Chapter - 1: Supply Chain Management

SUPPLY CHAIN MANAGEMENT
CHAPTER -1
INTRODUCTION
Page | 1
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT
INTRODUCTION
Atul Ltd is one of the diversified industries of the Lalbhai group and it deals with the production
of the various chemicals & dyes intermediates. Color division is one of the six division which are
governed by Atul Ltd. The project aims at highlighting the importance of Supply Chain Management at
Atul Ltd.
Various departments are studied in the course of the project report. This include the order
tracking system, the standardization process, the purchase department, marketing department,
manufacturing plant, storage room.
The project deals with the study of how supply chain management is done in Atul Ltd. I also
study the Order processing, Physical distribution, Inventory management of various depots.
1.1 INDUSTRY PROFILE
The Indian dyestuff industry is only about 40 years old though a few MNCs set up dyestuff units
in the pre independence era. Like the rest of the chemical industry, the dyestuff industry is also highly
fragmented. The industry is characterized by the co-existence of a small number of players in the
organized sector (around 50 units) and a large number of small manufacturers (around 1,000 units) in the
unorganized sector. The distribution of these units is skewed towards with western region (Maharashtra
and Gujarat) accounting for 90%. In fact, nearly 80% of the total capacity is in the state of Gujarat, where
there are nearly 750 units.
Over six hundred types of dyes and organic pigments are now being manufactured in the country
(both by the organized and the unorganized sector). But the per-capita consumption of dyestuffs is lower
than the world average. Dyes are soluble and essentially used in textile products. Pigments, on the other
hand, are insoluble and are important imports to product such as points.
During the past two years, the dyestuff industry was overtaken by a series of fast changing events
in the international arena. Indian companies failed to keep pace with the changing trends. The biggest
market for dyestuffs has been the textile industry. The dominance of polyester and cotton in the global
markets has decisively shaped the demand for certain types of dyestuffs. On the other hand, the demand
for polyamides, acrylics, cellulose and wool was more or less stagnant. Differences in the regional growth
rates of textile products too affect demand. The Asian region saw the biggest growth in textile production,
followed by North America, Latin America and Western Europe. This suggests the shift in the global
textile industry towards Asia. As a result, Asia leads in dyestuff production both in terms of volumes and
Page | 2
value, with a 42 % share of the global production; the US is next with 24 % and Europe has around 22 %.
Due to a greater use of polyester and cotton-based fabrics, there has been a shift towards reactive dyes,
used in cotton-based fabrics, and disperse dyes, used in polyester. These two dyes have been dominant in
all the three regional global market, especially Asia. Adding to the shift in textile usage pattern and
regional developments is the extent of over capacity in the global dyestuff industry. Capacity is estimated
to be around 1.2 million tones, with consumption at 0.8 million tones, leaving a clear gap of 0.4 million
tones.
Within India, the major players in the pigments industry are Color Chem. and Sudarshan
Chemicals while in the dyestuff industry companies such as are Atul, Clariant India, Dystar, Ciba
Specialties and IDI are important players in terms of market share. The Indian companies together
account for around 6 % of the world production.
Nearly 80 % of the dyestuffs is commodities. This means there do most producers manufacture
not much product differentiation between the goods. Since not much technology is involved, duplication
of products is also easy compared to specialties. However, in the recent past, there have been attempts by
global manufacturers to move to the specialty end of the product profile, with some success. Vat dyes
have always functioned as specialty products, with technology playing an important role. Now,
companies are concentrating on the higher end of the reactive dyes segment. The trend is now shifting
from supplying mere products to color package solutions. The emphasis is more on innovation,
production range, quality and environmental friendly products. Producers are collaborating with
equipment manufacturers to provide integrated solutions rather than products.
Fiscal policies and changes in the usage pattern of the global dyestuff industry have changed the
market shares of Indian companies. Excise concessions for the small-scale sector in the mid and the late
1980s spawned numerous units in Maharashtra and Gujarat. At one stage, there were in the unorganized
sector around 1,000 units, with most of them located in Gujarat and Maharashtra. This also led to large-
scale evasion of duties. However, since the early 1990s, there has been a gradual reduction in the excise
duty rates applicable to the organized sector. From 25 % in 1993-94, the excise duty rates were reduction
to 20 % in 1994-95 and further to 18 % in 1997-98.
The latest Union Budget further reduced these rates to 16 %. This gradual reduction in the duty
rates blunted the competitive edge of the unorganized sector. The organized sector, with better product
range, technology and marketing reach, was able to increase its market share. But more important
changes have come through the German ban on certain dyestuffs, followed by the implementation of the
local pollution control laws. While the organized sector has been able to phase out the production of dyes
Page | 3
based on the 20 banned amines by the German legislation, many in the unorganized sector were forced to
exit. This was compounded by the local pollution laws, which required setting up of effluent treatment
plants, and pushed out companies in the unorganized sector.
1.1.1 Consumption Pattern:

Dyestuff is a broad term, which includes dyes and pigments. A dye is a colored substance or an
organic compound, which when applied in a solution to a fabric, imparts a color resistant to washing. The
textiles, paper and leather industry largely use them, with textiles accounting for over 80% in India. This
links the dyestuff industry's fortunes to that of the textile industry. Dyes are classified according to
various systems. The most commonly used one is the one used by the US International Trade
Commission. According to this system, there are 9 Types of dyes, as detailed in the following table:
Table 1.1: Most commonly used 9 types of dyes.
Application
Group
Acid Wool, silk, paper, synthetic fibers, leather
Azoic Printing Inks and Pigments
Basic Silk, wool, cotton

