You are on page 1of 16

Agile Supply Chains -Reverse Supply chain. Agricultural Supply Chains.

Supply Chain Management Approaches


• Agile Approaches or Adaptive methods

• Plan Driven Approaches Or Predictive methods

• Traditional Methods

There are a number of approaches in Supply chain management activities which can be broadly
classified as
• Plan Driven Approaches Or Predictive methods

 PERT Model (Program Evaluation and Review Technique)

 CPM Model (Critical Path Method)

 PRINCE Methodology

• Agile Approaches or Adaptive methods

 Scrum Model.

 Extreme Programming models.

 Crystal Clear,

 Lean Development,

 Feature Driven Development,

 Dynamic Systems Development Method

• Traditional Methods

 Waterfall Model

Regardless of the methodology employed, careful consideration must be given to the overall
project objectives, timeline, and cost, as well as the roles and responsibilities of all participants
and stakeholders.
 Plan Driven Approaches:

Effective management and technical support are required for the success of large-scale projects.
PERT packaged programs provide scheduling capability. However, many tasks must still be
performed by a human being, including activity plan generation, construction of activity
networks, modification of a schedule produced by PERT program, and project monitoring. To
support these tasks, we believe that the application of artificial intelligence techniques to this
area has great potential. Accordingly, we are developing an experimental project management
expert system named EPM (Electronic Project Management).
The main tasks that EPM supports are
 Activity plan generation,

 Activity scheduling,

 Project monitoring.

 Agile software development:

Agile software development refers to a group of software development methodologies based on


iterative development, where requirements and solutions evolve through collaboration between
self-organizing cross-functional teams.
Agile methods generally promote a disciplined project management process that encourages
frequent inspection and adaptation, a leadership philosophy that encourages teamwork, self-
organization and accountability, a set of engineering best practices intended to allow for rapid
delivery of high-quality software, and a business approach that aligns development with
customer needs and company goals.
Conceptual foundations of this framework are found in modern approaches to operations
management and analysis, such as lean manufacturing, soft systems methodology, speech act
theory (network of conversations approach), and Six Sigma.

Agile Supply Chains :


Objective:

The objectives of agility may put higher emphasis on the flexibility and quick
delivery to the customers. Therefore, the agile manufacturer needs to
maintain a certain degree of buffer capacity to cope with the volatile demand
and high variety of products.
• Market Sensitive: Supply chain is capable of reading and responding to real demand.

• Virtual: Information-based supply chain, rather than inventory-based.

• Network based: EDI and internet enable partners in the supply chain to act upon the real
demand.

• Process Integration: Collaborative working between buyers and suppliers, joint product
development, common systems and shared information.

Seven steps to agility:


• Substitute information for inventory
• Work smarter, not harder (eliminate or reduce non-value adding activities)
• Partner with suppliers to reduce in-bound lead-times
• Seek to reduce complexity (not necessarily variety)
• Postpone final configuration/assembly of products
• Manage processes not just functions
• Utilize appropriate performance metrics, e.g. end-to-end pipeline
Concept of agility:

Agricultural Supply Chains:


Reverse Logistics in scm
The Increasing Necessity for Reverse Logistics
About Reverse Logistics®
"Forward Logistics" describes the conventional manufacturer-to-
customer supply chain.

"Reverse Logistics" is the process of returning goods from


consumers back to suppliers.
Due to environmental regulations and consumer pressures to
increase customer service, companies are focusing on Reverse SCM or
reverse logistics. Reverse logistics can lead to improved relationships
with supply chain partners, improved profits through reduced costs, and
improved efficiencies and higher recovery rates for returns .
In “An Examination of Reverse Logistics Practices,” Rogers and
Tibben-Lenbke define reverse logistics as:
“The process of planning, implementing, and controlling the
efficient, cost effective flow of raw materials, in-process inventory,
finished goods, and related information from the point of consumption to
the point of origin for the purpose of recapturing or creating value or
proper disposal .”
The concept of reverse logistics is very important in the European
business environment and is slowly gaining importance to American
businesses (3). In both regions, the cost of land filling and increased
restrictions on what can be placed into a landfill are causing companies
to invest in reverse logistics processes (1). In Europe for example,
environmental regulations require tire manufactures to recover and
recycle one old tire for every tire produced (4). Manufacturers must have
an efficient system to recover the tires to comply with this regulation.

