Global marketing

SUPPLY CHAIN MANAGEMENT IN THE TWENTY-FIRST CENTURY: B. S. Sahay - Editor; Macmillan India Ltd., 2/10, Ansari Road, Daryaganj, New Delhi- 110002. Rs. 348.

IN ORDER to gain a competitive edge in business to satisfy customers and to keep costs down, many manufacturing businesses have resorted to the technique of total quality management programme. More recently, however, business process re- engineering has emerged as an additional or alternate strategy for growth. There can be a variety of reasons why any of these techniques, seemingly successful in an organisation, need not work quite as well in another.

There is yet another approach, indeed, which does not involve any major change in culture and direction; which is becoming increasingly recognised as a more certain way of meeting customer specification and creating customer delight; and that approach is supply chain management (SCM). It considers demand, supply, and inventory needs for each item of production; and looks critically at how inventory flows through the system to achieve output to the customers' specifications, and on time, and at least cost. Customer service is enhanced by the reduction in lead times, by delivery precisely as per specification, and by elimination of activities which do not add value.

Supply chain management focusses on the critical measures of all elements of the supply chain. These measures include the supplier at one end of the chain, and the customer at the other end. Traditionally, the information flow was the domain of the commercial division; whilst the conversion process of materials was the manufacturing division's responsibility. With the current integrated supply chain management approach, the responsibility for all elements of supply is now with operations management.

Perhaps, the greatest challenge before the present-day enterprise is managing the impact of the cataclysmic changes taking place in the development and marketing of products on a global basis. The SCM has become the paramount need for contemporary competitive advantage, because it enables companies to operate in alignment with the emerging new realities transforming the market place.

The first international conference ``Supply Chain Management for Global Competitiveness'' was held at New Delhi in November 1998. The book under review is the second volume flowing from the proceedings of this conference. It contains 20 select papers written by professionals drawn from the industry and academic institutions. These papers are serialised as so many chapters, grouped under five sections. These five sections focus on corporate profitability and shareholder value; inventory and logistics management; vendor partnership; the tools available for enabling supply chain; and the integration of supply chain and its influence on competition.

The first section deals with the competitive advantage obtained through supply chain management. The opening chapter brings out the theme of the book. The next three chapters deal with customer orientation, corporate profitability, and shareholder value. The fifth chapter explains the success achieved in the Indian steel plants through the application of the SCM.

Issues regarding inventory management and logistics are discussed in the second section. Case studies from Maruti Udyog (chapter 6), and the ONGC (chapter 7) are analysed in detail. The eighth chapter is an exposition of the theoretical and conceptual content of the SCM wherein an attempt is made to provide a process-oriented framework for the purposes of analysis, design and management of the SCM systems and procedures. The ninth chapter explains the application of the regression model to create a basis for estimating bid rates to transport milk from village level cooperative societies in Pune district of Maharashtra to the chilling centres of the main dairy. The next chapter delineates a mathematical model for improving the technique of transportation management in the context of the SCM.

Involving the vendors in the supply chain management is yet another method of reducing the inventory. The third section concentrates on the issue of vendor partnership. The twelfth chapter emphasises the need for introducing some elements of fairness in the purchasing process, lest the end objective of consolidating the bond between these two functions is in jeopardy. Information technology is clearly surfacing as an essential enabler for achieving and sustaining competitiveness in the millennium. The four chapters in the next section address this aspect by drawing examples from Modi Xerox, Lotus Corporation and General Motors.

Supply chain management is the systematic effort to provide an integrated approach to the process flow in order to meet customer aspirations and demands. The fifth and final section tackles this key issue. The case study of the ICI is discussed in chapter 17, while the experience of the SPL company is highlighted in the next chapter.

The penultimate chapter deals with the issue of market overlaps between distribution channels and direct sales force. The solution suggested is a more cohesive approach to the channel, rather than adhering to a rigid structure and the straitjacket of traditional incentives. The concluding chapter deals with the significance of planning in the process of supply chain.

The book will be useful for those desirous of knowing more about supply chain management, both in theory and practice. The wide range of case studies drawn from current Indian experience adds considerable lustre to this volume. There are, however, a couple of chapters which will warrant a prior knowledge of statistical models, in order to appreciate the content and the message they seek to deliver.

R. DEVARAJAN

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