Direct Cotton, cellulosic and blended fibers
Disperse dyes Synthetic fibers
Reactive Cellulosic fiber and fabric
Organic pigments Cotton, cellulosic, blended fabric, paper
Sulphur Cotton, cellulosic fiber
Vat dyes Cotton, cellulosic and blended fiber
With the change in the product profile of the textile industry from the high-cost cotton textiles to
the highly durable and versatile synthetic fibers, the consumption pattern of dyes has also been changing.
Polyesters are projected to account for a large part of dye consumption in the country. Accordingly,
disperse dyes, which find application in polyesters, are projected to grow faster.
In addition to textiles, dyestuffs are also used in industries like plastic, paints, printing inks, paper
and leather. While these industries account for a very small part of domestic consumption, globally these
account for a substantial part of total consumption.
1.1.2 Technology:
Page | 4
The technology for dyestuff manufacturing varies widely from relatively simple (direct ago) to
sophisticated (disperse and vat) dyes. Though technology is locally available, most of it is outdated. The
problem is further compounded by the fact that the nature of the process changes from batch to batch and,
therefore, controlling the process parameters becomes difficult. The Indian industry has made significant
progress in terms of technology and production.
The dyestuff industry is one of the heavily polluting industries and this has resulted in the closure
of units internationally and shifting of units to the emerging economies. Most of the international
manufacturers have transferred the technology to developing nations like China, India, Indonesia, Korea,
Taiwan and Thailand. This shift of manufacturing capacities is because the industry is perceived as a
high-cost and low return one. The batch processing also makes it a labor- intensive industry. Thus, the
competitiveness of developing economies increases. However, the judiciary has come down with a heavy
hand on several manufacturing units, especially in Gujarat.
1.1.3 Restructuring:
There has been severe a drain on the profitability of the industry. This is due to entry of many
new players in the last few years resulting in severe competition and price wars. Restructuring of the
Indian dyestuff industry, initiated a couple of years ago, is in progress. The trend was set last year by the
market leader Colour-Chem. Ltd, which decided to opt out of the dyestuffs business. It has entered into a
toll manufacturing agreement with Dystar India Ltd. There have been other alignments, which would
result in improving capacity utilization at manufacturing facilities and also obtain better reach of export
markets.
Ciba India and IDI have signed a pact to market polyester and cellulose dyes. IDI has also tied up
with Ciba for the manufacture and marketing of dyes and pigments. Atul products has completed the
acquisition of Zeneca’s 50% stake in Atic Industries Ltd and tied up with BASF, Germany to market 50
% of its production of vat dyes.
The restructuring of Sandoz, consequent to the merger with Ciba, has led to the creation of
Clariant AG. The dyestuffs manufacturing division of Khatau Group has been merged with its marketing
company, Indokem Ltd.
1.1.4 Dyestuff Industries of Gujarat.
Page | 5
Gujarat Dyestuff Industries Pvt. Ltd. was set up in the year of 1981. The company shifted the
manufacturing base from Textile Dyes & Chemicals to PPP/HDPE Woven Bag/Sacks/Fabrics and PE
Liner in the year of 1985.
Presently, the company is the leader in manufacturing of these bulk packaging items in the
country. As of today the company enjoys a very high reputation for consistent high quality of products
and committed service to the customers. The company has installed most modern technology Plant &
Machineries of 10000 TPA capacity to manufacture PP/HDPE Woven Bag/Sacks/Fabrics and PE Liner
etc. Encored with good demand the company implemented expansions in quick succession from time to
time.
Atul Ltd. is an honorable member of following organizations
 All India Plastic Manufacturer Association (AIPMA)

 All India Flat Tape Manufacturer Association (AIFTMA)
 Indian Plastic Federation (IPF)
 Indian Institute of Plastic (IIP)
 Gujarat Chamber of Commerce & Industries (GCCI)
 Director General of supplies & Disposals (DGS& D)
 The Plastic Export Promotion Council (PEXCONCIL)
 Chemicals & Plastics Manufacturers Association (CPMA)
The company has won several awards in these 2 decades of operation, which shows the high
standard of quality. The Indian dyestuff industry has been facing difficult times. Low profitability and
demand growth combined with increasing importance for environmental protection have resulted in the
exit of many small producers. However these factors have seen the consolidation of major players in the
industry. Currently there is an over capacity situation in the domestic market that has forced the industry
to look at exports for growth. With the closure of many manufacturing bases in the US and Europe,
MNCs are shifting to Asian countries like India and China. The share of the MNCs in the domestic
production of these two countries has been going up steadily over the last few years.
1.2 COMPANY PROFILE
Page | 6
Atul Ltd is a member of Lalbhai group, one of the oldest business houses of India, with interests
mainly in textiles and chemicals. The group is strongly committed to serve the society in the field of
education, health as well as culture.
Lalbhai with dream to make India self reliant in chemicals, generated employment on a large –
scale and create wealth for the society. For translating his dream into reality, KASTURBHAI LALBHAI
brought his confident, BULLUBHAI MUZUMDAR, an economist- and his son, SIDDHARTH
KASTURBHAI LALBHAI, A CHEMICAL ENGINEER, to lead Atul Ltd and established a large
chemical conglomerate.
Atul Ltd became the first private sector company of India to be inaugurated by Jawaharlal Nehru,
the first Capital Minister of the country. The company thus commenced its business with just a few
dyestuffs, the know-how of which was brought from freight companies?
Over the year, Atul Ltd joined hand with American Cyanamid crop (1952), Imperial chemical
industries plc (1955) and Ciba-Geigy Ltd (1960) to from Respectively 3 joint venture companies, namely,
Cyanamid India Ltd, Atic industries Ltd and Cibatual Ltd respectively. Consequent to worldwide
divestment of the days and polymers business by ZENECA plc (formerly a part of ICI plc) and Ciba Ltd
respectively, Atic industries Ltd and Cibatual Ltd were merged into Atul Ltd in 1995 and 1998
respectively.
Atul Ltd operates through six-business division, namely, Agrochemical bulk chemicals &
Intermediates, Colors, Pharmaceuticals, Intermediates, and Polymers. Each business, in step with the
company vision, develops and implements its growth plans.
Atul’s registered office is in Ahmadabad whereas its corporate headquarters are located in Atul
Gujarat. Company is listed on the NSE in India and has over 35000 shareholders. Atul also has office in
the USA, the UK, Germany, and Vietnam that service its international customers.
1.2.1 Organization structure of Atul Ltd.
Page | 7
Source: Discussion with Manager, Marketing Dept. Atul Ltd.
Page | 8
1.2.2 Different divisions of Atul Ltd.
Agrochemicals Division:
In 1967 , Atul Limited started manufacture of phenoxy herbicides and in subsequent years added
more products to the range, including urea & sulfonylurea herbicides, triazole fungicides and carbamate;
neonicotinoid; organophosphorus & pyrethroids insecticides. Phosgene, a vital raw material is
manufactured by the division.
Consistency in quality, commitment to timely deliveries and prompt

