Introduction

What is Supply Chain?

Supply Chain is the network created amongst different companies producing, handling
and/or distributing a specific product. Specifically, the supply chain encompasses the steps
it takes to get a good or service from the supplier to the customer.

The Council of Supply Chain Management Professionals (CSCMP) defines Supply Chain
Management as follows: “Supply Chain Management encompasses the planning and
management of all activities involved in sourcing and procurement, conversion, and all
logistics management activities. Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries, third-party service providers,
and customers.

In essence, supply chain is the entire network of entities, directly or indirectly interlinked
and interdependent in serving the same consumer or customer. It comprises of vendors
that supply raw material, producers who convert the material into products, warehouse
that store, distribution centres that deliver to the retailers, and retailers who bring the
product to the ultimate user. Supply chains underlie value-chain because, without them,
no producer has the ability to give customers what they want, when and where they
want, at the price they want.

Supply chain management is a crucial process for many companies, and many companies
strive to have the most optimized supply chain because it usually translates to lower costs
for the company. Most producers compete with each other only through their supply
chains, and no degree of improvement at the producer’s end can make up for the
deficiencies in a supply chain which reduce the producer's ability to compete.

Importance of Supply Chain

The importance of efficient supply chain to companies can be judged from the fact that
supply chain operations of companies have moved from a cost focus to a customer focus
and now currently to a strategic focus. A great supply chain strategy, linked with
operational excellence, has become the need of the hour and is the only way to provide
success for not only the company in question but also its partners and customers.
A supply chain strategy defines how the supply chain should operate in order to compete
competitively. Supply chain strategy is an iterative process that evaluates the cost benefit
trade-offs of operational components. Market demands, customer service, transport
considerations, and pricing constraints all must be understood in order to structure the
supply chain strategy effectively. These are all factors, which change constantly and
sometimes unexpectedly, and an organization must realize this fact and be prepared a
strategy to adapt the structure the supply chain accordingly.

A supply chain strategy is so important because it operationalizes and supports your

business strategy. Supply chain strategy also focuses on driving down operational costs
and maximizing efficiencies. For example, an organization may choose a strategy directed
at supplier management as a way to remain competitive. By providing a clear purpose, the
organization keeps sight of the strategy and is able to devise tactical steps to achieve these
goals.

Another reason for having a competitive, effective and well defined supply chain strategy is
to establish how you work with your supply chain partners, including suppliers,
distributors, customers, and even your customers’ customers. As the marketplace
becomes more competitive, it is critical to reinforce existing relationships and work
together. And for all these reasons, a well executed supply chain strategy results in value
creation for the organization.

Supply chain strategy if implemented properly, will provide a new dimension to competing
quickly introducing new customized high quality products and delivering them with
unprecedented lead times, swift decisions, and manufacturing products with high
velocity.
Parts of a Supply Chain
A supply chain is the stream of processes of moving goods from the customer order
through the raw materials stage, supply, production, and distribution of products to the
customer. It is a bi-directional. 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.

All organizations have supply chains of varying degrees, depending upon the size of the
organization and the type of product manufactured. These networks obtain supplies and
components, change these materials into finished products and then distribute them to the
customer.

Supply chain management involves managing and coordinating the movement of

materials, information and funds across the supply chain. Effective management of supply
chain must take into account coordinating all the different pieces of this chain as quickly as
possible without losing any of the quality or customer satisfaction, while still keeping costs
down.

The first step in supply chain is obtaining a customer order, followed by production,
storage and distribution of products and supplies to the customer site. Customer
satisfaction is paramount. Included in this supply chain process are customer orders, order
processing, inventory, scheduling, transportation, storage, and customer service. A
necessity in coordinating all these activities is the information service network.

There are six key elements to a supply chain:

  Production
 Supply
 Inventory
 Location
 Transportation
 Information

Production
Strategic decisions regarding production focus on what customers want and the market
demands. This first stage in developing supply chain agility takes into consideration what
and how many products to produce, and what, if any, parts or components should be
produced at which plants or outsourced to capable suppliers. These strategic decisions
regarding production must also focus on capacity, quality and volume of goods, keeping in
mind that customer demand and satisfaction must be met. Operational decisions, on the
other hand, focus on scheduling workloads, maintenance of equipment and meeting
immediate client/market demands. Quality control and workload balancing are issues
which need to be considered when making these decisions.

