NAME: SAMAN MUBIN KHAN ID NO: 7206 MBA (M) ASSIGNMENT TOPIC: SUPPLY CHAIN OF AUTOMOTIVE INDUSTRY V/S

SUPLLY CHAIN OF FMCG INDUSTRY PRESESNTED TO: SIR SOHAIL MAJEED

SUPPLY CHAIN MANAGEMENT:

Supply chain management is the process of managing and integrating all the activities concerned with the flow of goods and services. it integrates management activities between entities in the chain realize delivery of end products and services, satisfying customers at minimum cost. The main objective of supply chain in all the industries is to reduce cost of production and to maintain high quality of their goods and services.

AUTOMOTIVE INDUSTRY:
The automotive industry is formed by various organizations that are involved in designing, developing, manufacturing, marketing and selling of all sorts of motor vehicles.

SUPPLY CHAIN OF AUTOMOTIVE INDUSTRY:

Automotive industry has entered in to the Mega Competition era. The auto industry has become a highly globalised business. The key function of the industry is to produce beautiful designs with advanced technology, making the future vehicles more efficient and powerful. The automotive industry is made up of supply chain management and physical distribution management. This industrys supply chain stretches from producers of raw materials and to the final product and till its distribution. The supply chain activities of automotive industry are depended on three elements talent, capacity and liquidity. These three significant challenges, if tackled correctly can lead the automotive industry to new heights. The supply chain of the industry flows in this manner.

DEMAND FORECAST/PLANNING:
Automotive industry depends on the unique designs for its motor vehicles. This industry adds greatly to the future of automobiles. Being an extensively heavy industry, it is crucial to forecast the demand correctly. The risk factor is in this industry is extremely high due to huge investment by the producer. For example BMW always searches for new and premium designs for their customers. This approach is known as lean manufacturing.

SOURCING:
Sourcing is purchasing of components and parts from optimal places. The production of a motor vehicle is a very complex one because it is a combination various different components. This industry always seeks for long term and strong relationships with their suppliers. Automotive industry has two types of suppliers. Foreign suppliers Local suppliers Suppliers choose to relocate near plants for significant integration. The sourcing in automotive industry is subjected to changes because of fluctuating international laws and prices.

PRODUCTION:
Motor vehicles are designed classically so that they have a long life. For this purpose the material used in the production should be of great quality and high standard. The supply chain management has to ensure that the production line is getting the right quantity of raw materials and the required output should be produced with minimum possible cost and time. Over and under production

can lead to disastrous consequences. Production sequence of automotive industry is as follows:

Body shop Body shop Paint shop Assembling of components

LOGISTICS:
Logistics includes inbound and outbound transportation of goods and warehousing.

Transport:
Demand of vehicles has been increasing day by day. Getting the product made available at their demand destinations requires efficient, predictable and environmental friendly solutions. The most commonly used mode of transportation is shipping. Heavy vehicles are transported through sea routes ensuring efficient and smooth transportation.

Warehousing:
Control and efficiency is the essence of warehouse operations. The warehouses are used to store finished product stock. This industry takes care of the following aspects in warehousing. Finding right level of automation and systems. Inventory management in the warehouse. Freight management. Outsourcing options.

DISTRIBUTION:
The distribution process of automobile industry is highly globalised and complex one. A vehicle can be demanded from anywhere across the world. The distribution channel is very strong and giant enough to cater the national or international demand. Supply chain manager keeps a close look at distribution centers and further integrate the activities of sales and finance department. The distribution intermediaries can be of two types. Independent intermediaries: these are independent individuals or companies which work on manufacturers behalf on certain commission. Dependent intermediaries: these are manufactures owned distribution center which the company has designed as vertical integration strategy.

FAST MOVING CONSUMER GOODS INDUSTRY:

This industry is concerned with the production and selling of food and non-food items. Purchasing of these items is usually take place at grocery stores, supermarkets and hypermarkets. Some of the FMCG companies are P&G, Unilever, and Coco Cola etc.