techno-commercial services have ensured that the division is now
among the world's five leading manufacturers of 2,4-D range of
chlorophenoxy derivatives.
The products marketed by the division have been well

received by customers across 35 countries, including quality
conscious markets like South East Asia, Latin America, Spain and Australia.
The division has the technical expertise to meet country specific requirements of regional
registration and regulatory authorities. The division is fully committed towards promoting
environmentally sound chemicals, and provides the necessary support to all customers for safe use of its
products.
Aromatics Division:
Aromatics Division is one of the world’s largest manufacturers of Para anisic aldehyde, Para
cresol and Para anisic alcohol, supplying its products to diverse industries, including cosmetics, flavours
and fragrances, bulk drugs, dye intermediates; and plant and animal micro-nutrients.
The Division's manufacturing site is located at Ankleshwar

in Gujarat, about 350 km north of Mumbai.
The Division has always laid great emphasis on innovation. The

state-of-the-art cost-effective processes, scientific research,
ingenious technology and detailed market knowledge form the
basis for the Division’s success.
Aromatics has strengthened its global competitiveness through process innovation and has developed new
tools to gauge customers’ needs. Through collaborations with universities and research institutes, the
Division gets access to new knowledge and technology constantly.
Page | 9
Bulk Chemicals and Intermediates Division:
The Bulk Chemicals and Intermediates division manufactures a variety of bulk chemicals and
semi-speciality intermediates.
The division started manufacture of bulk chemicals in 1960

and intermediates in 1963 to provide backward integration to Atul
Ltd.'s dyes business.
Drawing on its strong research base and flexible manufacturing

capabilities, the division now manufactures numerous
intermediates for dyes and semi-speciality chemicals for customers
world-wide.
With capability to handle a wide variety of chemical processes, the division is ready to become a
global leader in selected intermediates.
Colors Division:
The Colors division is the largest business division of Atul Ltd,

manufacturing a wide range of dyestuffs for the textile, leather, paper, wool
and silk industries. The division is the largest supplier of dyestuffs in India
and exports nearly 40% of its production to more than 40 countries
worldwide.
The division's manufacturing operations started with sulphur dyes

in 1952. In quick succession, other classes of dyes - direct, acid, azoic and azo disperse - were added to
the product range. Vat, reactive and anthraquinone disperse dyes were manufactured by the erstwhile Atic
Industries Ltd, a 50:50 joint venture between Atul Ltd and Zeneca plc (formerly a part of Imperial
Chemical Industries plc).
In 1995, when Zeneca decided to divest its textile colors business

worldwide, Atul Ltd bought over Zeneca's stake in Atic Industries.
Consequently, the same year, the two companies were merged.
With state-of-the-art manufacturing facilities, stringent quality

control systems and an efficient pool of skill-sets, the division is in the
forefront of exploiting market opportunities and providing optimum solutions to its customers.
Page | 10
The division is ISO 9001 certified.
Pharmaceuticals and Intermediates:
For over two decades, this unit manufactured Sulpha Drug Intermediates for Ciba Geigy. Now, as
a separate Division of Atul, Pharmaceuticals Intermediates has diversified into a wide range of specialty
intermediates and APIs.
Atul is the world leader in Dapsone, an anti-bacterial drug. A newly built GMP manufacturing plant,
supported by an approved DMF, assures you a high quality and regular supply.
The division specializes in offering a range of fine chemicals and intermediates based on in-house
Phosgene supply. Intermediates based on Phosgenation and Hydrogenation is offered from kilogram to
metric ton scale.
The Division has recently launched a range of new products based on phosgene chemistry namely
various Chloroformates, Isocyanates, NCA, Carbonates & Dicarbonate, Chlorides, Ureas & other
products.
The phosgenation business is backed by a strong R&D, Pilot Plant facility and the new PHIN
plant; all covered under scope of ISO 9000 and ISO 14000 certification.
Polymers
Lapox Epoxy Resins and Hardener systems are manufactured and marketed by Polymers division
of Atul Limited. The manufacture of Epoxy systems began in 1968
in a company established as a joint venture between Atul and Ciba,
Switzerland. In 1999, on the merger of the JV with the parent
company, the Epoxy operations became a part of Atul Limited.
Having achieved a leadership position in the domestic

