REPORT

ON

BENCHMARKING

OF

FMCG INDUSTRIES IN INDIA

BY:

SHASHANK CHAUHAN

TABLE OF CONTENTS

CONTENT PAGE NUMBER

1. Acknowledgements ………………………………………………02

2. Declaration……………………………………………………......03

3. Introduction……………………………………………………….05

4. Executive Summary………………………………………………06

5. Industry analysis………………………………………………….07

6. About industry……………………………………………………08

7. Structural analysis of Indian FMCG industry………………….. 08-09

8. Distinguish feature of Indian FMCG business…………………...09

9. Analysis of marketing and distribution of Indian FMCG……….09-10

10. Reason for competition of Indian FMCG………………………...10

11. Company Analysis………………………………………………..11

12. Company profile (Cadbury India Ltd.)…………………………...12-13

13. Company profile( Johnson & Johnson India Ltd…………………14

14. Company profile (Nestle India Ltd.)……………………………...15-17

15. Comparison of sales of Cadbury India Ltd……………………….17

16. Comparison of net profit of Cadbury India Ltd…………………..18

17. Comparison of sales of Johnson………………………………….18

18. Comparison of Net profit of Johnson India Ltd…………………19

19. Comparison of sales of Nestle India Ltd………………………….19

20. Comparison of Net Profit of Nestle India Ltd…………………… 20

21. Comparison of sales of three industry……………………………..20

22. Comparison of net profit of three industry………………………..21

23. Comparison of yearly growth of three company………………... 21

24. Comparison of profit increased of three company………………..22

25. Research Methodology…………………………………………... 23

26. Data Analysis………………………………………………………24-33

27. Opportunity analysis……………………………………………... 30-31

28. Analysis of internal supply chain efficiency……………………… 32

29. Analysis of internal supply chain working capital productivity……33

30. Conclusion----------------------------------------------------------------- 34

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31. Recommendation---------------------------------------------------------- 34

32. Reference------------------------------------------------------------------- 34

3. INTRODUCTION

This project is about finding the Issues, Constraints, Relevant alternatives, develop an implementation plan & mapping Supply Chain and doing benchmarking of three various companies. This project is done mainly for academic purpose in the subject of Supply Chain Management for the course of PGDSCOM (08-10). At the macro level, Indian economy is poised to remained buoyant and grow at more than 7%.The economic growth would impact large proportions of the population thus leading to more money and

the hands of the consumer. Changes in demographic composition of the population and thus the market

would also continue to impact the FMCG industry.

Recent survey conducted by a leading business weekly, approximately 47 percent of India’s 1+billion people wear under the age of 20, and teenagers among them numbered about 160 million. Together, they wielded INR 14000 Cr worth of discretionary income, and their families spent an additional INR 18500 Cr on them every year, by 2015, Indians under 20 are estimated t make up 55% of the population- and wield proportionately higher spending power. Means, companies that are able to influence and excite such consumers would be those that win in market place.

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4. EXECUTIVE SUMMARY

The accomplishment of the report mainly depends upon research methods viz. industry analysis, and internal benchmarking of supply chain management.

The project was assigned to perform the analysis three company of the same industry.

In this project opportunity analysis has been done with the data of holding period of the firm’s Raw material, Semi finished goods, and Finished goods.

Analysis of internal supply chain efficiency has been done for the same companies.

Internal supply

Internal supply chain working capital productivity analysis has been done with the data of Working Capital Productivity and Inventory, Accounts receivable, and Accounts payable and reached the conclusion that only internal supply chain analysis cannot suggest the whole cost reduction we also need to analyze the external factors.

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INDUSTRY ANALYSIS

5

ABOUT INDUSTRTY

The Indian FMCG market has been divided for a long time between the organized sector and the unorganized sector. While the latter has been crowded by a large number of local players, competing on margins, the former has varied between a two-player –scenario to a multi- player one

Unlike the U.S market for fast moving consumer goods (FMCG), which is dominated by a handful of global players, India’s Rs. 460 billion FMCG market remains highly fragmented with roughly half the market going to unbranded, unpackaged home made products This presents a tremendous opportunity for makers of branded products who can convert consumers to branded products. However, successfully

Launching and growing market share around a branded product in India presents tremendous challenges. Take distribution as an example. India is home to six million retail outlets and super markets virtually do not exist. This makes logistics particularly for new players extremely difficult. Other challenges of similar magnitude exist across the FMCG supply chain. The fact is that FMCG is a structurally unattractive industry in which to participate. Even so, the opportunity keeps FMCG makers trying.