Supply
An organization must determine what their facility or facilities are able to produce, both
economically and efficiently, while keeping the quality high. But most companies cannot
provide excellent performance with the manufacture of all components. Outsourcing is an
excellent alternative to be considered for those products and components that cannot be
produced effectively by an organization’s facilities. Companies must carefully select
suppliers for raw materials. When choosing a supplier, focus should be on developing
velocity, quality and flexibility while at the same time reducing costs or maintaining low
cost levels. In short, strategic decisions should be made to determine the core capabilities of
a facility and outsourcing partnerships should grow from these decisions.

Inventory
Further strategic decisions focus on inventory and how much product should be in-house.
A delicate balance exists between too much inventory, which can cost anywhere between
20 and 40 percent of their value, and not enough inventory to meet market demands. This is
a critical issue in effective supply chain management. Operational inventory decisions
revolved around optimal levels of stock at each location to ensure customer satisfaction
as the market demands fluctuate. Control policies must be looked at to determine correct
levels of supplies at order and reorder points. These levels are critical to the day to day
operation of organizations and to keep customer satisfaction levels high.

Location
Location decisions depend on market demands and determination of customer satisfaction.
Strategic decisions must focus on the placement of production plants, distribution and
stocking facilities, and placing them in prime locations to the market served. Once
customer markets are determined, long-term commitment must be made to locate
production and stocking facilities as close to the consumer as is practical. In industries
where components are lightweight and market driven, facilities should be located close to
the end-user. In heavier industries, careful consideration must be made to determine where
plants should be located so as to be close to the raw material source. Decisions concerning
location should also take into consideration tax and tariff issues, especially in inter-state
and worldwide distribution.

Transportation
Strategic transportation decisions are closely related to inventory decisions as well as
meeting customer demands. Using air transport obviously gets the product out quicker and
to the customer expediently, but the costs are high as opposed to shipping by boat or rail.
Yet using sea or rail often times means having higher levels of inventory in-house to meet
quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a
product is encompassed by transportation, using the correct transport mode is a critical
strategic decision. Above all, customer service levels must be met, and this often times
determines the mode of transport used. Often times this may be an operational decision,
but strategically, an organization must have transport modes in place to ensure a smooth
distribution of goods.

Information
Effective supply chain management requires obtaining information from the point of end-
use, and linking information resources throughout the chain for speed of exchange.
Overwhelming paper flow and disparate computer systems are unacceptable in today's
competitive world. Fostering innovation requires good organization of information.
Linking computers through networks and the internet, and streamlining the information
flow, consolidates knowledge and facilitates velocity of products. Account management
software, product configurators, enterprise resource planning systems, and global
communications are key components of effective supply chain management strategy.

The key to the success of a supply chain is the speed in which these activities can be
accomplished and the realization that customer needs and customer satisfaction are the
very reasons for the network. Reduced inventories, lower operating costs, product
availability and customer satisfaction are all benefits which grow out of effective supply
chain management.

Supply Chain of an Apparel Retail Organization

Introduction to Fabindia
Fabindia is one of India’s fastest growing retail chains in India with 117 stores across the
length and breadth of the country and 6 stores abroad. The company markets hand crafted
products created by using traditional skills and techniques and is committed to bringing the
best of rural craftsmanship to discerning urban markets. Over the past few years it has
grown to spread its reach across India in terms of both retail outlets and an expanding
supply base. The company’s distinctive products - both textile and non-textile - have helped
redefine the concept of the handmade which is being recognized as a sought after, viable
alternative to the mass produced.

Supply Chain Model of the Organization.

IDENTIFICATION OF THE ARTISANS BY SUPPLIER REGIONAL CHANNEL (SRC)

SRC identifies artisans in its region. They collect samples of the craft and
send it’s across to the Product Selection Committee (PSC).

Being a craft based organization fabindia continuously endeavours to find out new rural
crafts that can be incorporated into the fabindia collections of craft. this job is done by
members of the SUPPLIER REGIONAL CHANNEL. SRC are present in 21 states of India and in
total there are 14 SRC.