market of Epoxy Systems, the company intends to play its rightful
part in the global market. It has plans to build on the success already achieved in certain segments of the
European and North American markets. The strategy is to target niche markets offering customized
solutions for challenging applications.
Recently added products such as Multifunctional Epoxy Resins, Cycloaliphatic Epoxy Resins,
Epoxy Novolacs, Bis F Resins, Brominated Epoxies, Reactive Diluents, Phenalkamines, and Aromatic
Amines have enlarged the long-standing grades offered by the company for applications in electrical
Page | 11
casting, composites and laminating, civil and coating industries. These are strongly supported by a well-
equipped Application Development Center and synthesis as well as analytical labs.
Apart from an intensive network of branch offices and dealers in India, the company has
established marketing subsidiaries in the UK (Manchester), the USA (Charlotte), Germany (Weisbaden)
and China (Shanghai). Besides, it has enterprising agents/dealers in the UK, France, Germany, USA and
China. These dealers stock Lapox to cater to the needs of their regular customers.
The company has geared itself to delight epoxy users with Lapox in the global niche markets.
Floras Division
Floras was started with a view of productive utilizing of large land holdings of Atul Ltd. Its
objective is to give genuine herbal extracts which are obtained from scientifically grown crops.
Floras has ensured that its products meet the perfumery and cosmetic industry’s needs for
genuine natural essential oils.
1.2.3 Departments at Atul Ltd.
Human Resource Management.
In any organization only their employees are the real assets. This is the only asset, which make
use of all the resources and can generated revenues from business. Employees are human beings and they
have their own beliefs, attitudes, personality and goals to achieve from the organization. As organization
is the group activities of the employees needs to work in order to achieve common organization goals.
Due to above reason Human Resource Department is essential in the organization. Human
Resource Department deals with the managing human in an organization. Now due to changing
conditions and global effects the people of different culture, attitudes, language, behavior works to bather
at that time human resource management becomes essential part of organization.
In Atul ltd, Human Resource Department manages all the employees very effectively and
efficiently.
Human Resource means “TO PUT RIGHT PERSON AT RIGHT TIME AT RIGHT PLACE.”
Page | 12
Core Values of Human Resource Management:
C -Competences building
A -Adapt to new environment
R -Respect human values
E -Empower, Enrich, Excel
People are key element in the chemistry of the Atul ltd.
It is entrepreneurship and creativity of the people as also their integrity and commitment that
determine the success of the company. Atul Ltd aspires to develop a work environment where these
abilities and qualities are nurtured.
Atul Ltd endeavors to identify area of individual development of employees through its
performance management system. The training regimen, which covers every employee, prepares them to
anticipate and meets challenges.
While continuing the tradition of being compassionate and caring, the focus is on empowering
employees and helping them to excel in the business.
Top Three Priorities:
Safety:
Atul Ltd through comprehensive system of design, training, reporting, and review achieves high
levels of performance in plant and employee safety.
Health:
From recruitment to retirement, the health of employees is given attention and care. Pre-
employment medical check-ups, annul routine health surveillance and target health check-ups are
conducted at the medical centers Atul Ltd. Employees have access to facilities for badminton, billiards,
gymnasium, sauna, squash, swimming, table tennis.
Page | 13
Environment:
In environment, Atul ltd has given also three major priorities.
A. Water:
The factory sites have extensive pipeline system to keep ground water free of any contamination.
The state-of-the-art effluent treatment plants are of large capacity to fully treat all effluence from the
manufacturing facilities.
The treated effluence meeting specified standard are taken in covered pipelines for discharge in
zones agreed with regulatory authority.
B. Air:
Numerous scrubbing systems are integral part of the manufacturing facility of Atul ltd.
Analyses of vent gases and monitoring of ambient air are done routinely.
C. Soil:
Organic chemical wastes are incinerated in the incinerators of Atul ltd. Incinerator ash
and solid wastes generated from manufacturing process are carefully monitored in line with
prevalent rules and regulation.
Hazardous solid wastes are disposed of in a secured facility owned by the company.
1.3 RESEARCH METHODOLOGY
Topic of the study: - Supply chain management at Atul Ltd.
Problem Statement: - To study the marketing and distribution of dyes manufactured by Atul
Ltd.
Objective of the study:-
 To study how the company perform various functions of received order,

procurement of raw material –material required for making product,
transformation of this material to intermediates and the finished products and
the distribution of the finished products to the customer.
 To study distribution strategy, information and inventory management.
 To study about the location, size and number of warehouses, distribution
centers and facilities.
 To study transportation strategy including frequency, routes and contracting.
Page | 14
Method of data collection:-
Secondary Data:- secondary data are the data already collected and analyzed by someone else
 Reference to past performance, report and register.

 Personal talk with the marketing manager.
Research Design:-
Descriptive research design is appropriate for this study. A detail information

about the present and past situation of the company is available in descriptive
research.
1.4 RATIONALE FOR THE STUDY
Today’s business environment is changing rapidly so to remain in the competition each and every
company has to adopt the latest technology and process to minimize its production cost so that they can
give their product at the competitive price and can make their position in stable in the market.
This study is based on supply chain management. Supply chain execution means managing and
coordinating the movement of materials, information and funds across the supply chain. The flow is bi-
directional.
This study shows all the processes starting from the procuring of the raw material to the
distribution of the finished products. This study gives the information regarding purchasing of raw
material, which are the different processes necessary for testing the quality of the raw material, how the
inventory is managed at the each and every stage of the production process. This study gives the
information about the necessary steps taken for testing the quality of the finished product. The study also
shows the necessary arrangement required at the dispatch area. The study gives information to the
management that how they can add the value and reduce the total cost across the entire process. It gives
information about which are the value added process and which are not. So that they can eliminate that
non value added processes.
Thus this study gives full information starting from receiving order to the distribution of the
finished product. It also focus on the weak area of the company and where it required the proper attention.
Page | 15
CHAPTER 2
THEORITICAL FRAMEWORK
Page | 16
A supply chain is a network of facilities and distribution options that performs the functions of
procurement of materials, transformation of these materials into intermediate and finished products, and
the distribution of these finished products to customers. Supply chains exist in both service and
manufacturing organizations, although the complexity of the chain may vary greatly from industry to
industry and firm to firm.
Supply chain management (SCM) is the process of planning, implementing, and controlling the
operations of the supply chain as efficiently as possible. 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.
A supply chain, as opposed to supply chain management, is a set of organizations directly linked
by one or more of the upstream and downstream flows of products, services, finances, and information
from a source to a customer. Managing a supply chain is 'supply chain management'
Figure shows the key concepts of the supply chin management.
As shown in the figure 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
Page | 17
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
Supply Chain Management is the systemic, strategic coordination of the traditional business
functions and the tactics across these business functions within a particular company and across
businesses within the supply chain, for the purposes of improving the long-term performance of the
individual companies and the supply chain as a whole
Supply chain management is a cross-function approach including managing the movement of raw
materials into an organization, certain aspects of the internal processing of materials into finished goods,
and the movement of finished goods out of the organization and toward the end-consumer. As
organizations strive to focus on core competencies and becoming more flexible, they reduce their
ownership of raw materials sources and distribution channels. These functions are increasingly being
outsourced to other entities that can perform the activities better or more cost effectively. The effect is to
increase the number of organizations involved in satisfying customer demand, while reducing
management control of daily logistics operations. Less control and more supply chain partners led to the
creation of supply chain management concepts. The purpose of supply chain management is to improve
trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity
of inventory movement.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations

along the supply chain operated independently. These organizations have their own objectives and these
are often conflicting. Marketing's objective of high customer service and maximum sales dollars conflict
with manufacturing and distribution goals. Many manufacturing operations are designed to maximize
throughput and lower costs with little consideration for the impact on inventory levels and distribution
capabilities. Purchasing contracts are often negotiated with very little information beyond historical
buying patterns. The result of these factors is that there is not a single, integrated plan for the
organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through
which these different functions can be integrated together. Supply chain management is a strategy through
which such an integration can be achieved.
Supply chain management is typically viewed to lie between fully vertically integrated firms,
where the entire material flow is owned by a single firm, and those where each channel member operates
Page | 18
independently. Therefore coordination between the various players in the chain is key in its effective
management.
2.1 SUPPLY CHAIN DECISIONS
There are four major decision areas in supply chain management: 1) location, 2) production, 3)
inventory, and 4) transportation (distribution), and there are both strategic and operational elements in
each of these decision areas.
2.1.1 Location Decisions
The geographic placement of production facilities, stocking points, and sourcing points is the
natural first step in creating a supply chain. The location of facilities involves a commitment of resources
to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths
by which the product flows through to the final customer. These decisions are of great significance to a
firm since they represent the basic strategy for accessing customer markets, and will have a considerable
impact on revenue, cost, and level of service. These decisions should be determined by an optimization
routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution
costs, production limitations, etc. Although location decisions are primarily strategic, they also have
implications on an operational level.
2.1.2 Production Decisions
The strategic decisions include what products to produce, and which plants to produce them in,
allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions
have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume
the existence of the facilities, but determine the exact path(s) through which a product flows to and from
these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely
depends the degree of vertical integration within the firm. Operational decisions focus on detailed
production scheduling. These decisions include the construction of the master production schedules,
scheduling production on machines, and equipment maintenance. Other considerations include workload
balancing, and quality control measures at a production facility.
Page | 19
2.1.3 Inventory Decisions
These refer to means by which inventories are managed. Inventories exist at every stage of the
supply chain as either raw materials, semi-finished or finished goods. They can also be in-process
between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply
chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their
efficient management is critical in supply chain operations. It is strategic in the sense that top
management sets goals. However, most researchers have approached the management of inventory from
an operational perspective. These include deployment strategies (push versus pull), control policies --- the
determination of the optimal levels of order quantities and reorder points, and setting safety stock levels,
at each stocking location. These levels are critical, since they are primary determinants of customer
service levels.
2.1.4 Transportation Decisions
The mode choice aspect of these decisions are the more strategic ones. These are closely linked to
the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the
particular mode of transport with the indirect cost of inventory associated with that mode. While air
shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping
by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to
buffer against the inherent uncertainty associated with them. Therefore customer service levels, and
geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the
logistics costs, operating efficiently makes good economic sense.
2.2 SUPPLY CHAIN MANAGEMENT FLOWS:
Supply chain management flows can be divided into three main flows:
 The product flow

 The information flow
 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.
Page | 20
2.3 SUPPLY CHAIN MANAGEMENT PROBLEMS:
Supply chain management address the following problems:
 Distribution Network Configuration:
Number, location and network missions of suppliers, production facilities, distribution

centers, warehouses and customers.
 Distribution Strategy:
Questions of operating control (centralized, decentralized or shared), delivery scheme,

DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier,
including truckload, parcel, railroad, intermodal transport, ocean freight; air freight;
replenishment strategy (e.g., pull, push or hybrid); and transportation control. (e.g., owner-
operated, private carrier, common carrier, contract carrier).
 Trade-Offs in Logistical Activities:
The above activities must be well coordinated in order to achieve the lowest total
logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For
example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than
truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce
transportation costs, there will be an increase in inventory holding costs which may increase total
logistics costs. It is therefore imperative to take a systems approach when planning logistical
activities. These trade-offs are key to developing the most efficient and effective Logistics and
SCM strategy.
 Information:
Integration of processes through the supply chain to share valuable information, including
demand signals, forecasts, inventory, transportation, potential collaboration, etc. These all the
information should be share with the related employees so that they can contribute their best
effort for accomplishing the task.
 Cash-Flow:
Page | 21
Arranging the payment terms and methodologies for exchanging funds across entities
within the supply chain.
2.4 INPORTANCE OF SUPPLY CHAIN MANAGEMENT
Supply Chain Management (SCM) is "Maximizing added value and reducing total cost across the
entire trading process through focusing on speed and certainty of response to the market." Due to
globalization, SCM has become a tool for companies to compete effectively either at a local level or at a
global scale. SCM has become a necessity especially for manufacturing industry when it comes to deliver
products at a competitive cost and at a higher quality than their competitors.
Today's business climate has rapidly changed and has become more competitive as ever in nature.
Businesses now not only need to operate at a lower cost to compete, it must also develop its own core
competencies to distinguish itself from competitors and stand out in the market. In creating the
competitive edge, companies need to divert its resources to focus on what they do best and outsource the
process and task that is not important to the overall objective of the company. SCM has allowed company
to rethink their entire operation and restructure it so that they can focus on its core competencies and
outsource processes that are not within the core competencies of the company. Due to the current
competitive market, it is the only way for a company to survive. The strategy on applying SCM will not
only impact their market positioning but also strategic decision on choosing the right partners, resources
and manpower. By focusing on core competencies also will allow the company to create niches and
specialization of core areas.
SCM has allowed business nowadays to not just have productivity advantage alone but also on
value advantage. 'Productivity advantage gives a lower cost profile and the value advantage gives the
product or offering a differential 'plus' over competitive offerings.' Through maximizing added value and
also reduce the cost in the same time, more innovation can be added to the product and process. Mass
manufacturing offers productivity advantage but through effective supply chain management, mass
customization can be achieved. With mass customization, customers are given the value advantage
through flexible manufacturing and customized adaptation. Product life cycles also can be improved
through effective use of SCM. Value advantage also changes the norm of traditional offerings that is 'one-
size-fits-all.' Through SCM, the more accepted offerings by the industry to the consumers would be a
variety of products catered to different market segments and customers preferences.
Page | 22
Non added value activities are considered to be waste and therefore must be eliminated. Such non
added value activities are overproduction, waiting, unnecessary transport, over processing, excess
inventory, unnecessary movement, defects and unused employee creativity.
2.5 VALUE CHAIN ANALYSIS
Value chain analysis is a powerful tool for managers to identify the key activities within the firm
which form the value chain for that organization, and have the potential of a sustainable competitive
advantage for a company. Therein, competitive advantage of an organization lies in its ability to
perform crucial activities along the value chain better than its competitors.
Figure shows Porter's Generic Value Chain Model
The value chain analysis essentially entails the linkage of two areas. Firstly, the value chain links
the value of the organization’s activities with its main functional parts. Then the assessment of the
contribution of each part in the overall added value of the business is made.
In order to conduct the value chain analysis, the company is split into primary and support
activities (Figure). Primary activities are those that are related with production, while support activities
are those that provide the background necessary for the effectiveness and efficiency of the firm, primary
and secondary activities of the firm are discussed in detail below.
Page | 23
2.5.1 Primary activities:
The primary activities of the company include the following:
 Inbound Logistics
These are the activities concerned with receiving the materials from suppliers, storing these
externally sourced materials, and handling them within the firm. So all these activities related with
bringing the raw material, keeping them in the store and managing the for the production process.
The following are the various processes which are used in the inbound logistics.
 Transportation
 Material handling
 Material storage
 Communications
 Testing
 Information systems
 Operations
These are the activities related to the production of products and services. This area can be split into
more departments in certain companies. It consist of various plants where the production is done.
Here the inventory should be managed at each level of production process. So here all the production
process is included. The following are the various processes which are used in operation.
 Process
 Materials
 Machine tools
 Packaging
 Maintenance
 Testing
 Building design & operation
 Outbound Logistics
These are all the activities concerned with distributing the final product and/or service to the
customers. All the process related with handling the finished product and distribution of these
product are there in the outbound logistics. The following are the various processes which are used
in the outbound logistics.
 Transportation
 Packaging
 Communications
Page | 24
 Marketing and Sales
This functional area essentially analyses the needs and wants of customers and is responsible for
creating awareness among the target audience of the company about the firm’s products and
services. Companies make use of marketing communications tools like advertising, sales promotions
etc. to attract customers to their products. The following are the various tools which are used in the
marketing and sales.
 Media
 Audio/video
 Communications
 Service
There is often a need to provide services like pre-installation or after-sales service before or after
the sale of the product or service. The following are the service tools.
 Testing
 Communications
2.5.2 Support Activities:
The support activities of a company include the following:
 Procurement
This function is responsible for purchasing the materials that are necessary for the company’s
operations. An efficient procurement department should be able to obtain the highest quality
goods at the lowest prices. It is the responsibility of the procurement department to purchase
the good quality goods so that product can achieve higher quality. It is the responsibility of the
department to order the sufficient amount of the quantity at the lower price.
 Human Resource Management
This is a function concerned with recruiting, training, motivating and rewarding the workforce of
the company. Human resources are increasingly becoming an important way of attaining
sustainable competitive advantage. To keep the employs highly motivated and trained is the
responsibility of human resource department so that they can help the company to achieve their
target.
Page | 25
 Technology Development
This is an area that is concerned with technological innovation, training and knowledge that is
crucial for most companies today in order to survive. Latest technology should be provided to
the employs of the company so that they can do their work more efficiently and timely. Latest
technology is the one important requirement of the company to remain in the competition with
the other industry.
 Firm Infrastructure
This includes planning and control systems, such as finance, accounting, and corporate strategy
etc. This department is related with all the finance and account related planning. It concern with
the process of allocating the money to the various department for their work.
 Margin
The word ‘margin’ is used for the difference between the total value and the cost of performing
the value activities. Means the value achieved by selling the product or the services the customer
and the cost occurred in the process of manufacturing product or service. This difference is
shown by margin here.
2.5.3 Linkages Between Value Chain Activities
Value chain activities are not isolated from one another. Rather, one value chain activity often
affects the cost or performance of other ones. Linkages may exist between primary activities and also
between primary and support activities.
Consider the case in which the design of a product is changed in order to reduce manufacturing
costs. Suppose that the new product design results in increased service costs; the cost reduction could be
less than anticipated and even worse, there could be a net cost increase.
Sometimes however, the firm may be able to reduce cost in one activity and consequently enjoy a
cost reduction in another, such as when a design change simultaneously reduces manufacturing costs and
improves reliability so that the service costs also are reduced. Through such improvements the firm has
the potential to develop a competitive advantage.
Page | 26
CHAPTER 3
SUPPLY CHAIN MANAGEMENT AT
ATUL LTD.
Page | 27
SUPPLY CHAIN MANAGEMENT AT ATUL LTD.
This chapter is about how the supply chain management is done at Atoll ltd. It shows the whole
process of supply chain management. Staring with taking the order to the dispatching of the finished
products. The order is taken by e-mail or fax or on the telephone by the marketing department. According
to the order quantity they inform the production department to plan for the required order quantity.
3.1 PRODUCTION PLANNING
Basically production planning is done on the basis of three month forecast given by the
marketing. Every week there is meeting of production and marketing and all the order are reviewed. The
minimum batch size for production is 1 ton so they don’t give the priority if the order is quit small.
Compared to reactive dyes plant, vat dye plant is a bit slow because large no. of steps go in the production
of vat dyes.
FLOW CHART OF PRODUCTION PLANNING:
International Marketing National Marketing
Get Stock details and merge requirement
To Calculate Quantity to be manufacture for finished product
To Determine Nos. of crude and intermediates Batches
To check rough-cut capacity of plants
Plant loading and batch scheduling as per priority

