Discussion:Supply,Chain Management :
It was late August 2005. and the monsoons were in full swing in Northern India. At the W'Up Bottlery in Uttar Pradesh, India. Rajat Mehra, director of supply-chain management. listened to the din of huge raindrops drumming down incessantly on his office window as he mused over the W'Up plant's supply-chain performance over the peak summer period that had just ended. The W'Up Bottlery, which was a wholly owned subsidiary of Hindustan Coca-Cola Beverages Private Limited (HCCBPL). made Coca-Cola and other soft drinks for several regions within the Uttar Pradesh market. While inventories had gone down and fill rates had improved relative to the previous peak-sales season. Mehra was looking for ways to improve performance dramatically.
The size and highly granular nature of the W'Up plant's distribution network posed major challenges in supply-chain management. With six levels in the supply chain, the plant received, at best, third-hand information about actual retail demand. Mehra was familiar with the concept of vendor-managed inventory (VW) that was gaining popularity in Western markets. In contrast to traditional supply chains-in which each supply-chain entity' placed orders to its immediate upstream supplier-in this approach, upstream entities received downstream demand information via electronic data interchange or Internet-based information exchange. and made order decisions for their customers so as to meet a customer-specified service level. Mehra wondered how this idea could work in a supply network where even phone lines, let alone computers, were scarce. To complicate matters, 70% of the W'Up plant's sales came from its returnable-glass-bottles business, which required forward as well as reverse logistics. Determined to find a way to implement VMI, Mehra decided to convene a meeting with his team to brainstonn this idea.