As soon as a new craft, group of artisan performing an existing craft is identified by SRC
members, they purchase samples of the craft and send it across to PRODUCT SELECTION
COMMITTEE.

In the identification of artisans the lead time is variable as it is occasional occurrence .It is
one of the greatest value addition to the organisation as a new craft adds most value to
the product range

SELECTION OF CRAFT
The product selection committee at Delhi evaluates the sample on the basis of merit. If it
Product Selection Committee (PSC) evaluates the sample on the potential in
finds it suitable to the FabIndia look andthe
wants to incorporate the craft in its range then it
market.
experts in the area of design visit the Artisans in the traditional niche. If it does not find
merit in the craft then it guides the SRC members for to look for more improvements and
improvisations of the craft.

The lead time here is very large as first the samples are sent to SRC’s for evaluation and
then improvisation in the crafts had to be made to suit to the FabIndia look
 SUPPLIER REGIONAL CHANNEL (SRC) VISIT

Product Selection Committee (PSC) members (experts from the field of

design and marketing) visit the artisan and provide them design inputs.

After the craft is selected then the design team visit the SRC and the artisan to provide for
designs inputs and various innovations of the craft. financial help is also provided to assist
the growth of the craft.

The lead time is variable and depends upon the proximity of the SRC to the Product
Selection Committee (PSC). And it is one of the greatest additions to the value chain of the
organisation

PRODUCT SELECTION FOR THE COMING SEASONS (SRC)

Product Selection Committee (PSC) experts select styles and designs to be

taken up in next year’s collection from the designs presented to them by the
artisans after
in presence of the SRC Head
a cordial

After building a cordial relationship between the artisans and Fabindia, SRC along with the
artisans (new and old) come to the PSC with the new products developed by them during
the season. New products are selected and best sellers reordered to be presented in the
next year’s collection. Delivery of merchandise is scheduled keeping in mind the selling
season, artisans capacity to deliver the merchandise and other schedule of deliveries.

ISSUE OF ORDER TO FABRIC SUPPLIERS BY ARTISANS

Artisan source quality fabric from predefined fabric vendors of fabindia.

If an Artisan is an fabric manufacturer then he/she starts the process of making the fabric
of defined quality in pre-decided colours. But if the artisan does a craft on fabrics then after
receiving an order; the artisans order fabric from predefined vendors of the company and
then the vendor supplies the fabrics ordered by all the artisans under one SRC to the SRC.
There by significantly reducing the transportation cost. Artisans with the assistance of SRC
collect their fabric and start the manufacturing of the final product.

After the inclusion of ERP the lead time in the issue and execution of orders to fabric
suppliers for fabric by artisans is greatly reduced. Orders are transmitted in matter of
seconds and status of delieveries can also be known through a quick response system.

SUPPLY OF PRODUCTS BY ARTISANS TO SRC

Artisans supply the merchandise as per the schedule of deliveries to SRC.

SRC checks it for quality and quantity and reports the same to PSC

it is inbound logistics that after the merchandise is ready it is delivered to the SRC
warehouse where it is checked for quality and quantity. The SKU level entry into the
company’s ERP system is done and hand tags and price labels are attached to each product.
The same information is sent to PRODUCT SELECTION COMMITTEE. Payment is made to the
artisan within 45 days of the delivery.

the lead time in this case is due to simplistic inventory stocking policy of the organisation.

DISTRIBUTION LIST

Buyers at Product selection committee develop a distribution list to

distribute the merchandise to various stores.
The PSC then prepares the store wise distribution list for the style and decided the
Minimum Stock Float (MSF). MSF is the amount to merchandise to be stocked with SRC for
repeat order reference and future customer orders.

Minimum stock float (MSF) creates value not only for the company but also for the
vendor. Lead time here is minimal.

SIGN OFF

Buyers at Product selection committee take a approval of the quantities

allocated to stores by the respective market region heads.
After the distribution list are prepared by PSC the they are sent to the Market Region Heads
(MRH) for approval called sign off. this is outbound logistics The MRH can increase or
decrease the quantities for stores in his/her market region as per the sales of similar styles
in the previous season, provided that the total quantity in each size & colour is not greater
than the one allocated by PSC.