SUPPLY CHAIN OF FMCG INDUSTRY:

The supply chain of FMCG industry is interrelated with all the processes suppliers, manufacturers, logistics, warehouses, distributors. All these entities lead the product to the final consumer. As the life of an FMCG product is very short so its supply chain management should be quick enough to deal with the daily challenges occurring in business world. Due to a great number of products availability, FMCG industry is highly competitive and subjected to severe changes. A supply chain manager of an FMCG company should be dynamic and

versatile to integrate all the activities involved in production. In production process value starts to be added in the product at each level. The supply chain of FMCG industry works in the following manner.

DEMAND FORECAST (PLANNING):

The first and foremost step in supply chain management is to see where we are and where we want to go. FMCG industry is always in an urge to optimize their demand with their supply. Which course of action should be adopted to minimize cost and to maximize your profit. All these critical questions are answered through intellectual planning. FMCG industry has huge demands without any break so the planning is being done very strongly to integrate all the activities that are involved in producing, finishing and delivering of goods.

SUPPLIERS:
The main motive of FMCG industry is to produce in large quantities and sell them to the market but for this huge production the quantity of raw materials should also be huge. The raw materials are purchased (sourced) by a number of suppliers. FMCG industry always searches for that supplier who can provide timely availability of raw materials with minimum possible cost. This is one of the greatest challenges for a supply chain manager because the whole production activity is based on the availability of quality raw material. FMCG industry mostly uses multi sourcing instead of single sourcing as it increases risk factor of raw materials availability.

FMCG industry focuses on following challenges to develop better supplier-customer relationship. Development of long term relationships with suppliers. Greater and earlier involvement of suppliers in product technology. Supplier associations. Benchmarking Common supplier assessment schemes.

PRODUCTION:
Production is another important key driver of supply chain management. In production process FMCG industry is the fastest because perishable goods are being used by consumers daily. Production department is responsible for making quality and quantity goods in a short span of time. A manager has to keep a very strict eye on the production processes. Shortage of raw materials can lead to higher cost of production. Moreover, finished goods should further move smoothly to the next step in their production journey.

LOGISTICS:
Logistics is the process of designing, managing and improving the flow of products. After the product is being produced, the next important aspect of supply chain management takes place which is logistics. It includes two core functions.

Warehousing:
This is a place where company keeps its products save so that when demand arise it can be easily fulfilled without waiting. Warehouses are large rooms and are designed in accordance with the nature of the products. Products directly come here from the production point and are dispatched to the point of consumption (distributors, wholesalers, retailers) in FMCG industry the flow of goods is very fast. Therefore, it is necessary that warehouses should be maintained with optimum level of stock. Another technique is cross docking. Companies often use where no storage facility is being utilized.

Transportation:
It is the mode through which goods actually move from one place to another. FMCG industry has very efficient modes of transportation. It uses every mode of transport to make huge availability of FMCG goods in the market. Transport also greatly adds to the cost of product that is why it is important that supply chain manager should make the transportation ways better and reasonable.

RETURN:
FMCG industry also has to face returns, whether it is from the customers or the company itself returning defective raw materials to the suppliers. This function can be carried out at both the ends. This aspect of supply chain mangement cannot be neglected because returning raw materials to the supplier can cost a lot to the company in terms of money and time. Similarly, returns from customers means that production has not been up to grade which in turn has caused a loyal customer to switch to another brand.

FMCG INDUSTRY VERSUS AUTOMOTIVE INDUSTRY

Nature of business: FMCG industry deals with perishable Automotive industry deals in heavy items Risk factor: Due to low cost per unit, risk factor is Due to high cost per unit, risk factor is low Production motive: Bulk production is the main motive. Design and technology is the main motive. Demand pattern: FMCG products are always in demand An automotive industry product takes and they are quickly produced. Supply chain: This industry follows push supply This industry uses pull supply chain chain strategy in which products are strategy for anticipated customer orders. in which products are manufactured on standardized basis procured on the bases of customer demands. a lot of time to be produced. very high. vehicles.

CONCLUSION:
The workings of both the industries are different from one another and both have their own supply chain challenges. As the business world is going globalised the supply chain managers has to be more efficient and versatile to cater the changing needs of customers at best possible cost as well as they also have to focus on the competition. Supply chain management is the backbone of the business, so it has to be effective, efficient as much as possible within the best cost limitations.