At the macro-level, over the long term, the efforts on the infrastructure front (roads, rails, power, and river linking) are likely to enhance the living standard across India. Till date, India’s per capita consumption of most FMCG product is much bellow world averages. This is the latent potential that most FMCG companies are looking at. Even in the much penetrated categories like soaps/detergents companies are focusing on getting the consumer up the value chain. Going forward, much of the battle will be fought on sophisticated distribution strengths.

STRUCTURAL ANALYSIS OF FMCG INDUSTRY:

Typically, a consumer buys these goods at least once a month. The sector covers a wide gamut of products such as detergents, toilet soaps, toothpaste, shampoos, creams, powders, food products, confectioneries, beverages, and cigarettes. Typically characteristics of FMCG products are:-

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1. The products often cater to 3 very distinct but usually wanted for aspects- necessity, comfort luxury. They meet the demands of the entire cross-section of population. Price and income elasticity of demand varies across products and consumers.

2. Individual items are a small value (small SKU’s) although all FMC products put together account for a significant part of the consumers budget.

3. The consumer spends little time on the purchase decision. He seldom over looks at the technical specifications. Brand loyalties or recommendations of reliable retailer/dealer drive purchase decision s.

4. Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required.

5. Brand switching is often induced by heavy advertisement, recommendation of the retailer or word of mouth

DISTINGUISH FEATURES OF INDIAN FMCG BUSINESS:

FMCG companies sell their products directly to consumers. Major features that distinguish this sector from the others include the following:-

Design and manufacturing

1. Low capital intensity- Most product categories in FMCG require in FMCG requires relatively minor investment in plant and machinery and other fixed assets. Also, the business has low working capital intensity as bulk of sales from manufacturing take place on cash basis.

2. Technology-Basic technology of manufacturing is easily available. Also, technology for most products has been fairly stable. Modifications and improvements rarely change the basic process.

3. Third party manufacturing- Manufacturing of products by third party vendors is quite common. Benefits associated with third party manufacturing include (1) flexibility in production and inventory planning; (2) flexibility in controlling labor cost; and (3) logistics-sometimes it is essential to get certain products manufactured near the market.

Marketing and distribution:

Marketing function is sacrosanct in case of FMCG companies. Major features of the marketing function include the following:-

1. High initial launch cost – New products require a large front ended investment in product development, market research, test marketing and launch. Creating awareness and develop franchise for a new brad requires enormous initial expenditure on launch advertisements, free sample and product promotions. Launch costs is as high as 50-100% of revenue in the first year.For established brands, advertisement expenditure varies from 5-12% depending on the categories.

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2. Limited mass media options-The challenge associated with the launch and/or brand building initiatives is that few no mass media options. TV reaches 67% of urban consumers and 35% of rural consumer .Alternatives like wall paintings, theaters, video vehicles, special packaging and consumer promotions become an expensive but required activity associated with a successful FMCG.

3. Huge distribution network- India is home to six million retail outlets, including 2 million in 5,160 towns and 4 million in 627,000 villages. Super markets virtually do not exist in India. This makes logistics particularly for new players extremely difficult. It also makes new product launches difficult since retailers are reluctant to allocate resources and time to slow moving products. Critical factors for success are the ability to built, develop, and maintain a robust distribution network.

Competition

Significant presence of unorganized sector –Factors that enable small, unorganized players with local presence to flourish include the following:

1. Basic technology for most products is fairly simple and easily available.2. The small scale sector in India enjoys exemption/lower rates of excise duty, sales tax etc. This

makes the more price competitive vis-à-vis the organized sector.3. A highly scattered market and poorly transport infrastructure limits the ability of MNCs and

national players to reach out to remote rural areas and small towns.4. Low brand awareness enables local players to market their spurious look-alike brands.5. Lower overheads due to limited geography, family management, focused product lines and

minimal expenditure on marketing.

A general analysis of this would lead to the conclusion that FMCG is not a Structurally Attractive industry to Enter.

8

COMPANY ANALYSIS

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Cadbury India Ltd.