Approval from all the market region heads (MRH) is a time consuming task and normally
takes around 15 days

MOVEMENT OF GOODS FROM SRC TO MARKET REGION WAREHOUSE(MRW)

After sign off are received the SRC sends the products to the various market
region warehouses according to the quantities of the distribution list.
through rail-road transport.
After receiving sign off the consolidated final distribution list is sent to SRC, from where the
merchandise is packed according to the stores in various market regions and dispatched
using rail – road transport systems. There are only 8 Market Region Warehouses for all 117
stores.

The lead time in this step is dependant upon the geographical proximity and cordial
relationships between the SRC and MRW’s. At most the lead time in this step amounts to
two weeks.

MOVEMENT OF GOODS FROM MARKET REGION WAREHOUSE (MRW) TO

STORES

After receipt of goods MRW sends the allocated quantities to various stores
where the finally reach the end user

On receipt of goods market region warehouses sends goods received in good condition to
the stores. There by effectively breaking the bulk and reducing the cost of transportation of
each SRC sending to each store. This is outbound logistics. Customers buy these goods from
the stores.
The lead time is generally one week as only goods are despatched weekly from
warehouse to stores

MERCHANDISE LEFT WITH THE SRC

If merchandise is left with the SRC after the distribution according to the
distribution list, then it added on B2B portal of the company’s ERP system so
that store can order according to their need.
The merchandise left with the SRC after supplying to all the SRC’s is added to B2B portal of
the company from where it is traded as per the order of the store.

The lead time is dependent upon the availability of stock and geographical proximity of
the SRC or the stores/Market Region Warehouse (MRH)

Pitfalls in the Supply Chain of the Organization

Pitfalls are the point of congestion or bottlenecks in the supply chain of the organization. It
is the reasons for inefficient supply chain.

In Harley – Davidson there was a three week strike at its largest manufacturing plant in
February 2007. As a result its first quarter shipments of motorcycles would be 20 percent
lower than planned and that its 2007 earnings-per-share growth would be in the 4-6
percent range rather than in the projected 11-17 percent range.
Harley-Davidson was not the only company hit by an operations crisis that month. A
combination of icy weather and poor planning crippled JetBlue's operations for nearly a
week, leading to the cancellation of hundreds of flights. In addition to the negative publicity
and damage to its customer-service reputation, JetBlue estimated that the February crisis
could cost the airline more than $30 million. Examples such as these highlight the
continuing need for both manufacturing and service companies to develop robust and
resilient Supply Chain.

Based on knowledge and experience from supply chain management in electronics, apparel
and, automobile companies, Lee and Billington identify 14 pitfalls in supply chain of an
organization. These are:

 Lack of supply chain strategy

 Inadequate definition of customer service
 Inaccurate delivery status data
 Inefficient information systems
 Ignoring the impact of uncertainties
 Simplistic inventory stocking policies
 Discrimination against internal customers
 Poor coordination
 Incomplete analysis of shipment methods
 Incorrect assessment of inventory costs
 Organisational barriers
 Product process design without supply chain considerations
 Separation of supply chain design fro operational decisions
 Incomplete supply chain strategy

Eight of which are found relevant to our organization which are discussed below:

Pitfalls of Fab India’s Supply Chain Management

1. INACCURATE DELIVERY STATUS DATA

Inaccurate delivery status data is the problem of inaccurate delivery status data of
shipment in the supply chain of Fabindia. When stores place the orders they want to know
the status of the shipment and when their product will arrive, especially when the order is
late.

In Fabindia enough attention is not paid to providing stores and Market Region Warehouses
with timely and accurate updates on the status of orders. The consequence is
dissatisfaction at the customer and store personnel level at the, confusion among the
supply chain managers and loss of goodwill of the brand.

Although Fabindia tries to keep the response time to its store orders to the minimal level,
but they need to implement accurate response to make their supply chain more effective.
Fabindia’s ERP system lack efficiency details in relation to transaction to goods in transit.

Commercial carriers such as federal express may be used to keep track the delivery
performance and manufactures can use this information to understand their delivery
cycles.