/advance planning
Page | 28
Communicate schedule to the plant/DQC & R&D
Calculate required quantity of raw material
Communicate raw material requirement qty along with schedule to

purchase department
Monitor Manufacturing Activities
3.2 PURCHASE PLANNING
Once when to products and how much to produce is decided than according to the order of
product, requirement of raw material is decided and purchase department give order to purchase the raw
material. Following is the flow chart of purchase planning.
FLOW CHART OF PURCHASE PLNNING
Requirement from planning
Getting Stock detail and merge req. for East & West
Calculating quantity to be
order
Page | 29
Floating enquiry to approve vendor
Receipt of Quotation
Reminder for Quotation
Evaluation of Quotation
Negotiation
1st Level
2nd Level
3rd Level
Approval of QCS at different level
Asst. Mgr
Sr. Mgr
GM
Preparation of Order
Signature of Order
Page | 30
Preparation Advance note for advance

item
Preparation of Government Paper work for control

item
Pss approval/import product
Dispatch of RM from Vendor to Atul
Material to quality department for material quality approval
Else reject material after second test
3.3 RAW MATERIAL STORES

In Atul ltd colors division has two sites , East site & West site. Both sites have their own RM
stores. RM stores had taken the decision about how many raw materials is required and then given the
order for purchasing the raw material. Here is the flow chart of receiving raw material.
FLOW CHART OF RAW MATERIAL STORES
Receipt of the Material Stores
Unloading of R.M. as per number
Marketing of Consignment number
Staking of Receipt
Page | 31
Data entry of receipt
Preparation of MRA/Account Advice
Intimation to Lab/Excise/Finance
Sampling of Consignment
3.4 RAW MATERIAL TESTING ACTIVITY
After purchasing raw material, it is given to the testing for the testing department. Testing
department has taken some sample from this raw material and check the quality of this sample. We are
prepared following flow chart of the raw material testing activities.
FLOW CHART OF RAW MATERIAL TESTING ACTIVITY:
Preparation of Sample Bottles (Labeling etc)
Sampling
Eatery in Sampling Registry & Work Distribution
Checking Entry in Register & Comparison with Specification
Page | 32
Report printing
Approval & release for Conformed Quality Consignments
Distribution of Reporting
Referred to R&D for dose not Confirmed Consignment
Return to Reports from R&D their Decision
Approval & Release
Distribution of Reports
Re-sampling & Retesting in case of Rejection of
Consignment/Deduction
3.5 PRODUCTION AND PACKING
After the testing of the raw material, raw material is sent to the production plants and depending
upon the requirement of product, process is done to produce the product. Vat dyes takes longer time to be
prepared compared to the other dyes. Vat green dyes is the monopoly of the Atul Ltd. 60% market of the
vat green in India is captured by Atul Ltd. Here, general routine procedure is followed, every day in the
morning they take Tempo to the shed D which is for reactive, there is a person who checks all the
material while loading, the material is then send to the warehouses and it is arrange out there. After
finishing with shed D, the tempo goes to shed E for carrying the vat dyes.
Page | 33
When the product is prepared it is send to the packing department where the packaging process is
done according to the order of packages. Following is the flow chart of packing department.
FLOW CHART OF PACKING DEPARTMENT
Arrange goods in Warehouse

Receiving the packing advice
and makes its entry
If not Wait until the tempo from

Check if material is available
inform warehouse
prod.
Forward Doc. to D.Q.C excise &

Check if packing material is If not
warehouse
available proc-ure
Make entry into Database

According to priority schedule
packed
Make necessary mark on dry

Pack both material National &
paint
International.
Repaint the drums
PROBLEMS FACED BY PACKING DEPARTMENT
The product that comes from the finishing plant is not properly arranged so they have difficulty in
spotting the product of particular blend and this leads to delay.
The drums that are brought from the store are not properly kept and due to which they have to
repaint the drums for export before making and markings. So painting and drying of drums consumes lot
of times.
Page | 34
3.6 DISPATCH
In east site they keep finished goods inventories so generally they do not determine the critical
time of dispatch. The critical time is determined by dyes coming to the bonded warehouses in the West
site. The palletisation of drums is also done in the bonded warehouse.
For dispatch of the material they get intimation from logistics National regarding dispatch of the
material, then they make necessary arrangements. And on the receipt of weight list from excise they keep
cargo ready in the dispatched area. The cargo is loaded in the presence of the security. Person checks the
materials according to the weight list. Incase if cargo is at east site warehouse, then first the east site cargo
is loaded then the truck comes to the west site.
3.7 EXCISE DEPARTMENT:
They are responsible for giving ARE-I form, which is required for custom purpose. On the day
dispatched value sheet and invoice copy goes to them. They also get the packing data from the packing
department. These ARE-I forms are made scheme wise and party wise. They hardly required any time to
make ARE-I form and weight list, which goes to the warehouse. Normally 6 copies of the ARE-I forms
are made which are modified according to the different purpose.
Among six copies original, duplicate and triplicate copy goes with the driver, out of which original
and duplication are returned back to the factory the third copy is kept by driver. Before giving it to driver
the triplicate copy goes to the logistics international. After dispatch, some copies of ARE-I form goes to
central excise to the endorsement, this is done within 24hrs.
Page | 35
CHAPTER 4
SUGGESTION & RCOMMENDATION
Page | 36
SUGGESTIONS & RECOMMENDATION

 Chemicals are mishandled at the shop floor at the plant site. Proper care should be taken to avoid
the wastage occurring due to spilling of the chemicals.
 Maximum utilization of the intermediate product should be there during the production process so
that it will help in getting more profit for the company because sometime it is discharged into the
river which pollutes the water.
 Production process is too lengthy so keen observation should be there during the whole process to
maintain the quality of the product because sometime workers and employs become careless and
due to the lack of proper attention the whole batch of product become useless or have to sell at
lower price..
 Arrangement of the finished products should be such that it becomes easy to identify the product
at the time of delivery if such arrangement is not there than it becomes time consuming to load
the container and deprtment cant get the right information aout the stock of the finished products.
 Proper care should be taken in weight of the product when the container is loaded at the
warehouse because any careless will rise into the delivery of wrong amount of product and it will
cost to the company.
 Proper attention should be there at the time of documentation process and be clear with the
officer of the excise department regarding to all the documents.
Page | 37
ANNEXURES
1 ) Key Products of Aromatics Division:
 Para Cresol 99%

