Ardhendu Pahari, Pepsico

Beauty Mahajan, ESPL

Jhilam Ghoshal, Pepsico
6 March 2019
 It helps to understand and provide
information of customer need, taste.
 Helps to reduce chances of failure,
 It lowers transportation, packaging and
warehousing cost and improves flexibility,
capacity and capabilities
 Helps to get better control over suppliers
and to reduce labour and procurement cost
 To achive better inventory control, higher
revenue beside increases performance and
profitability.
 Makes faster order processing and usefull
in return or recall management
 Improves brand reputation.
 Supply Chain Strategy can be copied by
Competitors
 Full supply chain process can be expensive
to implement.
 Sometimes benefit on investment is difficult
to measure
 Extensive training and planning required
 Lean Supply Chain can be vulnerable
 SCM is basically a long term goal, it is
negative part if focus is on short term profit
rather than Strategic SCM Plan integration.
 Supply Chain Risks

External Internal
Risks Risks
Supply Chain Risks

Manufacturing
Demand Risk
Risk

Supply Risk Business Risk

Environme Business Risk

ntal Risk

Business Planning and

Risk Control risk

Mitigation and
Govt Contingency Risk
compliance
and political
uncertainty Cultural Risk
Supply chain risk can also be viewed as 4 fold construct

Supply
Risk

Supply
Control Chain Process
Risk risk Risk
sources

Demand
Risk

Environmental risk
Transportation issue

Procurement Failure due to Lack of Co ordination

/direction

Quality Mismatch

Natural Disaster

Market Volatility
Operation failure due to lack of equipment
knowledge /specialization.

Factory Strike by Workforce

High rejection of incoming RM/PM impact

production

High rejection of FG due to poor process control

High equipment breakdown due to Poor

preventive Maintenance

No production due to unavailability of RM/PM or

critical part of Equipment
Loss of major customers

Volatility of demand

Concentration on customer base

Short life cycles

Invisible inventory status

Innovative competitors

Inaccurate forecasts
Inefficient Communication

Inappropriate rules that distort

demand
Lack of collaborative planning
and forecasts
Operational risk like
failure/breakdown of operation,
changes in technology.
Security risk like theft, data loss,
counterfeiting terrorism, piracy.

Innovative competitors

Inaccurate forecasts
o Understand the process and proper mapping of the whole process. Here
management principle no. 10 (Order) applies.
o Identifying the critical paths like what are the bottlenecks and key nodes or links.
o Make contingency plans. (Principle no 1: Division of work, 4: Unity of command,
5:Unity of direction)
o By Allowing network visibility
o Advanced level collaborative planning with Supply Chain Partners.
o Cont
o Identify and protect against unwanted penetration
 Transportation issue.
This is the biggest challenge in procurement . If timely vehicle is not reported or
vehicle management not proper, detention will happen due to constraint of
unloading/ storage capacity
 Procurement Failure due to Lack of Co ordination /direction
By adopting principle no -5 ( unity of Direction) – everyone should follow one
command directed by leader to achieve common goal.
 Quality Mismatch
Procurement is based upon company’s specified quality . If quality is not getting as
per specification , it will hamper production
 Natural Disaster .
Heavy flood, unseasoned rain, shortfall of rain impact badly on procurement
 Market Volatility
Local market rate fluctuation , less production of Agricultural product
impact product cost which impact finally profit of the organization
 Operation failure due to lack of equipment knowledge /specialization.
By adopting principle no -1. ( Division of Work) we can assign responsibility of
of different equipment to different people and make them accountable for
deliverables
 Factory Strike by Workforce
Fare wages to be paid for their services ( principle No 7 – Remuneration) ,
Manager must be kind and fair to their subordinates ( principle No 11- Equity) and
must provide basic employee welfare /facilities
 High rejection of incoming RM/PM impact production
Vendor to be developed as per incoming acceptance specification , regularly vendor
meet require for analysis of rejection and accordingly fixing action plan. Vendor debit
programme must be their for any rejection which impact volume delivery although
market demand is there
 High rejection of FG due to poor process control.
this type of incident happen due to indiscipline at production floor . All process
step must be defined and Machine operator must follow standard operating
procedure . By using principle no-3 ( discipline ) we can eliminate this Risk
 High equipment breakdown due to Poor preventive Maintenance
Production unit must have equipment wise preventive Maintenance schedule and
maintenance team must adhere 100% as per PM schedule to avoid unscheduled
Breakdown
 No production due to unavailability of RM/PM or critical part of Equipment
Production unit must have policy of MAX/MIN. stock level norms of all RM/PM
and all critical parts of all equipment in stores ( Both RM/PM store and
Engineering Store) . Store in-charge must maintain Max/Min stock level of
RM/PM and critical parts to avoid production loss
 All across Maersk headquarters, the full scale of the crisis was starting to become clear.
Within half an hour, Maersk employees were running down hallways, yelling to their
colleagues to turn off computers or disconnect them from Maersk’s network before the
malicious software could infect them…” Dec 10, 2018

 Maggie ban case in India: Since 2014 when Nestle India was imposed for adding
Monosodium Glutamate in Maggie noodles where in packet it was labelled as “No MSG”.
Later then executive Vice President Luca Fichera lead recall process (between 5th June and
1st Sep 2015) which was collected 38000 tonnes of Maggie noodles from the stores and
destroyed them by first crushing, mixing them with fuels and then burning in incinerators in
11 cement plant in India.

 The entire Japanese vehicle industry ground to a halt following an earthquake that stopped
production of piston rings for engines provided by Riken, the industry leader in the
domestic market
Toyota, in particular, was forced to stop operations at all 12 of its domestic plants
Financial Times, 24 July 2007
 A fire at a key Philips semiconductor factory in 2000 caused a worldwide shortage of the
radio frequency chips used by both Nokia and Ericsson. Nokia immediately lined up
another source and redesigned other chips so they could be produced elsewhere.
However, Ericsson responded more slowly and lost an estimated $400 million in mobile
phone handsets 2007

 The entire Japanese vehicle industry ground to a halt following an earthquake that stopped
production of piston rings for engines provided by Riken, the industry leader in the
domestic market
Toyota, in particular, was forced to stop operations at all 12 of its domestic plants
Financial Times, 24 July 2007
 Supply Chains are exposed to a variety of risks that are unique to each Supply
Chain.

 These risks are related to actions and events that are inside and outside of supply
chain.

 Supply Chain Risk analysis seeks to identify these risks their sources and drivers,
and their impact on the supply chain.

 Supply Chain Risk Management seeks to establish mitigative and contingent

strategies for how to deal with the identified risks and their potential impact on the
Supply Chain.