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Presentation on:
Role Of Information Technology In Supply Chain Management & Food Corporation Of India
Table of Contents
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01 02 03 04 05 06 07 08 09
TOPICS
Introduction of SCM Role of I.T. in SCM Bar-coding Conclusion Introduction of FCI Procurement, Warehousing, Distribution Practical Analysis Conclusion Bibliography
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Introduction
Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service. Supply chain management flows can be divided into three main flows:
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. Effective supply chain management solves many of the problems encountered by businesses today. First, the vendors involved in the chain will actually have a clearer idea of what the buyer needs and can then adequately provide for these needs. Slow response times and delays in project start dates also become less frequent because the automated supply chain helps shave the time off of the order placement and fulfillment process. Furthermore, Internet-enabled supply chains generally result in lower costs for all parties involved because when secure relationships are established and when the supply and demand for products is in alignment, the total prices paid by organizations are generally much lower.
OBJECTIVES OF SCM:
Enhancing Customer Service Expanding Sales Revenue Reducing Inventory Cost Improving On-Time Delivery Reducing Order to Delivery Cycle Time Reducing Lead Time Reducing Transportation Cost Reducing Warehouse Cost Reducing / Rationalize Supplier Base Expanding Width / Depth of Distribution
TACTICAL ACTIVITIES:
Sourcing contracts and other purchasing decisions. Production decisions, including contracting, locations, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone payments
OPERATIONAL ACTIVITIES :
Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute) Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities. distribution centers, and other customers. Performance tracking of all activities.
ELECTRONIC COMMERCE:
It is the term used to describe the wide range of tools and techniques utilized to conduct business in a paperless environment. Electronic commerce therefore includes electronic data interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic/optical data capture. Companies are able to automate the process of moving documents electronically between suppliers and customers.
Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information.
Bar-coding
Many companies are using the bar-coding system to effectively track their inventories and assets while some of them have an efficient checkout system. A barcode system in place can make things easier for you as a business owner. This is why its always recommended that you invest in a system to make your operations more effective and efficient. If you have warehouses or offices in different parts of the globe, you dont have to wait for someone to manually enter the information about your inventory. You can also track your assets more efficiently. Youll know if something is missing or if you need to buy something. With the software, you can label everything from your products to your inventories. Barcode systems ushered in a modern way of doing inventory and asset management. Theyre not just for checkout counters at supermarkets. If youre looking for efficiency and effectiveness in the operations of your business, you can use it. A system generally consists of two things hardware and software. In order for it to be effective, you have to make sure that the components will complement well with one another.
HARDWARE
Hardware will generally consist of three things. The first one is your computer. This is where youre going to operate the software needed for the whole operation. If you have a big operation, a network of computers is better. That way, you can track your inventory at your warehouse at a different location. The next thing that youll need is the barcode scanner. Without it, your barcodes will just be labels that you cannot read. The scanner captures the data and feeds it to the computer. The third hardware that you need is a printer. Youre going to need it in order to print barcodes and labels.
SOFTWARE
Barcode systems wont work efficiently without software. Good software will let you design your labels and barcodes. There are also programs for asset and inventory management. Software is very important because it provides your hardware the things that they need in order to function properly.
information as price, number of items available, and other pertinent information like that. It helps keep the pricing more accurate than humans simply keying in a price would. By scanning, the margin of error is much less. It also helps a company know exactly how much of an item they have in stock or when they run out of an item, so it helps them keep up with their inventory.
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Analysis: Bar coding has the advantage of making analyzing data much quicker and easier. Optical scanners scan bar codes, continually updating an organization's database on a realtime basis. Rather than having to wait for time-consuming counting or reconciliation efforts, a business can pull up current information on their inventory, parts and many other items by using a bar coding system. Training: Bar coding systems require little employee training. Using a bar code scanner is very simple, allowing managers and business owners to save a lot of time and money that would normally go toward training their staff. The majority of an organization's personnel can begin using a bar coding system immediately. Flexibility: Bar coding can be used in a variety of applications. Although inventory control is one of the most popular applications, it is frequently used in parts identification and warehouse organization applications as well. Besides sales and inventory tracking, barcodes are very useful in logistics. When a manufacturer packs a box for shipment, a Unique Identifying Number (UID) can be assigned to the box. A database can link the UID to relevant information about the box; such as order number, items packed, qty packed, destination, etc. The information can be transmitted through a communication system such as Electronic Data Interchange (EDI) so the retailer has the information about a shipment before it arrives. Shipments that are sent to a Distribution Center (DC) are tracked before forwarding. When the shipment reaches its final destination, the UID gets scanned, so the store knows the shipment's source, contents, and cost.
Barcode scanners are relatively low cost and extremely accurate compared to key-entry, with only about 1 substitution error in 15,000 to 36 trillion characters entered. The exact error rate depends on the type of barcode.