 Para Anisic Aldehyde
 Para Anisyl Alcohol
 Para Cresidine
 Meta Para Cresol
 Ortho Cresol
 Para Cresol Methyl Ether
Perfumery Grades
 Para Anisic Aldehyde
 Para Anisyl Alcohol
 Para Anisyl Acetate
 Para Cresyl Methyl Ether
 Para Cresyl Acetate
 Para Cresol
Inorganics
 Manganese Sulphate Powder

 Sodium Sulphite
 Liquid Sulphur Dioxide
 Oleum 65%
 Oleum 25%
 Sulphuric Acid 98%
New Additions
 Anisole
 Ortho Methoxy Toluene
 Para Methoxy Acetophenone
 Para Toluene Sulphonic Acid
Page | 38
Products Under Development
 p-Cyanophenol
 1,3-Cyclohexanedione
 Benzophenone-12
 4-Hexylresorcinol
These all Chemical products are used in the production process of dyes.
2 ) Key Products of Agrochemical Division:
Fungicides
 Triazoles
 Organo sulphur
Insecticides
 Neonicotinoids
 Pyrethroids
 Carbamates
Intermediates
 Chlorophenols
 Benzyl Chloroformate
 Centralite I (N,N’-Diethyl – N, N’ diphenyl urea)
These all Chemical products are used in the production process of
Page | 39
3 ) Key product’s of Colors Division:
Domestic International
Atul Acid Acid Dyes
Atul Direct Direct Dyes
Atul Sulphur Disperse Dyes
Dermat Leather Dyes
Duratic Naphthol & Dyes
Novatic Optical Brightners
Procion Reactive Bifunctional / VS Dyes
Solatic Reactive Cold Brand Dyes
Tulabase Reactive Hot Brand Dyes
Tulactiv Reactive Printing Dyes
Tuladir Solubilised Vat Dyes
Tulasteron Vat Dyes
Tulathon
These all Dyes are used in the textile industries for the printing purpose. The following are the major
buyer of these dyes.
 Alok Industries.
 Welspun.
 Arvind Mills.
 Raymond.
 Vardhaman Industries.
Page | 40
BIBLIOGRAPHY:
Books Referred:
Kotler, P, 1994, Value Chain Analysis, United States, Pearson Education.
Websites Referred:
http://www.en.wikipedia.org/wiki/Supply_chain_management
http://www.supplylogistic.blogspot.com
http://www.EzineArticles.com/?expert=Razamith_Sovereign
http://www.coursework4you.co.uk/essays-and-dissertations/value-chain-analysis.php
Other References:
Reports of the Color Division, Atul Ltd.
Page | 41
Page | 42

Chapter - 1: Supply Chain Management

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Chapter - 1: Supply Chain Management

Diunggah oleh

Hak Cipta:

Format Tersedia

SUPPLY CHAIN MANAGEMENT

1.1 INDUSTRY PROFILE

1.1.1 Consumption Pattern:

Table 1.1: Most commonly used 9 types of dyes.

Azoic Printing Inks and Pigments

Basic Silk, wool, cotton

1.1.4 Dyestuff Industries of Gujarat.

Atul Ltd. is an honorable member of following organizations

 All India Plastic Manufacturer Association (AIPMA)

1.2 COMPANY PROFILE

1.2.1 Organization structure of Atul Ltd.

Source: Discussion with Manager, Marketing Dept. Atul Ltd.

1.2.2 Different divisions of Atul Ltd.

Consistency in quality, commitment to timely deliveries and prompt

The products marketed by the division have been well

The Division's manufacturing site is located at Ankleshwar

The Division has always laid great emphasis on innovation. The

Bulk Chemicals and Intermediates Division:

The division started manufacture of bulk chemicals in 1960

Drawing on its strong research base and flexible manufacturing

The Colors division is the largest business division of Atul Ltd,

The division's manufacturing operations started with sulphur dyes

In 1995, when Zeneca decided to divest its textile colors business

With state-of-the-art manufacturing facilities, stringent quality

The division is ISO 9001 certified.

Pharmaceuticals and Intermediates:

Having achieved a leadership position in the domestic

1.2.3 Departments at Atul Ltd.

Human Resource Management.

Core Values of Human Resource Management:

A -Adapt to new environment

R -Respect human values

E -Empower, Enrich, Excel

People are key element in the chemistry of the Atul ltd.

Top Three Priorities:

In environment, Atul ltd has given also three major priorities.

1.3 RESEARCH METHODOLOGY

Topic of the study: - Supply chain management at Atul Ltd.

Objective of the study:-

 To study how the company perform various functions of received order,

Method of data collection:-

 Reference to past performance, report and register.

Descriptive research design is appropriate for this study. A detail information

1.4 RATIONALE FOR THE STUDY

SUPPLY CHAIN MANAGEMENT

Figure shows the key concepts of the supply chin management.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations

2.1 SUPPLY CHAIN DECISIONS

2.1.1 Location Decisions

2.1.2 Production Decisions

2.1.3 Inventory Decisions

2.1.4 Transportation Decisions

2.2 SUPPLY CHAIN MANAGEMENT FLOWS:

 The product flow

2.3 SUPPLY CHAIN MANAGEMENT PROBLEMS:

Supply chain management address the following problems:

 Distribution Network Configuration:

Number, location and network missions of suppliers, production facilities, distribution

Questions of operating control (centralized, decentralized or shared), delivery scheme,

 Trade-Offs in Logistical Activities:

2.4 INPORTANCE OF SUPPLY CHAIN MANAGEMENT

2.5 VALUE CHAIN ANALYSIS

Figure shows Porter's Generic Value Chain Model