2. INEFFICIENT INFORMATION SYSTEMS

This problem encompasses the fact that the databases at different operating sites that
describe the system’s environment, inventory/backlog status, future production plans, are
controlled manually at Product selection Committee in FabIndia. Consequently, retrieving
product information can be tedious, manual process at other point in the supply chain. This
leads to further the delays in information retrieval and transmission make it difficult to
quote details of shipment and product archives.

It also discourage or prohibit short production planning cycles, leading to gross forecast
errors and inventory accumulation at various levels of supply chain.

3. IGNORING THE IMPACT OF UNCERTAINTIES

There are many sources of uncertainties in supply chain. Supplier lead time and Delivery
performance are very much dependent on natural factors such as sun and rain for
handicraft and hand made products retailed by Fabindia. Qualities of incoming materials,
manufacturing process time are also very uncertain and are dependent upon natural
factors such as rain and natural calamities.

FabIndia is dependent upon the artisans for their supply; the artisans develops traditional
and aesthetic designs with the help of traditional techniques, which poses uncertainty to
output which can vary from high to low, owing to environmental factors, which they cannot
deny. The delivery quantity may fluctuate due to these factors.

To reduce the impact of these uncertainties supply chain managers must understand their
sources of supply and their magnitude of impact of uncertainties. Buffer time and
quantities must be always provided to supplier and these must always be additionally
cushioned to take into account uncertainties.

4. SIMPLISTIC INVENTORY POLICIES

Fabindia follows simplistic inventory policies. It is important to use inventory information to

drive inventory stocking policies. Fabindia does not rate its vendor on timely deliver and
quality of merchandise supplied. The company should offer incentives to supplier based on
their efficiencies. Some suppliers become more reliable in both delivery and quality than
others. Inventory stocking policies should be periodically adjusted to reflect changes in
vendor rating. More rigorous techniques on vendor base management must be included in
the ERP.

5. POOR COORDINATION

Coordination among the supply members is very important. Lack of coordination among
the chain members results in excessive delays, amplified bull-whip effect and ultimately
poor customer service. Lack of coordination may leads to Market Region Warehouses
habitually expediting deliveries, which is unnecessarily, creates a bull-whip effect in the
chain and lead to greater inventory holding cost and obsolescence.
Their exist lack of coordination between the Supplier Regional Channel and Market Region
Warehouses. Stores orders for quantity of product on B2B portal on their scheduled day
like, Monday’s, Tuesday’s specified for a particular region as per the ERP, but the SRC is
under no boundation to delivers the quantity as per the order sequence. Primarily the
region which orders first should be delivered first (FIFO), but SRC’s follow convenience
regarding deliveries, they may deliver first to a region where it has cordial relationship or in
geographical proximity even though the order by that region was placed after some
unprocessed order. It shows lack of coordination.

As the supply chain becomes more and more complex, coordination becomes more
critical, to achieve greater efficiency and reduce the bull whip effect and ultimately
reduced cost..

6. INCORRECT ASSESSMENT OF INVENTORY COSTS

Incoorect assessment of inventory cost exists due to obsolescence owing to short product
life cycles of fashion apparel and large cost of reworking inventory.

At FabIndia distribution lists are prepared they are sent to the Market Region Heads (MRH)
for approval called sign off. The MRH can increase or decrease the quantities for stores in
his/her market region as per the sales of similar styles in the previous season, provided that
the total quantity in each size & colour is not greater than the one allocated by Product
Selection Committee. If there is demand for a particular style in a region increases, but the
MRH’s cannot order more than the allotted quantity hence failing to achieve the increased
bottom line and loosing the opportunity cost, which also affect the reputation of the brand,
Similarly, if the MRH’s do not order the minimum quantity owing to less demand in their
area, the stock may lie idle, hence increasing the inventory holding cost at the Supplier
Regional Channel.

7. ORGANISATIONAL BARRIERS

Generally supply chain belong to different organisations within a company, each

organisation having its own performance measures and evaluation responsibilities. It
includes difference in objectives and performance metrics, disagreements on inventory
ownership, and unwillingness to commit resources to help some other member of supply
chain.

In Fabindia organisational barriers too exists. There is no direct communication between

Production Selection Committee (employees of Fabindia) and the artisans (members of a
NGO or independent craftsmen). The interaction between both of these members is routed
through the Supplier Regional Channel (employees of Fabindia who work on commission
basis). Since the objectives of all three parties are different so misalignment of objectives
between them creates a barrier in developing a efficient supply chain. Besides this the
artisans cannot interact directly with the top management of the company for handling
their grievances and giving suggestions.