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Pricing Discrepancies and Scanning Problems: When discounts apply to bar-coded merchandise, store employees may forget to code in the discount price. This, in turn, can lead to confusion and delays at the checkout counter, inconveniencing the customer, the checkout clerk, and other customers waiting in line. If a barcode can't be scanned, for any reason, the clerk must then read the corresponding numeric code and enter it manually. Because clerks have become used to scanning barcodes quickly and automatically, without any additional effort on their part, their lack of practice in manual code entries may potentially cause them to be slow and/or inaccurate in entering the information, further delaying the checkout process. Label Damage: Barcodes that are printed on a torn section of packaging, or that have been smeared, smudged or otherwise damaged, will present additional scanning problems. If the corresponding numeric code is also illegible due to damage, the checkout process can be significantly delayed while another package of the same merchandise is located and brought to the checkout counter for scanning. Financial and Equipment Costs: For businesses that are not already equipped for barcode checkout, the cost of the equipment necessary to implement the new system can be prohibitive. Other delays can occur in training employees to adapt to new equipment, and expensive printers must be purchased to print coded labels for any merchandise that doesn't come prepackaged with a barcode already on it. Dot matrix and ink jet printers, for example, are generally incapable of printing finely-detailed barcodes.
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Conclusion
World is shrinking day by day with advancement of technology. Customers' expectations are also increasing and companies are prone to more and more uncertain environment. The strategic and technological innovations in supply chain will impact on how organizations buy and sell in the future. However clear vision, strong planning and technical insight into the Internet's capabilities would be necessary to ensure that companies maximize the Internet's potential for better supply chain management and ultimately improved competitiveness. Internet technology, World Wide Web, electronic commerce etc. will change the way a company is required to do business. These companies must realize that they must harness the power of technology to collaborate with their business partners. That means using a new breed of SCM application, the Internet and other networking links to observe past performance and historical trends to determine how much product should be made as well as the best and cost effective method for warehousing it or shipping it to retailer.
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Introduction
Food Corporation of India was setup on 14th January 1965 having its first District Office at Thanjavur in Tamilnadu and headquarters at CHENNAI under Food Corporations Act 1964 to implement the following objectives of the National Food Policy Effective price support operations for safeguarding the interests of the farmers
Distribution of food grains throughout the country for Public Distribution System Maintaining satisfactory level of operational and buffer stocks of food grains to ensure National Food Security It is the Largest Corporation in India and probably the largest supply chain management in Asia. It operates through 5 zonal offices and 24 regional offices. Each year, the Food Corporation of India purchases roughly 15-20 per cent of India's wheat output and 12-15 per cent of its rice output. The purchases are made from the farmers at the rates declared by the Govt. of India. This rate is called as MSP (Minimum support Price). There is no limit for procurement in terms of volume; any quantity can be procured by FCI provided the stock satisfies FAQ (Fair Average Quality) specifications with respect to FCI. The stocks are transported throughout India and issued to the State Government nominees at the rates declared by the Govt of India for further distribution under the Public Distribution System (PDS) for the consumption of the ration card holders. The difference between the purchase price and sale price, along with internal costs, are reimbursed by the Union Government in the form of Food Subsidy. FCI by itself is not a Decision making authority, it does not decide anything about the MSP(Minimum support Price), Imports or Exports. It just implements the decisions made by the Ministry of Food and Ministry of Agriculture.
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Procurement of FCI
FCI undertakes the procurement of food grains on behalf of the Government of India & state Government in the states where it has been entrusted with this either as a sole agency or jointly with other public procurement agencies. The FCI purchases food grains from producers during both the seasons.FCI procures wheat, Paddy and rice for which the minimum support price (MSP) is announced by the Govt. of India well before commencement of Rabi and Kharif marketing seasons along with specifications. Only fair average quality (FAQ) food grains of laid down specifications by Govt. of India are purchased. The purchase centres during procurement are operated to facilitate the purpose of food grains from farmers in such a manner that farmers need not to cover more than 10 K.Ms. Purchase centres are allotted by state govt. among the procuring agencies i.e. FCI and state govt. Agencies. The allocation of purchase centres is decided by concerned state govt. along with the share of procurement of procurement of wheat and paddy. If the farmers able to get a higher price, they are free to sell their produce to the traders/food grains dealers. The main procuring states are Punjab and Haryana, & the levy percentage is 7.5%. FCI is also functioning in Rajasthan and activities of procurement, storage, preservation of stocks and distribution have been undertaken successfully. In Rajasthan the levy percentage is 50%. The main crop is wheat, Paddy and cereals i.e. Bajra, Maize and Jowar which are not procured by FCI.
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Practical analysis
To get a practical knowledge about the process of supply chain management followed in Food Corporation of India, we visited the district food corporation depot located at Borivali East. There we met Mr. Anil Chavan, the union leader of the depot and Mr. V.G. Khobragade, the quality control manager of the depot. We are very thankful to both of them for providing us with such valuable information required for our project.
After a two and a half hour long conversation with both the officials, the following is the knowledge that we gained from them. Food corporation of India is an public sector undertaking. The Borivali depot was established in 1969 and had only 5 go-downs in the beginning. There are three main steps followed in the FCI to keep the flow of food grains going all over the country. They are Procurement Warehousing and Distribution.
The basic motto of FCI is to serve the farmers. They intervene and help prevent exploitation of farmers who sell their food grains to a private marketer at cheaper rates other than the rates fixed by the government. FCI not only deals in rice and wheat, but it also maintains stocks of jowar, bajra, maize, pulses etc.