Some statistics
Reverse logistics accounts for 3 percent to 4 percent of a company’s
total logistics costs. Companies can save 10 percent from their annual
logistics bill by implementing an efficient reverse logistics system.
Twenty percent of this amount is saved in labor costs and the remaining
80 percent is saved in lowered freight costs and reduced pipeline
inventory (5).

Process to implement reverse logistics system


Reverse logistics includes handling, storage, transportation, inspection,
repair, repackaging, refunds, and customer service. Retrieving the
product is the first step in the process. The quality and quantity of
products retrieved must be coordinated with other distributors and
customers. Then the product must be efficiently transported to a central
location, where it is inspected and sorted. In this step, processes must be
in place to determine what products can be saved, reworked,
remanufactured, resold or disposed. Automated tracking and testing
systems can be used for parts of the sorting process.

Then, the appropriate products can be reconditioned. Design for


disassembly (DFD) is a method of designing products, such as electrical
devices, so they can be easily pulled apart, reconditioned, and reused (5).
The products that are not reconditioned are recycled, resold for parts, or
disposed. The final step is distribution and sales of the reconditioned
products. Companies must create a market for the refurbished products,
which can be sold to the general public at cost or at a discounted price,
or sold to foreign markets.

Companies with successful reverse logistics processes


Bosch, an automotive and industrial technology company, builds sensors
into its power tools that indicate if the motor is worth reconditioning.
The sensors reduce inspection and disposition costs, allowing the
company to realize profits on the remanufactured power tools (4).

General Motors (GM) simplified its process for returning automotive


parts by allowing parts to be returned to a single facility using GM’s pre-
printed shipping labels. This less costly process enhanced GM’s
relationships with its customers and supply chain partners (2).

Volvo, a Swedish car manufacturer, anticipated the Swedish government


passing a resolution holding auto manufactures accountable for disposal
of vehicles. Volvo implemented a reverse logistics process of salvaging
and dismantling cars. The company generated revenues by selling the
used metal, plastics and car parts (2).

Reverse logistics is a growing area of emphasis by many companies.


Each company, regardless of industry, can implement a reverse logistics
process that saves money or even generates new profits. A company can
also recycle products or packaging to improve its environmentally
friendly practices.
Reverse logistics in Supply Chain Management

Reverse logistics is "the process of planning, implementing, and


controlling the efficient, cost effective flow of raw materials, in-process
inventory, finished goods and related information from the point of
consumption to the point of origin for the purpose of recapturing value
or proper disposal. More precisely, reverse logistics is the process of
moving goods from their typical final destination for the purpose of
capturing value, or proper disposal. Remanufacturing and refurbishing
activities also may be included in the definition of reverse logistics."

Introduction
The evolution of reverse logistics for manufactured products is
developing in direct proportion to the rapid advancements in technology
and the subsequent price erosion of products as new and improved
products enter the supply chain at a faster pace. With such thin margins
and so much competition, mismanagement of the supply chain can be
devastating.

Those organisations with the infrastructure to capture and compare


the composite value of components with real time intelligent analysis
and disposition based on changes in refurbishment cost, resale value,
spare parts, repair and overall demand will not only become more
profitable, but such flexibility and scalability will allow them to
outmaneuver and eliminate the competition.

Early days
The early days of Reverse Logistics were measured by
convenience and customer accommodations. The focus was on the front
end of the return process, the ability for consumers to be able to return
unwanted or defective merchandise. The ability to facilitate a consumer
return was a courtesy that turned into a compelling competitive
differentiator in retail.

The companies that did not support consumer returns found


themselves at a strategic disadvantage to those that did, and were
eventually forced to adopt the same consumer conveniences or lose
those customers to the competition.

It did not take long for retail merchants to seek the same
concessions from manufacturers and distribution channels. Stock
rotation became a normal condition of business, and processes for
returning defective merchandise became standard practice. Although this
is accepted as commonplace today, it has not always been this way.
Even today there are cultural differences with regards to consumer
returns, especially for product that is not defective and returned because
of 'customer remorse'.
The next step
As the cost of Reverse Logistics continued to increase, and as the
methods of transportation became more sophisticated, manufacturers
and distributors began to look for alternatives in transportation for
savings. Planning and consolidating freight for return products was
identified as a way to reduce expenses related to fuel and labor. This
also led to detailed analysis of transportation options, like truck, air and
railway. In Supply Chain Logistics business you are either the one
driving the truck, the one pumping the gas, or the one paying the other
two.