COMPANY PROFILE:

Cadbury plc (LSE: CBRY, NYSE: CBY) is a confectionery and beverage company with its headquarters

in London, United Kingdom, and is the world's largest confectionery manufacturer. The firm was

formerly known as "Cadbury Schweppes plc" before demerging in May 2008, separating its global

confectionery business from its US beverage unit, which has been renamed Dr Pepper Snapple Group Inc.

The company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It is

headquartered in Mayfair, City of Westminster, and Greater London

Early history

In 1824, John Cadbury began vending tea, coffee, and (later) chocolate at Bull Street in Birmingham in

the UK and sometimes in India. The company was later known as "Cadbury Brothers Limited".

After John Cadbury's retirement, his sons, Richard and George, opened a major new factory at

Bourneville, five miles south of the city. In 1893, George Cadbury bought 120 acres (0.5 km²) of land

close to the works and planned, at his own expense, a model village which would 'alleviate the evils of

modern more cramped living conditions'. By 1900 the estate included 313 cottages and houses set on 330

acres (1.3 km²) of land. As the Cadbury family was Quakers there were no Public houses in the estate; in

fact, it was their Quaker beliefs that first led them to sell tea, coffee and cocoa as alternatives to alcohol.

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After World War I, Cadbury Brothers Limited undertook a financial merger with J.S. Fry & Sons

Limited, another chocolate manufacturer.

Merger

The Cadbury Schweppes logo used until the demerger in 2008Cadbury merged with drinks company

Schweppes to form Cadbury Schweppes in 1969.

Snapple, Mistic and Stewart's (formerly Cable Car Beverage) were sold by Trier to Cadbury Schweppes

in 2000 for $1.45 billion. In October of that same year, Cadbury Schweppes purchased Royal Crown from

Trier.

Demerger

In March 2007, it was revealed that Cadbury Schweppes was planning to split its business into two

separate entities: one focusing on its main chocolate and confectionery market; the other on its US drinks

business. The demerger took effect on 2 May 2008, with the drinks business becoming Dr. Pepper

Snapple Group Inc. Cadbury is selling its Australian beverage unit to Asahi Breweries.

The Cadbury Schweppes logo used until the demerger in 2008

Recent developments

In October 2007, Cadbury announced the closure of the Key sham chocolate factory, formerly part of

Fry's. Between 500 and 700 jobs would be affected by this change. Production transferred to other plants

in England and Poland.

In 2008 Monk hill Confectionery, the Own Label trading division of Cadbury Trevor Bassett (vs.), was

sold to Tangerine Confectionery for £58million cash. This sale included factories at Pontefract,

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Cleckheaton & York and a distribution centre near Chesterfield, and the transfer of around 800

employees.

Johnson & Johnson Ltd.

COMPANY PROFILE:

Johnson & Johnson Ltd. is the most comprehensive manufacturer of healthcare products, selling more

than 100 different products in the consumer, pharmaceutical and professional markets. Since 50 years of

establishment in India, they have gained a reputation for delivering high-quality products at competitive

prices. Their success stems from our staunch commitment to caring for and catering to the needs of Their

customers and employees.

quest to provide high-quality, yet cost-effective products has led to active R&D efforts. Rich dividends

have led not only to innovations in the pharmaceutical industry, surgical science and diagnostics industry,

but have also earned us an important place in virtually every household. Their success has also helped us

introduce and continuously innovate on highly sophisticated products for new markets in India.

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Nestle India Ltd.

Company profile:

Nestlé S.A. (French pronunciation: [nɛsle]) is a multinational packaged food company founded and

headquartered in Vevey, Switzerland, and listed on the SWX Swiss Exchange with a turnover of over 87

billion Swiss francs. It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products

established in 1866 by the Page Brothers in Cham, Switzerland, and the Farine Lacteal Henri Nestlé

Company set up in 1866 by Henri Nestlé to provide an infant food product. The two world wars both

affected growth: during the first, dried milk was widely used but the second war caused profits to drop by

around 70%. However, sales of the instant coffee Nescafe were boosted by the US military. After the

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wars, growth was stimulated by acquisitions expanding its range and taking control of several well known

brands, so they now include Magi, Thom and Nescafe, that are known globally.