The Market Region Warehouses and Stores are dependent upon the PSC for the products
and for distribution list, and also there is no independence on part of their operations.

8. INCOMPLETE SUPPLY CHAIN STRATEGIES

Fabindia’s supply chain is in rudimentary state and there is no well defined supply chain
strategy to improve upon the present structure. Rigidity is followed while carrying out its
operations and efficient supply chain techniques such as Cross Docking and Just In Time
are not applied to the system to reduce cost and optimize efficiencies. Roles and
responsibilities of In bound and Out bound logistics are not well defined which leads to a
increased supply chain cost.

Going beyond the internal supply chain by including external suppliers and customers often
exposes new opportunities for improving internal operations of supply chain and open
avenues for greater strategic decisions which can be operationalized.

The true restructure of the supply chain starts with a good strategy and physical elements,
not the virtual (like ERP investments).  Though Information transfer is critical to swiftly
moving parts through the chain of processes, but not the only one. Analyzing the processes
in the supply chain can identify the causes and facilitate solutions to reduce overall
throughput time. Compressing time in the chain of events from the time a customer places
an order until the order is satisfied can provide a competitive edge without the burden of
carrying excessive inventory.

Development of Supply Chain for the Apparel

Retail Organization
In today’s world compressing the time in the product spend in the supply chain i.e. from the
from the time a customer places an order until the order is satisfied can provide a
competitive edge without the burden of carrying excessive inventory.
So after analyzing the supply chain of the organization and determining the pitfalls in it we
have come up with a new model of supply chain for Fabindia.
Some changes in it supply chain would be short term and some which require huge
investment will be adopted over a period of time.
The new supply chain of the organization is as follows.

Supply Chain Model of the Organization.

IDENTIFICATION OF THE ARTISANS BY SUPPLIER REGIONAL CHANNEL (SRC)

SRC identifies artisans in its region. They collect samples of the craft and
send it’s across to the Product Selection Committee (PSC).

Being a craft based organization fabindia continuously endeavours to find out new rural
crafts that can be incorporated into the fabindia collections of craft. this job is done by
members of the SUPPLIER REGIONAL CHANNEL. SRC are present in 21 states of India and in
total there are 14 SRC.

As soon as a new craft, group of artisan performing an existing craft is identified by SRC
members, they purchase samples of the craft and send it across to PRODUCT SELECTION
COMMITTEE.

In the identification of artisans the lead time is variable as it is occasional occurrence .It is
one of the greatest value addition to the organisation as a new craft adds most value to
the product range

SELECTION OF CRAFT
Product Selection Committee (PSC) evaluates the sample on the potential in
theevaluates
The product selection committee at Delhi market. the sample on the basis of merit. If it
finds it suitable to the FabIndia look and wants to incorporate the craft in its range then it
experts in the area of design visit the Artisans in the traditional niche. If it does not find
merit in the craft then it guides the SRC members for to look for more improvements and
improvisations of the craft.

The lead time here is very large as first the samples are sent to SRC’s for evaluation and
then improvisation in the crafts had to be made to suit to the FabIndia look
 SUPPLIER REGIONAL CHANNEL (SRC) VISIT

Product Selection Committee (PSC) members (experts from the field of

design and marketing) visit the artisan and provide them design inputs.

After the craft is selected then the design team visit the SRC and the artisan to provide for
designs inputs and various innovations of the craft. financial help is also provided to assist
the growth of the craft.

The lead time is variable and depends upon the proximity of the SRC to the Product
Selection Committee (PSC). And it is one of the greatest additions to the value chain of the
organisation

PRODUCT SELECTION FOR THE COMING SEASONS (SRC)

Product Selection Committee (PSC) experts select styles and designs to be

taken up in next year’s collection from the designs presented to them by the
artisans after
in presence of the SRC Head
a cordial

After building a cordial relationship between the artisans and Fabindia, SRC along with the
artisans (new and old) come to the PSC with the new products developed by them during
the season. New products are selected and best sellers reordered to be presented in the
next year’s collection. Delivery of merchandise is scheduled keeping in mind the selling
season, artisans capacity to deliver the merchandise and other schedule of deliveries.