The next step in the evolution of Reverse Logistics was the


experimentation and cost comparison between multiple local hubs and
single consolidated returns centers. The simple analysis for savings
contrasted the costs of warehouse space and manpower to the amount of
freight and transportation fees for handling the back end of the Supply
Chain. Other factors also played a significant role in the financial
analysis, including volume, material costs and inventory controls.

As the costs of Reverse Logistics continued to rise, the importance


of returning refurbished merchandise to market also became more
significant. Organisations began to place financial significance on the
devaluation of product for every day lost in transportation, handling,
processing or warehousing.

As technology and features improved, price and demand for aging


product diminished, as did the ability to recoup costs from returns.
Speed to return to market could be measured in resale value.
Awakening
In the next step of Reverse Logistics evolution, there was an
awakening and realization that reverse logistics is only a portion of the
entire back-end services solution. Consolidation meant more than merely
consolidating returns, it meant consolidation of activities related to back-
end support operations.
Manufacturers began to consolidate spare parts and materials in the
same warehouse as the returned merchandise, discovering that it is less
expensive to move parts and packing materials across an aisle than
across state lines. Spare parts used to refurbish returns were placed in the
same building.

Taking this concept one step further, manufacturers began to


consolidate depot warranty repair operations inside the same facility to
maximize the utilization of parts, labor, warehouse and materials. This
activity often required collaboration between previously diverse
management and operational groups within large organizations. The
collaborative effort reduced expenses for all participating departments
and groups within the organizations.

Collaboration
The next major step in the evolution of Reverse Logistics is
collaboration with partners and external resources. It is a greater
awakening and realization of integration with the entire Supply Chain by
leveraging data exchange.

It begins with an understanding of the value of the components that


comprise a completed manufactured product, the Bill of Materials
(BOM). The Bill of Materials is also used by manufacturers to forecast,
procure and manage an inventory of spare parts that are used for repair.
Frequently, the combined cost of the individual components exceeds the
cost of the original retail product. Furthermore, due to price erosion, the
cost to repair some products exceeds the cost of replacing the entire unit.

Manufacturers must make quick financial decisions regarding the


return on investment to refurbish returned products, repair or replace
defective warranty products, and the potential resale value for
refurbished products returned to market. Manufacturers must also weigh
the potential cost if inventory for procuring spare parts to support
warranty, extended warranty and out of warranty regulations. To be truly
effective, manufacturers must make these decisions before the returned
product enters the reverse logistics supply chain, not after it is in it.

Manufacturers have the ability to gather data on activities that


drive demand. Contributors to demand planning include failure rate or
rate of repairs that require spare parts. At the very front end, potential
return trends and potential repair trends can be identified by customer
technical support or customer care phone calls. Quality analysis of
returns and defective products can also be used to identify demands for
spare parts planning.

Resale value trends for refurbished products and seasonal sales


cycles can be used to predict demand and resale value for refurbished
products, and if the product is cost effective to refurbish or repair. In
some cases the parts can actually be sold for more greater margin than
the whole product. At the very least, parts can be harvested from return
products to mix and match repair of other defective return products,
avoiding expensive spare parts procurement when applicable. All of
these factors contribute to planning the demand for a refurbished product
or the component parts.

Once you know the demand and resale value for component parts
and whole units, then it is only a matter of maintaining an intelligent
planning engine that uses the input to analyze the Bill of Materials for
returned products. Before the merchandise enters the Reverse Logistics
Supply Chain, make an immediate and intelligent decision regarding the
value and intended disposition of the whole unit or the component parts.

In some cases the product will be scheduled for de-configuration to


feed refurbishing activities or develop a spare parts inventory for
warranty repairs. In other cases, the units may be expedited for
refurbishing and resale. Some products may be scheduled to be
environmentally scrapped for materials. Product may even be de-
configured at the retail location to support local customer demands and
thereby avoid freight entirely.
Whatever the final result may be, the decision can be made before
the product enters the Reverse Logistics Supply Chain cycle, as long as
the intelligent engine is provided with continuously updated and
accurate information. The new problem and the new solution is knowing
what you sold, who wants to return it and what it is really worth, before
you own it again.