The company dates to 1867, when two separate Swiss enterprises were founded that would later form the

core of Nestlé. In August of that year, Charles A. and George Page, brothers from Lee County, IL in the

United States, established the Anglo-Swiss Condensed Milk Company in Cham. In September, in Vevey,

Henri Nestlé developed a milk-based baby food and soon began marketing it. In the succeeding decades

both enterprises aggressively expanded their businesses throughout Europe and the United States. (Henri

Nestlé retired in 1875, but the company, under new ownership, retained his name as Farine Lacteal Henri

Nestlé.) In 1877 Anglo-Swiss added milk-based baby foods to its products, and in the following year the

Nestlé company added condensed milk, so that the firms became direct and fierce rivals

In 1905, however, the companies merged to become the Nestlé and Anglo-Swiss

Condensed Milk Company, retaining that name until 1947, when the name Nestlé Alimenting SA was

taken as a result of the acquisition of Barbeque de Products Magi SA (founded 1884) and its holding

company, Alimenting SA of Kempten, Switzerland. Magi was a major manufacturer of soup mixes and

related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company

was operating factories in the United States, United Kingdom, Germany and Spain. World War I created

new demand for dairy products in the form of government contracts; by the end of the war, Nestlé's

production had more than doubled.

After the war, government contracts dried up and consumers switched back to fresh milk. However,

Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw

Nestlé's first expansion into new products, with chocolate the company's second most important activity

Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6

million in 1939. Factories were established in developing countries, particularly Latin America.

Ironically, the war helped with the introduction of the company's newest product, Nescafe, which was a

staple drink of the US military. Nestlé's production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and

companies were acquired. In 1947 came the merger with Magi seasonings and soups. Crosse & Blackwell

followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a

shareholding in L’Oreal in 1974. In 1977, Nestlé made its second venture outside the food industry by

acquiring Alcon Laboratories Inc.

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In 1984, Nestlé's improved bottom line allowed the company to launch a new round of acquisitions,

notably American food giant Carnation and the British confectionery company Row tree Mackintosh in

1988, which brought the Willy Wonk Brand to Nestlé

The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets

developed into more or less integrated trading areas. Since 1996 there have been acquisitions including

San Pellegrino (1997), Spillers Pet foods (1998), and Ralston Purina (2002). There were two major

acquisitions in North America, both in 2002: in June, Nestlé merged its U.S. ice cream business into

Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot

Pockets. In the same time frame, Nestlé came close to purchasing the iconic American company

Hershey's, though the deal fell through. Another recent purchase includes the Jenny Craig weight loss

program for US$600 million.

In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240 million. In January 2006

it took full ownership of Dreyer's, thus becoming the world's biggest ice cream maker with a 17.5%

market share.

In November 2006, Nestle purchased the Medical Nutrition division of Novartis Pharmaceutical for

$2.5B, also acquiring in 2007 the milk flavoring product known as Oval tine. In April 2007 Nestlé bought

baby food manufacturer Gerber for $5.5 billion.

In December 2007 Nestle entered in a strategic partnership with a Belgian chocolate maker Pierre

Marceline.

DIFFERENT COMPARISON BY CHARTS:

Comparison of sales of Cadbury India ltd.

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16

17

18

19

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RESEARCH METHODOLOGY:

There has been an increased awareness in recent years regarding the role and potential of supply chain

management in supporting corporate goals.

Benchmarking is one way of assessing performance based on these measures (Began and English

1994).Seltzer and Carr(19999) tested the relationship among benchmarking, strategic purchasing, and

firm’s performance and found that bench marking is positively related to firm’s performance and strategic

purchasing.

This research develops performance measures that was computed through publically available

information and demonstrates how benchmarking these measures may be useful to a firm.

STEPS DELINEATING THE BENCHMARKING FRAMEWORK

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Selection of performance measures among the ones taken in this research by the firm depending on its

competitive focus, market niche, and strategy

Benchmarking exercise on the firms in the industry using the selected performance measure. This would

enable the identification of firms with “best performance’’ in terms of selected measures. Other

performance measures developed in this research may then be computed for the selected firms

The information about specific strategies of the “best performance” firms to be obtained from business

periodicals and other sources in public domain. This information can be extracted and be related to the

specific performance measures of the firms.

Leveraging this knowledge to find what bearing the firm’s performance measure have on their Specific

practices and policies. At this stage, management’s objective is to identify practices and policies that

drive superior performance.

