1. Supply Chain
for
Food Industry

3. Food Supply Chain
• The chain starts with a farmer using farm supplies
like machinery, seeds, fertilisers,pesticides etc.
• The farmers then use logistics providers to
transport the food eitherdirectly the food
processor or indirectly through storage and
marketing via acooperative group or consolidator
• The involvement of the farmer is often limited
upto the processor and does not extend down to
the customer or even the distributor.
• This limits the traceability and transparency of a
typical supply chain

4. Food supply chain risks
• The drive for efficiency and the just-in-time
philosophy used by the food industry has
progressively reduced stock levels throughout the
supply chain
• The consolidation of distribution networks by
food manufacturers and the trend towards using
3PL providers and reducing distribution sites
means that the loss of a site due to events such
as a fire or flood could also cause a disruption in
the supply chain

5. Food supply chain risks
• Statistically such events are predictable but
the trend toward fewer and larger production
and distribution sites means that the potential
impact is very high
• Supply chain risks have been classified as:
– risk arising from the problems of coordinating
supply and demand
– risks arising from disruptions to normal activities

7. • Established in India in 1996
• Invested USD 0.5 Bn in India
• Market Share: 32.3% (FY 2009)
• Total Market (Value): 1300Cr (FY 2009)
• Sales of Rs. 20,000 per minute

8. Supplier
More than 100 suppliers
Manufacturing Plant
3 Manufacturing Plants (Punjab, Pune, Kolkata)
Depot/Warehouse
All-India: 34 NCR: 3 (Delhi, Gurgaon, Noida)
Distributor
All India: 3072 NCR: 61
Wholesaler
All India: Not defined NCR: 19
Retailer
All India: Over 10 Lac NCR: Over 75,000

9. Supplier
More than 100 suppliers
Manufacturing Plant
3 Manufacturing Plants (Punjab, Pune, Kolkata)
Depot/Warehouse
All-India: 34 NCR: 3 (Delhi, Gurgaon, Noida)
Carry and Forwarding Agent
All India: 63 NCR: 11
Retailer
Not-Defined (All Standalones that come under the territory)

11. Logistics & Transport
• Tracks products throughout the supply
chain
• Uses 848 tractors, 2,251 trailers
• Fleet of thousands of local computer-equipped
delivery trucks
• GIT Trackers

12. Inventory Management
• Over 100 warehouses and CFAs in India
• 3rd Party outsourcing
– 3rd party CnF agents hired on commission basis
– Control lies with the company

13. Inventory Management
• ABC Inventory Analysis
– Division of SKUs into 3 parts
– Total SKUs: 78
– Part A: Top SKUs that form 80% volumes (15 SKUs)
– Part B: The SKUs that form next 15% volumes (36 SKUs)
– Part C: The bottom 5% of the SKUs (27 SKUs)

14. Forecasting
• Routine forecasting done on
monthly/quarterly/yearly basis
• Regression analysis used.
• Weekly forecast in collaboration with retail
links
–Live inventory tracking

15. Order Processing
• Type 20: Ones directly sent to the retail
outlet.
• Supply failure leads to empty shelves.
• Type 33: Ones delivered to the warehouse
of the retailer.
• 50 % inventory maintained

16. Order Delivery
• PSR Model:
– PSR goes a day in advance to take orders
– Delivers within 1-2 days.
• RSA Model:
– RSA carried stock along
– Simultaneous order booking and delivery
• Shifting from RSA to PSR

17. Collaboration with Suppliers
• 2.3 billion pounds of potatoes and 775 million
pounds of corn purchased annually.
• Fewer than 100 individual suppliers of potatoes.
• Collaboration with the farmers
– Long Term contracts
– Best varieties of potatoes

18. Collaboration with Retailers
• Over 10 Lac outlets reached every year
• Collaboration important
• Credit policies for retailers and distributers.
• Retail link increases order processing and delivery
efficiency

19. SAP SCM

20. Planning Activities
• Demand planning and forecasting
• Safety stock planning
• Supply network planning
• Distribution planning
• Strategic supply chain design

21. Key Planning Benefits
• Increase demand accuracy and order fulfillment
satisfaction levels
• Reduce inventory levels and increased inventory
turns across the network
• Increase profitability and productivity
• Integrate sales and operations planning process

22. Execution
• Integration of distribution, transportation, and logistics into
real-time planning processes
• Features:
• Order fulfillment
• Procurement
• Transportation
• Warehousing
• Real-world awareness
• Manufacturing

23. Key Execution Benefits
• Improved tracking with RFID-enabled processes
• Seamless integration of different transportation
process steps
• Higher transparency
• Reduced costs of goods sold throughout your
company

24. Collaboration
• Suppliers
– Seamless access to supply chain information
– Synchronize supply with demand.
• Customers
– Provide broad capabilities for replenishment
– Min/max-based vendor managed inventory (VMI)
– Exclusion of promotions and transport load building.
• Contract manufacturers
– Extend visibility and collaborative processes to their manufacturing
processes.

25. Key collaboration Benefits
• Streamline collaboration with your suppliers,
contract manufacturers, and customers
• Significantly decrease procurement, sales, and
inventory costs
• Reduce inventory levels while managing variations
in supply and demand

26. • Demand/Supply gap leading to sales loss
• Out of stock situation due to non availability of stock
• Mismatch of primaries of the company and the organized
players leading to sales loss and reduction in fill rates
• High spoilage and sales returns

28. Inventory management: RFID
• Implementation of RFID
• High cost and high return
• Ease in tracing securing and managing items
• According to AMR research,
– 3-5 percent reduction in Supply chain costs
– 2-7 percent growth in revenue

29. Green Supply Chain
• Reduction of carbon footprint
– Greener manufacturing activities
– More Recycling
• Cost Reduction
– Lower waste-disposal and training costs
– Fewer environmental-permitting fees
– Reduced materials costs.
• Image enhancement in public eyes

30. Better Collaboration with
retailers
• Low fill rates and the loss of sales due to sales
returns and out of stock situations
• Solution
– Better use of the Retail link
– Better Forecasting
– Lesser los of sales

31. Various risks
• Freak weather conditions such as the drought
or the floods decreases the production to such
a level that prices rise exponentially. Eg.
Onion, sugarcane etc.
• Fluctuating cost of fuel means transport costs
also rises sharply, which again pushes up
prices thereby decreasing supply chain profits

32. Various risks
• A lot of dependency on uncontrollable factors:
Internationally, supplies of animal feed crops such as
maize and soya have suffered
• The reduced supply results in shooting up of the prices
of meat, particularly chicken and pork
• Wastage related to Storage: Infrastructure is a big
constraint in India. Tons of grains get wasted because
of improper storage. Pests and rodents are a big
challenge. Sufficient number of silos unavailable in
India to store grains properly. Sufficient Cold storage
facilities yet to be developed.

33. Various risks
• Perishability: Because of being perishable by
nature, a lot of wastage happens during
transportation and material handling.
• Highly fragmented market i.e. the industry is
highly unorganized. Hence, there is lack of
consistency in prices, quality, quantities etc
• Maintaining relationships is very crucial for
success in any supply chain. However, this
becomes very difficult in food industry because of
being highly unorganized in nature.

34. Thank You
Submitted by –
H.Sanchay Grover (91021)
TamalTaru (91116)