Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers” – (Harald, 1996).
A network of autonomous or semi-autonomous business entities collectively responsible for procurement, manufacturing, and distribution activities associated with one or more families of related products.
Supply Chain Management is the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders
It comprises of all activities associated with the flow and transformation of goods from the raw materials stage to providing it to the end user along with the associated information flows i.e., it deals with the whole process of creating each element of a product to the final consumption of the product. Material and information flow both and down the supply chain.
The ultimate goal of any company for using the supply chain management would be to reduce the inventory supposed that the raw materials we needed are available.
There are 3 different types of supply chain management flows:
The product flow
The information flow
The finance flow
The product flow:
It corresponds to the flow of goods to customer from supplier.
The information flow:
It corresponds to the flow of transmitting orders and updating the delivery status.
The finance flow:
It corresponds to payment schedules, credit terms, consignment and title ownership arrangements
Significance of SCM:
India is the world largest producer of many fruits and vegetables AND also ranked amongst the world’s five largest producers of over 80% agricultural produce items, including many cash crops such as coffee and cotton but there still exist huge gap between per capita demand and supply due to enormous waste during post-harvest storage and handling caused by improper bagging without crating, lack of temperature controlled vehicles, unavailability of cold chain facilities in various parts of country for preserving the produce, along with significant processing of the agricultural produce which results in immense losses to the nation. Hence a proper supply chain management in fruits and vegetables has to be improved in all the stages of the supply by adopting best global practices in storage, packaging, handling, transportation, value added service etc to meet the country’s demand of fruits and vegetables.
According to the Food and Agriculture Organisation (FAO), “One third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year.” It also states: “Food is lost or wasted throughout the supply chain, from initial agricultural production to final household consumption.” The losses, it says, represent “a waste of resources used in production such as land, water, energy and inputs, increasing the green gas emissions in vain”.
There are Food wastages which happen in any case due to food’s perishability and the absence of an effective distribution mechanism and legal framework. Looking at the scale of problems, it is wise to frame a comprehensive strategy by combining the efforts of the government and private sectors and civil society.
Food wastage has multiple socio-economic and environmental impacts. In a country like India, not only is food scarce for many poor families, it is a luxury for many others. Though hunger cannot be tackled directly by preventing food wastage, a substantial amount of food that is wasted in our country can feed many hungry people. India ranked 97th among 118 countries in the Global Hunger Index for 2016. About 20 crore people go to bed hungry and 7,000 people die of hunger every day; wastage of food is not less than a social delinquency. According to one estimate, 21 million tonnes of wheat are wasted in India every year. A recent study by the Indian Institute of Management, Calcutta, revealed that only 10% of food is covered by cold storage facilities in India. This, coupled with poor supply-chain management, results in significant wastage, both at pre- and post-harvest stages, of cereals, pulses, fruits and vegetables.
The wastage of food entails loss of considerable amount of resources in the form of inputs used during production. For example, 25% of fresh water and nearly 300 million barrels of oil used to produce food are ultimately wasted.
The increasing wastage also results in land degradation by about 45%, mainly due to deforestation, unsustainable agricultural practices, and excessive groundwater extraction. Wastage results in national economic loss. To put a monetary value to the loss in terms of wastage, India loses ₹58,000 crore every year, to quote The CSR Journal.
The energy spent over wasted food results in 3.3 billion tonnes of carbon dioxide production every year. Decay also leads to harmful emission of other gases in the atmosphere; for instance, decaying of rice produces methane. Food waste emissions have a major impact on climate change and result in greater carbon footprint.
Many countries have legislation providing for global best practices, such as the 1996 Bill Emerson Good Samaritan Act in the U.S., which was intended to encourage donation of food and grocery products that meet quality and labelling standards by protecting the donor and the recipient agency against liability, except in the case of gross negligence and/or intentional misconduct. France has taken a lead by becoming the first country in the world to ban supermarkets from destroying unsold food, forcing them instead to donate it to charities or food banks or send it to the farmers to be used as fertilisers in crop production.
In India, there are many civil society, private sector and community initiatives aimed at distributing food among the poor. The government is also committed to securing availability of food grains for two-thirds of the 1.3 billion population, under the National Food Security Act, 2013. While securing food for all or feeding them through such initiatives is important, addressing wastage of food in all forms is equally critical to complete the cycle of food sufficiency and food sustainability. There are initiatives such as India Food Banking Network (IFBN), which is promoting the concept of collaborative consumption with support from the private sector and civil society organisations. Such initiatives, creating networks and channels of distribution between those who have surplus food and those who are in need of them, are necessary.
The government needs to do more and should play a larger facilitating role. The Prime Minister’s call to the nation needs to be followed up with further interventions. There is an urgent need to understand the complexity of the problem and then to devise a national-level strategy to combat it so that surplus of food can be turned into an advantage instead of resulting in wastage. Hunger and food wastage are two sides of the coin. The cycle of hunger cannot be broken without channelising the wasted food to help the needy. Without stopping wastage of food, we cannot do justice to millions of hungry people, our economy and the planet.
Supply chain management holds the key to improving the manufacturing sector in the country and SCM is getting revolutionised with the introduction of new, disruptive technologies, We must gear up to make use of these technologies – artificial intelligence, Internet of Things, machine learning, and 3-D printing. We have no choice but to digitise, but there is no need to be unduly apprehensive of new technologies. We must make the best use of them, especially block-chain technology,