Data analysis:

Table -1

2007 DRM DWIP DFG TOTAL LENGTH

CADBURY 48.75 4.95 19.11 72.82

JOHNSON 40.55 1.19 24.82 66.56

NESTLE 31.46 5.35 22.31 59.12

The cumulative lengths are

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Table-2

LENTH AT THE

END OF RAW

MATERIAL

STAGE

LENTH AT THE

END OF WIP

STAGE

LENGTH AT THE

END OF FINISHED

GOODS STAGE

TOTAL LENGTH

CADBURY 48.75 53.70 72.82 72.82

JOHNSON 40.55 41.74 66.56 66.56

NESTLE 31.46 36.81 59.12 59.12

Table-3

START DAY

LENTH AT THE

END OF RAW

MATERIAL

STAGE

LENGTH AT THE

END OF WIP

STAGE

LENGTH AT THE

END OF FINISHED

GOODS STAGE

CADBURY 0 48.75 53.71 72.82

JOHNSON 42.26 46.81 48 72.82

NESTLE 13.7 45.16 50.51 72.82

Table-4

CADBURY JOHNSON NESTLE

COST OF RAW

MATERIAL

350.29 141.98 1647.46

COST ADDITION IN

THE RAW MATERIAL

STAGE

5.84 3.89 15.50

COST AT THE END OF

RAW MATERIAL

STAGE

356.13 284.60 1454.66

COST AT THE END OF 1064.24 1416.92 2893.47

23

WIP STAGE

COST ADDITION AT THE

FINISHED GOODS

STAGE

8.66

14.00 24.71

COST AT THE END OF

FINISHED GOOD

STAGE

1072.90 1430.922918.18

Table-5

CADBURY JOHNSON NESTLE

NORMALIZED COST

OF RAW MATERIALS

.32 .19 .49

NORMALIZED COST

AT THE END OF RAW

MATERIAL STAGE

.33 .19 1.03

NORMALIZED COST

AT THE END OF WIP

STAGE

.99 .99 .99

NORMALIZED COST

AT THE END OF

FINISHED GOOD

STAGE

1 1 1

Figure-1

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Figure-2

Figure-3

25

Figure-4

Figure-5

26

Table-6

COST OF

HOLDING

INVENTORY FOR

TIME PERIOD I

INTERNAL

SUPPLY CHAIN

MANAGEMENT

COST FOR TIME

PERIOD I

INTERNAL

SUPPLY CHAIN

INEFFICIENCY

RATIO FOR TIME

PERIOD I

CADBURY 16.31 276.34 .20

JOHNSON 18.46 249.58 .15

NESTLE 49.08 389.29 .12

Table-7

INTERNAL SUPPLY CHAIN

WORKING

INTERNAL SUPPLY CHAIN WORKING

CAPITAL PRODUCTIVITY

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CAPITAL FOR TIME PERIOD

I

FOR TIME PERIOD I

CADBURY -182.89 -3.1

JHONSON -103.07 -5.7

NESTLE -396.52 -3.4

Table-8

INTERNAL SUPPLY CHAIN WORKING CAPITAL ANALYSIS

COMPANY ACCOUNTS

RECEIVABL

ACCOUNTS PAYBLE IMPECT ON INTERNAL

SUPPLY CHAIN

WORKING CAPITAL

PRODUCTIVITY

CADBURY 71.63(LOW) 385.09(HIGH)

JHONSON 244.36 495.33

NESTLE 168.6 957.78

Table-9

INTERACTION OF THE WORKING CAPITAL COMPONENTS AND LOST SALES

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SENARIO ACCOU-NTS

RECEIV-ABL

INVENTORY LOST-

SALES

ALING OF ACCOUNTS/

BED DEBTS

CADBURY 71.63 151.02

JHONSON 244.36 150.5

NESTLE 168.6 401.22

Opportunity Analysis

Table-11 shows the inventory holding periods for the three firms and figure 5 presents the cost

profiles for the three firms and industry aggregate for the year 2007

Table-10

SUPPLY CHAIN INEFFICIENCY RATIO

2005 2006 2007

CADBURY

-0.149799 -0.240716 -0.322037

JHONSON

-0.322008 -0.137835 -0.172492

NESTLE

-0.340106 -0.321709 -0.292786

Table-11

HOLDING PERIOD FOR THE FIRMS

29

HOLDING

PERIOD

(NO.OF

DAYS)

CADB-

URY

JHON-

SON

NEST-

LE

200

5

2006 2007 2005 2006 2007 2005 2006 2007

RAW

MATERIA

L

29 48 54 54 40 25 31

WIP 5 6 4 1 1 1 4 1 5

FG 22 17 19 22 22 24 20 22 22

The following conclusion can be drawn from figure 5 and Table-11

1. Nestle has the least days of raw material inventory. Also, this company has the lowest

aggregate length, i.e. the composite figure including days of raw material, WIP, and

finished goods.