Compliance

It's hard to believe that there are still companies that invest millions of dollars
each year in tools to forecast procurement and inventory management of spare
parts, without accurately forecasting and managing the largest single source of
surplus components that results from return merchandise. There are still
organisations that struggle to achieve freight savings purely by negotiation or
consolidation, without a achieving a balanced approach to freight avoidance,
localisation and intelligent de-configuration disposition.
In the competitive landscape of rapidly evolving technology, mass production and
eroding profit margins, managing the total cost of the supply chain and the
composite value of the components is essential to cost reduction and financial
survival. To ignore this aspect of reverse logistics can not only be costly, it can
be fatal for an organization.
For Consumer Electronics and Computer products, the Reverse Logistics
handling requirements are further complicated by compliance and regulations like
RoHS, WEEE, controls on Lead based and Mercury materials, just to name a
few. Recognising these component parts is absolutely essential to the proper
management of the intelligent engine that directs the disposition of returns
immediately upon notification that merchandise may enter the returns cycle.
Proper management is not only financially rewarding, but in the case of
hazardous materials, it is the law.

Conclusion

In service, to be competitive is to be the first to provide the services that would


otherwise put you out of business. If you can do this, you will place your
competitors out of business, or at least have them working for you. Gathering the
data that pertains to customer call centers, extended warranty services, spare
parts, resale value, parts procurement costs and impending returns often
requires extensive collaboration, integration and data exchange.
To be successful, it is often necessary to partner with multiple organisations and
experts to leverage best practices in a collaborative environment. The companies
that collaborate, integrate and optimize data exchange will enjoy the competitive
advantages of improved profit margins and precision management. The
organizations that do not participate will be remembered as fabulous fossils.
"The old ways are dead. And you need people around you who concur. That
means hanging out more with the creative people, the freaks, the real visionaries,
than you're already doing. Thinking more about what their needs are, and
responding accordingly. Avoid the dullards; avoid the folk who play it safe. They
can't help you any more. Their stability model no longer offers that much stability.
They are extinct, they are extinction." - Hugh Macleod

Agri scm:
SCM has emerged as recently as 1990s and has grown rapidly due to
various internal and external factor in the agriculture sector.
The main drive is to check the competitive behaviour in the agriculture
production side which based on the consumer requirement which is ever
changing ,affecting the agriculture business chain.
Here from the agriculture sector - Farmers, Processors, Marketers and
Distributors and finally the consumers are the major players in this
system.

Advantages:

1. Fair price for farmers and consumers

2. Agriculture transforming to Agri business Status.

3. Availability of different products from various agro climatic under


one roof.

Disadvantages:
1. If there happens any breakage or little distubances in the chain the
entire system collapsed.
. Inspite the total process is aimed to cut the overall cost,the service has
to be maintained. That is called as the Global Optimization.

2. The inherent uncertainity in the Agribusiness.

3. Continuous implementation of improvement and having proper


vigilance on the whole system.
feel that the first thing that is needed is broadening the concept of
Commodity Exchange where almost every agri commodity can be
traded. I have once had an opportunity to see the plans of a very big
corporate house. I hope it sees the light of the day.

Having said that I feel that the broad guideline of a e-market place
should be in line with Tea Auction House where speculative trading is
almost nil and every bidder has to take delivery, if he wins the bid,
otherwise his membership is cancelled.

The necessary infrastructure needed, in my opinion is:

a) A Regulatory Authority like Tea/ Coffee Board


b) Dedicated warehouses in all corners of the country to store items.
c) Good Quality Control modules along with dedicated Inspecting
Agencies
c) Good Transport System to ship in and ship out the products without
much damage
d) Last but not the the least educated Growers and Traders
Thanks for highlighting the points that are required for making the
SCM ,a success.

As Narmata have told,cold chain is a must for perishables and to meet


out the odd requirements.

Yes,SCM do need proper planning,implementation & efficient


controlling of the products for effective flow of storage goods,services
and related information from the point of origin to the point of
consumption.

For this as you said,Agribusiness educated traders and growers are


necessary.

Basically harnessing the technical know-how will work effectively.

Agribusiness should to IT enabled too.


Then the big corporate players like Reliance, ITC, Tata has to come
forward taking up this project as not just a business opportunity but
something more. You can refer to the e-choupal project of ITC which is
most probably the best example of a "Win-Win"game.

You might also like