The objective of the FCI is to transfer the food grains from the place of excess to the place where there is scarcity/deficit.
PROCUREMENT:
Whenever there is excess supply from the farmers, FCI intervenes and purchases the grains from the farmers at the rate fixed by the state government. The rate at which FCI currently purchases the food grains from farmers is Rs. 6.50 for per kg of rice and Rs. 8.50 for per kg wheat. These rates are decided by the state government at the time of Kharif and Rabi season. There also provision of subsidies for farmers as well as for the FCI.
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FCI approaches the farmers by going to their fields and purchases their grains. Or at times farmers themselves walk to the FCI depots to sell their grains. After the farmers approach the FCI with their grains, FCI checks the grains by conducting various tests like the quality control test, moisture content check, etc. If the grains are approved by the quality control manager, then the grains are purchased and the full payment is done to the farmers at the time of purchase itself. Quality check is done in every stage and at every level in FCI. No marketer tries to go beyond the rates the fixed by the state government. Hence farmers prefer selling the grains to the FCI in order to avoid exploitation.
WAREHOUSING:
After the grains are collected by the state government, the next step is to pack the grains and sent them to respective warehouses. The food grains are packed in gunny bags and transported to various warehouses in different states as per the requirement through wagons. The FCI has its warehouses in north, south, east and west and even at the north east frontier. Its main headquarter is at Delhi. In the FCI depot at Borivali where we visited, there are rail tracks just next to the warehouse. Wagons carrying food grains halt there and are emptied manually. Each gunny bag weighs only 50 kgs. As per the Indian labour organisation, it is mandatory that no human being should lift the weight which is more than his body weight. And hence, these gunny bags weigh only 50 kgs. The total capacity of the depot warehouse is 135,000 tons out if which they currently have a stock of 117,000 tons of wheat. The depot has in all 52 go-downs. The total depot area is around 118 acres. At a time 7 wagons can halt in front of the warehouse. Mr. Anil Chavan, also added that last year the national requirement for food grains was around 6900,000 tons of grains and the production went up to 8900,000 tons of food grains. In such cases when they have excess stocks, they either hire private warehouses on rental basis or purchase those warehouses. This decision is taken by the FCI head i.e. chairman cum managing director of the FCI. Also the FCI maintains 30% reserves of grains known as the buffer stocks to meet the excess requirement during any natural calamity or emergencies. FCI has computerised depot administration to maintain the accounts. It maintains its records through integrated rapid reporting system (IRRS). This information is directly monitored by the headquarters at Delhi. With the help of this information, the state government frames policies and movement plan is also framed i.e. allocation of grains to various states is done.
DISTRIBUTION:
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The distribution is planned by the state government with the help of records supplied from various depots. FCI supplies food grains to defence forces and even to the north east frontier. In the west zone, the distribution is done to Maharashtra, Goa, Gujarat, Chhattisgarh and Madhya Pradesh. The depot at Borivali covers the area from Colaba to Palghar. The basic distribution takes place in the following form: The director of civil supply of the state government agency picks the grains from FCI godowns, gives it to rationing shops and wholesalers, and then the grains reach the consumers. District collectors are appointed to look after the proper distribution of allocated grains. The stock is audited by the state bank of Indias auditor to check for quality of food grains distributed. FCI also appoints squads or agents to keep a check on the rationing prices. FCI follows FIFO i.e. the first in first out trend. The grains which enter the go-down first are distributed first.
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Conclusion
From the information that we gained from FCI, we can come to the conclusion that FCI has a great maintenance and warehousing facilities, proper recod maintenance is also done, and ever move is well planned. But as every coin has two sided, FCI instead of having such good process, it also has few drawbacks. They are:
Lack of control over the stock of grains once they leave the depot. The FCI has no control over the grains after that. They cannot trace whether the grains reach the destination in the same form as they are loaded from the depot. They have no checks to see whether any manipulation takes place after the goods have left the depot. Secondly, lack of ability to supply good quality grains to the consumer. As they do not have any control, the grains are mixed with bad quality grains thus exploiting the consumers.
The FCI has been demanding the state government that they should be given the direct distribution rights in order to stop the exploitation by the middlemen but this plea has always been fallen on deaf ears. Hence, we would conclude by saying that the system is never wrong, the people running the system are wrong.
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Bibliography
Websites visited:
http://www.ehow.com/about_5044719_advantages-bar-coding.html http://www.epiqtech.com/supply_chain.htm http://www.witiger.com/internationalbusiness/SupplyChainManagement.htm http://searchmanufacturingerp.techtarget.com/definition/supply-chainmanagement. http://fcamin.nic.in/dfpd_html/plan-scheme.html http://post.jagran.com/lack-of-staff-responsible-for-poor-state-of-foodcorporation-of-india-1303568311 http://fcp.bih.nic.in/Procurement.htm http://fciweb.nic.in/procurements http://www.indianmba.com/Faculty_Column/FC461/fc461.html http://www.ehow.com/about_5474836_impact-technology-supply-chainmanagement.html
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