India.
 Maruti was working on a 3.5% per annum
reduction in vendor prices by 2004-2005.
 Maruti streamlined the sourcing and stocking of
materials and components through its Delivery
Instruction system, one of Suzuki's best practices.

13.  This system provided details of Maruti's
component requirements for every 15 days, across
the different variants of the various models, to its
vendors.
 Web initiatives helped Maruti to bring down
procurement time and costs.