Possible remedies-:

Artisan must be allowed to visit the Product Selection Committee without the Supplier
Regional Channel Head so that their ideas and grievances are put forward to the Product
Selection Committee and grievances immediately addressed.

ISSUE OF ORDER TO FABRIC SUPPLIERS BY ARTISANS

Artisan source quality fabric from predefined fabric vendors of fabindia.

If an Artisan is an fabric manufacturer then he/she starts the process of making the fabric
of defined quality in pre-decided colours. But if the artisan does a craft on fabrics then after
receiving an order; the artisans order fabric from predefined vendors of the company and
then the vendor supplies the fabrics ordered by all the artisans under one SRC to the SRC.
There by significantly reducing the transportation cost. Artisans with the assistance of SRC
collect their fabric and start the manufacturing of the final product.

After the inclusion of ERP the lead time in the issue and execution of orders to fabric
suppliers for fabric by artisans is greatly reduced. Orders are transmitted in matter of
seconds and status of deliveries can also be known through a quick response system.

Possible remedies-:

JUST IN TIME Supply Chain Strategy can effectively be applied to the process of fabric
supply by one vendor and issue of fabric to the other artisan for the manufacture at the
SRC. This would effectively reduce inventory holding cost of the SRC and would also be
beneficial to the artisan would receive fabric at the earliest and hence he could make the
deliveries on time.

SUPPLY OF PRODUCTS BY ARTISANS TO SRC

Artisans supply the merchandise as per the schedule of deliveries to SRC.

SRC checks it for quality and quantity and reports the same to PSC

it is inbound logistics that after the merchandise is ready it is delivered to the SRC
warehouse where it is checked for quality and quantity. The SKU level entry into the
company’s ERP system is done and hand tags and price labels are attached to each product.
The same information is sent to PRODUCT SELECTION COMMITTEE. Payment is made to the
artisan within 45 days of the delivery.

the lead time in this case is due to simplistic inventory stocking policy of the organisation.

Possible remedies-:

Although the artisans supply the merchandise the order as per the schedule of deliveries to
SRC’s as per the schedule, but the supplies are more dependent on natural factors, which
cant be avoided and escaped, the remedy to this can be that every organisation maintains
its vendor rating, and has reliable and unreliable suppliers. Fabindia should provide buffer
to suppliers (on the basis of vendor rating) to avoid shortage in stock, and if there is
overage of stock it can make unreliable suppliers dispatch their supply first and make the
reliable supplier wait for some time although they will have to pay them extra for holding
their inventory supply, but it will help in avoiding fluctuations

Besides this the organisation can also implement RFID, utilising RFID technology, large
quantities of information can be analysed and made available to internal and external
systems in near real time, which is proving crucial to improving the quality of business
operations.

DISTRIBUTION LIST

Buyers at Product selection committee develop a distribution list to

distribute the merchandise to various stores.

The PSC then prepares the store wise distribution list for the style and decided the
Minimum Stock Float (MSF). MSF is the amount to merchandise to be stocked with SRC for
repeat order reference and future customer orders.

Minimum stock float (MSF) creates value not only for the company but also for the
vendor. Lead time here is minimal.

Possible remedies-:

the control and supervision while handling the ERP mainly lies with the product selection
committee(PSC’s) which are also entrusted with the selection of designs, they are loaded
with more work which makes their performance of task time consuming, and delay in
handling the data owing to busy schedule, leading to difficulty in data mining, more manual
processing. Although WIPRO’s ERP is good but still improvement is required. The
organisation instead of giving the authority of handling the ERP related transaction to PSC
can give this responsible to dedicated expert’s of WIPRO, who are well proficient in
handling the data.
 SIGN OFF

Buyers at Product selection committee take a approval of the quantities

allocated to stores by the respective market region heads.

After the distribution lists are prepared by PSC they are sent to the Market Region Heads
(MRH) for approval called sign off. this is outbound logistics The MRH can increase or
decrease the quantities for stores in his/her market region as per the sales of similar styles
in the previous season, provided that the total quantity in each size & colour is not greater
than the one allocated by PSC.