2. Cadbury has the least days of finished goods inventory. However the product stays as raw

material for the longest time in Cadbury.

3. Johnson has the longest days of finished goods inventory but the least days as WIP.

4. The aggregate industry profile shows that for the industry as a whole, the product stays in

finished goods inventory for a long time and the companies bear significant cost in

keeping the product as raw material.

The result suggests that the companies strive to bring down the level of raw material and finished

goods since there is no value added in these stages and the company has to bear the inventory

carrying cost. Nestle seems to be successful in this objective. However, the product stays in WIP

stage for the medium time for this company. This suggests that the company attempts to delay

the product differentiation to the last stage of the production process.

Analysis of internal Supply chain efficiency

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Cadbury has been successfully in bringing down the internal supply chain inefficiency ratio

from -0.149799 in 2005 to -0.322037 in 2007 for nestle this ratio has decreased from -0.340106

in 2005 to -0.292786 in 2007. Likewise, the ratio has increased for Johnson -0.322008 in 2005 to

-0.172492 in 2007.

This suggest that the industry in general and Cadbury in particular seem to be following an

integrated logistic strategy ,thereby achieving cost efficiency and optimization in the internal

supply chain process. Nestle has managed to achieve the highest increase in sales while, at the

same time it increases the internal supply chain inefficiency ratio. It may be further observed that

the duration for which the product stays in the finished goods stage was the least for Cadbury.

Internal supply chain working capital productivity analysis:

Table-12 shows the breakdown of working capital for each of the three companies.

The following conclusion can be drawn from Table-12 and Table-13

1. Cadbury’s working capital productivity has increased steadily over the years, buts its

account payable also have increased substantially 205.57 from in 2005 to 385.09 in 2007.

One can infer from this result that the internal supply chain working capital productivity

increase is attributable to the deferral of payments to the suppliers.

2. For Johnson, the internal supply chain working capital productivity has decreased

substantially from 2005 to 2007. Sales have gone down for this firm, but the inventory

and accounts receivable have gone up instead of coming down proportionately during the

same period. This phenomenon has driven internal working capital productivity.

3. Nestle has allowed its internal supply chain working capital productivity to decrease from

-2.94026 in 2005 to -3.41546 in 2007. This is explained by significant increase in its

accounts receivable from 112.08 in 2005 to 168.6 in 2007.

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Table-12

WORKING CAPITA PRODUCTIVITY

2005 2006 2007

CADBURY -6.675593595 -4.154267899 -3.105237262

JHONSON -3.105512675 -7.255061645 -5.797384988

NESTLE -2.940262167 -3.108399375 -3.415464542

Table-13

INVETORY, ACCOUNT RECEIVABLE, AND ACCOUNT PAYABLE

CADBURY JHONSON NESTLE

2005 2006 2007 2005 2006 2007 2005 2006 2007

I 149.29 160.99 149.29 117.78 245 147.72 220.03 245.21 392.66

AR20.06

39.471.63

164.38 219.6 244.36 112.08 158.99 168.6

AP 205.57 293.41 385.09 537.39 553.01 495.33 685.32 768.87 957.78

Conclusion:

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The above data analysis results point to the fact that looking only at internal supply chain working capital

productivity parse would be myopic and would not capture the total performance of the firm .Total

performance needs to take into account the partnering approaches of the firm, which is possible by

examining the components of the internal supply chain working capital.

Recommendation:

If a firm is very large in comparison to its suppliers, then it should be more concerned about keeping its

accounts payable at lower levels since the cost of capital faced by a small player is much higher.

On the sell side, a firm may be prone to offer extensions of credit and sell more on credit to generate

sales.

Reference:

1. Janet shah, supply chain management, 2009

2. Journal of supply chain management; winter 2001; 37, 1, ABI/INFORM Global,

benchmarking internal supply Chain performance: Development of a framework

3. PROWESS DATA BASE (CMIE).

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