Approval from all the market region heads (MRH) is a time consuming task and normally
takes around 15 days

Possible remedies-:

After receiving sign off from all the market region heads (MRH) the buyer must consider
reordering the stock if there is excessive demand for the style or if the style is accepted
more in one region then it must move the inventory to those regions and order the
development of new styles with fresh and more acceptable print suitable to that region.

MOVEMENT OF GOODS FROM SRC TO MARKET REGION WAREHOUSE(MRW)

After sign off are received the SRC sends the products to the various market
region warehouses according to the quantities of the distribution list.
through rail-road transport.
After receiving sign off the consolidated final distribution list is sent to SRC, from where the
merchandise is packed according to the stores in various market regions and dispatched
using rail – road transport systems. There are only 8 Market Region Warehouses for all 117
stores.

The lead time in this step is dependent upon the geographical proximity and cordial
relationships between the SRC and MRW’s. At most the lead time in this link would be
two weeks.
 MOVEMENT OF GOODS FROM MARKET REGION WAREHOUSE (MRW) TO
STORES

After receipt of goods MRW sends the allocated quantities to various stores
where the finally reach the end user

On receipt of goods market region warehouses sends goods received in good condition to
the stores. There by effectively breaking the bulk and reducing the cost of transportation of
each SRC sending to each store. This is outbound logistics. Customers buy these goods from
the stores.

The lead time is generally one week as only goods are despatched weekly from
warehouse to stores

Possible remedies-:

Market Region Warehouses can implement the strategy of always sending FULL TRUCK
LOAD stock to each store so that it can effectively reduce its inventory cost. By coordinating
this activity with the store; the store would always be knowing when and what stock is to
arrive and can keep the retail shelf space and manpower ready to take the stock in
immediately.

While in the movement of goods from SRC to market region warehouse MRW’s and from
market region warehouse MRW’s to stores, these two cases are of outbound logistics and
require speedy and efficient data mining and retrieval, the ERP here needs improvement.

There can be two solution to this problem, for short term run, fabindia can outsource
services of FEDEX or DHL, outsourcing here means purchase of services from these
companies that were previously provided internally, who are technically equipped with day
to day data and its functioning on a large basis, while maintaining stability and efficiency
equally

On long term basis the ERP of fabindia instead of outsourcing can merge with FEDEX or DHL
and incorporate such features in their ERP, that instead of outsourcing they can have
speedy data transmission and retrieval within the organisation, although the cost will move
up by incorporating such services but it will benefit in the long run. It will facilitate effective
communication among the SRC’s and MRW’s and to the final destination that is the stores
Another remedy to this can be that fabndia should implement RFID in its supply chain
management as with the advent of time it has been observed that the companies investing
in RFID are experiencing new levels of supply chain efficiency. RFID offers a unique
combination of control and flexibility. Unprecedented levels of accuracy allow
manufacturers and retailers to operate and collaborate more effectively. This innovative
technology is increasing the visibility of goods across the chain and beyond. Utilising RFID
technology, large quantities of information can be analysed and made available to internal
and external systems in near-real time, which is proving crucial to improving the quality of
business operations. With the help of RFID, the organisation will be able to achieve:

 Improved tracking of high-value items.

 Reduced shrinkage and shipping errors.

 Inventory visibility, accuracy and efficiency.

 Improved production planning and smart recalls.

 Technology standards to drive down costs.s

MERCHANDISE LEFT WITH THE SRC

If merchandise is left with the SRC after the distribution according to the
distribution list, then it added on B2B portal of the company’s ERP system so
that store can order according to their need.
The merchandise left with the SRC after supplying to all the SRC’s is added to B2B portal of
the company from where it is traded as per the order of the store.

The lead time is dependent upon the availability of stock and geographical proximity of
the SRC or the stores/Market Region Warehouse (MRH)

Possible remedies-:
The organization must try to establish good relation between all SRC’s and MRW’s. This
would reduce Market Region Warehouse uncertainty to receive stock. Stores which have
some level of inventory in a particular category must be prohibited to order more stock in
that category so as to reduce the bull – whip in the chain. Hence leading to alignment to
manufacturing with customer orders. It should be made mandatory for SRC to process
request in First In First Out format so that effective coordination can be achieved in the
supply chain.